In the USA....
Report: U.S. companies keeping $166 billion in offshore tax shelters
By Agence France-Presse
Monday, March 11, 2013 7:00 EDT
US companies are keeping more of their profits offshore, choosing overseas tax havens amid talk in Washington about closing corporate tax loopholes, The Wall Street Journal reported Monday.
The business newspaper said its analysis of 60 big American companies had found that they had collectively parked a total of $166 billion offshore last year.
That shielded more than 40 percent of their annual profits from US taxes, the report said.
Each of the 60 companies chosen for the analysis had held at least $5 billion offshore in 2011, according to The Journal.
The list included Abbott Laboratories, whose store of untaxed overseas earnings rose by $8.1 billion, to $40 billion, the paper said. The increase exceeded the pharmaceutical maker’s net income of $6 billion.
Industrial conglomerate Honeywell International Inc. boosted its store of untaxed earnings held by its offshore subsidiaries and earmarked for foreign investment by $3.5 billion last year to $11.6 billion, a rise equal to the company’s annual profit, excluding a pension adjustment, The Journal said.
The practice is a result of US tax rules that allow companies to not pay taxes on profits earned by overseas subsidiaries if the money is not brought back to the United States, the report pointed out.
Pelosi demands minimum wage increase after massive stock market gains
By Stephen C. Webste
Thursday, March 7, 2013 14:52 EDT
House Minority Leader Nancy Pelosi (D-CA) said Thursday that after witnessing Wall Street reach all-time highs this week, it’s time to raise the minimum wage to $10.10 an hour.
“This week, we saw something quite remarkable, the stock market soaring to record heights. At the same time, we see productivity keeping pace,” Pelosi said during a Thursday briefing at the Capitol, according to The Hill. “But we don’t see income for America’s middle class rising. In fact, it’s been about the same as since the end of the Clinton years.”
Pelosi’s proposal overshoots a similar one by President Barack Obama, who suggested raising the minimum wage to $9 an hour from the current rate of $7.25, which translates to just $15,080 a year for a full-time employee.
A House Democratic aide told Raw Story that Pelosi asked for more than Obama did because she wants to see working people receive a livable wage, not just a small raise. “The economy is recovering, corporate profits are rising, but wages for lower-income folks are stagnating,” the aide said. “So there’s a strong case to be made for a wage that will help people raise families.”
“If we are going to honor our commitment to the middle class, we have to reflect that intention in our public policy,” Pelosi told reporters.
The Dow Industrial Average closed at 114,253 on Tuesday, an all-time high that bests the previous record set in October 2007, just before the financial crisis that nearly ground the global financial system to a halt.
Despite massive gains in share prices and corporate profits in recent years, under-employment remains rampant and the overall unemployment rate is hovering around 8 percent, according to a Gallup survey released Thursday.
Proponents say raising the minimum wage to $10.10 more closely reflects the purchasing power of the minimum wage in 1968, which was roughly $10.50 an hour when adjusted for inflation.
Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) said Tuesday they are proposing legislation to raise the minimum wage and peg it to the rate of inflation, which they say would better ensure working class Americans don’t fall behind the curb as corporate and Wall Street keep the lion’s share of profits for themselves.
Pelosi on raising Medicare age: ‘It’s a scalp’ for Republicans, ‘not a solution’
By David Edwards
Sunday, March 10, 2013 12:53 EDT
House Minority Leader Nancy Pelosi (D-CA) says raising the eligibility age for Medicare benefits is just a political “trophy” for Republicans because the idea would not strengthen the program.
“We don’t want to hurt beneficiaries,” Pelosi told CNN’s Candy Crowley on Sunday. “We certainly want to strengthen Medicare, Social Security, Medicaid. We want to make them more fiscally sound. We want to make sure that for the purpose that they have been instituted, they’re honoring the purpose and the taxpayer, and the beneficiaries are getting their money’s worth.”
“The rising cost of health care in our country is the biggest increase to the rising cost of Medicare,” she explained. “So stopping the drastic increase of the cost of health care is important for our whole economy and health care. Especially important when it comes to Medicare is it’s already working — 0.4 percent, the rate of increase, much slower than it had been. And as I said, Medicaid [is] not increasing. Now, we want to do better than that.”
Pelosi pointed out that Democrats were willing to negotiate with Republicans if the objective was to strengthen earned benefits programs.
“But if the point of it is to take trophies — ‘Let’s raise the age’ — that doesn’t save money. It’s a trophy, it’s a scalp, but it’s not a solution.”
She concluded: “Raising the age, I’m very much against… We’re not there to make [the programs] cash cows to give tax breaks to the wealthiest people in our country and say, ‘We’re balancing the budget.’”
March 10, 2013
Cuts Give Obama Path to Create Leaner Military
By DAVID E. SANGER and THOM SHANKER
WASHINGTON — At a time when $46 billion in mandatory budget cuts are causing anxiety at the Pentagon, administration officials see one potential benefit: there may be an opening to argue for deep reductions in programs long in President Obama’s sights, and long resisted by Congress.
