Gems in the Inflation Reduction Act

 Thus Manchin-Schumer bill has lots of good things in it.

The nonpartisan Committee for a Responsible Federal Budget estimates that the bill would put about $385 billion into combating climate change and bolstering U.S. energy production through changes that would encourage nearly the whole economy to cut carbon emissions. With the planet rapidly warming, Schumer and Manchin say the bill would reduce carbon emissions by roughly 40 percent by 2030, close to President Biden’s goal of cutting U.S. emissions by at least 50 to 52 percent below 2005 levels by 2030. Manchin also emphasized that it would spur American energy independence more broadly, including by encouraging natural gas, as the war in Ukraine has exposed domestic reliance on petrostates’ fossil fuel production.

The bill uses two main levers: major new incentives for private industry to produce far more renewable energy, and other incentives for households to transform their energy use and consumption. Democrats say this second set of incentives will also offer immediate consumer relief for the higher energy prices that have bedeviled the Biden administration.

The agreement would also raise roughly $470 billion through new tax provisions, the budget group estimates — the biggest of which will fall on the country’s large corporations.

But it would still raise taxes significantly, and it would give the badly underfunded Internal Revenue Service its biggest budget increase in its history.

“This would certainly be the biggest corporate tax increase in decades,” said Steve Wamhoff, a tax expert at Institute on Taxation and Economic Policy, a left-leaning think tank. “We’ve had decades of tax policy benefiting the rich, but this is really the first attempt to raise revenue in a progressive way that would begin to combat wealth and income inequality.”

On health care, Democrats campaigned in 2020 on major changes, and this deal fulfills two major pledges: Allowing Medicare to negotiate the price of prescription drugs, and making health care more affordable for millions of Americans

Read the article for more juicy details.

A Cautionary Tale

 The balance sheet of the fracking industry holds lessons for big clean energy investments.

From 2006 to 2014, fracking companies lost $80 billion; in 2014, with oil at $100 a barrel, a level that seemed to promise a great cash-out, they lost $20 billion. These losses were mammoth and consistent, adding up to a total that “dwarfs anything in tech/V.C. in that time frame,” as the Bloomberg writer Joe Weisenthal pointed out recently. “There were all these stories written about how V.C.s were subsidizing millennial lifestyles,” he noted on Twitter. “The real story to be written is about the massive subsidy to consumers from everyone who financed Chesapeake and all the companies that lost money fracking last decade.”

At the risk of oversimplifying the never-ending complexities of energy, there is a climate lesson here — a clear contrast to draw. Fracking was nothing less than a genuine energy transition, enacted quite rapidly and at enormous upfront expense with only speculative paths to real profit, requiring large-scale infrastructure build-outs against some cultural and political resistance and yet celebrated all the while as a product of irrepressible capitalism, the almost inevitable result of the never-ending appetite Americans have for cheap energy. And yet for a decade, as fracking boomed, Americans were told again and again — and not just by climate deniers — that rushing a green transition would be too expensive, imposing a huge burden on taxpayers, who would be footing the bill to subsidize and support a renewable build-out that couldn’t possibly be justified in terms of market logic or demand. For those exact same years, though middlemen profited off fracking, sector-wide losses mounted. “The industry, you know, it destroyed a lot of wealth,” Jeffrey Currie, the head of commodities research at Goldman Sachs, said recently. “Like 10 to 20 cents on every single dollar. I think the number is actually closer to 30 cents on every dollar.”

The contrast raises a basic question: What does it mean to call one form of energy “expensive” or to say that transitioning to another would “cost too much”? Put another way: Why did the country decide it was OK to lose money on one kind of energy but anathema to lose it on another?

