The Power and the Money

The trillion dollar coin

The trillion-dollar coin ideas seems completely irresponsible on its face. Here you have a law that lets the U.S. Treasury mint commemorative platinum coins with whatever face value that it wants. So let’s have the Treasury mint a coin with “One Trillion Dollars” stamped on it and use that to finance the federal government if Congress refuses to raise the debt limit.

Uh … okay? That seems inflationary and rather banana-republic like. Crazy, actually.

But weirdly, it’s not crazy. There are two ways that the government can use the trillion-dollar coin to get around the debt limit without affecting inflation at all. One involves the active cooperation of the Federal Reserve; the other does not.

Here’s how it works. Start with the fact that the Federal Reserve (the “Fed”) has a balance sheet. Cash in circulation and bank deposits held at the Federal Reserve are liabilities of the Fed. Why is cash a liability? Well, at some point in the past the Fed printed it up and used it to purchase assets or reduce other liability accounts. So in accounting terms, it’s a liability.

More intuitively, cash is to the Fed what writing an IOU is to me. If I write an IOU and give it to you, it’s a liability. The IOU isn’t enforceable, though. (Well, unless you’re my brother and I’m 12 years old, in which case, yeah, it is.) So it’s a liability I don’t have to pay off unless I choose to. And if I do, say, sell an asset of mine to somebody in return for that IOU, I just throw the IOU in trash. A IOU to someone that I wrote isn’t an asset to me; what, I owe resources to myself?

So let’s start with the Fed’s balance sheet from September 30, 2021:

STEP ZERO:

ASSETS		LIABILITIES
U.S. Treasury securities	5,431,056	2,197,401	Currency in circulation
Federal agency debt securities	2,347	1,702,347	Repo agreements
Mortgage-backed securities	2,494,684	4,524,350	Deposits from banks
Mark-to-market adjustment	338,797	27,447	Treasury accounts
Loans	105,509	45,866	Other liabilities and capital
Foreign exchange	26,421
Other assets	35,704
Gold	11,041
Coins and treasury currency	50,853
TOTAL	8,496,412	8,496,412

On the liability side, we have the federal government’s deposit account. The federal government basically uses the Fed as its bank. (It would be so damn much easier to teach this to undergraduates if the United States would just call its central bank “The Central Bank of the United States” instead of the “Federal Reserve.”) Look at the two bold-faced categories. The Fed’s biggest asset is debt issued by the federal government: $5.4 trillion worth. It also holds reserves of coins and what is called “treasury currency”: i.e., old-fashioned dollar bills issued by the U.S. Treasury instead of the  Federal Reserve. The Fed is legally obligated to accept these when the U.S. government deposits them in its accounts at the Fed.

In other words, if the Treasury minted up a trillion-dollar coin, it could then go down to the Federal Reserve and deposit said coin into it’s deposit account. The balance sheet of the Federal Reserve would then look like this:

STEP ONE: Deposit the trillion-dollar coin

ASSETS		LIABILITIES
U.S. Treasury securities	5,431,056	2,197,401	Currency in circulation
Federal agency debt securities	2,347	1,702,347	Repo agreements
Mortgage-backed securities	2,494,684	4,524,350	Deposits from banks
Mark-to-market adjustment	338,797	1,027,447	Treasury accounts
Loans	105,509	45,864	Other liabilities and capital
Foreign exchange	26,421
Other assets	35,704
Gold	11,041
Coins and treasury currency	1,050,853
TOTAL	9,496,412	9,496,410

STEP TWO: Spend the money in the Treasury’s account

The federal government now has a trillion dollars deposited at the Fed, and the Fed has a trillion-dollar coin sitting in a vault somewhere. The federal government, of course, now wants to spend the money sitting in its deposit account. So it will! Presumably its spending will wind up in the checking accounts of recipients (although some will likely end up as cash in circulation) so for simplicity’s sake I’ve moved the liabilities from the Treasury’s account at the Fed to the deposit accounts that banks keep at the Federal Reserve.

ASSETS		LIABILITIES
U.S. Treasury securities	5,431,056	2,197,401	Currency in circulation
Federal agency debt securities	2,347	1,702,347	Repo agreements
Mortgage-backed securities	2,494,684	5,524,350	Deposits from banks
Mark-to-market adjustment	338,797	27,447	Treasury accounts
Loans	105,509	45,864	Other liabilities and capital
Foreign exchange	26,421
Other assets	35,704
Gold	11,041
Coins and treasury currency	1,050,853
TOTAL	9,496,412	9,496,410

Isn’t that inflationary?

Well, by itself, no. And not just because (as we’ve discovered over the past 13 years) printing money isn’t always inflationary.

STEP THREE: Fed open-market operations counteract increases in the monetary base

The move will not be inflationary because the Federal Reserve can simply sell its holdings of Treasury securities. People will buy those holdings for cash. I’ve assumed here that they will buy those holdings using deposit accounts at various banks, which will ultimately lead those banks to hold fewer deposits at the Fed, but it could show up as a reduction in any of the Fed’s liabilities.

And voila! We are back more-or-less where we started. 

ASSETS		LIABILITIES
U.S. Treasury securities	4,431,056	2,197,401	Currency in circulation
Federal agency debt securities	2,347	1,702,347	Repo agreements
Mortgage-backed securities	2,494,684	4,524,350	Deposits from banks
Mark-to-market adjustment	338,797	27,447	Treasury accounts
Loans	105,509	45,864	Other liabilities and capital
Foreign exchange	26,421
Other Federal Reserve assets	35,704
Gold	11,041
Coins and treasury currency	1,050,853
TOTAL	8,496,412	8,496,410

But now all the Argentines reading this are screaming. We’ve discovered is a way to subvert the independence of the Federal Reserve and force it to finance federal spending by printing money! Isn’t that a problem?

STEP FOUR: Replace the coin with new debt

Well, I can understand that we might not want to set a precedent here. Congress can get it’s act together after-the-fact, abolish the debt ceiling, ban the minting of new trillion-dollar coins, and issue one trillion in federal debt to make up for the coin-based spending. It can then order the Treasury to hand over the newly issued trillion-dollars in debt to the Fed in return for the coin, which can then be melted down (or, preferably, demonetized and put in the American History Museum at the Smithsonian).

