A SCOTUS case aiming to protect rich people from taxes could lead to chaos for the federal government’s finances.
The Supreme Court will soon hear a lawsuit that seeks to kill a leading proposal to reduce wealth inequality in the United States, even before that proposal becomes reality.
During her 2020 presidential campaign, Sen. Elizabeth Warren (D-MA) proposed a 2 percent wealth tax on Americans worth over $50 million. The idea was that, rather than merely taxing very wealthy people’s income and leaving their accumulated capital intact, the new tax would gradually chip away at massive fortunes and start to bring wealth inequality under control.
Warren, of course, did not become president. And congressional Republicans would endorse appointing Lucifer to lead the Treasury Department before they would allow such a tax to become law. So the idea of a wealth tax remains a pipe dream — shared by many in the Democratic Party, but with no chance of becoming law anytime soon.
Nevertheless, on December 5, the Supreme Court will hear a preemptive strike on the very concept of wealth taxes.
The plaintiffs’ arguments in Moore v. United States have little basis in law — unless you think that a list of long-ago-discarded laissez-faire decisions from the early 20th century remain good law. And a decision favoring these plaintiffs could blow a huge hole in the federal budget. While no Warren-style wealth tax is on the books, the Moore plaintiffs do challenge an existing tax that is expected to raise $340 billion over the course of a decade.
But Republicans also hold six seats on the nation’s highest Court, so there is some risk that a majority of the justices will accept the plaintiffs’ dubious legal arguments. And if they do so, they could do considerable damage to the government’s ability to fund itself.
“Realization,” briefly explained
Moore involves a fairly basic tax accounting concept: realization. Ordinarily, the federal government does not tax income until it has been “realized,” which most of the time means that someone purchased an asset, sold it at a profit, and now must pay income taxes on those profits.
As a general rule, investors are not taxed right away when their assets gain value. If an investor buys $1,000 worth of stock in Company X, and that stock increases in value to $1,500, they pay no taxes on that gain until after they sell or otherwise dispose of the stock and earn a profit. If this investor does sell their stock for $1,500, they will pay income taxes on the $500 in profit.
This rule, the Supreme Court explained in Helvering v. Horst (1940), is “founded on administrative convenience.” It is often difficult to determine how much an asset is actually worth until the asset is sold, especially if that asset is anything other than stock in a publicly traded company. So the requirement that profits ordinarily must be realized before they are taxed prevents a situation where an investor cannot figure out how much they owe in taxes, because they don’t know the specific value of all their assets.
Additionally, the realization requirement helps prevent a situation where a taxpayer owes a significant amount of taxes on assets they cannot easily sell, and doesn’t have any other source of cash they can use to pay the taxes.
But, while no-taxation-without-realization is typically the rule in federal taxation, it is not always the rule. Partial owners of some kinds of businesses — including partnerships, S corporations, and some foreign corporations — are often taxed on the company’s profits before they sell their stake in the company (or otherwise receive any of those profits in the form of a distribution or dividend). Securities dealers are also sometimes taxed on unrealized investments.
For most of the last century, Congress has been allowed to determine when unrealized gains are taxed, and when taxation of these gains will be delayed until after the asset is sold or the investor otherwise realizes those gains. In most cases, Congress has chosen to delay taxing appreciated assets until realization — again, this rule makes sense because it is often difficult to determine how much an asset is worth until it is sold — but the Constitution does not prevent Congress from taxing unrealized gains if it chooses to do so.
The plaintiffs in Moore, however, claim that it is unconstitutional for the federal government to tax profits before those profits are realized. This case is widely viewed as a stalking horse against Warren-style wealth taxes, as it would be impossible to tax wealth (as opposed to merely taxing the income generated by wealth) if the Constitution were to prohibit taxation of unrealized gains on the very assets that Warren-style proposals target. But a sweeping decision in favor of these plaintiffs could also endanger numerous other, existing taxes — forcing the entire government to scramble as hundreds of billions of dollars’ worth of anticipated tax revenue is suddenly declared unconstitutional.
So what, specifically, is Moore about?
The specific tax challenged by the Moore plaintiffs is a provision of the Tax Cuts and Jobs Act, the law signed by former President Donald Trump in 2017, which imposed a one-time tax on certain investors in foreign corporations.
Before the Trump tax bill became law, the United States attempted to tax US corporations’ overseas income. Under the old regime, however, corporations could defer taxation of their foreign profits indefinitely by creating a foreign subsidiary. Income earned by these foreign subsidiaries would not be taxed until it was repatriated into the United States, giving companies a strong incentive to hoard money overseas and away from US tax collectors.
By 2015, US corporations were keeping an estimated $2.6 trillion overseas to prevent this money from being taxed in the United States.
The Trump tax bill largely gave up on taxing US companies’ foreign assets in the future — corporate money kept overseas is now generally immune from taxation, even if it is brought into the United States. But the Trump tax bill also imposed a one-time tax on US investors in foreign corporations in order to offset some of the lost revenue resulting from the new tax regime.
Under this one-time tax, certain investors in foreign corporations must pay a percentage of the money that the corporation has kept overseas, even though the investor has not sold their stock or received any of that money as a dividend. This one-time tax, which investors may pay in installments over eight years, is expected to raise $340 billion by 2027.
