ThinkProgress Logo

Climate Progress

When Sen. Dorgan finds out what’s in the climate bill — hint, hint, White House — he might just support it

http://weblogs.sun-sentinel.com/news/politics/dcblog/Byron%20Dorgan.jpgSen. Byron Dorgan (D-ND) has a “Probability of Yes” vote (PrY) of 22% for the climate bill, as it’s currently written (see “Who are the swing Senators?“).   That is notwithstanding his April remarks:

North Dakota is the Saudi Arabia of wind….  I’m going to keep pushing for policies in Congress that help us develop our wind resource for the benefit of the whole country.”

Hard to do more for wind than the stimulus bill did — other than pass something like the Waxman-Markey climate and clean energy bill (with a stronger renewable standard).

Dorgan has, however, now published an op-ed in The Bismarck Tribune with a headline that befits his 22% PrY, “Reduce our CO2, yes … but cap-and-trade, no,” but with contents that mostly suggest he might actually be a real fence-sitter — and a potential filibuster buster — if somebody actually explained the bill to him and worked to address his concerns.

Indeed, the sole objections he raises to the bill — the potential for Wall Street to engage in questionable derivatives tradings and speculative bubbles that might drive the price of CO2 soaring — are actually addressed in Waxman-Markey by multiple provisions (as I discuss here and reprint below).  As an important aside, it would be almost impossible to write a bill reducing CO2 emissions that would not lead to “derivatives,” which, after all, include futures contracts and options.

If you are going to create a CO2 price — really the only way of reducing CO2 other than mandatory, command-and-control, sector-based emissions regulations (which it is impossible to believe Dorgan supports) — then Wall Street is going to create futures and options to allow companies to mitigate risk.  And that’s a very good thing, as even conservative economists will tell you.

The only question is whether you design a system with checks and balances against fraudulent derivatives and speculation, which this bill does.  No doubt it could be improved, and perhaps after someone explains the bill to him — Browner, Biden, Reid, Boxer … anyone? — Dorgan will join an effort to add more oversight.

Now, you might say that Dorgan isn’t interested in a real bill, that he is just positioning himself for a “no” vote.  Well, if so, he has written a very strange op-ed.  Let me excise all the “railing against Wall Street” stuff, and see for yourself:

Read more

Economy

Can Cramdowns Make A Comeback?

house_moneyThree months after the idea met its demise in the Senate, Mike Lillis at the Washington Independent noticed that the Senate Judiciary committee has scheduled a hearing to reconsider cramdowns — a proposal to allow bankruptcy judges to modify the terms of mortgages:

Nearly three months after the Senate killed a House-passed proposal allowing homeowners to stave off foreclosure through bankruptcy, some upper-chamber Democrats are wondering if it isn’t time to revisit the issue. Leaders of the Senate Judiciary Committee, not satisfied that mortgage lenders and servicers have done enough to prevent foreclosure voluntarily, have scheduled a cramdown hearing for Thursday.

As I outlined last week, there are a number of plans circulating that would address the ever-increasing number of foreclosures and attempt to boost the sputtering administration plan to encourage mortgage modifications. The problem with the current plan is that lenders would rather wait to write down a loan’s losses or hope that a borrower makes a miraculous turn away from foreclosure, and there’s no stick to incentivize them into pursuing a modification. Cramdown was supposed to be that stick, but then it ran into the Senate.

The administration has recently started pushing lenders to voluntarily up the pace of modifications. It sent a letter to mortgage firms saying that “we believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share.” Financial executives are coming to the White House on July 28 to discuss how the modification program has been implemented, and “the administration plans to grill servicers that have done few modifications or have had many complaints.”

However, all of this prodding is no substitute for a real stick, and Treasury has thus far been reluctant to endorse any other legislative remedies. “We have enough tools,” said Herbert Allison, the Treasury Department’s assistant secretary for financial stability. But Congress seems to be open to at least exploring new legislative efforts.

Cramdown does not have to be the stick that Congress settles on (and given the way that it went down last time, it probably won’t be). Right-to-rent, which would give delinquent borrowers the ability to surrender their property but rent it at market price for a set period of time, is one option. Lenders, reluctant to become landlords, might find this a good reason to modify loans.

Another option is taking away the tax advantage enjoyed by trusts that hold mortgage-backed securities “if the investors refuse to allow modifications.” And then there is mandatory mediation, a very successful program requiring that lenders and borrowers meet and try to work out an agreement before a foreclosure can proceed. In the end, the point is to incentivize modifications, and it’s encouraging to see Congress acknowledging that the current effort is falling short.

Politics

Nick Rahall ‘thrilled’ to jump out of a plane for coal.

