Month: November 2017

The Bernie Sanders Show: What Is The Future Of Digital Media?

Posted on November 29, 2017

In this video, Senator Sanders interviews four journalists from digital media sources: NowThis, The Young Turks, AJ+, and ATTN.

They begin by discussing the evolution of news and especially their role in the 2016 election: covering stories that were largely ignored by mainstream media, and resonating with people who do not feel represented in traditional media (racially, or through their socioeconomic backgrounds.)

The conversation then addresses Net Neutrality. The journalists explain the importance of Net Neutrality and what would happen to internet access without neutrality: “Wealthy corporations get to decide what you get to see. What the public is aware of is no longer the same. Its no longer fair.”

The video ends with a conversation about what the media can do better – to better inform and educate Americans.

The GOP Tax Plan: Who Pays More?

Posted on November 28, 2017

The media is currently filled with analyses, reports, and opinions about the GOP tax plan. With a lot of information out there, it is important to understand the key points. Education is the first step towards making a difference.

So what do you need to know about the tax plan?

It is a regressive plan. This means that it is better for the rich, and worse for the poor. You can clearly see this in a chart put together by the Congressional Budget Office. They list out, in millions, the net changes in federal revenues by income category and by year. Each cell represents how much revenue the federal government will gain or lose from that income category in that year.

For instance, Americans making $35,000 a year will pay 3,920,000,000 less to the government in 2019 but will pay 7,610,000,000 more to the government in 2027.

We have taken a portion of that chart and color coded it. The red cells represent that the federal government will receive more money from that income category in the form of taxes, the blue cells represent that the federal government will receive less from that income category.

Lower income categories will clearly pay more to the government while higher income categories will pay less. Below is a visual representation of this data.

This tax plan, however, does not approach the issue solely through income categories. It makes a number of changes to the tax code that influence some people and not others (e.g. whether they have children, whether they would have to pay the Estate Tax.)

Therefore, the overarching amount of revenue gathered by the federal government doesn’t show the full picture of the chances of an individual in that income bracket receiving a tax cut or a tax increase. The graph below shows the percent of each quintile of the population (The population is split into 5th based on income) that would receive a tax cut and the percent that would receive a tax increase.

Like the previous graph, the regressive nature of the tax plan is clear. The top quintile is the only quintile where a greater percentage will receive tax cuts than tax increases. Just over half (53%) of the top quintile will see tax cuts, while 45.7% will see tax increases.

Breaking this down even further: the top 1% and 0.1% in particular will receive the most tax cuts with 83% and 98.1% respectively receiving tax cuts.

This analysis is by no means exhaustive, but we hope that it will give you a better sense of the regressive nature of the GOP tax plan.

Congressional Budget Office Cost Estimate: The Tax Cuts And Jobs Act

Posted on November 26, 2017

The Reconciliation Recommendations of the Senate Committee on Finance, the Tax Cuts and Jobs Act, would amend numerous provisions of U.S. tax law. Among other changes, the bill would reduce most income tax rates for individuals and modify the tax brackets for those taxpayers; increase the standard deduction and the child tax credit; and repeal deductions for personal exemptions, certain itemized deductions, and the alternative minimum tax (AMT).

Those changes would take effect on January 1, 2018, and would be scheduled to expire after December 31, 2025. The bill also would permanently repeal the penalties associated with the requirement that most people obtain health insurance coverage (also known as the individual mandate).

The legislation would permanently modify business taxation as well. Among other provisions, beginning in 2019, it would replace the structure of corporate income tax rates, which has a top rate of 35 percent under current law, with a single 20 percent rate. The legislation also would substantially alter the current system under which the worldwide income of U.S. corporations is subject to taxation.

The staff of the Joint Committee on Taxation (JCT) estimates that enacting the legislation would reduce revenues by about $1,633 billion and decrease outlays by $219 billion over the 2018-2027 period, leading to an increase in the deficit of $1,414 billion over the next 10 years. A portion of the changes in revenues would be from Social Security payroll taxes, which are off-budget. Excluding the estimated $27 billion increase in off-budget revenues over the next 10 years, JCT estimates that the legislation would increase on-budget deficits by about $1,441 billion over the period from 2018 to 2027. Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues.

JCT estimates that enacting the legislation would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2028.

Because of the magnitude of its estimated budgetary effects, the Tax Cuts and Jobs Act is considered major legislation as defined in section 4107 of H. Con. Res. 71, the Concurrent Resolution on the Budget for Fiscal Year 2018. It therefore triggers the requirement that the cost estimate, to the greatest extent practicable, include the budgetary impact of the bill’s macroeconomic effects. The staff of the Joint Committee on Taxation is currently analyzing changes in economic output, employment, capital stock, and other macroeconomic variables resulting from the bill for purposes of determining these budgetary effects. However, JCT indicates that it is not practicable for a macroeconomic analysis to incorporate the full effects of all of the provisions in the bill, including interactions between these provisions, within the very short time available between completion of the bill and the filing of the committee report.

CBO and JCT have determined that the tax provisions of the legislation contain no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA).

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary effects of the Tax Cuts and Jobs Act are shown in the table below.

BASIS OF ESTIMATE

Revenues and Direct Spending

The Congressional Budget Act of 1974, as amended, stipulates that JCT’s estimates of revenues will be the official estimates for all tax legislation considered by the Congress. Therefore, CBO incorporates JCT’s estimates into its cost estimates of the effects of legislation. JCT provided virtually all estimates for the provisions of the bill, but JCT and CBO collaborated on the estimate of the provision that would eliminate the penalties associated with the requirement that most people obtain health insurance coverage.¹ The date of enactment of the bill is generally assumed to be December 1, 2017.

