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2024-07-16 07:00 by Karl Denninger
in Federal Government , 666 references
[Comments enabled]  

Jack Smith's appointment ruled unconstitutional and thus the indictment against Trump dismissed.

Former President Trump’s Motion to Dismiss Indictment Based on the Unlawful Appointment and Funding of Special Counsel Jack Smith is GRANTED in accordance with this Order [ECF No. 326]. The Superseding Indictment is DISMISSED because Special Counsel Smith’s appointment violates the Appointments Clause of the United States Constitution. U.S. Const., Art. II, § 2, cl. 2. Special Counsel Smith’s use of a permanent indefinite appropriation also violates the Appropriations Clause, U.S. Const., Art. I, § 9, cl. 7, but the Court need not address the proper remedy for that funding violation given the dismissal on Appointments Clause grounds.

Note that Merrick Garland failed to answer on what authority under the Constitution said appointment was made before Congress.  An act undertaken without authority, and Garland cited none, is not only void it's malicious by definition.

There's no law broken "per se" when you're wrong but when you can't point to the specific Statute or Constitutional basis on which you took an action then if said action is struck as unconstitutional that act was undertaken with actual malice as you refused to even put forward a theory upon which your act was appropriate and legal.

Garland tried to deflect claiming he was relying on a "regulation" that the DOJ itself established without a legal basis.  But the fact remains that without a foundational law or Constitutional provision under which you can issue a regulation its a dead letter issue and thus knowingly malicious in that your act serves to harass or otherwise interfere with someone.  Never mind that a former AG (Meese) actually filed an amicus in the case arguing exactly this; that there was no statutory basis for the appointment and it had created an office without Congressional authorization.

This is just another in a long line of acts of this general character that are blatantly unconstitutional and most of them go unchallenged because they either create huge classes of beneficiaries (e.g. DACA) and thus become politically very difficult to reverse even though they're illegal or they create a nearly-impossible economic burden to obtain review and relief although blatantly unconstitutional (e.g. the attempted use of SarBox against the Jan 6 defendants.)

Both have now gone up in smoke but the question remains what deterrent effects now exists, and will exist in the future, to prevent a second or subsequent abuse?  That question requires an answer.

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2024-07-12 07:44 by Karl Denninger
in Federal Government , 682 references
[Comments enabled]  

There are multiple types of law.

The one everyone is familiar with and understands occurs when the cop behind you turns on his lights.  He or she thinks you broke some sort of law, usually a traffic violation of some sort.  You might get a ticket and you might not.  You might have to pay the whole ticket if you do get it, and you might not -- depending on what it is you might wind up having to actually pay nothing (e.g. a "fix it" ticket), pay half with no points (e.g. a "clean" record and a modest speeding ticket) or have to pay the whole thing.

Note that the penalty for breaking that law is often situational, and has two prongs to it -- the cop might let you go, and if he does write the ticket there may be some way to reduce or eliminate the penalty.

Many people believe, as a result of this, that all laws are this way.

Certainly in the political sphere you can see evidence of that.

But there is a second sort of law that always is exactly the same, and comes with the same penalty if you violate it.  There are no exceptions to these laws, ever.  They are in fact laws and perhaps we should come up with a different name for either them or the man-created prohibitions and constraints because they are of very different character.

As an example acceleration under the force of Earth gravity is always 32 ft/sec2.  Yes, it varies a slight bit from this place to that because the Earth is not exactly round and centrifugal force, which contributes to it, is not exactly the same at all points of the planet.  But there is no exception possible for man, beast, machine or, as far as we can tell, God from it.  That is an actual law and if you attempt to violate it you will learn rather rapidly (and quite-possibly fatally) that there are no exceptions.

Mathematics, the language of physics (including its subsets thermodynamics and chemistry), describes these laws with exact precision.

Today, due to 20+ years of attempting to "cheat" these laws which cannot be done and worse, we claim we're not cheating, we have multiple and very-serious distortions in our economic systems worldwide.  There are plenty of people -- indeed the majority -- who do not understand that these are in fact unnatural conditions and cannot permanently persist, and worse, just as the damage you will take from a collision in a vehicle at 40mph is much worse than the same collision but at 20mph the economic damage that has been built in by these policies is much worse as well.  That impact could be spread over time but the amount of it cannot be decreased once it is accrued, just as once you climb to 100' the only way you can reduce the damage from jumping onto a hard surface, assuming no parachute, is to climb down part of the way first.

