Reflections on the 2020 Election

By Frank Sherman

Like many in this country, I was glued to the TV and cell phone last week waiting to hear the final outcome of the most contentious election in modern history. I volunteered for the first time at a polling location on the south side of Milwaukee to see Americans turned out in record numbers to vote in the midst of the worst pandemic in the last century.

Shortly after the race was called for Biden & Harris on Saturday, ICCR issued a statement saying “We have faced many obstacles and headwinds over the last four years… we must turn the page and get back to work.” Ceres said the election results are a “win for our health, our planet, our economy and our future.” The Catholic Climate Covenant added “the work begins anew to heal together and to work together to protect God’s creation.” I must admit, my heart rate lowered… until Monday morning when reality set in.

The cover article of The Wall Street Journal stated that the election looks like it may yield a “dream scenario for business: a moderate Democratic president whose more aggressive plans can’t pass the Senate, but who eschews the unpredictability that has often marked the Trump administration”. As COVID infections and hospitalizations hit new records this week, and unemployment and food bank lines grow ever bigger, the stark realities facing the next Administration…and us…came back into focus.

So what can we take away from this election? Analyst Bruce Mehlman states that, although President Trump lost for failing to competently manage the pandemic and for sowing excessive chaos and division, House Democrats lost because voters feared too-aggressive ‘socialist’ policies from the Left. We learned that the electorate is not monolithic….and the 72 million Trump voters are not all white nationalists. Many fear that globalization and technology threaten their jobs; their voices aren’t heard by the coastal elitist; and they fundamentally disagree with some policies offered by the Left (e.g. defunding the police, decriminalizing the border, ending fossil fuels, higher taxes).

Our nation remains closely and bitterly divided. Both parties face internal battles over future direction and leadership. Biden is viewed as a transitional leader, hired to manage COVID and bring back civility to our politics. A divided Congress will limit his options. He’s already dismissed      Healthcare For All, the Green New Deal, and a Wealth Tax from the progressive wing of his party. He will now have to rely on executive orders and his regulatory authority to even execute his more moderate agenda.

But there are reasons for hope. Biden is a legislator with a history of finding common ground with Congressional opponents. He is an institutionalist with respect for the people, processes, and      protocol that make government work. The business community recognizes the growing expectations of their stakeholders, asking for them to stand for a higher purpose and to speak out for more inclusive and equitable public policy. The global investor community is demanding corporations to address their environmental and social impacts that haven’t yet appeared on their quarterly earnings statement.

I don’t expect the GOP to suddenly take a knee, like the guards in the Wizard of Oz, to say “All hail Dorothy. The wicked witch is dead!”; no more than I expect Senator Bernie Sanders to invite Senator Mitch McConnell over for Thanksgiving dinner. But as we approach the holiday season, we all can learn from the words of that great and powerful Wizard: “A heart is not judged by how much you love; but by how much you are loved by others.”

A USDA Christmas

It’s hard to think about fall and winter holidays without thinking of food. Thanksgiving turkeys, Christmas roasts and cookies, and plenty of latkes and chocolate gelt are on everyone’s minds for the last two months of the year.

On December 4th, the USDA changed the Supplemental Nutritional On December 4th, the USDA approved changes to the Supplemental Nutritional Assistance Program (SNAP). Despite receiving thousands of negative comments, they proceeded with the first three proposed changes to the SNAP, all of which are expected to go into effect before the next presidential election.

Starting April 1, 2020, SNAP benefits will be cut for roughly 700,000 individuals, by reducing waivers and introducing new work requirements for able bodied adults without dependents. NPR Stated, “SNAP statutes already limit adults to three months of benefits in a three-year period unless they meet the 20 hours per week [work] requirement, but many states currently waive that requirement in high unemployment areas.” This rule change will make it more difficult to get this waiver. This initial change is expected to ‘save’ over $5 billion over the course of five years. 

The other two proposed rule changes would:

  • Close a “loophole that allows people with incomes up to 200 percent of the poverty level — about $50,000 for a family of four — to receive food stamps” and “prevent households with more than $2,250 in assets, or $3,500 for a household with a disabled adult, from receiving food stamps.”
  • Cut close to $4.5 billion “from the program over five years, trimming monthly benefits by as much as $75 for one in five struggling families on nutrition assistance.

If all of these proposed rule changes go into effect, approximately 3.7 million fewer people and 2.1 million fewer households would have received SNAP in an average month (Urban Institute).

According to the USDA website, SNAP provides nutrition benefits to supplement the food budget of needy families so they can purchase healthy food and move towards self-sufficiency. These changes are proposed in order to ‘cut costs and help individuals achieve this idea of self-sufficiency’. However, access to SNAP allows individuals to support themselves and provide nutritious food for their families. Many believe these changes affect not only the individual’s ability to pay for other necessities, but will add stress to local food pantries and other non profits (Lohud, Dec 10, 2019). These changes will lead to an increase of food insecurity, devaluing of life, and challenge the idea that dignity belongs to every human being. “In this case, the result is more hunger and hardship for the members of low-income families who are doing their best to make sure everyone is cared for” (The Atlantic, Dec 10, 2019).