JCT estimates that, together, the provisions contained in the legislation would decrease federal revenues, on net, by about $38 billion in 2018, by $972 billion over the period from 2018 to 2022, and by $1,633 billion over the period from 2018 to 2027. Net outlays would be nearly unchanged in 2018, and would decrease by $46 billion from 2018 to 2022, and by $219 billion over the period from 2018 to 2027. On net, deficits would increase by $38 billion in 2018, by $926 billion from 2018 to 2022, and by $1,414 billion from 2018 to 2027. A portion of those effects reflect changes to revenues from Social Security taxes, which are off-budget. JCT estimates that over the 2018-2027 period, the bill would increase on-budget deficits by $1,441 billion and reduce off-budget deficits by $27 billion.

Tax Changes for Individuals. The bill would make numerous changes to tax law pertaining to individuals.

JCT estimates that the individual tax provisions would, on net, reduce revenues by $1,119 billion from 2018 to 2027. Those provisions also would decrease outlays by an estimated $233 billion over the 2018-2027 period. Some provisions would increase off-budget revenues by $20 billion over the period from 2018 to 2027, JCT estimates. On-budget revenues would decrease by an estimated $1,139 billion.

Revenue-Reducing Provisions. Provisions that are estimated to reduce revenues over the 2018-2027 period include the following, which would take effect on January 1, 2018 and expire on December 31, 2025:

Modify the seven tax brackets in place under current law to create brackets with rates of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 38.5 percent;
Increase the standard deduction;
Repeal the individual AMT (Alternative Minimum Tax);
Allow a 17.4 percent deduction, subject to certain limits, for qualified business income that individuals receive from pass-through entities, namely partnerships, S corporations, and sole proprietorships;
Increase the child tax credit to $2,000, and, among other related changes, provide a new $500 credit for certain other dependents; and
Double the exemption allowed under estate and gift taxes.

According to JCT’s estimates, the largest revenue reductions would result from the provision that would modify income tax rates and brackets: Revenues would fall by $1,165 billion and outlays for refundable tax credits would increase by $9 billion over the 2018-2027 period. The increase in the standard deduction would reduce revenues by $654 billion and increase outlays for refundable tax credits by $83 billion over the same period, JCT estimates. Repealing the individual AMT would reduce revenues by $769 billion from 2018 to 2027.

JCT also estimates that the bill’s provisions that provide a deduction for qualifying income from pass-through entities would reduce revenues by $362 billion over the 2018-2027 period and that modifications to the child tax credit would, over the same period, reduce revenues by $431 billion and increase outlays for refundable tax credits by $154 billion. JCT estimates that additional revenue reductions, totaling $83 billion from 2018 to 2027, would result from the modifications to estate and gift taxes.

Revenue-Increasing Provisions. Provisions that are estimated to increase revenues over the 2018-2027 period would:

Repeal deductions for personal exemptions through 2025;
Repeal certain itemized deductions, including those for state and local taxes and interest on home equity indebtedness, also through 2025;
Disallow immediate use of certain losses by active owners of pass-through entities; and
Permanently index tax parameters to the chained consumer price index instead of the traditional consumer price index.

The largest revenue increases would result from the provision to repeal deductions for personal exemptions, which JCT estimates would increase revenues by $1,086 billion and reduce outlays for refundable credits by $134 billion over the 2018-2027 period. JCT estimates that the repeal of certain itemized deductions also would increase revenues by $974 billion and reduce outlays for refundable credits by $3 billion from 2018 to 2027.

Substantial but smaller increases in revenues would result from two other provisions. First, disallowing certain losses by pass-through entities would increase revenues by an estimated $137 billion over the 2018-2027 period. Second, the change in the inflation measure used to index tax parameters would increase revenues by $115 billion and reduce outlays for refundable credits by $19 billion over the 2018-2027 period, according to JCT’s estimates.

Repealing the Individual Mandate. The bill’s most significant effects on outlays would occur as a result of the elimination, beginning in 2019, of the penalties associated with the individual mandate. CBO and JCT estimate the following effects of that provision:

Federal budget deficits would be reduced by about $318 billion between 2018 and 2027, consisting of estimated reductions in outlays of $298 billion and increases in revenues of $21 billion over the period;
The number of people with health insurance would decrease by 4 million in 2019 and 13 million in 2027;
Nongroup insurance markets would continue to be stable in almost all areas of the country throughout the coming decade; and
Average premiums in the nongroup market would increase by about 10 percent in most years of the decade (with no changes in the ages of people purchasing insurance accounted for) relative to CBO’s baseline projections. In other words, premiums in both 2019 and 2027 would be about 10 percent higher than is projected in the baseline.

Those effects would occur mainly because healthier people would be less likely to obtain insurance and because, especially in the nongroup market, the resulting increases in premiums would cause more people to not purchase insurance. In this estimate for the Tax Cuts and Jobs Act, the estimated reduction in the deficit is different from a CBO and JCT estimate published on November 8, 2017.2 The differences occur because the provision of this legislation eliminates the penalties associated with the mandate but not the mandate itself and because of interactions with other provisions of the bill.

Business-Related Tax Changes. The bill would make many permanent changes to business taxes. The provisions with the largest effects on revenues, as estimated by JCT, are those that would:

Replace, starting in 2019, the current graduated structure of corporate income tax rates, which has a top rate of 35 percent under current law, with a single 20 percent rate;
Limit the deduction for net interest expenses to the sum of business interest income and 30 percent of an adjusted measure of taxable income; and
Limit the deduction for past net operating losses to a portion of current taxable income, and generally repeal the two-year period over which losses may be carried back to previous tax years.

JCT estimates that those tax provisions would, on net, reduce revenues by $669 billion from 2018 to 2027. In addition, those provisions would increase outlays for refundable tax credits by an estimated $14 billion over the 2018-2027 period.