The question is a purposefully naïve one, of course, eliding some important differences. It’s true that the “subsidy” to fracking has come primarily from private markets and investors, not from public handouts designed to produce a particular energy-balance outcome. Measured by benefits to consumers, fracking has been a sort of bonanza. And it’s also true that renewables have received their fair share of investor support, on top of the tax subsidies and R. & D. money that came out of the 2009 Recovery and Reinvestment Act; in fact, clean tech has enjoyed its own speculative boom years lately. But at the level of policy and public discourse, we spent a decade applying an intuitive market test to green energy — remember the right-wing furor over the bankruptcy of the solar company Solyndra? — even as the dirty alternative boom was itself flailing, quarter after quarter, producing billion-dollar bankruptcy after billion-dollar bankruptcy.

the viability of green energy creation has never been greater. The International Energy Agency has declared solar photovoltaic power “the cheapest electricity in history,” and a huge majority of the world’s population lives in places where renewables are already more affordable than power from fossil fuels. Those triumphs are a result of an astonishing decade-long, investment-powered decline in the cost of solar, wind and battery power: Between 2010 and 2020, the cost of solar power fell 90 percent, and the cost of wind and battery power fell nearly as much. In June, the International Energy Agency announced that global investment in clean, green and renewable technologies had exceeded investment in fossil fuels for the first time, accounting for more than $1.4 trillion of the total global investment of $2.4 trillion.

These advances have come despite, not because of, the major oil and gas companies, which are currently contributing less than 5 percent of all investment into clean tech — even as their net income, according to the International Energy Agency, is projected to more than double in 2022 to a staggering $4 trillion. And the United States too is sitting largely on the sidelines: For example, in 2004 the country sold 13 percent of all photovoltaic cells worldwide, but in 2021 that figure had fallen to less than 1 percent, even as China’s share has grown to nearly 80 percent now. 

Learning not to depend on the courts

 Niko Bowie explains what to do when the courts ignore reason.

To reverse this week’s court decisions we need national laws. To enact national laws we need political power. To build political power we need to collectively commit not just to the biannual ritual of voting, but also to the day-to-day grit of organizing the people around us.

In contrast with legal liberalism, organizing is a theory of change that doesn’t trust people atop hierarchies to share our values. Rather, we must build our relationships with one another into the disruptive leverage necessary to compel skeptics to follow our lead.

The labor movement is currently perfecting the art of organizing, whether structure-based or momentum-driven. Its tactics aren’t new but modeled after histories of working women, people of color & abolitionists who built political power with strikes & boycotts, not just lawsuits.

Libraries document specific strategies ordinary people have used to change legal structures worse than today’s: books like @rsgexp ’s No Shortcuts, Marshall Ganz’s Why David Sometimes Wins, Frances Fox Piven’s Challenging Authority, and Barbara Ransby’s biography of Ella Baker.

This is the “history and tradition” we should cultivate. The major question for the left is not how to persuade Justice Kavanaugh or Senator Manchin to listen, but how to persuade our neighbors and coworkers to commit to collective action.

Fighting the Myths

 Paul Krugman gives a rundown of major right-wing myths and the counterfactuals.

On the domestic violence front, a study by the Anti-Defamation League found that 75 percent of extremist-related domestic killings from 2012 to 2021 were perpetrated by the right and only 4 percent by the left.

Finally, about B.L.M.: The protests were, in fact, overwhelmingly peaceful. Yes, there was some arson and looting, with total property damage typically estimated at $1 billion to $2 billion. That may sound like a lot, but America is a big country, so it needs to be put in perspective.

Here’s one point of comparison. Back in April, Greg Abbott, the governor of Texas, pulled a political stunt at the border with Mexico, temporarily imposing extra security checks that caused a major slowdown of traffic, disrupting business and leading to a lot of spoiled produce. Total economic losses have been estimated at around $4 billion; that is, a few days of border-security theater appear to have caused more economic damage than a hundred days of mass protests.

To take one measure, I can’t think of any prominent Democrats — actually, any Democratic members of Congress — who have expressed admiration for any authoritarian foreign regime.

This is in contrast to widespread conservative admiration for Hungary’s Viktor Orban, who recently denounced other Europeans for “mixing with non-Europeans” and declared that he doesn’t want Hungary to become a “mixed-race” country.

It’s true that violent crime rose during the pandemic, but it rose about as much in rural America as it did in urban areas. And despite that recent rise, violence in many cities is far lower than it was not long ago.