On the list are not only base closings but also an additional reduction in deployed nuclear weapons and stockpiles and a restructuring of the military medical insurance program that costs more than America spends on all of its diplomacy and foreign aid around the world. Also being considered is yet another scaling back in next-generation warplanes, starting with the F-35, the most expensive weapons program in United States history.
None of those programs would go away. But inside the Pentagon, even some senior officers are saying that the reductions, if done smartly, could easily exceed those mandated by sequestration, as the cuts are called, and leave room for the areas where the administration believes more money will be required.
These include building drones, developing offensive and defensive cyberweapons and focusing on Special Operations forces.
Publicly, at least, Mr. Obama has not backed any of those cuts, even though he has deplored the “dumb” approach of simply cutting every program in the military equally.
Mr. Obama will visit Capitol Hill on Tuesday in another attempt to persuade lawmakers to reach a long-term deficit-reduction deal and replace the indiscriminate cuts with more targeted ones.
Still, Pentagon officials are starting to examine targeted ways to cut their budget. “What we’ve learned in the past year is that the politics of dumb cuts is easy, because no one has to think through the implications of slicing everything by 8 percent,” said one senior defense official who has been deeply involved in the planning process. “The politics of cutting individual programs is as hard as it’s always been.”
When Mr. Obama took office four years ago, with the Iraq and Afghanistan wars raging, deep cuts in the defense budget seemed unthinkable. He forced the Pentagon to cut nearly $50 billion a year, which was regarded by many as huge.
But today, deficit hawks outnumber defense hawks on Capitol Hill, and the possibility of $100 billion or more in additional annual cuts does not seem outrageous — if only agreement were possible on which programs should shrink fastest.
Last week, a group of five former deputy defense secretaries — essentially the Pentagon’s chief operating officers — called for a “bottom up” review that reassesses the need for each major program and weapons system, saying this was an opportunity to accomplish cuts that have long been delayed, after a decade in which the American national security budget has nearly doubled.
In their more candid moments — almost always when speaking with a guarantee of anonymity — the Pentagon’s top civilian and military leaders acknowledge that the painful sequestration process may ultimately prove beneficial if it forces the Defense Department and Congress to reconsider the cost of cold-war-era systems that are still in inventory despite the many changes made to the military in the last 10 years.
“Sequester is an ugly experience, but it could grow up to be a budget discipline swan,” said Gordon Adams, a former senior budget official in the Clinton administration who is now at the Stimson Center, which studies defense issues. “It could provide the planning discipline the services and the building have been missing since 2001.”
The central challenge facing the Pentagon and the White House, Mr. Adams and several current senior officials said, is this: All the big, immediate budget benefits come from reducing the size of active-duty forces. By contrast, cutting new weapons systems and bases and reducing health care costs can save large amounts 5 to 10 years out, but it does little in the short term.
Mr. Obama took a step in that direction in 2011, when he rejected a Pentagon request for a permanent standing force of 100,000 or so troops for future “contingency operations” like those in Iraq and Afghanistan. “That’s not the way we are going to go,” he told his staff after the request was received.
The message quickly got back to the Pentagon that Mr. Obama had no interest in repeating the kind of lengthy interventions that have consumed more than $3 trillion since the attacks of Sept. 11, 2001.
But the Pentagon’s subsequent agreement to cut $500 billion in planned spending over a decade turns out to have been just a start, and military officials are now abandoning the phrase that they will have to “do more with less” and starting to assess what it would mean to just do less.
Toward that end, officials say that Ashton B. Carter, the deputy defense secretary, plans to convene a panel of experts to conduct a crash review of the current national military strategy with an eye to reshaping it to fit the new budget constraints.
Mr. Carter, whom the White House asked to remain under the new defense secretary, Chuck Hagel, has already cut the budget for information technology, to force the Pentagon to find cheaper ways to provide it, officials say.
But the next set of cuts will be much harder, because they involve huge constituencies — in Congressional districts, inside the military services and among veterans’ groups.
“The problem is that the biggest, most-needed cuts are in programs that also have the broadest set of defenders,” said Maren Leed, the director of the defense policy studies group at the Center for Strategic and International Studies in Washington and a former top aide to Gen. Ray Odierno, now the Army’s chief of staff.
The most obvious examples of those problems come in base closings and higher co-payments or premiums for the beneficiaries of Tricare, the military’s sprawling health care program, which costs upward of $51 billion a year. To take the politics out of base closings, Congress in the past has established a commission to identify underused facilities, creating a list that it could either vote up or down on but could not amend.
But with many of the targeted bases now fairly obvious to members of Congress, they are reluctant even to establish a new commission. Similarly, Congress turned back a modest administration effort to revamp Tricare. “There’s not a single district without a lot of beneficiaries of the system,” Ms. Leed said.
Cuts in the nuclear arsenal face a different political imperative. Mr. Obama has been sitting for months on a proposal, agreed to by the Joint Chiefs of Staff, that could trim the number of active nuclear weapons in America’s arsenal by nearly a third and make big cuts in the stockpile of backup weapons. But he has not signed off on it.