Mathematics provides a very simple relationship when it comes to "money printing" (really credit and they're not the same any more than "laws" are between nature and man) and the economy of a nation as a whole.  The basic economic equation is and always has been:

GDP = C + G + N(I) + (E - I)

In other words Consumption (by private entities) plus Government Spending (consumption by government) + Net Investment + Net Exports (or exports minus imports)  You can find this data on the official BEA web page here as "Domestic Product and Income" under Table 1.1.5.

This computation assumes that the denominator (dollars, which is what we measure it in) is fixed in number.  Obviously if there are 100 bushels of corn (and that's all) and 100 dollars then each bushel will likely trade around $1 each, and if all other things being equal you double the number of dollars so will the price.

Plenty of people mislead you to believe that in fact "dollars" are constant or in some way hard to compute.  Well, in some ways it is hard to determine exactly how many dollars effectively exist because anyone can issue credit -- that is, let you buy something now and pay for it later.  But the government keeps a very good set of accounting books called the Monthly Treasury Statement which is, on a cash basis, the spending and taxes received, and thus if they spend more than they take in we know that the number of dollars the government controls has gone up by the difference, and the extra were literally "wished" into existence rather than being produced by addition of value.

So let's take the May 2024 MTS.  That represents eight out of twelve months (the fiscal year ends on September 30th) so we'll multiply be 12/8.  That figure is thus far $1.202 trillion; annualized it is 1.80 trillion.  Divided by the current GDP figure of $28.269 trillion that amounts to 6.38%, which is the inflation rate from government spending at the current excess credit rate.

Note that the BEA claims that the "GDP" increase on an annualized basis is 4.5% in today's dollars but the government is inflating at slightly less than 2% greater than that, so in real terms, no matter what the BEA claims as "real" GDP based on their black-box "deflator", we are in fact taking approximately a 2% decrease in real economic activity.

That is the more the government emits in deficit spending the less comes back out per unit of credit in real goods and servicesThat is the inevitable outcome of this graph when you persist in deficit spending for a long enough period of time:

 

That graph shows a hypothetical situation (but not far from reality) where you start with much less debt than GDP (say, $1,000 in GDP and $100 in debt) and increase the amount of debt faster than GDP expands by emitting more and more credit.  No matter how much advantage you started with in GDP if you don't stop doing that you will reach the point where for each dollar of new debt you get back less than one dollar of GDP and the more you continue to do it beyond that point the worse it gets AT A RAPIDLY ACCELERATING RATE!

This is not conjecture or politics -- its mathematics.

If you do not stop upon crossing that threshold and continue indefinitely your nation's economy will be destroyed each and every time.  There are no exceptions because this is mathematics, not a speeding violation where the cop can be nice to you and let you go with a warning.  Just as you will never get a different outcome from the pull of gravity you will never get a different outcome and in fact no nation that has done this ever has obtained a different outcome because mathematics makes clear it is not possible.

Every nation that has done this in the past has either stopped and accepted the economic damage accrued or been destroyed

There is no way to prevent having to absorb the entire amount of damage that has accrued from the point from where those two curves crossed.  You can stop accruing more damage but you can't avoid that which you've already done.  The longer you continue doing what you've been doing the worse that damage is.  In the extreme case it can AND WILL literally collapse your entire society because obviously if net GDP is reduced to zero everyone starves, and the actual collapse point is thus far before that happens.

Worse is that this situation is even more-treacherous than it appears because by the above fundamental equation all that government credit emission went into GDP more than once in that when a dollar is spent at a merchant that merchant pays salaries and those people then spend that money; this is the "virtuous cycle" of economic expansion in that there is a multiplier effect (which varies; obviously in some cases its very small, but in others, where you wind up with some breakthrough technology it can be very large) -- but in no case is it less than 1.0.  That is, when you contract said excess "on credit" spending you will shrink GDP by some amount more than what you took out.  It may be a little more or a lot more -- but there is no way to avoid it being more.

To make that choice and accept the accrued damage is thus essential when this crossover happens -- and as we can see from the GDP tables it has happened and we are into the rapidly-expanding part of the curve beyond the cross-over point.  Failing to recognize this and stop it means that for each successive day we let it continue the contraction in GDP will not only of necessity, by mathematics, be the entire excess credit creation over time it will be worse due to that multiplication effect and since it is impossible to thus know in advance exactly where society will collapse you'd better stop doing that as soon as you detect it.

Will Congress recognize this and cut expenditures by a third, raise taxes by 60%, or some combination plus the multiplicative effect from that spending being withdrawn or taxes increased to reach the same outcome?