The plaintiffs in Moore are US investors in a company that provides supplies to farmers in India. In 2017, these investors paid $14,729 in additional taxes due to the one-time tax provision in the Trump tax bill. They then sued to get this money back.
The specific details of this very complicated change to the US tax code are not especially important — although, for reasons discussed below, they could matter a great deal if the Moore plaintiffs prevail. The most important detail to understand, if you want to get your head around the Moore case, is that the plaintiffs and their lawyers successfully identified a tax on unrealized gains. And that gives them a vehicle they can use to claim that taxes on such gains are unconstitutional.
Moore is simultaneously a case about slavery and a case about robber barons
In order to understand the legal arguments in the Moore case, one must first understand two dark periods in American history — the 1787 debates over how to form a durable Union between slave and free states, and the Supreme Court’s Lochner era, a period when the justices frequently embraced far-fetched interpretations of the Constitution that benefited entrenched wealth and capital.
The Moore plaintiffs claim that taxes on unrealized income violate a provision of the Constitution that states that “direct taxes” must be “apportioned among the several states.” This meant that, if, say, the state of Maryland contained 6 percent of the US population, then any “direct” tax enacted by Congress must collect exactly 6 percent of its total receipts from people in Maryland.
This direct tax clause also incorporated the Constitution’s infamous three-fifths compromise. So enslaved people were counted as three-fifths of a person whenever Congress had to calculate how much money it could raise from each individual state.
Of course, this clause raises one fairly obvious question: What on earth is a “direct” tax? The unsatisfying answer to this question is that no one knows, and the framers themselves had wildly divergent views on what this vague phrase might mean. As legal scholar Bruce Ackerman wrote in a 1999 law review article, this provision was included in the Constitution largely to offer “symbolic satisfaction” to constitutional delegates concerned with the slavery question.
Among other things, the direct tax clause “served as a fig-leaf for anti-slavery Northerners opposed to the explicit grant of extra representation for Southern slaves,” because it also suggested that white residents of slave states would pay higher federal taxes than residents of free states. According to Ackerman, the framers largely avoided discussing what the word “direct” actually means because “more debate on the meaning of ‘direct taxation’ might destroy” any hope of a deal that could bring Northern and Southern states together in a single Union.
For much of American history, the direct tax clause lay dormant — and it certainly wasn’t understood to prevent taxation of unrealized income. Indeed, in Collector v. Hubbard (1871), the Supreme Court held that “it is as competent for Congress to tax annual gains and profits before they are divided among the holders of the stock as afterwards.” That’s an explicit declaration that taxes on unrealized income are permitted.
But then the Supreme Court reversed course in Pollock v. Farmer’s Loan & Trust (1895), holding that a tax on investment income is a “direct” tax that must be apportioned among the states. As a practical matter, Pollock made it impossible to tax investment income, because taxable investments are not evenly distributed among the residents of the many states.
The Pollock decision was widely criticized, poorly reasoned, and eventually sparked an entire constitutional amendment — the 16th Amendment, which was enacted in 1909 in order to overrule Pollock. That amendment provides that Congress may tax incomes “from whatever source derived,” thus abolishing Pollock’s ban on taxing the proceeds from investments.
Indeed, Pollock is best understood as part of a wide-ranging effort by conservative justices to impose strict limits on the government’s power to disturb the interests of capital, while simultaneously giving the courts unprecedented power to protect capital’s interests.
In the first six months of 1895, the Court handed down three cases, which destroyed Congress’s ability to tax the rich (Pollock), gutted Congress’s power to regulate business, and gave the Supreme Court’s blessing to “labor injunctions,” court orders requiring unions to end strikes and similar labor actions. These three cases arguably mark the dawn of the Lochner era, which is named for a 1905 Supreme Court decision that imposed strict limits on both the federal government and the states’ power to enact laws seeking to improve workplace conditions for workers.
The Lochner era ended in 1937, after a four-year fight between President Franklin Roosevelt and far-right justices who relied on cases like Lochner to strike down New Deal programs. Many Lochner-era cases are now taught to law students as examples of how judges should never behave.
So what does all of this dark history have to do with the Moore case?
The plaintiffs in Moore are represented by Andrew Grossman, an adjunct scholar at the right-libertarian Cato Institute, and David Rivkin, a Republican lawyer known for defending torture during the George W. Bush administration, and for filing one of the first lawsuits claiming that Obamacare is unconstitutional.
Grossman and Rivkin’s brief is a love letter to the Lochner era. Their argument rests largely upon decisions that were handed down between 1895 and 1937, and the linchpin of their argument is Eisner v. Macomber (1920), a Lochner-era case interpreting the 16th Amendment that has repeatedly been repudiated by more recent Supreme Court decisions.
Indeed, an early section of their brief opens with a quote from Justice Stephen Field’s concurring opinion in Pollock, an anti-tax jeremiad that claimed that, if Congress were allowed to enact an income tax, then it would inevitably lead to “a war of the poor against the rich.” Field was arguably the most strident proponent of laissez-faire social Darwinism in the Supreme Court’s history. So opening a brief with a Stephen Field quotation is a bit like beginning a political speech by citing Ron Paul, or opening an economics paper with a quote from Ludwig von Mises.
