Friday, April 20, 2018

Federal debt out of control, crisis looms

Last week, the U.S. got news of an impending national disaster, a situation that could have “serious negative consequences for the budget and the nation.”

The warning came from the Congressional Budget Office, a rare, nonpartisan federal agency. Almost nobody paid attention.

The threat comes from ever-increasing deficits and an exploding national debt. It is not a bill that will be paid by our grandchildren, as is often said, but one that we will have to begin paying soon.
The national debt will soon be the same size as the value of the country’s entire annual economy.

While the U.S. usually runs deficits, two recent congressional actions have taken the unbalanced budget to a whole new level.

First came the tax cut bill. New breaks were added to the tax code, mainly to benefit the wealthy and corporations. In theory, they would use their added funds to invest. Everybody knew the argument was flimsy that such investment would spur new tax revenues.

The CBO says that effect will last about a year, then melt. The tax cut will never pay for itself.

Without cutting spending, the result is a growing deficit each year.

While revenues were cut, spending was not touched. Then came the spending bill. Congress decided to spend more on almost all government programs.

For the Republicans to gain votes they needed for their expanded defense spending, they agreed to let the Democrats have more funding for their favorite programs. Previously agreed spending caps, applying to both sides, became historic relics.

The Republicans traditionally charged the Democrats with seeking a “tax and spend” economy. The Dems would add more government programs and propose raising taxes to pay for them. Nobody likes higher taxes, so the GOP would be “deficit hawks” and oppose them.

When President Obama proposed more economic stimulus spending, the Republicans opposed it because of increased deficits. Now, the deficit hawks have flown away, though they could reappear just as soon as there’s a Democratic president.

What’s more, technology will reduce payrolls. The economy will take a break from its continuous growth. The effect will be even less tax revenues.

How does the U.S. pay for the growing annual deficit? It borrows the money. It can borrow because the U.S. dollar is the world’s standard, based on the belief that the country always pays its debts.

Spending on “mandatory” programs like Social Security and Medicare now accounts for 62 percent of all outlays. “Discretionary” programs take 30 percent with half of that going to defense. The fastest growing portion is interest on the national debt, now amounting to 8 percent.

Because the size of the debt will soon come to equal all national output, the CBO warns of a “fiscal crisis,” a situation in which the government can’t pay its bills. The effect of this crisis would quickly spread across the entire economy.

Annual shortfalls in the federal budget must be cut to keep the national debt from bringing on this crisis. How can the yearly deficit be reduced?

The government could cut spending. Departing House Speaker Paul Ryan targeted major programs like Social Security and Medicare. Social Security could be made financially healthier without affecting benefits for those who need them. But it’s not realistic to propose across-the-board cuts.

Could we keep borrowing? Debt service costs less than paying the full price. But the CBO says more borrowing will suck money out of the economy, raising interest rates for both the government and the people. That leaves less money for saving and an even bigger federal debt.

The government could simply print more money, almost magically giving itself the ability to pay off its debt. But that would devalue everybody’s dollar, making what people and the government buys more expensive. That amounts to a hidden tax. It would also reduce the world’s confidence in the dollar as the standard currency.

Finally, the government could raise taxes, using the philosophy “there’s no free lunch.” If the people need or want government programs, they should pay for them and not try to pass the cost on to later generations. And it’s not possible to pay only for programs you like.

The alarming CBO report warns that we can no longer pile on the debt and expect future taxpayers to cover the deficit. We must recognize that refusing to increase taxes as spending grows is beginning to fail.

As the report shows, the future is now and the next ten years will only be worse.

The real bottom line? A tax increase becomes inevitable.

Monday, April 16, 2018

RCV demands serious debate, not partisan wars

Maine seems to be enjoying what could turn out to be a long-running political saga.

It began with the 2010 election, when a split electorate made Paul LePage governor, even though he had failed to gain a majority of votes. Frustrated, some saw a solid majority that could have elected an opponent if there had been no split.

Unhappy with the election outcome, they realized that electing governors who had not won an outright majority dated back decades. It looked like it was growing easier for independent candidates, thanks to public financing and the requirement of a relatively low number of nomination signatures.