JCT estimates that the modifications to the rate structure, including reducing the top corporate tax rate from the 35 percent that is assessed on most taxable income to a 20 percent rate that would apply to all amounts of taxable income, would reduce revenues by $1,329 billion over the 2018-2027 period. JCT also estimates that limiting the deductions for interest expenses would increase revenues by $308 billion and that limiting the use of net operating losses would raise revenues by $158 billion over the same period.

The outlay effects from the business provisions would result from repealing the corporate alternative minimum tax. That change would reduce receipts by $26 billion and increase outlays by $14 billion over the period from 2018 to 2027, according to JCT’s estimates.

International Tax Changes. The bill would substantially modify the current system of taxation of worldwide income of U.S. corporations, generally including foreign earnings in taxable income when paid to businesses as dividends by their foreign subsidiaries and with an allowance for tax credits for certain foreign taxes that businesses pay. Under the Tax Cuts and Jobs Act, the tax system would provide an exemption for dividends paid by a foreign corporation to its U.S. parent, and no foreign tax credits would be allowed for taxes paid on the amount of such dividends. Other changes also would be implemented. The international tax provisions with the largest estimated effects on revenues are those that would:

Provide a deduction for the foreign-source portion of dividends received by domestic corporations from certain foreign corporations;
Require that certain untaxed foreign income of U.S. corporations be deemed to be immediately paid to those corporations as dividends and included in taxable income, subject to taxation at a rate of 10 percent (or 5 percent for certain illiquid assets), and with an option to spread the resulting tax payments over an eight-year period with 60 percent paid in the final three years;
Impose on U.S. corporations a minimum tax of 10 percent (12.5 percent starting in 2026) on a tax base that excludes certain otherwise tax-deductible payments to foreign affiliates; and
Require that U.S. corporations immediately include in taxable income certain amounts earned from low-taxed investments by foreign subsidiaries.

JCT estimates that the provisions related to international taxation would, on net, increase revenues by $155 billion from 2018 to 2027. It also estimates that the deduction for dividends received from foreign corporations would reduce revenues by $216 billion over that period. JCT estimates that three other provisions would have large budgetary effects that would increase revenues from 2018 to 2027. Those provisions would require a deemed repatriation of untaxed foreign income ($185 billion), impose a new minimum tax ($138 billion), and require the immediate inclusion in taxable income of certain amounts earned by foreign subsidiaries ($135 billion).

Revenue-Dependent Repeals. The bill would make parts of six business and international taxation provisions dependent on future revenue collections. The parts that would be affected generally begin in 2026, and would increase revenues in 2026 and 2027. Those amounts are incorporated into the overall revenue effects shown in the estimate of this legislation. The provisions include those that would require that certain research or experimental expenditures be amortized, that would limit the deduction for net operating losses, and that would impose a minimum tax on a tax base that excludes certain otherwise tax-deductible payments to foreign affiliates.

Under the legislation, the parts of those provisions beginning in 2026 would not take effect if an overall revenue target was reached. Specifically, if on-budget revenues for the period from 2018 to 2026 exceeded $28.387 trillion, then those revenue-raising provisions would be repealed starting in 2026. Under CBO’s latest baseline revenue projections, adjusted to include the revenue effects of the bill (without incorporating any macroeconomic feedback), the on-budget revenue target would not be reached and therefore the revenue-raising modifications would occur. JCT has estimated that the revenue-dependent repeals would have a negligible effect on revenues. Given variations in inflation, economic output, and many other economic developments that affect revenues, including the response of overall economic activity to this legislation, there is some probability that the target would be reached and that the modifications to those provisions, and the resulting revenues, would not occur.

PAY-AS-YOU-GO-CONSIDERATIONS

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays and revenues that are subject to those pay-as-you-go procedures are shown in the following table. Only on-budget changes to outlays or revenues are subject to pay-as-you-go procedures.

ALLOCATION OF BUDGETARY EFFECTS ACROSS INCOME GROUPS

Section 4107 of H. Con. Res. 71 requires that CBO and JCT’s estimates of budgetary effects for major legislation include, to the extent practicable, the legislation’s distributional effects across income categories.

JCT has published a distributional analysis of the Tax Cuts and Jobs Act that includes the effects of the bill on revenues and on the portion of refundable tax credits recorded as outlays.3 That analysis included effects on outlays for premium tax credits stemming from eliminating the penalty associated with the requirement that most people obtain health insurance coverage. However, other spending related to eliminating that penalty was not included, specifically changes in spending for Medicaid, cost-sharing reduction payments, the Basic Health Program, and Medicare.

CBO has separately allocated across income groups the budgetary effects of those other changes for an earlier version of the legislation, under consideration by the Senate Finance Committee; those estimates also apply to the bill as ordered reported.4 In making those estimates, CBO did not attempt to estimate the value that people place on such spending, which may be different from the actual cost to the government of providing the benefits. CBO also did not attempt to make any distributional allocations for people who would choose to obtain unsubsidized health insurance in the nongroup market and who face higher premiums there compared with what would occur otherwise.

The combined distributional effect of the provisions estimated by JCT and CBO, thus representing the total distributional effect of the bill, was calculated by subtracting the estimated change in federal spending from the change in federal revenues allocated to each income group. The resulting changes in the federal deficit allocated to each income group are reflected in the following table.

Overall, the combined effect of the change in net federal revenues and spending is to decrease deficits (primarily stemming from reductions in spending) allocated to lower-income tax filing units and to increase deficits (primarily stemming from reductions in taxes) allocated to higher-income tax filing units. Those effects do not incorporate any estimates of the budgetary effects of any macroeconomic changes that would stem from the proposal.