In New York City, homicides so far this year are running a bit below their 2021 level, and in 2021 they were 78 percent lower than they were in 1990 and a quarter lower than they were in 2001. As Bloomberg’s Justin Fox has documented, New York is actually a lot safer than small-town America. Los Angeles has also seen a big long-term drop in homicides, as has California as a whole. Some cities, notably Philadelphia and Chicago, are back to or above early 1990s murder rates, but they’re not representative of the broader picture.

Treatment for Diabetes

Diabetes breakthrough restores insulin production using existing drug

Australian scientists have demonstrated a new way to restore insulin production in pancreatic cells, using a drug that’s already approved for use in humans. The study could mark a major breakthrough towards new treatments for diabetes.

In principle, a single course of this kind of drug over a few days could replace the need for regular insulin shots in diabetics.

The new treatment would work much faster, within a matter of days, and without the need for surgery. But perhaps the biggest advantage is that GSK126 is already approved by the US FDA and elsewhere in the world as a treatment for cancer. Its safety profile is already being assessed in clinical trials, which could reduce hurdles down the road for its use against diabetes.

That said, the scientists caution that it is still very early days. These experiments were conducted on cells in culture – not even in animals yet – so there’s still plenty of work to do. Nevertheless, it remains an intriguing new possible tool.

Turning the Tables

 California governor signs firearms bill modeled after the Texas abortion law.

California Gov. Gavin Newsom on Friday signed a bill into law that allows private citizens to bring civil action against anyone who manufactures, distributes, transports or imports assault weapons or ghost guns, which are banned in the state.

Big Players in Greenhouse Gases

A study from the University of Waterloo finds the biggest polluters in the world. 

The study found that the top 10 most influential actors, including investment advisors, governments, and sovereign wealth funds from around the world, own 49.5 per cent of potential emissions from the world's largest energy firms.

"If they're serious, capital markets can enable a low-carbon transition within the top coal, oil and gas reserve owners in the world," said Dordi. "Recent pledges to reduce carbon exposure in investment portfolios and engagement with the fossil fuel industry indicate we may already be moving in that direction."

The paper outlines specific ways these 10 governments and private investment advisors can make changes that will have a transformative impact in the fight against climate change. Some recommendations include public disclosure of a scheduled phase-out of fossil fuel financing, an assessment of a portfolio's exposure to climate risk in a 2°C world, and an alignment of investment portfolios with a 1.5°C scenario.

Winning Back the Workers

 Bryan Stryker has some thoughts.

To win these voters back, Democrats have got to do more to demonstrate that we are putting American workers first, starting with taking on outsourcing and bad trade deals. Democrats in Congress are taking small steps — like prioritizing the passage of a bill that will support the semiconductor industry and help make the United States more competitive with China — but there is much more we, as a party, can do, both in our actions and in our words.

Democrats can focus on three things. First, we need to talk about the work we’ve done to rebuild America — for example, through the infrastructure bill, which has engaged construction in places all over the country. Making things in America is not just a so-called Rust Belt issue, it’s an American-voter issue. People are getting hammered by inflation, and when they can afford something, it’s often back-ordered or plain out of stock. There are no easy answers to inflation, but voters want to hear that Democrats see it as the big problem that it is. And voters everywhere want to bring supply chains home, if possible, so Americans can build things in states all over the country.

Second, Democrats should continue to push legislation that helps the working class, particularly in building things — and point out how it will make a difference in people’s lives. The White House’s Buy American executive order and the American Rescue Plan help make sure that American companies get first crack at any contract funded by American taxpayers. That means jobs and income. We should immediately pass some version of the China competitiveness bill that brings critical supply lines like semiconductor production back to America, invests in American manufacturing, takes on China’s intellectual-property theft and illegal subsidies and expands worker training.

Democrats can also improve trade deals so they deliver tangible benefits for American workers. Hundreds of Democrats voted with Mr. Trump to make NAFTA better for workers, and they should continue to do that for other trade pacts. It wasn’t so long ago (2005) that Mr. Obama explained his vote against George W. Bush’s Central American Free Trade Agreement by pointing out that trade agreements too often have been “about making life easier for the winners of globalization, while we do nothing as life gets harder for American workers.”