ASSETS		LIABILITIES
U.S. Treasury securities	5,431,056	2,197,401	Currency in circulation
Federal agency debt securities	2,347	1,702,347	Repo agreements
Mortgage-backed securities	2,494,684	4,524,350	Deposits from banks
Mark-to-market adjustment	338,797	27,447	Treasury accounts
Loans	105,509	45,864	Other liabilities and capital
Foreign exchange	26,421
Other Federal Reserve assets	35,704
Gold	11,041
Coins and treasury currency	50,853
TOTAL	8,496,412	8,496,410

There is an alternate path that solves the inflation worries, although it sets an even spookier precedent. If the Federal Reserve agrees, we could just jump straight to Step 3, except instead of selling Treasury securities on the open market the Fed sells $1,000,000,000,000 worth of federal debt back to the U.S. government in exchange for the trillion-dollar coin. Poof, $1 trillion in debt is wiped out and the U.S. government finds itself back below the debt limit, with no worries about money creation.

What are the counterarguments? Well, it would set a lousy precedent, but as we explained above, Congress can easily close the loophole if it wanted to.

Minting a trillion-dollar coin does represent yet another transfer of authority from the legislature to the executive, but the United States has had a dysfunctional legislature (at least on some things) for quite a long time—and playing chicken with the debt ceiling represents a particularly dangerous kind of legislative dysfunction. 

(Senatus delenda est. Senatus delendus est.)

The real worry is that Congress won’t do anything and we will wind up paying off more and more of the federal debt with trillion-dollar coins. That seems unlikely to me, but I think everything about the present-day U.S. Congress — particularly the Senate’s advanced state of decay — would have seemed unlikely to me back in 1990.

I suspect that it won’t come to this. I fear, however, that it will come to what I consider a more dangerous route: the Biden administration simply declares that the debt ceiling violates the sentence in the 14th Amendment that reads, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

The legal argument is that Congress authorized the issuance of debt when it passed the budget, so the debt ceiling therefore questions the validity of the debt. I am not a lawyer, but I don’t find that convincing. The last thing the country needs is more executive aggrandizement.

Unless the alternative is chaos.

Dammit.

The Chilean senate is no longer completely terrible but ...

In 2015, Chile reformed its horror of a Senate. (This blog is no fan of senates.)

Previously, Chile elected two senators from 19 constituencies. Eight of the constituencies conformed to Chilean regions, regardless of population. The remainder consisted of regions split in half. In every constituency, the party that won a plurality would get one senate seat. Then the runner-up would get the other seat, unless the winning party more than doubled its vote share over the runner-up. This is the binomial system Andrei mentioned in comments.

That system is now mostly gone, replaced with one where each Chilean region gets a number of Senators proportional to its population. Inside each constituency, Senators are selected by proportional representation. 

But it is still terrible. Consider the below chart. The horizontal axis is the number of senators from each constituency. The vertical access is the population of the constituency. Five of the smaller ones are stuck with the old binomial system. And the distribution of senate seats is lumpy and only vaguely related to population. 

Moreover, smaller regions are ridiculously over-represented and metropolitan Santiago is massively under-represented. Consider:

So the Chilean senate is still a mess. But the lower house is even worse!

There is actual is actual overlap, with smaller districts getting more deputies that larger ones. Malapportionment is terrible.

In other words, the 2015 amendments may have (mostly) abolished the binomial system, but they still left districting a mess. Multimember districts are a good thing, but this is a terrible way to do it. Chile needs constitutional reform.

Although I am still not clear why it needs a whole new constitution. Thoughts?

In Mexico, like America, a Congressional majority is not enough to govern

Earlier we pointed out that Mexican presidents need an effective legislative majority of two-thirds to get much of anything done, since so much legislation requires constitutional amendments. Did AMLO’s coalition pass that threshold?

We won’t know for sure for a while, but the answer appears to be no. Preliminary data is here. Mexico elects its Senate by giving the plurality party two senators per state, the runner-up one senator, and allocating the rest by proportional representation in a national 32-senator district using the largest remainder method. That method gives AMLO’s coalition roughly 53% of the seats. 

In the lower house, the results look similar. Mexico elects 300 deputies in geographic winner-take-all (aka, FPTP) districts and allocates the remaining 200 via proportional representation. The calculation is more complicated than for the Senate, because the country is divided up into five 40-deputy districts for the purposes of allocating seats. There, my initial estimate is that AMLO’s coalition got about 63% of the seats.

AMLO’s coalition, of course, includes the crazy Social Encounter Party; I have no idea how many seats they will wind up with. It depends on the affliation of the senators and deputies who won under the coalition banner in the geographic districts. They may prove somewhat unreliable for the new President. So his actual majority will be a little less than the stated number.

That does not mean that President López won’t be able to govern! As mentioned, he can pick up votes from the two social democratic parties. The PRD and Citizen’s Movement won two senate seats each and picked up about 4% of the House; both parties will also get some seats from their weird left-right coalition with the PAN, up to a ceiling of 18 senate seats and another 8% of the House. If they meet the high-end of the above projection (which they won’t) then AMLO will have a governing majority. 

But he will still need their cooperation. And if the social democrats get less than 18 senate seats, then he will need the cooperation from other parties as well. (Like the Greens. Shudder.) 

Right now, attention should be moving to the state legislatures. In the Nuevo León congress, pictured below, the PRI-PAN coalition managed to hold on to about half the seats, down from 74% before the election. The result is that AMLO cannot count on N.L. to ratify constitutional changes despite his gains in the state. (In Nuevo León’s 42-seat congress, the PRI collapsed from 16 seats to three; the PAN seems to have gained, from 15 to 18 at last count. The AMLO coalition blew up, from two lone Labor Party state deputies before the election to 15.)

It is unlikely that AMLO won a majority of the state legislatures, since many are elected on off-years, but somebody should check what happened out in the provinces. 

