Six on History: "our" Economy
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"If you’re curious about what the bare-knuckled exercise of political power by special interests looks like, go no further than the torpedoing of Sarah Bloom Raskin’s nomination to a high post at the Federal Reserve.
Raskin withdrew her nomination by President Biden to be the Fed’s vice chair for supervision on Tuesday.
No, Raskin’s nomination was killed by the fossil fuel industry and its caucus in the Senate.
The final decisive blow was delivered on Monday by Sen. Joe Manchin III (D-W.Va.), who said that she had “failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy to meet our nation’s critical energy needs.”
Manchin is the founder of Enersystems, a coal brokerage now being run by his son. His holdings of Enersystems stock, according to his latest Senate disclosure statement, come to as much as $5 million and his income from the company in 2020, the latest year reported, was at least $500,000 and as much as $1 million.
Manchin has been a sedulous supporter of the fossil fuel industry. That may not be strange for a senator from a coal-producing state like West Virginia, but his political positions haven’t always reflected the interests of the coal miners who are his constituents.
In December, when Manchin’s opposition doomed a version of Biden’s Build Back Better program, the head of the United Mine Workers urged him to reverse course because the program included several provisions that “will help keep coal miners working, and have a meaningful impact on our members, their families, and their communities.” It didn’t work.
But Manchin is a favorite of fossil fuel managements. He’s the leading recipient in the Senate of oil and gas industry contributions, collecting nearly $743,000 in the current election cycle, nearly five times as much as the runner-up, James Lankford (R-Okla.).
For another window into the devotion of Manchin’s family to the public interest, remember that Heather Bresch, whose decision as CEO of the drug company Mylan to jack up the price of its EpiPen, a life-saving anti-allergy medical device, by nearly 500% bathed her and the company in infamy, is Manchin’s daughter.
Bresch retired from Mylan in 2020 when the company merged with Upjohn to create a new company named Viatris. It must be just a coincidence that Mylan was one of Manchin’s top campaign contributors throughout his career, donating more than $358,000 from 2009 through 2018 to him and his political action committee. In the 2020 election cycle, Viatris added another $80,425 to the total.
No one could say Manchin doesn’t deliver value for money. At the CERAWeek industry conference on March 11, Manchin disdained electric vehicles, the proliferation of which is a key to reducing the West’s reliance on oil.
“I’m very reluctant to go down the path of electric vehicles,” Manchin told attendees. “I’m old enough to remember standing in line in 1974 trying to buy gas — I remember those days. I don’t want to have to be standing in line waiting for a battery for my vehicle, because we’re now dependent on a foreign supply chain, mostly China.”
He also dismissed the idea of the government funding electric vehicle charging stations, another element of Biden’s proposed program. “I’ve read history, and I remember Henry Ford inventing the Model T, but I sure as hell don’t remember the U.S. government building filling stations,” he said. “The market did that.”
Raskin’s nomination isn’t the first target of an industry campaign against a Biden nominee.
Since last summer, an industry coalition has held up the confirmation of David Weil, a pro-union scholar and former official of the Department of Labor, who has been nominated to return to the agency. As we reported, industry lobbies assert that Weil’s advocacy of worker rights makes him “unfit” to regulate labor-management relations.
Big corporations including Amazon and Meta Platforms (formerly Facebook) have also sought to weaken Lina Kahn, chair of the Federal Trade Commission, who is overseeing FTC investigations of their operations.
The fossil fuel industry’s distaste for Raskin derives from her view that financial regulators must incorporate global warming costs into their calculations of the safety and soundness of the institutions under their jurisdiction.
“These costs are no longer theoretical or far off,” Raskin wrote in September. “They are here now, and though they are being shouldered across the board, the people who feel them most intensely have less access to information, work outdoors, or live in insufficiently protective conditions. Those who cannot easily relocate or afford sufficient property and casualty insurance are increasingly vulnerable.”
She added, “Despite these growing costs, U.S. financial regulators have yet to show that they are thinking creatively about potential solutions.... All U.S. regulators can — and should — be looking at their existing powers and considering how they might be brought to bear on efforts to mitigate climate risk.”
In other rich countries, she observed, “policies and processes are being reimagined to accelerate a rapid, orderly, and just transition to a renewable, biodiverse, and sustainable economy.”
Raskin, who since leaving the government in 2017 has been a professor at Duke Law School, repeated these observations upon her withdrawal.
