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To Have and to Have Not

Posted on by The Progressive Policy Institute

Longtime political reporter Tom Edsall has a long and fascinating piece of analysis up at The Atlantic on the present and future shape of the two major party coalitions. While none of the data he discusses is terribly surprising, he does suggest some real internal problems with the emerging Republican coalition, which is increasingly made of up married white folks, but includes those who are “haves” only because they “have” government benefits that are perceived as vulnerable to budgetary competition from “have-nots”:

It’s entirely possible that, if the deficit forces continued zero-sum calculations, the definition of the center-right coalition of “haves” will be expanded beyond its original boundaries, stretching past the wealthy, the managerial and business class, the gun owners, the anti-taxers, the home schoolers, the property rights-ers, the Western ranchers, Christian evangelicals, and the self-employed to begin to include members of what conservative operative Grover Norquist called the “takings” coalition — men or women who get federal benefits. A Republican Party hungry for victory would welcome as new members Social Security and Medicare recipients  — “takers” who simultaneously consider themselves part of the universe of “haves” and of Norquist’s “leave us alone coalition.”

Add in people who are self-consciously dependent on federal defense spending, and you can see how a Republican coalition of public- and private-sector “haves” could be formidable if not terribly stable.

Demographic trends, though, are very dangerous for the GOP, as this Edsall nugget shows:

While there is no doubt that the increase in the number of racial and ethnic minority voters works to the advantage of the liberal coalition, white voters remain a wild card. In 2008, whites made up 74 percent of the electorate, and McCain carried them 55-43. There are precedents for much higher Republican margins: in 1972, Nixon carried 67 percent of the white vote, and in 1984 Reagan won 64 percent. Conversely, Bill Clinton only lost the white vote by one percentage point to George H. W. Bush in 1992. The one clear conclusion to draw from these figures is that if the GOP is unwilling to make major policy shifts, especially on immigration reform, a crucial issue to many Hispanics, the party will have to drive its margins among white voters back up to the Nixon-Reagan levels.

If anything, the current pressure on the GOP from its rank-and-file, including the Tea Party Movement, is in the opposite direction from any position on immigration policy that could attract Hispanics. So there will be a strong temptation on the Right for indulging heavily in what might be called White Identity Politics. In light of Edsall’s insight on the “haves” in the GOP coalition who are dependent on government spending, White Identity Politics could involve racially tinged distinctions between the “deserved” government benefits received by white middle-class retirees and the “undeserved” government benefits received or sought by poorer or darker folk. That’s a dynamic that’s already been abundantly apparent in the Republican assault on health reform.

Looks like today’s political turbulence will be with us for quite a while, particularly if relatively high unemployment and budget deficits persist, accentuating the zero-sum politics of group competition that Edsall sees in the data.

This item is cross-posted at The Democratic Strategist.

Greenhouse Gas Permits Won’t Be Required Until 2011

Posted on by The Progressive Policy Institute

The Environmental Protection Agency (EPA) this week announced that it would not require greenhouse gas emitters to get permits until 2011, a decision that sets the stage for the administration’s regulation of greenhouse gases in the absence of climate change legislation. I posted recently on the EPA’s reconsideration of the “Johnson Memo,” a piece of regulatory arcana that determines when pollutant emitters have to get permits under the Clean Air Act for new plants or major upgrades to existing plants. The EPA’s final version of the memo (cheat sheet here) shows an agency that’s attempting to juggle several imperatives: congressional concerns, industry pressure, and its own mandate to regulate greenhouse gases as a pollutant.

Under the Clean Air Act, major emitters — those that release more than 250 tons of pollutants into the atmosphere — have to get permits that include analysis of all the pollutants they emit. With the EPA’s endangerment ruling — which classified carbon dioxide as a dangerous pollutant — big emitters will soon have to include greenhouse gas analysis in their permit applications. These permits are time-consuming and expensive, and industry is very concerned about their impact.

As always, politics plays a role. Strictly interpreted, the Clean Air Act would impose big burdens on lots of emitters through a permit process that isn’t really set up to deal with the scale and volume of greenhouse gas permits required. Industry is spooked by the process, but so are the state regulators who would have to issue many of the permits. The EPA itself also doesn’t think a full-scale, immediate permit requirement is workable.

The result is a series of compromises. The most well-known is the “tailoring rule,” in which the EPA is limiting the permit requirement to big emitters (really big emitters, according to the EPA’s latest statements). The Johnson memo revision strikes another compromise by delaying the permit requirement until 2011, when the EPA claims its new mobile-source rules will enter into effect.*

I think these recent moves are partly in response to pressure from Congress. Congress, in proposals by Sens. Lisa Murkowski (R-AK) and Jay Rockefeller (D-WV), has threatened to take away the EPA’s authority to regulate greenhouse gases (for mobile sources, stationary sources, or both). Part of this is driven by fears among industry and on the Hill that the EPA would wreak havoc on the economy with greenhouse gas permit requirements. By moderating the impact of these requirements, the EPA is trying to comply with the Clean Air Act and achieve its environmental goals while appeasing the congressional dragon. To be sure, the EPA and state agencies are probably concerned about their own ability to handle the permit requirements and would benefit from more time, but I think congressional pressure is a big factor. One piece of evidence is that EPA Administrator Lisa Jackson announced these moves first in a letter to Sen. Rockefeller.

You could characterize this series of events as influence by special interests behind the scenes, undermining an EPA regulatory program without a congressional vote. I think there’s a more benign balance-of-powers story, though. In regulating air pollution the EPA has used Clean Air Act powers delegated from Congress, and it has now followed the Supreme Court’s Massachusetts v. EPA decision affirming that those powers extend to greenhouse gases. This has led to a problem, however: it was hardly realistic to regulate every single emitter of carbon in the economy. The agency realized that to do so would create problems for itself and would be a political non-starter. Congress aside, it’s unlikely even Administrator Jackson or her boss, President Obama, would find much value in a draconian permit scheme, so the EPA proposed a solution — the tailoring rule. Congress continued to push back with some legislative saber-rattling, and the EPA moderated its approach a little further by expanding the tailoring rule and delaying the permit requirement. Time will tell whether that is enough to forestall congressional action against EPA, but it appears to be sufficient for now.

This isn’t ideal, but it’s regulatory government at work. In a real way, however awkward, politicized and bureaucratic, the three branches of government have had a conversation of sorts on climate policy. A compromise seems to have been reached. Of course, new climate legislation would be much better — not only because of its Schoolhouse Rock clarity but because of the superior policy mechanisms that Congress has the power to implement.

