DOMEocracy

hardline political news and analysis

Month: March, 2018

Lamb’s Victory and the 1974 Precedent

Conor Lamb’s improbable but likely victory in yesterday’s congressional race in the 18th district of Pennsylvania raises  comparisons to the 1974 victories of Democratic candidates running in traditionally Republican districts. The significance of those earlier upsets as precursors to a November wave victory, is recounted in my just-published book, The Class of ’74: Congress After Watergate and the Roots of Partisanship.

In one of those surprise elections, in February 1974, John Murtha, the first Vietnam veteran elected to the House, won a seat in Pennsylvania’s 12th district. Murtha’s military background and moderate views, were at odds with the majority of those Democrats running in November, but they helped him win the votes of district residents who had not sent a member of his party to Congress since 1936.

Even more stunning was the election a few weeks later of Richard Vander Veen in Michigan’s 5th district. The seat was vacant not only because the Republican incumbent had resigned, but because that incumbent was the House minority leader, Gerald Ford, who had been appointed vice president. Ford’s seat had been safely in Republican hands since 1912 and few had expected so secure a seat to change parties just 15 months after Richard Nixon’s landslide victory.

Two more special elections in 1974 – Tom Luken in Ohio and Bob Traxler in Michigan – seemed to set a pattern of Democrats filling vacancies in Republican districts, and panic began to spread among Republicans across the country. The House Judiciary Committee’s impeachments hearings and bipartisan resolutions, the Supreme Court’s decision against Nixon on the Oval Office tapes, the President’s resignation and then Ford’s surprise pardon just two months before Election Day all set the public mood against the GOP. In addition, the steadily worsening economy and growing energy crisis contributed to a decidedly anti-Republican sentiment.

Shortly before the election, Congressional Quarterly predicted “substantial gains” for Democrats, perhaps as many as 35 seats, and teased there was “at least the hint of a landslide.” Independent polls showed voters favoring Democrats in a generic congressional race by 20 points in the Gallup and 24 points in Harris. Democrats led in 18 seats held by Republicans, and were reportedly running even in another 32. Just a few weeks before the election, Ford was playing golf with Majority Leader Tip O’Neill and asked his old friend for a prediction. “It’s going to be an avalanche,” O’Neill advised the startled Ford.

The polls, and the early harbingers of Murtha, Vander Veen and the other special election winners proved prescient. Democrats picked up 49 seats from Republicans, elected 76 new members, and pushed their margin in the House to 291-144. The new members of the Class of ’74, called “The Reinforcements” by New York’s Bella Abzug, joined with veterans to implement sweeping modernization of the House and the Democratic Caucus, disbursing power more widely, imposing discipline on chairmen, and elevating issues of importance from Vietnam withdrawal to energy, the environment and children’s policy.

It may be too early to make predictions about the fortunes of congressional Democrats in November based on Lamb’s successful campaign, but some conclusions are clear. In a wave election, when the public is sufficiently fed up and hungry for change, incumbency and party labels do not provide the level of insulation one had long depended upon. While gerrymandered districts can afford Republicans some protection in typical elections, displeased voters stay home, and many seats thought to be secure can be lost. In 1974, well-entrenched Republicans like New Jersey’s William Widnall and Charles Sandman lost supposedly safe seats.

Another clear lesson is that parties aspiring to the majority must cast their nets wide, not only with voters, but with candidates. Lamb does not unqualifiedly reflect the liberal orthodoxy of the national Democratic Party, although evidence suggests he, like others elected in marginal districts, will reliably vote with the party on most measures once in office. But Lamb is the kind of candidate, running in the kind of district, that Democrats must win to reach the 218 seat majority. As liberal Rep. Phil Burton advised junior members in the mid-1970s, “Get to know southerners and conservatives. Be nice to those guys; listen to them. Without them, there is no Democratic majority.”

Several months ago, Democratic National Committee chairman Tom Perez declared Democrats would not support candidates who were not 100% pro-choice. His remarks drew criticism from many who recalled that, but for congresspeople who were not reliable on key issues, the party would not have won the majority in 2006 or been able to pass landmark legislation like the Affordable Care Act. Democratic activists can have purity or they might just be able to have a majority, but the chances of having both are less than, say, the odds of Conor Lamb being elected to Congress.

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You can order The Class of ’74: Congress After Watergate and the Roots of Partisanship” from the following online addresses:
JHUP: https://jhupbooks.press.jhu.edu/content/class-74

Amazon: https://www.amazon.com/Class-74-Congress-Watergate-Partisanship/dp/142142469X/ref=sr_1_1?s=books&ie=UTF8&qid=1508946588&sr=1-1&keywords=The+Class+of+%2774

Barnes & Noble: https://www.barnesandnoble.com/s/Class+of+%2774?_requestid=489232

 

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A Holiday for Oil Producers

The Trump Administration has decided oil companies are in desperate need of a holiday, and guess who is going to foot the bill? Surprise, the American taxpayer will pay for this first-class fleecing.