To her credit, she did not go quietly. She withdrew with a candid, scorching and utterly truthful letter to Biden blaming the death of her nomination on “relentless attacks by special interests” objecting to “my frank public discussion of climate change and the economic costs associated with it.”
Raskin noted that the assessment of the risks of extreme weather driven by global warming have become routine — indeed, imperative — for banks and insurers, farmers and businesses and central banks across the world. “Any vice chair for supervision who ignored these realities,” she wrote, “would be guilty of a gross dereliction of duty.”
Instead of engaging in an informed discussion about the issues, Raskin said, Senate Republicans boycotted committee votes to advance not only her nomination, but those of four other Fed nominees, including reappointments of Fed Chair Jerome Powell and board of governors member Lael Brainard.
One would have some respect for industry’s campaign, marginally, if it dealt candidly with its real issues. It didn’t. Instead, Raskin’s opponents ginned up a scandal by suggesting she had used her influence as a former Fed official on behalf of a financial company on which she served as a director. The assertion was debunked by the Fed.
"U.N. General Assembly resolutions feel good. Twitter hashtags are nice. Cutting off corporate services is better than the alternative. But the situation on the ground in Ukraine demonstrates that, at the end of the day, nothing is as helpful to the Ukraine national cause as Javelin missiles.
There is a drastic imbalance between soft power and hard power in Ukraine. The Ukrainian resistance has all of the former — a righteous cause, an inspiring leader, the support of most of the world — and Russia has a preponderance of the latter.
One lesson for the U.S. should be obvious: We need more and better weapons for a newly threatening security environment.
Russia’s aggression underlines the potential of the U.S. having to fight simultaneous wars in Europe and Asia, to defend NATO and to stave off a Chinese attack on Taiwan or elsewhere, when our forces currently may not be adequate to winning one fight.
Just as the new era of great power competition was aborning, we decided to drastically reduce defense spending. From fiscal years 2010-15, we cut defense spending from $794 billion to $586 billion (in terms of constant 2018 dollars).
Readiness took a hit and so did modernization. During these years, the Army and the Navy declined to their lowest end-strength, or number of active-duty personnel, since before World War II, and the Air Force shrank to the smallest it had been since its inception in the immediate aftermath of World War II.
An increase in spending in the first years of the Trump administrative relieved some pressure but was hardly transformative. In fiscal years 2020 and 2021, spending actually fell in real terms.
This is not a prudent posture for deterring, let alone fighting and defeating should it come to that, two ambitious and cynical revanchist powers. In war games conducted by U.S. analysts, Russia and China [and Afghanistan] routinely defeat us.
As the National Defense Strategy Commission explained in 2018, “These two nations possess precision-strike capabilities, integrated air defenses, cruise and ballistic missiles, advanced cyberwarfare and anti-satellite capabilities, significant air and naval forces, and nuclear weapons — a suite of advanced capabilities heretofore possessed only by the United States.”
Biden signed a $770 billion defense bill into law for 2022 after Congress bumped up his initial request by $25 billion. [More than the combined spending of countries 2-11 on the world's war spending ranks] The next defense budget should be north of $800 billion, and we should be headed toward $1 trillion.
We’ll need to adjust to the new threats. The Army doesn’t necessarily need to be larger. It needs different tools, including many more anti-air and anti-missile capabilities to protect its bases and tank brigades, and more of it will have to be deployed in Europe.
The Air Force should put an emphasis on long-range, stealthy planes to stay out of range of enemy missiles.
The Navy will have to be much larger, more like 500 ships than the current 296. The Navy’s shipyards, which currently fail to keep up to the task of repairing our submarines, desperately need to be upgraded.
We should push hard for continued technological advance in our long-range, high-precision missiles, and ensure that we have the surge capacity to replenish the supply in crisis.
The nuclear force has to be modernized, both the triad of bombers, intercontinental ballistic missiles and submarines and the underlying infrastructure.
Finally, we must focus on innovation in cutting-edge areas such as space, cyber, artificial intelligence, quantum computing and directed energy, once the stuff of science fiction but now potentially decisive in a future war.
Abraham Lincoln put it well in an 1862 message to Congress. “As our case is new, so we must think anew, and act anew.” And, we should add, when ensuring that we don’t lose our military edge, spend anew."
Rich Lowry is the editor of National Review.
