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Column: What FDR could advise Biden about reforming the Supreme Court — tread lightly

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Column: What FDR could advise Biden about reforming the Supreme Court — tread lightly

If it’s true that as Mark Twain supposedly said, history doesn’t repeat itself but it often rhymes, then we are about to embark on a poetry slam for the ages, with the Supreme Court as its theme.

President Biden on Monday unveiled a package of proposals to rein in a court that has seen public confidence reach a low ebb not recorded by the Gallup Organization in readings dating back to 1973.

Most significantly, he is calling for 18-year term limits for Supreme Court justices and the imposition by Congress of binding conduct and ethics rules requiring the justices to “disclose gifts, refrain from public political activity, and recuse themselves from cases in which they or their spouses have financial or other conflicts of interest.”

Term limits would… make timing for Court nominations more predictable and less arbitrary; and reduce the chance that any single Presidency imposes undue influence for generations to come.

— President Biden on his Supreme Court reform plan

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He is also proposing a constitutional amendment to neutralize a court decision appearing to give former presidents immunity for crimes committed while in office.

The template for these proposals is Franklin Roosevelt’s 1937 plan to “pack” the court by allowing presidents to appoint a new justice when any sitting justice failed to resign or retire within six months of turning 70, up to a maximum of six new justices.

The manifest goal was to dilute the influence of a cadre or conservative justices who had overruled almost every New Deal law or regulation that had come before them, as well as several other measures.

If FDR could counsel Biden today, he might warn him to move carefully; FDR’s court-packing scheme went down in flames amid congressional opposition, cut deeply into the popularity that had brought him a landslide reelection victory in the 1936 election, and brought the New Deal to a screeching halt. It also represented a moment in which FDR lost his unique ability to gauge the popular mood and act upon it.

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The politics of Supreme Court reform today resemble those of 1937 in many ways, though as Twain’s supposed quip suggests, there are significant differences. Let’s look at the differences first.

Roosevelt was then at the outset of his second term, riding high on an electoral victory that may have given him a greater sense of his political omnipotence than he actually possessed. Biden, of course, is less than six months away from the end of his presidency. Roosevelt could look ahead at four more years of policymaking; Biden may be more focused on cementing his legacy of progressive achievements by bequeathing the nation a reformed Supreme Court.

Both presidents may have felt they had nothing to lose by taking on what seemed to be the most revered of the three branches of government, albeit for different reasons — Roosevelt because nothing could chip away at his popularity, Biden because his own term in office can’t be affected by the fate of his reform proposals.

Roosevelt was faulted for springing his scheme on an unsuspecting public and Congress. Notwithstanding public discontent with the court, its reform hadn’t been an issue in the presidential campaign recently ended. FDR had not spoken publicly about the court after a series of anti-New Deal rulings in 1935 and 1936 except after one ruling in which he accused the court of relegating the country to “the horse-and-buggy definition of interstate commerce.”

Instead, he blindsided the nation by announcing his plan in a speech on Feb. 5. To his surprise, voters and legislators — including reliable New Deal supporters on Capitol Hill — reacted with fury.

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It was not merely the secrecy in which the scheme had been plotted that its critics found dismaying. FDR’s stated rationale, which was that the aging justices were overworked and needed help to manage their docket, was transparently deceptive.

That rationale might have looked superficially reasonable at first, since the oldest member of the court’s so-called Four Conservative Horsemen, Willis Van Devanter, had been born during the administration of James Buchanan, which supposedly rendered him utterly out of step with the politics of the 1930s.

However, the oldest justice on the court, Louis Brandeis, was even older — at 80, he had been born during the administration of Franklin Pierce, Buchanan’s predecessor, but nevertheless was the court’s liberal lion and not an impediment to the New Deal.

Biden seems to have absorbed the lessons of FDR’s failed effort. He has been telegraphing for weeks that he is contemplating Supreme Court reforms. His proposals are not as radical as expanding the court outright, but they address some of the most evident issues driving the court’s public standing into the sub-basement: a conservative majority that has shown no respect for values and rights long cherished by most Americans, and a record of financial grifting and overt partisanship, chiefly by conservative Justices Clarence Thomas and Samuel A. Alito Jr.

As in 1937, there is a sense that the court has taken aim at progressive principles and laws, running roughshod over individual rights.