Two decades ago, when oil was selling for less than $30 a barrel, President Bill Clinton promoted a “royalty holiday” that forgave drillers from paying the mandatory fees for the production of oil from deep water leases in the Gulf of Mexico. Freeing oil companies from the royalties, Clinton argued, would fuel interest in federal tracts located in 100 feet or more of water on the outer continental shelf (OCS). Taxpayers would benefit, Clinton asserted, from the payment of up-front bonus bid fees paid by the companies to acquire these so-called “deep water tracts.”

As the Democratic staff director of the House Resources Committee whose ranking member was Rep. George Miller of California, I was very familiar with OCS policy. Miller and I had played a role in the design of the 1978 law that modernized OCS leasing and production.

Although a leading environmentalist, Miller’s district included several large refineries. I was dispatched to ask company executives if, as proponents asserted, a royalty holiday would prompt them to purchase, explore and develop deep water leases. Every executive I interviewed responded with the same answer. “If you want to sell me a lease without any royalty, sure, I’ll take it,” the executives said. “But I would not premise that purchase on a promise that Congress could rescind at any time.”

Congress unwisely approved Clinton’s royalty holiday, which was supposed to end when the price of oil rose to $28 a barrel. But oil prices rose past $30, past $40 to more than $50, and still, the holiday was kept in place by regulators sympathetic to the industry despite oilman George W. Bush’s campaign critique of the policy in 2000 as a “huge tax break.” Tens of billions of dollars due taxpayers have been lost from  development that would likely have occurred anyway.

Now the oil industry friendly Trump Administration is preparing a royalty free holiday of its own, although circumstances are quite different from those of the 1990s. The price of oil is not low and the industry needs little incentive to drill in the deep Gulf, where they have more than two decades of experience. Moreover, the same companies have extensive experience drilling in the deeper, and more perilous, North Sea.

Unlike other nations, the United States does not award its leases to companies that bid the highest royalty rates (although such an option – net profit sharing — was authorized in the 1978 law). Instead, the Department of the Interior auctions off leases to the company that offers the highest “bonus bid” for a tract, a bid that might, or might not, reflect the actual value of the oil and gas deposits within the tract. Federal officials love the up front bonus bid system because they don’t have to wait for years to reap money from the sale as they would if, like other countries, American taxpayers received fat royalties from production of publicly owned oil and natural gas.

If the tract is productive, lessees pay the government from 12.5% to 18.5% in royalties, far less than the royalties they willingly pay other countries for access to their offshore lands. And if the holes come up dry, the government keeps the bonus windfall anyway. If the bid turns out to have undervalued the value of the actual find, taxpayers lose many billions of dollars that could have been recouped had companies competitively bid on the royalty.

Now, the Trump Administration is offering to give up even the inadequate royalties secured by taxpayers for the valuable offshore energy resources they own.

There is no urgent need to spur oil development in America’s deep waters. Oil prices are not historically low, necessitating a spur to development. Perversely, selling off lands prematurely can flood the market with bargain leases, causing the value of bonus bids to drop. Companies winning these leases often defer exploration and production, waiting for prices to rise, fully aware that the Interior Department lamely enforces the law’s due diligence requirements.

With enormous federal deficits swelled by the new tax law, it is no wonder that federal officials are in the hunt for some quick cash, and even speculative bonus bids fit that description. Unsurprisingly, the royalty holiday is being encouraged by the industry-dominated Royalty Policy Committee, whose friends and allies stand to pocket billions of dollars in profits. Even so, the insufficient proceeds gleaned from OCS development are impressive when measured against the taxpayers’ take from private companies that haven’t paid a royalty for the gold, silver, uranium and other valuable minerals they have produced from public lands since 1872. (That is not a typographical error.)

Nearly a decade ago, Miller, Ed Markey, Nick Joe Rahall and others in Congress responded to the Republicans’ “drill, baby, drill” mantra by insisting that companies be barred from bidding on new leases if they were not diligently producing the public leases they already owned. Not surprisingly, Republicans sympathetic to the energy industry laughed off the suggestion. Now, the Trump Administration appears ready to once again auction off public resources for a fraction of their true value. It may be a holiday for oil executives, but once again, it is the taxpayer who will be taken for a ride.

 

My new book,The Class of ’74: Congress After Watergate and the Roots of Partisanship,” is now available for order from Amazon.com, JHUP and Barnes & Noble. “An essential work of congressional history.” Kirkus Review