None of this will leave us much wiser about what AMLO will try to do. But it does mean that whatever it turns out to be, it will have to be done judiciously and after political negotiations. Of course, there is a lot that the chief executive can do to wreck a country, even one with stronger institutions than Mexico.

But I would venture that most of that sort of wrecking has already occurred under President Peña. I am not particularly optimistic that President López  will do much to help that little girl in Iztapalapa that I mentioned back in 2012, but I also do not think that he can or will do much to weaken the country’s democratic and legal institutions, at least inasmuch as they have survived the last six years. 

Call it an extremely cautious optimism, if you must. 

Puerto Rico is not following the Tennessee Plan, but it may work regardless

In 1790, North Carolina ceded its western territories to the federal government in payment for the federal assumption of its revolutionary debts. In March 1796, the Southwest Territory unilaterally declared that it was now a state. The legislature elected two senators and organized a popular vote for two representatives. The delegation showed up in Washington and demanded to be seated. After a few months of confusion, Congress passed a joint resolution admitting the Southwest Territory as the State of Tennessee. Congress seated the two senators, who had been constitutionally selected by the legislature, but insisted on a new election for the House of Representatives. 

That was before the 17th Amendment, however. But in 1959, the Alaska Territory tried the same thing. The state organized elections for two senators and a representative, who went to Washington and asked to take their seats. Congress agreed to seat the representatives in 1959, as part of a deal that also admitted (then Republican) Hawaii. 

But such a plan is not a sure shot at success. Did you know that  the District of Columbia has been electing shadow senators since 1990? I discovered this fact on March 13, 2016.

I was stuck at a red light on an exit ramp from Rock Creek Parkway onto Massachusetts Avenue, when I saw that the Chrysler 300M ahead of me had the strangest license plates. They were D.C. plates, but instead of a number there were the words “US SENATOR” in an unusually small font. 

So I took a photo.

To my surprise, the Chrysler dropped behind me and started to tail my car. This went on for about two miles. Annoyed, I pulled onto a side street, stopped the car, and walked over to car now tailing me. I knocked on his window. “You’re following me.” It wasn’t a question. 

The driver, a bearded white man, responded with no hostility in his voice. (That will be hard to believe when you read the words, but it is true.) “You took a picture. Was there something you didn’t like about the car?” 

My voice likely showed some irritation. “I’ve never seen a license plate like that. I took a picture. Are you a Senator I don’t recognize?”

He didn’t answer my question. Instead he said, “I’m sorry, there’ve been incidents.”

“What incidents?” I responded. “What senator do you work for?” But he drove off. 

And that was how I discovered that he was Paul Strauss, one of D.C.’s shadow senators, elected by the people of the District to lobby Congress for statehood. So far, Strauss and his colleague, Mike Brown, have accomplished precisely nothing.

Puerto Rico is now trying what it claims to be the same strategy. Appoint shadow senators and representatives and lobby Congress to have them seated. But:

1. Problem #1 with the plan is that the would-be congresspeople haven’t been elected. So poof, none of the legitimacy that the representatives from Tennessee (and later Alaska) brought to the table. 
2. Problem #2 is that Puerto Rico will be highly Democratic. Despite impressions, that was not true as of September 20, 2016 2017. But now, after the Trump administration decided that it did not care about the island, whatever conservative leanings the electorate might have had have been destroyed. Republican strategists know this. But the Puerto Rican delegation has no plan (a la the paired admission of Alaska and Hawaii) to counterbalance.
3. And problem #3 is that D.C. has been trying the serious version of the strategy for 27 years, to no avail. 

Which means that I should be here saying that this strategy has a snowball’s chance in Hell of succeeding. But I actually think the reverse. In fact, I would bet on statehood happening very fast the next time that Democrats win both houses of Congress and the presidency.

Once upon a time admitting two states (D.C. and P.R.) on a party-line vote would have been seen as a sort of unconscionable gerrymandering. But that time is passing. The norms of American political life have been going out the window for some time, maybe since Robert Bork, certainly since Texas decided to carry out its intercensal redistricting in 2003. (The redistricting violated political norms, but despite all the liberal outrage, it actually made Texas politics fairer and more democratic. Really.)

I do not see the political penalty for the Democrats from shoving through statehood for both jurisdictions at the next chance they get. Plus side: four extra senators. Minus side: some loss of control over the District on the part of Democratic representatives from Maryland.

Which leaves only one reason not to admit either or both the District and Puerto Rico: fear of a voter backlash at the following election.

Is that likely? 

Where to now in Colombia: the law and the polls

This post, unlike the previous one, is a backgrounder.

Plebiscites in Colombia are governed by Title IV, Chapter 1 of the Constitution, aka Articles 103-106. Essentially, it allows the President to call a referendum with the approval of the Senate. The chapter does say, “The decision of the people shall be binding,” but it vague on everything else.

And so, the Constitutional Court was called to issue an opinion as to the referendum law.  It said that a no would only prevent the President from implementing this accord. Another one could be negotiated or Congress could overturn the referenda and pass the accord via legislation. Similarly, with the approval of the Senate and his cabinet, President Santos could amend the accord and send it back out for a vote. 

There is still a mystery about the polls. Early polls in June recorded 53-point margins. But that soon changed. By mid-August, polls were all over the map. Cifras y Conceptos and the Centro Nacional de Consultoría indicated “yes”; Ipsos and Datexco projected “no.” In September, however, the polls were back to showing support, although one tracking poll showed support declining in the middle of the month. (Page 3.) That said, by the end all the polls projected a victory.

One facil explanation is low turnout. And it is true, turnout was shockingly low at 37%. But that only pushes back the mystery: the polls expected 67% turnout. At the end of the day, it is still a mystery. More data analysis is needed ...

The U.S. would not have had a better constitution without the Revolution

Dylan Matthews’ third point in his screed about why the American Revolution was a mistake is that without the Revolution, we would have had a Westminster-style parliamentary government, and parliamentary governments are better.