Rather than act unilaterally, the administration is hoping it can negotiate similar cuts with President Vladimir V. Putin of Russia — and do it without a treaty that would surely set off another battle with defense hawks in the Senate. But that prospect is doubtful, senior officials say.
Even if Mr. Obama wins his strategic argument that the arsenal is far too large for America’s future defense needs, it is not clear how big the savings would be. The easiest weapons to cut — those based in silos in the middle of the country — are also the cheapest to keep in the field.
The most expensive nuclear weapons to operate are carried aboard submarines; they are also the most invulnerable to attack, and thus Pentagon and White House strategists want to preserve them the longest.
Moreover, operating a production base for nuclear weapons, the Defense Department’s insurance policy in case the country ever needed to produce more, is very costly — though the administration is looking for ways to cut an $80 billion commitment to remake America’s nuclear laboratories.
The biggest target of all is the F-35 Joint Strike Fighter, a new jet for the Navy, the Air Force and the Marines, and the largest single line item in the Pentagon’s budget. Between $55 billion and $84 billion has already been spent, but the estimates of final production costs run close to $400 billion.
The Marine Corps says it has no choice but to go forward with its version of the plane, because its current aircraft are obsolete, and the Air Force wants to replace aging F-16s with the new, stealthy plane.
But the program was wildly mismanaged during the Bush administration — “The Joint Strike Fighter program has been both a scandal and a tragedy,” Senator John McCain, Republican of Arizona, said in December 2011 — and now that the number of planes scheduled for production has already been slashed, the per-plane cost has risen to well over $1 billion.
The handling of the production by Lockheed Martin, and the huge changes demanded by each of the services, has made the plane an easy target for critics.
But Lockheed has spread production over nearly every state in the union, in order to keep Congressional support high: as soon as the discussion veers toward strategic needs, Lockheed begins to stress the jobs at risk if the program were cut or canceled.
March 10, 2013
In Search of Debt Deal, Obama Walks a Narrow Path
By RICHARD W. STEVENSON and JOHN HARWOOD
WASHINGTON — President Obama will go to Capitol Hill this week to try to salvage a big deficit-reduction deal, battling not only Republican resistance but also complaints from Democrats that he mishandled his last attempt.
The president’s outreach to rank-and-file lawmakers, like the discontent of liberal Democrats, is the result of Republicans’ refusal to accept any additional tax increases to avert the automatic spending cuts that are beginning to affect the government and the economy. It could meet the same failure as Mr. Obama’s earlier bids to work privately through Congressional leaders and then to apply public pressure.
Hopes now rest on finding a narrow path through the ideological and political imperatives of both parties. White House aides have not ruled out some money-saving structural reforms to Medicare that Republicans favor, notably an idea promoted by the House majority leader, Eric Cantor, to combine the program’s doctor and hospital components with a single deductible for beneficiaries. Using savings from entitlement shifts like that to replace sequestration, as the automatic cuts are called, would meet Republicans’ demands not to use tax increases for that purpose.
At the same time, some Republican senators and aides, publicly and privately, have expressed an openness to accepting revenue increases as part of a loophole-closing overhaul of the tax code. Rolling together budget and tax agreements along those lines would allow Mr. Obama to complete the “grand bargain” that he has sought to tackle the nation’s long-term budget imbalances as the baby boom generation retires.
He plans to meet separately this week with Senate Democrats, Senate Republicans, House Democrats and House Republicans. White House officials said the consideration of budget plans by the House and Senate in coming weeks would provide a natural forum to explore what deal might be possible this year.
“Hopefully there’s an opportunity to work things out through regular order in the House and Senate,” said Dan Pfeiffer, a senior adviser to Mr. Obama. “How likely is that? I can’t say very likely — there are strong structural forces in the Republican Party working against it. But if you try and fail you still have an opportunity to build bonds of trust that could be helpful on other issues.”
Representative Paul D. Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, will introduce a budget blueprint this week that would reduce projected federal spending by $5 trillion over the next decade, repeal Mr. Obama’s health care law, substantially remake Medicare and cut $770 billion from the growth of Medicaid over the next 10 years. But Mr. Ryan suggested that he is open to negotiations with the White House, which is opposed to nearly every element of his plan.
“I think there are things that we can do that don’t offend either party’s philosophy,” Mr. Ryan said on “Fox News Sunday.”
Mr. Obama has signaled a willingness to reduce cost-of-living increases for Social Security by using a less-generous measure of inflation. He has indicated openness to imposing means-testing on Medicare beneficiaries so that high-income retirees would pay more for their medical care, and he has put on the table $400 billion of cuts in Medicare over the next decade.
Republicans say they are looking for more, including two elements they discussed with the White House during failed talks in 2011: raising the eligibility age for Medicare and cutting federal costs for Medicaid.
White House officials said that those proposals were deeply flawed as a matter of policy and that they did not intend to submit any more offers until Republicans expressed some willingness to make tax revenue part of the equation.
But Mr. Cantor raised an idea last month that had been endorsed by the Bowles-Simpson deficit-reduction commission: merging Medicare’s hospital and doctor coverage into one program in a way that could generate savings. Some Democrats also see that kind of proposal — in which Medicare is left fundamentally intact but is overhauled to become more efficient and which could potentially charge the affluent elderly more — as the basis for negotiation.