* This is because the rules apply to model-year 2012 cars and trucks. A 2010 rule applies in 2011 to 2012 vehicles. Only in Washington…

“About” Race

Posted on by The Progressive Policy Institute

A perennial issue that’s been bubbling up a lot since the rise of Barack Obama has been whether and when it’s fair for progressives to suspect racial motives in conservative political appeals. Obama’s race has made the subject pretty much unavoidable, but the special ferocity of conservative reactions to Obama’s candidacy, presidency and policies has raised the possibility that something a bit unusual is going on. But if the subject ever comes up, conservatives now angrily accuse their accusers of “playing the race card,” as though the issue is by definition illegitimate or demagogic.

Frank Rich of the New York Times stirred up the latest contretemps with a column that suggested the heat behind much of the grassroots anger towards Obama comes at least in part from “fears of disenfranchisement among a dwindling and threatened minority in the country” — e.g., white men. At RealClearPolitics, a noted analyst of and sometimes advocate for the political views of white men, David Paul Kuhn, issued a response that accused not only Rich but “liberal elites” of perpetually playing the race card in order to ignore or dismiss legitimate discontent with liberal policies.

I have no interest in adjudicating the Rich/Kuhn dispute, other than to say that Rich is clearly imprecise in his attribution of semi-racist motives to conservatives, and that Kuhn trumps that mistake by pretending that Rich has accused every single white person who doesn’t approve of Obama’s job performance of being a racist.

I am interested in Kuhn’s broader argument, which is pretty characteristic of conservative “race card” rhetoric. His standard on this subject seems to be that if there is any possible non-racial motive for a political posture, then it’s irresponsible to impute any racial motives, not just today, but in the past:

For decades, leading liberals explained white concerns about urban upheaval, crime, welfare, school busing, affirmative action and more recently, illegal immigration, as rooted in racism. Not safer streets or safer schools. Not concern about taxes for welfare, as working class whites (like all races) struggled in their hardscrabble lives. Not regular men who never knew “white male privilege” but were on the losing end of affirmative action (recall Frank Ricci). Not job competition or economic class. Instead, leading liberals constantly saw the color of the issue as the only issue.

I don’t know which “leading liberals” he’s talking about, but generally speaking, that’s just not true. “Liberals” have typically viewed conservative appeals on issues like crime, welfare, busing, affirmative action, welfare and immigration as designed to play on both racial and non-racial fears and concerns. Kuhn, however, seems to think so long as there is an available non-racial motive for a “concern,” then examining possible racial motives is out of bounds. It’s got to be one thing or another — all race, or all something more noble-sounding or at least less disreputable.

It doesn’t take a lot of deep thinking, or “liberalism,” for that matter, to understand the folly of this approach. Self-conscious, highly-motivated racists do not often proclaim their racism these days, precisely because it is disreputable and does not win friends or influence people. And even back when open racism was more common, racists often denied racism as a primary motive (viz., Confederate and neo-Confederate claims that secession was not “about” slavery, but about states’ rights, constitutional protections for private property, southern “culture,” anti-capitalism, or regional honor — anything other than the ownership of other human beings). And during the more recent period of southern resistance to civil rights, which I experienced personally, and whose constitutional “theories” have been so avidly seized upon by many of today’s conservative activists, you didn’t hear much talk about segregation as a means of subjecting black folk as inferior. It was all about “racial peace,” and “the southern way of life,” and again, state’s rights and constitutional protections for private property. And it didn’t fool a soul.

If David Paul Kuhn really believes that antagonism to busing, affirmative action, welfare and immigration did not have any racial content, or that conservative appeals on these issues (which, as far back as George Wallace’s 1968 presidential campaign, always avoided overt racial language) did not count on racial resentment as one factor for their success, he’s living in a land innocent of actual experience with human beings.

If he doesn’t believe that, and has at least one foot in the real world where racial motives coincide with others, then the issue is not some sweeping effort to delegitimize the “race card,” but an examination of when political appeals cross the line into deliberate efforts to promote white racial resentment.

I’d say, for example, that the strange centrality of the (now-defunct) inner-city advocacy group ACORN in recent conservative demonology is hard to understand as anything other than a deliberate dog whistle to racist sentiments. According to an awful lot of right-wing rhetoric, ACORN’s housing advocacy for poor and mainly black people helped create the mortgage finance crisis, which led to the financial collapse, which in turn led to demands by poor and minority people for relief, which then led to a wholesale socialist agenda, promoted by a black politician who worked with ACORN in Chicago, who counted on ACORN-secured fradulent votes for his election. Elements of this ACORN Derangement Syndrome made it into McCain-Palin campaign ads and speeches, and also fed the Republican-led drive in Congress to “defund ACORN” last year. Polls have shown a remarkable degree of rank-and-file Republican fixation on ACORN.

Is it possible to believe or promote these preposterous things about ACORN’s vast and sinister influence while being innocent of racial motives? I guess so, but it’s most unlikely, given the organization’s inner-city focus, inner-city staffing and inner-city clientele. Why pick ACORN as the center of this conspiracy if you don’t want to paint it black? Beats me.

A closer call is the return of conservative “anti-welfare” rhetoric, generally abandoned after the 1996 national welfare reform law. It popped up first in Republican (and McCain) attacks on Obama’s campaign proposals (particularly for an increase in the Earned Income Tax Credit for the working poor), and then during the health reform fight. Recent conservative discussion of the the EITC as “welfare,” enabling people to vote for more benefits without paying taxes (not really true, since working poor families still pay heavily regressive federal payroll taxes), has been interesting because that rhetoric was rebuked by none other than George W. Bush when Tom DeLay raised it back in 1999. Combined with the “welfare queen” treatment of minority families who supposedly took out mortgages they couldn’t afford, triggering the mortgage crisis, the 2008 “anti-welfare” rhetoric sure looked suspiciously racial. And there’s nothing illegitimate, either, about wondering if the “undeserved” beneficiaries of mortgage relief or health care benefits might look a little dusky in the eyes of resentful middle-class voters who are being encouraged to oppose this sort of socialist looting.

The bottom line is that anti-Obama appeals aren’t just “about” race, but it’s naive to think they are just “about” everything else. He is, after all, the living embodiment of the elite-underclass “liberal alliance” that conservatives have been warning white middle-class folks about for several decades now. At an absolute minimum, conservatives ought to accept responsibility for the racial sentiments their rhetoric can sometimes stimulate, and try to avoid such appeals, instead of simply intoning “race card” and trying to shut down any discussion of the subject.

This item is cross-posted at The Democratic Strategist.

