Showing posts from September, 2008

Bleeding Out the Excess Humors: Government Spending and the Financial Crisis

In the first presidential debate last Friday, the moderator's first question was addressed to John McCain: "[A]re there fundamental differences between your approach and Senator Obama's approach to what you would do as president to lead this country out of the financial crisis?" McCain's reply began as follows: "Well, the first thing we have to do is get spending under control in Washington. It's completely out of control." He soon added: "I'm going to veto every single spending bill that comes across my desk." Different viewers surely had different moments during the debate when their jaws dropped. Sen. McCain's assertion that Pakistan was "a failed state" caused at least one knowledgeable commentator to drop a stitch . (Sorry for the mixed metaphor.) For me, though, it was that first answer about cutting government spending that left me staring in wonder. McCain's comments indicated a complete disconnect from


I'm still not an economist , yet I continue to be amazed by what must be either the economic illiteracy or deliberate obfuscation of the McCain/Palin campaign. The all-purpose answer to the question of how we got into, and how we should get out of, the current crisis, is government spending: The government spent too much in the past and should spend less in the future. Sen. McCain has said something like this over and over again, including in Friday's debate, and Gov. Palin , to the extent that she said anything that could be said to have propositional content, seemed to reaffirm the point in her Katie Couric interview . Let's begin with the low-hanging fruit. If someone were committed to the proposition that government spending is bad for the economy, wouldn't he or she be strenuously opposed to the bailout? Indeed, wouldn't he or she be opposed to all of the proposed alternatives to the bailout that involve large expenditures of government funds? I suppose on

McCain's Blizzard of Words on Pakistan

Like a number of others , I did a series of double takes upon hearing some of John McCain's comments on Pakistan during this exchange in last night's presidential debate: MCCAIN: Now, on this issue of aiding Pakistan... We've got to get the support of the people of -- of Pakistan.... OBAMA: [T]he problem, John, with the strategy that's been pursued was that, for 10 years, we coddled Musharraf, we alienated the Pakistani population, because we were anti-democratic. We had a 20th-century mindset that basically said, "Well, you know, he may be a dictator, but he's our dictator." And as a consequence, we lost legitimacy in Pakistan. We spent $10 billion. And in the meantime, they weren't going after Al Qaida, and they are more powerful now than at any time since we began the war in Afghanistan. That's going to change when I'm president of the United States. MCCAIN: I -- I don't think that Senator Obama understands that there was a failed sta

I'm No Economist But I Can Do Arithmetic

During the first Presidential debate last night, Jim Lehrer challenged each candidate about what he would do to take account of the new fiscal reality likely to result from the bailout (or whatever action is taken). Sen. Obama said he would invest in vital infrastructure and look to cut unnecessary programs, singling out private insurance for Medicare; he also suggested he would delay some of his other proposals, presumably including health care; and he said he would seek an expeditious reduction in our spending on Iraq. Sen. McCain said he would consider an across-the-board spending freeze on non-military, non-veterans, non-entitlement programs. How much would such a freeze (described post-debate by a McCain campaign spinner as a "bold" answer) save? Well, according to the government figures , in 2006, total discretionary spending was $843 billion. Of that, $411 billion was spent on defense, and another $33 billion on veterans. So, the category of spending McCain single

This Post May Already Be Moot

I had planned to write today about the next steps in dealing with the financial crisis, following the agreement in Washington on the major contours of a bailout plan. Last night, however, the plan fell apart, with House Republicans walking away from the negotiations. The nature of any actions at the Federal level -- as I write at 8:30am EDT on Friday -- are thus very much in doubt. With the situation in flux, I will take the opportunity here to offer a few thoughts on the crisis and a number of ways that it might yet be handled, either picking up where we left off or starting from scratch. If the players in Washington do not abandon the general contours of the plan that the Bush Administration proposed (a revolving line of credit falsely called a "$700 billion bailout" when in fact it could be any amount, and when the numbers that are being tossed around are gross, not net, costs to the Treasury), then clearly the movement in the past week has all been in the right directi


