201103

March 28, 2011 9:45AM

Geraldine Ferraro, a Milepost in Social Change

At the Britannica Blog I reflect on the death of Geraldine Ferraro and the dramatic changes in women's role in political and social life in a surprisingly short time:

In the 1960s and 1970s feminism swept the field, overwhelming all opposition.

And if you don't know who was the first woman in American history to win an electoral vote, or the first woman elected to the U.S. Senate who did not follow her father or husband into politics, read the whole thing.

March 28, 2011 8:08AM

Another Day in the Life of the IRS

A previous post of mine at International Liberty addressed the debate over whether Republicans should trim the IRS's budget. The following case study should convince everyone that the answer is a resounding yes.

First, some background from a Joe Nocera column in the New York Times. The federal government made a rather troubling decision a few years ago to investigate, prosecute, and ultimately imprison a random home-loan borrower named Charlie Engle for the crime of mortgage fraud.

Mr. Engle is far from blameless in this saga, but I noted in another post that it was rather odd that the government would target a nobody while letting all the big fish swim away. This episode certainly paints a picture of a government that has one set of rules for ordinary people, but an entirely different set of rules for the political elite and those who make big campaign contributions to that ruling class.

But I also noted that I'm not a lawyer or legal expert and was unsure about the degree to which the big players actually broke laws, or whether they simply made stupid business decisions (often encouraged by bad government policy).

The most upsetting part of the story, though, is how the government wound up targeting Mr. Engle. It turns out that an IRS agent, Robert Norlander, must have been competing for the IRS's Bully-of-the-Year Award because here are some of the things he did:


  • Norlander decided to snoop into Engle's affairs because he saw a film about him training for a marathon. In other words, there was no probable cause, no reasonable suspicion, nothing. Just the perverse decision of an IRS bully to go after someone.

  • Norlander admitted a pattern of thuggish behavior, stating that he will snoop into someone's private life simply because that person drives an expensive car.

  • Norlander continued to investigate and persecute Engle, subjecting him to undercover surveillance, even though his tax returns showed no wrongdoing.

  • Norlander even engaged in "dumpster dives" to look for evidence of wrongdoing in Mr. Engle's garbage. Keep in mind that there is no probable cause, no reasonable suspicion, and Engle's tax returns were legit.

  • Norlander used a sleazy KGB tactic by sending an attractive woman to flirt with Mr. Engle in hopes of getting him to somehow admit to a crime.

  • Norlander failed to find any evidence of a tax crime. He couldn't even hit Engle with a money-laundering offense. But the undercover agent who was part of the "honey trap" was wearing a wire and supposedly got Engle to admit to mortgage fraud and Norlander used that extremely flimsy evidence to justify a Justice Department case against Engle.

In other words, this whole thing has a terrible stench. Assuming the details in the story are accurate, we have an IRS agent engaging in a random vendetta against someone, and then apparently justifying his jihad by figuring out how to nail the guy on a very weak charge of mortgage fraud. I would describe Norlander as a "rogue agent," but apparently this behavior is business-as-usual at the IRS.

Here are the relevant passages from Nocera's column:

Mr. Engle received $30,000 for his participation. The film, “Running the Sahara,” was released in the fall of 2008. Eventually, it caught the attention of Robert W. Nordlander, a special agent for the Internal Revenue Service. As Mr. Nordlander later told the grand jury, “Being the special agent that I am, I was wondering, how does a guy train for this because most people have to work from nine to five and it’s very difficult to train for this part-time.” (He also told the grand jurors that sometimes, when he sees somebody driving a Ferrari, he’ll check to see if they make enough money to afford it. When I called Mr. Nordlander and others at the I.R.S. to ask whether this was an appropriate way to choose subjects for criminal tax investigations, my questions were met with a stone wall of silence.) Mr. Engle’s tax records showed that while his actual income was substantial, his taxable income was quite small, in part because he had a large tax-loss carry forward, due to a business deal he’d been involved in several years earlier. (Mr. Nordlander would later inform the grand jury only of his much lower taxable income, which made it seem more suspicious.) Still convinced that Mr. Engle must be hiding income, Mr. Nordlander did undercover surveillance and took “Dumpster dives” into Mr. Engle’s garbage. He mainly discovered that Mr. Engle lived modestly. In March 2009, still unsatisfied, Mr. Nordlander persuaded his superiors to send an attractive female undercover agent, Ellen Burrows, to meet Mr. Engle and see if she could get him to say something incriminating. In the course of several flirtatious encounters, she asked him about his investments. ...Unbeknownst to Mr. Engle, Ms. Burrows was wearing a wire. ...No tax charges were ever brought, even though that was Mr. Nordlander’s original rationale. Money laundering, the suspicion of which was needed to justify the undercover sting, was a nonissue as well. As for that “confession” to Ms. Burrows, take a closer look. It really isn’t a confession at all. Mr. Engle is confessing to his mortgage broker’s sins, not his own.