Photo credit: https://www.flickr.com/photos/andrewaliferis/ / CC BY-ND 2.0

Partisanship Uncorked

Posted on by The Progressive Policy Institute

A little over a week ago, I praised Sen. Bob Corker (R-TN) for working with Sen. Mark Warner (D-VA) to come up with some bipartisan improvements to the financial regulatory reform package that Senate Banking Committee Chair Chris Dodd (D-CT) is looking to get through the Senate in time for Memorial Day. I may have spoken too soon. Corker said yesterday:

“I couldn’t support the bill in its current form,” Mr. Corker said in an interview with The Wall Street Journal. “I am absolutely not throwing in the towel. I have no plans to support the current legislation. I hope we’ll get back to the negotiating table.”

This is, of course, a familiar tactic. After a year of being actively courted by the administration and Democrats, congressional Republicans claimed they couldn’t support health care reform, but were willing to stall further by espousing an interest in negotiating. But despite Corker’s backing away from a bill that as recently a last week he said he thought was going to pass, it’s worth sticking to the principle of a bill with bipartisan ideas.

The big idea that Warner and Corker worked on was including an autonomous Consumer Financial Protection Agency (CFPA) as part of the Federal Reserve System. While sticking the CFPA in the Fed is an ungainly solution, it does have the benefit of giving the CFPA start-up funding through the Fed’s balance sheet. Additionally, creating a brand-new agency out of the parts of others does have the chance of echoing the struggles the Department of Homeland Security had getting off the ground, a fate a Fed-housed CFPA can avoid.

Senate Democrats shouldn’t bend over backwards and try to pass a flawed bill in the hopes of convincing Republicans to get on board. But neither should they give up on looking for broad-based support for meaningful reform.

Cap-and-Whatever

Posted on by The Progressive Policy Institute

Via TPM, I learned that Interior Secretary Ken Salazar went on CNBC today and said the administration would no longer be using the term “cap-and-trade” for its climate change proposals.

This decision does not appear to mean any change in the actual proposal, which would still presumably involve placing a “cap” on carbon emissions and then creating a system whereby credits for exceeding carbon goals could be “traded,” thus creating market incentives for pollution control efforts and technology. It’s the label that seems to be the problem, probably because conservatives have taken to calling it “cap-and-tax.”

I can sympathize with the rebranding effort (though it’s not clear what the new moniker will be). We at PPI — early proponents of “cap and trade” — spent years trying, without a lot of success, to find simple ways to explain the cap-and-trade approach to carbon emissions. It wasn’t as hard as, say, trying to write descriptions of the “revolution in military affairs,” another perennial head-scratcher, but it was never possible to capture it on a bumper sticker.

It probably doesn’t matter, so long as the administration and congressional proponents continue to make it clear that cap-and-whatever is a way to limit potentially catastrophic carbon emissions while employing market mechanisms to create incentives for private-sector innovations in clean energy technology. It is, indeed, the kind of market-friendly alternative to command-and-control environmental regulations that conservatives ought to find attractive, and often have in the past. But it’s the substance, not the politics, of this approach, that really matters, and that will remain regardless of the marketing.

This item is cross-posted at The Democratic Strategist.

Photo credit: https://www.flickr.com/photos/muora/ / CC BY-NC-SA 2.0

What’s Next for Russia?

Posted on by The Progressive Policy Institute

Tuesday’s Moscow attacks may do more to define the path of Russia’s future as a democracy than any single event since 1991. In a worst-case scenario, Vladimir Putin could return to the presidency. A sunnier forecast sees popular sentiment rising against Putin – and the emergence of a wild card that could lead the way to real change in Russia.

Hyperbolic? Sure, but certainly within the realm of possibility. Three things worth noting:

First, after the tragic Beslan school attack in 2004, then-President (and current Prime Minister) Putin used the event as a catalyst to execute a political power-grab in the name of national security. Most glaringly, Putin canceled the election of regional governors and chose to appoint them himself, thus consolidating power in the president’s hands. This was, as I mentioned yesterday, akin to George W. Bush canceling all elections for state governor in the wake of 9/11. That’s downright crazy. So Putin has set the power-grabbing precedent following past acts of terror — might he do so again?

Second, anecdotal evidence suggests the public may be starting to tire of Putin’s act. Ilya Yashin, a self-described youth activist, makes the point that since Putin has concentrated so much power in his own hands, “he is responsible for everything that happens in our country” and should therefore be held accountable for the latest attacks. “Not long ago Putin promised an end to terrorist acts in Russian cities and a military victory over terrorism. For this we gave up our political rights and civil liberties. We gave up the right to elect governors,” Yashin said.

Will this gently percolating anti-Putin sentiment boil over once Russians add concerns over security to concerns over a stagnating economy, as Josh Tucker and I wrote last year?

And then there’s the wild card: President Dmitri Medvedev. Let’s not forget that Putin may have handpicked Medvedev as his presidential successor, but Medvedev has shown an inclination to be open and possibly more pro-Western, having never been involved with the ex-KGB cadre that surrounds Putin. What’s more, Medvedev has distanced himself slightly from Putin’s Caucasus strategy, saying (from NYT) that the government should aggressively hunt down the terrorists, but also focus on the poverty and government malfeasance that he contended nurtured extremism.

Weighing these factors, I can envision two distinct outcomes for Russian democracy.

1. Putin brazenly unmasks himself as Medvedev’s puppet master. He uses the Beslan precedent and Moscow bombings to justify another round of power consolidation, saying that the last round had clearly not been effective enough. He crushes any sort of domestic civil opposition and launches a drive to change the Russian constitution to allow him to run for another term as president. Medvedev proves powerless to object and is slowly moved off to the side.

2. Medvedev realizes he has a potentially strong domestic political constituency as a resolute but smart antiterrorism president. He offers a different strategy to Russians to deal with the threat and successfully distances himself from Putin while effectively holding off Putin’s attempts to grab power.

Much of the outcome rests with Medvedev’s desire and ability to be independent from the man who picked him. I’m hopeful for the second, but my money is on the first.

Photo credit: https://www.flickr.com/photos/gloel/ / CC BY-NC-ND 2.0

Over the Brink

Posted on by The Progressive Policy Institute

The craziness surrounding futile efforts to overturn health reform via lawsuits reached a new crescendo in Georgia yesterday, when Republicans in the state House introduced articles of impeachment against Georgia Attorney General Thurbert Baker. You see, Baker (a Democrat) refused to join Republican Attorneys General who are launching a suit charging that federal health reform is unconstitutional. He argued (very accurately) that the suits have no change of succeeding, and that pursuing them would be a waste of time and money. Republicans claim he’s required to file suit at the request of Republican Gov. Sonny Perdue.

By threatening impeachment on such transparently partisan grounds, GOPers are probably doing Baker a big favor: he’s running for governor, and has been trailing former Gov. Roy Barnes in the polls. In addition, there’s something a bit attention-grabbing about the spectacle of Republicans demanding that an African-American statewide official embrace neo-Confederate constitutional theories on “state’s rights” grounds.

