What drives inflation? Electric rates rigged against consumers

Gordon L. Weil

If you pay the electric bill, you’re in for a shock.

In the electric business, it’s called “rate shock” and it occurs when rates suddenly increase to the point where some customers can’t pay their bills.

It’s here, now.  The electric business makes sure the companies who provide the fuel, produce the power and own the wires are fully compensated.  The system passes the buck and the buck stops with the customer.

Rates increase.  The reasons why reveal the anatomy of inflation. 

Can’t regulators protect customers?  That’s the theory, but it doesn’t work, because the game is rigged. An unjustified belief that the free market will set prices fairly plus well-meaning government policies that pile costs onto customers make it difficult for millions to pay their bills.

Sometimes the upward pressure on power and wires costs come together, beyond the control of regulators.  Oil and gas companies, renewable energy promoters, electric utilities and legislators can all make that happen.  Despite token representation, customers can’t stop it.

This is not only a local issue.  To be sure, Maine monthly bills are shooting up by about $40 and they will soar elsewhere in the U.S.  In England, they are forecast to climb by 56 percent. 

This wasn’t supposed to happen.  The industry was partly deregulated.  As a result, the cost of power was expected to decrease thanks to competition. The cost of the wires, then the smaller part of the bill, would remain under federal and state regulation. 

The cost of fuel used for generating power would continue to be set by the market.   That market is under the control of the fuel producers, mainly located in the Middle East, like Saudi Arabia, or in the American Southwest.  They try to charge all the customers can bear. Flip a switch and you’re boosting their income.

The current price jump is mainly due to an increase in the cost of fuel.  There may not be enough natural gas to meet demand.   A hot summer meant natural gas that would have gone into storage for winter went to power air conditioners. 

Also, the U.S. exports natural gas.  If we prefer to have Europe depend on American rather than Russian supplies, that comes at a cost to U.S. customers, some of whose winter gas goes overseas.  In a world market, other participants naturally jump on the upward price spiral.

The results could be serious.  With inadequate gas supplies, New England, where half the power is fueled by natural gas, faces possible rolling blackouts.  Nobody realized that regional energy policy was really set by the natural gas companies.

Renewable power sources like wind, solar, and hydro plus nuclear offer more price stability.  But they face opposition claiming they are unreliable, harm fish passage or spread radiation risk.    Even as the costs of non-fossil resources have fallen, bringing increased reliability and safety, they still struggle to gain against subsidized coal, oil and gas.

Part of the problem for renewables is the cost of transmission lines.  The resources are often sited far from main customer centers.  That means new lines must be built. When government mandates more use of wind and solar, it silently raises rates to cover the cost of new lines.

Maybe not so silently. The federal government favors renewables by offering transmission owners handsome profits on their investments.  State regulators allow lower profits for the distribution lines that deliver power locally.  No wonder utilities prefer to build high voltage lines and let residential service suffer.

An alliance has developed between the federal and state governments that adopt pro-renewables policies and the transmission owners who can increase their gains by building new lines.  The costs fall on most customers.

The biggest customers enjoy advantages that other customers don’t get.  They receive their power at high voltage and contribute little or nothing to the cost of distribution.  They are strong enough to make their own favorable deals with power suppliers.

Fuel costs, new transmission lines linked to new renewables, and better deals for bigger customers affect rates.  Electric rates also include aid for lower income customers and the costs of regulation. Electric utilities may even recover from customers their legal costs in arguing for rate increases.

Federal and state lawmakers have the power to improve this system.  When governments mandate policies, they should provide financial backing for their decisions.  Instead, they include some costs in rates that should be covered by taxes. It is easy to let customers pay more, promoting inflation.

There are a couple of positive signs.  President Biden’s proposed investment in new transmission  would come from taxpayers, and utilities could not earn a profit on it.

And consumer-owned public power, which serves 28 percent of the national market from Los Angeles, California, to Houlton, Maine, is non-profit. Its rates are lower. 

