Category Archives: Politics: The Party of Sleaze

Democracy in Action (Missouri Edition)

ProPublica’s The Payday Playbook: How High Cost Lenders Fight to Stay Legal is a little different from what they teach in high school civics classes.

As the Rev. Susan McCann stood outside a public library in Springfield, Mo., last year, she did her best to persuade passers-by to sign an initiative to ban high-cost payday loans. But it was difficult to keep her composure, she remembers. A man was shouting in her face.

He and several others had been paid to try to prevent people from signing. “Every time I tried to speak to somebody,” she recalls, “they would scream, ‘Liar! Liar! Liar! Don’t listen to her!’”

Such confrontations, repeated across the state, exposed something that rarely comes into view so vividly: the high-cost lending industry’s ferocious effort to stay legal and stay in business.

The problem was the legislature. During the 2010 election cycle alone, payday lenders contributed $371,000 to lawmakers and political committees, according to a report by the nonpartisan and nonprofit Public Campaign, which focuses on campaign reform. The lenders hired high-profile lobbyists, and Still became accustomed to their visits. But they hardly needed to worry about the House Financial Institutions Committee, through which a reform bill would need to pass. One of the lawmakers leading the committee, Don Wells, owned a payday loan store, Kwik Kash. He could not be reached for comment.

Eventually, after two years of frustration, Still and others were ready to try another route. “Absolutely, it was going to have to take a vote of the people,” she said. “The legislature had been bought and paid for.”

A coalition of faith groups, community organizations and labor unions decided to put forward the ballot initiative to cap rates at 36 percent. The main hurdle was collecting the required total of a little more than 95,000 signatures.

Someone raised $2.8 million to fight the initiative. We don’t get know exactly who:

Missourians for Equal Credit Opportunity (MECO), appeared. Although it was devoted to defeating the payday measure, the group kept its backers secret. The sole donor was another organization, Missourians for Responsible Government, headed by a conservative consultant, Patrick Tuohey. Because Missourians for Responsible Government is organized under the 501(c)(4) section of the tax code, it does not have to report its donors.

They sent deceptive threatening lawyers letters to the pastors and others running the petition drive.

And as if that wasn’t enough, they created fake initiatives to confuse people:

A Republican lobbyist submitted what appears to have been a decoy initiative to the Missouri Secretary of State that, to the casual reader, closely resembled the original measure to cap loans at 36 percent. It proposed to cap loans at 14 percent, but stated that the limit would be void if the borrower signed a contract to pay a higher rate — in other words, it wouldn’t change anything. A second initiative submitted by the same lobbyist, Jewell Patek, would have made any measure to cap loan interest rates unlawful. Patek declined to comment.

MECO spent at least $800,000 pushing the rival initiatives with its own crew of signature gatherers, according to the group’s state filings. It was an effective tactic, said Gerth, of the St. Louis congregations group. People became confused about which was the “real” petition or assumed they had signed the 36 percent cap petition when they had not, he and others who worked on the effort said.

They hired people to physically block access to petition gatherers.

Here’s the really sad part: it worked. The petition’s supporters gathered
118,000 valid signatures, about 23,000 more than needed.

But the state’s rules required that they collect signatures from at least 5 percent of voters in six of the state’s nine congressional districts. They had met that threshold in five districts — but in the First District, which includes North St. Louis, they were 270 signatures short.

Democracy in action.

They’re going to try again next year.

Posted in Econ & Money, Politics: The Party of Sleaze | 2 Comments

On ‘squishes’

Reading about Sen. Cruz calling other Republicans ‘squishes’ because they were not, at least in his telling, as hard-line as he is, reminded me of when I lived in the UK and the late Margret Thatcher and her supporters derided their less-immoderate fellow Tories as the “wets”.

It also made me wonder about the national differences the two terms imply. Am I alone in thinking that there’s some suggestion of unmanliness about ‘squishes’? And if so, is that in fact tied to a national difference, or just to the gender and general sexism of the particular speaker?

Wikipedia tells me that,

Historically, the term “wet” was English public school slang for someone judged to be weak, feeble or “soppy”. Within the political context it was used both as a noun and an adjective to describe people or policies which Thatcher would have considered to be weak or “wet”.

So maybe it isn’t all that different after all?

Posted in Politics: The Party of Sleaze, UK | Leave a comment

These People are Really Strange

FreedomWorks Made Video of Fake Giant Panda Having Sex With Fake Hillary Clinton.

A Fake Giant Panda?

Yes. Really.