Not so long as you don't force them to because if they do huge numbers of people will, at least temporarily, lose their jobs, many of which provide no actual value to anyone except themselves -- and people elect members of Congress.  We know you won't force them to do it (accepting that there is a price that might be paid by you as a voter) for the simple reason that if you were going to do that you should have back in 2008 as we knew this was happening, I wrote on it at the time, Leverage made this all clear including that chart up above and nobody did anything except make it worse, doing even more damage, over the next fifteen years.

So no, Congress won't stop -- until they're forced to stop.

If voters won't force them to stop what will force them to stop?

RAPIDLY escalating interest rates in the market, which The Fed cannot do anything about and which will force them to cut it out since Treasury won't be able to finance the spending bills they vote for.

The key takeaway item is this folks: Rates are not going to go back down to any material degree in the near future and likely, if they change at all, will only go higher for a decade or more because they can't to lower; once you get into that rapidly-escalating part of the curve nobody will lend money at a lower rate because they recognize that to take less is to lose money in real terms.  Government can offer whatever rate they want for their bonds but can't force people to accept their offer.  The current rate structure of about 5.25% in the short term is in fact still negative in real terms, but not by a lot, because while it looks like its negative about 1% (and about -2% on the longer end) as productivity remains slightly positive for now and that is defined as "doing more with less".

But as that curve continues to diverge, assuming Congress does not change its spending behavior, productivity will rapidly become negative too because that is, as you might guess, computed in dollars which are not constant.  It will not be long before that figure goes into negative territory and cannot be turned back positive by ordinary advancement in human achievement.

You cannot evade this in metals, cryptocurrencies or anything else.  You can try, of course, and plenty of people in the mainstream and on social media will attempt to sell you something and you might in fact be among the very few (e.g. 1% or less) who manage to pull it off but if you do it will be by pure luck -- not skill.

The first item in mitigating the risk from such an economic dislocation -- and one I've pointed out for more than a decade -- is to not need things that are at the root of the credit game.  First and foremost in the inflationary environment engendered by this is health care.  If you need it you are very unlikely on a forward basis to get it as if and when the foldback comes the place the problem is centered in the MTS (go look for yourself) is in CMS which is Medicare and Medicaid, both of which runs through and is a huge component of the entire medical system.  Worse, this is not just a federal problem in that Medicaid also implicates State budgets.  It is not, as politicians often claim, Social Security that is the problem and the reason is that Social Security is mostly covered by current tax receipts.  Yes, in an all-on collapse Social Security fails too because so do tax receipts as employment collapses but short of that Medicare and Medicaid go first and long before there is a complete collapse the squeeze will be on and, if you need medical care of any sort, aimed directly at you.  I've warned of this for more than a decade and you've had time to address your personal situation -- but now time is short if not entirely-expired in that you need to be healthy and accept your mortality one way or another along with your personal responsibility for both where you are and where you're headed.  If you have a cabinet full of pills and other troubles and are reliant on the medical system to remain upright the future is not very bright irrespective of your chronological age.

The second is to recognize that if you own a home and do not have leverage on it even serious negative "value" changes in your house do not realistically help or harm you because you need somewhere to live.  If your home's value is cut in half (and yes, I believe that or more is coming in much of the nation) the new house you buy will also be cut in half so the net is zero just as it was on the way up.  If, however, you have serially-refinanced you're in serious trouble and if you bought in the '21-23 timeframe at very low rates, put little down and cannot remain where you are as your job is in the impacted industries (which will be most of them) and thus your income gets cut or worse, you're forced to move to remain employed at all you are probably cooked.  But if you can remain where you are and bought it as a place to live rather than seeing it as an "investment" you'll be ok -- even in a fairly serious economic dislocation.  That doesn't mean you won't be impacted (you will) but compared to your neighbor who did any of those foolish things you'll be in much better financial shape.

If you can get rid of levered things, especially "toys", and actually get out without taking a cash loss now the time is -- and the risk of that time having passed rises with each passing day.  In another year or two it probably will be passed.  The modern version of "keep up with the Joneses", played most of the time with home equity or worse, credit cards, is going to blow up in everyone's face and when it does a hit to GDP will come out of that as well.

Be aware that the current valuations in the public equity markets are at nosebleed levels, particularly among technology.  If you're in the markets, and a lot of people are and thinking their "retirement" is safe do not be surprised if you see a 30-50% or even worse drawdown over the next year or two.

