Yes, Virginia, There Is Such A Thing As Constitutional Executive Orders

The Washington insider publication The Hill recently ran a breathless piece proclaiming that President Trump is “using executive orders at an unprecedented pace” and in a “whirlwind” he has unleashed “a rash of executive orders.” This focus on quantity, rather than quality, or more precisely, substantive nature, misses a key Constitutional point: There is nothing per se wrong or problematic with executive orders. It depends on who is being ordered to do what.
The president has authority to issue orders to the executive branch within the law. The key issue is whether the order directs the priorities or operations of the executive branch regarding how it enforces existing law. That is entirely proper. What is improper, indeed, unconstitutional, is if the order alters the rights or obligations of citizens in a way not provided by law, in other words, if the president effectively legislates by order.
It appears that at least one of Trump’s orders has crossed that line on an issue in which President Obama also abused his authority. Both presidents issued orders that altered the operation and effect of the Affordable Care Act in a way that conflicts with the plain language of the statute (at least that’s how Trump’s order was reported). The question isn’t whether the changes are sensible, or better than the existing statute. It is whether the order attempts to change statute. That is not a proper executive power.
Some observers note that Obama did not issue a particularly large number of orders compared to his predecessors. This again misses the point. By the content of his orders, the president often tried to alter the law of the land. A report by the Heritage Foundation cites numerous examples: As noted, he effectively amended Obamacare several times. He waived corporate reporting requirements to prevent bad economic news from coming out during the 2012 election season. He acted to unilaterally raise the minimum wage of employees of federal contractors. He upended immigration law and tried to grant legal work status to immigrants barred by law. He exempted school districts from some of the requirements of No Child Left Behind if they would adopt the administration’s preferred policies, such as Common Core.
In contrast, virtually all of Trump’s executive orders pertain to matters already within the authority of executive agencies or to reversing prior executive orders by Obama. For example, he directed the Education Department to review Obama era rules and regulations over K-12 Education. He directed the Department of Commerce to study the factors contributing to America’s trade deficit with certain nations. Trump is acting to remove barriers Obama erected to arctic drilling. He directed the Interior Department to study the Obama administrations methodology in using the Antiquities Act to seize millions of acres of undeveloped land without action by Congress.
None of those orders purport to change governing law (except in the case of removing improper “law” that Obama previously imposed). They are all proper exercises of directing the executive branch.

There’s another reason Trump might lean heavily on executive orders. Following eight years of Obama and decades of unchecked growth, overreach, and power grabs, the federal bureaucracy is a hard beast to tame. It is notoriously aggressive, unaccountable, and hostile to the intentions of Trump or any president that would attempt to rein it in. Issuing orders regarding specific reforms highlights the issues, gives purpose and presidential approval to cabinet secretaries implementing the policy, and may add to grounds to dismiss resistant bureaucrats for insubordination.

Given the stakes and the magnitude of the task, it is likely the stream of orders will continue. And if properly directed, that is a good thing. People who equate executive order with abuse of power are misunderstanding.


It Is Absurd

Just this morning this was posted by a newspaper publisher friend whom I personally like – though we may disagree on a wide range of issues:

“It is our solemn responsibility to show that government can have both a head and a heart; that it can be both progressive and solvent; and that it can serve the people without becoming their master.”

I appreciate the sentiment expressed. As much as I appreciate the sentiment and wish it was true or could be true – I do not believe it to be true and I do not believe that there are a set of circumstances under which it could become true.

The foundational cause for why this is not true and can never be true – human nature.

We have given those in government great power – and year over year for many decades the power we have given to government has grown and grown. Here is the caveat on what I am about to say: not everyone in government is a bad person or corrupt or a psychopath. However not everyone, or even most, or even more than a few need to be for the entire enterprise to go bad and here is why: it is not human nature to wake up in the morning and think, “What can I do today to make my life as difficult as possible so that the life of everyone else will become easier?”

Those with great power inevitably make decisions that will make their life and job easier. That is human nature – by and large we are not even conscious that this is what we are doing. We are egocentric beings. People who wake up in the morning and think, “What can I do today to make the life if everyone else easier and mine more difficult?” are exceedingly rare and to assume that these rare people are the same people who populate legislatures and councils and bureaucracies is incorrect.