In any event, if the Moore case were being argued during the Lochner era, then Grossman and Rivkin would have a very strong argument that their client should prevail. Macomber, a 5-4 decision mostly joined by pro-Lochner justices, said that “enrichment through increase in value of capital investment is not income in any proper meaning of the term.” That conclusion closely tracks the reasoning of Pollock, which was supposed to have been overruled by the 16th Amendment. It also mirrors the Moore plaintiffs’ claim that unrealized gains may not be taxed.
But, as legal scholars Ackerman, Joseph Fishkin, and William Forbath argue in an amicus brief, this language in Macomber is best understood as “short-lived judicial resistance to the Sixteenth Amendment” which “exhumed the logic of Pollock.” And, regardless of why these Lochner-era justices handed down such a confused decision, Macomber has repeatedly been repudiated by the post-Lochner Supreme Court.
Thus, in Horst, the Court said that “the rule that income is not taxable until realized” is “founded on administrative convenience,” instead of in the Constitution. In Helvering v. Griffiths (1943), the Court said that Macomber’s reasoning is “limited” to “the kind of dividend there dealt with” (Macomber held that an investor who benefits from a stock split — an event that does not change the value of the investment itself — may not be taxed because of this split). And in Commissioner v. Glenshaw Glass (1955), the Court said that Macomber’s narrow definition of “income” was “not meant to provide a touchstone to all future gross income questions.”
As one federal appeals court explained in 1954, “even as to income derived from capital the Eisner [v. Macomber] case has been limited to its specific facts.”
So Moore should not be a difficult case. Its plaintiffs rest their suit upon a nebulous provision of the Constitution that is a relic of an age when the United States enslaved people. And they rely on discredited Supreme Court opinions that have been repudiated by the Court itself — or by a whole damn constitutional amendment!
Regardless of whether it is a good idea or a bad idea for Congress to tax unrealized income — or to tax wealth itself, for that matter — the Constitution primarily leaves it up to Congress to decide what America’s tax policy should be. The Moore plaintiffs’ approach will be familiar to anyone who has studied the Lochner era, the age when the Court routinely struck down laws, not because they violated the Constitution, but because five justices deemed them “unwise, improvident, or out of harmony with a particular school of thought.”
A victory for the plaintiffs in the Moore case invites chaos
If the Moore plaintiffs prevail, the immediate impact is likely to be a huge hole in the federal budget. Again, they challenge a tax that is supposed to raise $340 billion in revenue.
Such a decision would also produce a wave of new litigation. As the Justice Department warns in its brief, a decision for the Moore plaintiffs would “require the government to adjudicate a flood of … refund claims” brought by other taxpayers who paid the Trump tax bill’s one-time tax. And these claims would “raise complex statute-of-limitations” and similar questions because the tax in question was first paid in 2017.
And then there’s the problem of severability. When a court strikes down one provision of a broader statute, it must ask whether the remainder of the law can be “severed” from the unconstitutional provision — and thus remain in effect — or whether Congress would have preferred for other provisions of the broader law to fall along with the unconstitutional provision.
The Supreme Court typically applies a strong presumption in favor of severability. As the Supreme Court held in Murphy v. National Collegiate Athletic Association (2018), “in order for other … provisions to fall, it must be ‘evident that [Congress] would not have enacted those provisions which are within its power, independently of [those] which [are] not.’”
But there’s a very strong argument that Congress would not have enacted at least some parts of the Trump tax bill if it knew that the one-time tax at issue in Moore would fall. After all, the whole purpose of this one-time tax was to offset some of the costs of no longer taxing US corporations’ overseas income.
And, if the old regime governing taxation of foreign corporate income must be reinstated, that will trigger countless other lawsuits. The government will likely attempt to collect taxes that were outlawed by the Trump tax bill, but that would suddenly become mandated by law once again. And numerous businesses will suddenly be hit with unexpected tax bills that could severely harm their operations.
Indeed, the severability inquiry may be even more complicated. When Congress passed the Tax Cuts and Jobs Act in 2017, it used a process that imposed a $1 trillion cap on how much the bill could add to the budget deficit over the next decade. So there’s a decent argument that, if Congress had known that the bill would increase the deficit by an additional $340 billion, it would have chosen not to enact any tax law at all.
But if the entire Trump tax bill is struck down, that would mean that millions of taxpayers would potentially need to litigate whether they paid the right amount of income taxes between 2018 and 2023. Some of these taxpayers would be hit with surprising new taxes that could seriously harm their finances. Others would receive unexpected windfalls that they did nothing to earn. And the federal government would potentially be thrust into an extended period of uncertainty over how much money it could keep, how much it could collect in back taxes, and how much money it had to pay for its obligations.
There are very good reasons, in other words, why the post-Lochner Supreme Court has historically been cautious about mucking around with tax policy. Federal budgeting is a complicated and politically fraught process that literally has implications for every single American.
This is the very sort of process that should be conducted by elected officials, and not by black-robed lawyers with a vendetta against Elizabeth Warren.
Is he blowing it? Will he bounce back? Or something in between?
Just how dire are President Joe Biden’s poll numbers looking for Democrats?