What's different this time from the last couple of times is that with government credit creation returning less than a dollar in GDP for each dollar put in it is extremely unlikely that they can do the sort of things that were done in the wake of 9/11 (which was really an excuse after the 2000 tech crash) and in 2008 and get a positive, new-bubble result where that market value is recovered in a reasonably-short period of time.

Congress might try it but it is very likely to blow up in their face if they do rather than produce a "rebound" or "recovery" as it did the last two times.  Thus, when those declines come they are likely to persist and not be recovered for many years -- perhaps as long as twenty years down the road, if ever, and in those time frames we will run into the demographic problem we have created and are living with right now with birth rates among those of higher intellectual capacity which are utterly essential to continue our national progress.  Those who are five today are the ones who, in 20 years, will be producing our GDP while those who are 60 today will be lucky, per the actuarial tables, to be alive at all so think long and hard about the incentives or lack thereof we have all put in place over the last few decades because at this point there is no avoiding the outcome of those decisions.

We should have accepted the consequences of this credit creation in the 1990s and then once again in the early 2000s but we did not and now, having done the same thing again we're faced with much more of a contraction that has to be accepted in order to bring the economy back into balance and make possible ordinary family formation and thus healthy next generations of Americans.

Realize that the actions taken during the pandemic did an amount of damage equal to four to six full months of economic output within the United States and at the same time we destroyed a year or more of educational progress for our young people in the majority of our children.  This in turn all showed up in prices; you (as a single person) got $3,200 in "stimulus checks" over two years time but if your income is around the median of $50,000 a year that $3,200 you received costs you close to $14,000 a year in higher prices each and every year and will not stop costing you an additional $14,000 each and every year until Congress stops putting excess credit into the economy.  Worse, for you to recover any of the roughly $30,000 you've lost thus far in purchasing power Congress has to take that excess back out!

If you're in the older cohort (I am, by the way; I'm 60) you are well-past the point where advocating for yourself at the expense of the younger generation will work and, even if you don't have children or don't care "don't work" means you won't "win" anyway so any such advocacy is pretty-much a guaranteed loser for everyone -- yourself included.

It's time to change course folks and accept that there are consequences for our prior actions and advocacy, the check is on the table, and attempting to avoid paying it by ordering up and downing another round of shots is no longer viable.

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First one to cause all manner of complaint is on when the Statute of Limitations runs:

Held: An APA claim does not accrue for purposes of §2401(a)’s 6-year statute of limitations until the plaintiff is injured by final agency action. Pp. 4–23.

Perfectly logical and reasonable considering that the Anti-Injunction Act similarly constrains filing before you get hosed.  In other words no, agencies and other entities of the government don't get to craft things so you can't file at all.  If you can't file a case for injunctive relief before you're injured then the Statute of Limitations may not start to run until that injury takes place.

There are plenty of leftists screaming about this but the Constitutional principle is clear: If Congress constrains you from suing to obtain relief when a law or rule is passed until you get actually screwed then the clock on the Statute of Limitations does not start to run until you get actually screwed.

Nothing else would be logical at all and to hold otherwise would be to allow the government to craft a regulatory structure and then deliberately not bring enforcement until the Statute of Limitations had run, then hose you with the clear intent to deny you any capacity for lawful relief.  Of course the three left-side Justices all argued that its perfectly fine for agencies to deliberately act in such a fashion as to deny any lawful means of relief.  Fortunately they are in the minority.

Now on to the Social Media First Amendment case:

In 2021, Florida and Texas enacted statutes regulating large social-media companies and other internet platforms. The States’ laws differ in the entities they cover and the activities they limit. But both curtail the platforms’ capacity to engage in content moderation—to filter, prioritize, and label the varied third-party messages, videos, and other content their users wish to post. Both laws also include individualized explanation provisions, requiring a platform to give reasons to a user if it removes or alters her posts.

One key item is the requirement in both laws that a platform identify exactly what it objects to.  As things stand now this is not the case -- I and others have articles flagged as "dangerous or derogatory", for example, but no indication of what the platform considers to be that.  It could be a literal single word that caused them to do this (and thus very easy for the person to edit or remove it, thereby voiding the complaint) but there is no obligation for the site owner to do that, and typically they refuse to do it even under challenge.

Held: The judgments are vacated, and the cases are remanded, because neither the Eleventh Circuit nor the Fifth Circuit conducted a proper analysis of the facial First Amendment challenges to Florida and Texas laws regulating large internet platforms. Pp. 9–31. 