I grant the point about parliamentary government. The U.S. constitution is a mess, at least as a governing document. It sets up multiple veto points and is quite unsuited to disciplined, ideological parties. The Canadian constitution, as it currently stands, works quite a lot better.

But the United States would not get the current Canadian constitution if we had not fought the Revolution.

Consider the Canadian constitution as it stood in 1867. It possessed this giant monstrosity called the Senate: an appointed chamber deliberately set up to represent the regions and throw sand into the legislative gears. And the Senate did just that! Occasionally, it rejected major reforms: in 1926, for example, the Senate axed Canada’s first attempt at a social security system. 

The Canadian senate, however, soon became remarkably deferential to the lower house. (For example, the failed 1926 social security bill sailed through unchanged the next year.) That is in part because the Prime Minister can appoint more senators, but mostly it is because the institution does not have the legitimacy to use its de jure powers to the fullest. It is not quite the House of Lords, but it’s close.

Now imagine designing a constitution for a British North America that includes a bunch of slaveholding states provinces. One might imagine that you would get an institution rather like the Canadian senate. But does anyone believe that politicians from the slave states provinces would hesitate to use every power at their disposal to protect their control? The end result would be an upper house that would be even more of a dog’s breakfast than our own.

And that assumes that you even get a united British North America without the Revolution! I will admit, it seems likely that the British colonies would eventually federate. But I mostly think that because Canada, Australia and South Africa eventually did federate, even if New Zealand and Rhodesia kept out of the latter two. Blind analogy is probably not a good reason to assume that British North America would go the same way.

Having North America divided into ... uh .... somewhere between 13 and 16 different autonomous entities under the British crown is not a recipe for good government. Give me the Senate instead of balkanization! Hell, give me the even messier constitutional wreck that is the European Union. 

In other words, claiming that North America would have had a better constitution absent the Revolution is ahistorical smoke blowing. Wasn’t gonna happen. 

Belated sign of Senate functionality!

 Three months ago, I fretted that the Democrats were unwilling to compromise with the GOP over a human-trafficking bill. The issue was over a provision preventing funds collected under the bill from being spent on abortions for the victims. Given that the U.S. Congress has regularly prevented federal funds from being used for abortions, I thought that this was crazy base-servicing. I also thought that if the Democrats kept this up, refusing to compromise on ideological grounds, it would mean bad things for the Republic.

In comments, I got some pushback.

1. McDevite said that the Democratic stance (as I presented it) was not as crazy as similar Republican base-servicing.
2. Logan (who is paid to know this stuff!) explained that the issue was not the prohibition of federal funds, which is a standard thing, but the fact that the prohibition would be permanent.
3. George pointed out that the funds in question were from fines imposed on criminal organizations, not tax monies.
4. Finally, co-blogger Doug Muir added that the GOP has a terrible terrible record as far as anything having to do with international development is concerned.

First my response; then what happened.

My response:

1. McDevite: true but irrelevant. I worried that this was a sign that the Democratic Party was heading in the direction of the GOP: an ideologically-driven party run by the true believers, rather than pragmatists. I do not think that the Democrats have arrived at that point.
2. Logan: I understand the logic. I do not understand why that is worth killling the bill over, considering as the prohibitions are not going anywhere. You are right that I am more sympathetic to that issue than I am to a fight over spending on abortions, but the truth is that the bill as it stood allowed the federal government to pay for abortions used to terminate pregnancies that were the result of rape.
3. George: That is interesting! Tell me more! Which federally-run (but not funded) programs are we talking about?
4. Doug: agreed, but as with McDevite’s comment I do not see the relevance.

What happened:

George seems to have gotten it right! The two parties compromised by stating that fines would only be used to provide legal services to the victims, whereas health services would come from a separate pot of tax money. The tax money would not fund abortion, but anti-abortion restrictions would not be explicitly extended to non-tax money. Implicitly, of course, the bill would prevent the non-tax money from being spent on abortion because it would prevent them from being spent on any health services. 

Which also means that McDevite got it right: this was not a sign of crazy base world. Which is not to say that I do not worry about the Democrats going the way of the Republicans: I do. But this story, at least, ended creditably.

Senatus delenda est

The news from Europe today concerns the birth of the new British royal heir. I actually don’t think the news is that big: the only place my wife and I have heard it discussed is on television. That’s it. None of the nurses in her hospital have mentioned it. None of the cops I meet in the morning could care less. Ditto the gym, the coffeehouse, the sports bar. Zero zip nada except for Chris Matthews.

More important political news from Italy has been obscured. It seems as though the current Italian government wants to neuter the Senate.

The official position of this blog is that Senates are a bad thing. Of the ones reviewed here, the U.S. and the Philippines have the worst; Argentina’s and Brazil’s are pretty bad; Canada’s is redeemed only by its relative lack of authority. Only Mexico and Colombia have halfway-decent upper houses, and even those are still halfway-indecent.

On paper, the Italian senate is not terrible. Each region gets a number of seats proportional to its population. The coalition with the most votes (even if not a majority) in the region then gets 55% of the seats from that region. Bizarrely, the national voting age is 18, but for the Senate it is 25.

But in practice, it’s a problem. In the lower house the coalition with a plurality of votes automatically gets at least 55% of the seats. The government therefore has an automatic majority. (In most parliamentary systems the government usually gets a majority, although not always. Minority governments are generally considered a problem and usually short-lived.) In the Senate, however, the government is not guaranteed a majority. Unless a coalition can be cobbled together, you run the risk of having the government collapse. Moreover, even when a government is formed, bicameralism slows down decision-making.

So now the current Italian government is trying to neuter the upper house! I approve. How can they do that, might one ask? Well, simply, if the Senators believe that replacing the Senate with a weaker body is in the interest of their party, then they will vote for the reform.

Nonetheless, success is unlikely ... but it sure beats the way the Canadian government wants to strengthen its Senate.

Senates: Colombia

Finally, I will have a good thing to say about a senate!

This blog is on record trashing the senates of America, Argentina, Bolivia, Brazil, Canada, and the Philippines. It has been slightly kinder to the one of Mexico, but only slightly. So, finally, here is a senate that I can support.

