Wednesday, April 1, 2015

The Real Reason the Indiana Religious Freedom Law Must Not Stand

The Atlantic has a good article explaining why Indiana’s so called “Religious Freedom Restoriation” law is different from and much more dangerous than Federal and other states’ similar acts.  As Garrett Epps points out in that article, there are two huge problems with the Indiana law that make it very different from similar laws passed by Congress and other states.  These differences make the Indiana law a major threat to the rights of not just the LBGT community but to all Americans.

First, the Indiana law greatly expands the definition of “a person whose religious exercise has been burdened” by any governmental law or regulation to include not just individuals, but “(2) An organization, a religious society, a church, a body of communicants, or a group organized and operated primarily for religious purposes. (3) A partnership, a limited liability company, a corporation, a company, a firm, a society, a joint-stock company, an unincorporated association, or another entity that: (A) may sue and be sued; and (B) exercises practices that are compelled or limited by a system of religious belief held by: (i) an individual; or (ii) the individuals; who have control and substantial ownership of the entity, regardless of whether the entity is organized and operated for profit or nonprofit purposes.  In other words, corporations are “people too.”  So are just about all organizations and entities that provide products or services whether for profit or not.  All of these entities, not just individuals, can claim a religious exemption from the applicable law or regulation.  So, Mr. or Ms. Corporation, go ahead and ban gays, blacks, Hispanics, or whomever you wish on religious grounds because YOU Mr or Ms Company are a person too.

Second, the Indiana law protects this broadly defined “person’s” religious exercise from being burdened even when no government agency is involved in the judicial or administrative proceeding related to the enforcement of the law or regulation.   Section 9 of the Indiana law reads:  A person whose exercise of religion has been substantially burdened, or is likely to be substantially burdened, by a violation of this chapter may assert the violation or impending violation as a claim or defense in a judicial or administrative proceeding, regardless of whether the state or any other governmental entity is a party to the proceeding.  You can use the religious excuse under just about any circumstance to avoid having to abide by anti-discrimination laws.

Okay, so what is wrong in treating companies the same way we treat individuals?  Just this.  Real People—John Smith, Jane Doe, etc.—are not products of the state.  They don’t come into existence because some government agency creates them.  Companies do.  If you want to incorporate a business, you have to obtain the approval of the state by paying a fee and showing that you and your fellow owners of the business meet certain legal requirements.  In return for seeking and obtaining state approval and recognition, you and your partners in the business obtain enormous benefits:  favorable tax treatment and the ability to deduct business expenses, enhanced credibility with customers, brand name protection, and, most importantly, protection of your personal assets and those of your fellow investors.  Your personal liability for the debts and obligations of your company is limited in the case of a lawsuit or claim against your business.  The State (actually the people through their government) grants you and your co-owners of your business these protections and benefits  In return, your company must abide by the laws and regulations of the state and federal government in regard to your business operations including laws forbidding your company from discriminating against customers and potential customers, even when the discrimination is dictated by some perverted religious belief.

Bottom Line:  If you—John Doe or Jane Smith--do not want to associate with certain individuals or groups of individuals, for whatever reason, including reasons dictated by your religious beliefs, that are wrong headed, mean spirited, immoral, unethical and/or just plain dumb, that’s your privilege.  Go ahead.  You will probably miss getting to know a lot of great people but that’s your choice.  Go live in your sanctimonious Hell.  However, when you hang out your business shingle to offer your products and/or services to the general public for a fee and, in particular when you seek the recognition and benefits of incorporation, you no longer have the right to be treated like just another person, at least with regard to how you conduct your business.  In the conduct of your business, you have obligations to the state and obligations to the public at large.  One of those obligations is to abide by all the laws and regulations against discrimination.  The Indiana law would eliminate those business obligations not to discriminate.  That is why the Indiana law is wrong and so very dangerous.  It can not be allotted to stand.


Read the Federal Religious Freedom Restoration law here:  https://www.law.cornell.edu/uscode/text/42/2000bb



Read about the benefits of incorporation here:  https://www.incorporate.com/benefits_of_incorporating.html

Thursday, March 12, 2015

There Are Two Major Errors of Fact in Republican Tom Cotton’s Letter to Iran

Senator Sen. Tom Cotton (R-Ark) who authored the letter to Iran offering Iranian leaders instruction on the U.S. Constitution, treaties and executive agreements that 46 other Republicans signed apparently doesn’t know much about the Constitution, treaties or executive agreements.  He got at least two things wrong, really wrong.