Well, let's look at this.  NetChoice made a decision to go after this on a facial challenge, in that those are very difficult to win because they must show that a subtantial number of the applications are unconstitutional, not that one, or a few are.  This is difficult -- but that was the decision they made, and they reason they made it was that they weren't interested in a narrow decision that applied only to their speech and conduct but rather to the policy as a whole.

The problem is that the courts never reached the proper set of analysis.  For example, as the judgement holds, they never looked at what is the scope of the law?  Does it, for example, permit Facebook to go into someone's private email box or X's "DMs" and police them either retrospectively or prospectively, taking enforcement action against the account holder, or is it limited to "public" postings.  If the latter, where is the line if, for example, the posting is in a "members-only" group that both sites have (e.g. "Subscribers" or on Facebook, "groups") or in the general, "everyone can see it" timeline areas?

Then the question, once you've looked at the decided the scope, is to then analyze whether the platform's editorial discretion, which they do have in every case to some degree (1) exists in that instance and (2) is impacted.

The Court has ruled on these things before; Miami Herald is one case they cite of several I remember.  Specifically, the question turns on whether the party being sued engages in its own expression and, if so, whether barring their discretion would alter or disrupt that expression.  This gets interesting in the case of social media in that it runs up against their claims as to who and what they are, and that was not disposed of.  A site that claims to be "a free speech forum" or a "town square", either explicitly or via their own labeling internally or otherwise has a problem in that the common definition of such controls and thus they are disavowing their own expression in favor of that which their users wish to put forward.  Having done that they would likely lose this analysis but it was never explored and decided.

The judgement was voided and remanded because Texas, in particular, was unabashed as to its intent with the law they passed and did not seek to separate these functions.  That was a decision they made when they crafted the legislation and as such they stepped over the line.  They could have chosen otherwise and likely had a survival bias at the court, and may come back for another bite at it -- and in my opinion should.

But they have to clear that threshold rather than simply stomp on the First Amendment.

The last is of course Trump's Immunity Claim.

From the oral argument that I listened to this is basically what I expected them to do and it once again fits squarely within precedent and reason.

Unsurprisingly the ruling finds that in part the indictment was Constitutionally impermissible and void; I'll add that it also, although unstated directly, colors between the lines and alleges deliberate malfeasance by the current Justice Department.  Specifically:

The Executive Branch has “exclusive authority and absolute discretion” to decide which crimes to investigate and prosecute, including with respect to allegations of election crime. Nixon, 418 U. S., at 693. And the President’s “management of the Executive Branch” requires him to have “unrestricted power to remove the most important of his subordinates”—such as the Attorney General—“in their most important duties.” Fitzgerald, 457 U. S., at 750. The indictment’s allegations that the requested investigations were shams or proposed for an improper purpose do not divest the President of exclusive authority over the  investigative and prosecutorial functions of the Justice Department and its officials. Because the President cannot be prosecuted for conduct within his exclusive constitutional authority, Trump is absolutely immune from prosecution for the alleged conduct involving his discussions with Justice Department officials. Pp. 19–21.

Why do I say that the Supremes basically indicted the DOJ for abuse of power and knowing misconduct?  That paragraph makes clear that the DOJ knows damn well that the Executive has an unrestricted right of discussion and debate with Executive Branch officials including the right to fire them.

Congress can impeach a President for this but the DOJ cannot prosecute as such is clearly within the realm of the President's exclusive authority and right to control the Executive Branch.  No law can impair that and no criminal penalty can attach to it.

Similarly the same applies to Trump's discussions with his VP; as the head of the Executive he is absolutely privileged in such discussions.  However, this does not necessarily extend to the acts but he does have presumptive immunity.  In other words the DOJ would have to show actual, knowing misconduct, that is official corruption, to pierce that immunity.  This, by the way, is exactly the same standard under which Obama, who droned civilians "by accident" is immune.  In order to prosecute Obama for that a finding would have to pass judicial muster (in open court) that the act was officially corrupt -- for example, that he knowingly fired on uninvolved civilians.  He is presumptively immune as the CiC from an act taken with reasonable expectation that it falls within his powers as Commander in Chief to direct the armed forces, but that immunity is not absolute as a showing of actual corruption would pierce it.

As to the actions to "find votes" (as alleged) the court did not issue a fact-based finding on whether those were official acts or not.  The acts of a candidate for office have no immunity; that person is a private citizen in that regard.  But to the extent that the acts were of a character of protecting the franchise and administering justice, which is an Executive function, they too are privileged.  Thus the remand to make that determination.