“The Emperor has no clothes” – the naked truth about vaxing, voting and hacking

 

Gordon L. Weil

An old tale, written by Hans Christian Andersen, tells the story of a foolish emperor who is swindled into believing that he wears the finest garment, visible only to the wise. But he really strides naked on parade.  Nobody risks telling him they see nothing until an innocent child blurts out, “The Emperor has no clothes.”

That declaration has come to describe a clear fact that many people insistently get wrong.  It means, “What you think is obviously incorrect. Here is the naked truth.”

Here are some of today’s naked truths.

Vaccination against Covid-19 works.  Maine provides the best possible proof of that truth.

The counties with the lowest new case rates have the highest percentage of vaccinated people. Most people in counties that are now nearly the worst in the country have chosen not to get shots.  They risk their own health and may spread the virus to others.

The term “herd immunity” was meant to convey the idea that, when only a few people remain unvaxed, the virus won’t easily spread.  In the counties with high case rates, we can see the reverse – herd vulnerability.

Many possible explanations exist for abstaining including partisan politics and misinformation, intentional or not.  It may be a matter of mindset.  Maine health expert Dr. Dora Anne Mills has said, “We very strongly need people from conservative circles – religious, faith and business – to really stand up and promote vaccination.”

Here’s another truth that causes harm if ignored. Voting matters.  And serious voting matters seriously.

On this truth, Maine takes comfort because it comes close to leading the country in voter participation.  The U.S. in 2020 had a high rate of two-thirds of eligible voters; Maine had 76 percent participation.  So what’s the problem?

Nationally, one-third of eligible voters did not vote. Joe Biden received 51.3 percent of the vote. That means the president was elected by one-third of the possible number of voters.  While the high turnout may feel good, it’s important to look at those who did not vote. In effect, they “voted” for Biden by not voting for anybody else.

Voting in the 2020 elections influenced decisions on matters such as whose vote will count next time, the future Supreme Court, and Biden’s legislative program.  In Senate races, the GOP margin in North Carolina and the Democratic margin in Arizona were small. If either had flipped, you would never have heard of Sen. Joe Manchin’s swing vote power.

Casual voting on the basis of personality or a wedge issue cannot achieve the full value of each vote.  Who paid attention to the fate of the child tax credit when they voted for senator?  If you care, voting seriously takes thought.

Some politicians have become blind to the truth that “two wrongs don’t make a right.” They justify dubious actions on the grounds that their opponents did the same thing, excusing themselves even while implicitly admitting their actions were wrong. 

This refusal to recognize the truth is a major cause of the spiral to the bottom in American politics, made even worse when the supposed action by the other party is fabricated.  When Trump was impeached for pressuring the Ukraine to help his campaign, his backers excused him by claiming, without any evidence, that Obama had done the same thing.

This ploy may help explain why many eligible voters stay home.  Hearing the claim that both sides have gone wrong, they can conclude there’s no real difference between the parties.  So why bother voting?

Another obvious truth is ignored by government, business and individuals in the computer age.  There’s a widespread belief that voting and personal privacy can be made secure from hacking.  Not so.  Security is growing worse.

The “emperor’s new clothes” answer is that complete computer security is impossible.  Election systems are always in danger and our personal lives are always at risk of public exposure.  Still, computer experts keep trying to get technology to solve its own problems. In the end, though, the “cloud” is just somebody else’s hackable computer. 

The truth may be that we have to go backwards.  Back up everything with vital stuff like election ballots and electric grid operating manuals on paper.  When somebody makes us a “great offer,” it should be on paper so we can read the fine print.

To reduce electronic security issues, from government to individuals, we should apply the old ways of doing things on paper now, even if it takes some work, to prevent problems later.  Otherwise, it could be a case of “sin in haste, repent at leisure.”

Too often, we believe we can see the emperor’s new clothes, while ignoring the naked truth.  Unlike the foolish emperor, we may be harming others as much as ourselves.