The federal data (for technical reasons) excludes traditional company pensions, which have been increasingly replaced by “defined contribution” plans like 401(k)s and 403(b)s that shift the savings burden from employer to employee. And while that shift may account for some portion of the chasm in savings, the vastness of today’s retirement wealth gap is largely the result of a string of Wall Street–backed tax incentives that have been a mother lode for the rich but of little use to the poor. Based on the SCF results, Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, calculated that the average family in the bottom half of the wealth spectrum held just $6,900 in retirement savings, including individual retirement accounts (IRAs), while the wealthiest 10 percent of families averaged $861,300.
Embedded in each of these “exceptionally confusing” retirement bills are “Easter eggs: big giveaways to the retirement industry and to high-net-worth individuals.”This 125-to-1 disparity is astonishing, considering the vast amount of revenue tax collectors give up in the name of helping families build their nest eggs. Retirement-related incentives will cost a total of $1.9 trillion from 2020 to 2024, according to the congressional Joint Committee on Taxation (JCT), making them the US government’s single biggest tax-related expense—more than twice the $1.85 trillion price tag of the 10-year Build Back Better plan that Sen. Joe Manchin rejected in December, and more than the cost of federal tax breaks for dependents, charitable donations, and capital gains combined. “It’s unbelievable the amounts of dollars at stake, and how tilted they are to the high end,” Rosenthal says. “It’s just staggering.”
Politicians on both sides of the aisle tout these annual subsidies—which have ballooned from an inflation-adjusted $145 million in 1996 to roughly $380 billion today—as tools to help ordinary families save. In reality, a series of bipartisan bills enacted over the past quarter century has exploded the savings gap and made the rich richer. “These retirement reform packages are exceptionally confusing and technical and long and really hard for anyone to sort out,” says Rosenthal, a former JCT attorney. “But embedded in every one are Easter eggs: big giveaways to the retirement industry and to high-net-worth individuals.”
Crafted under the watchful eye of finance lobbyists, some bills have included provisions aimed at giving more low-income workers access to retirement plans. But access is meaningless for people who have no money to spare. Take Weiss, an elementary school registrar who has held low-salary jobs in education for more than 25 years. She worked 15 years for a public school district with a mandatory state-sponsored retirement plan, eventually accumulating more than $65,000. But in 2010, Weiss was laid off—longtime staff went first, she recalls. When she later landed a job with a charter school, she was knocked back down to entry-level pay and had to burn through her savings. ... "
Savings plans pitched as helping the middle class have turned out to be a gold mine for the wealthy.
"The central issue in health care can be summed up in one word: Control. And not just controlling costs, which is how the issue has been cast by the politicians and lobbyists in Washington. Indeed, if controlling cost is the primary goal, HMOs are miserable failures. We do need to control waste, fraud and excesses — like more million-dollar MRI machines than we really need — but the bottom line is that good health care for Americans is going to be costly... but worth it.
A key measure of our success as a society is whether our fabulously wealthy nation is going to devise a system of providing good care for all. It's a worthy expenditure; just ask Canadians and people in the European nations that pay a lot in taxes for their systems but get excellent coverage in return. Their systems enjoy phenomenal approval by the populace.
We pay even more than they do when you add our health-care tax dollars to the billions in annual premiums and out-of-pocket costs we pay — yet we get poor coverage, and the system is about as popular as COVID-19.
"The entire medical enterprise exists for the benefit of patients. This principle, honed over several millennia, is now being undermined by a system where the central aim is to maximize profits," said Dr. Bernard Lown, winner of the 1985 Nobel peace prize and former chair of the Committee to Defend and Improve Health Care.
The first step is to reject the insidious notion that health care is an industry. It's not. It's a basic human need.
The system will not improve unless there is democratic control of this basic need, which means something akin to Canada's single-payer system, in which patients come first. Neither a corporate nor a government bureaucracy runs the system there; patients go to their own doctors and get the treatment they need. The role of the government is to collect the taxes and pay the bills (making it the "single payer" in the system), which reduces administrative costs.
Paul Ellwood, who coined the term "HMO" and founded the pro-business Jackson Hole Group, startled a Harvard audience by saying that "government intervention" is needed to improve the quality of health care. Motivation to improve the quality of care "is not going to come from within" the system, he said. "Market forces will never work to improve quality, nor will voluntary efforts by doctors and health plans."
Washington is not going to push meaningful reform, because both parties are mired in the corrupting muck of corporate campaign money. Democratizing health care requires the kind of grassroots rebellion that is already moving in various cities and states where citizens are pushing their own initiatives to put people in charge of the system. The good news is that the people are ready for the rebellion."