Under the Constitution of 1991, Colombia has two houses. The House of Representatives is elected by district. Each department gets two representatives, plus an additional one for every 250,000 people. The representatives, however, are not elected from geographic districts. Rather, they are elected by proportional representation at the level of the department. For example, Bogotá divvies up its 18 representatives according to the percentage of the vote taken by each party in Bogotá. La Guajira, then, does the same thing with its two representatives. (The geographic division of the 164 representatives can be found here.)

The 100 members of the Senate (actually 102, since two Senators represent indigenous communities) are also elected by proportional representation, but according to their percentage of the national vote. Voters vote separately for the two chambers.

Now there may be problems. First, proportional representation might not be the best way to organize a legislature under a presidential system — but given the train-wreck that is the American legislature, I would hesitate to make big claims about that. Moreover, Colombia is a country where it is vital that small political minorities receive direct representation.

Second, the actual system of proportional representation used is one of the worst (see page 6 here) advantaging small parties. Basically, they divide the number of votes cast by the number of seats. That becomes the magic number. Every party that gets above that number gets a seat. If it gets more than twice the magic number it gets two. More than three times the magic number, then it gets three. Any fractions over the magic number are thrown away. Then the smaller parties get any remaining seats in order of their vote tallies. Bigger parties get slightly fewer seats than they should and some tiny parties can sneak in. This is a problem for the smaller House districts, but does not really apply to the Senate, since the magic number there is a relatively small 1% of the total vote.

Finally, the benefit of a two-house legislature is unclear. There is a case that checks-and-balances are good, but multiple veto points can also empower minorities.

None of these three objections strike me as compelling.

Colombian politics has a lot of problems, of course. (Is there interest in the recent politics of Bogotá?) And in a perfect world I would not pick the Colombian system for the United States. (Although I would take it over our own crazier system in a heartbeat!) But similar to the way Mexico has made its Senate more functional by using proportional representation to dilute its undemocratic features, Colombia has made its Senate more functional by using proportional representation to make it more democratic.

But I will say that the problems of Colombian politics owe little to the constitutional design of the Senate. (These political scientists agree: their reforms mostly involve changes to electoral law, not constitutional design.) Moreover, in some ways the Senate is better designed than the House. So, finally, an upper house in the Americas that I can support.

At least sort of. The idea that legislators can vote by secret ballot strikes me as nuts. But that problem applies to both Colombian chambers, not just the Senate.

I am a very new observer of Colombian politics. Thoughts?

Finally, the world notices that no Senate is good Senate

This blog has panned the the Canadian senate, along with the Argentine, Brazilian, and Philippine ones. And we have not spared the American one, either! We blasted the American senate not only because of it has godawful stupid internal rules but because it is fundamentally undemocratic. In fact, we went so far as to calculate what the U.S. Senate would look like if you retained the 100-person membership but allocated Senators the way we did Representatives. Short result: California gets 10 senators. New York and Texas get six. Florida gets five. Ohio, Pennsylvania and Illinois get four, and you can click the link for the rest.

Given that, it is nice to see the New York Times finally catching up! Read the article. The Senate is fundamentally undemocratic and perverts our politics. Abolishing or reforming it is long overdue.

Unfortunately, the Senate is the one thing that the Constitution of the United States says cannot ever be reformed. It’s right there in Article 5: “[Amendments become part of the Constitution after ratification by ¾ths of the state legislatures or special state conventions] provided ... that no state, without its consent, shall be deprived of its equal suffrage in the Senate.”

Oh well.

Worthless Canadian initiative: the Senate of Canada

In the past week, the Senate of Canada — the upper house of the Canadian parliament, the chamber where politicians appointed by the Governor-General on the advice of the Prime Minister lend their sober second thoughts to legislation put forward by the House of Commons — has been getting quite a lot of bad press. Two senators appointed by Conservative Prime Minister Stephen Harper have been singled out for apparently abusing the Senate’s housing allowance, claiming that since they live somewhere far from Ottawa they need a special subsidy: Mike Duffy, of Prince Edward Island, hasn’t been seen by his claimed neighbours, while Patrick Brazeau of Québec faces criminal charges of domestic violence and sexual assault on top of housing expense fraud and any number of other tawdry claims ranging from non-payment of child support to stupid fights on Twitter.

In the above picture I took last summer of Parliament Hill’s Centre Block, the east wing housing the Senate is located on the right side of the picture. The House of Commons, the elected lower house, is on the left. Unpopular as the House’s MPs (Members of Parliament) may be, at least they have the legitimacy that comes from being elected. The Senate is a non-elected body, an upper house on the model of Britain’s House of Lords that was charged from the beginning with counterbalancing excesses of popular democracy with a regionally-balanced representation of people who are supposed to be seasoned politicians. To wit, after Wikipedia:

Under the constitution, each province or territory is entitled to a specific number of Senate seats. The constitution divides Canada into four areas, each with an equal number of senators: 24 for Ontario, 24 for Quebec, 24 for the Maritime provinces (10 each for Nova Scotia and New Brunswick, and four for Prince Edward Island), and 24 for the western provinces (six each for Manitoba, British Columbia, Saskatchewan, and Alberta). Newfoundland and Labrador, which became a province in 1949, is not assigned to any division, and is represented by six senators, while the three territories (the Northwest Territories, the Yukon, and Nunavut) are allocated one senator each.

Senators remain in office indefinitely, until they retire of their own free will or until they are unable to exercise their duties. They are appointed by the Governor-General, on the recommendation of the Prime Minister, who — whether Liberal or Conservative — has taken care to stock the Senate with politicians of their party. The social-democratic New Democratic Party (NDP), now the official opposition, has no Senators at all. This, as John Ivison noted in the right-of-center National Post, may be a significant problem for the NDP if as seems likely it may end up winning an election and forming a government.

The Senate has no legitimacy. Might it be reformed? No. The Conservative Party has promised, not least because of its roots in western Canada where a Triple-E Senate has been very popular. A senate that was Equal (each province having the same number of senators), Elected (being elected by each province’s electorate), and Effective (the body having greater control over what legislation was passed) is what Harper et al would like. A writer in the Halifax Chronicle-Herald has pointed out that reform has been very slow to come, even with the Conservatives’ majority government.

