Tuesday, April 30, 2013

Guest Post by Eric Segall: The Real Reason So Many Law Professors Failed to Predict the Favorable Reception of the Commerce Clause Argument in the Health Care Case

By Eric Segall

There has been a lot of talk on various blogs about David Hyman's forthcoming article detailing how many law professors and others wrongly predicted how the Court would decide the commerce clause issue in the ACA case. It is true that almost every law professor who decided to make a prediction about the case opined the Court would uphold the mandate under the combination of the commerce clause and the necessary and proper clause. And, as Professor Hyman points out, these predictions were uttered alongside high pitched and adamant statements about the frivolous nature of the arguments against the mandate. For what it is worth, and relevant to the thesis of this short piece, I argued both that the arguments against the mandate were frivolous, and that the Court might nevertheless strike it down. That I could be right on both points should not be surprising.

Professor Hyman’s article fails to dig deeply enough into the most obvious reason for the disconnect between the predictions and the result.  Most predictions were based on the professors’ rational reviews of prior cases, history, constitutional text, and simple logic. After all, how can a 2000 page law comprehensively regulating a trillion dollar industry that affects every state not be a regulation of commerce among the states? If Congress can prohibit two people from growing pot that was never bought or sold and whose ingredients were wholly in-state, how could Congress not be able to regulate the national market of health insurance and health care. Unfortunately, none of that (logic, precedent, and text) has much to do with how the Court decides constitutional cases, especially the very important ones.

We live in a world where Justices Thomas and Scalia overturn affirmative action programs despite their oft-stated views on the importance of federalism and originalism, which should lead them to uphold those programs; in a world where the bizarre standing cases of Flast, Valley Forge, and Hein coexist peacefully despite Justice Scalia's clear and correct protestations that they can't; in a world where the Court is likely to apply heightened scrutiny to laws enacted pursuant to Congressional power to enforce the 14th and 15th Amendments, despite the fact that the Constitution expressly gives Congress  the power to enforce those Amendments through "appropriate" legislation; in a world where the Court issued a paen to precedent in Casey even though in the same case it gutted a landmark decision (Roe) and overturned two others; and in a world where prior positive law such as text and precedent are frequently ignored by the Court.  In this world why do law professors and knowledgeable pundits still think they can predict important cases by reviewing criteria the Court cares little about?

Chief Justice Roberts' relationship with Justice Kennedy and his ruminations about personal and professional legacies should have been discussed as frequently as Raich and Wickard when predicting what might happen in the ACA case. That is not to say that is how we should teach our students, or that knowing the language of how the Court explains constitutional law decisions is not important. But in predicting what the Court will do, the Justices' world views, personalities, political calculations, and relationships, are far more important than prior positive law. The only real news relating to all this and the ACA case is that this is news at all.

Monday, April 29, 2013

So Much For Sequester Leverage

By Mike Dorf

As a professional who flies with some frequency for work and other reasons, I was relieved that Congress decided last week to reallocate FAA funds in such a way as to reduce the disruptive impact of the sequester on air travel.  As a citizen and a Democrat, I was disappointed, though not really surprised, that once again the D's had lost a game of chicken with the R's.

The backstory should be familiar.  Despite the right's mantra-like talking point in which President Obama owns the sequester, it was more or less a co-creation of the Republicans and Democrats in 2011.  As part of that year's deal by which the Republicans agreed not to ruin the country's two-centuries-plus record of paying its debts, both sides agreed to the creation of the "Supercommittee," which would propose budget cuts and tax increases to cut the deficit.  The sequester was part of what the academic literature calls a "penalty default"--an alternative so distasteful to all parties that it ensures that they will strike a deal that's not as bad.

And it is by now also familiar that the Democrats miscalculated in thinking that the sequester would give them at least as much leverage as it would give the Republicans.  Whereas D's would be eager to avoid spending cuts to domestic social programs, it was thought, R's would be eager to avoid military cuts. What the D's had not realized was that many of the new breed of ideological Republicans are (to their credit) less committed to spending on national defense than are the older generation of Republicans. And so from the perspective of many libertarian congressional Republicans, the sequester has been win-win: Budget cuts they wanted for ideological reasons and an opportunity to use them politically as "owned" by the Democrats--even though any objective analysis would recognize that regardless of the precise sequence by which the sequester was proposed and accepted, it never would have been on the table were it not for the Republicans' willingness to hold the country's credit rating (and the global economy) hostage by threatening to refuse to raise the debt ceiling in 2011 (and subsequently).

There's another reason why the Democrats lost this latest round.  They have been saying for months now that the sequester's cudgel approach is senseless, so when the Republicans came along and offered to retarget cuts in a way that would have obvious benefits for the public, the Democrats were left in the politically weak position of having to say the following: The FAA should have its funding restored but only as part of a package that restores funding to social programs that benefit poorer Americans.  That may well be the political strategy, but you can't say that out loud or you sound like hostage takers.  We will cause avoidable travel delays until the Republicans restore funding for Head Start.  Seen in broader perspective, then, the Republicans had so out-maneuvered the Democrats that the Republican hostage-taking on the debt ceiling led to circumstances in which Democratic insistence on their own budget priorities looked like hostage taking.  And so the Democrats caved.

There are two mysteries here, one concerning policy, the other concerning backbone.  The policy mystery is why Democrats have accepted--indeed, affirmatively embraced--the whole framing of the underlying situation.  Professor Buchanan is the macroeconomist on this blog, not I, but still, one doesn't need a Harvard PhD in macroeconomics to know that in a rational world, the right's program of austerity would have been countered by the left's alternative of fiscal stimulus.  Instead, President Obama pivoted towards deficit reduction way too early, setting up a policy debate in which the two positions are the Republican cut-the-deficit-through-budget-cuts and the Democratic cut-the-deficit-through-budget-cuts-mixed-with-tax-increases.  Neither position is especially popular but the choice is false.  The great policy mystery is why no one in the Democratic Party has adopted the Buchanan/Krugman/Keynesian position, especially given how easy it should be to sell to the public.  Yes, I understand why pundits who regard themselves as serious thinkers think that the way to show their nonpartisan seriousness is by promoting "tough choices" on spending and taxes, but I don't understand why more left-leaning politicians--or even centrists for that matter--don't simply start telling the American people that what they want to hear is actually true: For at least another few years, you don't have to choose between low taxes and social spending.

That's the policy mystery.  There's also the backbone mystery: Why are Republicans more willing to stake out and stick with hardline positions than Democrats?  It's tempting to think that this is simply a matter of personalities.  For over two decades, the most successful Democratic Presidents--Bill Clinton and Barack Obama--happened to be centrist compromisers.  Clinton wanted everyone to like him, whereas Obama appears to value compromise for its own sake.  But maybe they're just outliers, a product of the tiny sample size.

I'm skeptical.  It's not just the Democratic Presidents, after all.  It's Congress too.  Harry Reid got rolled on filibuster reform at the beginning of the current Senate session, and while it's possible he might have opposed real reform based on long-term institutional calculations, that may be part of the point.  It's hard to imagine the modern Republican leadership caring much about such matters.