Error #1:  The Senate does not “Ratify” treaties

Cotton wrote:



Not true.  The Senate’s own website in a briefing for Senators on Treaties, says this about the role of the Senate in the ratification of treaties:

The Senate does not ratify treaties—the Senate approves or rejects a resolution of ratification. If the resolution passes, then ratification takes place when the instruments of ratification are formally exchanged between the United States and the foreign power(s).
As Jack Goldsmith, the Henry L. Shattuck Professor at Harvard Law School, writes the constitutional role of the Senate in regard to treaties is to advise and consent.
The Senate takes up a resolution of ratification, by which the Senate formally gives its advice and consent, empowering the president to proceed with ratification”

Goldsmith cites a report prepared for the COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE by the Congressional Research Service in 2001:

“It is the President who negotiates and ultimately ratifies treaties for the United States, but only if the Senate in the intervening period gives its advice and consent.”  Ratification is the formal act of the nation’s consent to be bound by the treaty on the international plane.  Senate consent is a necessary but not sufficient condition of treaty ratification for the United States.  As the CRS Report notes: “When a treaty to which the Senate has advised and consented … is returned to the President,” he may “simply decide not to ratify the treaty.”

A treaty isn’t “ratified” by the Senate.  It is “ratified” by the President with the advice and consent of the Senate.

Error #2:  Even non-binding executive Agreements can’t really be revoked “with the stroke of a pen” by future presidents nor can Congresses easily “modify the terms of the agreement at any time.” as Cotton suggests.

Cotton wrote:



In Cotton’s world, any “executive agreement” negotiated by Obama would not be worth the paper it was printed on since it could be easily undone by a future president or Congress.  Not true.  While a future President theoretically could unilaterally terminate an executive agreement and Congress could theoretically modify the terms of an executive agreement, the process would not be nearly so easy or free of significant consequences for the country as Cotton implies.  Politifact addresses this in a recent fact check:

First, says Politifact, The possible agreement with Iran is being negotiated between the five permanent United Nations Security Council members plus one: the United States, the United Kingdom, France, Russia and China, plus Germany. So for the agreement to be truly modified, the other signatories would have to sign off.  No future President or Congress can dictate what these other countries might do.  The agreement would remain in force regardless of what a future president or Congress did.

Second, any effort by a future President or Congress to modify or cancel an agreement could result in a violation of international law which treats such agreements as legal commitments between nations that cannot be easily undone.  The U.S. would, in the eyes of many, become a rogue nation, not to be trusted.

Finally, the U.S. depends upon executive agreements in managing its relations with other governments.  Any president who vacated an executive agreement made by a former president would risk creating significant problems in international relations for his own presidency.  Politifact quotes Jeffrey S. Peake, a Clemson University political scientist on this point.

"For the president to vacate an executive agreement would be quite problematic," Peake said. It "would be largely unprecedented and cause the U.S. a great deal of grief in diplomacy, especially since 95 percent of international agreements are done via executive agreement rather than the constitutional treaty process." Indeed, Peake said, "It could call into question America’s commitment to the vast majority of her international agreements."

Bottom Line:  Senator Cotton and the 46 other Republicans need to learn a lot more about the U.S. Constitution, the role of the Senate, and international law before they go about instructing the leaders of other countries about executive agreements, our Constitution, the role of the U.S. Senate, and, I suspect, just about anything else.  If these guys were bulbs on a Chistmas tree, they wouldn’t be very bright.

Read more about executive agreements and treaties at these links:



Wednesday, March 11, 2015

The Truth About the Clinton Email Story

The Clinton email controversy isn’t about what you think it is about or what the media says it is about.  I’ll give you the real story later in this post.

Let me begin with a good article by Jason Linkins at the Huffington Post which begins to shed some light on what’s going on and why it is something Clinton can’t easily solve.  Linkins makes a good point that the whole Hilary Clinton email flap is probably unsolvable.  Essentially,says Linkins, there is nothing she can do to satisfy everyone, particularly not the Republicans or the media. Had she handled her email differently, says Linkins, things might have been—well—different.

Obviously, the simplest thing for Clinton to have done would have been to open and maintain some sort of "state.gov" email account and conduct State Department business in that domain. Had she done so, there wouldn't be an issue. In fact, had she done so and simultaneously had a personal email account on the side, this still wouldn't be an issue, because most people would find the notion that Hillary Clinton is not allowed to have a private email account to be insane. But by commingling the two -- government and personal -- Clinton opened the door to this criticism, because we can't be sure by what rules Clinton follows to guide her decisions to archive or delete emails. Does she follow State Department guidelines, or her own whims?

Sounds good at first read.  If Clinton had just used a government email account for work and a personal email account for personal stuff, then there wouldn’t be any email controversy.  But, is that true?

First, the email controversy revolves, so we are told, around questioning Clinton’s control over which of her emails were work-related and which were not.  Clinton has said that her attorneys followed a systematic three-step process in determining which emails were work-related and should be turned over to the State Department—(1) they searched for emails sent to a “.gov” address, (2) they searched for emails containing the first and last names of 100 State Department and/or U.S. officials, and (3) they did a key word search for emails mentioning words like “Benghazi”, “Libya” and so on.  See: http://www.huffingtonpost.com/2015/03/10/hillary-clinton-private-email_n_6843562.html

Clinton critics say they aren’t satisfied.  They question not only the search criteria but whether it was followed.  For them, Clinton just had too much control of deciding which emails were work-related and which weren’t.  It’s a bogus criticism intended to camouflage what the story is REALLY all about. 