In addition, the tax code should be reformed to incentivize companies to pay American workers an honest day’s pay here, not hire cheaper foreign labor.

Third, Democrats need to draw a contrast between themselves and Republicans, who have been all too glad to see corporations ship jobs overseas. For example, Republicans overwhelmingly supported Mr. Trump’s tax cuts for outsourcers. Democrats took Mitt Romney down for his outsourcing at Bain Capital and held John McCain to account in Michigan for his cheerleading of job-killing trade deals. We should bring this tactic back to the forefront of Democratic campaigns.

And fourth, Democrats should draw inspiration from our roots and union friends. We should remind voters over and over again about who saved the American auto industry: Barack Obama and his vice president, Joe Biden.

Democrats won’t solve their challenges with working-class voters in a day or a year, or with any one issue alone. But if we respond to voter frustrations, especially on pocketbook issues, and if we fully commit to those issues in government and in campaigns, we can start to find our way back with them.

Bad Economy for the Middle

 Ezra Klein looks at our problems.

“In one of the best decades the American economy has ever recorded, families were bled dry by landlords, hospital administrators, university bursars and child-care centers,” Annie Lowrey wrote. “For millions, a roaring economy felt precarious or downright terrible.” 

The numbers are startling. The median home price in 1950 was 2.2 times the average annual income; by 2020, it was six times average annual income. Child care costs grew by about 2,000 percent — yes, you read that right — between 1972 and 2007. Family premiums for employer-based health insurance jumped by 47 percent between 2011 and 2021, and deductibles and out-of-pocket costs shot up by almost 70 percent. The average price for brand-name drugs on Medicare Part D rose by 236 percent between 2009 and 2018. Between 1980 and 2018, the average cost of an undergraduate education rose by 169 percent.

We papered over the affordability crisis with low prices for consumer goods, soaring asset values that kept richer Americans happy, subsidies for some Americans at certain times and mountains of debt: housing debt and student-loan debt and medical debt that kept the working class semi-afloat. But none of this addressed the core problem. For far too long, the prices of the things we need most have been growing far faster than inflation.

And so a weird economy emerged, in which a secure, middle-class lifestyle receded for many, but the material trappings of middle-class success became affordable to most. In the 1960s, it was possible to attend a four-year college debt-free, but impossible to purchase a flat-screen television. By the 2020s, the reality was close to the reverse.

There’s a famous video where you’re told to keep your eye on a basketball being passed around and, as you do, you miss an actor in a gorilla suit ambling across the scene. But once you’ve seen the gorilla, you never miss it again. Politics works like that, too. It’s not just about the problems we have. It’s about the problems we learn to see. The prices problem has been lurking for years, but it’s never been the core of our politics. Now it is.

The political party that dominates this next era will be the one that shares the public’s fury and puts prices at the center of their agenda.

There are some early glimmers of what that might look like. The New Democrat Coalition, which is made up of 99 moderate-ish House Democrats, recently released a package of policy proposals meant to address inflation. But much of it is aimed at the affordability crisis that predates the rise in inflation. It includes legislation that would use federal transportation dollars to push cities and states to make it easier to build housing, that would ease worker shortages by raising legal immigration and that would cap insulin costs and allow Medicare to negotiate more drug prices.

If liberals look, they’ll find no end of ideas for bringing down prices across the economy. “I’ve been pulling my hair out about this stuff for years,” Dean Baker, one of the founders of the liberal Center for Economic and Policy Research, told me. “We can’t just accept markets as structured and then use tax and subsidy policy to make it less bad. A real big problem with progressives is we treat the market problems as givens rather than restructure those markets.”

For decades now, we’ve been in a politics of spending. The questions were about how much to spend and what to spend on. We’re moving into a politics that looks superficially similar but is fundamentally different: a politics of prices. How much to spend, and where to direct that spending, still matters. But it’ll be subordinate to a larger goal: bringing down prices across the economy. And that’ll be the work of years, perhaps decades.