OUR DEMOCRACY’S CHALLENGES ARE SERIOUS AND LONGSTANDING Part 2

Our democracy’s challenges are serious and longstanding. I presented an overview of the challenges, some history, and then focused on the selection of the president via the undemocratic Electoral College, including how to fix it, in a previous post. This post focuses on Congress. The Senate is a long way from the one person, one vote representation on which democracy is typically built. The extreme gerrymandering of some U.S. House districts (and of some state legislative seats) means that democracy is subverted there too. Finally, the Supreme Court has allowed elections to be held with gerrymandered districts.

(Note: If you find my posts too long to read on occasion, please just skim the bolded portions. Thanks for reading my blog! Special Note: The new, more user-friendly website for my blog is here.)

Like the process of selecting the president via the Electoral College, the process for electing members of Congress is also flawed and undemocratic. The Senate, while established in the Constitution at two seats per state, is blatantly unconstitutional under the “one person, one vote” standard established by the Supreme Court in the 1960s based on the Constitution’s Equal Protection Clause. Although Senators are elected now rather than appointed by state legislatures (due to the 17^th amendment to the Constitution in 1913), Senate representation is clearly undemocratic based on a state-to-state comparison. [1] For example, a California Senator represents the state’s 39 million people, over 67 times the 581,000 people a Wyoming Senator represents.

All Representatives in the U.S. House do represent similar numbers of people, but in some states the districts are so gerrymandered that they do not reflect the population of the state politically or racially. In part because of partisan gerrymandering, very few House elections are competitive. In 2022, only 30 out of the 435 House seats had a margin of victory of less than four-percentage points (i.e., 52% to 48% or closer). [2]

Gerrymandering, which is the manipulation of the boundaries of an electoral district to predetermine the outcome based on party, race, incumbency, or other factors, has been happening for a long time. Gerrymandering has become more blatant and effective in the 21^st century because computers and mapping software now allow more sophisticated mapping using more detailed data.

In the redrawing of U.S. House districts after the 2010 Census, independent analyses find that Republicans engaged in extreme partisan gerrymandering in seven states. Partisan gerrymandering is accomplished by packing as many supporters of the opposition party as possible into as few districts as possible. The opponents will win these seats overwhelmingly. Meanwhile, supporters of the favored party are spread more evenly across the other districts, so this party will comfortably win as many seats as possible. Partisan gerrymandering has also dramatically affected thousands of seats in state legislatures.

The best estimates are that, through gerrymandering, Republicans captured between 15 and 20 more seats in the House (out of 435) than would have been expected otherwise. After the 2022 elections, the Republicans controlled the House by a margin of just five votes (which has now shrunk to one vote due to resignations and a removal). For example, in South Carolina and Wisconsin the Republicans’ percentage of each state’s House seats is about 26-percentage points higher than the percentage of their vote in statewide races. (In SC: Republicans got roughly 60% of the vote in the Governor’s and Senator’s races but, due to gerrymandering, won 6 out of 7 House seats, 86%. In WI: Republicans got roughly 49% of the vote in the Governor’s and Senator’s races but, due to gerrymandering, won 6 out of 8 House seats, 75%.)

Extreme partisan gerrymandering means that officials get elected by a small handful of their constituents – those who vote for them in the primary election (where turnout is typically very low). Given that the party that will win the general election is in most cases pre-determined by gerrymandering or a district’s natural political characteristic, the winning candidate is selected by the small number of voters who are motivated enough to turn out and vote in the primary election. These are typically the party’s most committed and partisan voters. The result is that elected officials are in effect picking their voters, rather than most voters having any real choice about who their elected representative will be. (See this previous post for more details on gerrymandering and its undermining of democracy.)

The Supreme Court, prior to the 2022 elections, blocked the implementation of changes to House districts in at least seven states despite lower courts’ rulings that the districts were unconstitutionally gerrymandered. After the election, it confirmed that the districts were unconstitutional. This probably delivered at least seven seats to Republicans that otherwise would have gone to Democrats. (See this previous post for more detail on the Supreme Court’s rulings and their effects on the election.) The shift of five seats from Republicans to Democrats would have changed the control of the House, which would have made a dramatic difference in policy making in the House and for the country. It’s hard to believe that the Supreme Court’s actions and timing were anything but blatantly political.