With all the familiar obstacles looming, however, Democrats are increasingly looking at the previous round of negotiations — at the end of 2012, as the Bush-era tax cuts were scheduled to expire — and concluding that Mr. Obama flinched, leaving tax revenue on the table that would have ended the budget standoff on more favorable terms to Democrats.
“There’s a lot of Monday morning quarterbacking,” said Representative Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee.
The second-guessing extends to virtually every aspect of the deal: its failure to postpone the automatic budget cuts for more than two months, its failure to raise the federal debt limit and its yield of $600 billion in new tax revenue over 10 years out of $4 trillion of new taxes that would have taken effect had the Bush tax cuts been allowed to expire.
Senator Amy Klobuchar, Democrat of Minnesota, said the White House should have negotiated after the election with the bipartisan group of senators that he is courting now, rather than resuming the talks with Speaker John A. Boehner that failed in 2011. In the agreement that concluded that 2011 standoff, said John D. Podesta, a former White House chief of staff for President Bill Clinton, the administration committed a “fundamental miscalculation” by believing Republican opposition to automatic Pentagon cuts would compel them to accept tax increases.
Other Democratic critics say the president should have ratcheted up pressure on Republicans by allowing all the Bush-era tax cuts to expire, even at the risk of saddling middle-class families with tax increases and inflicting harm on the economy.
“Thinking they’d have a second bite of the apple was a real mistake,” said Robert D. Reischauer, a former director of the Congressional Budget Office.
White House aides said the deal was a good one. Not only did they crack Republican resistance to income tax rate increases, they said, but they did it without committing to any major cuts to Medicare and Social Security beneficiaries.
They said that the president was not willing to risk the economy’s health by forcing showdowns when he could get much of what he wants through negotiation, and that the president had been able to make progress on changes to immigration policy and gun control thanks in part to the deal.
Moreover, White House officials said their negotiating position had been undercut by calls at earlier points from prominent Democrats like Representative Nancy Pelosi, the House minority leader, and Senator Charles E. Schumer, the No. 3 Democrat in the Senate, for tax increases that would affect only families with incomes of at least $500,000, rather than Mr. Obama’s preferred $250,000 threshold. (The deal raised the top rate on income over $450,000 for couples and $400,000 for single people). And had they failed to reach a quick deal, White House officials said, they could have lost the opportunity for progress on the rest of the president’s second-term agenda.
Some former members of Mr. Obama’s economic team said the White House could have gotten more. Jared Bernstein, a former adviser to Vice President Joseph R. Biden Jr., faulted the administration for agreeing to extend the bulk of the Bush-era tax cuts rather than raising more tax revenue that could be used to pay for other priorities.
Peter R. Orszag, who was Mr. Obama’s first budget director, said, “By making the middle-class tax cuts permanent, we’ve unfortunately locked into a revenue base that is inadequate.”
Democracy Tested: Smaller States Find Outsize Clout Growing in Senate.The disproportionate power enjoyed in the Senate by small states is playing a growing role in the political dynamic on issues as varied as gun control, immigration and campaign finance.
By Adam Liptak
RUTLAND, Vt. — In the four years after the financial crisis struck, a great wave of federal stimulus money washed over Rutland County. It helped pay for bridges, roads, preschool programs, a community health center, buses and fire trucks, water mains and tanks, even a project to make sure fish could still swim down the river while a bridge was being rebuilt.
Just down Route 4, at the New York border, the landscape abruptly turns from spiffy to scruffy. Washington County, N.Y., which is home to about 60,000 people — just as Rutland is — saw only a quarter as much money.
“We didn’t receive a lot,” said Peter Aust, the president of the local chamber of commerce on the New York side. “We never saw any of the positive impact of the stimulus funds.”
Vermont’s 625,000 residents have two United States senators, and so do New York’s 19 million. That means that a Vermonter has 30 times the voting power in the Senate of a New Yorker just over the state line — the biggest inequality between two adjacent states. The nation’s largest gap, between Wyoming and California, is more than double that.
The difference in the fortunes of Rutland and Washington Counties reflects the growing disparity in their citizens’ voting power, and it is not an anomaly. The Constitution has always given residents of states with small populations a lift, but the size and importance of the gap has grown markedly in recent decades, in ways the framers probably never anticipated. It affects the political dynamic of issues as varied as gun control, immigration and campaign finance.
In response, lawmakers, lawyers and watchdog groups have begun pushing for change. A lawsuit to curb the small-state advantage in the Senate’s rules is moving through the courts. The Senate has already made modest changes to rules concerning the filibuster, which has particularly benefited senators from small states. And eight states and the District of Columbia have endorsed a proposal to reduce the chances that the small-state advantage in the Electoral College will allow a loser of the popular vote to win the presidency.
To be sure, some scholars and members of Congress view the small-state advantage as a vital part of the constitutional structure and say the growth of that advantage is no cause for worry. Others say it is an authentic but insoluble problem.