In a free market the check and balance on this behavior is that if you make your customers life more difficult they will take their business elsewhere. Government demands a monopoly and government has no hesitation in using force if you attempt to evade this monopoly – hence you cannot ‘take your business elsewhere.’ Example A: the DMV and the consequences of driving without a drivers license or without your car being registered. No matter how difficult they may make your life and no matter how illogical or arbitrary or unyielding their decisions are – you have little choice but to comply.

This is the essence of the argument for small government and for government with the least amount of power over your life. The essence of the argument for small government is not Auschwitz but it is the DMV. The essence of the argument is tens of thousands of government entities passing millions of laws and tens of millions of regulations – of which no person can possibly keep track or keep up with. The argument for small government is a 72,000 page Federal tax code. The argument for small government is that this country has 92,000 gun laws when totaled up at all government levels.

The argument for larger government is in attempting to make the compelling case that a tax code which is 72,001 pages rather than 72,000 pages will enhance your life. The argument for larger government is in attempting to make the compelling case that you are safer with 92,001 gun laws than you were with 92,000 gun laws. Go ahead – try and make that compelling argument. I am betting that you cannot.
It is absurd. There is simply no other word which applies. It is not that people in government are all bad people or corrupt or psychopaths – though there is no shortage of that in government – but it is a matter of giving great power to people when the natural tendency of human beings is to make their own lives easier with the power they possess. The government path to making the life of those in government easier is to pass a law, create a regulation, tax, spend, borrow.
As much as we maybe sympathetic with the sentiment expressed in the newspaper publishers post – we had better start dealing with what is true and what can be true rather than the fantasies which appeal to what we wish was true but can never be.

Elizabeth Warren Blows the Whistle on Obama, Sort Of.

Heh. Faucahontas Warren has concerns about Wall Street Barack. Sen. Elizabeth Warren says she’s concerned about former president Barack Obama raking in a $400,000 fee for an upcoming speech at a Wall Street Conference:

“I was troubled by that,” the Massachusetts Democrat said Thursday on SiriusXM’s “Alter Family Politics.” “One of the things I talk about in the book (“This Fight Is Our Fight: The Battle to Save America’s Middle Class”) is the influence of money. I describe it as a snake that slithers through Washington and that it shows up in so many different ways here in Washington.”

While it’s reasonable to wonder what Obama delivers that justifies his lavish payday,  there are several odd things about Warren’s outburst of scruples. First, it’s a private organization and Barack Obama is now a private citizen. He does not wield the levers of government, oversee  lucrative public contracts, or steer large government grants.

Second, where was the good senator’s Wall Street phobia when the president peopled the highest ranks of his administration with bankers from the empire? When he refused for two terms to prosecute a single scoundrel with dirty hands in the 2008 financial crisis? Was she sounding the alarm about the potential for money influencing the president then, when he was the most powerful man on earth?

For that matter, how was the “troubled” senator able to rouse herself to be Hillary Clinton’s biggest champion and surrogate during the 2016 campaign? Hillary gave $2 and $3,00,000 speeches to rich and powerful interests with regularity. And this at a time she was expected to be the next president of the United States. Clearly there was a lot more for potential sale in her tawdry transactions than there is now in the former president’s portfolio.

And lastly, while Warren fashions herself, with enthusiastic media complicity, as the scourge of the wealthy and the champion of the little guy, the facts are pungent with a different aroma. Warren is no stranger to the perks of privilege and ways to work the system. The fair haired Oklahoman’s career has benefited greatly from her undocumented claim of Indian heritage. She made a small fortune in distressed real estate, employing the buy-low-sell-high tactics that any good operator would, but that seem to gratingly clash with her pronouncements against profiteering and taking advantage of the poor and vulnerable.

Most recently she used creative accounting to avoid disclosing a $1.3 million line of credit on her $2 million Cambridge home. Rhetoric aside, Warren is no slacker in the ways of the shyster. Watching so many rich operator politicians criticize rich operator business people in a play for the support and votes of working Americans, one can’t help but think it’s all a cynical charade. Maybe that’s why they’re losing their audience to Trump and they’re in a panic.