Racial and partisan gerrymandering are closely linked because a large percentage of Blacks typically vote for Democrats. Racial gerrymandering is still very much present in the south. For example, in Alabama, there are seven congressional districts. Twenty-seven percent of the population is Black (and four percent is in other non-white categories), but by packing as many Black voters into one district as possible and splitting up the other Black voters among the other districts, there is only one Black-majority district in the state. The courts have ordered the creation of another Black-majority district but Alabama officials have been resistant. From a partisan perspective, Alabama Republicans got 67% of the vote in the Governor’s and U.S. Senator’s race but, because of gerrymandering, won 86% of the House seats (6 of 7), a 19-percentage point difference.

Similarly, in Louisiana, there are six congressional districts. A third of the population is Black, but, again, by packing as many Black voters into one district as possible and splitting up the other Black voters among the other districts, there is only one Black-majority district in the state. From a partisan perspective, Louisiana Republicans got 62% of the vote in the U.S. Senator’s race but, because of gerrymandering, have 83% of the House seats (5 of 6), a 21-percentage point difference.

My next post will present ways to reduce partisan and racial gerrymandering, which would make our elections for the U.S. House (and state legislatures) more democratic, i.e., more representative of a state’s and district’s population.

[1] Dayen, D., 1/29/24, “America is not a democracy,” The American Prospect (https://prospect.org/politics/2024-01-29-america-is-not-democracy/)

[2] Leaverton, C., 1/20/23, “Three takeaways on redistricting and competition in the 2022 midterms,” Brennan Center for Justice (https://www.brennancenter.org/our-work/analysis-opinion/three-takeaways-redistricting-and-competition-2022-midterms)

SHORT TAKES ON IMPORTANT STORIES #3: CORPORATE GREED

Here are short takes on three important stories that have gotten little attention in the mainstream media. Each provides a quick summary of the story, a hint as to why it’s important, and a link to more information.

STORY #1: Corporate profits have skyrocketed. They were roughly $12 trillion per year in 2022 and 2023. This is up from about $8.5 trillion a year in 2019 and 2020; a 50% increase in just three years. [1] (The graph linked to in this footnote is worth a thousand words.) This in large part reflects the price gouging large corporations engaged in in the post-pandemic years, claiming it was inflation. Their ability to inflate their prices and profits is due to the presence of just a few large corporations with monopolistic power in many markets in the U.S. economy. It also reflects squeezing workers to keep their pay low. [2]

This trend of high marketplace concentration, monopolistic power, and growing profits for large corporations has been going on for 40 years largely because of the failure to enforce antitrust laws. Corporate profits were $2.2 trillion per year in 2000, $1.1 billion in 1990, and $0.8 billion in the early 1980s. In other words, they are now over five times what they were in 2000, over ten times what they were in 1990, and 15 times what they were in the early 1980s.

In the last 20 years, marketplace concentration has increased in three-quarters of the U.S. economy with fewer corporations controlling more of the market than ever before. The good news is that the Biden administration is reviving enforcement of antitrust laws. It’s tackling price fixing in the meat industry – where four corporations control roughly 70% of the market. It’s suing Amazon for its monopolistic practices. It’s blocked the merger of JetBlue and Spirit Airlines as well as other mergers that would have increased concentration and monopolistic power.

Notably, the Biden administration initiated the first major antitrust case in 25 years that targets monopoly power. It charges Google with monopolizing the search engine market. The U.S. Department of Justice has been joined by 50 states’ attorneys general in the case. As the trial began, Google asked to keep the proceedings and evidence confidential and the judge was quite compliant. Google typically claimed the information represented business secrets that would harm the company if made public. In particular, Google tried to keep secret the dollar figure central to the whole case: how much it paid smart phone and computer companies to make its search engine the default on their devices. Six weeks into the trial, media representatives and transparency advocates filed a motion challenging the unprecedented secrecy and obstruction of public access to the trial’s proceedings and evidence. The judge responded by making much more information publicly available, including the amount Google was paying to have its search engine be the default on a wide range of phone and computer products and, therefore, effectively the default search engine across most of the Internet. It was a stunning $26.3 billion in 2021 alone. [3]