I realize that I don't have hard evidence for--or even a good measure of--the phenomenon I'm describing.  But it certainly jibes with what I've casually observed, going back at least as far as the 2000 post-election fight in Florida, in which the Republicans committed hard fouls while the refs were looking the other way and the Democrats, instead of responding in kind, looked at those same refs in stunned disappointment like Tim Duncan, Rasheed Wallace or (for hoops fans of my generation) Danny Ainge after being whistled for a foul.

I also have the sense that the reluctance of Democrats to play political hardball is not universal and to the extent that it's true, is a relatively recent phenomenon.  Certainly LBJ knew how to give as good as he (or anyone) got.  And even today, there are Democrats who will fight.  But  the most notorious tough guy in the first Obama Administration--Rahm Emanuel--picked his toughest fight with the left wing of the Democratic Party.

So, where are the modern heirs to LBJ when it comes to tactics?  I'm sure there are some still around but I want to float a hypothesis for why we're less likely to see this sort of thing from the core of the Democratic Party these days: the declining influence of labor unions has muted the portion of the Democratic constituency most likely to hang tough and drive a hard bargain.  Labor is still a key constituency for Democrats at election time, but mostly because unions realize that the Republicans would be far worse, not because the Democrats actively promote much of an agenda favoring organized labor.

The foregoing hypothesis is hardly meant as an all-purpose explanation and it doesn't even quite work on its own terms.  E.g., although LBJ had labor support as President, he had earlier supported Taft-Hartley and so was hardly labor's man.  And it's not even clear that I've identified a real phenomenon or one that I've specified sufficiently to admit of falsification of my causal hypothesis or any other.  Still, I put this out there for discussion.

Saturday, April 27, 2013

Special Note for Dorf on Law's Email Subscribers

-- Posted by Neil H. Buchanan

Readers who receive daily emails from Dorf on Law did not receive an email this past Thursday containing my post, "A Non-Progressive Budget from the President, and the Answer to the Chicken-Egg Question."  You can find that post at this link: http://www.dorfonlaw.org/2013/04/a-non-progressive-budget-from-president.html.  My apologies for mistiming my post.

Friday, April 26, 2013

Buchanan: The Next Generation, and the Conservative Cloud

-- Posted by Neil H. Buchanan

Almost four years ago, I wrote a post here on Dorf on Law in which I noted that my nephew, Ross Buchanan, had just graduated from the College of Wooster in Ohio.  In the time since then, he has been teaching high school, first in Seattle, and then for three years as a Fulbright Scholar in South Korea.  Starting this Fall, he will be entering the Ph.D. program in History at the University of Texas in Austin.  Ross was in middle school and then early high school in a suburb of Toledo when I was in law school, which is the time I came to know him best (because I lived nearby, in Ann Arbor); and it was easy to see even then that he was going to be an academic.  He had a keen interest in public policy, and his insights into intellectual issues were truly precocious.

Meanwhile, last Friday, my Dorf on Law post discussed the especially odd thinking that appears to lie behind the gold buggery that has moved from the most extreme right wing of the Republican party into its mainstream.  Conservatives for generations have mostly been big fans of monetarism, a policy that calls for minimalist monetary policy responses to economic crises (and no fiscal policy responses at all), which they like because it minimizes Big Government and purports to makes crises less necessary by following mechanical rules during good times.  A gold standard has the supposed virtues of the mechanical rules, but without the ability to respond to even the most extreme economic crises.  (As a matter of reality, of course, a gold standard is no more bound by its rules than is any other monetary system.  Congress -- or the Guardians of the Gold, or someone -- would retain the ability to change the ratio of gold to paper/electronic dollars.  The only way around this would be to require that all transactions be carried out in actual gold.  But why let reality intrude upon a good story?)

In that post, I argued that conservatives' abandonment of monetarism was similar to their attacks on the New Deal and the Civil Rights movement, because in all of these cases they rebel against even the most minimal attempts to save the United States from its worst excesses (economic and social).  Professor Robert Hockett's recent Dorf on Law post seemed to offer the best explanation for this phenomenon: Movement conservatives have been increasingly grabbing onto magical ideas that promise to solve problems without human intervention.  On the comments board for my post, Ross Buchanan offered the following extremely interesting observation (which he posted in two parts, and which I've lightly edited to re-post here):
Why is the right wing so passionately adopting such irrational and ultimately self-defeating causes, like abolishing the Federal Reserve? I suspect that we find such moves unfathomable because we—as outsiders—don’t understand the thinking of the right wing.

To anyone not in the camp of the modern right wing, it would seem natural to judge any given policy based on its projected impact. (For instance, a world in which an amoral plutocrat supports a regressive tax code and someone who cares about the poor supports a progressive tax code makes sense to us outsiders, regardless of where any one of us stands on that issue). From such a results-based perspective, goals like adopting the gold standard are truly inscrutable.

But perhaps the modern right's complete rejection of monetarism—as well as many other instances of extreme (and often erratic) shifts in right wing thought—has little to do with actual monetary policy, policy more generally, or its results.

I suspect that these shifts have more to do with a growing unwillingness by the right wing to trust the judgment of any person not deemed to be from its camp. Thus, the “anti-judgment” bias discussed in the post is really a bias against the judgment of all those not identified with the conservative movement.

This "anti-judgment-of-non-conservatives" bias would help to explain the discrepancies between prominent conservatives calling for specific policies in the past and then opposing those very same policies once Obama and Congressional Democrats championed (or at least accepted) them. (Examples include Newt Gingrich on health care, and Wayne LaPierre on gun control). It would also account for why so many of the self-described libertarians on the right were silent during George W Bush's presidency of big government and irresponsible spending (including rank and file members who didn’t benefit from his regressive economic policies).

In an unusual sense, identity politics now defines the right wing. The merits or goals of any given policy are secondary to the political identity of the people supporting it.
The ‘anti-judgment-of-non-conservatives’ bias may now be coinciding with a more general anti-judgment bias simply because the right wing no longer thinks it can muster a governing majority.

Basically, I don’t think most conservatives have a philosophical problem with governing institutions, so long as they control them; I suspect that even a lot of the anti-tax crusaders would be okay with the IRS if tax policies were regressive enough.

But as the conservative coalition continues to shrink and national elections become ever harder for conservatives to win, the right wing is becoming increasingly fearful of institutions it cannot control.

Destroying governing institutions would seem to be preferable to letting them fall into the hands of the enemy.
I find this to be an extremely promising explanation for much of what we are seeing.  The most crude form of the phenomenon that Buchanan describes is the Right's now-long-gone romance with term limits -- a "commitment" that was so crude and transparent that I doubt anyone even at the time expected it to survive Republicans' retaking Congress.  But even on policy matters, I think Buchanan is surely right that this is a matter of, to twist the old phrase, movement conservatives now favoring a "government of men, not laws."

Certainly, the Reagan and Bush II administrations were largely committed to subverting the executive branch, by putting people in charge of various agencies who were deeply committed either to eliminating the agencies altogether, or to neutering the agencies to prevent them from carrying out their statutory missions.  Putting Clarence Thomas in charge of the Equal Employment Opportunity Commission was exquisitely disgusting, as was the parade of anti-environmental appointees to the EPA and the Department of the Interior.