Here is why the Clinton control controversy is bogus. Clinton would have had just as much control if she had used two email accounts, one government and one personal.  Why?  Because SHE would have been the one who decided which account to use when sending an email, regardless of the actual content of the email.  If she didn’t want some work-related email to be archived, all she had to do is just call it “personal” and send it using her personal account.  That’s not much different than making the work/personal call after the fact.  As Clinton noted, government officials who have both government and personal email accounts, and most do, make these calls every day.

Of course, it would have been different if Clinton had used a government email account exclusively for both work-related and personal email.  Of course, then she would have been criticized I imagine for conducting personal business using government servers.

What is the Clinton Email Story really all about?

So, if the whole flap about the use of government accounts vs personal email accounts is bogus, what is this email controversy really all about?  Linkins thinks it is just politics and sleaze-hunting.  I agree.  Linkins writes:

I promise you, nobody in the wide world is interested in reading emails pertaining to Clinton's rote, day-to-day State Department work, and the number of political reporters in Washington who are genuinely concerned with State Department transparency is too small to be of statistical significance.
What people want to find is evidence of some buzzy internecine feud or conflict with the White House, some career-crippling statement of policy or opinion, some private message in which Clinton says something intemperate about a political opponent, or some tawdry act of State Department-Clinton Global Initiative synergy…

Failing that, evidence of some embarrassing family problem, health issue, or lifestyle choice would be what the press would seek to uncover in a Clinton email cache.

Bottom Line  There are only two kinds of people who give a damn about this entire Clinton email flap.  First, Republicans and other assorted Clinton-haters are looking for some dirt they might be able to use to prevent her from getting the Democratic Party nomination.  They are terrified that she just might win and four or eight years of another Clinton in the White House is something they could not endure.  Second, the media and pundits are just interested in getting hold of some Clinton miscue that they can turn into a real sleazy soap opera to attract readers and viewers during the slow spring and summer season.  They just need a good story.

Prediction.  This email story will have no impact on the 2016 election or Clinton’s possible candidacy.

Tuesday, March 10, 2015

47 Republican Senators May Have Just Committed a Federal Crime

On Monday, March 9th, 47 Republican Senators wrote a letter to the government of Iran in an effort to interfere with and sabotage negotiations between the Obama Administration and the government of Iran with regard to Iran’s development of nuclear weapons.  


The following Republican Senators signed this letter.  By doing so may have broken federal law (The Logan Act).  If found guilty of this federal crime, these Senators could  be fined and imprisoned for up to three years each.  They should also be removed from office.

Senator Tom Cotton, R-AR
Senator Orrin Hatch, R-UT
Senator Charles Grassley, R-IA
Senator Mitch McConnell, R-KY
Senator Richard Shelby, R-AL
Senator John McCain, R-AZ
Senator James Inhofe, R-OK
Senator Pat Roberts, R-KS
Senator Jeff Sessions, R-AL
Senator Michael Enzi, R-WY
Senator Michael Crapo, R-ID
Senator Lindsey Graham, R-SC
Senator John Cornyn, R-TX
Senator Richard Burr, R-NC
Senator John Thune, R-SD
Senator Johnny Isakson, R-GA
Senator David Vitter, R-LA
Senator John A. Barrasso, R-WY
Senator Roger Wicker, R-MS
Senator Jim Risch, R-ID
Senator Mark Kirk, R-IL
Senator Roy Blunt, R-MO
Senator Jerry Moran, R-KS
Senator Rob Portman, R-OH
Senator John Boozman, R-AR
Senator Pat Toomey, R-PA
Senator John Hoeven, R-ND
Senator Marco Rubio, R-FL
Senator Ron Johnson, R-WI
Senator Rand Paul, R-KY
Senator Mike Lee, R-UT
Senator Kelly Ayotte, R-NH
Senator Dean Heller, R-NV
Senator Tim Scott, R-SC
Senator Ted Cruz, R-TX
Senator Deb Fischer, R-NE
Senator Shelley Moore Capito, R-WV
Senator Bill Cassidy, R-LA
Senator Cory Gardner, R-CO
Senator James Lankford, R-OK
Senator Steve Daines, R-MT
Senator Mike Rounds, R-SD
Senator David Perdue, R-GA
Senator Thom Tillis, R-NC
Senator Joni Ernst, R-IA
Senator Ben Sasse, R-NE
Senator Dan Sullivan, R-AK

THESE SENATORS VIOLATED THE LOGAN ACT WHEN THEY SIGNED THIS LETTER

Logan Act (18 U.S.C.§ 953) reads as follows:

§ 953. Private correspondence with foreign governments.

Any citizen of the United States, wherever he may be, who, without authority of the United States, directly or indirectly commences or carries on any correspondence or intercourse with any foreign government or any officer or agent thereof, with intent to influence the measures or conduct of any foreign government or of any officer or agent thereof, in relation to any disputes or controversies with the United States, or to defeat the measures of the United States, shall be fined under this title or imprisoned not more than three years, or both.