Stories like this explain why I'm a libertarian.

As George Washington supposedly said, "Government is not reason; it is not eloquence; it is force. Like fire, it is a dangerous servant and a fearful master." Unfortunately, thanks to bad laws and thuggish bureaucrats, government is definitely now our master and no longer just a servant. The IRS is a grim example of this phenomenon. President Obama, not surprisingly, wants to increase their budget.

March 28, 2011 7:50AM

The First Amendment Protects All Speech

Vermont passed a law prohibiting the exchange of a variety of socially important information. Most notably, the law outlaws the transfer of doctors' prescription history to facilitate drug companies' one-on-one marketing — a practice known as "detailing" — because it believes detailing drives up brand-name drug sales and, in turn, health care costs. The state knew that the First Amendment prevented it from banning detailing itself, so it made the practice more difficult indirectly.

Yet data collection and transfer are protected speech — think academic research, or the phone book — and government efforts to regulate this type of speech also runs afoul of the First Amendment. See, e.g., Solveig Singleton, Cato Policy Analysis No. 295, "Privacy as Censorship: A Skeptical View of Proposals to Regulate Privacy in the Private Sector" (January 22, 1998). The First Circuit had earlier upheld a similar New Hampshire law, somehow finding that the statute regulates conduct rather than speech and that, in any event, the judiciary should defer to the legislative branch's judgment.

When the Supreme Court declined to review that case (which cert petition Cato supported), Cato joined the Pacific Legal Foundation and a number of individuals on a brief asking the Second Circuit to split with its First Circuit brethren and reject this dangerous narrowing of protection for free expression. The Second Circuit did just that and ruled that statutes restricting commercial speech about prescription drug-related data gathering are unconstitutional. The court emphasized that the First Amendment protects "[e]ven dry information, devoid of advocacy, political relevance, or artistic expression."

Vermont filed a petition asking the Supreme Court to review the case, which its adversaries supported in order to more quickly resolve the circuit split. Cato, again joining PLF, filed a brief supporting the respondents, two companies that collect and sell health information and analysis. Our brief argues that the Second Circuit should be affirmed and the Court should abandon the unworkable distinction between commercial and noncommercial speech set out in a 1980 case called Central Hudson Gas & Electric v. Public Service Commission.  Specifically, the Central Hudson approach to commercial speech veers into viewpoint discrimination and should be abandoned in favor of strict scrutiny because innovative and valuable commercial expression deserves full First Amendment protection.

The Supreme Court will hear argument in this new case out of Vermont, Sorrell v. IMS Health, on April 26.  Thanks to legal associate Caitlyn McCarthy for her help with Cato's brief and this blog post.

March 27, 2011 3:29PM

What Are Republicans Thinking?!?

I posted recently at International Liberty about the stunning political incompetence of Republican Senators, who reportedly are willing to give Obama an increase in the debt limit in exchange for a vote (yes, just a vote) on a balanced budget amendment.

As I explained, there is no way they can get the necessary two-thirds support to approve an amendment, so why trade a meaningless and symbolic vote on a BBA for meaningful and real approval of more borrowing authority for Obama? My analogy yesterday was that this was like trading an all-star baseball player for a utility infielder in the minor leagues.

I did acknowledge that forcing a vote on a BBA was a worthwhile endeavor, but said that the GOP has that power anyhow, so why trade away something valuable to get something you already can get for free?

Little did I realize that Republicans already did force a vote on the balanced budget amendment. Less than one month ago, on March 2, Senator Lee of Utah got a vote on a "Sense of the Senate" resolution in favor of a balanced budget amendment. Senator Lee's resolution received 58 votes, which is nice, but an actual amendment would need a two-thirds supermajority, so this test vote demonstrated that there is no way to approve an amendment this year.