Friends of Coal Auto Fair This Saturday, House Natural Resources chair Nick Rahall (D-WV) jumped out of a plane in service of coal. As he announced in a press release, Rahall’s leap with the US Army Golden Knights parachute team at the Friends of Coal Auto Fair was a “Nick Rahall affirmation of the importance of coal“:

I cannot tell you how thrilled I am to be invited by the Golden Knights to join them for the Friends of Coal event. It is a very special honor for me to be able to show – in a bold way, my continued support for not only coal, but for everyone who serves the people of West Virginia and our Nation through their service in our armed forces and law enforcement agencies. It is a Nick Rahall affirmation of the importance of coal and an opportunity to pay tribute to those who extraordinarily serve and make personal sacrifices each day for the citizens of West Virginia and our Nation as a whole.

Last month, Rahall voted against the American Clean Energy and Security Act because he believed it would not “ensure coal mining jobs for the future,” even though the legislation has “huge subsidies for ‘clean coal.’” Rahall recently cashed a $5000 check from the Coal Miners PAC, $2000 from the Arch Coal PAC, $5000 from the American Electric Power PAC, $2500 from the CONSOL Energy PAC, and $1000 each from the Dominion Resources and Allegheny Energy PACs.

Yglesias

Poverty Will Always Be With Us Until We Do Something About It

Charles Krauthammer scoffs at the idea of spending money on ensuring that poor people have health care with the observation that “Poverty and disease and social ills will always be with us” so we might as well spend our money on space exploration. Ezra Klein says “That’s true. But the degree to which they’re with us is directly dependent on where we spend those billions.”

I think even that concedes too much. I wish this chart actually started at zero, but the point should be clear either way. It shows the poverty rate in the United States:

poverty_rate1

What happened? Well, public policy happened. In the 1960s, federal domestic programs got more ambitious, especially with regard to senior citizens. And the poverty rate went down, with the declines concentrated among the seniors who were the main targets of the spending. The extent of poverty is very much subject to our control. Disease, presumably, really will always be with us. But still, polio isn’t with us anymore. Nor is smallpox.

Albert Hirschman wrote a book called The Rhetoric of Reaction: Perversity, Futility, Jeopardy. Of the three, I think “futility” is the most pernicious and in some ways the easiest to knock down. It sounds very wise to observe that problems are unsolvable. But even though change is hard, it’s very much possible.

Security

Israeli Ambassador Says Sun Sets In East, Palestinians Disagree

harhoma1This was an unfortunate bit of he said/she said reporting in the Washington Post’s story on Israeli Prime Minister Netanyahu rejecting the U.S.’s request that Israel halt building on Jerusalem land seized from Palestinians:

Palestinians argue that continued Israeli building in East Jerusalem is meant to change the demographics of the area and make it harder for them to establish a capital there.

[Israeli Ambassador Michael] Oren said that the neighborhood where the building would be located, Sheikh Jarrah, includes several Israeli government and diplomatic buildings and that the project “does not represent any attempt to alter the demographic balance” of the area overall.

Of course, it’s not just Palestinians who claim that continued Israeli building in East Jerusalem is meant to change the demographics of the area. Numerous Israeli organizations agree. Human rights group B’Tselem’s reports that “since East Jerusalem was annexed in 1967, the government of Israel’s primary goal in Jerusalem has been to create a demographic and geographic situation that will thwart any future attempt to challenge Israeli sovereignty over the city”:

To achieve this goal, the government has been taking actions to increase the number of Jews, and reduce the number of Palestinians, living in the city.

- Physically isolating East Jerusalem from the rest of the West Bank, in part by building the separation barrier;

- Discriminating in land expropriation, planning, and building, and demolition of houses;

- Revoking residency and social benefits of Palestinians who stay abroad for at least seven years, or who are unable to prove that their center of life is in Jerusalem;

- Unfairly dividing the budget between the two parts of the city, with harmful effects on infrastructure and services in East Jerusalem.

Israel’s Ir Amim, a group that supports equitable treatment in Jerusalem, said in a report on the Sheikh Jarrah neighborhood that “These developments strengthen Israeli control of this area and thwart the feasibility of future agreed-upon borders for Jerusalem.”

Ambassador Oren’s claim is also belied by documents from the Israeli government itself. Last month, the New York Times reported that Israel was “carrying out a $100 million, multiyear development plan in some of the most significant religious and national heritage sites just outside the walled Old City here as part of an effort to strengthen the status of Jerusalem as its capital.”

The plan, parts of which have been outsourced to a private group that is simultaneously buying up Palestinian property for Jewish settlement in East Jerusalem, has drawn almost no public or international scrutiny. However, certain elements related to it — the threatened destruction of unauthorized Palestinian housing in the redevelopment areas, for example — have brought widespread condemnation.[...]