What is certain is that the power of the smaller states is large and growing. Political scientists call it a striking exception to the democratic principle of “one person, one vote.” Indeed, they say, the Senate may be the least democratic legislative chamber in any developed nation.
Behind the growth of the advantage is an increase in population gap between large and small states, with large states adding many more people than small ones in the last half-century. There is a widening demographic split, too, with the larger states becoming more urban and liberal, and the smaller ones remaining rural and conservative, which lends a new significance to the disparity in their political power.
The threat of the filibuster in the Senate, which has become far more common than in past decades, plays a role, too. Research by two political scientists, Lauren C. Bell and L. Marvin Overby, has found that small-state senators, often in leadership positions, have amplified their power by using the filibuster more often than their large-state counterparts.
Beyond influencing government spending, these shifts generally benefit conservative causes and hurt liberal ones. When small states block or shape legislation backed by senators representing a majority of Americans, most of the senators on the winning side tend to be Republicans, because Republicans disproportionately live in small states and Democrats, especially African-Americans and Latinos, are more likely to live in large states like California, New York, Florida and Illinois. Among the nation’s five smallest states, only Vermont tilts liberal, while Alaska, Wyoming and the Dakotas have each voted Republican in every presidential election since 1968.
Recent bills to overhaul the immigration system and increase disclosure of campaign spending have won the support of senators representing a majority of the population but have not yet passed. A sweeping climate bill, meant to raise the cost of carbon emissions, passed the House, where seats are allocated by population, but not the Senate.
Each of those bills is a major Democratic Party priority. Throughout his second term, President Obama is likely to be lining up with a majority of large-state Congress members on his biggest goals and against a majority of small-state lawmakers.
It is easiest to measure the small-state advantage in dollars. Over the past few years, as the federal government has spent hundreds of billions to respond to the financial crisis, it has done much more to assist the residents of small states than large ones. The top five per capita recipients of federal stimulus grants were states so small that they have only a single House member.
“From highway bills to homeland security,” said Sarah A. Binder, a political scientist at George Washington University, “small states make out like bandits.”
Here in Rutland, the federal government has spent $2,500 per person since early 2009, compared with $600 per person across the state border in Washington County.
As the money started arriving, Senator Bernard Sanders, the Vermont independent, took credit for having delivered a “hefty share of the national funding.” Senator Kirsten Gillibrand, a New York Democrat, vowed to fight for her state’s “fair share.”
As a matter of constitutional design, small states have punched above their weight politically for as long as the United States has existed. The founding of the country depended in part on the Great Compromise, which created a legislative chamber — the Senate — in which every state had the same political voice, regardless of population. The advantage small states enjoy in the Senate is echoed in the Electoral College, where each state is allocated votes not only for its House members (reflecting the state’s population) but also for its senators (a two-vote bonus).
No one expects the small-state advantage to disappear, given its constitutional roots. But its growing importance has caused some large-state policy makers and advocates for giving all citizens an equal voice in democracy to begin exploring ways to counteract it. Those pushing for change tend to be Democrats.
One plan, enacted into law by eight states and the District of Columbia, would effectively cancel the small states’ Electoral College edge. The nine jurisdictions have pledged to allocate their 132 electoral votes to the winner of the national popular vote — if they can persuade states with 138 more votes to make the same commitment. (That would represent the bare majority of the 538 electoral votes needed for a presidential candidate to prevail.)
The states that have agreed to the arrangement range in size from Vermont to California, and they are dominated by Democrats. But support for changing the Electoral College cuts across party lines. In a recent Gallup Poll, 61 percent of Republicans, 63 percent of independents and 66 percent of Democrats said they favored abolishing the system and awarding the presidency to the winner of the popular vote.
In 2000, had electoral votes been allocated by population, without the two-vote bonuses, Al Gore would have prevailed over George W. Bush. Alexander Keyssar, a historian of democracy at Harvard, said he would not be surprised if another Republican candidate won the presidency while losing the popular vote in coming decades, given the structure of the Electoral College.
Critics of the outsize power of small states have also turned to the courts. In December, four House members and the advocacy group Common Cause filed an appeal in a lawsuit challenging the Senate’s filibuster rule on the ground that it “upsets the balance in the Great Compromise” that created the Senate.
The filibuster “has significantly increased the underrepresentation of people living in the most populous states,” the suit said. But for the rule, it said, the Dream Act, which would have given some immigrants who arrived illegally as children a path to legalization, and the Disclose Act, requiring greater reporting of political spending, would be law.
A federal judge in Washington dismissed the suit, saying he was “powerless to address” what he acknowledged was an “important and controversial issue.” The judge instead sided with lawyers for the Senate, who said that the challengers lacked standing to sue and that the courts lacked power to rule on the internal workings of another branch of the government.
However these individual efforts fare, the basic disparity between large and small states is wired into the constitutional framework. Some scholars say that this is as it should be and that the advantages enjoyed by small states are necessary to prevent them from becoming a voiceless minority.
“Without it, wealth and power would tend to flow to the prosperous coasts and cities and away from less-populated rural areas,” said Stephen Macedo, a political scientist at Princeton.