I'm glad Senator Lee proposed his resolution. I'm glad Senators were forced to go on the record.

But I'm mystified, flabbergasted, and stunned that Republicans apparently are willing to give Obama a bigger debt limit in exchange for something they already got.

Returning to our baseball analogy, this would be like the Yankees giving Derek Jeter to the Red Sox in exchange for a player they already have, such as Alex Rodriguez. I imagine New York sportswriters would be dumbfounded by such stupidity and would rip the team's management to shreds. So that gives you an idea of how I feel about what's happening in Washington.

As I noted in my earlier post, I'll soon write about the fiscal reforms fiscal conservatives should demand in exchange for a higher debt limit.

March 25, 2011 8:31PM

“To Declare [Kinetic Military Action]”

Recently, I've been blogging over at the Washington Examiner's lively "Beltway Confidential" site, mostly on the subject of congressional war powers and President Obama's Libyan adventure. Today's post, "Obama Makes 'Kinetic Military Action' on the English Language" has a little fun with the administration's wordgames and the legal rationales behind them. Other posts and a column on the subject are here, here, and here.

Today also brings a pair of columns--in the Wall Street Journal and the Washington Post, respectively--from conservative luminaries defending the notion that Obama has the constitutional power to bomb Libya without congressional authorization. Yoo, the legal architect of George W. Bush's Terror Presidency, chides Tea Party Republicans like Jason Chaffetz of Utah and Justin Amash of Michigan for questioning Obama's authority to launch a nondefensive war:

Their praiseworthy opposition to the growth of federal powers at home misleads them to resist Washington's indispensable role abroad. They mistakenly read the 18th-century constitutional text through a modern lens—for example, understanding "declare war" to mean "start war." When the Constitution was written, a declaration of war served diplomatic notice about a change in legal relations between nations. It had little to do with launching hostilities. In the century before the Constitution, for example, Great Britain fought numerous major conflicts but declared war only once beforehand.

Similarly, in the Post, David B. Rivkin, Jr., and Lee A. Casey write:

As commander in chief, the president has the authority to determine when and how U.S. forces are used.... When the Constitution was adopted, the power to “declare war” was not equivalent to permitting the use of military force.

The president certainly can't derive the authority to bomb Libya from the commander-in-chief clause. As Hamilton explained in Federalist 69, that provision merely indicates that the president is the "first General and admiral" of US military forces. Important as they are, generals and admirals don't get to decide whether and with whom we go to war.

It's more common for presidentialists to combine a broad reading of Article II, sec. 1's "executive Power" with an exceptionally narrow interpretation of Article I, sec. 8's congressional power "to declare War," to conclude that the president can start wars, leaving it up to Congress to make it official if they so choose.

One problem with that view is that virtually no one from the Founding Generation seems to have understood the clause in that way. For example, James Wilson told the Pennsylvania ratifying convention that ‘‘this system will not hurry us into war; it is calculated to guard against it. It will not be in the power of a single man, or a single body of men, to involve us in such distress; for the important power in declaring war is vested in the legislature at large.’’ Pierce Butler, like Wilson, had been a delegate to the Philadelphia Convention, and--to the dismay of some delegates--had actually argued for vesting the power to go to war in the president. Yet during the ratification debates, Butler assured the South Carolina legislature that the proposed constitution prevented the president from starting wars: ‘‘Some gentlemen [i.e., Butler himself] were inclined to give this power to the President; but it was objected to, as throwing into his hands the influence of a monarch, having an opportunity of involving his country in a war whenever he wished to promote her destruction.’’

As Professor Michael Ramsey puts it:

Every major figure from the founding era who commented on the matter said that the Constitution gave Congress the exclusive power to commit the nation to hostilities. Notably, this included not only people with reservations about presidential power, such as James Madison and Thomas Jefferson, but also strong advocates of the President’s prerogatives, such as George Washington and Alexander Hamilton.