As Eric Kleefield of TPM has noted, the “massive resistance” approach to health reform has already become a litmus test for conservative Republicans, right up there with criminalizing abortion and defending trust fund babies against “death taxes.” So get used to it; they just can’t help themselves any more.

This item is cross-posted at The Democratic Strategist.

How America Led, and Lost, the High-Speed Rail Race

Posted on by The Progressive Policy Institute

How did America get to where it is today, a country with the slowest and most threadbare intercity passenger rail service of any advanced nation?

Not so very long ago, we were not in this humiliating position. In fact, we operated trains that amazed and impressed the rest of the world. These trains were called streamliners, and their very names – Silver Meteor, Flying Yankee, Rocky Mountain Rocket, Denver Zephyr – connoted speed and luxury. In the period between 1935 and 1950, the 10 fastest scheduled passenger trains in the world were all U.S. streamliners.

One of the great racetracks of this period was the New York Central Railroad’s four-track mainline between Buffalo and Cleveland. Paging through an old timetable, I counted 42 daily passenger trains running on this line in the 1940s. Such trains as the Commodore Vanderbilt, Fifth Avenue Special and the extra-fare choice of tycoons and Hollywood starlets, The 20th Century Limited, routinely topped 90 miles per hour on straightaways and averaged 60-65 mph, including station stops.

The 187 miles between Buffalo and Cleveland were covered in 3 hours then. Today, the sole passenger train traveling this route, Amtrak’s Lake Shore Limited, takes 3½ hours, if (and this is a big if) the train is on schedule.

The Rise and Fall of American Rail

What differentiated our streamliners from contemporary trains in Europe and Asia was advanced technology. American railroads and equipment suppliers had not only pioneered the diesel-electric locomotive in the 1930s – a quantum leap over from the old steam locomotive – but introduced lightweight cars with better wheel sets, couplers, braking systems and lower centers of gravity to negotiate curves at higher speeds.

The interiors of these streamliners abounded in creature comforts – wide double-paned windows, recessed fluorescent lighting, luxurious reclining seats and the first air-conditioning found in any commercial transport.

Streamliners attracted customers by the carload. In fact, they made money. Wall Street consultants Coverdale & Colpitts surveyed 58 streamliners in 1948 and found that they grossed $98 million and netted $48 million after out-of-pocket costs, for a return of 49 percent.*

And then almost as quickly as the streamliner era flourished, it ended. There were a number of reasons for the rapid decline of rail passenger service, but the overwhelming factor was the explosion of government funding for new highways and airports. In 1956, Dwight Eisenhower signed the Interstate and Defense Highways Act. First estimated to cost $27 billion, the Interstate system took more than 30 years and $200 billion to complete. At the same time, state and local governments bankrolled airport construction, while Washington subsidized air carriers by fixing artificially high rates for U.S. airmail contracts.

The twin impact of airways and roadways was devastating on American railroads, which, after all, were private companies that paid property taxes and ticket taxes on their operations. For example, between 1956 and 1969, a total of 28,800 miles of interstate highways were opened to traffic. In the same period, 59,400 miles of railroad were taken out of passenger service.

From 2,500 daily intercity trains in 1954 (that’s excluding commuter service), fewer than 500 trains were left when the National Railroad Passenger Corp., or Amtrak, took over intercity rail service in 1971. Outside of the Boston-Washington Northeast Corridor, America’s passenger train had virtually disappeared.

American Technology Goes Abroad

So carelessly tossed away by our policymakers and politicians, the American streamliner did not simply die during those dismal decades of the 1950s and 1960s. Instead, it rose from the ashes as its key technological features moved overseas, welcomed by a visionary group of railroaders.

An all-electric test train ordered by Louis Armand, head of the French national railway, shattered world records with 208-mph speeds in March 1955. This achievement proved the capacity of rail equipment using overhead electricity for propulsion to operate far above 100 mph on a sustained basis.

The French experiments inspired Japan’s Minister of Transport Shinhi Sogo. In 1956, the same year that President Eisenhower signed the Interstate Highways Act, Sogo began planning a rail line without sharp curves or up and down grades that would permit streamlined, all-electric trains to run at extremely high speeds with utmost safety

To operate the Shinkansen, or “New Trunk Line,” between Tokyo and Osaka, Sogo actively imported technology from America, including the two-axle trucks of the Budd Manufacturing Co. and dynamic braking pioneered by General Motors’ Electro-Motive Division. To top it off, the Japan ordered the most advanced computer used outside of military applications (built by yet another American company, Bendix) to operate the line’s signal and dispatching systems.

Remarkably, the U.S. government gave Japan foreign aid – money purportedly going to an underdeveloped country – to build a rail infrastructure far superior to our own. Opened in time for the Tokyo Olympics in 1964, the first Shinkansen train traveled at a maximum of 125 mph. The latest-generation Shinkansen runs at 188 mph, and its ancestor is in a museum.

Japan wasn’t alone. After developing moderately high-speed trains on mixed freight-and-passenger lines, France opened Europe’s first all-new railroad between Paris and Lyon in 1981. This route featured the now-famous TGVs, or “Trains of Great Speed.” Six thousand of 20,000 rail miles in France are now covered by TGV trains. High-speed service has expanded into Belgium, Germany, Holland, Italy, Switzerland and Spain in Europe and in China, South Korea and Taiwan in Asia.

Playing Catch-Up

Compared to these developments, we’re still in the horse-and-buggy stage. Amtrak’s self-declared high-speed line, the Northeast Corridor, does not even qualify as high speed by world standards. The Acela Express is designed for 150 mph, but only goes that fast for about 25 miles in Rhode Island.

Overall, Acela trains average only 67 mph between Boston and New York. South of New York, Acela operates at an average of 77 mph and can’t go faster than 125 mph anywhere because the overhead electric wires are obsolete and can slip off the train’s pantographs at higher speeds.

This is what happens when you starve a business for 60 years. It becomes stunted. Our passenger rail system is stunted today not because of some inevitable law of economics or natural outgrowth of competition. It’s stunted because of longstanding government policy that thoughtlessly, absentmindedly, let some wonderful American-made technology slip away.

This piece is an excerpt from Mark Reutter’s keynote address at the High-Speed Rail Summit last week in Erie, Pa.

* “Streamliners Earn More Than Ever,” Railway Age, March 4, 1950.

No Bump?

Posted on by The Progressive Policy Institute

In the run-up to health care reform’s passage, many people (including yours truly) predicted that the president’s approval ratings would see a bump once the bill passed. Bill Clinton went out on a limb and forecast a 10-point bounce. And in the days immediately following passage, Obama’s approval ratings did seem to nudge up a little.