[With the bailout now practically a done deal, here's why it's a bad idea, courtesy of my Cornell colleague, Robert Hockett ]. It is now widely heard upon Wall Street, K Street, Main Street and beyond that the U.S. financial system might be faced with a sort of “financial 9/11.” Some now accordingly urge that a manner of “financial U.S.A. Patriot Act” be passed quickly. Treasury Secretary Paulson, Fed Chairman Bernanke, and other Administration officials urge Congress to confer nearly unreviewable discretion upon Treasury, that it might employ up to $700 billion or more in federal funds for the purchase of illiquid assets now seizing up credit markets. Mr. Bush has just addressed the nation from the White House in prime time, urging support of Treasury’s proposal. He tells us ominously, employing the words “you” and “your” multiple times, that each of our incomes, our life savings, our homes and even our neighborhoods are threatened. He summons Senators McCain and Obama t

Reasons not to postpone Friday's debate

5. The debate scheduled for Friday is supposed to be on foreign policy. McCain knows that with the financial crisis upon us, holding it on Friday will mean that domestic economic issues will instead play a substantial role in the debate. McCain believes that he will do better in a foreign policy debate than in a domestic policy debate in which Obama will point out how Phil Gramm, McCain's economic savant, bears more responsibility than anyone for the current mess (although plenty of Dems, including Pres. Clinton, bear their share too). By delaying the debate until after the financial crisis has been "solved," McCain can get a debate in which he talks about how principled he was in supporting the surge. 4. Even if we assume the purest of motives on the part of the McCain campaign, the idea that there is an emergency that demands the presence of two Senators who have stated their views more publicly than nearly all of their colleagues has substantive content. It feeds t


(Updated!) My latest FindLaw column (now posted here ) explains why Sarah Palin's question -- "What is it exactly that the V.P. does every day?" -- is not quite so disqualifying for the job she now seeks as it at first appears. As far as the Constitution is concerned, the answer to Palin's question is, not very much. My column goes on to explain that modern VPs, pretty much beginning with Walter Mondale, have taken on a great deal of responsibility. On reflection, therefore, Palin's question may well be disqualifying, but in a different way, for it shows that she has not been paying anything resembling close attention to how the government actually functions. How could anyone following national events for the last 7 and 3/4 years fail to notice that Dick Cheney is one of the most powerful people in America? One need not think (as I do not think) that Cheney was the "real" President, with Bush only the front man, to recognize that Cheney was the driv

Who's Right and What's Left?

One of the most interesting developments in the current financial crisis is the coalition of the left and right against the center (or what should probably be called the center-right, but I'll just call the center for simplicity.) Some on the right oppose the $700 billion bailout because it undermines market incentives. Thus, KY Rep Sen. Jim Bunning made this pitch: "It’s financial socialism, and it’s un-American." Meanwhile, on the left, there is marked skepticism for a plan that allocates billions to investors and nothing to people who have lost their homes, even as it radically undermines the possibility of other government programs, such as health care. The media have tended to portray those who favor the bailout in its current form as a pragmatic departure for a generally conservative Bush Administration. But of course it is no such thing. Between the wars in Afghanistan and Iraq, the massive tax cuts, and the addition of the prescription drug benefit, the Bush

Student Evaluations

Yesterday's NY Times Magazine , a special issue devoted to higher education, contained a particularly interesting story of professor hired to teach a course at Wesleyan, and then let go the following year because her student evaluations weren't good enough. Part of the point of the story is that three quarters of the students actually did think the course highly effective, although reactions were polarized. More broadly, the story points out how colleges and universities have increasingly made retention decisions based on student evaluations. Here I'll make two main observations. First, as the magazine story itself notes, at research universities (the only sort of institution at which I have taught professionally), teaching still rarely plays a substantial role in retention decisions (although I have seen speculation about the teaching effectiveness of an entry-level candidate with no prior teaching experience used as a criterion in appointments decisions). Truly incom


As a lawyer and former college debater, I probably have an inflated view of the importance of the Presidential and Vice Presidential debates. Actually running the government requires a somewhat different skill set from debating well. That said, and with the first Presidential debate less than a week away, debates are useful for at least the following reasons: 1) Especially in a campaign focused on nonsense (lapel pins, lipstick, etc), debates provide an opportunity to draw out policy contrasts. (This is much more true of the general election than the primaries.) 2) Effective communication with the pubic and others is part of the job of the President, and debates will at least expose those candidates who are not minimally qualified for that task (although these candidates are nonetheless elected sometimes). 3) Debates provide an opportunity for journalists or opposing candidates to ask tough questions with follow-ups, thus pushing the candidates off of their prepared talking points.