Two Statements From Trump On Korea

Two statements on South and North Korea from Donald Trump in a single evening:

“It’s a horrible deal. It was a Hillary Clinton disaster, a deal that should’ve never been made. It’s a one-way street. We’ve told them that we’ll either terminate or negotiate. We may terminate. I will do that unless we make a fair deal. We’re getting destroyed in Korea.”

“There is a chance that we could end up having a major, major conflict with North Korea. Absolutely. We’d love to solve things diplomatically but it’s very difficult,” followed by a reference to Kim Jong Un, “He’s 27 years old. His father dies, took over a regime. So say what you want but that is not easy, especially at that age. I’m not giving him credit or not giving him credit, I’m just saying that’s a very hard thing to do. As to whether or not he’s rational, I have no opinion on it. I hope he’s rational.”

Make of these what you will but this is not your fathers Oldsmobile.

Dems In Congress Will Support A Shutdown Over Healthcare Reform

Rep. Steny Hoyer (D-Md.), the Democrat whip, has allegedly sent an email to his caucus stating “If Republicans announce their intention to bring their harmful TrumpCare bill to the House Floor tomorrow or Saturday, I will oppose a one-week Continuing Resolution and will advise House Democrats to oppose it as well. Republicans continue to struggle to find the votes to pass a bill that will kick 24 million Americans off their health coverage, allow discrimination against those with pre-existing conditions, and impose an age tax on older Americans. That’s why they are trying to jam it through the House before their Members can hear from the American people this weekend about their opposition to this horrible legislation. If Republicans pursue this partisan path of forcing Americans to pay more for less and destabilizing our county’s health care system — without even knowing how much their bill will cost — Republicans should be prepared to pass a one-week Continuing Resolution on their own.”

It is unlikely the GOP could gather the votes to pass a one week continuing resolution without Democrat participation – consequently the threat here is essentially that if the reform of Obamacare is voted on prior to the continuing resolution to fund the government the Democrats will oppose it. The assumption is that we should then enter into yet another government shutdown.
Donald Trump responded via Twitter; “As families prepare for summer vacations in our National Parks – Democrats threaten to close them and shut down the government. Terrible!”
This will be a put-up-or-shut-up moment for the GOP and will test the political skills of Donald Trump. With a series of continuing resolutions the Democrats will be in a position to threaten this each and every time legislation is presented which they oppose – tax reform, immigration, so on and so forth. It will be endless if not successfully dealt with this week.

Normalizing The Abnormal

It has now been more than eight and a half years since the collapse of Lehman Brothers and the meltdown of AIG. In the wake of those calamities the Treasury Department and the Federal Reserve took extraordinary action in order to prevent the global credit markets from locking up entirely. Unfortunately that extraordinary action has continued each and every day since then. More than eight years down the road and central banks are still injecting liquidity into the global financial system at a rate of $200 billion per month in order to keep the credit markets solvent. The Federal Reserve still a balance sheet of $4.5 trillion while central banks around the world have already purchased more than a trillion dollars worth of assets just so far in 2017 – and we are not even half way through the year.

Once again, we have fixed nothing.
The governments and central banks around the world, led by the Federal Reserve, have created a liquidity trap. The very problem these central banks, including the Federal Reserve, set out to save us from in 2008 is the very problem which they have exacerbated which is why they are still required to keep interest rates at historical lows, cannot unwind their balance sheets and are still purchasing assets at a heart stopping pace. Every financial crisis has at its’ root illiquidity and the liquidity trap has created a near constant liquidity fear for the past eight years which is why the central banks cannot normalize. Here is what Jeffrey P. Snider said, “That, too, is in important factor because it was liquidity at the very least the QE’s were supposed to fix. The path of balance sheet expansion into the real economy was always murky to begin with, no direct channel would ever exist between the purchase of MBS or UST into the wage rates of ordinary Americans. It was thought to work through expectations more than anything else. But the trillions of bank reserves, so-called money printing, surely would cure all financial liquidity risk. And yet, that is the most prominent feature of the financial landscape apart from the stock market. Everywhere you look there are expressed abnormal (for all history before 2007) liquidity preferences; from eurodollar futures to German federal paper the story is the same – persisting fear of illiquidity, “dollars” most of all. If Bernanke could not get even that right through four QE’s and $2.5 trillion in reserves, the one thing closest to what everyone assumed was this central bank’s wheelhouse, then his views on stocks are likely to be, again, contrarian.”