Gary L. Gregg II, a political scientist who holds the Mitch McConnell Chair in Leadership at the University of Louisville, similarly argued that urban areas already have enough power, as the home of most major government agencies, news media organizations, companies and universities. “A simple, direct democracy will centralize all power,” he wrote recently, “in urban areas to the detriment of the rest of the nation.”
Others say the country needs to make changes to preserve its democratic vitality. They have called for an overhaul of the Constitution, as far-fetched an idea as that may be.
“The Senate constitutes a threat to the vitality of the American political system in the 21st century,” said Sanford Levinson, a law professor at the University of Texas, “and it warrants a constitutional convention to rectify it.”
Frances E. Lee, a political scientist at the University of Maryland, said the problem was as real as the solution elusive, adding that she and other scholars have tried without success to find a contemporary reason to exempt the Senate from the usual rules of granting citizens an equal voice in their government. “I can’t think of any way to justify it based on democratic principles,” Professor Lee said.
Fresno, Calif., is a city of a half-million people with a long list of problems, including 14 percent unemployment, the aftermath of a foreclosure crisis, homeless encampments that dot the sun-blasted landscape and worries about the safety of the surrounding county’s drinking water.
A thousand miles away, a roughly comparable number of people inhabit the entire state of Wyoming. Like Fresno and its environs, Wyoming is rural, with an economy largely based on agriculture. It is also in much better shape than Fresno, with an unemployment rate around 5 percent.
Even so, Wyoming receives far more assistance from the federal government than Fresno does. The half-million residents of Wyoming also have much more sway over federal policy than the half-million residents of Fresno. The vote people in Fresno remember best was taken in 2007, when an immigration overhaul bill that included a guest worker program failed in the Senate. Both agricultural businesses and leaders of Fresno’s large Hispanic population supported the bill, much as polls suggested a majority of Americans did.
But the immigration bill died in the Senate after a 53-46 vote rejecting a bid to move the bill forward to final passage. Wyoming’s two senators were in the majority and California’s two senators on the losing side.
Had the votes been allocated by population, the result would have been lopsided in the other direction, with 57 votes in favor and 43 against.
Even 57 votes would not have been enough to overcome a filibuster, which requires 60. In the last few years, 41 senators representing as little as a third of the nation’s population have frequently blocked legislation, as the filibuster (or the threat of it) has become a routine part of Senate business.
Beyond the filibuster, senators from Wyoming and other small states regularly oppose and often thwart programs popular in states with vastly bigger populations. The 38 million people who live in the nation’s 22 smallest states, including Wyoming, are represented by 44 senators. The 38 million residents of California are represented by two senators.
In one of every 10 especially consequential votes in the Senate over the two decades ending in 2010, as chosen by Congressional Quarterly, the winning side would have lost had voting been allocated by population. And in 24 of the 27 such votes, the majority of the senators on the winning side were Republicans.
David Mayhew, a political scientist at Yale, cautioned that the political benefit to Republicans is “quite small as well as quite stable,” adding that it is important not to lose sight of small blue states like Delaware, Hawaii, Rhode Island and Vermont. But he acknowledged that small states of both political stripes receive disproportionate federal benefits. Professor Lee, an author of “Sizing Up the Senate: The Unequal Consequences of Equal Representation,” argues that the partisan impact of the small-state advantage is larger. “There is a Republican tilt in the Senate,” she said.
“The way Republicans are distributed across the nation is more efficient,” she added, referring to the more even allocation of Republican voters, allowing them to form majorities in small-population states. Democrats are more tightly clustered, especially in large metropolitan areas.
Equal representation of the states in the Senate is a consequence of the Great Compromise, the 1787 deal that resolved a seemingly intractable dispute between the smaller states and a handful of large ones like Massachusetts, Pennsylvania and Virginia. But the country was very different then. The population was about four million, and the maximum disparity in voting power between states was perhaps 11 to 1. It is now six times greater than that. Even scholars who criticize how voting power is allocated in the Senate agree that parts of its design play an important role in the constitutional structure. With its longer terms and fewer members, the Senate can, in theory, be more collegial, take the long view and be insulated from passing passions.
But those qualities do not depend on unequal representation among people who live in different states. The current allocation of power in the Senate, many legal scholars and political scientists say, does not protect minorities with distinctive characteristics, much less disadvantaged ones.
To the contrary, the disproportionate voting power of small states is a sort of happenstance that has on occasion left a stain on the nation’s history.
Robert A. Dahl, the Yale political scientist, who is 97 and has been studying American government for more than 70 years, has argued that slavery survived thanks to the disproportionate influence of small-population Southern states. The House passed eight antislavery measures between 1800 and 1860; all died in the Senate. The civil rights movement of the mid-20th century, he added, was slowed by senators representing small-population states.
As the population of the United States has grown a hundredfold since the founding, to more than 310 million, the Supreme Court has swept away most instances of unequal representation beyond the Senate. In a series of seminal cases in the 1960s, the court forbade states to give small-population counties or districts a larger voice than ones with more people, in both state legislatures and the House.
