Lucia and PHH: Two Cases, Two Arguments for Constitutional Principles

It’s not often an appellate court agrees to re-hear a case en banc—that is, reexamine a decided case with all active judges participating—and when it does, usually it’s because the case is of particular importance.  Today the federal appeals court in D.C. heard two such cases, and both address fundamental issues of due process and constitutional integrity.  Heavy and exciting stuff.  Cato filed amicus briefs in both cases, given their potential impact on core principles of liberty and the rule of law.

The first case, Lucia v. SEC, considers the role of the Administrative Law Judge (ALJ).  While the case was nominally about whether ALJs are inferior officers, and therefore subject to certain constitutional appointment and removal proceedings, at its heart is the question: what makes a judge a judge?

Most Americans expect that if the government is going to haul them in for alleged wrongdoing, they’ll at least have their case heard by an impartial judge, with all the usual legal protections.  And this is what Americans should expect.  Unfortunately, some federal agencies operate differently, using their own internal administrative proceedings, with their own ALJs, to determine if someone has broken the rules, and to impose a fine or other punishment.

The vast majority of ALJs work for the Social Security Administration, determining whether individuals are eligible for benefits.  As Lucia’s lawyer pointed out in argument today, there is a big difference between ALJs determining whether someone will receive something from the government, as the Social Security Administration’s ALJs do, and determining whether the government will take something from someone.

Trump’s Missing Buildup

The biggest news about the Trump administration’s release yesterday of its $603 billion 2018 defense budget proposal is that there isn’t much. The anticlimax comes partly because most of the details were already out, thanks to the “skinny budget” plan for discretionary spending released in March and a recent leak. Moreover, the most newsworthy aspects of the proposal—its big cuts and chicaneries—came in non-defense areas and through 10-year projections that are little more than symbolic wish lists.

There’s a bigger reasons that Trump’s budget is historically unimportant: Congress is going to ignore it. Even the 2018 plan seems more statement than realistic attempt to guide appropriations. The breadth of the non-defense cuts used to fund the $54 billion defense increase makes it easy for even vulnerable Democrats to oppose it. That, along with Trump’s declining public support, even among conservatives, is why Republican backers won’t stick up for his plan.

Even if the budget were less impolitic overall, its military spending increase would face long odds thanks to the cap on defense spending, which is $54 billion less than Trump wants. Under the Budget Control Act, if an annual defense appropriation exceeds its cap, the Treasury must “sequester” the excess, pulling proportionally from all accounts in that category. Contrary to much reporting, sequestration hasn’t occurred since 2013, when it resulted automatically from the failure of the congressional supercommittee to come up with a deficit reduction plan.

Instead, Congress has cut a series of deals that raised the annual cap. Democrats made sure that the cap on non-defense discretionary spending went up by equal measure. The increases were paid for, in theory, by dubious future savings. Further Pentagon relief comes through abuse of the Overseas Contingency Operations (OCO) budget, which is uncapped out of deference to the pretention that it is “emergency” spending for wars. The OCO budget is annually stuffed with non-war funding—now at least $30 billion of it.

An Electrifyingly Bad Decision

Transportation Secretary Elaine Chao’s decision to give $647 million to California to electrify a San Francisco commuter rail line tells states and cities across the nation that they should plan the most expensive and wasteful infrastructure projects they can and the Trump administration will support them. The Caltrains electrification project had no political, economic, social, or environmental justification, so Chao’s support for the project despite its lack of virtues does not bode well for those who hoped that the Trump administration would take a fiscally conservative stance on infrastructure and transportation.

The California project had already been funded by the Obama administration, but it was a last-minute approval by an acting administrator who immediately then took a high-paying job with one of Caltrains’ contractors. When Chao took office, every single Republican in the California congressional delegation asked her to overturn the decision, and she agreed to review it. Even some Democrats opposed the project, meaning there was far less political pressure to fund it than many other equally wasteful programs.

Caltrains carries just 4 percent of transit riders in the San Francisco Bay Area, and based on the dubious claim that electric trains would go a little faster than Diesel-electric trains, the environmental assessment for the project predicted that electrification would boost ridership by less than 10 percent. It would save no energy and have a trivial effect on air pollution. 