Just last week, Prime Minister Stephen Harper announced he will refer proposed legislation for Senate reform to the Supreme Court of Canada. Introduced in 2011, the legislation has been moving at a snail’s pace through the House of Commons, with the government and opposition parties blaming each other for the delays.

Harper’s request to the Supreme Court could take as long as two years, meaning any meaningful changes would be unlikely to be implemented before the next federal election.

The Conservatives have proposed limiting Senate appointments to nine-year terms and has encouraged provinces and territories to hold elections to fill vacant Senate seats. A handful of existing senators have been elected for Senate vacancies in their home provinces, then subsequently appointed by the federal government.

[. . .]

It’s six years since Harper pledged Senate reform. Implementing change in a timely manner has proven more challenging than the prime minister may have hoped.

In actual fact, anything more than slow change is impossible, since central and eastern Canada largely opposes this, as Atlantic Canada and Québec see their shares of the Canadian population drop (and Ontario sees its share stagnates) while western Canada grows. To engage in constitutional reform in Canada, one needs to get the support of seven provincial governments together holding a majority of the Canadian population. (Good luck with with getting the provincial governments of Québec, the four Atlantic Canadian provinces, and even Ontario to agree with a measure that would weaken their position nationally.) Anyway, how democratic could the Senate be when there are almost a hundred times as many people living in the most populous Canadian province (Ontario, my province of current residence) as in the least (Prince Edward Island, my province of birth)? As this article in Ottawa’s Hill Times points out, it’s only in Alberta that a majority of Canadians want the Senate to be an elected body anyway.

Alas, the official NDP policy of abolishing the Senate is unlikely; as Ivison and I note above, how to cross the threshold is another question entirely. I agree with the opinion of Kelly McParland from the National Post, but again, getting the necessary majority to abolish the Senate is going to be impossible.

[C]ommon sense suggests it’s better to just close the place than try to turn it into some deeper-thinking wing of Parliament. Liberals, for decades, used the Senate as a rest home for hacks, money-raisers, loyalists, out-of-work MPs and the occasional feel-good appointee. Brian Mulroney took a similar approach, while Stephen Harper started his first mandate by ignoring it, and more recently has tried to stuff it with appointees pledged to support his troubled plans to reform it.

The impracticality of reform was demonstrated by Harper’s reported plan to block an improved Senate from overruling the House of Commons. There are many reasons that reforming the Senate is a bad idea, but the danger that it could become a rival for power is one of the most compelling. Two houses battling for position could only add to Ottawa’s dysfunctionality. But why reform something that is only going to remain powerless?

In an ideal world, prime ministers would indeed put great thought and effort into establishing a highly skilled, intellectually impressive, thoughtful and engaged Senate. But it’s not an ideal world. The NDP supports abolition, so if Thomas Mulcair were to become prime minister — which seems the most likely alternative once Canadians grow tired of the Tories — he’d most likely treat the institution with the same contempt displayed by the Tories. A Liberal revival, should it happen, would most likely see an effort to offset the Tory majority with an equal number of third-string Liberals.

The Senate of Canada is the appendix of the Canadian variant on the Westminister model of parliamentary democracy. Unlike the human appendix, alas, the Senate can’t be removed.

Does gerrymandering matter now? A question for political scientists

There is a political science literature that gerrymandering, as an empirical matter, has had less effect on American politics than the pundits like to claim. There is little past evidence that gerrymandering leads to more polarization or less competitive elections. The U.S. Senate provides perhaps conclusive evidence about polarization: you cannot gerrymander state boundaries, but the Senate is just as polarized as the House. Politicians are polarized because the U.S. now has polarized ideological political parties.

Still, it is hard for me to reject the hypothesis that gerrymandering is very important. Why is that? Well, two things:

1. California: it moved to nonpartisan districting, and Democrats pulled out a two-thirds supermajority. Of course, there could be other explanations: nonpartisan primaries, continuing Mexican-American population growth and leftward shifts in public opinion. It certainly seems as though the new cleaner districts helped the Democrats pick up Congressional seats;
2. The GOP seems to have lost the overall Congressional popular vote, but maintained its majority.

I do not know, but it seems as though gerrymandering may have made a very large difference in this election. What does the literature say? Anyone?

Failure modes of the United States, part 1c

  Many legislatures around the world have veto points.  If a particular party needs to be included in every plausible governing coalition, then that party wields an effective veto over policy.  Those situations, however, are rare.  They are also contingent on voter preferences.  One key election, and the veto player’s influence is gone. 

The U.S. Congress possesses multiple veto points.  One is the committee chairperson, who possesses almost absolute veto control.  Another is the Senate filibuster.  Neither of these are particularly new, but it is plausible to argue that two developments have made them far more problematic.

First, U.S. parties are far more parliamentary than they used to be.  It is now very difficult to peel away opposition legislators than it used to be, particularly among the Republicans.  Second, the Senate filibuster has become routine, creating a de facto 60-vote supermajority.  Thus, the emergence of two new veto points:  the Senate minority party and swing senators.  I wouldn’t bet on swing senators lasting all that long.  Moderate Republicans are down to two women from Maine.  Moderate Democrats are more common, but I suspect that the Democratic leadership will eventually figure out ways to discipline its members that are at least as strong as the Republicans’. 

I suspect, but do not know, that the above development is the half-threat to the American system of government that Carlos thought he might be seeing.