“The conception of political equality from the Declaration of Independence, to Lincoln’s Gettysburg Address, to the Fifteenth, Seventeenth, and Nineteenth Amendments can mean only one thing — one person, one vote,” Justice William O. Douglas wrote for the court in 1963, referring to the amendments that extended the franchise to blacks and women and required the popular election of the Senate.
The rulings revolutionized American politics — everywhere but in the Senate, which the Constitution protected from change and where the disparities in voting power have instead become more extreme.
A Barrier to Change
In his memoirs, Chief Justice Earl Warren described the cases from the 1960s establishing the equality of each citizen’s vote as the most important achievement of the court he led for 16 years. That made them more important in his view than Brown v. Board of Education, which ordered the desegregation of public schools, and Gideon v. Wainwright, which guaranteed lawyers for poor people accused of serious crimes.
“Legislators represent people, not trees or acres,” Chief Justice Warren wrote for the court in 1964, rejecting the argument that state senators, like federal ones, could represent geographic areas with varying populations. “Legislators are elected by voters, not farms or cities or economic interests.”
Applying that principle to the Senate would be very hard. Even an ordinary constitutional amendment would not do the trick, as the framers of the Constitution went out of their way to require states to agree before their power is diminished. Article V of the Constitution sets out the procedure for amendments and requires a two-thirds vote of both houses of Congress or action by two-thirds of state legislatures to get things started. But the article makes an exception for the Senate. “No state, without its consent, shall be deprived of its equal suffrage in the Senate,” the article concludes.
The United States Senate is hardly the only legislature that does not stick strictly to the principle of equal representation. Political scientists use the term “malapportioned” to describe the phenomenon, and it is common around the world.
But the Senate is in contention for the least democratic legislative chamber. In some other countries with federal systems, in which states or provinces have independent political power, a malapportioned upper house may have only a weak or advisory role. In the United States, the Senate is at least equal in power to the House, and it possesses some distinctive responsibilities, like treaty ratification and the approval of presidential appointments. A recent appeals court decision severely limiting the president’s power to make recess appointments, if it stands, will further increase the Senate’s power.
Professor Dahl has calculated the difference between the local government unit with the most voting power and that with the least. The smallest ratio, 1.5, was in Austria, while in Belgium, Spain, India, Germany, Australia and Canada the ratio was never higher than 21 to 1.
In this country, the ratio between Wyoming’s representation and California’s is 66 to 1. By that measure, Professor Dahl found, only Brazil, Argentina and Russia had less democratic chambers. A separate analysis, by David Samuels and Richard Snyder, similarly found that geographically large countries with federal systems tend to overrepresent sparsely populated areas.
This pattern has policy consequences, notably ones concerning the environment. “Nations with malapportioned political systems have lower gasoline taxes (and lower pump prices) than nations with more equitable representation of urban constituencies,” two political scientists, J. Lawrence Broz and Daniel Maliniak, wrote in a recent study. Such countries also took longer to ratify the Kyoto Protocol on climate change, if they ratified it at all. These differences were, they wrote, a consequence of the fact that “rural voters in industrialized countries rely more heavily on fossil fuels than urban voters.”
In 2009, the House of Representatives narrowly approved a bill to address climate change, but only after months of horse-trading that granted concessions and money to rural states. That was an example, Mr. Broz and Mr. Maliniak said, of compensating rural residents for the burdens of reducing greenhouse-gas emissions.
But it was not enough. The bill died in the Senate.
March 10, 2013
G.O.P. in Arizona Is Pushed to Expand Medicaid
By FERNANDA SANTOS
PHOENIX — In the battle to get the Medicaid expansion being championed by Gov. Jan Brewer approved by the state’s legislators, her closest advisers are hanging their hopes on the number eight. That is how many of the 17 Republicans in the State Senate they believe they can get on their side.
They were working on an equally modest tally in the State House of Representatives, an unusual state of affairs for a staunchly conservative governor: her most reliable supporters on this issue are on the other side of the aisle, in the Legislature’s usually powerless Democratic minority.
“It is not often we agree with her,” said Representative Bruce Wheeler, the minority whip, “but we certainly do on this issue.”
Indeed, the governor has won respect in conservative circles for her outspoken criticism of President Obama and for her support of Arizona’s strict immigration legislation.
Last week, Ms. Brewer took her fight from conference rooms and the halls of the Senate and House to the steps of the State Capitol, surrounding herself with health care professionals in a public show of force before the Legislature, where the Medicaid bill she endorses will be unveiled on Tuesday.
In the meantime, a coalition of business leaders began running television advertisements promoting Ms. Brewer’s plan as a lifeline to hospitals, particularly in rural areas, where the number of Medicaid recipients is large, as is the number of uninsured seeking care in emergency rooms.
But in their push to win over Republicans, the governor’s advisers have found that they have no single persuasive argument, and at times, no chance at all for persuasion.