Andersen’s amusing Danish kid’s story is a cautionary tale for everybody.

 

Strict Republican loyalty undermines constitutional system

Gordon L. Weil

The drafters of the Constitution in 1787 wisely authorized Congress to control space travel, social media and driverless automobiles.

Of course not. 

The 39 men who created the Constitution could not have imagined the future. While they proposed a new system of government, their invention was a political design, not a detailed operator’s manual. 

They knew they could not foresee the future.  But basic features like federalism, three branches of government, checks and balances and regular elections were essential. How they worked might change, though their evolution should always respect the common values embodied in the Constitution. 

If natural evolution, consistent with those common beliefs, did not keep up with the development of the nation, the Constitution would be formally amended.   While it has happened less often than they thought, the Constitution has been amended 27 times.

The drafters’ assumption about the survival of their common beliefs has been badly disappointed.  Political practices they had envisaged to fulfill the constitutional plan are in tatters. 

The Constitution, even with its amendments, is a short document.  This column is twice as long as the entire article on the judicial system.   The brief document left much room for maneuver to those ready to abandon the underlying beliefs that made it work as the drafters had intended.

Warnings that democracy is in danger are a signal that the common beliefs underlying the Constitution are being replaced by a new set of understandings.  The broad scope of the Constitution allows those who reject the common beliefs underlying it to replace them with a more authoritarian system with less popular control.

There were plenty of gradual changes in the underlying understanding over the years, but the sharp detour occurred after the Republicans won the 1994 congressional elections. Speaker Newt Gingrich imposed strict party discipline similar to the way foreign parliaments operate but not previously used in Congress.

Since then, the GOP has developed strong party loyalty.  A Republican member of Congress is now more likely to toe the party line than to represent their state, district or personal beliefs. Party loyalty has produced added GOP political strength.  That kind of loyalty has extended to state politics.

Voting is an example of the new ways of government.  While the drafters only planned popular control to cover elections for the House of Representatives, the Constitution has been formally amended six times to expand popular control.  However, it has become a cornerstone of GOP policy to try to limit access to voting.

Through their control of state governments, Republicans have drawn congressional districts to reduce the power of some voters, often minorities.  They are now transferring authority from neutral election administrators to partisans who can freely disallow Democratic votes.  They undermine methods, like mail ballots, that have increased voting.

Trying to reduce citizen election participation as a way of holding onto office is clearly against constitutional intent and the essence of democratic government.

Historically, Congress has accepted that elections have results and that presidents should have the right to pick their top staff and federal judges.  Now, the GOP has chosen to undermine presidential choice.  Their refusal to even consider President Obama’s Supreme Court nominee was a glaring case.

GOP Sen. Ted Cruz single-handedly blocks most of President Biden’s key appointments to the State Department.  He won’t relent, he says, until Biden changes his foreign policy in Europe.  Biden has been denied his own team for almost a year.

Cruz’s move is part of a larger trend in which Republicans in Congress seek to control foreign policy, despite the Constitution assigning that power to the president. Of course, Congress can try to cut off funding for presidential actions it opposes, but it was not supposed to micro-manage foreign policy.

On routine matters, partisan war replaces normal mutual accommodation. Democrats and Republicans have boosted the public debt and they have usually jointly agreed to raise the debt limit. This year, the Senate voted to force the Democrats alone to do it, but only 14 Republicans out of 50 would agree to even that.

Biden seeks to respond to public concern about deep political divisiveness. He may harbor an impossible hope if the GOP persists on its path to power by relentlessly blocking the Democrats. The Dems increasingly will seek to do the same.

What is the Republicans’ goal?  It seems to be about gaining power for its own sake more than enacting a specific agenda.  They steadfastly oppose all Democratic proposals, but offer few positive proposals of their own and refuse to compromise.

In writing this column, I regret seeming partisan, because I strongly believe we need a healthy party system.  What worries me is that the system created in 1787 is becoming all about partisan politics at the expense of popular government.  