Likewise whether Trump's January 6th speech constitutes protected official conduct and if in part but not in other part which parts are in which bucket must pass a fact-based analysis which the Justice Department summarily decided on its own.  It is not empowered to do that unilaterally; again, the case is remanded for proceedings and said fact-based analysis in open court on that point.

(e) This case poses a question of lasting significance: When may a former President be prosecuted for official acts taken during his Presidency? In answering that question, unlike the political branches and the public at large, the Court cannot afford to fixate exclusively, or even primarily, on present exigencies. Enduring separation of powers principles guide our decision in this case. The President enjoys no immunity for his unofficial acts, and not everything the President does is official. The President is not above the law. But under our system of separated powers, the President may not be prosecuted for exercising his core constitutional powers, and he is entitled to at least presumptive immunity from prosecution for his official acts. That immunity applies equally to all occupants of the Oval Office. Pp. 41–43.

91 F. 4th 1173, vacated and remanded.

Yep, and IMHO properly so.

BTW Sotomayor's "dissent" in this case?  She's demonstrably unfit and should be impeached as she either can't read or is prone to histrionics unfitting an Associate Justice or for that matter any judge, on any court.  She claims that malice murder is immune under this decision when it is clearly not.  Under her standard Biden could and indeed must, right here and now, be personally prosecuted and upon conviction executed as an accessory before the fact for his willful blindness with regard to the El Salvador illegal immigrant, wanted in his home nation for murder, that his Executive Department released and who went on to, it is alleged, murder an American and who is now in jail awaiting trial on that charge as it was an official act from his office that led to that man's release into the United States despite him being wanted for murder in his home nation, an inquiry that DHS deliberately, as a matter of Executive policy, did not conduct and act upon.

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2024-06-29 07:00 by Karl Denninger
in Federal Government , 5809 references
[Comments enabled]  

Three decisions -- first Fischer, which is of immediate importance to quite a few people.

This case turned on the DOJ's decision to abuse Sarbanes-Oxley as a means of charging Jan 6 defendants with obstruction of justice based on, to quote the opinion

...imposes criminal liability on anyone who corruptly “alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding.” 18 U. S. C. §1512(c)(1). The next subsection extends that prohibition to anyone who “otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so.” §1512(c)(2)."

This was a "novel theory" that was clearly not envisioned when Congress wrote the law.  If you recall this law was enacted after Enron had prosecutions fail because the alleged guilty party didn't commit an offense directly, but basically told someone else to who had no other liability and they would have been  liable if they did the same thing themselves, but managed to evade it via this mechanism.

I'd argue that evasion was improper but it is what it is and SarBox was passed to close that method of obstruction, making attempting to prevent an official proceeding via an act of either fabrication or destruction of something (directly or indirectly) that evidences corrupt intent but isn't itself a crime illegal -- if the outcome obstructs an official proceeding.

Ok, as far as it goes and in that realm.

But the January 6th defendants didn't destroy or fabricate evidence by their actions, nor did they induce anyone else to do so, which is the element of criminality that SarBox explicitly addressed.

In other words the DOJ tried to extend the statute beyond the four corners of the page and the clear intent from Congress when it was passed, but Congress never ratified that extension prior to the acts in question on January 6th.  Ratifying it now could only encompass future acts, since the ex-post-facto clause prohibits making something illegal later that wasn't at the time it occurred, and in any event thus far (more than three years in) Congress has declined to act in that regard.

The statutory analysis is quite clear and in no way implicates any sort of "new" holding.  In fact to the contrary as it was the DOJ that maliciously sought to find a statute that they could abuse through their own interpretation which is simply not a power they have.

Congress makes laws and the Executive enforces them; the Executive, of which the DOJ is a part, cannot write its own laws or amend existing ones.

This likely impacts many people already sentenced for acts undertaken on January 6th along with a large number of pending cases and is a slap in the face to the DOJ's attempt to reimagine SarBox to suit their purposes, remanding the case in question that reached the court.  It doesn't, however, exonerate anyone who, for example, trespassed or committed what amounts to vandalism; physical damage and trespass remain illegal of course, but the fact pattern for each person in the case of trespass is different (many of the Jan 6 defendants were literally waved through an open door by a police officer, which makes a claim of "criminal trespass" laughably defective.)  Indeed it also impacts some of the pending Trump indictments and, in combination with the immunity claim which is still to come as to a decision, essentially all of them.