The government development plan was first agreed upon in 2005 “to strengthen the status of Jerusalem as the capital of Israel,” as it states in its opening line, and became operational in the past year, with the prime minister’s office and the municipality jointly responsible.

I don’t expect the Washington Post to call the Israeli ambassador a liar, but it shouldn’t be too much to ask that the Post provide a remotely accurate rendering of the dispute. Such a rendering might note that Ambassador Oren said one thing, but that Palestinians, Israeli human rights groups, the United Nations’ human rights envoy for the Palestinian Territories, and internal Israeli government documents all say the opposite.

Security

Gingrich Still Clinging To Fiction Novels As The Basis For His Foreign Policy Ideas

For the past few months, Newt Gingrich has been trying to sound the alarm that the United States is on the cusp of a monumental security threat far greater than the dangers posed by Germany and Japan in the 1930s and 40s — an electromagnetic pulse (EMP) attack. Gripped by this fear, Gingrich once argued that the U.S. should take out North Korean missiles, while on their launch pads, with lasers because he believes the reclusive communist state has the ability to carry out such an attack on the U.S.

This morning, during a speech at the Heritage Foundation, Gingrich was at it again. He lamented how the world’s democracies “hid from reality” in the 1920s and 30s and failed to confront the emerging threat in Europe and East Asia. Citing what he had read in “novels,” he then linked that to his perceived EMP threat and deplored the “failure to translate the ability of the imagination into public policy.” “We are living at the edge of a catastrophe,” he said:

GINGRICH: [W]hat we are faced with is not simply a problem, it is potentially catastrophic. … [The] electro-magnetic pulse, from my co-author and good friend Bill Forstchen, has written a remarkable novel called One Second After, in which he takes a town in North Carolina and shows you what would happen with a successful electro-magnetic pulse attack. Electro-magnetic pulse is essentially a peculiarly-sized nuclear device that becomes a giant lightning strike. [...]

[E]xperts in nuclear weaponry, and they came back and said unanimously, “This is a catastrophic threat waiting to happen and North Korea, China and Russia all understand it and are all working on it.” Which is why I adopted the position towards North Korea that I would literally not allow them to fire any intercontinental range missile that we had not inspected. I would just take it out on the site.

And the reason is simple; one weapon of this kind that went off over Omaha would eliminate most of the electrical production in the United States. And we are not today hardened against this. It is an enormous catastrophic threat.

Watch it:

The Wonk Room’s Matt Duss observed of Gingrich’s “suspense thriller-based” foreign policy:

It’s worth noting as well that the argumentum ad Chamberlinum that Gingrich predictably deploys throughout the speech always involves a sin of omission: Free nations failed to act in the face of a rising threat, resulting in disastrous consequences. I would suggest that, in the wake of the Iraq war, there now exists an effective counter to this heavily overworked rhetorical device. Rather than failing to act, the Bush administration acted — unwisely and incompetently, in response to a largely imaginary threat — resulting in disastrous consequences. Call it argumentum ad neoconservatum.

“As the conservative movement continues to melt down,” Duss adds, “conservatives will return to same issue that conservatives have exploited since before fire: Abject fear of our barbaric, unreasoning enemies, and the imputation of faithlessness on the part of those who don’t perceive the threat in the same way.”

Transcript: Read more

Yglesias

Many Large Cities Report Crime Decline

I’ve noted previously that murder is on the decline in 2009 for the District of Columbia, and today’s Post brings the news that the tend seems to be going national:

dccrime

Violent crime has plummeted in the Washington area and in major cities across the country, a trend criminologists describe as baffling and unexpected. The District, New York and Los Angeles are on track for fewer killings this year than in any other year in at least four decades. Boston, San Francisco, Minneapolis and other cities are also seeing notable reductions in homicides.

In his excellent forthcoming book on crime Mark Kleiman makes the point that it’s much easier for a law enforcement system to be effective when there’s relatively little crime. With few people committing offenses, it’s pretty easy to monitor crime hotspots and to deploy swift and effective punishment. And because it’s pretty easy to capture offenders and punishment for offenses is likely to be swift and effective, people tend to be deterred from committing crimes. Which makes enforcement easier which makes crime decline which makes enforcement easier and on and on and on.

In other words, there’s at least some reason to expect that the past 15 years’ worth of success at better controlling crime in many of America’s major cities will just have a lot of momentum that can carry us forward even through unfavorable labor market conditions.

Politics

Missouri car dealer offers free AK-47 with purchase of new truck.