INCREASE IN LONG-TERM ON-BUDGET DEFICITS

JCT estimates that enacting the legislation would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2028.

MANDATES

CBO and JCT have determined that the legislation contains no intergovernmental or private-sector mandates as defined by UMRA.

A New Grand Coalition For Germany and Europe

Posted on November 26, 2017

With America AWOL and China ascendant, this is a critical time for Germany and the European Union to provide the world with vision, stability, and global leadership. And that imperative extends to Germany’s Christian Democrats and Social Democrats.

Friends of Germany and Europe around the world have been breathing a sigh of relief at the newfound willingness of Germany’s Christian Democrats and Social Democrats (SPD) to discuss reprising their grand coalition government. The world needs a strong and forward-looking Germany in a dynamic European Union. A new grand coalition working alongside French President Emmanuel Macron’s government would make that possible.

The SPD’s initial decision to go into opposition after its poor election result in September may have been sincere, and even strategically sound. But it is not timely. Diplomacy almost everywhere is fractured.
The United States is reckoning with a psychologically unstable president, a plutocratic cabinet, and a Republican congressional majority. Europe is in the throes of multiple economic, social, political, and institutional crises. China, by contrast, is dynamic and outward-looking – providing good reason for the EU to assume vigorous leadership and engage in constructive partnerships with China on key initiatives (such as sustainable infrastructure across Eurasia).

In short, this is a critical time for Germany and Europe to provide vision, stability, and global leadership. And that imperative extends to Chancellor Angela Merkel’s Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU), and the SPD.

But the CDU/CSU and the SPD need to do more than merely extend the previous government, which was too parochial in outlook and temperament. The world and Europe need an outward-looking Germany that offers more institutional and financial innovation, so that Europe can be a true counterpart to the US and China on global affairs. I say this as someone who believes firmly in Europe’s commitment and pioneering statecraft when it comes to sustainable development, the core requirement of our time.

Economic growth that is socially inclusive and environmentally sustainable is a very European idea, one that has now been embraced globally in the United Nations’ 2030 Agenda and its 17 Sustainable Development Goals, as well as in the 2015 Paris climate agreement. Europe’s experience with social democracy and Christian democracy made this global vision possible. But now that its agenda has been adopted worldwide, Europe’s leadership in fulfilling it has become essential.

A grand coalition government in Germany must help put Europe in a position to lead. French President Emmanuel Macron has offered some important ideas: a European finance minister; Eurobonds to finance a new European investment program; more emphasis on innovation; a financial transactions tax to fund increased aid to Africa, where Europe has a strategic interest in long-term development; and tax harmonization more generally, before the US triggers a global race to the bottom on taxing corporations and the rich.

Contrary to the Germans who oppose such ideas, a European finance minister and Eurobonds would not and should not lead to fiscal profligacy, but rather to a revival of investment-led green growth in Europe. China has proposed the Belt and Road Initiative to build green infrastructure linking Southeast Asia and Central Asia with Europe. This is the time for Europe to offer the same bold vision, creating a partnership with China to renovate Eurasia’s infrastructure for a low-carbon future.

If Europe plays its cards right, Europe’s (and China’s) scientific and technical excellence would flourish under such a vision. If not, we will all be driving Chinese electric vehicles charged by Chinese photovoltaic cells in the future, while Germany’s automotive industry will become a historical footnote.

A European finance minister would, moreover, finally end Europe’s self-inflicted agony in the aftermath of the 2008 financial crisis. As difficult as it is to believe, Greece’s crisis continues to this day, at Great Depression scale, ten years after the onset of the crisis.

This is because Europe has been unable, and Germany unwilling, to clean up the financial mess (including Greece’s unpayable debts) in a fair and forward-looking manner (akin to the 1953 London Agreement on German External Debts, as Germany’s friends have repeatedly reminded it). If Germany won’t help to lead on this issue, Europe as a whole will face a prolonged crisis with severe social, economic, and political repercussions.

In three weeks, Macron will convene world leaders in Paris on the second anniversary of the climate accord. France should certainly take a bow here, but so should Germany. During Germany’s G20 Presidency, Merkel kept 19 of the 20members of the G20 firmly committed to the Paris agreement, despite US President Donald Trump’s disgraceful attempt to wreck it.

Yes, the corruption of US politics (especially campaign funding by the oil and gas industry) threatened the global consensus on climate change. But Germany stood firm. The new coalition should also ensure that the country’s Energiewende (“energy transition”) delivers on the 2020 targets set by previous governments. These achievable and important commitments should not be a bargaining chip in coalition talks.

A CDU/CSU-SPD alliance, working with France and the rest of Europe, could and should do much more on climate change. Most important, Europe needs a comprehensive energy plan to decarbonize fully by 2050. This will require a zero-carbon smart power grid that extends across the continent and taps into the wind and solar power not only of southern Europe but also of North Africa and the eastern Mediterranean. Once again, Eurobonds, a green partnership with China, and unity within Europe could make all the difference.

Such an alliance would also enable a new foreign policy for Europe, one that promotes peace and sustainable development, underpinned by new security arrangements that do not depend so heavily on the US. Europe, a magnet for hundreds of millions of would-be economic migrants, could, should, and I believe would regain control of its borders, allowing it to strengthen and enforce necessary limits on migration.

The political terms of a new grand coalition government, it would seem, are clear. The SPD should hold out for ministerial leadership on economic and financial policy, while the CDU/CSU holds the chancellorship. That would be a true coalition, not one that could bury the SPD politically or deny it the means to push for a truly green, inclusive, EU-wide, sustainable development agenda.

With Merkel and SPD leader Martin Schulz in the lead, the German government would be in excellent, responsible, and experienced hands. Germany’s friends and admirers, and all supporters of global sustainable development, are hoping for this breakthrough.