There were also plain old hacks put in charge of Transportation and HUD, who mostly used the agencies for venal purposes, but the larger point in all of these appointments was to take control of the agencies away not only from the political appointees that previous Democratic Presidents had put in place, but from the career civil servants who actually follow the law in carrying out their duties.  A Treasury official told me once that a Reagan appointee actually held "re-education seminars" in which he required senior nonpolitical staff economists to listen to him explain the wonders of Supply Side economics.  That was silly and ineffective, of course, but the point was that the agencies were the enemy of the conservative movement, in exactly the way that Buchanan's argument above identifies: The question is whether you can trust the people in charge of the government entity.

Buchanan's hypothesis, however, makes it even more important to solve another mystery that has been stumping me recently.  Last month, I wrote two Dorf on Law posts (here and here) in which I tried to figure out what Republicans are talking about when they say that they refuse to "compromise their principles" even after a bitter electoral defeat.  The problem is that none of the principles that they so loudly proclaim seem to be immutable, except perhaps for a deep commitment to reducing/eliminating taxes for the rich.  In the end, I found myself concluding that their only principle seemed to be pure partisanship.  They oppose Obama and the Democrats simply because of partisan bile.

Taking Buchanan's argument seriously, however, means asking how one becomes one of the trusted people in whom other conservatives are willing to vest power.  We know how they treat outsiders, but how do insiders become insiders?  And perhaps an even more interesting question is how insiders become outsiders.  Consider the response to Newt Gingrich during last year's Presidential primaries, when he referred (accurately) to Paul Ryan's economic policies as "social engineering."

Gingrich was demonstrating his commitment to a principle -- laissez-faire economic and social policy -- and was trying to say that a fellow conservative was betraying that principle.  The response was, I am sure, shocking to Gingrich.  Suddenly, he was the outsider being savaged by the venomous attack machine that he had done so much to assemble.  Movement conservatives forced him to back down in humiliating fashion, making it clear that he was no longer trusted to do what must be done.

Again, however, what exactly is it that must be done, and how does that change over time?  An "It's not what, it's who" explanation loses its traction, I think, when we see prominent arch-right conservatives scramble to stay in the good graces of what one might call the "Conservative Cloud."  Even House Majority Leader Eric Cantor, who was one of the people whose views and actions led me to say that the modern conservative movement is led by sociopaths, is now reportedly in the crosshairs of "true" conservatives for various deviations from the invisible playbook.  Orrin Hatch had to scramble to his right to save his Senate seat in Utah last year!

I do think that Buchanan's explanation carries a lot of weight.  The "anti-judgment bias" on the Right really does look like an insider/outsider problem, although I would not have seen that without Buchanan's help.  Even so, the content of the insider group is clearly based on fealty to ideological commitments that are anything but random, but that continue to defy explanation.

But hey, my nephew is only 25 years old!  Maybe after his first year of graduate school, he will solve this and many other questions that have puzzled me for years.

Thursday, April 25, 2013

A Non-Progressive Budget from the President, and the Answer to the Chicken-Egg Question

-- Posted by Neil H. Buchanan

In my new Verdict column today, I discuss the budget proposal that President Obama announced two weeks ago.  Regular readers of Dorf on Law know that I have long since given up on the idea that the President is progressive economically, and this budget offers strong evidence to reinforce that conclusion.

Readers who think that I have been unfair to Obama-the-liberal for lo these many years will be pleased to see that I explicitly distinguish Obama's economic views from his other policy views.  I begin the column with a comment about his views on gun control, which have moved from standard-for-Obama cautious noncommitment (parroting right-wing talking points regarding the Second Amendment, but passively favoring some controls) to full-throated support for as much regulation as could be hoped for.  (If anything, he surprised me by being willing to support liberal outcomes that were politically difficult.)  Sandy Hook obviously changed him.

I did not mention other domestic non-economic issues, but one can see similar patterns across the board: Obama appears to believe in liberal goals (or, at least, is openly skeptical of conservative dogma), but his degree of commitment to any particular issue is limited by his extremely cautious brand of politics.  He was supportive, but passive, about gay rights during his first term, putting very little effort into major issues until the late push to eliminate don't-ask-don't-tell; but then he evolved quickly (although clearly as a follower, not a leader) on gay marriage.  On the environment, his mixed record is reasonably progressive.  He is probably the worst on labor issues, putting virtually no emphasis on organized labor's most important priorities (card check), although he did propose an increase in the minimum wage (with no follow-up thus far).

So, on noneconomic domestic issues, Obama has to be viewed as a B or B+ student, often falling short, but trying in varying degrees to follow paths that his supporters would have expected.  On foreign policy, of course, it is an entirely different story.  That, however, is too far afield for this post.

It is on domestic economic issues that I have been most critical of the President, and the budget proposal really does validate that criticism.  Naturally, however, the President has backers among the supposedly-liberal commentariat.  Those pundits' reaction to the budget proposal was rather striking, in two ways.

The first reaction goes like this: "This is not a serious budget proposal, because everyone knows the Republicans will never agree to anything.  So, Obama did himself a world of good by showing that he is willing to withstand the anger of his liberal base, by proposing an austerity budget that takes a big hack at Social Security.  Everyone will now understand that Obama is seriously interested in governing, and Republicans aren't."  What this really boils down to is captured best by a turn of phrase coined several years ago by Rachel Maddow: Obama is adopting "the kick-a-hippie strategy."  To look good in the eyes of self-styled centrist pundits, Obama deliberately goes after those out-of-touch lefties who can't be trusted, anyway.  Who cares that they elected him (twice)?  What matters now is showing that he is serious!

Paul Krugman probably puts it best when he asks what, exactly, is the point of appealing to those tut-tutting centrists.  There is nothing ultimately to be gained for Obama, because the self-styled reasonable pundits will always figure out a way to blame Obama in equal measure, no matter what his opponents do.  (And the pundits will add insult to injury, by saying that Obama bears extra blame for failing to be "a leader."  Whatever that means.)

As I suggest in my column, the most frustrating aspect of this is that Obama -- if he actually were a liberal -- could have used the budget proposal to lay out exactly what a progressive government would look like.  Republicans, year after year, have gladly signed onto the dystopian nightmare budgets that come out of Paul Ryan's overrated brain.  We have a very good idea what they want -- and they enthusiastically tell us, even though they know they are voting for "unrealistic" budgets -- but we have very little idea what Obama-the-supposed-liberal really wants.

And that leads us to the second reaction from the liberal-ish pundits.  Rather than concluding, as I have, that Obama fails to propose progressive economic policies because he is really not a progressive, some liberal pundits have decided to define liberalism down to whatever Obama proposes.  That is, they reject the premise that he is failing to propose liberal policies in the first place.

As I point out in the latter part of today's Verdict column, this is just an old trick that could make almost any politician look progressive.  For example, the very conservative politicians who have been proposing flat taxes almost always include in their proposals a large exemption, whereby a family can exclude the first $X of wage income from tax.  (All investment income would, of course, be exempt from tax.  That is one of the most important conservative goals!)  These politicians then tell us that the system is progressive, because the poorest people would pay no taxes, and average tax rates would rise as wage income rises (even though the marginal tax rate is flat).

It is a neat rhetorical trick, but it only works if one uses an absolute definition of "progressive," rather than a relative one.  Compared to the current tax system, every flat tax system proposal that I have seen would be a profoundly regressive move.  Similarly, even though there are items in Obama's budget that can be called progressive -- and even setting aside just how hard he would fight for those items, when push comes to shove -- that does not make the budget progressive in a meaningful sense.  (And he also makes gratuitiously regressive proposals as well.  Several years ago, he proposed -- not just agreed to under duress, but proposed -- the elimination of low-income heating assistance, to show that he is willing to make "tough choices.")  This year, his overall proposal amounts to an austerity budget.  It is better than they are doing in the U.K. and most of Europe, but that is hardly a defense.