An internal investigation of FreedomWorks—the prominent conservative advocacy group and super-PAC—has focused on president Matt Kibbe’s management of the organization, his use of its resources, and a controversial book deal he signed, according to former FreedomWorks officials who have met with the private lawyers conducting the probe. One potential topic for the inquiry is a promotional video produced last year under the supervision of Adam Brandon, executive vice president of the group and a Kibbe loyalist. The video included a scene in which a female intern wearing a panda suit simulates performing oral sex on Hillary Clinton. [Author's note: The previous sentence contains no typos.]

Posted in Politics: The Party of Sleaze | Leave a comment

More on the Temporary Debt Limit Waiver

The House duly passed the debt limit waiver bill 285 to 144, with 33 Republicans and 111 Democrats voting no. House GOP leaders duly made statements about what a great achievement ‘no budget no pay’ was, perhaps an attempt to distract from how great a climbdown the main part of the bill was.

Most lawyers I’ve communicated with took the view that most every court, and certainly the Supreme Court, would not choose to declare the debt ceiling waiver unconstitutional — even if both mechanistic and good-faith application of current severability doctrine would suggest that it should. That’s probably correct predictively, which says something about the importance of realpolitik in Constitutional interpretation. Although anyone who ever read Dames & Moore v. Reagan should already know that….

Meanwhile Seth Barrett Tillman has proposed a nice way to avoid the severability question altogether. Since the text of the 27th Amendment says “No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened” the remedy for a bill that violates this provision is an injunction staying the pay terms until the next election. Under this elegant formulation, the pay provision of the bill is not held to be unconstitutional as such, just given no effect until, in this case, it has no remaining effects. Very neat.

Posted in Econ & Money, Law: Constitutional Law, Politics: The Party of Sleaze | 1 Comment

Is There a Poison Pill in the Debt Ceiling Bill?

The House GOP leadership introduced its 3-month debt limit increase yesterday and plans to vote on it tomorrow. As a sweetener to paper over their turnaround on the debt limit, the GOP attached a “no budget no pay” provision to H.R. 325 that could change the payment of Congressional salaries. While this looks like unconstitutional grandstanding, there is a chance that — intentionally or not — the “no budget no pay” part of the statute could function as a poison pill clause. If so, I am concerned that any challenge to the unconstitutional part could have the effect of restoring the debt ceiling while seeming to put the blame on the courts rather than Congress.

Explaining what I’m worried about is slightly convoluted, involving first the validity of a Constitutional Amendment with a strange ratification history and second the arcane rules about “severability” — what courts should do when they find part of a statue unconstitutional — so bear with me.

As you may know, the House GOP’s fig leaf for its temporary parole of the hostage it had taken (the international economy) was to say that unless the Congress passes a budget this year — instead of the various continuing resolutions and such under which we’ve operated for some time — federal legislators would not get their salaries.

This provision is (almost certainly) blatantly unconstitutional. The US Constitution provides, in the 27th Amendment (proposed 1789, ratified 1992(!)),

No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.

The reason for the “(almost certainly)” is that the 27th Amendment has an unusual history. The provision was one of the two amendments in the original bill of rights that did not get approved by a sufficient number of states. It laid largely dormant for almost two centuries until being revived due to a campaign started by U. Texas undergraduate. (He got a C on the paper proposing the campaign, by the way.)

No court has ruled on the validity of the 27th Amendment, but in light of Coleman v. Miller, 307 U.S. 433 (1939) and the subsequent acceptance of the 27th Amendment by Congress, I think it’s a very good bet that just about every judge in the land would say it was valid.

If so, we turn to figuring out whether H.R.325 violates the 27th Amendment. The structure of the bill “To ensure the complete and timely payment of the obligations of the United States Government until May 19, 2013, and for other purposes” is simple: Two sections. Section One is short, and says the debt ceiling “shall not apply for the period beginning on the date of the enactment of this Act and ending on May 18, 2013.” Section Two is much longer and purports to put congressional salaries in escrow until the end of the session if no budget is passed. I’ve put the full text of it at the end of this post. The key parts that relate to salaries are these:

[2(a)](1) IN GENERAL- If by April 15, 2013, a House of Congress has not agreed to a concurrent resolution on the budget for fiscal year 2014 pursuant to section 301 of the Congressional Budget Act of 1974, during the period described in paragraph (2) the payroll administrator of that House of Congress shall deposit in an escrow account all payments otherwise required to be made during such period for the compensation of Members of Congress who serve in that House of Congress, and shall release such payments to such Members only upon the expiration of such period.