1 Stat. 613, January 30, 1799, codified at 18 U.S.C. § 953 (2004).


OBAMA HAS THE SOLE POWER TO NEGOTIATE WITH IRAN.  UNDER FEDERAL LAW NO U.S. CITIZEN--SENATOR OR NOT--CAN INTERFERE WITH THESE NEGOTIATIONS

The President of the United States has the sole authority to represent the United States in negotiations with foreign governments, according to a ruling by the Supreme Court in the case of United States v. Curtiss-Wright Export Corporation (1936). 

299 U.S. 304
United States v. Curtiss-Wright Export Corp. (No. 98)
Argued: November 19, 20, 1936
Decided: December 21, 1936
14 F.Supp. 230, reversed.

“[T]he President alone has the power to speak or listen as a representative of the nation. He makes treaties with the advice and consent of the Senate; but he alone negotiates. Into the field of negotiation the Senate cannot intrude, and Congress itself is powerless to invade it.

Read the full text of the decision here:

WHAT THESE SENATORS DID IS A DISGRACE TO THE SENATE AND POSSIBLE CRIMINAL ACT

Read more about this possible criminal act here:

Read Vice President Joe Biden’s condemnation of the possible criminal behavior of these Republican Senators here: http://blogs.wsj.com/washwire/2015/03/09/text-of-joe-bidens-statement-on-senators-letter-to-irans-leaders/


BOTTOM LINE:

 The 47 Senators who signed the letter to Iran should be tried for possibly committing a federal crime by violating the Logan Act.  At a minimum, these 47 Senators should be censored for conduct unbecoming a U.S. Senator and for bringing disgrace upon the Senate of the United States. 

Wednesday, March 4, 2015

The Future of Obamacare May Hinge on One Key Constitutional Issue--It Isn’t What You Think

Most observers agree that we are likely to see a 5 to 4 decision in the case of King vs Burwell which will decide the fate of Obamacare.  It seemed clear during oral arguments today that the four liberal justices will vote with the government to allow subsidies to be offered to citizens of all states, not just those residing in states that set up their own exchanges.  It seemed equally obvious that Scalia, Alito, and, most likely, Thomas will vote with the Republican challengers who are seeking to destroy Obamacare.  

The questions from Chief Justice Roberts and Justice Kennedy gave no clear indication concerning how they might vote but Justice Kennedy raised an issue that may be the key to how the court will decide the case and how he might vote.  If Kennedy sides with the four liberal justices, Roberts may well join the majority upholding Obamacare in order to avoid being on the losing side in such an important case.  Kennedy's vote could then make the difference between a 5 to 4 or 6 to 3 vote for the government or a 5 to 4 or 6 to 3 vote that would gut Obamacare.

The key issue upon which the court may decide the case
 
Kennedy's swing vote and the court's decision may hinge on an issue few people have discussed until now.  On several occasions, Kennedy brought up the question of whether Congress was coercing the states to set up state-run exchanges when it wrote the Affordable Care Act.  The key to the court’ ruling in King vs Burwell may hinge on how the court, particularly Justice Kennedy decides this one issue:

Was Congress coercing the states by threatening them with dire consequences stemming from a loss of subsidies if they failed to establish state-run exchanges?

In previous cases, particularly SOUTH DAKOTA v. DOLE, 483 U.S. 203 (1987), the Supreme Court has ruled that it is constitutional for Congress to place conditions on the states receiving federal funds, such as the subsidies for their citizens to purchase health insurance, as long as the conditions are not “so coercive as to pass the point at which pressure turns into compulsion. Pp. 209-212.”

The challengers have a "Constitutional Problem" 
 
The challengers to Obamacare in the King vs Burwell case argue that Congress intentionally inserted the phrase “established by the state” in the section of the act discussing the subsidy in order to force the states to set up state exchanges or risk dire consequences.  Congress was saying to the states, argue the challengers, that if a state refused to set up its own  state exchange then its citizens would lose subsidies and the state’s insurance market would be thrown in the so-called “death spiral” of ever increasing health insurance premiums.  No one disputes that the end of subsidies in the states with no state-run Obamacare exchange would create serious problems for these states and, perhaps Obamacare in general.

If the challengers are right , as Kennedy pointed out during oral arguments, then the court is faced with a serious constitutional problem in ruling for the challengers.  Essentially, the court would have to rule that Congress COULD coerce the states, something the court had warned Congress in South Dakota vs Dole and other cases that it could not do.  Additionally, the court has long ruled that when Congress places conditions on the states receiving federal funds, it must make those conditions clear. Something it didn't do when it buried the phrase "established by the state" in one small section of the Act.  In fact, officials in at least 22 of the 34 states who refused to set up exchanges have said they were never informed that their citizens would lose subsidies if they failed to set up a state-run exchange. 