World’s Richest Are Waging War On The Poor, Says Jeffery Sachs

Posted on November 21, 2017

The world’s richest people are waging a war on poor people, a Columbia University economics professor has said.

Jeffrey Sachs urged Republican senators not to support tax cuts or proposed changes to health care, which he warned were examples of “populism by the super rich.”

In an interview with Bloomberg Surveillance, Mr Sachs said: “Well this war of the rich on the poor is really astounding.

“On top of a huge budget deficit, unprecedented inequality in America, largest wealth soaring at the top, they want more, and more, and more.”

Asked what he would advise Republican senators who were on the fence about tax cuts or changes to health care, Mr Sachs replied: “Patriots should oppose this, period.”

He added: “Because our budget deficit is already huge and rising and this is pure populism. An unusual kind of populism. Populism by the super rich. But it’s pure populism.”

Going on to talk about the $1.5trn tax cut passed by the House of Representatives last week, he said: “We cannot afford tax cuts. The idea that somehow has gotten into our heads in recent weeks that ‘oh, $1.5 trillion, that we can give away’, is unbelievable in any serious country.”

The economist continued: “Unfortunately we are not seriously governed right now. Governance is flakey in this country. How you start out with the idea we can make a gift of one and a half trillion to the super rich for the heck of it is really shocking.

“I’ve never seen anything like this in being part of and watching policy in this country for three and a half decades.”

Nina Turner Contributes To What’s At Stake: Healthcare For All

Posted on November 20, 2017

Free Speech TV (FSTV) and Manhattan Neighborhood Network (MNN) co-hosted a “health care for all” town hall, led by veteran journalist Laura Flanders and produced by Globalvision. “What’s at Stake? Health Care for All” features a panel of experts who discuss single payer health care options. Featured panelists include:

Joshua Holland, Contributing Writer, The Nation
Nina Turner, President, Our Revolution, Founding Fellow, The Sanders Institute
Donna Smith, Executive Director, Progressive Democrats of America

US Must Transition To Low-Carbon Energy

Posted on November 20, 2017

Energy is the lifeblood of the economy. Without ample, safe, and low-cost energy, it is impossible to secure the benefits of modern life. For two centuries, fossil fuels — coal, oil, and natural gas — offered the key to America’s and the world’s growing energy needs. Now, because of global warming, we have to shift rapidly to a new low-carbon energy system.

President-elect Donald Trump has vowed to resurrect coal, promote gas fracking, and restart the Keystone XL pipeline project to bring Alberta, Canada’s oil sands to market. He won’t get far. Today’s low world prices of oil, coal, and gas reflect the fact that newly installed power generation and vehicles worldwide are shifting decisively to low-carbon energy.

The world has far more fossil fuel reserves than can be safely used. Many will stay in the ground, forever. Saudi Arabia, not Alberta, is the low-cost oil supplier. Investors in a resurrected Keystone would go broke, as have investors in coal. Wall Street figured this out long ago.

Nonetheless, Trump may well try to resist the tide at the start. In that case, climate change would quickly become his biggest controversy, costing decisive political capital as the climate debate engulfs his nominations, undercuts America’s diplomacy, and stymies infrastructure plans as well. The US government would be challenged in courts across the country. We are not back in 2001, when George Bush pulled out of the Kyoto Accord. Now the entire world, not just a group of high-income countries, has signed on to climate action.

What’s also clear is that climate change, together with mega-student debt and the loss of entry-level jobs to robots, will trigger a millennial revolt. Twenty-five-year-olds starting out in the workforce, and 35-year-olds with young children, are not going to settle for a septuagenarian president repeating climate falsehoods and squandering their future.

While the president-elect and a few self-serving coal and oil executives might still pretend that climate change is overblown, the rest of the world knows better. For 120 years, scientists have known that burning fossil fuels adds to the carbon dioxide in the atmosphere and thereby warms the planet. Last year was the warmest year since record keeping began, in 1880, and 2016 will be warmer than 2015. Around the world, people observe and suffer the consequences.

For this reason, every nation in the world, including the United States, agreed in Paris, in December 2015, to shift to a low-carbon energy system. The Paris Climate Agreement went into force this month. The global agreement aims to keep human-caused global warming to “well below 2-degrees Celsius” (3.6 degrees Fahrenheit) and to aim for no more than 1.5-degrees Celsius (2.7 degrees Fahrenheit), all measured relative to the earth’s temperature at the start of the fossil-fuel era (around 1800). The warming of the earth up to 2016 is already around 1.1 degrees Celsius, more than halfway to the globally agreed upper limit.

Climate scientists have come up with a tool called the “carbon budget” to guide us back to climate safety. Roughly speaking, the earth’s warming is proportional to the cumulative amount of fossil fuels burned or carbon release into the atmosphere by cutting down forests. To have a “likely” (that is, two-thirds) probability of staying below 2-degrees Celsius warming, humanity has a remaining carbon budget of around 900 billion tons of CO2.

To put the remaining 900 billion tons into context, the world as a whole is currently emitting around 36 billion tons of CO2 into the atmosphere each year. At the current rate of fossil fuel use, the world therefore has only about 25 years remaining to stay below 2-degrees Celsius, with a two-thirds probability (and still a hefty one-third chance of exceeding 2-degrees C). The key is an energy “transplant” that replaces coal, oil, and gas, with zero-carbon energy such as wind and solar power, or that combines the continued use of some fossil fuels with technologies that capture CO2 and store it safely underground (known as carbon-capture and storage, or CCS). Such an energy transplant may seem impossible, but it’s actually well within reach, in fact underway.