More than a week later, however, Obama’s approval ratings seem to have been little changed:

Democrats who held out hopes that President Barack Obama’s health reform win would mean a quick boost to the party’s political fortunes are getting a reality check — a reminder that it takes more than one good week to shake up a year of sliding polls.

Obama and his health reform plan did get a bump in several surveys immediately after the House vote eight days ago — but the numbers in some of those polls flattened out, showing how difficult it will be for Obama to capitalize on reform, even after his top legislative goal cleared Congress.

Even the bounce for the plan itself has proven evanescent. A USA Today/Gallup poll immediately after passage found 49 percent favoring it versus 40 percent against, an improvement from earlier polls. But the newest USA Today/Gallup poll now finds a 47-50 favor/oppose split. An aggregate of polls on health care finds little movement from the pre-passage days.

How to read the numbers? For one thing, it reveals just how divisive the health reform debate has been. After months of Republicans demonizing the plan as the next stage in Obama’s grand totalitarian scheme, it’s no surprise that a week-plus of good news cycles has done little to change public opinion.

But perhaps the more important lesson here is just how much the economy overrides everything right now. With the employment situation still dismal and the recovery yet to manifest itself on Main Street, the public mood is still understandably sour.

In a blog post yesterday, Charles Franklin repeated an observation he made earlier — that Obama’s public approval ratings, and the forces influencing it, track very closely with what we saw with Ronald Reagan:

The short version is both come in with inherited economic troubles that don’t turn around miraculously in the first 24 months. Both replace deeply unpopular predecessors, and suffer from high expectations in comparison. And both set out to dramatically change the direction of national policy. Reagan suffered substantial losses in the House in his first midterm (26 seats lost), and Obama looks headed to similar if not larger losses in 2010.

So how is the analogy holding up? In approval terms, still quite well. The two continue to track rather well. Obama has occasionally been slightly below and recently slightly above Reagan’s trend, but the parallel movement remains striking. Likewise, their relative location compared to other first term post-war presidents continues to drive home the point that these have been (so far) among the lowest approval ratings in the first 24 months.

One bright spot for Democrats is that the economy seems to be turning earlier for Obama than it did for Reagan. Even though unemployment has not yet begun its descent, the upward trend in GDP is a hopeful sign. (According to Franklin, GDP is “consistently a better predictor of midterm outcomes than is unemployment,” counterintuitive though that may seem.)

The other bright spot for Dems comes from a closer look at the polling numbers. Though the overall numbers have seen little improvement, Democratic enthusiasm seems to have been buoyed by health reform’s passage. In a midterm election, when traditionally low turnout puts even greater pressure on a party to bring its faithful to the polls, a depressed base would have been disastrous for Democrats. Obviously, the Republican rank-and-file will be fired up for November. But now, at least, the Democrats can make a fight of it with its own energized base.

Mitt’s “Problem” Redux

Posted on by The Progressive Policy Institute

Back at the beginning of the year, I wrote a piece suggesting that putative 2012 Republican presidential front-runner Mitt Romney might have a hard time overcoming his sponsorship of a form of health care reform in Massachusetts that was impressively similar to that great socialist abomination, ObamaCare. This has now become a pretty common refrain in the early 2012 handicapping (viz. this Jonathan Martin-Ben Smith item in Politico yesterday), to the point where the estimable Marc Ambinder of The Atlantic posted a rebuttal to the Mitt-as-toast hypothesis yesterday.

Ambinder made four reasonable points about Romney’s potential viability regardless of RomneyCare. Let’s consider them in order:

(1) RomneyCare may look more successful by 2012. I don’t think the problem with RomneyCare is that it’s unpopular on unsuccessful in MA; it’s that it bears a lot of resemblence to ObamaCare, which is by definition, regardless of public opinion or objective reality, a horror to the kind of people who participate in Republican presidential primaries.

(2) Health care may not be a transcendent Republican issue by 2012 (just as the Iraq War began to recede once the 2008 Democratic contest reached its climax). Sure, other major issues of importance to Republican primary-goers may emerge, but until such time, if ever, health reform is repealed, there is virtually no chance that it will be forgotten by 2012 (and it can’t be repealed before then unless Republicans win every single Senate race this year and also win two-thirds of the House). If the Iraq War is a suitable analogy, as Ambinder suggests, I think it’s indisputable that Barack Obama would have never emerged as a viable presidential candidate in 2008 if Hillary Clinton hadn’t voted for the war resolution and then refused to say she made a mistake by doing so. Other issues mattered, but that was the big threshold issue. (One of my fellow Mitt-o-skeptics, Jonathan Chait, did a response to Ambinder today that mainly focuses on his own belief that RomneyCare will actually be a bigger issue for Republicans in the future than it is today.)

(3) The Republican nominating process is “hierarchical,” and especially favorable to establishment favorites like Romney. This is something you hear all the time, and it’s valid in the very limited sense that the rules for awarding delegates in Republican contests don’t demand strict proportionality, and thus help front-runners consolidate early victories. But in 2012, as in 2008, Mitt’s problem could be getting out of the gate, not finishing off the field. Recall that in Iowa in 2008, he couldn’t survive what was basically a one-on-one contest with Mike Huckabee, despite a vast financial advantage and endorsements from most of the local GOP establishment, and even though he was running as the “true conservative” in the race. None of Romney’s problems from 2008 (a wooden speaking style, a history of flip-flops on cultural issues, his religion, his history as a corporate downsizer) have gone away, and it’s very likely the Iowa Caucuses will be even more dominated by cultural conservatives than ever, given the huge importance of the gay marriage issue to conservatives in that state. Add in RomneyCare, and the odds look pretty bad; skipping Iowa like McCain did is a possibility, but would also give another candidate a good chance to become the early front-runner, going into two states (Michigan and New Hampshire) that Romney can’t lose and still have a prayer for the nomination.

(4) Romney is just too reasonable and accomplished a candidate to get knocked out by one issue. Maybe so, but as noted above, he has more than one problem, and as it happens, “one issue” — in fact, one utterance — knocked Mitt’s father, George, out of the 1968 presidential contest, and his resume was if anything stronger than his son’s. If I were a Republican, I’d actually be worried that Mitt’s sitting there soaking up attention endorsements, and poll numbers that could go to some attractive darkhorse candidate, leaving the GOP with a very weak field if he does go belly-up. And you don’t have to be a total Democratic partisan to observe that Republicans aren’t disposed at the moment to be completely rational about their choice of candidates: a recent PPP survey suggested that nearly as many rank-and-file Republicans think it’s more important to nominate a candidate who is “conservative on every issue” as those who think it’s more important to nominate someone “who can beat Barack Obama.”