But, one may argue, what choice does Obama have?  His economists have been telling him that there is no alternative to austerity.  Obama could not have known that the Reinhart-Rogoff paper, for example, was flawed (although, as I pointed out last week, it was obvious long before the coding errors were discovered in that paper that its methodology was deeply problematic).  He might not be proposing the budget that LBJ -- or even Richard Nixon -- would have proposed, but times have changed, and economists really do not support a progressive economic policy.

Support for that argument was apparent in a column in yesterday's New York Times, in which economic columnist Eduardo Porter reported on a recent conference of big-name economists, who all seemed to be saying that the profession has no clue what to do now.  And he certainly has some quotes to that effect from highly respected economists.  As the column proceeded, however, it became almost poignant to notice how hard Porter and his interviewees were trying to avoid mentioning the elephant in the room -- simple, short-term Keynesian economics.  It was as if everyone was saying, "We don't have any policies to propose.  Well, except for the policies that everyone knows about, but we have all decided not to talk about them.  Because, you know, we have all decided not to talk about them."

Why would everyone agree not to talk about a policy agenda that they all know is out there, and that has been overwhelmingly validated by events of the past few years?  Because they know that politicians do not want to hear about that.  As much as we think that politicians listen to economists, the fact is that economists trim their sails and change their emphases in anticipation of the perceived desires of their political patrons.

I recall having a conversation in 1993 with a prominent economist whose closest colleagues regularly passed through the revolving door to Democratic policy circles in D.C.  At the time, the big stupid policy obsession was a proposed balanced budget amendment.  (Nothing ever changes.)  I said to this economist, "That is a terrible idea, and everyone knows it.  Why don't your colleagues say so?"  His reply: "Well, Democrats need a response to the Ross Perot phenomenon.  Left-leaning economists don't want to say things that make life politically difficult for Democrats."  (Note for younger readers: Perot's 1992 independent presidential candidacy was a proto-Tea Party uprising that scared the political establishment to its core.)

I guarantee you that, if President Obama wanted to take a different tack on economic policy -- an actually progressive tack -- he would have prominent economists lined up behind him.  I am not just talking about the few true lefties who have not been driven out of economics departments.  The same economists who are now hedging and saying that Obama is wise to be cautious could -- and would -- easily adjust their message, not just lauding him for being willing to propose a real alternative to austerity, but pointing out that the extant economic research overwhelmingly supports that alternative.

Therefore, even though Obama's defenders would have us believe that the problem is that economists are not willing to back expansionary policies, the problem is really that everyone knows that Obama does not want to hear any of that.  He signaled his true intentions from the word go in 2008, when he went with the Clinton-era Rubin-Summers economics team that gave us Tim Geithner as Treasury Secretary.  Obama occasionally talks about economics in ways that sound progressive, but the reality is that he is willingly moving the country in the wrong direction.  I give him credit for doing so more slowly than Republicans would have preferred, but that is faint praise indeed.

Wednesday, April 24, 2013

Foreigners Suing Foreigners for Foreign Conduct: Remaining Loopholes

By Mike Dorf

My latest Verdict column discusses last week's SCOTUS ruling in Kiobel v. Royal Dutch Petroleum.  I argue in the column that notwithstanding the Court's seemingly sweeping rejection of extraterritorial application of the Alien Tort Statute (ATS), in light of Justice Kennedy's concurrence, the actual holding may  not be that far from the test proposed by Justice Breyer for the more liberal wing of the Court: namely, that foreigners may sue based on conduct occurring in the territory of another sovereign where the case sufficiently touches on U.S. interests.

Other commentators have noted further wrinkles.  For example Tom Lee suggests that even after Kiobel, treaties that are not self-executing may nonetheless be deemed to provide the basis for causes of action under the ATS.  And, as I note in the column, commentators (including Tom) also suggests that failed states (like Somalia) could be treated as lacking a sovereign, and thus more akin to the high seas than to the territory of a foreign sovereign. If so, allowing ATS claims could be analogized to allowing ATS claims against pirates.  (This point was also made to me in private by my colleague Jens Ohlin, before Tom's post appeared, so I didn't bother to credit either of them in the column.  I'm crediting them both here.)  Indeed, the analogy is arguably more than an analogy--as actual pirates sometimes operate out of failed states (such as Somalia).

Thus, the thrust of my column and some other commentary I've seen (also including this SCOTUSblog piece by attorney Anton Metlitsky) tend in the direction of saying that despite first impressions, Kiobel may not prove so ruinous for human rights litigation in the U.S. courts.  There's yet another way in which that appears to be true: No Justice raised the Article III objection in any of the Kiobel opinions.

What Article III issue?  As I noted in my preview post on the case, the first oral argument in Kiobel indicated that at least some Justices might use it as an opportunity to cut back on the power of U.S. courts to recognize international law as federal common law.  That would present an Article III issue because, in order for a foreigner-versus-foreigner case to be in federal court, it must arise under federal law for purposes of Article III.  The diversity of citizenship portion of Article III allows party-based cases between U.S. citizens and foreigners but not between two foreigners.  Jurisdiction in such cases must be based on a federal question.  But if customary international law (CIL) isn't federal common law (or incorporated by a treaty or a federal statute), then it isn't federal law at all, and thus there would be an Article III problem.

And as I noted in my preview post, there is a body of revisionist scholarship arguing that customary international law is not federal law.  In a nutshell, the revisionists argue that in the 19th century, CIL was thought to be "general common law" not attributable to any sovereign; thus, when the Supreme Court in the Erie case did away with general common law, CIL was demoted to state law (at least in those states that incorporate CIL as part of their common law).

The idea that CIL could be state law but not federal law is deeply counter-intuitive, given federal supremacy on matters of foreign relations.  And thus not surprisingly, there's a substantial body of scholarship contesting the revisionist view and contending that, notwithstanding Erie, CIL is indeed federal law (at least absent a contrary statute or treaty).  The SCOTUS has not definitively weighed in on this controversy but in the academy, views on the subject tend to track ideological divisions and one would expect the same in the SCOTUS: Liberals take the traditional view that CIL is federal law; conservatives take the revisionist view that CIL can be state law but no more.  This issue--like so many others--could well come down to Justice Kennedy, who would be likely pulled in competing directions.  On the one hand, his internationalist bent would drive him towards the traditionalist view; on the other hand, his federalist bent would drive him towards the revisionist view.

There is a potential irony here.  As Roger Alford notes in a recent blog post, following Kiobel, claims that once might have been brought under the ATS for violations of human rights will (or at least should) now be brought as ordinary tort cases in state courts.  For such cases to succeed, it won't be necessary for plaintiffs to show that the particular state tort law incorporates CIL; it will only be necessary to show that under the applicable choice-of-law rules, the defendant committed a tort.  And even that won't be hard because nearly all countries have something like a tort system that provides for civil liability in cases involving serious harm.