Abortion case: Much more than women's rights at stake

Gordon L. Weil

Abortion has again arrived at the U.S. Supreme Court.  The issue boils down to whether the Court will abandon its Roe v. Wade ruling that abortion is a federally protected right and leave the issue to the states.

Its decision could place abortion at the center of next year’s political campaigns.

Abortion may be the single most controversial national issue, but there is much more behind the conflict than the question before the Court. Because abortion has been so heavily politicized, its decision will affect both national politics and the Court’s own standing.

The formal question is whether the Constitution protects a woman’s right to have an abortion.  Roe supporters maintain that the natural right of a person to control their own body is protected.  Opponents reject any such right, because they argue that abortion ends the rights of another person, the fetus.

When people assert conflicting rights, they turn to government to determine or reconcile them.  Congress has avoided action.  In effect, the political decision that was too hot for Congress was passed to the Supreme Court, putting it in the middle of the controversy.

In Roe and later decisions, it ruled that federal protection of the abortion right exists in the early stages of pregnancy, but not afterwards.  Abortion opponents, including some state governments, reject those decisions and seek Roe’s reversal, ending all federal protection.

Unable until now to reverse Roe, some states, like Mississippi in the current case, keep trying to narrow the effect of the Court’s rulings. 

Drawing abortion into the center of partisan politics began decades ago. In 1969, President Richard Nixon launched the idea of a “great silent majority.” Ever since, the Republican Party has worked hard to activate that majority by encouraging and exploiting divisive social issues. 

These are “wedge” issues.  The Republicans expect to be repaid for backing dedicated advocates on these issues by gaining their votes.  The single-issue support gives them a blank check for unrelated policies.  For example, if you elect the GOP because of abortion, you give it a free hand on the environment.  

After the 1973 Roe decision, opposition to abortion became a leading wedge issue for the GOP.

The Court’s choice is whether to keep Roe, even with more limits, or declare that its previous decision was a mistake.  If the Court retains Roe in any form, abortion opponents will campaign hard for candidates who will back more supportive appointments to the Court and restrictive legislation. The GOP will inevitably exploit the issue.

If the Court overturns Roe, some believe the result will be a divided country in which some states protect abortions while others outlaw it.  The GOP would relieve some pressure, and an uneasy accommodation would occur.  That’s an illusion.

Anti-abortion advocates will shift their attention to the states, mostly Democratic, which protect the right.  These states will come under heavy pressure, and the GOP could seek to increase its active support there.  In short, the conflict would continue, driven by the GOP effort to gain control of state governments.

Either way, the Supreme Court’s ivory tower image would be tarnished.  Its decision would add to its being seen more as a political agency than as a judicial body.  Under continual pressure, it has arrived at this position by its retreat from Roe.

It could retain respect if it chose to keep a modified Roe on the grounds of following binding precedent.  Sen. Susan Collins reported that Justice Kavanaugh told her that he regarded the case as “settled law,” gaining her support by implying that he would defer to it as a Court precedent. 

Yet precedents are often reversed.  Now Kavanaugh looks ready to overturn Roe.   Either he offered her a hollow assurance or she mistakenly gave “settled law” more weight than it deserved.

The Court has been intentionally loaded with GOP appointees whose coolness to Roe is obvious. Stacking the Court for partisan purposes goes back to John Adams, the second president.  His Federalist justices dominated the Court long after his party had died.

Chief Justice John Roberts is trying to reduce the political effect of a Court decision. He seems ready to shorten the protected period, but keep Roe.  The nature of a good compromise is that both sides end up equally unhappy.  This could qualify as a compromise, but not the last word.

The decision, which will come in an election year, may be an historic turning point. While the issue is abortion, the struggle for political control and respect for the Supreme Court are fundamental concerns. 

Beyond arguing the merits of the abortion case, Democrats need to highlight more aggressively the broader political strategy linked with it. Voters should better understand the full implications of what is at stake in the case.