The solution for some unhappy voters was a system called ranked choice voting. Through a complicated system under which people could vote for more than one candidate at the same time, an artificial majority winner could be guaranteed.

RCV, as it has come to be known, responded to broad unhappiness with LePage and others winning with less than a majority. No other alternative was offered, and voters adopted the RCV proposal.

That might have been the end of the story, except that the Maine Supreme Court opined that RCV violated the state Constitution, notably when it came to electing the governor. Since the 1880s, it had explicitly prescribed a plurality – the person with the most votes wins.

Now, Maine has embarked on what inevitably will be a multi-year story to resolve just how it will vote. This June’s vote is only one chapter.

RCV supporters have taken to claiming the RCV opposition comes from the Republicans. They hope the GOP’s expected lack of popularity in forthcoming elections can be used to leverage support for RCV. You don’t like the GOP, so you must like RCV. That was the theme of a piece in this paper last week.

Well, I am not a Republican, and I have serious reservations about RCV. I agree that we should look for ways to end plurality voting, but think it is far from the best available solution.

There are three reasons for looking for alternatives to RCV.

First, according to data from the Maine Secretary of State, it is the most expensive possible alternative.

Second, it can allow one person’s vote to count more than another’s.

Third, it is not the system in any state, while other states have developed sound ways of ensuring majority winners.

On cost, RCV requires special equipment and transportation, which must be rented for each election. The costs will be borne by both the state and local governments, and should hit seven figures. No alternative requires special equipment or transport of ballots.

This year, the Democrats have seven candidates for governor. Under RCV, you could vote for all seven or fewer in rank order. If your favorite washes out in the system, your second choice vote is then cast. Meanwhile, the voter who picked the leader gets no second vote.

That’s the second problem. One voter can get two or more votes, while others get only one. RCV solves the plurality problem, but only by undermining the principle of “one person, one vote.”

Finally, there are a number of better alternatives. Here are just two.

Some states use run-off voting. If no candidate receives a majority, the top two candidates run again. Voters can experience a new campaign and a chance to compare the two. That’s preferable to having a computer stage the run-off without benefit of an additional campaign.

The cost of run-offs is less than RCV. But run-offs have been criticized because the turnout on the second vote may be low. Not necessarily.

In 2015, the writer of last week’s pro-RCV piece ran for mayor of Lewiston. Under plurality voting, he would have won. But Lewiston uses a run-off, and on the second vote, another candidate received the absolute majority. Turnout was about the same in the two elections.

The coming new system is not RCV, but the “open primary.” A closed primary, now used in Maine, is accessible to party members only, and there is one for each party. An open primary is open to anybody who gets the signatures. Each candidate may declare a party preference. There is one primary for all candidates.

California uses the “Top Two Candidate Open Primary.” Every candidate participates in a single primary and the top two vote getters are on the general election ballot. In practice, the system reduces the chance for spoilers, but encourages more candidates, just as is claimed for RCV.

In 2016, among candidates for the U.S. Senate, Californians picked two Democrats for the general election. In the primary, there were 14 candidates from four parties receiving more than one percent of the vote.

How we vote should not be a partisan matter. It should be a question of good government with the intent to build a consensus on the best way to replace the plurality vote. Everything should be on the table – and soon.

Friday, April 13, 2018

Tampering, voter suppression threaten elections

This year’s elections will be confusing and possibly corrupt.

Voting used to be a routine process in which people had confidence. But the ways it is being undermined have only recently begun to be understood, raising real questions about just how “free and fair” elections really are.

Begin with the obvious Russian efforts to undermine voting. They are meant to destroy Americans’ confidence in our own political system far more than to dictate election winners.

The Russians admit nothing, but continue trying to tamper with vulnerable election systems in the U.S. and many European countries. They see election tampering as a war they can win.

They can mess with state voter lists. That means that everything in the election process should be backed up on paper and hand checked well before Election Day. Use electronics, but back up in hard copy. Creating smaller precincts, as in Canada, would help ensure local officials knew their voters.

While the Russians try to harm electoral operations, the Republican Party simply wants to keep people from voting – voter suppression. Using false assertions of voter fraud, states under its control impose voting access rules aimed at blocking likely Democratic supporters.