What about forum non conveniens--the discretionary doctrine that permits courts to dismiss cases based on lack of connections to the case?  Alford says that "forum non conveniens does not have the same force or favor in state courts as in federal courts," but that may be an overstatement.  Consider Kiobel, which was brought in the federal district court for the Southern District of NY.  Suppose it had been brought instead as a state tort suit in the state court across the street.  Then NY's forum non conveniens statute would apply, and it's not so forgiving.  In the leading case, the NY Court of Appeals affirmed a FNC dismissal as within the discretion of the trial judge, even though there was no alternative forum.  So it's possible that going to state court won't be a good option, at least for some states.  But Alford is broadly right about FNC nonetheless, because even though particular states (like NY) may enforce FNC as strictly as the federal courts, other states will not, and so the good plaintiff's lawyer will simply shop for the right forum.

In the end, the biggest obstacle to tort suits may be personal jurisdiction.  Individual human rights abusers will avoid the relevant fora.  Corporate presence might be enough to get around that problem--and in state tort litigation, unlike ATS litigation, it's clear that there can be corporate liability.  But proving sufficient corporate presence to establish personal jurisdiction may be difficult because the Supreme Court may be about to close that door.  On Monday the Court granted cert in a case presenting the question of when a foreign company's subsidiary's contacts with a state may be the basis for the assertion of general (personal) jurisdiction over the parent company for alleged human rights abuses by another sub outside of the country.  The fact that Judge Reinhardt (aka Chief Justice of the Warren Court in Exile) wrote the opinion finding personal jurisdiction is a pretty good predictor that the Supreme Court plans to reverse.

Tuesday, April 23, 2013

Another Way to Read the FBI Memo Re Public Safety

By Mike Dorf

In my first post yesterday I said that the 2010 FBI memo argued that in terrorism cases the "public safety" exception to Miranda may be broader than in regular criminal cases.  I then went on to note how some of the factors at play in the regular public safety case suggest a narrower, not broader, public safety exception.  In response to my post, I received a couple of suggestions from readers that I was misreading the FBI memo  in its initial step and, upon reflection, I think these readers are probably right.  That reassessment does not relate to most of what I wrote yesterday but in the interest of completeness, I thought it worth elaborating the point here.

Recall that the "money quote" I included in my blog post went like this:
There may be exceptional cases in which, although all relevant public safety questions have been asked, agents nonetheless conclude that continued unwarned interrogation is necessary to collect valuable and timely intelligence not related to any immediate threat, and that the government's interest in obtaining this intelligence outweighs the disadvantages of proceeding with unwarned interrogation.
Here's the alternative reading: The FBI was advising its agents that in exceptional cases they should continue to interrogate suspects without Mirandizing them, even though any statements thereby obtained would be outside of the public safety exception and therefore inadmissible in any eventual criminal trial of the suspect.  Non-specialists might think that such further questioning would be unconstitutional under Miranda but that's  not true.  A footnote in the relevant paragraph of the FBI memo cites a line of Supreme Court cases that says that failure to Mirandize does not result in a Fifth Amendment violation unless and until the government introduces the resulting statements at trial.  Accordingly, it appears that the FBI memo was saying that in exceptional cases, the government should bear the cost of "proceeding with unwarned interrogation" in the sense that it should forgo the possibility of using any statements produced as evidence at trial--instead using those statements to foil other plots or apprehend other suspects.

Of course, there are limits beyond which the FBI cannot go, nothwithstanding the foregoing analysis.  Coercive interrogation that "shocks the conscience" would be a substantive due process violation at the moment it occurs, regardless of whether or not the government later attempts to use any resulting evidence at trial.  I certainly don't read the FBI memo as advocating anything of that nature, however.

Monday, April 22, 2013

Tsarnaev, the AUMF, Hamdi, Haupt, Padilla, and the Confederate Soldiers: Drawing the Boundary Between Criminal and Military Cases

By Mike Dorf

The White House just charged Dzhokhar Tsarnaev in a civilian criminal court.  Provided the government wants to execute or otherwise punish Tsarnaev, that was always the only real option.  After all, in the Hamdan case, the Supreme Court held that military commissions could not be used to try detainess without congressional authorization.  Congress provided such authorization in the Military Commission Acts of 2006 and 2009, but only for aliens, not citizens.

So what were Senator Lindsey Graham and others going off about over the weekend in suggesting that  Tsarnaev be sent off to Gitmo as an enemy combatant to whom the constitutional rules of criminal procedure do not apply?  One possibility is that they hoped to strip Tsarnaev of his citizenship first, then ship him to Gitmo.  This may actually be realistic because Tsarnaev is a relatively recently naturalized citizen, but I think it may first require a treason conviction in a civilian court--and so would defeat the purpose of shipping Tsarnaev to Gitmo.  (I could be wrong about that.  I'm not an immigration law expert.  Corrections in comments on this and other points of course welcome.)

Perhaps what Graham was suggesting that Tsarnaev should be held and interrogated as an unlawful enemy combatant for some extended period--substantially longer than the FBI thinks it can interrogate a terrorism suspect even under its expansive view of the public safety exception to Miranda (as discussed in my post earlier today).  That too now appears to be off the table--but with Sen. Graham having raised an interesting set of constitutional questions, I'll address them here.  Unfortunately, they may arise again in another case.

1) Citizenship.  Graham and others were correct that Tsarnaev's U.S. citizenship does not necessarily pose a constitutional obstacle to subjecting him to military jurisdiction.  The 2004 Hamdi case affirmed that principle, even as it rejected the Bush Administration's claims that U.S. citizens (and, a fortiori, foreigners) lack judicially enforceable due process rights.  A majority of the Court rejected the position espoused by two Justices--the odd couple of Stevens and Scalia--under which a U.S. citizen charged with fighting for the enemy is entitled to be tried for treason in a civilian court.

2) The AUMF.   Hamdi suggests another potential obstacle to military detention, however.  In dissent on this point, Justice Souter, joined by Justice Ginsburg, contended that Hamdi could not be held in military custody because Congress had not authorized such custody, and accordingly the Non-Detention Act barred it.  The plurality opinion of Justice O'Connor rejected that argument because the plurality thought that the Authorization for Use of Military Force (AUMF) counted as authorization of detention of enemy combatants, even though it didn't expressly mention enemy combatants.  But the AUMF only applies to "those nations, organizations, or persons [that the President] determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons."  Is Tsarnaev part of an organization that was involved in 9/11?  Maybe by virtue of working with his brother, who may have received training from al Q'aeda affiliates, he is.  But that looks like a factual question, at least as a threshold matter.  If I had to predict, I'd say that five Justices of the SCOTUS would not now find an obstacle in the Non-Detention Act + AUMF, regardless of what the facts show.  But that's the legal realist in me, not the legal scholar.  (One further possibility is that the Court might say that the Non-Detention Act has nothing to do with military custody.  This argument was advanced by the government in Hamdi but the plurality didn't reach it because they found statutory authorization in the AUMF.)

3) Quirin and Haupt.  One might think that Hamdi is inapplicable to Tsarnaev's case because Hamdi was apprehended in a foreign theater of war, whereas Tsarnaev was apprehended here at home.  But the Hamdi plurality relied in substantial part for its conclusion that U.S. citizens may be subject to military jurisdiction on Ex Parte Quirin, the Nazi Saboteur Case, which arose on U.S. soil.  One of the German soldiers who was there subject to military jurisdiction was a man named Haupt, who, the Court assumed arguendo, was a U.S. citizen.  That made no difference.  The Court stated: "Citizenship in the United States of an enemy belligerent does not relieve him from the consequences of a belligerency which is unlawful because in violation of the law of war."  So Haupt's case looks like a crucial precedent for the argument for military custody for someone like Tsarnaev.