The president is currently registering a 38.9 percent approval rating on average. He’s trailing Donald Trump in national polls by 2.3 percentage points. And he’s also trailing Trump in five of the six key Electoral College swing states.
If we take all this at face value, the natural conclusion is that Biden’s reelection bid is in deep trouble — indeed, that he is currently on track to lose to likely Republican nominee Donald Trump.
So now, Democrats and political commentators are embroiled in a fierce debate about whether to take them at face value — and about just how much panic about Biden is currently called for.
Like nearly every new president, Biden started out with far more Americans approving than disapproving of his job performance, due to what’s known as the “honeymoon” period. But in the latter half of his first year in office, amid the chaotic withdrawal from Afghanistan, rising inflation, and a resurgent Covid pandemic, his approval plunged. In the two years since, it hasn’t recovered.
Indeed, Biden’s numbers have been remarkably stable — since the end of 2021, FiveThirtyEight’s polling average has shown between 38 percent and 43 percent of poll respondents approving. But by the same metric, the recent presidents who won reelection all had approval in the high 40s or above in their election years.
Polls pitting Biden against Trump also look grim for the president right now. RealClearPolitics’ polling averages currently show Biden trailing Trump by 2 points nationally, by about 2 points in Michigan and Pennsylvania, and by 4 to 5 points in Nevada, Georgia, and Arizona. (Biden is only leading one swing state, Wisconsin, by about 1 point.)
In conversations with pollsters and political scientists, I’ve heard three separate theories of how to interpret these numbers.
One theory: Biden is blowing it — the polls are a clear warning sign that the president has unique flaws as a candidate, and another Democrat would likely be doing better.
A second theory: Biden’s facing a tough environment — voters have decided they don’t like the economy or the state of the world, and, fairly or not, he’s taking the brunt of it.
And a third theory: Biden’s bad numbers will get better — voters aren’t even paying much attention yet, and as the campaign gears up, the president will bounce back.
Which theory you believe has major implications for Democrats’ strategy next year — and for how comfortable the party should be with Biden running again at all. The stakes of the 2024 election are immense, so it’s worth digging into the arguments about what, exactly, is at the root of Biden’s bad numbers.
Theory 1: Biden is blowing it — and another Democrat wouldn’t be
One notable feature of Biden-era elections, particularly starting in 2022, is that Democrats have done reasonably well even as the president’s numbers have been poor. The party won most key swing states’ governor and Senate races in the midterms, and it did well in this November’s elections, too.
Yet for the past two years, those bad numbers for Biden have been basically constant. Though you can try to blame various events in his first year in office for Biden’s initial popularity drop, little that’s happened since appears to have budged his approval in either direction. It’s as if perceptions of Biden became fixed in amber.
That has led some to conclude that the reason for Biden’s bad numbers is, well, Biden.
As you may have noticed, Biden is rather advanced in years. He’s also never been the most effective communicator, or the most inspiring of politicians. He may have succeeded despite those limitations when so many Americans had the burning desire to get Trump out of office. But now, in the glare of the presidential spotlight, maybe all this has caught up with him.
As Nate Cohn has written, polls currently show Biden performing weakly among less politically engaged and less ideological Americans who don’t frequently vote — many of whom are young. Perhaps these voters are less issue-driven and would be more likely to make up their minds based on Biden’s personal traits, such as age. Perhaps they think Biden simply isn’t inspiring enough to bother voting for.
Could another Democrat do better? Some polls do indeed find that a “generic Democrat” would handily outpoll Trump. The problem there, though, is that generic Democrat can’t run. When actual Democratic alternatives are tested, they don’t tend to do dramatically better than Biden.
Some of those alternatives don’t yet have national name recognition, so perhaps voters are hesitant to support them. But those other Democrats also haven’t yet been subject to months of attacks from Trump and the right-wing media, who will inevitably find negative narratives to push that will make any politician appear less likable. Think of how Hillary Clinton was quite popular when she was secretary of state — but, when she ran for president afterward and became Republicans’ number one target, she became one of the least popular presidential nominees ever.
The age issue, mentioned constantly by voters in polls and focus groups, is particularly glaring. Biden is the oldest president ever. Unfortunately for him, this is a problem he can’t solve. Maybe swing voters just don’t believe such an old candidate could be up to the task. “On the specific question of Biden’s age, voters are sending about as clear a message as they can,” Nate Silver recently wrote. Would a younger Democrat be better positioned to win?
Yet here’s my doubt. In 2021, Biden was also very old — but, for most of that year, he was popular. He’s gotten older since then (as have we all). But it clearly wasn’t the case that voters two and a half years ago were intractably opposed to the concept of an old president. And I’m skeptical that his age has become that much more glaring to the general public in the two years since.
More likely, in my view, is that voters have come to doubt Biden’s competence, and many are attributing that perceived lack of competence to his age. But would simply swapping in another Democrat solve that problem — or is it the results of Democrats’ governance that these poll respondents dislike? If it’s the latter, that would be harder for a new Democratic nominee to shake off. Which brings us to the next theory.