Its tactics range from higher voter ID requirements, which impose complexity and cost on lower income voters, to cutting hours and days for voting. The GOP faces increasing opposition to its moves, but opponents need to help people comply with the tougher laws.

Another openly announced GOP policy is gerrymandering, designed to reduce the number of Democrats elected to state legislatures and Congress. Under this system, bizarre district lines are drawn to cram as many Democrats as possible into one district, allowing the GOP to pick up more seats.

This year, that system will end in Pennsylvania, where the congressional delegation has been 13 Republicans and 5 Democrats. The parties are evenly divided in votes cast statewide, so the likely outcome is nine members each. The GOP sponsors most gerrymandering, but in a few places the Dems do the same.

If efforts to reduce voter suppression and gerrymandering succeed, either the House or Senate or both could flip from GOP control to the Democrats. In today’s negative political atmosphere, many incumbent Republicans have chosen not to seek reelection. Their seats have become more competitive.

The president’s party usually loses seats at mid-term elections. To an unusual degree, the president himself has become what may be the major issue of the election, particularly if discussion of impeachment surfaces.

Given their strong congressional majority, until quite recently the possibility of the GOP losing control of Congress would have seemed impossible. But this array of troublesome developments suggests that control of Congress is a toss-up.

More usually, voters will see presidential hopefuls in both the Democratic and Republican parties helping legislative candidates across the country as a way of building their political organizations for the 2020 primaries. This process should reveal who expects to challenge Trump.

Without election corruption, Maine has managed to add its own level of election confusion. It’s about ranked choice voting.

In a referendum, voters decided to end elections going to the candidate getting the most votes, if less than an absolute majority. RCV allows voters to pick more than one choice, in rank order, with their votes being electronically redistributed until a candidate has a majority.

The Maine Supreme Court found parts of RCV unconstitutional, leading the Legislature to delay its use until the State Constitution was amended. RCV supporters want voters to overturn part of that new law.

In June, the confusion may end up placing Maine voters in an unusual position. They may be asked to cast primary votes using RCV, for the first time ever at any state level, but also if they support the Legislature’s delay. In theory, they could agree to suspend using RCV now, but also cast their primary votes under that system.

Decisions on RCV issues will continue to rest with the Maine Supreme Court. It may take a few years for this confused system to sort itself out, and there could be still other legal challenges. For example, does RCV violate the rule of one person, one vote?

As in any discussion of elections, people are urged to vote. Fair enough, but the system will continue to become more vulnerable unless voters go beyond campaign TV spots to understand the system, candidates and issues.

Those who tamper with the election system try to exploit voters’ ignorance and apathy. To protect free elections, people need to be well-informed not merely well-intentioned.

Friday, April 6, 2018

Trump’s politics of change yields chaos, kills compromise

People say they want change. Politicians promise it.

Barack Obama offered change “we can believe in,” for fear of leaving the false impression that he meant to alter America democracy.

Donald Trump offered change by making proposals that broke with traditional policies. It’s possible that he means to alter American democracy.

Even if many, or even most, people want change, they say they also want it to be bipartisan and carried out peacefully. But these days political change seems to cause chaos. Perhaps what people want – change without chaos – is impossible.

To further complicate the equation, there needs to be some political continuity. Bringing broad change rapidly may produce clean breaks from the past. But previous policy produced some positive results.

Even more important, by recognizing the need for continuity, government can reassure foreign allies and give business the predictability essential for investing and planning.

Despite these considerations, the Trump administration has reduced the formula to its simplest terms. Change equals chaos.

Perhaps the prime reason for pushing change without considering the ensuing confusion is that Trump promised major changes and believes that such promises won him the White House. 
Surprising even himself by winning, he wants to stick with the formula that seems to have worked.
Also, the president’s main focus is himself, so many of his tweeted actions are launched more for their immediate public effect than for their impact, especially long term. In fact, his aides often seem to be chasing after his tweets to deal with the impacts not taken into account.

To be fair, Trump promised change. Many voters, including some of his supporters, thought he would mellow when he learned the difficult political and diplomatic balancing acts that go along with high office. Trump would become a more conventional president. Instead, he stuck to many of his promises.