That this took nearly four years to reach the Supremes is an outrage, and so are those who were sentenced (and presumably have served time) on a serious felony charge that is now declared legally void.  I suspect there will be an attempt to hold people accountable for that but I have no odds on success in that regard.  However, an attempt to do this sort of "creative interpretation" in the future now comes with an attendant risk of personal liability for malicious prosecution, and thus should pretty-much stomp on any future DOJ attempt to do so.

The second, Loper Brightis a jurisdictional earthquake long overdue.

I put these together (along with the third) as one Ticker because they're fundamentally the same thing.  All three cases turn on the question as to whether an Executive Department or Administrative Agency can effectively color into a law that which is not clearly there, when the Constitution sets forth that it is the exclusive purview of Congress to craft laws and the Executive is required to enforce them as-written, not as they might prefer they be written.

Specifically this case addresses what is known as The Chevron Deference for the case in which it arose, where the Supremes found that a reasonable Administrative interpretation where ambiguity was believed by an agency to exist was presumptively correct.  That didn't mean you couldn't challenge it but it did mean you had a very difficult road to travel in doing so because it was presumed the agency both acted in good faith and had the right interpretation as they saw it, and that was valid.

In other words rather than entrust Judges and Juries to interpret the fact pattern in the fact of a potential case or controversy and assign the duty to interpret the law to said courts as the Constitution provides and which traces directly to The Federalist and, I might add, in the American era as held valid in Marbury .v. Madison this doctrine instead usurped that authority into unelected members of the Executive Branch and away from both Judiciary and Congress.

The 1984 decision in Chevron in fact turned the APA itself and all precedent prior on its ear.  The problem is that the APA, an act of Congress, said the exact opposite and in fact even an act of Congress can't change this as the Constitution delegates this authority!

Indeed when there is controversy the alleged "expertise" of an agency is far less reviewable and public than that of a courtroom.  Judges deal with this every day in the process of evidentiary hearings; various experts, many of them at odds with one another, testify and offer evidence that is weighed.  The Chevron decision essentially destroyed that process of review in favor of allowing an administrative agency to present its exclusive view of such an interpretation without any capacity to examine the evidence, sources, and potential conflicts of interest, declaring that because it was from an Executive Agency it was above reproach and thus presumptively correct, forcing the challenger to prove it either wrong or corrupt.

Tossing this decision is decades overdue, particularly given the wild-eyed expansion of this decision's reach over the last few decades.  The Justices were, however, quite-careful to state that no, this doesn't automatically void everything done under the former view in that "stare decisis" controls in those cases and thus if someone wishes to bring an attempt to reverse one or more of those decisions they still will have to show both standing and cause to believe the former interpretation is wrong.

This will, however, stick a fork in (for example) BATFE attempts to claim that a "bump stock" is a "machine gun" when the term "machine gun" is in fact defined in the statute, forcing BATFE to return to Congress and get the statute amended should they wish to proceed.  (You might note that decision was overturned in this session of the court as well, which I note further on.)

The third from a few days ago, SEC .v. Jarkesy, is for all intents and purposes the same thing.  Here the SEC had arrogated to itself via Dodd-Frank the right to remove a penalty proceeding from the courts into administrative action.  The Supremes found this was a wild-eyed violation of the 7th Amendment when the finding and proposed penalty is best characterized as a penalty that would attach to a civil tort.  A purely restitutive order, that is that a malefactor had done something dishonest or otherwise in violation of SEC regulations and the order was to return to the damaged party the property they formerly had (typically money in the context of securities, of course) can be administratively handled but an action that essentially fines someone (where the proceeds go to the government) or is intended in whole or part to punish implicates the 7th Amendment right to trial by jury.

Originally the Securities Act did not permit this sort of cudgel but the 2010 Dodd-Frank law added that to the SEC's list of powers.  Jarkesy was subsequently accused of securities fraud, an offense which is at its essence identical to the common-law tort of fraud.  The 7th Amendment was written specifically because this sort of administrative adjudication of alleged torts was one of the means by which the British tormented the Colonists, who had no right of judicial review.  Again the allocation of this power dates back to The Federalist as it does in the Chevron case, and again even Congress can't change that absent a Constitutional Amendment.

There are those who are screaming about all of this but the fact of the matter is that all three cases are at their essence the same question, the same controversy and have the same answer.  The Constitution sets forth the prime "Rules of the Road" and if you don't like them then the proper method to alter that is to amend the Constitution, as we have done several times through the years.