Theory 2: Biden is being hurt by a tough environment for incumbents — and other Democrats would be, too
Biden’s low approval rating seems less like an aberration when we look overseas. Notably, many leaders of developed democracies are wildly unpopular right now, spanning the ideological spectrum — including Justin Trudeau of Canada, Rishi Sunak of the UK, Emmanuel Macron of France, and Olaf Scholz of Germany. (Indeed, Biden is significantly more popular than any of those four, even though they’re all decades younger than him.) This suggests it’s simply a tough time for an incumbent to be in power.
So what if Biden’s unpopularity is driven instead by bigger, broader factors than his own personal traits? What if many voters, in the US and these other countries, are simply pissed off about the state of the world — about how the post-pandemic return to not-quite-normal has gone?
The state of the economy looms large in this theory. In survey after survey, large majorities of respondents say both that the economy is terrible and that Biden is doing a bad job managing it. For months, American economists and policy wonks have expressed puzzlement about these results, pointing to strong GDP growth, low unemployment, the lack of a recession in the US, and cooling inflation rates.
But after a two-year period featuring the highest inflation in decades, prices are still a whole lot higher than they were four years ago — and voters seem not to have forgiven that just yet. (This has been a global phenomenon, worse in Europe than in the US, that could be dragging down many incumbents.) And governments’ chief inflation-fighting tool, high interest rates, may also be painful to many people, making it harder to get credit. Stock markets have stagnated or fallen since early 2022 (after many years of continuous upward expansion in the US). Some Americans could also see their incomes taking a hit due to the expiration of generous pandemic aid.
Another problem that could be dragging down incumbents across the Western world is the perception of a world on fire. Biden’s own approval dropped significantly after the chaotic US withdrawal from Afghanistan in 2021, in the clearest example of a specific real-world event affecting his polls. (Though Americans had regularly said that they wanted to end the Afghanistan war, the actual withdrawal was portrayed in the media, and taken by Americans, as a debacle and humiliation, calling into question Biden’s competence.)
Then came Russia’s invasion of Ukraine, which became the biggest land war in Europe since World War II, led to more than 100,000 deaths, and threw the global economy into turmoil (including by sending food and fuel prices surging). Biden’s approval did not significantly drop since the war began — it was already low — but it didn’t rebound, either.
The Israel-Hamas war is the newest global crisis to capture the world’s attention. Like with Ukraine, it does not seem to have driven Biden’s approval lower — per FiveThirtyEight’s average, Biden’s approval was at 39.1 percent the day before Hamas’s October 7 attack and it’s at 38.9 percent now. But it’s an awkward issue that splits Democrats’ political coalition, with younger and progressive voters more likely to be sympathetic to the Palestinians, and could play out electorally and in swing states in an unpredictable fashion. It may reinforce the sense among some voters that the world is falling to pieces, and that Biden hasn’t managed to put those pieces back together.
The theory that Biden’s bad numbers are driven by real-world problems also implies that his numbers would improve if those problems were alleviated. Americans’ economic sentiment has been improving through much of this year, and the latest headlines suggest inflation is cooling and the Fed could start cutting interest rates next year. And today’s foreign crises might be out of the headlines a year from now.
Yet this doesn’t perfectly fit what we know either. Notably, though Americans’ economic perceptions have improved somewhat this year, Biden’s approval has not improved with them. And if Americans are blaming incumbent Democrats for problems in the world, why do Democrats and incumbents keep doing reasonably well in down-ballot elections?
Theory 3: Biden’s polls look bad now — but they’ll get better next year
But there’s another theory about what’s going on, which basically posits that maybe polls about Biden right now just aren’t so useful at predicting how things will go in 2024.
After all, it’s true that, historically, presidential general election polls this far out haven’t matched the final outcome very well. “History’s lesson is clear: Don’t pay attention to general election polls a year before the election,” Harry Enten wrote at FiveThirtyEight in 2015. Part of that may be because voters simply didn’t know that much about prior presidential nominees this early — something that may not hold true this year, with the all-too-familiar Trump expected to be the GOP nominee.
But another reason is that the campaign season, which hasn’t really started yet, matters for framing the choice to voters. Pretty much the entire political world will spend a lot of time next year making arguments for how people should vote in 2024. The media will also shift to covering the election as a choice between two candidates — the Democratic and Republican nominees.
Per this theory, Biden is starting off looking weak in polls because of two groups of voters — disgruntled Democrats and tuned-out independents — who may well come back to Biden as the campaign continues. These voters aren’t yet fully yet grappling with the likely choice between Biden and Trump as the two major nominees. But over the next year, that choice will become clear, and as they’re reminded about how terrible Trump is, many of those voters will likely end up backing Biden.
Because Trump has been playing a relatively minor (for him) role in the news cycle of late, voters may not yet be focused on how plausible it is that he’d return to the White House. Voters who might have rosy memories about how “things were better” in the pre-pandemic Trump years may think twice once they’re exposed to Trump’s bizarre and disturbing behavior again. And he is set to have at least one, and potentially more than one, criminal trial next year that could well make him a convicted felon. Once the nation’s attention is again focused on Trump’s many controversies and weaknesses, he may not seem like such an appealing candidate.
What’s the evidence that this might actually happen? Some point to the 2012 election, where President Barack Obama faced similar mediocre polls and pundit second-guessing for parts of 2011, but recovered the following year. There’s also the 2022 midterms — where voters who were unhappy with Biden often ended up voting for Democratic candidates, particularly in high-profile races with a MAGA Republican nominee.