Most of the key changes will hardly be noticed by most of us. Instead of driving a Chevy Malibu, with a gasoline-burning internal combustion engine under the hood, we will instead drive a Chevy Volt, with an electric motor under the hood. Instead of charging the Chevy Volt with the electricity currently generated by a coal-burning power plant, the power plant will instead use wind, solar, nuclear, hydroelectric, or some other noncarbon energy technology (such as CCS) to generate the electricity.

Forward-looking engineers have already given us a pretty good roadmap from fossil fuels to zero-carbon energy. There are three guidelines.

The first is energy efficiency. We need to cut back on excessive energy use by investing in energy-saving technologies: LED lighting rather than incandescent bulbs; smart appliances that do not draw energy when not in use; better housing insulation and passive ventilation that cut heating needs (and heating bills); and so forth.

The second is zero-carbon electricity. Depending on where you live, your power today is generated by a mix of coal, natural gas, nuclear power, hydroelectric power, and a bit of wind and solar power. By 2050, electricity should be generated entirely by noncarbon sources (wind, solar, hydro, geothermal, nuclear, tidal, biofuels, and others) or fossil fuels with CCS.

The third is called fuel switching. Instead of burning gasoline in the car, you would use electricity in its place; instead of burning heating oil to warm the house, you would use electric heating. For every current use of fossil fuel, we can find a low-carbon fuel substitute. Most of us would hardly notice the difference. The main thing we would notice is a slightly higher electricity bill and a vastly safer climate. But even the slightly higher costs are likely to be transitory. As producers slide down the learning curve, the costs of electric vehicles, industrial fuel cells, fourth-generation nuclear power plants, and solar grids are likely to fall significantly.

We’ll also enjoy the new low-carbon technologies more than we do today’s. Smart electric vehicles will not only be cleaner and safer but will also drive you to work while you read the morning news. The shift from coal to renewable energy and from gas-guzzlers to electric vehicles will clear the deep smog that now envelopes Delhi, Beijing, and other places now literally choking on their air. That’s why China politely reminded the United States this past week that the global climate agreement is here to stay.

The challenge is to make the energy transition quickly, seamlessly, and at low cost, without destabilizing the energy system or putting America’s industrial companies at a competitive disadvantage with enterprises in China, Mexico, and India. The beauty of the Paris Climate Agreement is that all countries are now in this effort together.

Is the energy transition worth it? Much of the transition will pay for itself, in the sense of cleaner air, better appliances, and better services. Yet some parts will require a small extra cost for essentially the same energy services, at least at the start.

But here’s a critical point to keep in mind. The last time the earth was less than 1 degree warmer than now (about 130,000 years ago, in a geological period called the Eemian), the ice sheets in Antarctica and Greenland had disintegrated to such an extent that the global ocean level was around 5-6 meters higher than today. Today’s small-island economies would disappear.

I’m not talking only about the Maldives and Vanuatu. Manhattan would be inundated, and Boston, too, would be mostly under water.

But the risks transcend the disasters facing New York City, Boston, New Orleans, and countless other low-lying cities around the world. Global warming has already destabilized food supplies in many parts of the world, and there is much worse ahead unless we undertake the energy transplant. Syria, to name just one case, experienced its worst drought in modern history between 2006 and 2010, leading to impoverishment, hunger, forced migration, and social instability that provided tinder for the war that broke out in 2011.

Many Americans understandably fear the job displacements that would hit today’s coal miners and oil roustabouts. Fortunately, the news on this front is reassuring. At latest count, the total number of coal miners in America is around 16,000, out of a labor force of 150 million. Total extraction workers in coal, oil, and gas combined is around 150,000, around 0.1 percent of the workforce. These workers, whose physical health is routinely crushed for corporate profits, can easily be compensated and retrained for much healthier work and better wages. Other workers in the fossil-fuel sectors — accountants, managers, programmers, and the rest — will be needed directly in the new-energy sectors and in other parts of the economy.

There are a few true economic “losers” in America’s energy transformation, and David and Charles Koch are perhaps among them. The Koch brothers own the largest private oil company in the world. In their narrow private interest, it might be better for them to defend their $100 billion oil industry investment and wreck the rest of the world. After all, they can afford to buy new property above the rising sea level. Yet even on that narrow and extremely callous calculus, uncontrolled climate change is certainly not better for the Koch family children and grandchildren, who would suffer dire consequences from their parents’ and grandparents’ selfish disregard for humanity’s needs.

Recent excellent work by my colleague Dr. Jim Williams and other energy specialists has charted the US energy transition to 2050. Just this week, the White House issued a superb United States Mid-century Strategy for Deep Decarbonization along the same lines. It turns out indeed that renewable energy, nuclear power, and carbon-capture and storage technologies offer a range of possible pathways to decarbonization. North America is blessed with vast stores of renewable energy, including solar power in the southwest, wind power in the Midwest and eastern seaboard, and vast hydroelectric potential in Canada. And if you don’t like nuclear power or CCS, it’s still possible to make the transition to low-carbon energy, but at a higher cost. (Not surprisingly, the costs rise a bit when options such as nuclear energy are taken off the table).

The bottom line of these scenarios is reassuring. According to Williams’s study, the cost of decarbonizing the US energy system is less than 1 percent of national income per year, perhaps much less. While one percent of GDP is not negligible, it will be a very small price to pay for global climate safety. Similar calculations, and similar bargains, will be the case for the energy transplant operation in other parts of the world. A few lucky places, with magnificent wind, solar, or hydroelectric power will find the incremental costs of zero-carbon energy systems to be negligible.

If the energy challenge is all so clear, why isn’t it happening? First, some part of the energy transformation is already underway, with a rise in deployments of wind and solar energy. Now that the climate risk is finally appreciated worldwide, the entire world is ramping up for energy-transplant surgery. The second is that powerful vested interests, including the Koch Brothers, ExxonMobil (until recently), and Peabody Coal told the American people lies about climate change for years and, even worse, funded the campaigns of politicians who have been willing to oppose climate legislation in return for campaign dollars.