Where has all of this liquidity gone? It has not gone into expanding corporations, new products and increased employment and wages. It is primarily gone to equities and real estate. Just this morning it was announced that the global market cap has reached $50 trillion. EPS is reaching historical heights – again Jeffrey P. Snider: “”Dr. Bernanke noted that corporate earnings have risen at the same time; he believes corporate earnings will continue to grow and “catch up” to asset prices.” Obviously, given his track record, that is a chilling statement of contrarian purposes. Kidding aside, it is interesting that he of all people would feel comfortable enough in making such a claim. For one, that is exactly the market problem at the moment. It is priced for enormous growth, way out in front of actual earnings which for nearly three years now have failed $100 (for the S&P 500). In order for EPS to “catch up” will require the kind of growth you actually find in a recovery, at the very least a short burst of intense activity that creates all the follow-on effects that he once talked about igniting through QE. But that isn’t what he actually said in his interview. Like Janet Yellen, Bernanke sees only vague improvement, so unsure that he felt compelled to qualify it further.”

For each and every year that Obama was President more American businesses went out of business than were created. It is not looking as though the first year of Trump will be any better. Just this morning the Atlanta Federal Reserve revised their first quarter GDP growth down to 0.2% while JP Morgan estimates first quarter GDP growth at 0.3%. There is no growth in the economy – yet the Dow Jones and Nasdaq are screaming and real estate prices have now exceeded the high water mark of 2006-07. That should send chills down your spine.
The net effect of the actions of the central banks over the last eight and half years is to communicate that the central banks will not allow the markets to suffer a significant decline – let alone fail. One of the consequences of this communication has been the belief that it is much safer to invest your money in real estate or the stock market than it is to invest your money in starting a new business or expanding an existing business. Consequently capital has flowed out of business expansion and creation and into equities and real estate. The net effect of this market distortion has been, due to the decline in business creation and expansion, a decline in the corresponding creation of full time private sector jobs.
On the other hand shadow banking has thrived under this monetary regime – derivatives received a deluge of blame for the disaster of September 2008. At that time the notional value of derivatives was on the order of $240 trillion. What is the notional value of derivatives today? About $550 trillion. Again, we have fixed nothing. That should also send a chill down your spine.
Despite this, people continue to argue what a great idea Dodd-Frank was. Yes, Dodd-Frank is a great piece of legislation – if you are a Wall Street bank.
Even though the last eight years has been the greatest credit expansion in history – the United States has lost something on the order of nine million full time private sector jobs over that same timeframe. There is an obtuseness to this that is in no small measure at the root of our discontent. Raúl Ilargi Meijer said it well – “But as these maps show, it’s not about Le Pen, or Trump, or Nigel Farage. It’s about people being left behind in ever larger numbers, susceptible to voices other than the ones they’ve known for a long time and who never listened to them. And nothing is being done to address these people’s claims; on the contrary, things are only getting worse for them. I saw a headline today that said ECB president Mario Draghi’s “Stimulus Could Blunt Populism as Unemployment Declines”. There’s only one possible reaction to that: what happens when he stops his stimulus?”

Indeed, what happens when all of this stimulus stops? If you are in a position to profit from this mind bending credit bubble you are doing very well. If you are not in that position then you are very likely growing poorer by the day. This situation is true in Europe, in the United States, in Canada, in Japan and in China. Unfortunately the profit from this credit bubble to a large degree has been consigned to specific geographical boundaries – causing many people to draw the mistaken implication that the profit from the credit bubble equates into a superior cultural model being prevalent in these geographical locations.

It is difficult to imagine a more lethal mistake to make than believing that profit from a credit bubble equates to superior culture yet here we are.
Buckle up…
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