As we gather around Christmas dinner with our families, let us pause for those among us who go without.

EPA Rolls Back Auto Fuel Efficiency Standards

By Frank Sherman

Yesterday, the EPA announced a long awaited rollback of federal fuel economy standards for cars and light-duty trucks in the U.S. (Vox, Aug 2, 2018). (See a previous blog post about it here.) The proposal, released Thursday morning by the EPA and the US Department of Transportation, called the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule freezes the fuel economy standard for model years 2021-2026. The rule also revokes California’s waiver to set its own rules under the Clean Air Act, a waiver also followed by 13 other states and the District of Columbia, representing approximately 35% of the vehicle market.

The transportation sector has taken over from electric power generation as the largest greenhouse gas emitter in the United States. This short-sighted move not only undermines one of the most significant steps the U.S. has taken to address climate change, but also hurts the global competitiveness of the U.S. auto industry at a time when the world is demanding cleaner, more efficient vehicles. The Union of Concerned Scientists estimated that this rollback would add 570 million metric tons of greenhouse gas emissions by 2030, equivalent to 140 typical coal-fired power plants for a year. The Environmental Defense Fund (EDF) found that the proposal would result in nearly 200 billion gallons of cumulative additional gasoline consumption by 2040. According to Margo Oge, former head of the EPA’s Office of Transportation and Air Quality, the fuel savings alone through 2025 would add up to $1.7 trillion. Ceres estimated the proposal would result in the loss of $20 billion in sales by auto parts suppliers between 2021 and 2025.

The EPA argues that the proposed changes would save money and lives. The agency reported that the prior standards would cost $500 billion over the next 50 years. They claim that people will continue to drive older, less safe cars to avoid the cost of air pollution equipment installed in new cars. “More realistic standards can save lives while continuing to improve the environment,” said EPA Acting Administrator Andrew Wheeler in a statement.

But many question the EPA’s rational. “At first glance, this proposal completely misrepresents costs and savings. It also relies on bizarre assumptions about consumer behavior to make its case on safety,” said California Air Resources Board Chair Mary D. Nichols in a statement. The existing CAFE fuel standards would add an additional $2,340 to the overall ownership costs of a new vehicle or an additional $468 per year over five years. Given that air pollution from vehicles is responsible for 30,000 premature deaths annually, it stands to reason that the lives saved by improving efficiency and reducing air pollution outweigh the lives saved by potential car buyers on the margins upgrading to safer cars.

California plans to fight back. “The Trump Administration has launched a brazen attack, no matter how it is cloaked, on our nation’s Clean Car Standards,” wrote California Attorney General Xavier Becerra in a statement. “The California Department of Justice will use every legal tool at its disposal to defend today’s national standards and reaffirm the facts and science behind them.”

A 60-day comment period will begin once the proposal is published in the Federal Register. Ceres will be organizing investor comments during that time. Buckle your seat belts…

Fuel Economy Standards Under Threat

The Environmental Protection Agency faces an April 1 deadline to decide whether Obama-era corporate average fuel economy standards for cars and light trucks from 2022 to 2025 are attainable or should be revised. The earlier conclusion issued by the Obama EPA that no changes to the 2025 standards are needed has already been abandoned by Administrator Scott Pruitt. He also dismissed the possibility of setting standards beyond 2025. “Being predictive about what’s going to be taking place out in 2030 is really hard,” Pruitt said. “I think it creates problems when you do that too aggressively. That’s not something we’re terribly focused on right now.”

In the meantime, Pruitt signaled a showdown with California who has a waiver from the federal law allowing it to set its own air pollution requirements. California set more stringent CAFE targets for both 2025 and 2030. “California is not the arbiter of these issues. California regulates greenhouse gas emissions at the state level, but that shouldn’t and can’t dictate to the rest of the country what these levels are going to be.”

The transportation sector has taken over from electrical power generation as the leading emitter of greenhouse gases (GHG) in the U.S. SGI joined many investors within the Ceres Investor Network earlier this year to send letters to the EPA and members of Congress, as well as to GM and Ford, in support of strong Corporate Average Fuel Economy (CAFE) standards. More recently, SGI signed on to letters addressed to GM and Ford urging them to call out the Alliance of Automobile Manufacturers to end its lobbying and public advocacy that questions climate science. The Alliance efforts to roll back the CAFE standards are in opposition to the auto industry’s support of actions to reduce GHG emissions. The letter also urges Ford and GM to publicly express opposition to changes to the CAFE standards that would lead to increases in GHG emissions.

SGI members continue to advocate that business and our government leaders take immediate action to avert climate change.