There are multiple ways in which this could cause the Argentinization of the United States.  The current employer-based health care system, for example, is collapsing.  A failure to reform won’t cause any sort of immediate disaster.  But it might (perhaps) cause inequality to increase while saddling those businesses that try to maintain coverage with unsustainable costs.  Over the decades, that could become a slow-motion catastrophe.  Conversely, American public finance is unsustainable over the long-term.  But the definition of “crisis” keeps ratcheting up.  You can punt for a long tine, as debt piles up and public services ratchet down, but unless a miracle occurs you eventually run down the public sector and with it, long-term economic growth.  In that story, we have seen the future, and it is California.  Finally, financial reform already seems to have been quite watered down.  You can’t blame Congress for that, and it might not even be a problem … but there are reasons to believe that we’re setting the stage for another October 2008.  Not to mention Simon Johnson’s suspicion that the U.S. government has been captured by a financial elite.  More veto points, the harder it will be to free the Republic from that capture. 

And then there is global warming.  There is no world government, which means that there is a coordination problem among the big players.  A U.S. incapable of making big decisions probably means that nobody makes the big decisions.  I don’t know, maybe the European Union would decide to impose carbon tariffs, or some farsighted Brazilian leader could bring together a coalition of everybody-but-America, but that seems unlikely. 

To be honest, I’m not convinced that the combination of the filibuster and parliamentary parties necessarily spells paralysis.  Nor does federal paralysis necessarily spell Argentinization:  this country has a lot of things going for it that Argentina never did.  But the legislative provisions of the U.S. constitution are not functioning well right now.  The growing ability of a minority to block Congressional action seems to me to bring a much greater chance of political failure than the presidential veto or judicial review. 

The Philippine legislature, corrected

  I while back, I ran a post about upper legislative houses in the Americas, including the Philippines, and a later one on Bolivia.  It turns out that I got the history of the Philippine legislature wrong.

The Constitution of 1935 established a unicameral National Assembly.  The reason was not that the drafters wanted a unicameral legislature.  (Although I'll be damned to understand why they didn't want one.)  Rather, the drafters wanted an upper house, but couldn’t decide on how it should be apportioned.  Delegates from underpopulated provinces wanted equal representation for each province.  Progressives proposed a Senate elected by proportional representation.  Conservatives wanted to keep the existing 12 senate districts, each with equal representation.  Each proposal lost in a vote.  Unicameralism emerged by default.  (See here, p. 144.) 

In 1937, President Quezon started to raise the bicameralism issue.  Publicly, he claimed that he feared that a unicameral legislature could create an “oligarchy.”  Privately ... well, who knows?  Ricardo Jose of the University of the Philippines believes that Quezon worried that a unicameral legislature could more easily challenge presidential authority, especially if a political enemy controlled it. 

Whatever the reason, Quezon got the Assembly to approve the change to bicameralism on September 15th, 1939.  (The amendment also changed the presidential term from six years to four and allowed re-election.)  How was the new chamber to be elected?  Article 4, Section 2:  “The Senate shall be composed of 24 Senators who shall be chosen at large by the qualified electors of the Philippines, as may be provided by law.” 

In other words, every three years Filipinos picked twelve names off a list of Senate candidates.  The top twelve vote-getters became Senators.  Sort of like proportional representation, only not.  The amendment passed the required popular referendum on June 18th, and President Roosevelt approved them on December 2nd.

As so often, however, the devil is in the details.  The 1941 election introduced “block voting,” in which a voter could check a box next to the name of a party, thereby automatically giving each of that party’s candidates one vote.  Under that system, a party that could muster a plurality would sweep all the Senate seats.  Unsurprisingly, Quezon’s Nacionalista Party managed to pull off just such a feat. 

For reasons unknown, the Philippine senate is still selected by at-large elections.  Yet another inexplicable upper house, out of so many that America has given the world.

Another senate

  One rather strange thing, when you think about it, is the incredible influence that the United States Constitution has had over political structures in Latin America.  None of those polities developed under similar circumstances — the Argentine Republic comes closest, and it's not very close — and none of them had similar political traditions.  So its rather strange when you realize both how universal the American presidential-bicameral model has become and how durable it's proved.

It turns out that Bolivia also has a U.S.-style senate. Before the recent constitutional reform, each province enjoyed three senators. Now each one has four. Not much of a change there, unless the system for electing those senators (still undetermined) has the result of dividing the delegations from the other provinces while united the Media Luna ones, or vice versa. That's remotely possible: the old system worked like Argentina, giving the election winner two senators and the runner-up one, while the new system is proportional. Depending on the election rule chosen, the effect would be to strengthen parties with overwhelming support within their province and split delegations from provinces with more divided electorates. But we'll need to see both what proportional rules is chosen (the constitution seems unclear on whether the provinces or the legislature will set the rules) in order to know the actual effect.

In short, in terms of the Bolivian legislature, the new and awfully-named “Plurinational Legislative Assembly” doesn't change much. Not only is equal representation preserved in the Senate; the new reserved “indigenous” seats in the lower house are designed to insure that the Media Luna's current representation will not change. 

My opinion of the Bolivian senate, however, is very different from my opinion of the Argentine, American, and Brazilian senates.  Those are undemocratic travesties that need to be reformed. (Here's a much more democratic way of apportioning the U.S. senate among the states.) Inertia and the power of special interests are the only reasons to keep them. 

The Bolivian senate, on the other hand, is a necessary compromise to hold a deeply-divided country together. President Morales's original proposal for a single-house FTFP legislature with a block of reserved “indigenous” seats would most likely have served only to keep fueling the political violence that wracked Bolivia last year. Given that it's hard to see anyone benefitting from a breakup of the nation, the undemocracy of a senate is a price worth paying. 

Newsflash: Boychick from Brooklyn loses Senate race, and word he deserves it

  Official it ain't, but Norm Coleman of James Madison High School in Midwood, Brooklyn, New York appears to have lost to Al Franken. Now, Coleman has always been an a--hole, but he was once the sort of a--hole that I could respect, having unfortunately been a similar one myself.  Frex, the dude wrote, in the late 1960s, “I know these conservative kids don't f--k or get high like we do (purity, you know). Already the cries of motherhood, apple pie, and Jim Buckley reverberate thorough the halls of the Student Center.  Everyone watch out, the 1950s bobby-sox generation is about to take over.”

Nor do I fault Coleman for becoming a Republican in the 1990s; once again, I did that myself, and the past can be forgiven. And my priors are always in favor of the candidate who sounds most like Jerry Ferrara. 