Mark Muller, the president of Max Motors in Missouri, is offering a gift certificate for a Kalashnikov AK-47 rifle to anyone who purchases a pick-up truck. Muller, whose business slogan is “God, Guns, Guts, and American Pick-Up Trucks,” said the response to the offer has been very strong. “There is a lot of worry about crime, we have a methamphetamine problem around here and people just want to protect themselves,” said Muller. The UK Telegraph notes that there may be other dynamics at play:

Never before, however, has the AK-47 been used to sell cars in Missouri. For all its gimmickry, the interest in Mr Muller’s newest promotion reflects rising concern among gun owners that President Barack Obama will eventually seek to tighten the rules on ownership, despite his promises to the contrary.

max

Economy

How Minnesota’s AG Saved Consumers From the Credit Card Industry

Minnesota Attorney General Lori Swanson

Minnesota Attorney General Lori Swanson

The bedrock of America’s legal system is an impartial judiciary; if judges are in the pocket of an industry, then laws regulating that industry simply cease to exist.  This is why the credit card industry absolutely loves a company known as the National Arbitration Forum (NAF), which for years has allowed this industry to effectively write and enforce its own laws against consumers.

The scam works like this:  beginning in the 1980s, the Supreme Court rewrote federal law to endorse a practice known as “forced arbitration.”  Under this practice, companies ranging from nursing homes to cell phone companies to employers can refuse to do business with anyone who doesn’t give up their right to sue or be sued in a regular court presided over by a neutral judge.  Instead, consumers and employees are shunted into a privatized, corporate-run judicial system, which overwhelming favors corporate parties.

No one has taken greater advantage of forced arbitration than the credit card industry–it may now be impossible for consumers to get a credit card in the United States without signing a forced arbitration agreement–and the industry’s most important partner in this shell game has been the NAF.  According to one study, which examined over 20,000 NAF cases between a credit card company and a consumer, the credit card company won an incredible 95% of the time.  In one case, NAF ordered a woman to pay the credit card company MBNA almost $8000 because she had the same name as another woman who owed MBNA money.  Conversely, when a Harvard Law Professor named Elizabeth Bartholet, who used to work part-time as an NAF arbitrator, handed down a single decision against a credit card company she was immediately stripped of her caseload by NAF at the request of the credit card industry.

The credit card industry’s halcyon days as judge, jury and victorious litigant may be numbered, however, thanks to a lawsuit brought against the NAF by Minnesota Attorney General Lori Swanson.  Under a settlement announced yesterday, the NAF will cease accepting any new consumer arbitration cases by the end of this week (NAF’s entire business will now be limited to arbitrating Internet domain disputes).  In other words, the credit card industry will need to find a new train conductor if they want to keep railroading consumers into lawless corporate tribunals.

For their part, NAF complained that they are being forced to shut down because “the Forum lacks the necessary resources to defend against increasing challenges to arbitration on all fronts, including from state Attorneys General and the class action trial bar,” but this simply shows that our court system worked.  Thanks to suits brought by Swanson and others, the cost of NAF’s lawbreaking finally became greater than the cost simply shutting down their corrupt business.

Unfortunately, NAF was vulnerable to this kind of attack because the evidence against it was so overwhelming–not every forced arbitration company has a Harvard Law professor prepared to testify about how they were strongarmed into shafting consumers–so it remains to be seen whether another, equally offensive company will emerge to fill the void (a bill, currently pending in Congress, would end the practice of forced arbitration in consumer and employment contracts altogether).  Even so, the near-total demise of NAF is one of the most important pro-consumer developments in decades; for the first time in years, credit card companies may actually have to follow the law.

Yglesias

Inequality and Declining Marginal Utility

The good life

The good life

Will Wilkinson advances a number of argument in his recent Cato paper “Thinking Clearly About Inequality” including one that’s pretty question-begging. This point, however, seems valid:

You can see leveling in quality across the price scale in almost every kind of consumer good. At the turn of the 20th century, only the mega-rich had refrigerators or cars. But refrigerators are now all but universal in the United States, even while refrigerator inequality continues to grow. The Sub-Zero PRO 48, which the manufacturer calls “a monument to food preservation,” costs about $11,000, compared with a paltry $350 for the IKEA Energisk B18 W. The lived difference, however, is rather smaller than that between having fresh meat and milk and having none.

The upshot is that tracking the growth in inequality of wealth and income may be overstating the growth in actual inequality of human welfare.

At the same time, the point here is that the marginal utility of money income declines as it grows. This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing. The difference, in welfare terms, between a Sub-Zero refrigerator and an Ikea refrigerator is much smaller than the difference in welfare terms between having health insurance and not having health insurance. So a surtax on high earners that goes to finance expansion of health coverage to the working poor is making people better off. In that case, when we look at statistics indicating skyrocketing income inequality we’re seeing evidence of inefficiency that can be rectified through the policy process.

Older

Newer

Switch to Mobile
ThinkProgress Signup Overlay Skip and Continue to ThinkProgress Skip and Continue to ThinkProgress

Sign Up