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The Economic Impact of Climate Change Rattles the Oil Industry

Research shows that global warming will hit the American economy hard, particularly in the South.

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David Sirota

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According to Department of Energy data, six out of the 15 biggest energy-related carbon emitters are states in the Southeast, and lawmakers from those states have been among the most powerful opponents of public policies designed to fight climate change. Those lawmakers have typically argued that cracking down on carbon emissions could reduce economic growth — but now, the Richmond branch of the Federal Reserve Bank is promoting a study suggesting that refusing to combat climate change could utterly devastate the South’s entire economy.

Researchers homed in on the economic effects of heat, documenting a correlation between higher temperatures, lower factory production rates, lower worker productivity and lower economic growth. One finding they cite: “The occurrence of six or more days with temperatures above 90 degrees Fahrenheit reduces the weekly production of U.S. automobile manufacturing plants by an average of 8 percent.”

While researchers acknowledge some positive economic aspects of higher temperatures in colder seasons, they conclude that the so-called “summer effect” of excruciatingly high temperatures in the summer months is the biggest factor, “leading to a negative net economic effect of rising temperatures.”

For the American economy, the Richmond Fed says the research shows that “higher summer temperatures could reduce overall U.S. economic growth by as much as one-third over the next century, with Southern states accounting for a disproportionate share of that potential reduction.”

While many of the South’s most influential congressional lawmakers continue to block climate change legislation, at least one of the region’s most politically powerful forces now appears to acknowledge the threat: the fossil fuel industry.

The Associated Press reports that the oil industry is now pushing for government-funded storm barriers to protect its refineries and infrastructure along the Gulf Coast. Texas lawmakers such as Sen. Ted Cruz and John Cornyn – both leading critics of government spending – have backed the funding initiative.

Cruz has publicly challenged the science of climate change, while Cornyn has applauded the Trump administration for pulling out of the Paris international accord on climate change – so their support for funding efforts to mitigate the effects of climate change could be seen as a bit of a shift for two of the South’s most powerful public officials.

The lawmakers, however, have not signaled they are willing to back major efforts to reduce the country’s use of the fossil fuel industry’s products, whose carbon emissions produce climate change in the first place.


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TMI is our running blog that follows the money and tracks the key economic stories

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Joe Biden Backs ‘Public Option’ Foe in Primary Fight

Co-published by Splinter
Delaware Sen. Tom Carper, who is battling a progressive challenger in his party’s primary, has found an unexpected supporter — former Vice President Joe Biden, whose Affordable Care Act public-option proposal Carper helped defeat back in 2009.

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David Sirota

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Joe Biden photo by David Lienemann

Co-published by Splinter

Former Vice President Joe Biden is coming to the rescue of embattled Democratic Sen. Tom Carper, as the veteran Delaware lawmaker faces a stronger-than-expected primary challenge from progressive Kerri Evelyn Harris. Biden’s foray into a race in his home state may seem predictable — but there’s an ironic twist. Biden is swooping in to try to save a lawmaker who played a pivotal role killing Biden’s own health-care policy priority to help reduce insurance premiums — and Carper killed the initiative just as he was raking in big money from the industries opposed to the measure.

Back in June of 2009, Biden helped lead the fight for the creation of a government-backed public insurance option, to compete with private health insurers.

“We’ve made it clear that we think there should be a public plan,” he said on NBC’s Meet the Press. “Here’s the reason for the public plan. You’ve got to have some competition.”

Three months later, Democratic leaders introduced a proposal for such a public plan in the Senate Finance Committee. Despite Democrats having a filibuster-proof majority, Carper and a handful of Democratic lawmakers joined with Republicans to vote down the initiative — effectively guaranteeing that it would be left out of the final version of the Affordable Care Act.

Carper did support a watered down version of a public plan, but he refused to support the full version because, he asserted at the time, “it would give the government an unfair advantage in the marketplace by allowing it to negotiate prices initially based on Medicare.”

Data from the National Institute on Money in State Politics show that in just the last four months of 2009 — as Carper helped kill Democrats’ public option — the Delaware senator raked in $34,500 of campaign cash from donors in the insurance and drug industries, which opposed the initiative. That election cycle, donors from the insurance and drug industries were collectively two of Carper’s three top contributors, funneling more than $971,000 to his campaign, according to the Center for Responsive Politics.

Since the public option was killed, new data have emerged suggesting that a public insurance plan would have saved even more money than originally predicted. Meanwhile, without a public option, health insurance premiums have periodically skyrocketed — and some have argued that those premium spikes in late 2016 helped vault Donald Trump into the White House.

Despite all that, Carper remains among the Democratic lawmakers who has not committed to supporting a public option, should Democrats win back the Congress.


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The Chasm Between CEO and Median Worker Pay Widens

Data from the Securities and Exchange Commission offer a rare snapshot of how, in low-wage industries, the rich get especially rich, at the expense of employees.

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TMI is a running blog that follows the money and tracks key economic stories.


Industries that pay their workers particularly low wages appear to have a particularly huge gap between CEO pay and employee pay, according to a new analysis of government filings.

2018 is the first year that a new Securities and Exchange Commission rule forces publicly traded companies to disclose the ratio between CEO pay and the pay for median workers. Executive compensation consultancy Farient Advisors finds that as of mid-August, 418 of the companies in the S&P 500 have released their ratios, and the median corporation among that group pays its CEO 157.5 times the amount it pays its average worker.

That median, though, obscures far bigger gaps in specific industries — and according to Farient, there’s a clear “inverse relationship” at play: “Sectors with the lowest median pay have the highest ratios” between CEO pay and worker pay.

“In the S&P 500, the Consumer Discretionary sector has the highest median ratio at 453.5:1 and the lowest median employee pay at $26,095,” the firm finds. “The Consumer Discretionary sector includes McDonald’s, Mattel and Target, among others… Consumer Staples ranks number 2 in median pay ratio and includes the second lowest employee pay group among sectors.”

Overall, a separate study from the Economic Policy Institute found that in 2017 “average compensation for CEOs of the top 350 publicly traded firms increased 17.6 percent to $18.9 million” and that for those firms, “the ratio of CEO-to-worker compensation rose to 312-to-1—far greater than the 20-to-1 ratio in 1965 and more than five times greater than the 58-to-1 ratio in 1989.”

The Farient data suggest the widening gap is being fueled by specific sectors — and the iconic companies in those sectors have made deliberate choices that could be exacerbating the situation. For instance, McDonald’s, Mattel and Target in recent years have all plowed resources into stock buybacks, which can enrich shareholders and CEOs, but deprive companies of resources to increase wages. These sectors have also been hostile to unionization, which can increase wages through collective bargaining.

The new SEC data offer a rare snapshot of the cumulative effect, illustrating how in low wage industries, the rich get especially rich, at the expense of the employees.


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