In short, if Congress inserted the wording “established by the state” in order to coerce the states into setting up their own Obamacare exchanges, then that part of the act would be unconstitutional if the threat of loss of subsidies would “pass the point at which pressure turns into compulsion.”  In supporting the challengers, the court would have to either (A) find that the threat of loss of subsidies and insurance “death spiral” wasn’t serious coercion, which even the challengers agree it was or (B) reverse itself and find that it was Constitutional for Congress to coerce the states, overturning precedent and threatening the whole concept of federalism built into the Constitution.

Irony here:  The Republican challengers to Obamacare who brought the King vs Burwell case are advocates of states' rights and seek to limit the power of the Federal government.  And yet, if they win their case, then the power of the Federal government over the states could be increased since there will be fewer Constitutional limits on the ability of Congress to coerce state governments to undertake activities or adopt programs they oppose.

Bottom Line: The fate of Obamacare may well hinge on how Justice Kennedy and, perhaps Roberts, rule on the issue of whether Congress can coerce the states and/or whether Congress was trying to do so when it wrote the Affordable Care Act.

Sources:
Read more here about the oral argument and the coercion issue here:


Read about the South Dakota vs Dole case here:


Tuesday, March 3, 2015

Our Government is Broken and It Probably Can’t Be Fixed

Our form of government is very likely irretrievably broken.  The most we may be able to expect from the federal government is constant crisis, indecision, and the inability of Congress, the President, and the federal courts to govern.  That’s the conclusion of  Matthew Yglesias in a recent article in Vox.  (See: http://www.vox.com/2015/3/2/8120063/american-democracy-doomed/)  Yglesias writes:

“To understand the looming crisis in American politics, it's useful to think about Germany, Japan, Italy, and Austria. These are countries that were defeated by American military forces during the Second World War and given constitutions written by local leaders operating in close collaboration with occupation authorities. It's striking that even though the US Constitution is treated as a sacred text in America's political culture, we did not push any of these countries to adopt our basic framework of government.”

Just about every other country has created a parliamentarian form of government rather that the presidential form found in the U.S.  Why? It’s very simple writes Yglesias:

“In a parliamentary system, deadlocks get resolved. A prime minister who lacks the backing of a parliamentary majority is replaced by a new one who has it. If no such majority can be found, a new election is held and the new parliament picks a leader. It can get a little messy for a period of weeks, but there's simply no possibility of a years-long spell in which the legislative and executive branches glare at each other unproductively.”

But within a presidential system, gridlock leads to a constitutional trainwreck with no resolution.

And, the more ideologically polarized our government becomes—assuming it is possible for it to get more ideologically polarized—the more often we will see gridlock leading to one constitutional trainwreck, as Yglesias puts it, after another.

Yglesia notes that in a climate of sharp ideological differences, both sides begin playing "constitutional hardball.”

Constitutional hardball describes legal and political moves "that are without much question within the bounds of existing constitutional doctrine and practice but that are nonetheless in some tension with existing pre-constitutional understanding." In other words, moves that do not violate the letter of the law, but do trample on our conventional understanding of how it is supposed to work.”

Conservative Republicans faced with a liberal, Democratic Senate and a Democratic President begin using the filibuster to not just block the President and majority party on the big issues but on just about every piece of legislation and every Presidential appointment.  Not getting their way, they threaten to even shut down the government completely.  As Yglesias notes, the Republicans weren’t doing anything illegal or unconstitutional, but what they were doing was “in its intent and its scope, unprecedented.”  The same could be said for Obama’s counter moves.

As relations with Congress have worsened, the Obama administration has set about expanding executive authority over domestic policy to match Bush-era unilateralism in the national security domain. This came to the fore most publicly with Obama's decision to protect millions of unauthorized migrants from deportation without congressional agreement.

Again, in spite of what you hear from Republicans and Fox News, there was nothing illegal or unconstitutional about what Obama was doing, what he has said he felt he had to do to get something done in Washington.  However, it is unprecedented.


Yglesia sees no hope that things will get better.  Congressional districts are now, for the most part, gerrymandered by Republican state legislatures to ensure that the House of Representatives will be filled with Republicans with extremely Conservative views facing a minority Democratic caucus with less extreme but decidedly liberal views.  Today the divide in the House is so great along ideological lines that, as someone said, the most liberal House Republican is far more conservative than the most conservative House Democrat.  There is almost no overlap between the two parties, at least in the House and this ideological divide continues to increase in the Senate as it does among the American public in general.  Consider these charts prepared by Pew Research.


 Source: http://www.pewresearch.org/fact-tank/2014/06/12/polarized-politics-in-congress-began-in-the-1970s-and-has-been-getting-worse-ever-since/



























Could A Dictatorship Be in Our Future?

In a separate article at Vox, Dylan Matthews predicts that continuing and worsening gridlock in Congress will lead to a tremendous expansion of presidential power regardless of which party controls the White House or whether the President is a liberal or conservative.  Matthews notes:

“Any president worth his salt is going to want to make major revisions to statutes and to alter the fiscal status quo. They're going to want to raise taxes on the rich and increase transfer programs, or slash taxes across the board while restructuring entitlement programs, or rewrite No Child Left Behind and make Medicare more cost-effective, and so on. Their legacy as more than placeholders depends on leaving some kind of legislative mark.”