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The court’s direction has been led by a conservative majority including three judges appointed by Donald Trump — among them Neil M. Gorsuch, who slid into a seat kept open by Senate Republicans’ refusal to even consider Barack Obama’s nomination of Merrick Garland to the late Antonin Scalia’s seat; and Amy Coney Barrett, rushed to confirmation by Senate Republicans in October 2020 only 38 days before the election that would unseat Trump and bring Biden to the White House.

Barrett took the seat vacated by the death of Ruth Bader Ginsburg, one of the most liberal justices ever to sit on the court.

The three Trump judges were in the majority that in 2022 overturned Roe vs. Wade, the decision that had protected women’s reproductive health rights since 1973.

It may be useful to compare the court’s behavior in recent years with what provoked FDR into launching his court-packing scheme.

The court’s distaste for elements of the New Deal was assumed as the Roosevelt administration proceeded to remake the U.S. economy. But it didn’t become palpable until it issued three decisions on May 27, 1935, a date that would become known to progressives as “Black Monday.”

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In the first decision, the court overturned Roosevelt’s ouster of a reactionary member of the Federal Trade Commission, placing a limit on a president’s authority over executive officers. The court then invalidated a farm mortgage law because it applied to existing mortgages, not just new ones. Then came the court’s invalidation of the National Recovery Administration, through which the government had tried to regiment competition throughout the economy to help dig the country out of the Depression.

All three decisions were unanimous, but they still signaled that a conservative cadre was poised to undermine New Deal initiatives due to come before the justices. In 1936, the court narrowed the authority of the Securities and Exchange Commission and invalidated a relief program for coal companies. Most significantly, it overturned a New York minimum wage law in a decision known as Tipaldo, after its detestable protagonist, the owner of a laundry who had been cheating his laundresses of their legal wages.

Condemnation of the Tipaldo decision came from across the entire political spectrum. “If this decision does not outrage the moral sense of the country, then nothing will,” FDR’s Interior secretary, Harold Ickes, wrote in his diary. Conservatives were dismayed that the decision undercut their argument that labor rights should remain in the hands of the states — how could that be, if the Supreme Court had overturned a state minimum wage law?

Roosevelt and his fellow progressives foresaw that the court would invalidate the entire New Deal. For a time, FDR seemed content to let that happen, reasoning that it would help him get a constitutional amendment enacted that would allow Congress to save any law the court deemed unconstitutional by reenacting it. If the court kept overturning the New Deal, he reasoned, there would be “marching farmers and marching miners and marching workingmen throughout the land.”

In the end, he chose to go with the court-packing scheme, recognizing that it fit within the constitutional provision giving Congress the unquestioned right to dictate the size of the court.

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For many Americans today, the court’s Dobbs decision overturning Roe vs. Wade has supplanted its 1857 Dred Scott decision as the worst in its history. By relegating abortion to a state-level decision, Dobbs has spawned a patchwork of punitive state laws that have life-threatening ramifications for pregnant women (among many other shortcomings).

Public distaste for Dobbs, as was the case with Tipaldo, has been manifest. Since it was handed down in June 2022, every single state initiative to protect women’s reproductive rights has prevailed at the ballot box. The chief weapons in the antiabortion camp’s quiver have been efforts to stymie referendum and initiative votes by changing the ballot box rules, as has been tried in Florida and Ohio.

Biden’s proposal to establish staggered 18-year terms for justices has several virtues. One is that it would rebalance a court on which GOP appointees are arguably overrepresented. From 1960 through this year, Republicans held the White House for 32 years and Democrats for 31, almost an even split. But in that period, Republicans have appointed 15 justices and Democrats only ten. Under Biden’s proposal, every president would have the opportunity to appoint two justices during each four-year term.

“Term limits would … make timing for Court nominations more predictable and less arbitrary; and reduce the chance that any single Presidency imposes undue influence for generations to come,” the Biden White House says.

The one flaw in the proposal is that it could require a constitutional amendment. The Constitution states that federal justices may serve “during good behavior,” but expert opinion is divided over whether that bars Congress from imposing any other conditions on their service.

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It’s worth noting that the Supreme Court was so unnerved by the groundswell of criticism it faced after Tipaldo that Chief Justice Charles Evans Hughes engineered an about-face, orchestrating a 5-4 opinion upholding a Washington state minimum wage law that was almost identical to the New York law it had overturned, also by 5 to 4. That helped to take the wind out of FDR’s scheme. The change would forever be known as “the switch in time that saved nine.” The court never overturned another New Deal initiative.