When observers express surprise at the loyalty of his “core” voters, they may miss the appeal of keeping promises, no matter what they were or their unsuspected implications. For them, Trump may be entirely different from traditional politicians and that, more than policies, is what they want.

Among the problems of governing the way he does is that policy is developed on the fly. Trump reacts to his instincts without talking with advisors. In fact, the high turnover in top administration jobs leaves him with only the most loyal not necessarily the most savvy.

Recently, he launched a trade war with China, ignoring its effect on U.S. consumer prices. He had previously kept his promise to quit the Trans-Pacific Partnership, which he saw only as a bad trade deal rather than as an attempt to encircle China together with a dozen other countries.

He took great credit for a soaring stock market, but failed to recognize that his protectionist trade policy and attacks on Amazon would bring it down.

Trump gets a lot of his policy ideas from Fox News. He likes the outlet because it praises him. It lauds him because he follows Fox’s policy proposals, often based on false data.

One place where Trump’s desire for change has run into some reality is his relationship with Congress. At first, he seemed to believe that his surprise victory should cause Congress to fall in line behind him. He missed the fact the legislators also have real powers, especially when both parties can agree.

That’s what happened with the government spending bill. The parties engaged in horse-trading, but avoided paying the full bill for Trump’s wall, which Mexico was supposed to finance. The president was furious, but bipartisan majorities left him no choice but to sign.

Because of his refusal to learn on the job, it’s likely only two major bills will have passed in the first two years of solid GOP rule – the tax cut and the spending bill. If the Democrats gain this fall, even less will happen before the next presidential election in two years.

Maine echoes Washington. Referendum voters decide to accept federal Medicaid expansion. Gov. LePage creates chaos by refusing to allow it. He continues to believe that he is above mere democracy. Ignoring the law, he closed the prison facility in Washington County. A judge made him reverse course.

With his term ending, LePage won’t learn how to govern in the time left. With two years left in his term, Trump won’t learn how to govern, because of his personal limitations.

Both are right that change is needed. Change requires courage, to be sure, but also some wisdom to keep the chaos under control.

Friday, March 30, 2018

Heated debates arise over census, Second Amendment

Americans love their Constitution, but most of us probably don’t fully understand it.

That became evident this week in major news stories. They both show that we may miss two important facts.

First, most of the Constitution applies to all people within the borders of the United States, even if they are not citizens.

Second, people in the United States have more rights than the relative few listed in the Bill of Rights.

The Framers of the Constitution, the 39 men who agreed in September 1787 on the draft document, wanted the House of Representatives to be directly elected by citizens. The number of seats allocated to each state is to be determined by the state’s population, counting just about everybody, not just citizens.

Remember that women did not have the right to vote, though they were citizens, and the new country was attracting immigrants, not yet citizens. Yet both women and immigrants were directly affected by the federal government. They were part of the population, but only men could the vote.

To know the correct allocation of seats, the Constitution requires that everybody, citizen or not, should be counted every ten years. Slaves were originally counted less, and Indians, when not taxed, not at all. Both are now fully counted. The first census was in 1790, and there is a census every ten years.

Over time, the federal government began to operate some of its activities and provide financing to states based on state populations. As a result, the census, with questions added, became the best way to know about some characteristics of people so that the federal support could be distributed proportionately.

The census was not used for law enforcement out of concern that some people might avoid being counted, which would undermine the basic constitutional purpose of the census.

Now, the Trump administration is proposing to add a question about citizenship to the census questionnaire. Because most government programs are not run for citizens alone, the prime purpose of the question is law enforcement. If people refuse to be counted or lie about citizenship, they may face deportation.

By using the census to remove people from states, the result may be under-representation of some states. Remember, the Constitution says people, not only citizens, should be counted.

That provision is consistent with other parts of the Constitution. For example, the Bill of Rights applies to all people in the United States, not only citizens. Everybody has freedom of speech.

Some states are taking the federal government to court over the citizenship question in the census. One possible result may be that no questions may be asked in the census beyond the simple count required by the Constitution.

The other event this week was an article by John Paul Stevens, a retired justice of the U.S. Supreme Court. Responding to the student gun control demonstrations in the wake of the Parkland shootings, he called for the repeal of the Second Amendment. That would allow the kind of gun control the students wanted.