In any event, will all due respect to Marc Ambinder (who may simply be playing devil’s advocate), I’d say the burden of persuasion should be on those who think Mitt Romney’s stronger than he was in 2008 than on those who think he’s in very deep trouble thanks to RomneyCare.

This item is cross-posted at The Democratic Strategist.

Photo credit: https://www.flickr.com/photos/newshour/ / CC BY-NC-ND 2.0

A Common Enemy?

Posted on by The Progressive Policy Institute

While the Moscow bombings have brought out fighting words and suggestions of a scorched-earth response from Russian Prime Minister Vladimir Putin – a reaction that I cautioned against in my previous post – President Obama’s has been perfectly pitched. He has expressed solidarity with the Russian people and sympathy for the killed and injured. The president has made a notable attempt to distance himself from overly emotional Bush/Putin-style rhetoric about terrorism, reasoning (correctly in my mind) that pounding a fist on the table and screaming about revenge only plays into the terrorists’ hands.

I would urge one note of caution, however. Secretary of State Hillary Clinton, appearing on Canadian television, compared the Moscow terrorist attack to those in the West: “We face a common enemy, whether you’re in a Moscow subway or a London subway or a train in Madrid, or an office building in New York, we face the same enemy.” I’d counsel the State Department to be a bit more nuanced here. True, one can argue that the ultimate motivation in all these attacks was to establish part of the Muslim caliphate that stretched from North Africa to Southeast Asia. But it’s a tricky argument to make when part of the history of that motivation is independence from Moscow (whether you’re a pure separatist or one motivated by Muslim ideology).

Endorsing a “common enemy” might encourage the Kremlin to continue heavy-handed tactics against its own people, not to mention attempting to retroactively justify, say, the invasion of Georgia by conflating it with terrorist motivations. Or, to continue Putin’s 2004-2005 precedent, throw language like this back into American faces when he uses it to justify another power-grab…like his return to the presidency. Seriously — he’s not above it, and this might be exactly what’s coming.

Foggy Bottom should be clear on these distinctions about a common enemy, particularly when there’s no evidence of direct al Qaeda involvement in the Moscow bombings.

“Populist Crossfire”

Posted on by The Progressive Policy Institute

Over the weekend Ron Brownstein wrote up the nightmare scenario for Democrats in terms of their appeal to white working class voters:

[P]olling just before the [health reform] bill’s approval showed that most white Americans believed that the legislation would primarily benefit the uninsured and the poor, not people like them. In a mid-March Gallup survey, 57 percent of white respondents said that the bill would make things better for the uninsured, and 52 percent said that it would improve conditions for low-income families. But only one-third of whites said that it would benefit the country overall — and just one-fifth said that it would help their own family….Obama has already been hurt by the perception, fanned by Republicans, that the principal beneficiaries of his efforts to repair the economy are the same interests that broke it: Wall Street, big banks, and the wealthy. The belief that Washington has transferred benefits up the income ladder is pervasive across society but especially pronounced among white voters with less than a college education, the group that most resisted Obama in 2008. Now health care could threaten Democrats from the opposite direction by stoking old fears, particularly among the white working class, that liberals are transferring income down the income ladder to the “less deserving.”

Brownstein calls this dynamic “an unusual populist crossfire.” The antidote, he suggests, might be two-fold: continuing to stress the benefits for the middle class, and to the country, of health reform, while spending more time reinforcing a Democratic message on the economy and the financial system that makes Republicans, not Democrats, defenders of Wall Street and the wealthy. The White House and congressional Democrats seem to be moving briskly on both those fronts, and how well they succeed could be fateful in November. At the same time, it wouldn’t hurt to make sure that perceptions (which Brownstein also documents) by poor and minority voters that health reform does in fact help them and help the country produce a greater willingness to vote this year than would normally be the case in a midterm election.

This item is cross-posted at The Democratic Strategist.

Terrorism in Russia

Posted on by The Progressive Policy Institute

Nearly 36 hours after the attacks in Moscow’s subway system, reports indicate that nearly 40 are dead and more than 70 have been injured. As of this writing, no group has claimed responsibility, though heavy suspicion has fallen on Muslim separatist groups based in southern Russia’s Caucasus region, the primary source of terrorism in Russia since the breakup of the Soviet Union in the early 1990s. More on that in a second.

There were two bombings, conducted quasi-simultaneously (about 40 minutes apart) at two busy metro stations in Moscow’s city center. The Lubyanka station is located near the headquarters of Russia’s Federal Security Service (the legacy organization of the KGB), which points to a message the attackers may have been hoping to convey; the second scene at the Park Kultury Station is located a few stops to the south along the same metro line. If you’d like to see some interesting citizen-journalism of the attacks’ aftermath, click over to the NYT’s The Lede blog.

Much has been made of the attackers’ identity — two women dressed in black robes with explosives and shrapnel packed underneath their garments. Female suicide bombers have been used by Chechen separatists dating back to 2002 and are commonly — and disturbingly — referred to as “black widows.” Furthermore, female suicide bombers are hardly a new phenomenon. If memory serves, they’ve been used as long ago as the early 1990s by the Tamil Tigers in Sri Lanka. Terrorist groups — even those with no formal ties to one another — observe each others’ tactical successes and adopt the effective ones. The use of unsuspecting women has made the rounds in terrorist circles, even if Western audiences still find the tactic shocking.

It’s important to appreciate the dynamic nature and motivations of the Caucasus’ separatist groups over the last decade and the Russian government’s response to them. Boris Yeltsin first installed the then-little-known ex-KGB chief Vladimir Putin as prime minister in 1999, and Putin vowed to crush the Chechen separatist movement. In the early-to-mid 2000s, the group was a relatively structured militia that was responsible for mostly large-scale terrorist attacks. The group most famously conducted the 2004 siege at the Beslan school that killed over 300 people, many of whom were school children; it was also responsible for the 2002 siege at a Moscow theater.

In large part, Putin was responsible for successfully dismantling the organizational hierarchy behind those acts, killing leaders like Shamil Basayev and Abdul Khalim Sudalayev in 2006. He used victories like those to consolidate power behind the Kremlin, saying political power-grabs like eliminating the direct election of regional governors were necessary to defeat terrorism. Can you imagine if Bush had eliminated the election of state governors after 9/11? Just a bit of a stretch, right?

But as often happens with insurgent organizations, cutting off their head rarely kills them. Moscow’s success only caused the resistance to morph over the last four or five years from a top-down military-style structure to more of a flat, non-hierarchical, Islamic-based motley crew. Here’s an excellent run-down on the insurgency’s changing nature and motivation from WaPo’s Philip Pan late last year:

Russia has long blamed violence in the region on Muslim extremists backed by foreign governments and terrorist networks, but radical Islam is relatively new here. In the 1990s, it was ethnic nationalism, not religious fervor, that motivated Chechen separatists. That changed, though, as fighting spilled beyond Chechnya and Russian forces used harsher tactics targeting devout Muslims.