Still, even if we expect a Biden rebound, we can’t know for sure whether Biden’s numbers will improve by enough to win. Notably, his polls now are worse than Obama’s were in 2011, and they’ve been worse for longer. They’re also far worse than Biden’s own polls against Trump were at this point in 2019.
A presidential recovery during the election year is hardly a guarantee. Jimmy Carter and George H. W. Bush, for instance, saw their approval drop precipitously as the election loomed. There’s also the worrying possibility for Democrats that this ebbing support for Biden isn’t just a blip, but rather a realignment. Sometimes “your” voters won’t “come home” — sometimes they stop voting, or decide the other party is the home they now prefer.
So Biden may not be able to take for granted that less engaged young and nonwhite voters will come back to him, rather than staying home or even switching to Trump — he will have to work to win their support.
Which theory is the strongest?
All of these theories have decent arguments in their favor, and we can’t know for sure which is right.
Here’s my view: I do expect Biden’s numbers to recover somewhat from where they are now. But I think how much they recover will depend on events — specifically, on what happens in the economy and in the world over the next year. So I’d subscribe to a kind of combination of theory 2 and theory 3.
I’m skeptical of the idea that Democrats’ problems would be solved by swapping out Biden. I’m not convinced that Biden’s age or lack of charisma are the true root of his polling difficulties. I suspect a more fresh-faced Democrat would face similar challenges as the nominee, once they’ve gotten the demonization that now regularly comes along with being the head of one of the two national parties.
There’s certainly a risk that a health- or age-related crisis could end up derailing Biden’s campaign later. But I think his current polling woes can be explained by a combination of real-world conditions like the economy, plus the fact that the campaign hasn’t really started yet.
If Biden’s governing record is the problem, I don’t think it would be so easy for another Democrat to turn the page. Of course it is possible that a different nominee would do a point or two better than Biden, and that that could make a difference in a close race — but that’s impossible to know with precision. A candidate untested on the national stage could also do worse.
I do expect Biden’s numbers to rebound as the campaign gears up in 2024, and for the race to get close. But again, I don’t know whether Biden will rebound enough. Anyone predicting confidently who would win the 2016 or 2020 elections was, in retrospect, wrong, since both were decided by tiny margins in just a few key states that could have easily shifted.
And here’s my other caveat: If the economy takes a turn for the worse again, or the global situation ends up getting more dire — well, I’d expect Biden to end up like Jimmy Carter, and Americans to learn what havoc a second Trump term will bring.
But I do think it’s too early to say that Biden is doomed. A year is a long time; we had no idea at this point in 2019, for instance, that a global pandemic was about to emerge. All sorts of surprises could lie ahead.
The controversial concepts shaping climate action, defined.
Often, the highest-stake decisions impacting the planet come down to the simplest phrases. The importance of words plays out every year as world leaders and diplomats gather at the United Nations climate change conference, also known as the Conference of the Parties (COP), where they adopt a new climate agreement. Consider one especially foundational one: whether countries agree that they voluntarily “should” slash climate pollution or phase out fossil fuel subsidies or contribute to international funds, or whether they “must.”
Climate action includes vast, sometimes elusive concepts, which is what makes precise language so important.
To really boil it down, there are two broad courses of action we need to take at once: reducing emissions to limit global warming and reducing the harm from the warming we’ve already caused. The longer we wait to slash emissions from the fossil fuel industry, which has disproportionately caused the crisis, the more we’ll pay to adapt to the harms of climate change.
To help clarify the most important debates that underscore our current moment, there are five concepts to keep in mind. Together they help make sense of what needs to be done about supercharged heat waves, hurricanes, and other troubling thresholds on the horizon. Ongoing efforts in the climate movement hinge on these concepts, but they will also take center stage in Dubai at COP28, the 28th United Nations climate conference, which begins this week.
- Net zero
As long as we continue to put more greenhouse gasses into the atmosphere than we remove, the planet will continue to overheat. The sooner we reach a balance of these, the less drastic warming the world will have to contend with.
Because of one little word — “net” — the phrase “net zero” inherently allows wiggle room for activities that are hardest to clean up, like producing steel and meat, which emit harmful greenhouse gasses. Since phasing those out completely isn’t currently feasible, countries must find another way to reach an equilibrium. For that we need more ways to absorb carbon. Nature already soaks up about one-third of carbon pollution, so one way to curb the impacts of climate change is to plant more trees, restore wetlands, and grow algae. But there are also mechanical methods of taking carbon dioxide out of the air, using machines (more on that later).
During the 21st international climate conference in Paris in 2015, businesses and governments embraced net zero pledges after nearly 200 countries signed an agreement — now known as the Paris Agreement — to balance emissions in the “second half of this century,” thereby creating the first broad framework for tackling ever-rising emissions. The year 2050 signifies the earliest possible date that politicians think we can manage to balance emissions and avoid the worst-case scenarios for global warming.