  

What Biden can learn from Trump -- promote yourself

 

Gordon L. Weil

There’s a huge difference between Donald Trump and Joe Biden. (You knew that.)

Last month’s unemployment numbers, reporting the fewest new applicants over more than 50 years, showed the difference.

Trump would have trumpeted that news and claimed that it was due to his historic efforts. No matter the truth of his claim, you could not have missed that the news was good, unusual and important. If you might consider voting for Trump, his loud and proud announcement could have left a favorable impression.

Biden failed to aggressively link himself to that good news. It passed in the daily parade of “breaking news,” but without the fanfare and credit-taking of his predecessor. The low unemployment sign-ups could boost an incumbent president, but not Biden.

The Dems seem to follow a Republican tactic – trickle down. The GOP often argues that when the rich do well, benefits trickle down to workers. The Dems seem to favor trickle down news. They expect benefits from their policies will effortlessly gain them political support from grateful recipients.

That approach failed for Barack Obama. In 2010, after the passage of the Affordable Care Act, the Republicans attacked it. The Democrats offered no coordinated national support, and the party was drubbed in the congressional elections. Obama’s good deed did not trickle down, at least not then.

The New York Times headlined “the disconnect between Biden’s popular policies and his unpopularity.” It cited programs that had brought direct and immediate benefits to people, but who claim he hasn’t helped them.

Maybe they separate the president from his policies. Maybe they are disappointed that he hasn’t ended Covid-19, his major focus at the outset.

The Times notes that other Democratic presidents also did not gain the acclaim Franklin D. Roosevelt received for his popular policies. But it misses the fact that FDR was a master of public relations and kept the focus on himself. Similar to Trump, he was always in the news and elicited strong reactions for or against him.

Biden is hampered by a splintered party. “Every little movement has a meaning all its own” was an old pop tune. The late Frank Mankiewicz, a true political insider, flipped it, noting that having many reform agendas meant “every little meaning has a movement all its own.”

Progressive groups saw Biden’s victory and Democratic congressional control as a rare opportunity to undertake major social legislation and for each to achieve its desired reforms. His inability to deliver on all their hopes has deflated their enthusiasm, weakening the Democrats’ chances of preserving their control after the 2022 elections.

On the right, moderate Democrats led by Sen. Joe Manchin (WV) resist major reforms and worry about losing swing supporters to the Republicans. Manchin has a critically needed vote in the Senate and has blocked large parts of Biden’s social program, strong election reform and ending the filibuster.

As a conciliator, he has tried not to confront Democrats whose support he needs, and has sought little recognition for his significant changes in government policy. It would be unrealistic to believe that Biden could have satisfied House progressives while pleasing moderate Manchin in the Senate.

In fact, he will have done well to get Covid-19 recovery spending, infrastructure and some major social policies adopted. Economic uncertainty and his public struggles with Democrats may cost him popularity. Perhaps he counts on using next year purely to campaign on his achievements. But he has to come back from a low point.

Gaining votes may be as much a matter of political packaging as about what’s in the package. Biden could pay for being too conciliatory. As a result, he has not aggressively promoted his role in producing major new initiatives designed to put money into the pockets of average people or deal with Covid-19.

He does not project the image of a powerful president who gets things done. Perhaps he needs to resist Manchin, even at the risk of losing his vote on a major issue. Does Manchin really want to take sole responsibility for killing his president’s proposal? If so, can Biden gain some esteem for fighting for himself?

His needs to have a strong, clear message. He has been in office for less than a year, and the progressives expected too much, too fast. Biden could claim his efforts are a work in progress. He needs stronger Democratic congressional control, which calls for Democratic unity, not Capitol Hill internal infighting.

If they are to succeed, Biden and the Democrats should understand that good deeds do not trickle down to people, but must be sold to them. People are not grateful beneficiaries; they are voters who respond to strong political messages.

In short, Biden could learn from FDR and maybe even from Donald Trump.