In 2007, the rebel leader Doku Umarov abandoned the goal of Chechen independence and declared jihad instead, vowing to establish a fundamentalist Caucasus Emirate that would span the entire region. After Moscow proclaimed victory in Chechnya in April, he issued a video labeling civilians legitimate targets and reviving Riyad-us Saliheen, the self-described martyrs’ brigade that launched terrorist attacks across Russia from 2002 to 2006.

It would appear on the surface that the Kremlin has failed to appreciate this change. In my mind, the new shape and motivations of the Chechen insurgency would call for more of a counter-insurgency style strategy that has been adopted by the U.S. in Iraq and Afghanistan. Instead, Putin has vowed a continued heavy hand, saying, “The terrorists will be destroyed!” This is of course what any national leader must say to placate a fearful and confused domestic audience, but may begin to ring a bit hollow in light of Putin’s similar rhetoric of 1999:

“Putin said [before these attacks], ‘One thing that I definitely accomplished was this [stopping the Chechen threat],’ and he didn’t,” said Pavel K. Baev, a Russian who is a professor at the International Peace Research Institute in Oslo.

“My feeling is this is not an isolated attack, that we will see more,” Mr. Baev said. “If we are facing a situation where there is a chain of attacks, that would undercut every attempt to soften, liberalize, open up, and increase the demand for tougher measures.”

In my next post, I’ll take a look at how the U.S. has responded to the attacks.

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Primary Challenges, Ideology and Electability

Posted on by The Progressive Policy Institute

Something interesting is going on in Arkansas Democratic politics right now: a serious primary challenge to an incumbent senator, Blanche Lincoln, who is not mired in any sort of personal scandal, and is not, it would seem, mispositioned ideologically for a general election in her conservative state.

As Steve Kornacki notes at Salon today, Lt. Gov. Bill Halter’s primary challenge to Lincoln is hard to categorize as simply an ideological challenge to a wayward politician who has offended the party base, or as simply an “electability” challenge to a weakened incumbent who looks likely to lose in November:

Generally, it’s easy to categorize these primary challenges. There are two basic varieties: ideological, with an exercised party base seeking retribution for an incumbent’s dissent from the party-line; and pragmatic, with party members responding to the perceived electoral deficiencies of the incumbent. And then there’s the Democratic Senate primary now underway in Arkansas, which seems to be a perfect hybrid of these two types. With the latest poll showing Blanche Lincoln’s challenger, Bill Halter, within 13 points of her, that primary – now just seven weeks away – has become the hottest Democratic contest in the nation.

Lincoln, who’s in the final year of her second term, has managed to pull off a somewhat remarkable feat, infuriating both the left-of-center base of her party and her state’s right-leaning general election audience at the same time. Thus, the challenge she’s receiving from Halter doesn’t neatly fit into either of the above categories.

Kornacki goes on to examine prior examples of ideological primary challenges, and finds little evidence of any that were also based on evidence of superior electibility (absent some non-ideological factor like a personal scandal affecting the incumbent’s political standing).

Now it should be obvious that Kornacki’s premise would not be accepted by a fair assortment of people in both parties. Among both self-identified progressives in the Democratic Party, and most especially self-identified conservatives in the Republican Party, many have argued for decades that “centrists” aren’t really more electable, and that rigorously ideological candidates could actually, if given the chance, exert a superior general-election appeal (via better “frames,” or clearer messages, or by mobilizing non-voters, or simply by providing a “choice”), even in difficult partisan terrain like the one Democrats face in Arkansas. There’s definitely evidence that this proposition is true at times and in places where there are significant numbers of voters who are “mispositioned” by adherence to parties with ideologies alien to their own (e.g., southern conservative Democrats in the 1980s and 1990s, and northern moderate-to-liberal Republicans more recently). A subset of the “electability” argument for ideological rigor is that Democratic progressives or conservative Republicans can and will offer messages that have particular appeal to swing voters in a given constituency. That’s also sometimes true, as with antiwar Democrats in times of unpopular wars, or with anti-tax Republicans in places where some state or local tax revolt is underway.

But the Halter challenge to Lincoln is emphatically not in a state where there are liberals outside the Democratic Party ripe for the picking, and there’s not much evidence that Arkansans are generally receptive to any particular progressive arguments, notwithstanding the ancient claim that southerners are especially receptive to anti-corporate “populism” (a complicated topic which I won’t get into here, other than to say that I personally think the claim is vastly overstated since southern conservatives are conservatives on nearly every imaginable topic, including economics).

Lincoln is, however, an incumbent senator at a time when incumbency is not an advantage, and that alone could make Halter as competitive as, if not more competitive than, Lincoln in a general election. And it’s not as though Halter is running as the re-incarnation of Huey Long. His anti-corporate rhetoric, in fact, is pretty much indistinguishable from what we hear from Tea Party folk, opposing bailouts rather than promoting regulation.

It appears Lincoln’s strategy (other than touting endorsements from relatively popular Democrats like Bill Clinton) is to use Halter’s challenge as evidence that she’s not the raging socialist that Republicans make her out to be. If it works, this playing-off-the-left message would presumably boost her general election standing, thus making it easier for her to appeal to Democrats on electability grounds. But she doesn’t have much time to pull this off, and if she doesn’t, she hasn’t instilled enough loyalty in Arkansas Democrats to give her much confidence in a primary win absent an electability argument.

Arkansas will thus be an interesting test of the limits of tolerance for Democratic heterodoxy in tough terrain. And if Halter wins the primary, his performance in the general election will be watched closely for its broader implications as well. The last widely-discussed Democratic primary challenge to an incumbent senator, the Ned Lamont candidacy in Connecticut in 2006, involved a totally different situation: a blue state, a more famous incumbent, a red-hot issue where Joe Lieberman was horribly mispositioned with local opinion, and most of all, a third-party Lieberman general election candidacy that Republicans largely supported. The results of a Halter nomination in Arkansas would be sui generis.

This item is cross-posted at The Democratic Strategist.

Plan B for Climate Policy?: A PPI Series

Posted on by The Progressive Policy Institute

PPI has long been a proponent of an economy-wide cap-and-trade system to confront the problem of climate change. But as the fortunes of cap-and-trade legislation in the Senate fade, we need to begin looking at other options before Congress. This post, on the Cantwell-Collins “cap-and-dividend” bill, is the first in a series of analyses of various alternatives to cap-and-trade.