But few such opportunities for an about-face are on the horizon. The damage this court has done to individual rights and the rule of law is manifest. Biden’s sense is that the time is ripe for reform, and that this time the public may go along.

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Startup Varda Space Industries snags former Mattel plant in El Segundo

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Startup Varda Space Industries snags former Mattel plant in El Segundo

In an expansion of its business of processing pharmaceuticals in Earth’s orbit, Varda Space Industries is renting a large El Segundo plant where toy manufacturer Mattel used to design Hot Wheels and Barbie dolls.

The plant in El Segundo’s aerospace corridor will be an extension of Varda Space Industries’ headquarters in a much smaller building on nearby Aviation Boulevard.

Varda will occupy a 205,443-square-foot industrial and office campus at 2031 E. Mariposa Ave., which will give it additional capacity to manufacture spacecraft at scale, the company said.

Originally built in the 1940s as an aircraft facility, the complex has a history as part of aerospace and defense industries that have long shaped the South Bay and is near a host of major defense and space contractors. It is also close to Los Angeles Air Force Base, headquarters to the Space Systems Command.

Workers test AstroForge’s Odin asteroid probe, which was lost in space after launch this year.

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(Varda Space Industries)

Varda is one of a new generation of aerospace startups that have flourished in Southern California and the South Bay over the last several years, particularly in El Segundo, often with ties to SpaceX.

Elon Musk’s company, founded in 2002 in El Segundo, has revolutionized the industry with reusable rockets that have radically lowered the cost of lifting payloads into space. Though it has moved its headquarters to Texas, SpaceX retains large-scale operations in Hawthorne.

Varda co-founder and Chief Executive Will Bruey is a former SpaceX avionics engineer, and the company’s spacecraft are launched on SpaceX’s workhorse Falcon 9 rockets from Vandenberg Space Force Base in Santa Barbara County.

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Varda makes automated labs that look like cylindrical desktop speakers, which it sends into orbit in capsules and satellite platforms it also builds. There, in microgravity, the miniature labs grow molecular crystals that are purer than those produced in Earth’s gravity for use in pharmaceuticals.

It has contracts with drug companies and also the military, which tests technology at hypersonic speeds as the capsules return to Earth.

Its fifth capsule was launched in November and returned to Earth in late January; its next mission is set in the coming weeks. Varda has more than 10 missions scheduled on Falcon 9s through 2028.

For the last several decades, the Mariposa Avenue property served as the research and development center for Mattel Toys. El Segundo has also long been a center for the toy industry as companies like to set up shop in the shadow of Mattel.

The Mattel facility “has always been an exceptional property with a legacy tied to aerospace innovation, and leasing to Varda Space Industries feels like a natural continuation of that story,” said Michael Woods, a partner at GPI Cos., which owns the property.

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“We are proud to support a company that is genuinely pushing the boundaries of what’s possible, and are excited to watch Varda grow and thrive here in El Segundo,” Woods said.

As one of the country’s most active hubs of aerospace and defense innovation, El Segundo has seen its industrial property vacancy fall to 3.4% on demand from space companies, government contractors and technology startups, real estate brokerage CBRE said.

Successful startups often have to leave the neighborhood when they want to expand, real estate broker Bob Haley of CBRE said. The 9-acre Mattel facility was big enough to keep Varda in the city.

Last year, Varda subleased about 55,000 square feet of lab space from alternative protein company Beyond Meat at 888 Douglas St. in El Segundo, which it started moving into in June.

Varda will get the keys to its new building in December and spend four to eight months building production and assembly facilities as it ramps up operations. By the end of next year, it expects to have constructed 10 more spacecraft.

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In the future, Varda could consolidate offices there, given its size. Currently, though, the plan is to retain all properties, creating a campus of three buildings within a mile of one another that are served by the company’s transportation services, Chief Operating Officer Jonathan Barr said.

“We already have Varda-branded shuttles running up and down Aviation Boulevard,” he said.