"How could this be, though," Ramsey asks, "if Congress has only the power to 'declare War', which we may think refers to making a (now-outmoded) formal announcement? Why can’t the President begin a war informally, merely by ordering an attack, without a declaration?" The answer:

...is that in founding-era terminology war could be “declared” either by formal announcement or by military action initiating hostilities. John Locke’s classic Two Treatises of Government from the late 17th century referred to “declar[ing] by word or action.” Blackstone and Vattel, two of the 18th century legal writers most influential in America, also used “declare” in this way.... Johnson’s dictionary gave as one definition of “declare” to “shew in open view” – which, applied to warfare, would obviously encompass military attacks.... Thus in 18th century terms initiating an attack was as much “to declare war” as was making a formal announcement; Congress’ Article I, Section 8 power is not narrowly about issuing formal announcements, but broadly about authorizing the sorts of actions that begin war.

Professor Ramsey lays out the argument in greater detail in his book The Constitution's Text in Foreign Affairs, and in his (for my money) devastating 2002 rebuttal of Yoo [JSTOR] in the University of Chicago Law Review. Ramsey has further thoughts on the poverty of the argument from "past practice" here as does GMU law professor and Cato adjunct scholar Ilya Somin here.

One last point. While this doesn't speak directly to the original meaning of the "Declare War" clause, I think it's worth noting nonetheless:

Like Yoo, Rivkin, and Casey, I'm convinced that Obamacare's individual mandate is unconstitutional. But consider how that view fits with their other views on federal power. They've argued, among other things, that the president can order up bombing raids without so much as a by-your-leave to Congress. As Yoo puts it, the president has the "right to start wars", for good reasons, bad reasons, or no reason at all, presumably. If the president suspects you're a terrorist, he doesn't need a warrant to tap your phone, and, right here in America, he can send soldiers to search your house without offending the Fourth Amendment. He can (according to Yoo, at least) ignore the federal statute prohibiting torture, and he can lock you up for the duration of the war on terror (forever?) without charges.

But there is one thing that he can never, ever do: he cannot penalize you for failure to purchase health insurance. Ours is a government of limited powers, you see.

Taken all in all, doesn't that constitutional vision strike you as... strange?

March 25, 2011 4:47PM

The Economy Tanked but, Hey, Wealth Inequality Declined

I just read through a new report from the Federal Reserve, “Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009,” on how the Great Recession of 2007–2009 impacted the balance sheets of American households. The short and unsurprising answer is: very negatively. The average net worth of U.S. households fell by nearly 20 percent between 2007 and 2009.

A less intuitive finding was that the more wealthy households took a bigger hit, not just in dollars but in percentage of wealth. As the survey put it, there were “progressively larger decreases at the higher percentiles” of net wealth.

The survey also found progressively larger declines in income during the recession. The higher a household’s income in 2007, the steeper the decline on average by 2009. As the survey put it:

On the whole, events of the 2007–09 period tended to have an equalizing effect on income, although most of the changes in income were relatively modest. All the measures of income change presented here suggest that income increased for families with income below the 2007 median and income fell for families with income near or above the 2007 median.

The reason for the decline in inequality during the downturn isn’t all that mysterious, I suppose. Households with higher net worth tend to have more invested in stocks and real estate, which both took a big hit. And, as the report explained, their income is more dependent on capital gains, and farm, business, and self-employment income, which all fluctuate more with the business cycle.

Still, it is kind of jarring to see that even during a recession, income rose for families in the lower half of the income spectrum and fell for those in the top half. The curse of “rising inequality” and the rich getting richer at the supposed expense of the poor was temporarily suspended from 2007 to 2009, but at the cost of the deepest downturn since the Great Depression.

If forced to choose between a deep recession and rising inequality, I would gladly accept the latter.

March 25, 2011 4:23PM

This Week in Government Failure

Over at Downsizing the Federal Government, we focused on the following issues this week:

  • Sen. Rand Paul introduces a practical, common sense budget that recognizes that the federal government’s growth has become unsustainable, and thus a threat to our economic well-being and future living standards.
  • According to the Congressional Budget Office, the president’s latest budget proposal would once again leave "our people" with a "mountain of debt."
  • It would be nice if the latest example of FAA bungling woke Congress up to the idea of privatizing our nation’s air traffic control system.
  • Instead of tinkering with federal welfare programs, let’s have a public discussion and debate over the fundamental justness and desirability of letting Washington dictate how to meet the needs of the less fortunate.
  • Electric vehicle subsidies: The Obama administration apparently believes that it possesses the unique foresight to optimally plan the economy.

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