Little Voter Red Riding Hood and the Congressman

On Tuesday, November 2, my wife and I cast our ballots in Arlington, VA for the first time as American citizens. This momentous occasion led me to share some political musings with you. The media has breathlessly commented on the dramatic elections and what they mean for America, so I won’t bore you with more of the same. Instead, I want to share with you my thoughts on a particularly pernicious (in my view) form of political chicanery that goes by the rather ominous sounding name of gerrymandering – or redistricting. The story goes something like this:

 

“What a funny starfish-shaped congressional district you have!” exclaimed Little Voter Red Riding Hood. “All the better to get elected with, my dear,” replied the Congressman.

Your grade school civics teacher taught you that in a democracy, voters select their political representatives. Well, I’ve got news for her – she was only partly right. In America, a bastion of democracy if ever there was one, many of our political representatives select their voters – through the process of redistricting.

 

Redistricting is necessitated because our constitution fixes the number of representatives in the House at 435, with each congressman representing approximately the same number of people. As the population of the United States increases and its distribution shifts among and within states, the states need to redraw their congressional district boundaries. We usually redraw districts every 10 years at the start of each new decade, based on decennial census data. Because we had a national census in 2010, the process of redistricting will begin in 2011, and the new congressional district boundaries will come into effect in most states prior to the 2012 elections.

 

Based on the most recent census data, Texas is likely to gain 4 House seats, and Florida 2. Six other states (Arizona, Georgia, Nevada, South Carolina, Utah and Washington) are expected to gain 1 seat each, whereas eight states (Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, and Pennsylvania) will probably lose 1 seat each. Meanwhile, New York and Ohio would each lose 2 seats. So all these states will have new congressional district boundaries. In addition to congressional elections, redistricting also has an impact on presidential elections, because any change in the number of House seats in a state results in a change in that state’s contribution to the national electoral college.

 

So far, this is all good and nice – a boring chapter right out of your civics book, to be sure. As we mentioned at the outset, redistricting is a necessary process required by the stipulations in the United States constitution. But then it gets murky – and this is when straight-forward redistricting, left in the hands of men and women with political designs, becomes insidious gerrymandering. Same phenomenon, divergent motivations, and different results. Call it the political equivalent of Dr. Jekyll and Mr. Hyde, if you will.

 

After the 2010 elections, the GOP has the upper hand in many states in drawing congressional district shapes and boundaries in incredibly creative ways that would be most favorable to them, thereby ensuring that as many districts as possible in a given state would reliably elect Republicans to the US House of Representatives. If in the course of this endeavor, the enterprising cartographers must arbitrarily connect two distinct regions of the state by means of a concocted narrow strip of land on the map, so be it. Of course, Democrats are far from saints either, and they also indulge in these machinations whenever they can, with both political parties presumably commencing the fun and games in smoke-filled backrooms but then passing bills in broad daylight in state legislatures to codify the district boundaries into law. It is a silver lining that some states like Iowa and Florida have seen it fit to remove the power of drawing congressional boundaries from state legislators and governors, and instead devolving said power to non-partisan commissions.

 

Redistricting is widely blamed as one of the causes for a more partisan, polarized US House of Representatives, because districts are drawn with the intention of retaining a Republican seat in Republican hands and a Democrat seat in Democrat hands. This makes for a situation where the electorate in numerous congressional districts skew either heavily Republican or heavily Democrat, resulting in the true electoral contests occurring in the primaries rather than the general election, which is often a mere formality with a foregone conclusion. As a result, there are several districts in the country that tend to elect very conservative Republicans or very liberal Democrats, because the elected officials in these districts must appeal to a politically homogenous constituency.

 

Will the voters rise up against this crafty trick that our politicians play? It seems to be the only way to stop it from occurring, because incumbent elected officials, left to their own devices, have little incentive to.

 

To read a National Journal article on state legislature gains for the Republican party in the recent elections, and what that means from a redistricting perspective, click here: http://hotlineoncall.nationaljournal.com/archives/2010/11/devastation-gop.php.

Financial News for Major Energy Companies, Third Quarter 2010

“Financial News for Major Energy Companies (the News)” is a report on the recent financial performance of major U.S. oil and natural gas companies. Twenty U.S. majors collectively reported $17.4 billion of net income in the third quarter of 2010, which was 32-percent more than the $13.2 billion these companies reported for the third quarter of 2009 (but 41 percent less than their third-quarter average over the 2005-2009 period, after adjusting for inflation).

 

The leading operations, in terms of net income, for the U.S. majors during the third quarter of 2010 were foreign oil and natural gas production, U.S. oil and natural gas production, and worldwide chemicals, which generated contributions to net income of $9.6 billion, $5.7 billion, and $1.6 billion, respectively. All of the lines of business of the U.S. majors tracked by the News recorded higher earnings in the third quarter of 2010 than during the third quarter of 2009.