Under a best case scenario, writes Matthews, we could end up with an ” an elective dictator but retain peaceful transitions of power.”  In the worst case, we end up with a President with greatly expanded powers who decides to use (those powers) to punish political enemies, interfere with elections, suppress dissent, and so forth.”

Matthews doesn’t think that either scenario is very likely for a long time, perhaps ever.  However, it could happen.  That’s disturbing.  Matthews thinks it is time for us to begin thinking about a new and more workable and lasting parliamentarian form of government.  Why not?  We did it before in 1788.


Monday, March 2, 2015

Three Charts You Have to See—The Stock Market Under Obama

If you listen to Republicans and Fox News, you would think that Obama has done a terrible job when it comes to business and the economy.  Well, if you are an investor, you know just how much crap the Repubs and Fox have been feeding the American people.  The following three charts set the record straight.  If you have been fortunate enough to have investments in the stock market, you’ve done pretty well during the Obama years.  Take a look at these charts from Yahoo Finance.  Each shows where each index was when Obama took office and where it is now.  I would say that's a pretty damn good record.   Take it to the bank.  A lot of people did.

S&P 500



NASDAQ



Dow Jones



Check it out here:

Thursday, February 26, 2015

Impact of the King v. Burwell case and the Possible End of Obamacare Subsidies

Let’s assume for a moment that next June Justice Kennedy (the swing vote on the Supreme Court) will side with conservative Justices Scalia, Thomas, Roberts and Alito in the case of King v. Burwell in ruling that Congress never intended to provide subsidies to Americans getting health insurance coverage through federal-run exchanges, thereby almost immediately making health insurance unaffordable for an estimated 7.5 million Americans who just recently got insurance.  Now, I know that sounds crazy, but that’s what the King v. Burwell case is all about. 

Here is some background on the King v. Burwell case.  A group of Republican Obamacare haters found four words in the Affordable Care Act that they say restricts subsidies to Americans purchasing health insurance through state-run exchanges only.  They argue that Obama and the Democrats who largely wrote and passed the Affordable Care Act were more interested in forcing states run by Republican Governors and Republican-controlled legislatures to set up state-run health care exchanges than they were in getting the largest number of Americans covered as possible.  Consequently, they say Democrats inserted stealth wording in the law to punish any American who lived in a Republican-controlled state that did not set up its own health insurance exchange. 

The four words in contention are “established by the state” and appear in the following section:
26 U.S.C. § 36B(b)(2)(A) and (c)(2)(A)         “[T]he premium subsidy amount” is based on the cost of a “qualified health plan. . . enrolled in through [a Marketplace] established by the State under § 1311.”

Republican Obamacare haters jumped on these four words and brought a suit claiming that federally operated exchanges could not provide subsidies since they were not “established by the state”  irregardless of the fact that the whole purpose of the Affordable Care Act was to provide subsidies to people who couldn’t afford health insurance so that they would have access to affordable health insurance.  

Let me put this in context.  Republican Obamacare haters are focused on four words in the legislation and choose to ignore the meaning of the other 381,513 words in the act in their entirety.  They say, forget about the rest of the Act.   .0001 % trumps the other 99.999 %. That would include the part of the law that requires that federally-run like state-run exchanges report information on the subsidies they provide even though (in the view of the Obamacare haters) Congress never intended the federal exchanges to provide subsidies, although Congress DID intend that federal exchanges provide extensive reporting on the amount and type of subsidies they weren’t providing and couldn’t legally provide anyway.  I guess the Repubs think Democrats were just setting up a “make work” program for bureaucrats to file reports on what the WERE NOT doing.

It gets better (or worse, if you will).  In order to bring a suit in the federal courts, the Obamacare haters’ lawyers had to find some people who had cause to sue because they had been damaged by the Act.  That’s tough since: (A) most Americans already have health insurance, (B) many of those who do not are exempt from any penalties because of low income or for other reasons, (C) many others who might pay a penalty can easily avoid doing so by getting insurance through the exchanges at no or very low cost, and (D) the Act provides virtually no mechanism for the federal government to collect the penalties/fines if someone refuses to pay.  