One of the certainties of being a tax policy scholar who is not opposed to all taxes is that I am called names on a regular basis. The most common epithets are the standby favorites of the Cold War era: commie, pinko, commie-pinko, socialist, red, Marxist, Marxist/socialist . . . you get the idea. It pretty much does not matter what one says -- again, unless one says that all taxes are theft -- but the most surefire way to become subject to this kind of name-calling is to advocate any kind of income redistribution. Thus, while giving a talk last year, someone asked me if my argument might suggest that we should increase the estate tax. When I said yes, another academic (!) in the room said, "Oh, I see, so you believe in 'from those who have the ability to those who have the need,' right?" I bring this up now because of the recent increase in the frequency of the attacks on Sen. Barack Obama as a "socialist" because of his tax positions. As should be wel

Structure, Shmucture

About a year ago, Justice Scalia spoke at a symposium on "Separation of Powers as a Safeguard of Federalism" at Notre Dame Law School. A copy of the published proceedings just crossed my desk. In addition to a number of interesting scholarly articles, the issue includes a very short introduction by Justice Scalia. It includes Justice Scalia's claim---which he has made in other settings---that the structural provisions of a constitution (things like federalism and separation of powers) are more important than rights provisions. Only half-jokingly, he says that when he was a law professor, he referred to structural constitutional law as "real" constitutional law. There is a certain plausibility to this claim. For example, were it not for the structural provision of the Electoral College, Al Gore would have likely won the Presidency in 2000. I say "likely" rather than surely because the candidates would have campaigned differently if they knew that

Who Wants to be Vice President?

I am currently reading a fascinating book about the systematic ways in which human beings behave irrationally. Entitled "Sway: The Irresistible Pull of Irrational Behavior," authors Ori Brafman and Rom Brafman convey a series of anecdotes and social psychology experiments that demonstrate the biases that drive people regularly to make decisions that are comically foolish, at best, and tragically misguided, at worst. In one portion of the book, the authors discuss the game show "Who Wants To Be a Millionaire?" On the assumption that readers are familiar with this game, I will give only a brief description here: The contestant is asked a series of multiple-choice questions, and if he answers the requisite number correctly, he wins a million of whatever the local currency is (dollars, pounds, etc.). When he feels stumped, he can ask for a lifeline. A lifeline takes a number of forms (from which the contestant may choose), but the relevant option for our purposes


A new report just out on Common Cause warns that we should expect troubles in at least one of the ten (10!) swing states this go around. As Rick Hasen has long been pointing out on his Election Law Blog , the election administrator's prayer now is " Lord, let this election not be close ." For those of us who trust more in injunctions than prayers, though, we'd rather know where to report in the event. Given the strikingly small margins of victory in swing states in recent elections (less than 6,000 in NM in 2004) and the high probability that whoever wins this one will do so by a slim margin of electoral votes, my question is this: who on the Democratic side is coordinating the legal army's deployment to the front(s)? I've heard that much more of the crucial litigation is taking place beforehand this time around. But I still have this nagging suspicion that much more is yet to come. So who's got the sign-up sheet? Posted by Jamie Colburn

Suddenly, the mattress looks like a pretty good place to keep my money

Here's the recent tally: 1) When Bear Sterns is in trouble, the federal govt subsidizes its acquisition by JP Morgan Chase. 2) When Fannie Mae and Freddie Mac are in trouble, the federal govt takes them over outright. 3) When Lehman Bros. is in trouble, the executive branch of the federal govt does nothing, leaving the bankruptcy court to sort things out. 4) When Merrill Lynch is in trouble, the federal government watches closely, and then breathes a sigh of relief as Bank of America buys it. (Bank of America shareholders are likely making a different kind of sound.) 5) When AIG is in trouble, the federal government jawbones other banks to lend it some dough (after NY State permits AIG to dip into its subsidiaries' reserves). Is there a rationalizing principle for this bewildering combination of actions and inactions? Each move can be explained as individually sensible: Taking over Fannie and Freddie made sense given that they were already quasi-governmental; taking no a