And third, stunningly, because of the same lobbying pressures, long-term energy thinking has been largely blocked. The first step for Trump and Congress in January should be to call on the National Academy of Engineering to mobilize the great engineers across America to come up with a climate-smart energy strategy that makes sense for all regions of the nation. Then the president’s new infrastructure program would build the right kind of future.

The GOP Wants To Eliminate The Estate Tax. Let’s Use It To Expand Social Security Instead

Posted on November 15, 2017

Of the many giveaways to the super-rich in the Republican tax bill, the elimination of the estate tax stands out. This tax, the government’s most progressive source of revenue, does not affect 99.8 percent of Americans. Rather, it is paid by Republicans’ billionaire donors.

The United States has the largest number of billionaires in the world; their combined wealth is measured in the trillions of dollars. Perhaps not surprisingly, Republican politicians, whose campaigns the billionaires fund, want to repeal the estate tax, so the privileged children of those donors will be even richer. To use Donald Trump’s words, eliminating the federal estate tax is “a big, beautiful Christmas present” to super-privileged children — those born to multi-millionaires and billionaires.

Our nation is founded on the idea that we are created equal. The reality is that children of billionaires have many opportunities denied to the rest of us. Instead of making those children even richer and more privileged, here’s a better idea: If Republicans don’t want the revenue from that top 0.2 percent of wealthiest Americans to run the government, let’s dedicate it to Social Security and use it to expand those modest but vital benefits for everyone.

There are sound reasons for doing so. As a result of tax giveaways, the deregulation of Wall Street, and other policies favoring the rich, we have seen enormous wealth redistributed upwards to the most affluent Americans over the last thirty-five years. Meanwhile, the rest of us have been running in place or, worse, falling behind.

Rising inequality is a key driver of the retirement income crisis facing our country. It’s all but impossible for working- and middle-class families to prepare for retirement when nearly all of the income gains are going to the wealthiest 1 percent of the population.

Inequality is also a major factor behind Social Security’s projected modest funding shortfall. The vast majority of workers contribute to Social Security with every paycheck, but when their wages are stagnant, so are their Social Security contributions. The percentage of wages paid as current cash compensation has also declined sharply as health insurance has accounted for a bigger and bigger portion of employee compensation.

Meanwhile, the bulk of income gains captured by the wealthy either fall above Social Security’s maximum earnings contribution cap (currently $127,200), or are unearned income on which they do not pay Social Security contributions.

Since the earnings of high-income workers have increased much more rapidly than the average in the last several decades, Social Security now covers only about 82 percent of all wages. In 2016 alone, those at the top paid $80 billion less to Social Security, only because the cap has slipped from covering 90 percent of wages, as Congress intended, to 82 percent today. Those are billions of dollars that should have gone to Social Security but instead stayed in the pockets of the wealthiest among us. Unquestionably, the richest are not paying their fair share into Social Security.

The idea of scrapping the cap – eliminating the annual limit on wages subject to Social Security – is one that most Americans favor. Congress should do this. But that simply requires the wealthy to pay the same rate on earned income as everyone else. Most of their wealth is in stocks and other unearned income, which is currently shielded, so that none of it goes to Social Security.

Given the role of wealth and income inequality in creating both the retirement income crisis and Social Security’s modest shortfall, it is only fair that billionaires contribute more. Opponents of the federal estate tax like to call it a death tax. But what could be more generous than to only tax the billionaires’ wealth once they are dead and gone?

Isn’t it more than fair that their heirs, who had nothing to do with creating the wealth, receive most of it, but not every single penny of it? Isn’t it more than fair that a small piece of all that wealth go to the rest of us, without whom that wealth would never have been amassed?

After all, that wealth would have been impossible without the highways, courts, military, and other expenditures all of us paid for through our taxes. Requiring the very wealthiest Americans to forgo a portion of their fortune — on a one-time basis, only after death — to improve the economic security of all seems a reasonable minimum to require of those who have benefited so greatly from America’s commonwealth (i.e. common wealth).

The idea of a tax on inherited wealth goes back to our country’s founding. This is not surprising. After all, our founders were rebelling against the British king and aristocracy, against inherited wealth and position.

Thomas Paine, famed as the author of Common Sense, also wrote Agrarian Justice, in which he advocated an estate tax. He argued that it should be used to pay for pensions for older Americans and people with disabilities. We have caught up to part of Thomas Paine’s vision by creating our Social Security system. Now, it’s time for us to catch up to the financing part.

The late Robert M. Ball, the longest serving Social Security commissioner and widely recognized as the foremost expert on our nation’s Social Security system, dedicated his life to protecting and expanding the program. Like Thomas Paine, he believed that the estate tax should be dedicated to Social Security.

[The best alternative is to propose] that the estate tax be dedicated to Social Security and used to expand benefits for everyone.

That would be in keeping with the wisdom of founder of the nation, Thomas Paine, and founder of Social Security, Robert Ball. Dedication of the estate tax to Social Security while increasing its benefits would begin to combat income inequality and address our looming retirement income crisis.

New Medicaid Work Requirements Will Deny More Care

Posted on November 14, 2017

Having failed to repeal the expansion of Medicaid under the Affordable Care Act, the Trump Administration wants to open the door for states to dismantle this essential safety net program by allowing them new ways to deny care.

Specifically, CMS Administrator Seema Verma said last week, “State[s] will be encouraged to promote work requirements for Medicaid recipients.” And Verma went further, challenging opponents to this requirement for their “soft bigotry.” Is she trying to pre-empt arguments that this requirement smacks of the racist “welfare queen” meme of the Reagan administration?