But Norm took a dive off the right end of the pool, hit his head, and never came up for air. That I fault him for.

Plus, Al Franken is whip-smart, right on the issues, and a great writer. I gave dinero to his campaign, to my wife's great amusement, and I think he will make a great senator. Icing on the cake is that Minnesota is one of the few states that deserves no more and no less than its two seats. Go, Al!

Senates

 There is a debate going on downblog over the United States Senate. 

Let’s take a brief tour of Senates around the hemisphere. (To which we’ll include the Philippines, due to its political history.) The American example set in 1787 proved very influential, particularly for the larger nations of América. Did their adoption of an upper house with equal representation for federal subunits make sense? Did they keep it? 

Argentina: The Argentine constitution gives each province three senators. That’s obviously undemocratic. Argentina, however, has a historical justification for the practice. Like the United States, the Argentine Republic began as a federation of independent states. Unlike the United States, the states that formed the Argentine Republic had very little autonomous political history; most had been created from city councils that simply declared independence in the wake of the political chaos that enveloped South America after 1808. After a great deal of civil war, including the loss of Bolivia, Paraguay, and Uruguay, provincial forces decisively defeated Buenos Aires in 1852. A convention that excluded representatives of Buenos Aires hammered out a constitution the next year. That same constitution has remained in effect since then, at least juridically. 

The convention accepted equal provincial representation in the Senate in order to limit Buenos Aires’s dominance. It also had senators elected for nine-year terms by state legislatures and required them to be able to show a minimum annual income of 2,000 pesos. (That’s approximately US$67,000 today in terms of purchasing power.) Thankfully, later amendments got rid of those latter features, but equal representation remains. In short, while there isn’t really any good reason to keep the apportionment of the Argentine senate, the institution has deep roots in Argentine political history. The resemblance to the U.S. case is quite strong.

Brazil: The constitution of the Federal Republic of Brazil gives three senators to each state. The historical roots of this institution, however, are rather shallower than in Argentina or the United States. The 19th-century Imperial senate did not provide equal representation for the provinces. When the empire fell to a military coup in 1889, the new leaders had to find ways to convince provincial elites to support the new government. One of the ways that they did so was to provide the provincial governments with equal representation in the upper house, in open imitation of the American example. (In fact, the constitution of 1891 named the country the United States of Brazil.) Brazil has gone through multiple constitutions since then, but the institution of the Senate has remained. Unfortunately. 

Mexico: The constitutions of 1824, 1857, and 1917 all granted equal senate representation to each state. There was never much historical justification for doing so, other than imitation of the United States. (Mexican states gained much autonomy during the 19th century, and several declared independence, but that came about after the end of Spanish rule.) Since the country’s governments rarely ruled by the constitution, however, legal stipulations didn’t matter. Under Porfirio Díaz, for example, all legislative votes were unanimous after 1893. Nor did senators necessarily come from their putative state. Under those circumstances, the number of senators per state didn’t make a difference. The Revolution didn’t change that. Under President Álvaro Obregón, for example, recalcitrant legislators were often shot. Then came the creation of the PRI, with its iron-lock over politics, and ‘nuff said. Constitutional stipulations didn’t become more important than party rules until the 1997 midterm election. 

Mexico, however, is now ruled by a democratic government, and the constitutional rules matter a lot. As part of the transition to democracy, Mexican politicians amended the constitution in 1993 and 1996. In theory, the reforms granted each state four senators, up from two. In practice, the reforms created an upper house selected by a weak form of proportional representation. The winning party in each state receives two seats. The runner-up receives one. The remaining 25% of senate seats are then allocated to each party in proportion to their popular vote share. In effect, the Mexico’s current senate keeps the form of equal representation for each state while abandoning much (but not quite all) of the substance. 

The Philippines: The Philippine Autonomy Act of 1916 created a 24-person senate. The act grouped the country’s 50 provinces into 12 districts, each of which received two senators. The 1935 constitution of the Philippine Commonwealth dumped that crazy system, but selected something even crazier in its place:  at-large Senate elections. That is, every voter writes in 12 names. The top 12 vote-getters then become senators for six years. The exercise is repeated every three years, making for a total of 24 senators. The 1987 constitution of the Philippine Republic retains the feature.

The only polity that I can imagine justifiably imitating the United States, Argentine Republic, and Federal Republic of Brazil in the 21st century is the European Union. Then again, I may suffer from a lack of imagination.

Great Debate Attempt #1: The U.S. Senate, plus a good $30 cigar

  Resolved:  $30 is not too much to pay for a really good cigar in the Commonwealth of Massachusetts.  In inflation-adjusted terms, that would be only 37 times the price of the good cigar that Vice-president Thomas Marshall claimed the United States needed in 1917. 

Further resolved:  The U.S. senate is an undemocratic travesty, and needs to be reformed in order to better reflect the population distribution of the United States.  In 1787 the United States was a federation of 13 different nations with a common colonial heritage.  We are no longer a federation of nations.  The European Union is a federation of nations.  The United States of America has become a single continental federal nation, and it would be better and more fairly governed if the second chamber of its legislature more closely reflected that fact. 

At the very least, our rather well-governed nation to the north should not emulate our bad example the way that Argentina (with some historical justification), Brazil (with rather less), and Mexico (with no good reason at all) have done.

God bless small children, cigar smokers, the federal-nation-formerly-known-as-Dominion of Canada, and the United States of America.

ADDENDUM:  How many senators would the states have if the U.S. Senate were apportioned in the same way as the House?  29 states would have one senator.  The rest would be distributed as follows:

Minnesota	2
Arizona	2
Maryland	2
Wisconsin	2
Missouri	2
Tennessee	2
Washington	2
Indiana	2
Massachusetts	2
Virginia	2
North Carolina	3
Georgia	3
New Jersey	3
Michigan	3
Ohio	4
Pennsylvania	4
Illinois	4
Florida	5
New York	6
Texas	6
California	10

There would still be a gap between the representation of the smallest state and the largest, but it would be reduced to only 5:1 from something more like 57:1.