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How Iran War Is Threatening Global Oil and Gas Supplies

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How Iran War Is Threatening Global Oil and Gas Supplies

Ships near the Strait of Hormuz before and after attacks began

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Note: Times shown are in Iran Standard Time. Some ships in the region transmit false positions and others sometimes stop broadcasting their locations, and may not be reflected in the animation. Ships with sparse location data are shown in a lighter shade. Source: Kpler and Spire.

Every day, around 80 oil and gas tankers typically pass through the Strait of Hormuz, the narrow waterway off Iran’s southern coast that carries a fifth of the world’s oil and a significant amount of natural gas.

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On Monday, just two oil and gas tankers appear to have crossed the strait, according to a New York Times analysis of shipping activity from Kpler, an industry data firm. Since then, one tanker passed through.

“It’s a de facto closure,” said Dan Pickering, chief investment officer of Pickering Energy Partners, a Houston financial services firm. “You’ve got a significant number of vessels on either side of the strait but no one is willing to go through.”

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Tankers have been staying away from Hormuz since the U.S.-Israeli attacks on Iran that began on Saturday. A prolonged conflict could ripple broadly across the global economy, threatening the energy supplies of countries halfway around the world and stoking inflation.

International oil prices have climbed 12 percent since the fighting began, trading Tuesday around $81 a barrel, and natural gas prices have surged in Europe and in Asia.

A senior Iranian military official threatened on Monday to “set on fire” any ships traveling through the Strait of Hormuz. Vessels in the region have already come under attack. Several oil and gas facilities have also been struck or affected by nearby shelling, though the damage did not initially appear to be catastrophic.

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Where ships and energy facilities have been damaged

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Note: Damage as of 2 p.m. Eastern time Tuesday. Source: Kpler, Kuwait National Petroleum Company, Saudi Arabian Ministry of Energy, Planet Labs, QatarEnergy, United Kingdom Maritime Trade Operations and Vanguard Tech.

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A fire broke out Tuesday at a major energy hub in Fujairah, United Arab Emirates, from the falling debris of a downed drone, the authorities said. On Monday, Qatar halted production of liquefied natural gas, or fuel that has been cooled so that it can be transported on ships, after attacks on its facilities.

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Facilities at Ras Tanura oil refinery in Saudi Arabia were on fire on Monday after two Iranian drones were intercepted, according to Saudi Arabia’s Ministry of Energy, causing fragments to fall. Vantor

The sharp reduction in tanker traffic is reducing the supply of oil and gas to world markets, pushing up prices for both commodities. And the longer that ships stay away from the Strait of Hormuz, the less oil and gas get out to the world, which could raise prices even more.

Shipping companies have paused their tankers to protect their crew and cargo, and because insurance companies are charging significantly more to cover vessels in the conflict area.

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On Tuesday, President Trump said that “if necessary,” the U.S. Navy would begin escorting tankers through the strait. He also said a U.S. government agency would begin offering “political risk insurance” to shipping lines in the area.

In addition to tankers, other large vessels regularly go through the strait, including car carriers and container ships. In normal conditions, nearly 160 make the trip each day.

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Some ships in the region turn off the devices that broadcast their positions, while others transmit false locations — making it hard to give a full picture of the traffic in the strait.

The Shiva is a small oil tanker that has repeatedly faked its location, according to TankerTrackers.com, which tracks global oil shipments. It is suspected of carrying sanctioned Iranian oil, according to Kpler. The Shiva was one of the two tankers that crossed the strait on Monday.

The oil and gas that typically move through the strait come from big producing countries like Saudi Arabia, Iraq, Iran and United Arab Emirates, and are exported around the world.

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Where tankers moving through the Strait have traveled

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Note: Tanker paths are since Jan. 1 and include all tankers and gas carriers. Source: Kpler and Spire.

In 2024, more than 80 percent of the oil and gas transported through the Strait of Hormuz went to Asia. China, India, Japan and South Korea were the top importers, according to the U.S. Energy Information Administration.

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Countries have energy stockpiles that could last them into the coming months, but a continued shutdown of the strait could damage their economies.

Several big disruptions have roiled supply chains in recent years, but the tanker standstill in the Strait of Hormuz could have an outsize impact.

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Paramount credit downgraded to ‘junk’ status over debt worries

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Paramount credit downgraded to ‘junk’ status over debt worries

Paramount Skydance’s jubilation over its come-from-behind victory to claim Warner Bros. Discovery has entered a new phase:

Call it the deal-debt hangover.