(4) RELEASE OF AMOUNTS AT END OF THE CONGRESS- In order to ensure that this section is carried out in a manner that shall not vary the compensation of Senators or Representatives in violation of the twenty-seventh article of amendment to the Constitution of the United States, the payroll administrator of a House of Congress shall release for payments to Members of that House of Congress any amounts remaining in any escrow account under this section on the last day of the One Hundred Thirteenth Congress.

Does this comply with the 27th Amendment? I don’t think this is even a close question: in my view the escrow provision clearly does not. The prohibition on “varying the compensation” seems pretty clear to me: it means no changes in amount, and no changes in time of payment because there is a time value to money. Anyone who gets a salary would think it a very material change in the terms if the money were escrowed for more than a year and a half instead of being made available to pay the mortgage.

You might, therefore, be forgiven for dismissing the House GOP insistence on this provision as mere grandstanding — one quick lawsuit by a member of Congress wanting his pay, and the pay limit is toast.

But here, finally, is where I have a somewhat scary thought: Is it possible that the pay provision is non-severable from the debt ceiling increase? Could it be the case that if a court strikes down the pay provision — as I think it must do if asked — will the court also be forced to nullify the debt ceiling increase provision of the bill? Is this pay provision not just grandstanding but in fact, and perhaps even intent, a piece of Machiavellian scheming?

Answering those questions requires some background in the law relating to “severability”.

We are long past the point where one unconstitutional clause necessarily infects an entire statute. There is now a substantial body of doctrine about when a court should “sever” the unconstitutional piece and leave the rest. Much of that doctrine concerns statutes with a “severability clause”, an instruction from Congress about what to do if a dubious clause is struck down. As H.R. 325 does not have a severability clause, we can ignore all that and turn straight to the rules for statutes without severability clauses.

The Supreme Court recently addressed this very issue in Free Enterprise Fund v. Public Co. Accounting Oversight Board, 130 S.Ct. 3138, 3161-62 (2010), which involved the fate of the Sarbanes-Oxley Act. I’ve excised the citations in the quote that follows:

“Generally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem,” severing any “problematic portions while leaving the remainder intact.” Because “[t]he unconstitutionality of a part of an Act does not necessarily defeat or affect the validity of its remaining provisions,” the “normal rule” is “that partial, rather than facial, invalidation is the required course[.]” Putting to one side petitioners’ Appointments Clause challenges (addressed below), the existence of the Board does not violate the separation of powers, but the substantive removal restrictions imposed by §§ 7211(e)(6) and 7217(d)(3) do. Under the traditional default rule, removal is incident to the power of appointment. Concluding that the removal restrictions are invalid leaves the Board removable by the Commission at will, and leaves the President separated from Board members by only a single level of good-cause tenure. The Commission is then fully responsible for the Board’s actions, which are no less subject than the Commission’s own functions to Presidential oversight.

The Sarbanes–Oxley Act remains “ ‘fully operative as a law’ ” with these tenure restrictions excised. We therefore must sustain its remaining provisions “[u]nless it is evident that the Legislature would not have enacted those provisions … independently of that which is [invalid].” Though this inquiry can sometimes be “elusive,” the answer here seems clear: The remaining provisions are not “incapable of functioning independently,” and nothing in the statute’s text or historical context makes it “evident” that Congress, faced with the limitations imposed by the Constitution, would have preferred no Board at all to a Board whose members are removable at will.

So the issue is whether (1) HR 325 remains fully operative as a law, and (2) whether in light of the statutory and historical context “it is evident that the Legislature would not have enacted those provisions … independently of that which is [invalid].”

Even assuming HR 325 passes the first test, does it pass the second? Will it be clear at passage that the bill would have passed without the Republican face-saving section on Congressional pay?

There are powerful reasons to say no, that the two parts of the statute are tightly linked. Just consider what the GOP leadership has been saying. For example, Eric Cantor and John Boehner:

“We will authorize a three-month temporary debt limit increase to give the Senate and House time to pass a budget,” House Majority Leader Eric Cantor, R-Va., said. “Furthermore, if the Senate or House fails to pass a budget in that time, members of Congress will not be paid by the American people for failing to do their job.”

In selling the idea, House Speaker John Boehner called the Senate’s failure to pass a budget over the last four years “shameful.”