Regardless, the Obamacare hater lawyers finally found four Americans who would allow them to use their names.  They are two men and two women, all living in Virginia with a federally-operated health insurance exchange.  The facts about these four will make you scratch your head:
  • At least, one says she doesn’t know how her name got into the case.  She doesn’t remember talking to any lawyers, but maybe she did, she can’t remember.  And, she doesn’t want anyone to lose their health insurance, even though that is what she (or better her lawyers) are suing to make happen.
  • Two of the men are veterans and qualify for coverage under the VA if they would just go to the trouble of applying.  VA coverage would make them exempt from Obamacare fines.
  • One of these men and one woman are exempt from Obamacare fines because they can’t purchase insurance through the Virginia federal exchange even with subsidies for less than 8% of their income.  The Act says you can’t be required to pay more than 8%.  By the way, the reason their insurance premiums would be over 8% even with subsidies is that they are both smokers.
  • All four have health issues, some serious, that require treatment which hospitals are required to provide even though they have chosen not to get insurance even when at least some of them could afford to do so. In short, tax payers get stuck with the bill when people don't have health insurance and are unwilling or unable to pay for their care.  I know someone who has no health insurance and has run up a $2 million hospital bill they refuse to pay.
  • Finally, three of the four are well into their early 60s and will be soon eligible for Medicare whether they want it or not.  In fact, one of the women will become eligible for Medicare this summer, possibly even before the Supreme Court rules.  The two men who are already eligible for VA coverage will be eligible for Medicare within about a year from the time the Supreme Court rules.


If the words “trumped up” come to mind, you’re right.  The whole case should have been treated as a joke, which is how most legal scholars thought it would have been treated.  It wasn’t.  The activist conservative justices on the Supreme Court decided to ignore precedent and stick their noses into the wad of stinking garbage.

Does the Outcome of the Case Really Matter?

Let’s assume that the court overules practically all of the lower courts who have ruled that the Congress logically meant to provide subsidies to everyone regardless of whether they got their insurance through a federally-run or state-run exchange.  What would happen?

  • At least 7.5 million Americans in the 34 states that don’t run their own state exchange would lose subsidies.
  • These individuals’ out-of-pocket cost for health insurance would increase by an average of 256%, making access to health insurance unaffordable to most of them.
  • Although federal subsidies in these 34 states would be illegal, the other provisions of Obamacare would still apply.  For example, insurers would still have to guarantee access to insurance regardless of health status and sick people could not be charged more than healthy people.
  • Many healthy people in these states may drop their health care coverage knowing that insurers will have to sell them a policy if they later get seriously ill thus triggering an adverse selection “death spiral” where only the least healthy obtain health insurance, causing health insurance premiums to skyrocket, causing even more healthy people to drop out.  Eventually, health insurance becomes unaffordable for all.
  • Unable to make a profit, many insurance companies will stop selling insurance in these 34 states, resulting in less competition and ever increasing premiums for those who can still obtain insurance from the few carriers that remain.
  • Some of these 34 states might decide to create their own state-run exchanges in order for their citizens to obtain the federal subsidies.  However, that would require considerable time to accomplish.  New state legislation would be required in many of these states and might be difficult to pass with Republican Governors and Republican controlled legislatures filled with on record Obamacare hater/repealers.  As the Kaiser Foundation notes, “It took existing state-based marketplaces several years to put the necessary infrastructure into place, and they were able to access federal start-up grants that are no longer available, so states would have to cover the initial administrative expenses.
  • Of course, Congress could come to the rescue and simply amend the Act to read “established by the state or federal government.”  Three words would do it.  Fat chance that will happen with the current Republican-controlled Congress.

Bottom Line:  At least 7.5 million Americans and maybe all Americans who have been able to finally afford health insurance because of Obamacare could become uninsured once again.
On a brighter note, if the Supreme Court rules to destroy Obamacare, American voters just might throw the Republican Obamacare-hating nut cases out of office in 2016 in favor of Democrats who could finally do what we should have done all along—expand Medicare to cover all Americans.  Wouldn’t that be great!
Check out these sources for more information on the King v. Burwell case and its possible ramifications:

http://www.motherjones.com/politics/2015/02/king-burwell-supreme-court-obamacare

Thursday, February 19, 2015

Unemployment—Obama vs the Republicans—Who Was Right?

You don’t hear the Republicans talking very much about the Obama record on unemployment anymore.  There is a very good reason for that.  Obama and the Democrats have done a pretty good job in bringing unemployment down.  In fact, we may be on track to a full or near-full employment economy (that would be around 4% or so) in the next few years unless, of course, Republicans gain control of the White House and implement their disastrous economic policies.

Take a look at Chart 1 prepared by the Council of Economic Advisors.  Unemployment in the U.S. peaked in 2010 and then began to decline at a steady rate largely due to the stimulus package passed by a Democratic Congress and signed by Obama, a stimulus practically every Republican opposed.  Not only has unemployment come down, but it has come down at a faster rate than forecast.  Had the stimulus been larger or Congress had passed a second stimulus in 2010, the unemployment rate would have come down faster.  Since 2010, we had positive job growth just about every month with the average number of jobs per month being created INCREASING every year.  See Chart 2.


Chart 1: Unemployment in the U.S. 2008-2014

















Source: Economic Report of the President 2015 by Council of Economic Advisors


What Would Have Happened If We Followed Republican Economic Policy?

It is obvious from the Charts 1 and 2, that Obama and the Democrats handled the economic crisis of 2008 pretty well, particularly when it came to getting Americans back to work.  But, how would our country have fared if we had followed the approach the Republicans advocated.  Well, we will really never know (fortunately) however, we can compare the Obama/Democratic record to the record of the European Union.  Europe listened to the Republicans.  In fact, Republicans praised the Europeans at the time for taking the right approach—you don’t hear that from Republicans anymore.