To make their case, they are pressing the idea that expanding Medicaid, the federal and state program that provides health care to poor and disabled people, is the best way to stabilize the state’s health care system, already buckling under the weight of caring for uninsured patients. They invoke the burden borne by the insured, whose high premiums cover, in part, the cost of treatment that goes unpaid. They remind legislators that to back the plan is to honor the choice of voters, who overwhelmingly passed ballot measures, in 1996 and 2000, expanding coverage for childless adults with incomes up to 100 percent of the federal poverty level.
For good measure, they warn of the perils of bad press just as the 2014 campaign season is getting started. If the state got hammered in 2010 for cutting Medicaid coverage for certain organ transplants, affecting 94 patients, the thinking goes, imagine the reaction if the expansion does not go through and thousands of childless adults are dropped from the rolls just days after Christmas. (The waiver that has allowed for their coverage expires on Jan. 1.)
“The legislative dance is just getting started,” said Chuck Coughlin, the governor’s former campaign manager and one of the lobbyists leading the effort.
It is a choreography that has fostered unlikely alliances and uncertain behind-closed-doors deals, in Arizona and in other states where Republican governors’ embrace of Medicaid expansion set off a backlash from Republican legislative majorities.
Committees are exploring other options in Florida, where Gov. Rick Scott faces increasing uncertainty over whether the expansion there will pass. In Ohio, Gov. John R. Kasich invoked dollars and God during his State of the State address, telling conservative legislators that the vulnerable should not be left behind.
For Ms. Brewer, getting the expansion approved has become a matter of personal pride, even if it has gone against her strong opposition to the Obama administration’s health care overhaul. She has thrown all of her political capital behind the effort, traveling across the state to sell her message and encouraging a Republican lawmaker, State Representative Heather Carter, who has generally been in line with the governor’s health policies, to nudge her colleagues in the Legislature.
“One of the things she has demonstrated is that she generally gets what she wants,” said her spokesman, Matthew Benson.
The battle has sometimes boiled down to semantics. For example, the state’s Medicaid director, Thomas Betlach, refuses to use the word expansion. “Restoration,” he said assertively during an interview, referring to the fact that the under the governor’s plan, the program would again apply to people who lost coverage when the recession hit and the state froze enrollment. (The expansion would stretch the coverage beyond the state’s income threshold to 133 percent of the poverty level, or $30,675 for a family of four.)
Ms. Brewer and her supporters call a fee that would be levied against hospitals to help offset the state’s share of the costs a “hospital assessment.” Opponents call it a “bed tax.”
Recently, 40 lobbyists, representing at least 110 groups pushing for the expansion, among them hospitals, health care associations and business organizations, huddled in the executive wing of the State Capitol to update the governor’s advisers on their progress and hone strategies. One of them reminded colleagues not to encourage enthusiastic Democrats to interfere; later, he said that in Arizona, using Democrats to win over Republicans can be disastrous.
The lobbyists have trained their focus on the Senate, whose president, Andy Biggs, a conservative Republican from a conservative district southeast of Phoenix, they hope to sway.
If enough Senate Republicans get behind the expansion, their thinking goes, House Republicans will follow. The House speaker, Andy Tobin, a Republican, has been carrying on his own offensive, meeting with freshman Democrats to try to dissuade them from voting for the expansion. And in an interview, State Representative John Kavanagh, chairman of the Appropriations Committee and a vociferous opponent of the governor’s plan, said that if the measure were to get a vote in the coming days, “it wouldn’t pass.”
“As more facts are revealed about the way it’s being funded, the bed tax and all,” he added, “more members of our caucus fall off.”
The Medicaid expansion is, by all accounts, the most contentious element of Ms. Brewer’s proposed budget, and the proposed hospital fee its sharpest thorn. In private, conservative groups like the Phoenix-based Goldwater Institute have been weighing whether to sue the state, arguing that the assessment is a tax, which would require approval by a two-thirds vote in the Legislature, as prescribed in a ballot measure passed in 1992.
“They’ll never get two-thirds out of this chamber,” Mr. Kavanagh said.
The governor’s advisers seemed certain that the vote would not be necessary.
John Arnold, the state’s budget director, said the fee would be equal to the difference between what Arizona gets each year from the 1998 settlement with tobacco companies, which was struck as a means for most states to recover health care costs linked to tobacco use, and the state’s share of the Medicaid program. The amount is not fixed, he added, as settlement payments, federal contribution to the program and enrollment fluctuate.
Ms. Brewer has argued that expanding Medicaid would provide the state about $1.7 billion in federal financing, and that the state would be able to stop offering benefits to childless adults if federal reimbursement dropped below 80 percent.
In an interview, Darcy A. Olsen, the Goldwater Institute’s president, said: “This money doesn’t come free from Washington. Arizona taxpayers pay federal taxes, too.”
The governor has also emphasized Medicaid’s current cost (its cost per participant is $680 lower than the national average, according to an analysis by the Kaiser Family Foundation) and managed-care system (it functions like an H.M.O.), which has helped reduce the number of emergency room visits and the length of hospital stays among participants. And Ms. Brewer has showed no signs of backing off.
“The governor is committed,” Mr. Benson, her spokesman, said. “People who follow politics in this state know that when she makes a decision, she digs in her heels.”