4) Padilla.  However, Haupt, even while acting in violation of the law of war, was clearly engaged in warfare, as his actions were taken in pursuit of the aims of an enemy in a recognizable war, and presumably on orders from enemy superiors.  That's not quite true of Hamdi but, assuming the facts as alleged by the government as of 2004, it was still clear enough that Hamdi was affiliated with an enemy force, albeit an irregular one.  What's most troubling about subjecting someone like Tsarnaev to military jurisdiction--and what wasn't true of either Haupt or Hamdi--is that Dzhokhar Tsarnaev and his brother Tamerlan Tsarnaev may well have been acting on their own, in ways that make them largely indistinguishable from domestic lone-wolf criminals.  To be sure, we don't know that yet.  Perhaps further details will emerge indicating that Tamerlan was on a mission at least loosely directed by the Taliban, al Q'aeda or some other affiliated force as to which it could be said that a state of war exists with the United States.  But even with some such evidence, the best analogy is probably to the case of Jose Padilla--another U.S. citizen who received some foreign training and whom the U.S. at least initially sought to subject to military custody and adjudication.  The SCOTUS never passed on the lawfulness of so treating Padilla but a fair number of scholars thought that the most sensible set of results in the Hamdi and Padilla cases would have been to allow military adjudication for Hamdi but not for Padilla, based on the location of the acts with which they were charged.

5) The Confederate Soldiers.  What about the fact that we have a gigantic precedent for the proposition that military custody and adjudication are constitutionally permissible for U.S. citizens committing hostile acts on U.S. soil--namely, the treatment of Confederate captives during the Civil War?  These many cases seem to me much more like Haupt's case than like that of Padilla or Tsarnaev: There is an organized enemy force.  Thus, Confederates who violate the law of war (by, e.g., slipping behind enemy lines out of uniform to sabotage railways) are still clearly enemy combatants when doing so.  There is no difficulty in saying the war paradigm applies to them.  That could turn out to be true of a Padilla or Tsarnaev, but it seems to me that at least there needs to be some substantial threshold adjudication of affiliation with some sort of enemy force before people like them are taken outside of the civilian criminal justice system.

6) The Two Basic Questions.  The real constitutional questions, then, are both substantive and procedural.  As a substantive matter: What must the government show when it wishes to submit a U.S. citizen to military custody and adjudication for acts perpetrated on U.S. soil?  To prevent military justice from swallowing civilian criminal justice, I would want a showing of some substantial affiliation with an enemy force.  Now it's true that demanding such a showing means that a truly decentralized organization will avoid having its "soldiers" subject to military jurisdiction.  But I'm not sure that's a problem because such people--the sort of person who simply goes to a jihadi or other radical website and is inspired to commit an act of terrorism without ever receiving any training or orders--really isn't a "soldier," and the rules of war were not designed with such a person in mind.

As for the procedural issues, I would want at least access to a civilian court to determine whether the relevant substantive showing has been made.  Habeas would be available for this purpose after the fact, but ideally such access should be made available in advance.  Putting in place such a system no doubt requires some new legislation.  The problem, of course, is that there aren't many political rewards for Congress in further restricting the limits on military custody and adjudication.  Indeed, we will probably see bills introduced going in the other direction--allowing for the possibility of military trials for U.S. citizens in circumstances like Tsarnaev's.  I don't think such legislation is likely to be enacted, but I think it's even less likely that we'll see the sort of legislation I favor being enacted.

Finally, I want to be clear that what I've said in this post goes to the constitutional permissibility, under existing precedents, of subjecting someone like Tsarnaev to military custody and adjudication.  If I were writing on a clean slate, I would almost certainly require civilian courts more frequently than the SCOTUS has.  And even given existing precedent, I have been discussing the question of what can be done, not what ought to be done.  Even if the Administration could, consistent with the Constitution and existing statutes, subject Tsarnaev to military custody and adjudication, there are good policy reasons why it shouldn't.  In charging Tsarnaev criminally, the Justice Dep't got this one right.

The Scope of Miranda's Public Safety Exception

By Mike Dorf

By now it has been widely reported that federal investigators and prosecutors plan to interrogate Dzhokhar Tsarnaev without first reading him his Miranda warnings, pursuant to the "public safety" exception to Miranda v. Arizona.  That exception allows the government to interrogate a suspect without first issuing the Miranda warnings, and then introduce any evidence obtained as a result, when the initial interrogation is undertaken for the purpose of protecting the public from an immediate threat.  A leaked 2010 internal FBI memo contends that in certain terrorism cases, the exception can be broader.  [NB: I've since rethought that reading of the memo, as described in a short follow-up post.]  Here is the money quote:
There may be exceptional cases in which, although all relevant public safety questions have been asked, agents nonetheless conclude that continued unwarned interrogation is necessary to collect valuable and timely intelligence not related to any immediate threat, and that the government's interest in obtaining this intelligence outweighs the disadvantages of proceeding with unwarned interrogation.
Whether the courts find this more expansive view persuasive remains to be seen, but here I want to suggest that it's not even 100% clear that the regular public safety exception applies in a case like Tsarnaev's, much less an expanded exception.

To be sure, the exception only comes into play if the government attempts to introduce a statement obtained from Tsarnaev at his trial.  As Orin Kerr explains on the Volokh Conspiracy, there is no freestanding right of arrestees (or anyone else) to be read warnings.  The warnings only become relevant when the government offers a statement obtained as a result of custodial interrogation.  So, let's assume that happens.  That is, let's suppose that: Tsarnaev recovers; the FBI interrogates him without first giving Miranda warnings, asking him questions designed primarily to detect information about an immediate threat; Tsarnaev makes a statement in response; in addition to using the statement for any information it contains about ongoing threats, the government attempts to introduce it as evidence of Tsarnaev's guilt at his criminal trial.  Is it admissible under the public safety exception?

The public safety exception was first announced in New York v. Quarles and the Court rested it on a number of considerations.  In some respects, interrogation of a terrorism suspect makes out a stronger case for the application of the public safety exception than an ordinary criminal case like Quarles, but in other respects it's a weaker case.  Let's look at the relevant considerations in Quarles and compare them with the Tsarnaev case.

The Quarles opinion is short and I encourage readers interested in this subject to read it.  The main points are these:

1) The Miranda rule balances the needs of law enforcement for convictions of guilty persons against the protection of suspects from the risks to their Fifth Amendment right against compelled self-incrimination--risks that inherently arise from custodial interrogation.  But, as the Court said in Quarles, "the need for answers to questions in a situation posing a threat to the public safety outweighs the need for the prophylactic rule protecting the Fifth Amendment's privilege against self-incrimination."

There are in that statement two points, and they face in opposite directions.  In Quarles, the threat to public safety was a gun that Quarles had discarded.  In the Tsarnaev case, the potential threat to public safety is much greater.  Tsarnaev or his brother or as-yet-unknown co-conspirators may have planted or plotted additional mayhem.  Thus, the "public safety" consideration in the public safety exception is heightened here.