Instead, the main purpose of the Caltrains project was to wire the way for California’s bloated high-speed trains, which at least initially would use the same electric power to get to San Francisco. Normally, high-speed trains would not use the same track as ordinary commuter trains, but the costs of the high-speed rail project have risen so much that the state’s rail authority is cutting corners wherever it can. One result is that the project, if it is ever completed, won’t really run trains at high speeds for much of its route.

The Case for Calling them Losers

President Trump made headlines with his impromptu remarks after he learned of the tragic attack in Manchester earlier this week.

President Donald Trump put the latest incident in perspective: “So many young beautiful innocent people living and enjoying their lives murdered by evil losers in life. I won’t call them monsters because they would like that term. They would think that’s a great name. I will call them from now on losers because that’s what they are.

“They’re losers, and we’ll have more of them, but they’re losers, just remember that,” he added.

He spoke from the heart, but there is wisdom in the President’s words, as I explain at The National Interest’s The Skeptics

I note that “loser” is the same word that Ruslan Tsarni used to describe his nephews, Tamerlan and Dzhokhar Tsarnaev, the two Boston Marathon bombers.

When asked what provoked the bombing suspects, the uncle stated: “Being losers, hatred to those who were able to settle themselves—these are the only reasons I can imagine.

“Anything else, anything else to do with religion, with Islam, is a fraud, is a fake,” Tsarni added.

Other words include nitwits and idiots. My colleague John Mueller, who has assembled a catalog of all the post-9/11 terrorism cases in the United States—92 as of January 2017—characterizes most of these plots as bone-headed. These words describe mostly instances in which the would-be terrorists managed to kill and injure no one, not even themselves. But we should be equally dismissive of the losers that manage to detonate their bombs, or fire their weapons. Trump got it right.

I explain:

The word “loser” works because it doesn’t imply that there is anything particularly special about the individuals who perpetrate these heinous acts. They might wish to make a statement by indiscriminately killing and injuring helpless victims. They might fashion themselves as heroic, or uniquely evil, or superhuman. They are none of these things.

And I conclude:

I refuse to reward these losers. I refuse even to mention their names. Though we should never forget their victims, we shouldn’t allow [killers] to change the way that we live. They were sad and angry, and they lived unhappy lives. They wanted us all to be unhappy, too.

I’m not having it. I just cranked an Ariana Grande shuffle on my iPhone.

You can read the whole thing here.

The Wall Street Journal Declares “Creditor Emptor”

Last week the Wall Street Journal’s editorial page criticized the investors who lent money to Puerto Rico as being naive about political risks and suggested that they more or less deserve the massive haircuts currently being proposed.  However, this is a puzzling perspective that misconstrues the legal issue at hand—and bodes poorly for the next government that gets in such a mess.

Disregarding the Commonwealth’s constitutional requirement to prioritize general obligation debt above other obligations is not a regrettable necessity, as the Journal seems to suggest, but a violation of the law. Such a step is not only unnecessary but also portends long-run ramifications that would be to the detriment of the island’s residents.

The Journal mistakenly places its faith in the island’s recently announced fiscal plan, which bases its sparse debt repayments on the island’s supposedly ongoing economic contraction. In fact, Puerto Rico’s nominal GDP is at an all-time high (as are tax revenues), having grown 20% over the last decade. While the Journal praises the fiscal plan’s ostensible parsimony, spending actually grows by 12% over the next decade—it’s the 80% reduction in debt payments that makes it appear as if Puerto Rico’s government has restrained anything. To essentially forego any serious spending reforms when there is a fiscal oversight commission in place to take the political heat is mystifying—as is the Wall Street Journal’s facile praise of this approach. It’s also worth remembering that Puerto Rico’s government employs a much greater proportion of its workforce than any state in the union, so this notion that there’s nothing to cut in their budget doesn’t hold water.

If Puerto Rico does succeed in escaping its obligations to secured creditors, look for a stampede in the bond markets, as lenders come to realize there is no such thing as a safe government bond or an ironclad legal protection. What happens in Puerto Rico is going to be perceived by the bond markets as the model for Illinois—and Kentucky and California before too long.