Two major ratings agencies have raised concerns about Paramount’s credit because of the enormous debt the David Ellison-led company will have to shoulder — at least $79 billion — once it absorbs the larger Warner Bros. Discovery, bringing CNN, HBO, TBS and Cartoon Network into the Paramount fold.

Fitch Ratings said Monday that it placed Paramount on its “negative” ratings watch, and downgraded its credit to BB+ from BBB-, which puts the company’s credit into “junk” territory. Fitch said it took action due to “uncertainty” surrounding Paramount’s $110-billion deal for Warner Bros. Discovery, which the boards of both companies approved on Friday.

S&P Global Ratings took similar action.

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To finance the Warner takeover, Ellison’s billionaire father, Larry Ellison, has agreed to guarantee the $45.7 billion in equity needed. Bank of America, Citibank and Apollo Global have agreed to provide Paramount with more than $54 billion in debt financing.

“Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage and limited visibility on post-transaction financial policy and capital structure,” Fitch said.

Late last week, Paramount sent $2.8 billion to Netflix as a “termination fee” to officially end the streaming giant’s pursuit of Warner Bros. That payment paved the way for Warner and Paramount’s board to enter into the new merger agreement.

Paramount hopes the merger will be wrapped up by the end of September. It needs the approval of Warner Bros. Discovery shareholders and regulators, including the European Union.

Paramount executives acknowledged this week the new company would emerge with $79 billion in debt — a considerably higher total than what Warner Bros. Discovery had following its spinoff from AT&T. That 2022 transaction left Warner Bros. Discovery with nearly $55 billion of debt, a burden that led to endless waves of cost-cutting, including thousands of layoffs and dozens of canceled projects.

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Warner still has $33.5 billion in debt, a lingering legacy that will be passed on to Paramount.

Paramount plans to restructure about $15 billion in Warner Bros. Discovery’s existing debt.

Paramount CEO David Ellison at a 2024 movie premiere for a Netflix show.

(Evan Agostini / Invision / AP)

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Paramount told Wall Street it would find more than $6 billion in cost cuts or “synergies” within three years — a number that has weighed heavily on entertainment industry workers, particularly in Los Angeles.

Hollywood already is reeling from previous mergers in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.

Some entertainment executives, including Netflix Co-Chief Executive Ted Sarandos, have speculated that Paramount will need to find more than $10 billion in cost cuts to make the math work. More recently, Sarandos went higher, telling Bloomberg News that Paramount may need $16 billion in cuts.

Cognizant of widespread fears about additional layoffs, Paramount Chief Operating Officer Andrew Gordon took steps this week to try to tamp down such concerns.

Gordon is a former Goldman Sachs banker and a former executive with RedBird Capital Partners, an investor in Paramount and the proposed Warner Bros. deal. He joined Paramount last August as part of the Ellison takeover.

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During a conference call Monday with analysts, Gordon said Paramount would look beyond the workforce for cuts because the company wants to maintain its film and TV production levels.

Paramount plans to look for cost savings by consolidating the “technology stacks and cloud providers” for its streaming services, including Paramount+ and HBO Max, Gordon said. The company also would search for reductions in corporate overhead, marketing expenses, procurement, business services and “optimizing the combined real estate footprint.”

It’s unclear whether Paramount would sell the historic Melrose Avenue lot or simply centralize the sprawling operations onto the Warner Bros. and Paramount lots in Burbank and Hollywood.

Workers are scattered throughout the region.

HBO, owned by Warner Bros. Discovery, maintains its West Coast headquarters in Culver City; CBS television stations operate from CBS’ former lot off Radford Avenue in Studio City; and CBS Entertainment and Paramount cable channels executive teams are located in a high-rise off Gower Street and Sunset Boulevard, blocks from the Paramount movie studio lot.

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“The combination of PSKY and WBD could create a materially stronger business than either individual entity,” Standard & Poor’s said in its note to investors. “However, this transaction presents unique challenges because it would involve the combination of three companies, with the smallest, Skydance, being the controlling entity.”

David Ellison’s production firm, Skydance Media, was the entity that bought Paramount, creating Paramount Skydance.

Ellison has not announced what the combined company will be called.

Paramount shares closed down more than 6% Tuesday to $12.45.

Warner Bros. Discovery fell 1% to $28.20. Netflix added less than 1% to close at $97.70.

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