You may not have noticed lately, but there are other major legislative initiatives, including climate and energy, on the Senate’s docket. One climate action bill that has received a lot of attention is the bill sponsored by Sens. Maria Cantwell (D-WA) and Susan Collins (R-ME). When the bill, officially called the Carbon Limits and Energy for America’s Renewal (CLEAR) Act, was first introduced in December, it caught the eye of some in the enviroblog world, but didn’t make much of an immediate splash in the Senate. Between the long build-up of the Kerry-Lieberman-Graham multi-partisan grab bag and the poorly understood Copenhagen outcome, however, it filled a vacuum with a poorly appreciated concept at the time: offsetting costs of climate legislation to consumers by cutting them a check.

The Basics

Also known as “cap-and-dividend,” the Cantwell-Collins bill is pretty simple: starting in 2012, it would mandate monthly auctions of pollution permits, called carbon shares, to the first seller (producer or importer) of fossil fuel carbon into the economy. The bill sets a floor price (shares can’t be sold for less) of $7 and a ceiling price (shares can’t be sold more) of $21 in the first auction in 2012, with the cap lowering — leading to rising prices — over time.

Most of the revenue from these auctions is distributed back to citizens in the form of a monthly check, while the rest is placed in a Clean Energy Refund Trust (CERT) fund established by the bill for use on a variety of different purposes: energy R&D, climate change adaptation, non-CO2 greenhouse gas reductions, international forestry and agriculture offsets, carbon capture and storage projects. First sellers cannot trade carbon shares and carbon derivatives are prohibited. In addition, the legislation has economy-wide emissions reduction goals of 20 percent below 2005 levels in 2020, 42 percent in 2030, and 83 percent in 2050.

The Good

Advocates of Cantwell-Collins praise it for being simple and transparent. As has been noted by others, it is a mere 40 pages, certainly an easier read than Waxman-Markey, the behemoth, 1,400-page cap-and-trade bill passed by the House last June. It regulates fossil fuel-related CO2 as far “upstream” in the economic supply chain as possible, meaning that whoever produces or imports a fossil fuel is on the hook for the CO2 content. Under Cantwell-Collins, coal mines and oil producers are responsible for paying for carbon, which means that only about 3,000 facilities need to be regulated. This upstream approach is administratively more streamlined, affecting far fewer parties than Waxman-Markey, which regulates electricity producers, natural gas distributors and manufacturers (over 75,000 regulated facilities).

The CLEAR Act also rejects the convoluted system of free and auctioned allocations in Waxman-Markey for a straight-up auction of all carbon shares. All regulated parties must participate in open monthly auctions, the revenue from which is split 75-25 percent: 75 percent is redistributed per capita to every American citizen and 25 percent is placed in the CERT. Whether you agree with the approach or not, offering to cut a monthly check for every U.S. citizen is not a bad way to gain some political support. Also, from the perspective of regulated firms, the use of price floors and ceilings, also known as a price collar, would reduce future price uncertainty and help them better predict investment needs.

Finally, the bill is co-sponsored by a Republican and a Democrat. That bipartisan provenance could certainly help its chances for passage.

The Bad

So with a bill that’s easy to read, easy to monitor and easy on the wallet, is there anyone who won’t like it? Well, anyone who favors hard targets for emissions reductions and anyone who believes in markets, for two. First, while the bill establishes economy-wide reduction goals as strong as Waxman-Markey, the auction system alone will not reach them. National emissions are capped at 2012 (note that it only caps CO2 emissions, unlike Waxman-Markey, which covered other greenhouse gases as well), and the cap doesn’t tighten until 2015, at which point it decreases by 0.25 percent that year, then by an additional 0.25 percent every corresponding year (so in 2016, the cap reduces by 0.5 percent, in 2017, 0.75 percent, etc).

This slow lowering of the cap will result in only five percent reductions below 2012 emissions by 2020, well short of the 20 percent reductions by 2020 goal. Even at that, the cap is not rock solid due to the price collar, which functions as a sort of safety valve. That is, if the auction price goes higher than the established ceiling price, then that essentially releases extra carbon shares for firms to bid on until the price falls back below the ceiling.

That means the remaining reductions to be met in 2020 will have to come from technology advances, land use offsets in forestry and agriculture, and reductions of non-CO2 gases, all of which are paid for by the CERT (which will be administered by the Department of Treasury). If we assume an initial carbon price of $15 in 2012 (a middle-range price, based on analyses done by the EPA and EIA), and the projected cap of roughly 7.2 billion carbon shares, then the CERT will get about $27 billion in the first year of the program.

That’s $27 billion to be split among all the uses listed above to help reduce emissions, as well as adaptation projects, energy efficiency efforts, and support for trade-sensitive industries and low-income families. The problem with a bill that’s only 40 pages is that it doesn’t have a lot of room for details — indeed, the CLEAR Act provides no guidance on how to prioritize uses of CERT funds. Although CERT funds will increase as the price of carbon shares rise, it will likely not even be close to enough to compensate for the majority of necessary carbon reductions.

A carbon market could mobilize private capital to help address some of these issues efficiently, instead of leaving all the choices and funding responsibility to the federal government. While it’s understandable that the public and politicians might still distrust markets in the wake of the recent financial collapse, the fact is that when it comes to finding inefficiencies and catalyzing innovation, nothing works better. But the “market” in Cantwell-Collins is simply an auction system. Unlike in Waxman-Markey, regulated firms can’t trade their permits, and carbon derivatives are strictly prohibited. These restrictions are going to severely limit the efficacy of the program to find the cheapest emissions reductions.

Also, there is a huge amount of risk in carbon markets (both in terms of accurate compliance and extreme events), so while they should be tightly regulated, derivatives are a necessary component because they allow firms to hedge against the risk of non-compliance or shifting standards. You will be hard-pressed to find any industry player who will advocate for a market without any trading, and there will need to be at least some industry support for any viable future climate legislation. Moreover, the monthly auction system may generate more carbon share price volatility than a continuous market, making it even more unattractive to firms.

The Upshot

Cantwell-Collins injects some great ideas into the climate policy debate that had not been prominently discussed before. If a policymaker wants to reduce the burden of increased energy costs on consumers, a direct rebate is an efficient and effective way to do it. The bill overall, however, is a somewhat naïve approach that does not fully appreciate the ability of markets to generate efficient emissions reductions and does not limit carbon emissions effectively. Its merits (simplified approach, upstream regulation, price collar) are outweighed by its limitations (extremely slow cap reduction, heavy reliance on CERT-funded reduction programs, draconian market restrictions). The CLEAR Act will continue to play a role in the climate debate of the Hill, but in its current form, it is unlikely to be the last bill standing.

Photo credit: https://www.flickr.com/photos/haglundc/ / CC BY-NC 2.0