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Since the Paris Agreement, more than 120 countries, 800 cities, and one in five Fortune Global 2000 companies have adopted their own net zero targets in the same timeframe. But how that translates into policy or planning really varies. An article penned by more than a dozen climate scientists in the journal Nature Climate Change in 2021 pointed out that most of these plans lack details, are overly optimistic, and face inadequate accountability: “Long-term ambition is often not backed up by sufficient near-term action.”
You can think of net zero as a balancing equation, with endless ways to get there. Many countries and companies are putting a lot of faith in the carbon removal side of the equation, which affords them with a budget — albeit an increasingly scrutinized one — to pollute.
“We need the whole planet to get to zero and ultimately to get to negative, where you’re using forests, wetlands, and other natural systems absorbing carbon that we put up in the atmosphere, not as an offset or a way of allowing continued emissions from industry or power plants,” said Alden Meyer, a veteran of international climate conferences, who works at the climate think tank E3G.
Another wrinkle is that too many of these pledges are moving too slowly to hit net zero by 2050. If the richest countries and companies in the world are waiting until the last possible year to reach net zero, that leaves poorer nations and more difficult-to-decarbonize industries in a bind.
Every part of the economy, and every part of the world, has to move as fast as possible to slash emissions to nearly zero, and then rely on other methods for removing the remainder of the emissions from the atmosphere. The risk otherwise is running a “shell game,” said Meyer, when the reality is “everyone has to get out of carbon, full stop.”
- An “unabated” fossil fuels phasedown
This one is complex and there’s quite a lot to tease out here, so bear with us. Once you wrap your head around this concept, the rest will feel easy.
First, some background: Fossil fuels consumption — the oil, gas, coal, and petrochemicals we use to power our buildings, run our cars, and create plastics — is responsible for over 75 percent of global warming. Addressing climate change means we must transition away from running the economy on fossil fuels. And with every passing year, there’s been more pressure coming from vulnerable nations, activists, and climate scientists to name the problem directly — fossil fuel combustion — and call for an explicit end to more extraction.
Fossil fuel industries, and the economies and politicians dependent on them, sidestep this basic reality. And more often than not, powerful nations with vested interests in fossil fuels (the US, Saudi Arabia, Russia, and China, all among them) push back on the mere mention of fossil fuels in international agreements.
Two years ago, this began to change. Negotiators battled over inserting an acknowledgment about the need to phase out coal use when the world gathered for COP26 in Glasgow in 2021. Talks almost broke down over differences in wording, or whether it would be included at all. Ultimately, the final text included the “phasedown of unabated coal power.”
There are two things to tease apart here. “Phasedown” is careful phrasing — it implies we will reduce coal use, but not necessarily abandon it altogether. The other qualifier “unabated” literally means allowing something to continue “without any reduction in intensity or strength.” That sends a strong signal that “by 2050 we’ll still have fossil fuels in the pipeline — the question is how much,” European Climate Foundation CEO Laurence Tubiana, who helped negotiate the Paris agreement, said this fall.
Clearly, there’s some room for interpretation here.
To count as abated, a fossil fuel-reliant plant would need to use technology that captures carbon emissions before they escape into the atmosphere. This is called carbon capture and storage (CCS).
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There’s no universal agreement among policymakers and scientists on how efficient CCS would need to be at the grand scale. The Intergovernmental Panel on Climate Change (IPCC), the largest climate scientific body, just addressed this in a footnote of a report, saying abatement could involve capturing more than 90 percent of carbon dioxide at power plants.
The acceptance of “abated emissions” ends up being a better deal for the oil and gas industry than for the planet. Major oil companies, which will have a heavy presence at this year’s UN climate conference, like to tout that the technology is feasible and already in wide use today. (Spoiler: It’s not.)
“The fear is if the language is phrased around phasing out unabated fossil fuels, that gives an open license to just put [carbon capture and storage] on as many facilities as you can and then just perpetuate the harm that fossil fuels cause — not just combustion, but environmental and social impacts,” said Katie Lebling, a research association at the World Resources Institute.
- Carbon removal
Let’s return to the idea of balancing our climate equation. To counteract the carbon emissions from our polluting lifestyles and societies, we have a few options to remove them through direct air capture.
It’s easy to confuse CCS with direct air capture, but think of it in terms of when the intervention happens. Carbon capture and storage helps industries avoid pumping as much carbon dioxide into the atmosphere as they would otherwise, while direct air capture removes the greenhouse gas from the air. It’s a subtle but pretty important difference, because CCS could be used to prolong the life of fossil fuel plants that might otherwise transition to cleaner technology, while direct air capture could reduce pollution that is absolutely unavoidable in the first place.
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Direct air capture can sound like a get-out-of-jail-free card for climate change, and that’s why climate experts warn not to be overly optimistic about a technology that still has a lot of hurdles ahead of it. For starters, billions of machines would have to be up and running over the course of decades, to really make a dent in the climate. And, once captured, we will have to put the carbon somewhere. Current methods of injecting it into bedrock require a lot of permitting and infrastructure before direct air capture becomes a reality.
All this is really expensive to scale up, which is why governments play a key role in guiding investments in carbon removal. Activists worry if companies and countries put too much stock in expensive, finicky carbon removal, they will be less concerned with moving off of fossil fuels in the first place.