The N.R.A. immediately responded, seeing his statement as an attempt to sweep away a basic right, protected by the Constitution.

The Declaration of Independence says people are “endowed by their Creator with certain unalienable Rights.” Rights do not come from government. People naturally have rights.

When the Constitution was debated, Alexander Hamilton opposed the Bill of Rights. He argued that people had many rights and listing only some of them would give the mistaken impression that these were the only human rights.

But many states wanted protection from government action that would excessively restrict at least a few of those rights, notably where the British king had cracked down. But the Bill of Rights states there are more rights, “retained by the people.”

Even if the Second Amendment were repealed, the right to “keep and bear Arms” would not have been repealed. But some its supporters say the Second Amendment is needed to ensure it as an absolute right, one the government cannot limit in any way.

The Supreme Court decision that every person has the right to own and use a gun also found that reasonable limits could be placed on the right. Keeping guns out of schools was one example given. The Court had long ago ruled that any right has its limits, especially when its use can harm others.

These two situations – who the census counts and the extent of the Second Amendment – take us back to understanding the Constitution. If only we had paid attention in civics class.

Friday, March 23, 2018

Internet, social media become weapons of war

America is at war.

You may not have noticed it, because the battlefields are almost invisible. But the signs are evident, and millions have been recruited to serve in that war.

The Internet was essentially an American invention. In a fit of idealism, the federal government decided it should be like the airwaves, open to all but entirely free of cost and regulation. It could be a means of communication, education and better understanding across the world.

Instead, it has been weaponized. Though it serves some of its original purposes, it has also become the prime battlefield in international conflict and a major tool to undermine the very open society it was meant to promote.

The federal government has just announced sanctions against Russian entities and individuals because of their efforts to tamper with elections and undermine electric and water systems.

Despite the focus on the 2016 elections, the real point of the Russian effort is intended to weaken the functioning of the democratic system of government. Chaos would result in the United States, which Russian President Putin sees as his prime adversary, rendering it increasingly incapable of challenging his expansionist plans.

Putin understands that Russia can derive economic and political control of other countries by use of the Internet and its wealth, derived from selling natural gas to Western Europe. Even more important, the Internet gives Putin a low-cost but powerful weapon against the United States.

Similarly, China seeks American business secrets and to undermine government operations to give itself the necessary breathing space to develop as a great power rival to the United States. It denies access to its Internet system and uses strict censorship while taking advantage of the openness of American participants.

Both Russia and China are clearly adversaries of the United States, determined to weaken it in world affairs. It is difficult to distinguish such policies from the goals of traditional warfare.

And it looks like they are winning. That’s because U.S. agencies frequently announce their successes in penetrating the walls designed to protect official secrets, corporate information or the functioning of the political system.

But they never announce any opposing actions by the U.S. Either this country is helpless or it believes that unveiling any successes will only help the Russians or Chinese. That’s unfortunate, because it fails to give Americans and U.S. allies any sense of the government’s ability to mount an adequate defense.

Few people know that there is a U.S. Cyber Command and even fewer know what it does. It should be strengthened and more centralized and its top general should be made a member of the military Joint Chiefs of Staff. After all, it is engaged in real warfare. Such a change could demonstrate that the U.S. is fully engaged.

The American weakness in the wars fought over the Internet is partly of our own making. Russia’s meddling in U.S. elections is greatly aided by the information and access that can be drawn from people’s obsession with revealing a raft of personal information on publicly available social media.

Who needs to be encouraged to demonstrate? Who should be lied to? Whose prejudices or religious beliefs should be exploited? Sitting in St. Petersburg or Beijing, a person set on sabotaging the U.S. plays with American social media without risk. That’s war today.

Social media users need to understand that their data, along with that of thousands of others can be harvested and analyzed by computers in a matter of hours. You cannot be anonymous.

A matter of the greatest concern is less about Russians messing with the political system than that Americans are. Through a phony outfit called Cambridge Analytica, wealthy American conservatives bought Facebook data on 50 million people to influence elections in favor of Republican candidates,

That firm was a shell for a British company that developed the analysis. In short, a foreign entity tried to influence American elections, a violation of federal law. And their American clients knew that.