Or Darrell Issa, who originally said the no pay idea was unconstitutional, but then backpeddled, said,

“I strongly support the House Republican leadership’s proposal to link the debt ceiling increase to passage of a budget by the Senate, which has gone 1360 days without passing a blueprint for federal spending.

So Congressional leaders are selling the provisions as linked. Does this mean that the two sections of H.R. 325 are too closely linked to be severable? I think the best answer is that we don’t know yet, since the vote hasn’t happened, but it is a real possibility. The answer may turn on the final vote and the debate around it. The more that Members of Congress say the only reason they are going along is the “no budget no pay” clause, the worse it will look. If the vote is close, will a judge be able to say in good conscience that H.R. 325 would have passed without the pay provisions? I’m not sure I could say that if I were a judge. On the other hand, if the vote is very lop-sided, it could be easier to argue, and to persuade oneself, that the provisions were not key to passage, and that even some Republicans voting for it might have swallowed the debt ceiling increase without the pay sop attached.

One could of course argue that all the talk about the value of the “no budget no pay” rule is just legislative camouflage, and should not be taken too seriously. That might well be true politically. But in the face of statements by both key House leaders and perhaps many of the rank and file saying “no budget no pay” matters to their vote, asking a court to in effect hold that members of a co-ordinate branch of government were dissembling might be asking lot.

Continue reading

Posted in Econ & Money, Law: Constitutional Law, Politics: The Party of Sleaze | 9 Comments

Disgusting Antics in Virginia

Holding session on MLK Day is a distasteful thing for any Southern legislature to do — it’s about not treating the day as a holiday in order to disrespect Dr. King’s memory not to mention what he stood for. Adjourning at the end of the day to celebrate General Thomas J. ‘Stonewall’ Jackson is just putting the boot in.

But what the Virginia legislature did today is truly toxic.

The VA Senate is split 50-50. Today, one Democrat was absent. Sen. Henry Marsh, a 79-year-old civil rights veteran, was in Washington DC for the Obama inaugural. That’s when the Republicans pounced: they introduced and rammed through without notice a redistricting bill that would take the 20-20 Senate and make it, by some calculations 27-13 by packing as many Democrats as possible into a minority of the districts.

Fortunately, if some of the online commentators at Blue Virginia are to be believed, there’s a good chance the move violates the Virginia Constitution, Art. II, sec. 6, which reads in relevant part (as recently amended):

Members of the House of Representatives of the United States and members of the Senate and of the House of Delegates of the General Assembly shall be elected from electoral districts established by the General Assembly. Every electoral district shall be composed of contiguous and compact territory and shall be so constituted as to give, as nearly as is practicable, representation in proportion to the population of the district. The General Assembly shall reapportion the Commonwealth into electoral districts in accordance with this section in the year 2011 and every ten years thereafter.

Any such decennial reapportionment law shall take effect immediately and not be subject to the limitations contained in Article IV, Section 13, of this Constitution.

I am not in any way informed about the Virginia Constitution, but this seems consistent with the view that reapportionment must be decennial, and that mid-decade reapportionment is unconstitutional. I’d be interested in hearing other views.

(Additional context here.)

UPDATE: JST points me to this eye-witness account of the Virginia Senate in action.

Posted in Politics: The Party of Sleaze | Leave a comment

Citizens Insurance Won’t Be Making Sweetheart Loans to Dodgy Insurance Companies After All

Some time ago, I got upset that Citizens Insurance planned to use our premiums to make GIFTS to private insurance companies. Well, it seems the bright boyos at Citizens paid Goldman Sachs a great deal of money to explain how it would work, and they explained that it wouldn’t work as none of the potential participants were solvent enough to be trusted with any money, so the plan is off the table at least for this year. See The Buzz for the details, Citizens to abandon loan program for private companies, floats new ‘clearinghouse’ idea. (How do I know Goldman Sachs was paid a lot of money when the article doesn’t say? Simple: it’s Goldman Sachs.)

This of course has nothing to do with the increasing ethical quicksand gradually engulfing the management at Citizens in which we’ve learned that Citizens fired all four members of its “integrity team” while they were investigating allegations of sexual harassment, indecent drunken behavior in public, questionable payments and falsified documents. Things got so bad that Gov. Rick Scott said he wants Citizens Insurance to have an inspector general — think about it: there’s a state body so corrupt that Rick Scott thinks it needs investigating and cleaning up! That’s a scary concept. But do not fear, the earth still revolves around the sun: the Governor is in no hurry to do anything. So that’s alright then.

Posted in Econ & Money, Florida, Politics: The Party of Sleaze | Leave a comment