- Climate finance
Climate finance covers the bill for efforts to mitigate or adapt to climate change and to address the pain already occurring as a result of the crisis. There are multitudes here — “like layers of the onion,” says Meyer. He puts the cost of that onion at trillions of dollars, which includes paying for the transition from fossil fuels to clean energy and changing land use and agricultural practices, as well as investing in resilient infrastructure and health care or providing more support for vulnerable countries in the Global South that experience the brunt of climate change’s worst impacts.
This type of spending is increasing, but governments and the private sector are failing to keep up with what’s needed to align with how fast the climate is changing. “For every $1 banks are spending on fossil fuels, they are spending $1.7 on renewable and emerging technologies,” Ceres’s managing director for sustainable capital markets Steven Rothstein said. It’s a big deal for renewable investment to finally outpace fossil fuels, but at this point, banks should not be funding any new fossil fuel infrastructure. The world already has too much coal, oil, and gas in reserve that would burn the planet well past the 2 degrees Celsius increase in global average temperatures.
Once you start to peel back all the different layers of climate finance, you can understand how different global, bilateral, and private financing are all supposed to add up to the impossibly large number that’s needed. Here are a few ways that this is happening:
Green Climate Fund: One key layer is the international goal of reaching $100 billion annually through public and private investments.
The world is falling far short of hitting that $100 billion goal, but we are (barely) hitting some smaller targets. One of those is the Green Climate Fund, a multilateral fund meant to help developing nations make the renewable transition. The fund has started to make distributions, like a $39 million project to restore Rwanda’s rainforests.
Carbon markets: The idea of a carbon market is that you’re trading carbon offsets, a credit that any person or business or entity can buy to reduce its carbon footprint. For example, a livestock farmer who wants to cut methane emissions could make up for it by paying to restore a wetland. The same can be done on a much larger national scale, with countries trading emissions.
Problems abound in today’s voluntary carbon markets, like double-counting and failing to reduce absolute emissions. Some see carbon markets as a capitalist sham, others as an elegant solution to the biggest roadblocks to decarbonization.
Loss and damage (a.k.a. climate reparations): Climate change isn’t just about slashing pollution, and making a jump to clean energy and zero-emission technology. The world is already well on its way to 1.5 degrees Celsius of warming, and we need to be adapting to the irreversible impacts.
Climate change is causing harms across the world that fall unequally on poorer communities least responsible for creating this mess. The official phrase for this is “loss and damage,” sometimes also called reparations. Global leaders have reaffirmed the principle that rich countries should help poorer nations repeatedly in UN texts since then, but many key questions remain at a stalemate: Who should be paying into funds to help vulnerable nations? What counts as a particularly vulnerable country? And are affluent countries obligated to pay or should they do it of their own volition?
Last year at the UN climate conference in Sharm el-Sheikh, countries officially adopted a loss and damage fund — a key win for climate adaptation. But there are a few hurdles. Countries, including the United States, have been firmly against any language that requires countries to pay into the fund, preferring voluntary contributions instead.
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- Scope 3 emissions
Beyond the actions that national governments take, the private sector also has a key role to play here. There are three basic ways to think about a business’s impact on the climate, organized into three scopes that break down direct and indirect pollution.
Scope 1: The first slice of its emissions, Scope 1, means the pollution produced directly from a company’s operations. So if you were, say, accounting for a car manufacturer, you would count any fossil fuels burned directly by the company for things like gas heating, delivery, or machinery.
Scope 2: Scope 2 is the category that measures indirect emissions from company operations that occur directly at a closely related facility or partner business. Consider a business’s electricity cost; those emissions would occur at the utility where the power is generated, not at the business that benefits from it. The key distinction here is that these emissions are indirectly caused by the company, but occur directly somewhere else.
Scope 3: This one is the slipperiest.
Scope 3 is the final, often biggest layer — and includes all of the indirect emissions coming from everything else, like using the products, third-party delivery, and their waste. Scope 3 refers to a company’s emissions coming from everything else not accounted for elsewhere, like how customers use their products, third-party delivery, and the waste.
Companies have made bigger strides in reporting Scope 1 and Scope 2 emissions. They’ve also set out goals for reducing those emissions. Over 80 percent of S&P 500 companies already have some kind of climate disclosure but they rarely account for their biggest footprint, the final category of Scope 3 emissions.
Attempts to regulate Scope 3 emissions have faced a lot of backlash. After all, a company’s Scope 3 emissions can be more than 11 times greater than its direct emissions. The US Treasury has faced heavy pressure to withdraw proposed draft rules that would require companies to disclose their Scope 3 emissions to investors (the rules, now delayed, have still not been finalized). European regulators have implemented new Scope 3 reporting rules for large companies, with smaller companies to follow. And California has new legislation that would mandate this kind of reporting for major companies based there.
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Why does all this matter? First of all, we don’t even have great accounting for what companies’ impact on the climate is, and if companies plan to highlight their sustainability and climate commitments, we need a better understanding of their total impact first.
The issue eventually can play an important role in the growing number of climate lawsuits around the world, providing more data that’s needed about the impact of climate change on business practices and vice versa.
Data alone doesn’t fix the climate crisis, Rothstein said. “But the data, the disclosure, is a foundation,” he said. “You can’t manage what you can’t measure.”