The idea here is that we need to impose more barriers to health care and if we don’t impose those barriers, somehow we’re bigots. It’s Orwellian logic applied to health care. Like in the ACA repeal debate, the administration has got everything backwards. Less is more to them. Denial of care equals access to care. This approach has nothing to do with the reality that people face when trying to get the care they need.

Under this proposal, states would be able to set work requirements, or what Verma calls “community engagement” requirements. If someone does not fulfil those requirements, states could limit or eliminate their Medicaid eligibility. In addition, it signals that there are other waivers that the Obama administration had declined that the Trump administration may very well approve. That is, waivers that would impose additional barriers to care. These include:

Capping the years that you can be on Medicaid;
Limiting the access to individuals who make no more than 100% of the federal poverty level, (currently the requirement is states have to cover through 138% of federal poverty level);
Basing eligibility on drug screening;
Income premiums that people wouldn’t be able to afford.

These waivers reduce access to care but also reduce spending by the states. The specific “community engagement,” requirement, could be very onerous. It is also unnecessary. The work requirement is based on the false idea that we’ve got people just lying around getting their Medicaid and not working. According to a report in the New York Times, 59 percent of able-bodied people on Medicaid now already work. 78 percent of all Medicaid recipients are in households where somebody works. It’s a so-called solution in search of a problem.

But at least they will have “hope.” Seema Verma asserts that “we owe our fellow citizens more than just handing them a Medicaid card. We owe a card with care. And more importantly, a card with hope.”

Real hope would come from expanding Medicaid in those states where millions have no healthcare coverage. Or from eliminating the private HMO’s within Medicaid that take money from patients and providers to deliver profits to the home office, bonuses to top executives, and dividends to shareholders. Real hope would come from addressing the structural barriers to employment that create poverty.

Many of the states that are seeking these kinds of waivers are heavily rural, like Indiana, where Ms. Verma perfected the art of privatization, and where jobs are few and far between. Let’s address the structure of the US economy that limits job opportunities, that keeps people in poverty through lack of good living wage jobs.

An approach based on hope and care would address those structural problems in the economy before essentially blaming the individual for the fact that jobs are not available in their communities. In fact, unemployment is a problem that increases health risks. That people are voluntarily or for generations by their own choosing unemployed is of course a tenet of conservative dogma, but it bears no relationship to what working people in this country actually experience, and have experienced for decades.

Sadly, Ms. Verma’s home state of Indiana restricted access to HIV prevention and drug treatment, and has now seen an opioid and HIV epidemic sweep through parts of the state. They’re now lecturing the rest of the country based on the same conservative dogma on how to organize access to health care. It’s ironic, it’s perverse and it simply won’t work.

In contrast to the supporters of these new requirements among conservatives in state legislatures — who just want to cut spending on the poor and give tax cuts to the rich–voters in Maine and elsewhere have expressed strong support for expanding Medicaid. Health care was the top issue in the recent Virginia election, and they voted for the candidate who favored Medicaid expansion.

In the last year, Medicaid has become newly popular, a sign of the desperation of people, particularly low income workers, who literally have no other option to get health care. And for disabled people it is literally a matter of life and death. Medicaid is our healthcare safety net and this so-called work requirement, along with others, aims to shred it.

We cannot stand by and allow these new ways to deny care. There will likely be lawsuits and rightly so. In the case of the Roberts decision that limited the Medicaid expansion under Obamacare, such expansion has been left up to the states. That doesn’t mean that the states should be free to simply impose requirements that have nothing to do with legitimate eligibility. Medicaid is too important a program to be exploited by a conservative social engineering agenda to punish out-of-work poor people in an economy that doesn’t provide enough jobs – much less jobs that pay a living wage. Rather, Medicaid is a program to make sure that we have a basic level of care in this country.

Stories Of Service And Sacrifice By Our Nation’s Veterans

Posted on November 11, 2017

Veterans Day is special to me. It’s a day when I often get to spend time with fellow veterans from many different generations, share stories, and remember our brothers and sisters who never made that long trip home. We will never forget.

Senator Mazie Hirono and I worked together for years on legislation that finally awards the well-deserved Congressional Gold Medal to World War II Filipino veterans—legislation that Barack Obama signed into law as one of his final acts as president. Last month, Mazie and I welcomed many of these veterans to the US Capitol, where we presented this long-overdue recognition to heroes like Sixto Tabay, the last living WWII Filipino veteran on Kaua?i, and around 200,000 others who served.

Recently, I hosted a screening of the film “Go for Broke: Origins” at the US Capitol in honor of the 100th Infantry Battalion / 442nd Regimental Combat Team, units created in the aftermath of the attack on Pearl Harbor, which were made up of young Japanese-American men who volunteered to serve in the US Army, despite facing bigotry and prejudice as their families and loved ones were thrown into internment camps. Our late Senator Daniel Inouye is featured in the film as a young man who volunteered to fight for freedom alongside thousands of others. Through their courage, valor, and sacrifice, the 442nd became the most highly decorated unit in Army history.

I could share so many stories of the courage and sacrifice displayed by the men and women that I had the privilege of serving with during my deployments to the Middle East. People of all walks of life—different religions, races, political ideologies, and more—all setting aside differences and coming together with one common goal: service to our country.

It is this selflessness by our nation’s veterans that should inspire us all this Veterans Day—and every day. They have shown us through their example and their lives what ‘service and sacrifice’ really means, and how we can all find ways to set aside our own differences, respect and treat each other with aloha, and work together for the good of our communities, our country, and humanity.

Today, let us reflect on how we can honor our nation’s veterans by living aloha and being of service in our own lives.