Take a look at Chart 3, particularly the segment from 2008 on.  It compares the unemployment rate in Europe to that of the U.S.  The U.S. and Europe experienced just about the same spike in unemployment due to the 2008 recession.  Both the U.S. and Europe seemed to be on track to a slow but steady recover after 2009.  Then, by 2011 or so, there is a drastic change.  Unemployment keeps coming down in the U.S., but starts back up in Europe.  Why?  The Europeans practiced Austerity—just what the Republicans advocated.  The U.S. had a stimulus.  The Europeans focused on deficits and cut spending.  Today the unemployment rate in Europe is twice what it is in the U.S.  

(See more on the impact of a Republican Austerity approach to an economic crisis here: http://econ.economicshelp.org/2011/12/how-does-austerity-affect-economy.html )


Chart 3: Unemployment in Non-U.S. OECD, Euro Area, and United States






Bottom Line:  Obama and the Democrats were right when it came to how to deal with the spike in unemployment during our most recent recession.  The Republicans offered a prescription for disaster, but they have not learned from their wrong-headed thinking.  They still offer the same old economic talking points-“cut spending, cut taxes for the rich, focus on deficit reduction.”  We’re on track to full employment thanks to Obama and the Democrats.  The only thing standing in our way is the prospect of Republicans gaining power.. Think about it.

Wednesday, February 18, 2015

It's Time End Income Inequality--Here are Two Things We Can Do

As this chart prepared by the Center on Budget and Policy Priorities shows, until about 1980, the real family income of Americans at all income levels increased at approximately the same rate.  It didn’t matter if your family was in the 20th percentile, 95th percentile or anywhere in between, you participated about equally in the growing wealth of the nation.  That all changed around 1980 when Reagan took office and the Republicans began their accent to power.  Since about 1980, lower and middle income Americans have seen few if any income gains.  The country has become richer overall, but the wealthy has gone to the top 5%.  The rich got richer, almost every year.  Income creation became less fair.  Why was that?

Chart 1:  Real Family Income



Cause #1: Decline of Progressive Taxes

As you can see from the following charts, since the 1950s and particularly since 1980, the highest income tax bracket (the tax rate very rich people pay on their income above a certain level—over about $400,000 in 2014) has been cut dramatically as has the average tax rate that the highest income earners paid.  The highest tax rate is now at a level comparable to the late 1920s, just before the Great Depression and New Deal.  These dramatic cuts in the tax rates the top 10% of Americans pay has made the taxe much less progressive as shown in Chart 3.    As a result, the burden of taxation has been shifted to lower and middle income brackets.

Chart 2: Top Tax Bracket





Chart 3: Average Tax Rate Paid by Highest Income Tax Payers








Chart 4: Progressive Taxes





NOTE:  Republicans argue that reducing the tax burden on the rich is the true path to economic growth.  They say with less taxes to pay, the rich will create jobs for the rest of us and wealth will come trickling down.  The fact is, it never happens.  The independent Congressional Research Service analyzed the impact of cuts in the top tax rates on economic growth going back to 1945.  It found practically no relation between the top tax rate and economic growth.  In fact, real per capita GDP growth was higher in the 40s and 50s when the top rate was 90%.

"Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it
is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the
1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP
increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was
1.7% and real per capita GDP increased annually by less than 1%. This analysis finds no
conclusive evidence, however, to substantiate a clear relationship between the 65-year reduction
in the top statutory tax rates and economic growth. Analysis of such data conducted for this report
suggests the reduction in the top tax rates has had little association with saving, investment, or
productivity growth."


Cause #2: The Decline of Union Membership

The decline of union membership is a second contributing cause of income inequality as can be seen in Chart #3 from the Economic Policy Institute.  Union membership in America peaked in the 1950s and has been in decline since then. The decline has been particularly sharp since 1980, again coinciding with Reagan and the rise of Republicans who have waged an ongoing and largely successful war on unions, first private and now public, by advocating so called “right to work” laws that make it very difficult for unions to operate.  

Click here for an explanation of why Right To Work laws are so deadly for unions:



Without the ability to organize, the average working American is at the mercy of his/her employer for wage gains and employers are typically very reluctant to share the bounty from productivity growth even when that bounty in no small part from worker sacrifices.  In fact, a 2013 Bureau of Labor Statistics report found more than a $3 per hour difference in he average wages of union vs non-union workers.  In short, wages for most Americans remain low because they have lost he one vehicle through which they could bargain for higher wages.  Without unions, profits from productivity gains flow to the owners and top managers who, thanks to favorable non-progressive tax policies allow the to keep most of the gains as after-tax income.


Chart 5: Union Membership and Top 10% Income





Sources:

Bottom Line:  If we are concerned about income inequality (and we should be) then we need to re-institute a progressive tax system and make it easier, not harder, for Americans to organize and bargain for better wages and benefits.  It’s called Income Fairness.