2) However, note that the language I have just quoted from the late CJ Rehnquist's opinion tacitly makes another point, by referring to Miranda as a "prophylactic rule."  He was pointing to the fact that the Court in Miranda did not say that the Fifth Amendment requires the Miranda warnings.  That's the point Kerr makes.  But there's something else too.  CJ Rehnquist was also saying that the Constitution does not even require that Miranda warnings be given if the government later attempts to introduce the suspect's statement as evidence.  All that Miranda does is to say that the pressure inherent in custodial interrogation requires some safeguards to mitigate that pressure, and that the warnings are one such effective set of safeguards.  But, the Court implies in Quarles, because the Miranda rule is judge-made--i.e., "prophylactic"--the Court may choose not to apply it where its costs outweigh its benefits.

That looks pretty good for the government in the Tsarnaev case but for one major problem.  In 2000, in Dickerson v. United States, the Court, in another Rehnquist opinion, rejected the idea that Miranda is a mere prophylactic rule in favor of the view that it was a "constitutional decision."  In dissent, Justice Scalia argued that, in light of Quarles and other cases seemingly holding that Miranda was prophylactic, the Dickerson majority made little sense.   In an article in the Supreme Court Review shortly after the case came down, Barry Friedman and I agreed that the majority opinion did seem somewhat inconsistent with the language of various prior Miranda cases, but that this did not mean those earlier cases had been overruled.  What it did mean was that the rationales of those prior cases needed to be reconceptualized.  Quarles, in particular, could no longer be based on an ad hoc weighing of costs and benefits, but must be reconceptualized in some way.

3) If we look to the other factors at play in Quarles, they appear inapplicable to a case like Tsarnaev.  One point the opinion emphasizes is that time is of the essence: If the gun is not found, perhaps the suspect himself or a hidden co-felon will use it, or a child will discharge it accidentally.  The Court is envisioning a very immediate emergency, referring to the decisions police must make "in a matter of seconds."  That sort of exception would certainly allow the FBI, upon arresting Tsarnaev, or upon his awakening and gaining the power of speech, to ask him a few urgent questions.  But Quarles itself does not envision an extended interrogation.

4) The Quarles Court also thought it noteworthy that Quarles was asked one question--"where's the gun?"--upon his arrest, rather than in the inherently coercive environment of the station house for which the Miranda warnings were originally designed.  It's possible that Tsarnaev will be questioned at his hospital bedside.  That seems somewhat less coercive than the station house, but depending on the length of the questioning, would seem more like it than different.

How does all of the foregoing cash out?  I think it's a fairly close case, although I strongly suspect that, if it came to it, most judges would find the sort of interrogation I'm envisioning falling within the public safety exception.  My point here is simply that it's not an obvious slam dunk.  The seriousness of the threat is doing a lot of the work.

In any event, I also would note a certain unreality to the whole discussion.  The Quarles opinion cites as one important factor the risk that the giving of Miranda warnings will lead suspects not to talk.  But the fact is that Miranda has only a marginal impact on a suspect's willingness to talk.  Occasionally a warned suspect will clam up and/or lawyer up because of the warnings.  But usually they make no difference.  Even innocent people confess after receiving the warnings.

Friday, April 19, 2013

FDR, MLK, and Absolutism on the Right

-- Posted by Neil H. Buchanan

A few weeks ago, there was a big public relations push for former Reagan budget director David Stockman's new book.  The blitz, complete with an appearance on "The Daily Show with Jon Stewart" and an op-ed in The New York Times, revealed Stockman as a man who has completely lost it -- a Reagan conservative who has migrated to the rightward edge of the political spectrum (and in some ways beyond), complete with claims that we should return to the gold standard, and other fringe views.  On Dorf on Law, Professor Robert Hockett aptly described Stockman as the equivalent of an alien abductee.  That is, Hockett colorfully argued, Stockman has become one of those people who might initially seem sane and even reasonable, but after a few moments of conversation, one realizes that he is someone with whom one should not even make eye contact.

A few days after Professor Hockett's post, I added a few comments on the Stockman screed, in the course of a post that was mostly dedicated to discussing how economists make embarrassing errors when discussing political issues.  Because Stockman is not an economist, his lunacy was illuminating simply because it shows that non-economists can make even bigger fools of themselves, when discussing economic policy.

Lately, however, I have been thinking a bit more about the phenomenon that Stockman now so spectacularly represents: the once-fringe right-wing contingent that wants to eliminate all human control over monetary policy.  This group of extreme movement conservatives, as Professor Hockett described, seems committed to the idea -- in most every policy debate, not just in debates about monetary policy -- that human judgment is to be banished from all public governance.  It is no longer a matter of arguing for conservative policy outcomes, but of structuring our governing institutions so that fallible humans never have the opportunity even to exercise a policy judgment (which will surely be exercised foolishly, according to this crowd).

Although Professor Hockett is right that this anti-judgment bias applies more broadly than merely to monetary policy disagreements, the hyper-right views expressed by Stockman continue to be fascinating even in their original context.  About a year ago, Bruce Bartlett wrote an excellent column on the Times's Economix Blog discussing last year's neo-gold-bug hero, the now-former Congressman Ron Paul.  As Bartlett pointed out, there has long been a genuine split in the conservative movement regarding this most basic question of monetary policy: Should there be no policy discretion at all (the gold bug view), or should the Fed continue to have policy discretion, but either with their mandate limited to a narrower set of goals, or with the Fed being populated with people who will faithfully pursue appropriate conservative goals (the monetarist view)?

Bartlett's post suggested that the Paul camp was once safely marginalized among conservatives, but that it had (at least by May 2012, when Bartlett was writing) emerged as the new orthodoxy among movement conservatives.  With an iconic monetarist like Anna Schwartz calling in 2009 for monetary stimulus (rather than fiscal stimulus, through government spending and tax cuts), growing numbers of conservatives decided that they did not like stimulus at all -- and thus that they no longer liked monetarism.  Stockman's emergence this year suggests that growing numbers of former non-believers are coming on board to the gold bug view.

Therefore, growing numbers of conservatives seem increasingly determined to eliminate the Federal Reserve entirely, or at least to make it little more than something like a "support desk," to make sure that the software is running correctly and that the maintenance personnel show up to work.  When it comes to monetary policy, this now-dominant view among conservatives is that human judgment would only make matters worse.  Even in the midst of a genuine, widespread human catastrophe, the Right's view is once again that nothing should be done to make things better.

This, it seems to me, is yet further proof that the conservative movement has become dominated by people who really, really do not think strategically -- who are so convinced that there is only one right end result that any middle ground is completely unacceptable.  It thus strikes me as another example of the failure of conservatives to understand just how much they should appreciate reformers who make the capitalist system less likely to collapse under the weight of its own excesses.

Scholars have long argued persuasively that capitalists should have LOVED President Franklin Delano Roosevelt.  Faced with the very real possibility that the American people would respond to economic disaster by rejecting modern capitalism outright, FDR made it possible to smooth out capitalism's worst excesses and thus to stabilize the political and economic environment sufficiently to remove the threat of revolutionary change.  Similar arguments have been made, with equal force, about the Rev. Dr. Martin Luther King, who is even easier to see in this light, because of the clear contrast of his nonviolent message with the militant message associated with Malcolm X.  (I have often argued that Bill Clinton and Barack Obama are also examples of this type of political figure: men reviled by the Right, even as they give the Right what it needs most to survive and thrive.)