STORY #2: Chief executive officers’ (CEO) compensation is exorbitant and does not reflect their skills, their productivity, or competition for good candidates for the CEO position. Rather, it reflects CEOs’ power over their Boards of Directors and the lack of any counter weight to such unwarranted influence. CEO compensation declined slightly in 2022 because of weak stock market performance, which reduced the value of stock-based compensation. However, over the last 45 years, CEOs’ compensation is up over 1,200% (adjusted for inflation) while a typical workers’ pay is up 15%. CEOs are now paid 344 times as much as a typical worker, up from 21 times worker pay in 1965. [4]

The most egregious example of exorbitant CEO pay is the 10-year compensation agreement for Elon Musk approved in 2018 by Tesla’s Board of Directors. It’s potentially worth $56 billion. A shareholder sued and a judge just ruled that this level of compensation was unfair to shareholders. Tesla’s Board has only eight members and many have close personal ties to Musk (such as his brother) and therefore don’t have the degree of independence required for a publicly traded company. The compensation package would have allowed Musk to buy 304 million shares of Tesla stock for about $23 each. Over the last 3 ½ years, the stock’s price on the market has always been over $100, hit a high of $400, and has generally been around $200 per share – far above the purchase price of just over $23 given to Musk. [5] [6]

STORY #3: Our tax system needs to require wealthy CEOs and other wealthy individuals to pay their fair share in taxes. To achieve this, fair taxes are needed on income, including capital gains (i.e., the profit from selling stock). Without a fair and well-enforced national tax system, the wealthy play games to avoid national and state taxes. Recently, Amazon founder Jeff Bezos announced that he’s moving his official residence from Washington state to Florida. (He just bought two mansions for almost $150 million on a literally gated island near Miami.) It appears that his motivation for the move was to avoid a new 7% capital gains tax that Washington state has enacted on the sales of stock worth over $250,000. Bezos has been selling about 50 million shares of Amazon stock each year generating roughly $8 billion a year in income that was previously untaxed in Washington. He will save roughly $600 million a year by moving his legal residence to Florida, which has no income tax and no tax on capital gains. Washington enacted its capital gains tax to make its tax system fairer. Prior to its enactment, Washington’s state tax system was rated as the most regressive in the country. With this new, fairer tax system in place, Florida is now the state in the country with the most regressive state tax system. [7]

[1] Federal Reserve Economic Data, 12/21/23, “Corporate profits after tax,” St. Louis Federal Reserve Bank (https://fred.stlouisfed.org/series/CP)

[2] Reich, R., 2/16/24, “Where are record corporate profits coming from? Your thinning wallets,” Reich’s daily blog (https://robertreich.substack.com/p/corporate-soaring-profits-are-from)

[3] Goldstein, L., 11/28/23, “The secret trial,” The American Prospect (https://prospect.org/justice/2023-11-28-google-secret-trial/)

[4] Bivens, J., & Kandra, J., 9/21/23, “CEO pay slightly declined in 2022,” Economic Policy Institute, (https://www.epi.org/publication/ceo-pay-in-2022/)

[5] Chase, R., 1/31/24, “Elon Musk cannot keep Tesla pay package worth more than $55 billion, judge rules,” The Boston Globe from The Associated Press

[6] Hals, T., 1/31/24, “Judge voids Elon Musk’s ‘unfathomable’ $56 billion Tesla pay package,” Reuters

[7] Johnson, J., 2/13/24, “Tax-dodging Jeff Bezos to save $610 million with move to ‘Billionaire Bunker’ in Florida,” Common Dreams (https://www.commondreams.org/news/jeff-bezos-billionaire-bunker)

SHORT TAKES ON IMPORTANT STORIES 2/1/24

These short takes highlight important stories that have gotten little attention in the mainstream media. They provide a quick summary of the story, a hint as to why it’s important, and a link to more information.