The social media have abused the free access given to them by the Internet by allowing illegal misuse. They cannot police themselves. They act like there are no limits on free speech, even in supporting illegal activities.

They are much like radio and television stations that are regulated because they use the limited spectrum. Without limiting their usual free speech rights, the social media, using the Internet, should be subject to some regulation against their users performing or encouraging illegal activities.

Or they could be classified as publishers, making them responsible for what they allow on line.

Friday, March 16, 2018

Electric woes caused by industry restructuring, weak regulation

Note: While I mention CMP, Maine's largest electric utility, the subject is relevant across the U.S. 
The news is full of reports about skyrocketing electric bills across the country and numerous outages in the Northeast. Maine gets it share of both.

Something is wrong when the complaints occur as often and as loudly as they do now. Utilities and their friends have come up with ready responses that squarely place the blame on somebody else.

Customers are faulted for not recognizing their power consumption increases as they run electric heaters or oil burners. And frequent nor'easters get the blame for what seems to be an unusually high number of outages.

Of course, electric consumption increases in cold, dark winters. And, this year, the cost of fuel to run utility generation may also have increased. So it is not surprising that as usage increases, bills are higher. And some customers look only at the bottom line and ignore the number of kilowatt-hours.

But this is not the most severe winter ever, so some huge increases seem to be caused by more than usage. CMP, for example, has removed the prior year's monthly usage from the bill, making ready comparisons impossible. That deletion makes it more difficult to accept the explanation that it's all a matter of usage.

One obvious culprit is the meter. Utilities have installed so-called “smart” meters, supposedly because they will allow customers to manage their usage better, obtaining greater efficiency and lower costs. While that promise mostly goes unfulfilled, it has worked well for utilities that can eliminate meter reader jobs.

During a major, recent nor'easter, smart meters turned out to be dumb. They could not highlight outage locations very well, nor did they provide good data to the central office, which would help it efficiently assign repair crews. Despite their shortcomings, a big part of the meter’s cost is recovered in a customer's rates and will be for many years.

Given these known defects, it just might be possible that bills, way out of line with past experience, may be caused by defective meter information. To relieve customer worries while the cause is being investigated, the regulators should announce that their payment obligation will be limited to the previous year's level.

Without such action, customers bear all the risk when their bills shoot up. And when a utility falsely warns them they may be cut off if they don't pay the bill, they can rightly feel they are victims, not customers. CMP and others should not only withdraw such bills, but be fined for issuing them.

While customers, utilities and regulators scramble to figure out what went wrong, they will miss the big picture that can reveal underlying problems. It began with industry restructuring. Electric power supply was separated from wires. Many utilities ended up as wires companies.

The utilities’ monopoly position as wires companies was an opportunity to coin money. With a limited commitment to maintenance plus government incentives to build more transmission lines at customer expense, their outlook brightened. The cost of power was reduced by competition, but the cost of wires in the customers' bill zoomed up.

Federal utility regulators allow higher rates to encourage more transmission. State regulators mostly stay on the sidelines until problems arise.

Regulators depend on technical input from utilities rather than having staff capable of conducting continuous, independent review. While they may hire outside consultants when a problem arises, this approach does nothing to prevent problems.

To top this situation off, as Congress and state legislatures restructured the industry, they levied new burdens on ratepayers. They imposed public policy mandates on customers' bills, ranging from low-income assistance to promoting renewables. It was a lot easier to load these costs on electric customers than to increase taxes.

The failure of regulators to be more aggressive contributes to both the frequency of weather-caused outages and billing alarms such as are now occurring. Studies to find the causes of these problems are no substitute for continuing surveillance to prevent them.

Beefed-up regulation would undoubtedly cost more. But electric rates increase to cover utilities' costs of dealing with storm outages or fixing meter problems. Adequate regulation should reduce some of these cost increases.

The bills add up. Customers struggle with outages. Regulators belatedly investigate. Customers subsidize the very meters that may be causing their problems. Utilities maximize profits by cutting field personnel. Customers foot the bill for the utility lawyers who defend company practices.

Instead of viewing the current problems as likely to be soon forgotten, now is the time for legislators to take a new look at the electric industry and how it is regulated.