What makes the anti-Federal Reserve absolutism even more difficult to fathom, however, is that monetary policy is a tool for stabilizing the economy that does not commit the federal government to doing anything to help the "undeserving" moochers so reviled by the far Right.  That is, when the Fed engages in expansionary monetary policy, the effects are felt through indirect financial mechanisms that have nothing to do with providing nutritious lunches to schoolchildren, or job training to unemployed people, or retirement security to people who never earned enough money to build up a sufficient nest egg, or health care for anyone.

By ruling out human-directed monetary policy, the new normal among movement conservatives makes it more likely that the political system will ultimately be forced to adopt aggressive fiscal stimulus to fight a recession/depression.  Prior to 2008, even staunch liberal macroeconomists like Paul Krugman agreed that fiscal stimulus should not be used to stimulate the economy, because monetary policy works more reliably (and with fewer side effects).  Those macroeconomists continue to believe in that basic view, with the key difference being that monetary policy is not currently effective, making fiscal policy our reluctant (and temporary) tool of choice.

Without monetary policy as an available tool in the future, however, the inevitable public clamor for a response to high unemployment in a future crisis would leave policymakers with only one choice: increasing government spending.  Because we would want such spending to be effective and spent wisely, we would generally try to use it to build fiscal institutions that would be addressed to helping all of those moochers.

The realistic alternative to FDR was not pure capitalism.  The realistic alternative to MLK was not rejection of all civil rights laws.  The realistic alternative to Clinton/Obama was not Paul Ryan or Ron Paul.  And the realistic alternative to the Fed is not a world in which the government refuses to respond to people's desires.  By ruling out human-directed monetary policy, the Right increases the likelihood of human-directed fiscal policy, the content of which is infinitely more offensive to their preferences.

Of course, by ruling out monetary policy as an available tool, the Paul-led camp also makes it much more likely that the interim damage will be greater, which means that the ultimate fiscal policy response will be much larger, because the public's appetite for more radical change will be inflamed by much more severe suffering.  Therefore, even though the end result -- the self-marginalization of the conservative movement -- might be an appealing prospect for people like me, the collateral damage is awful to contemplate.

Thursday, April 18, 2013

When Economists Say What Politicians Want to Hear

-- Posted by Neil H. Buchanan

Anyone who has been paying attention to the debates in the U.S. and Europe about austerity and debt has heard (at least indirectly) about a 2010 paper by two Harvard economists, Carmen Reinhart and Kenneth Rogoff, that purports to show that countries with government debt levels exceeding 90% of national income experience severe economic damage, in the form of much slower growth (and sometimes shrinkage).  The paper drew a great deal of attention, mostly because it confirmed what the political class had already decided was the correct path: inflicting pain on citizens during the deepest economic downturn since the Great Depression -- actually, in some European countries that have taken the austerity medicine (including the U.K.), the current situation is even worse than the Great Depression -- in the name of growing more quickly in the future.

I had been aware of the R-R paper ever since it made news, but I do not recall writing about it, because it struck me as an extraordinarily weak paper (for reasons that I will explain in a moment).  There has been a bit of news this week, however, that has thrown a harsh new light on the paper.  Three economists at UMass-Amherst (Thomas Herndon, Michael Ash, and Robert Pollin) have written a paper that claims that Reinhart and Rogoff's statistical analysis was flawed, with the results biased by the exclusion of certain data points and/or coding errors in the computational algorithm.  Correcting those errors, Herndon et al. say, severely undercuts the Reinhart-Rogoff result.

So, it turns out that the go-to academic article that every deficit scold considers the end of the argument on fiscal policy is potentially invalid even on its own terms.  What is more important, however, is the paper's problems that were obvious all along.  Several of my recent posts have discussed the problem of economists "committing politics" (e.g., here and here).  My argument has been that economists are not trained to understand politics, and their professional socialization makes it an actual point of pride not to know anything about politics, which results in their making either avoidably silly statements or thinking that they can get away with the most crude political misanalysis, because "politics is easy."

There is a bit of that going on in the Reinhart-Rogoff affair.  Yesterday's New York Times ran a news article that summarized the debate at this stage, which included the following gem from reliably Republican economist Douglas Holtz-Eakin: "There’s nothing about this that will change my view of the universe.  The sun still rises in the east. It sets in the west. And a lot of debt is still bad."  In other words, he's a hack.  But Reinhart and Rogoff are not hacks, or they have not obviously been so up to this point.

Even so, this is another good example of how shoddy economics can be, when it is performed in the service of a right-wing political agenda (especially a right-wing political agenda that a Democratic president and much of his party endorses).  Following are two of the most important things that we knew were wrong with the R-R analysis all along (that is, even before the current discussion of potential data manipulation):

-- The paper (which was not peer-reviewed) claims that something important happens when the debt-to-GDP ratio hits 90%.  The action in the plus-90% range, however, is largely driven by two countries, Italy and Japan, which currently have debt levels of 126% and 219%, respectively.  And, as some economists have noted (especially Paul Krugman, who has been on top of this since the R-R paper originally made news), those two countries perfectly illustrate why the paper's conclusion is so weak.  R-R claim that debt causes slow growth, whereas both Italy and Japan are clear examples of slow growth causing debt to increase.  This is a classic correlation-is-not-causation problem, in other words.  Reinhart was recently quoted acknowledging the direction of causation problem, but defending her conclusion by challenging anyone to find a high growth country that has high debt.  This, of course, is not the point the she and Rogoff were making at all.

-- Another example of the odd analytical strategy in the R-R paper is that they include the U.S. in the post-WWII period as a "high debt causes low growth" case.  Everyone knows that the debt in the U.S. was very high coming out of the war, and that the economy experienced a brief recession after the wartime spending ended (and as the returning veterans were slowly reintegrated into the new economy).  Saying that the debt had anything to do with the recession is not reverse causation, it is spurious correlation.

You get the idea.  Apparently, R & R have issued a preliminary defense against the Herndon et al. paper, claiming that even their critics find that growth slows at higher debt levels.  If that is the best they can do, however, this is pretty weak tea.  Their paper's fame was based on that 90% breaking point -- a number conveniently set at about the level that the U.S. debt would have reached, if we had followed Keynesian policies to fight the Great Recession.  If, instead, there is simply a slow tailing off of growth as debt rises, then that is a very different story -- and involves very different policy considerations -- than the one that they have been telling.  And again, even that continues to confuse cause with effect.

A couple of years ago, the big pro-austerity argument was based on a paper co-authored by another Harvard economist, Alberto Alesina (which I discussed at various points, e.g. here), that purported to show that countries that engage in fiscal austerity are rewarded with higher rates of growth.  That argument, too, ended up being based on extremely shoddy statistical analysis.  What Alesina and R & R had going for them is that they gave intellectual backing to what the political classes in both the U.S. and Europe wanted to hear.  I find it impossible to imagine that the authors of those papers were not aware of the weakness of their arguments.  Even if they were acting in good faith, however, these episodes show that economists are sorta-kinda right: Politics is easy, if you tell powerful people what they already believe (especially if you dress it up with a bit of math).