What Puerto Rico threatens to establish is that regardless of any contractual agreements or constitutional pledges, all bets are off when a government not covered by Chapter 9 bankruptcy can’t pay its debts.

Dollars per Vote in the 2016 Election

In the early days of the 2016 election cycle pundits were expecting the most expensive election ever. There were predictions of a $2 billion Hillary Clinton campaign and a $5 billion total for all presidential candidates. In the end, the campaigns spent less than expected, and less than in 2008 and 2012, and the winning candidate spent much less than the runner-up. “News” is supposed to be something unexpected, yet I haven’t seen many headlines about the drop in campaign spending and the dramatic revelation that money doesn’t always win.

Of course, in every election the bigger amounts are government spending. When politicians vote or promise to give money to students, the elderly, farmers, automobile companies, defense contractors, and other voting blocs, political considerations are certainly part of the decision-making process. When presidential candidates promise free college or a trillion dollars for infrastructure construction, they are clearly understood to be appealing for votes. When Republicans vote for $60 billion in “Hurricane Sandy recovery aid,” including money for Alaskan fisheries and activist groups, aren’t they buying votes? 

But for the moment, let’s take a look at how much the candidates did spend, and how much they got for it. I’ve added Libertarian nominee Gary Johnson to the usual Clinton-Trump comparison to get some perspective.

The vote totals are from Dave Leip’s Atlas of U.S. Presidential Elections. Spending figures for the Democratic and Republican candidates are from the Washington Post and for Johnson from OpenSecrets.org.

So the first thing we notice is that Clinton and Trump spent respectively just over $9 and $5 per vote, while Johnson spent less than $3. But party and outside groups more than doubled spending for the major candidates. All told, Clinton spent substantially more than Trump. She did get 2 percent more in the popular vote, but that wasn’t much return on the extra half-billion dollars. Johnson spent about six times as much as he did in 2012 to get three times the percentage, but we can only wonder how much of “the libertarian vote” a Libertarian Party candidate might pick up if he had enough money to be heard. 

Jeff Sessions Pulls Back on Bullying Sanctuary Cities

Throughout his presidential campaign Donald Trump pledged to defund so-called “Sanctuary Cities.” Since his election the president and his administration have had to backpedal on this commitment thanks to serious constitutional issues with such a proposal. Recent news that Attorney General Jeff Sessions has narrowed the category of funds that can be withheld from sanctuary cities as well as the definition of sanctuary jurisdictions is good news for constitutionalists and federalists who oppose the federal government bullying cities and states.

Before unpacking Sessions’ recent memo it’s worth taking a look at the Trump administration’s actions against “Sanctuary Cities,” a term that has no legal meaning but is usually used to describe cities and localities where local officials have decided not to assist with federal immigration enforcement.

On January 25, President Trump signed Executive Order 13768: Enhancing Public Safety in the Interior of the United States. Section 9 of this executive order is the “sanctuary” section and reads, in part (emphasis mine):

Sec. 9. Sanctuary Jurisdictions. It is the policy of the executive branch to ensure, to the fullest extent of the law, that a State, or a political subdivision of a State, shall comply with 8 U.S.C. 1373.

(a) In furtherance of this policy, the Attorney General and the Secretary, in their discretion and to the extent consistent with law, shall ensure that jurisdictions that willfully refuse to comply with 8 U.S.C. 1373 (sanctuary jurisdictions) are not eligible to receive Federal grants, except as deemed necessary for law enforcement purposes by the Attorney General or the Secretary. The Secretary has the authority to designate, in his discretion and to the extent consistent with law, a jurisdiction as a sanctuary jurisdiction. The Attorney General shall take appropriate enforcement action against any entity that violates 8 U.S.C. 1373, or which has in effect a statute, policy, or practice that prevents or hinders the enforcement of Federal law.

There is a good argument that 8 U.S.C. 1373 is unconstitutional. 8 U.S.C. 1373 is a prohibition on a prohibition, banning local governments from preventing police departments from sending or receiving immigration status information to or from federal immigration authorities. This law potentially runs afoul of the 10th Amendment’s “anti-commandeering” doctrine, which bans the federal government from compelling local officials into enforcing federal law.

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