Cases and Controversies have as their proper place of adjudication in our Constitutional system a public courtroom where experts can vie to present their opinions on the facts, if challenged they must be able to defend them in open court against attempts to impeach their testimony so the public can see what's going on, the record then presents itself in written form as precedent (particularly when such is taken up on appeal and affirmed or overturned) and thus in the future people can look to said public record with a reasonable belief that, absent a future public court proceeding they can act in accordance with that record of decisions and know what the outcome will be in advance.  Administrative entities acting behind a closed door offering an "expert opinion" that cannot be countered or impeached because it is stamped "theirs" and thus controls is unconstitutional in the first instance as is well-documented all the way back to The Federalist and original debates on our government's formation, and that is in fact at the core of all three of these holdings.

To put it in short form with regards to all three rulings (and Cargill as well since we're on the current court term's decisions, which is basically the same thing): It's about damn time.

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2019-02-13 14:50 by Karl Denninger
in Federal Government , 449 references
[Comments enabled]  

There's simply no other way to express this....

 

These numbers are for only three months, so for the full year multiply by four.

Again, the total "social insurance and retirement" tax grab is $274 billion.  Social Security is a 12.3% tax (up to the cap) and Medicare is 2.9% (no cap.)  The split is thus roughly-speaking ~19% Medicare, the rest (81%) Social Security.

If you want to get down into the detailed numbers they don't "quite" add there because there is both spending and tax revenue that gets bucketed in each from the various line items.  But it's not off by much; the "line item" (without the bucketing) comes up as 74/26 -- not materially different.

81% of $274 billion is $222 billion.  Social Security spent $251 billion.  That's a ~29 billion shortfall.  Not good but there are a lot of Treasuries held against that requirement, and by 2026 the budget impact as a percentage starts to fall because the boomers start to die, statistically speaking.  In other words Social Security had a ~12% shortfall over the first three months, indistinguishable from my last look (12% .vs. 13%.)  This is easily fixable on a forward basis without much economic pain.

Medicare, on the other hand, spent $153 billion but took in just $52 billion.  That's a shortfall of 66%; that is, two thirds of it is unfunded.  You would have to more than triple the Medicare Tax Rate in order to bring it to parity.

That's an "improvement" over the nearly 75% deficit in the first month but we are in fact talking about bleeding out in two minutes rather than three; the outcome does not change.

Add to that "Health" (Medicaid, mostly) and it's much worse; now you take in $52 billion but pay out nearly $300 billion.

Note that the deficit thus far is $319 billion.  If you were to get rid of the deficit between Medicare and Medicaid .vs. tax receipts you would almost close the deficit to zero.  If you also increased the FICA tax rate by 13% (to just under 7% for "each half"), increased the income cap where it stops being collected or some combination that wounds up in the same place as well the deficit would be effectively zero.

$319 billion over three months equals roughly $1,300 billion, or close to $1.3 trillion in deficit for the entire fiscal year.  The only good news is that April is usually a strongly positive month (as a result of taxes being due) but either way the deficit is almost-certain to be in the neighborhood of $1.1 trillion this year.

You cannot fix this with either taxation or cost-shifting. It is mathematically impossible to do so.

For example you'd have to nearly double the individual income tax rate on everyone, including the middle class; to close the gap by increasing the corporate tax rate you would have to raise it by more than an insane and utterly impossible 600%.  Any claim that we can solve this by making people pay "their fair share" is a flat-out lie.

You cannot get there by "cutting spending" on other than these programs either; if you cut all "other spending" to zero along with transportation and education you'd only cover 30% of the deficit.  Cutting military spending to zero (which is obviously impossible) wouldn't get there either.

There is only one way to solve this problem and that is to collapse Medicare and Health spending by 80%.  You can only resolve the problem by collapsing the medical and health insurance monopoliesforcing everyone to publish a price for everything and charge everyone the same price, where said price must be handed out before service is provided, along with telling everyone involved that for any and all conditions in which a lifestyle change will remove the need for treatment government will pay zero unless the person in question makes that change.

The trend is not improving and it is not "The Next Generation" that will have to deal with this.

This has to stop right damn now or it will blow up before we get through the next Presidential term -- and no, you cannot tax your way out of it either.  The people in Washington DC -- Congress and the President -- must be held personally and politically responsible for their refusal to deal with the only way to put a stop to it, which is to destroy the medical monopolists using existing, 100+ year old law, and to do it right damn now.

And if they refuse we the people must enforce our demand for them to do so.  They will refuse, I remind you, unless forced by the people -- and there are peaceful and lawful means to do exactly that (e.g. a general strike.)

Nothing less than the literal existence of this nation as a Constitutional Republic is at stake.

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