Risk, Consent, Abortion, and Child Support

My latest FindLaw column elaborates on the question of whether consent to an amniocentesis -- which risks a spontaneous abortion -- is tantamount to consent to an abortion, if the pregnancy is lost. I conclude that it is not, but I raise the issue of whether the pro-life position -- that women consent to any resulting pregnancy when they have intercourse -- is perhaps inconsistent with that conclusion. In the process, I discuss a variety of examples in which we do or do not treat risk-taking as consent to foreseeable consequences, and I identify some of the factors that appear to distinguish the two sets of examples. In this post, I want to take up the distinct question of whether it is unfair to demand child-support from biological fathers who did not choose to have a child but only to have intercourse and who may, in fact, have unsuccessfully encouraged their partners to terminate their pregnancies. As I have written elsewhere , I do not think that a simple genetic connection is

Spam,Spam Spam Spam Spam Spam, Glorious Spam

Last week the Supreme Court of Virginia held that that state's anti-spam law was overbroad. The opinion contains an interesting and pretty sophisticated discussion of First Amendment overbreadth doctrine (in which I have long had an academic interest). The core substantive decision, however, rests on the conclusion that an anti-spam law that makes it a crime for any person "to falsify or forge electronic mail transmission information or other routing information in any manner in connection with the transmission of unsolicited bulk electronic mail" violates the right to anonymous speech. The U.S. Supreme Court has held that anonymous speech is protected by the First Amendment, and the Va Supreme Court worries that in applying to non-commercial as well as commercial spam, the VA statute infringes the right to speak anonymously. The VA Supreme Court writes that "were the Federalist Papers just being published today via e-mail, that transmission by Publius would viol

Eggs in the Age of Enlightenment

Imagine my surprise on Thursday evening when, at the ServiceNation forum on public service, John McCain decided to talk about Locke's political theory and its impact on American law and society. It sounded kind of elitist to me, but it would have been nice if he'd at least made some sense. Here are the two clips: 1) "I do believe we’re a unique nation, and blessed with certain in alienable rights that we want to extend to the rest of the world. But I think that we probably still have that opportunity." (I've used a transcript from CNN, which misrendered "inalienable" as "in alienable".) 2) "We’re the only nation I know in the world that really is deeply concerned about adhering to the principle that all of us are created equal and endowed by our creators with certain rights. And those we have tried to bring to the world. And we have not so much militarily, but through example, through leadership, through economic assistance." Let'

Empirical Legal Studies

In 1897, Oliver Wendell Holmes, Jr. wrote in the Harvard Law Review: "For the rational study of the law the blackletter man may be the man of the present, but the man of the future is the man of statistics and the master of economics." Well, it appears that the future is finally here. Today and tomorrow, Cornell Law School is hosting (and NYU and Texas Law School are joining Cornell in organizing) the third annual Empirical Legal Studies Conference . I'm attending and participating in the conference, even though my own work is not especially empirical (with an occasional exception ). Only a fool of a law professor would be completely uninterested in whether the world as imagined by legislators and judges corresponds with the world as it actually is. Still, I want to quibble slightly with both Holmes and the ELS Conference organizers for their tacit but unmistakable suggestion that doctrinal analysis is not itself empirical. Holmes has a better excuse. He was reacti

The "Palindox" of Sarah the Feminist

One of the very interesting dynamics that has emerged lately (and on which Ruth Marcus, among others, has written) is the topsy turvy nature of people's reactions to Sarah Palin's life choices. Democrats in general and feminists in particular have questioned the consistency of Palin's career ambition with her commitment to being a good mother. Republicans in general and opponents of feminists in particular have applauded the fact that a mother of five, including a special-needs infant, is able to ascend to the highest levels of government and power without taking time off for motherhood. My own sense is that both groups are being unfair and disingenuous but for different reasons. Feminists appear to question Palin's commitment to family because they suppose -- correctly -- that if a woman who hailed from the liberal or left wing of the political spectrum were to make the choices that Palin has made, she would be excoriated rather than celebrated. At some level, wome