The data presented are for the July through September time period of 2009 and 2010 and are collected from company press releases. The next issue of the News, covering the October through December time period of 2009 and 2010, will be released in February 2011.

More here.

Derivative Rules Seen Lifting Cost of Swaps

(Via Wall Street Journal)

Corporate end-users of derivatives may face higher transaction costs for large hedges under new regulatory proposals that will require post-trade reporting of swaps.

End-users are companies entering hedges to mitigate commercial risks rather than to speculate on market prices. Examples include airlines that are hedging the costs of jet fuel or exporters hedging against lower revenue from overseas sales because of currency fluctuations.

[OBAFIN]

As part of its efforts to write new rules for OTC derivatives under the Dodd-Frank Act, the Commodity Futures Trading Commission said Friday that it wants to see over-the-counter derivatives executed on registered trading platforms publicly reported in real time. The rules are out for public comment for 60 days after they are entered into the Federal Register and must be completed before a July 15, 2011, deadline.

Click here to continue reading.

Food Safety Bill To Move Later This Month After Senate Agreement

(Via Inside U.S. Trade)

The Senate Democratic Leadership and Sen. Tom Coburn (R-OK) late last week reached a unanimous consent agreement on the Food Safety Modernization Act (S. 510), clearing the way for a final Senate vote right after the Thanksgiving holiday on Nov. 29.

They reached a unanimous consent agreement on Nov. 18 to begin the floor action with a cloture vote on an amendment in the nature of a substitute that was unveiled in August by Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-IA). The substitute amendment would replace the committee version of the bill as approved by the HELP Committee.

If cloture is invoked, the discussion will proceed to four key amendments for a time period of about five hours. Two of these amendments are sponsored by Coburn, who has filed one to establish a two-year congressional ban on earmarks through fiscal year 2013.

The second amendment Coburn filed is an alternative to the pending food safety bill that he claims would cost less than the pending version. It would not expand the Food and Drug Administration’s power to increase facility inspections and focuses more on having federal agencies coordinate food safety work under their existing authority.

The other two amendments that will be presented by Senate Finance Committee Chairman Max Baucus (D-MT) and Sen. Mike Johanns (R-NE) deal with the repeal of a reporting requirement for business purchases exceeding $600 that was used as a cost offset in the health care legislation.

CFTC Updates

The following Proposed Rules have been published:

  • 75 FR 71379
    17 CFR Parts 3, 23 and 170 Registration of Swap Dealers and Major Swap Participants
  • 75 FR 71391
    17 CFR Part 23 Implementation of Conflicts of Interest Policies and Procedures by Swap Dealers and Major Swap Participants
  • 75 FR 71397
    17 CFR Part 23 Regulations Establishing and Governing the Duties of Swap Dealers and Major Swap Participants

Stabenow Takes Ag Gavel

Sen. Debbie Stabenow is poised to take the helm of the powerful Senate Agriculture Committee next year to fill the vacancy left by Blanche Lincoln’s defeat.

The Michigan Democrat announced her intention Friday to take the gavel after Kent Conrad (D-N.D.) opted to keep his post atop the Budget Committee.

Stabenow will assume the agriculture post as the committee prepares to begin negotiating the next multi-billion dollar farm bill. The bill, which Congress renews every five years, will likely become a battleground over farm subsidies, efforts to boost domestic ethanol production and the Obama administration’s environmental regulations.

“I look forward to working with my colleagues on both sides of the aisle, as we begin writing a new farm bill that once again recognizes the importance of America’s agricultural economy and rural communities,” she said in a statement.

Continue reading on Politico here.

CFTC Updates

The following Proposed Rules have been published:

  • 75 FR 70881
    17 CFR Part 3 Designation of a Chief Compliance Officer; Required Compliance Policies; and Annual Report of a Futures Commission Merchant, Swap Dealer, or Major Swap Participant
  • 75 FR 70973
    17 CFR Part 48 Registration of Foreign Boards of Trade

The following Sunshine Act Announcement has been published:

  • Sunshine Act Meetings: December 1, 2010, December 9, 2010 and December 16, 2010
    Open Commission Meetings December 1, 2010, December 9, 2010, and December 16, 2010; Matters to be considered: The Commission has scheduled these meetings to consider the issuance of various proposed rules. Agendas for each of the scheduled meetings will be made available to the public and posted on the Commission’s Web site at http:[sol][sol]www.cftc.gov at least seven (7) days prior to the meeting. In the event that the times or dates of the meetings change, an announcement of the change, along with the new time and place of the meeting will be posted on the Commission’s Web site.

The following Public Information Collection Requirement has been published:

  • 75 FR 70910
    Agency Information Collection Activities Under OMB Review: Proposed Collection; Comment Request: Part 41 Relating to Security Futures Products