The U.S. economy is performing better than any other major economy in the world. Workers’ wages have grown 2.8% over the last four years after adjusting for inflation. The overall economy is 7% larger than before the pandemic and unemployment has been at record lows. Inflation is down to a benign 2% and consumer spending, which drives the U.S. economy, is growing. This isn’t just happenstance; it’s been fueled by pandemic relief measures and economy-stimulating legislation passed by Democrats in Congress and the Biden Administration. The success of these policies suggests that in future economic downturns, stimulative spending (i.e., fiscal policy) may well be more effective in reviving the economy than the Federal Reserve’s adjustment of interest rates (i.e., monetary policy). (Lynch, D. J., 1/28/24, “You don’t have to look far for the world’s best economic recovery because it’s happening here. What is going on in the US?” The Boston Globe from The Washington Post)

In February 2023, a train derailed in East Palestine, OH, and created a toxic nightmare. The railroads promised to operate more safely and Congress promised to pass legislation to prevent future accidents. However, derailments have increased and no legislation has been passed. Congressional legislation, the Railway Safety Act, has been opposed by lobbyists for the railroads. (Eavis, P., 1/28/24, “Since Ohio train derailment, accidents have gone up,” The Boston Globe from the New York Times)

The Consumer Financial Protection Bureau (CFPB) has proposed limiting the overdraft fees big banks can charge. The proposal, which will probably take a year or two to finalize and go into effect, would reduce the $35 overdraft fee that’s the current standard to between $3 and $14 or just enough to cover banks’ costs. The proposal would only apply to the 175 largest banks (out of about 9,000), but those banks collect about 2/3 of all overdraft fees. In 2022, consumers paid $7.7 billion in overdraft fees; the CFPB’s proposal would save bank customers about $3.5 billion a year. CFPB will be accepting public comments until April 1. (Crowley, S., 1/17/24, “Consumer bureau proposes overdraft fee limits for large banks,” The Boston Globe from the New York Times; The CFPB website: CFPB Proposes Rule to Close Bank Overdraft Loophole that Costs Americans Billions Each Year in Junk Fees)

Republicans in 15 states are refusing to provide federally-funded food to 8 million very low-income children this summer when they don’t get free meals at school. In 2022, roughly one out of every six households with children did not have enough food (17.3%). This was up almost 50% from 2021 due to the end of emergency food assistance, which was a response to the pandemic. The states refusing the federal funding are: Alabama, Alaska, Florida, Georgia, Idaho, Iowa, Louisiana, Mississippi, Nebraska, Oklahoma, South Carolina, South Dakota, Texas, Vermont, and Wyoming. (Gowen, A., 1/10/24, “Republican governors in 15 states reject summer food money for kids,” The Boston Globe from the Washington Post)

A record 20 million people have enrolled in health insurance under the Affordable Care Act (aka Obama Care) this year. This is up 25% over last year’s record of 16 million and is at least in part due to increased subsidies for health insurance’s costs. The need for and popularity of federally subsidized health insurance grows, despite Republican attempts to reduce the subsidies and statements denigrating the Affordable Care Act. (Weiland, N., 1/22/24, “20m signed up for Obamacare for the new year,” The Boston Globe from the New York Times; Weiland, N., 12/21/23, “Americans are signing up for Obamacare in record numbers,” The Boston Globe from the New York Times)

Intuit Inc., the maker of the Turbo Tax software for doing income tax returns, has lobbied aggressively against the IRS creating an easy, free, on-line system for Americans to file their income tax returns. It has claimed such a system would be too expensive and not a good use of taxpayers’ money. The IRS has estimated that it would cost between $64 and $249 million annually for it to offer a free E-filing system. Intuit got a federal research tax credit of $94 million in 2022, which would roughly pay for the cost of the free IRS filing system. (Business Talking Points, 1/4/24, “Lawmakers say break for Intuit could have financed free government tax filing program,” The Boston Globe from Bloomberg News; Senator E. Warren, 1/3/24, “Warren, Blumenthal, Sanders, Porter probe massive tax breaks received by Intuit while company fights free tax filing for millions of Americans”)