Found: 112 records....
cato.org
Monday February 27, 2017 @ 05:41:34 PM mt

How Much Does Your Congress Critter Vote to Spend



SpendingTracker.org is a project aimed at giving citizens a clear idea about how much individual members of Congress vote to spend. Jonathan Bydlak of the Coalition to Reduce Spending discusses the project.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 03:02:47 PM mt

War of the Worst Case Scenarios



A few nightmare scenarios haunt the dreams of civil libertariansscenes drawn from our long andignominious historyof intelligence abuses. Onecall it the Nixon scenariois that the machinery of the security state will fall into the hands of an autocratic executive, disdainful of the rule of law, who equates national security with the security of his own grip on political authority, who is all too willing to turn powers meant to protect us from foreign adversaries against his domestic political opponents, and who lacks any qualms about quashing inquiries into his own illegal conduct or that of his allies. Anothercall it the Hoover scenariois that the intelligence agencies anxious to protect their own powers and prerogatives will themselves slip the leash, using their command of embarrassing secrets to intimidate (and in extreme cases perhaps even select) their own nominal masters. As the American surveillance state has ballooned over the past 15 years, weve often invoked those scenarios to argue out that the slippery slope from a reasonable-sounding security measure a tool of anti-democratic repression is disquietingly short and well-oiled. You may trust that some new authority will only be used to monitor terrorists today, but under a more authoritarian administration, might it be used to suppress dissentas when civil rights and anti-war activists became the targets of the FBIs notorious COINTELPRO? You may be reassured by all the rigid rules and layers of oversight designed to keep the Intelligence Community accountable, but will those mechanisms function if the intelligence agencies decide to use their broad powers to cow their own overseers?

We are now, it seems, watching both scenarios play out simultaneously. Perhaps surprisingly, however, theyre playing out in opposition to each otherfor the moment. Whatever the outcome of that conflict, it seems unlikely to bode well for American liberal democracy.

On the one hand we have Donald Trump, whose thin-skinned vindictiveness and contempt for judicial checks on his whims are on daily display, and who during his presidential campaign revealed a disturbing instinct for lashing out at political opponents with threats to disclose embarrassing personal information. (Recall his tweets promising to spill the beans on Heidi Cruz, wife of primary opponent Ted, or his warning that the Ricketts family, which funded ads opposing him, had better be careful because they have a lot to hide.) As a private citizen, Trump treated the legal system as a tool to harass people who wrote unflattering things about him; as a candidate, he thought nothing of offhandedly suggesting he could use the power of the Justice Department to jail his opponent. Even before taking the Oval Office, then, Trump had provided civil libertarians and intelligence community insiders with a rare point of consensus: Both feared that with control of both the intelligence agencies and the institutional checks on those agencies within the executive branch, Trump would fuse a disposition to abuse power with an institutionally unique ability to get away with it. On the flip side, Trumps dismissive attitude toward the intelligence consensus that Russia had intervened to aid him in the election; his frankly bizarre, fawning posture toward Russias strongman leader; and his insistence on defying decades of political norms to shield his finances from public scrutiny signaled that inquiries into illicit conduct by himself or his allies and associates would be likely to wither on the vine once Trump loyalists had been installed at the heads of law enforcement agencies. As Nixon scenarios go, to steal a turn of phrase from my colleague Gene Healy, Trump is a civil libertarians grimmest thought experiment come to life.

And yet.

For all that, its difficult not to be a bit uneasy about the way the way the national security establishment, or factions with in it, appear to be pushing backat least, assuming the leaks that have dominated headlines in recent weeks are originating within the IC. We havewitnessed the torpedoing of the presidents appointed national security adviserby means of a decision to illegally leak the contents (or, more precisely, sources characterizations of the contents) of foreign intelligence intercepts of his phone conversations with the Russian ambassador. That was followed almost immediately by the explosive, albeit vague, news thatcontra the administrations denialssenior Trump associates and campaign aides had regular contact with Russian intelligence officials over the past year, though this time without any description of what those conversations concerned.

The public interest in knowing these facts is clear enough, and under the circumstances, it is not hard to reconstruct why officials within the intelligence community might regard the drastic step of going directly to the press as necessary under extraordinary circumstances. We can infer that the ongoing investigation into the Trump campaigns Russian ties hasnt turned up any smoking gun evidence of collusion yet, or that would likely have leaked already as well. Yet theres presumably enough smoke that investigators are anxious to either render it politically impossible for the new administration to kill any ongoing inquiry, orfailing thatensure that Congress feels constrained to pick up the baton after the agents working the case are reassigned to Juneau. Critically, however, this is not traditional whistleblowing about misconduct that a leaker has observed within their own agency, but rather disclosure of information gleaned from intelligence collection on Americans.

That ought to raise disturbing echoes of J. Edgar Hoovers notorious Official and Confidential and Personal and Confidential archivestroves of salacious dirt on public figures that made the FBI director a dangerous man to cross. As Hoovers aura of omniscience grew over his three decade tenure, policymakers and even presidents were cowed by the prospect of finding their dirty laundry aired in the tabloids should they earn Hoovers ire. Whether or not the leakers intend it, the perception that the IC is waging war on Trump is likely to resurrect that toxic chilling effect. The lesson many commentators are now drawingsome apprehensively, a few with gloating enthusiasmis getting on the wrong side of the Deep State can be hazardous to your political health, which is an unhealthy notion for officials in a liberal democracy to have lodged in their heads.

Moreover, the tension between these two scenarios is inherently unstable. If you come at the king, as one great political thinker has observed, youd best not miss, and doubly so when the king is your employer. The New York Times recently reported that the Trump would be tapping an old business associatewho notably lacks any intelligence backgroundto conduct an overarching review of the intelligence community, perhaps as a prelude to a future leadership role. That has reportedly created a fair amount of anxiety in intelligence circles. Trump allies like Rep. Steve King (R-Iowa) have already ominously suggested that people there need to be rooted out,and the narrative of a disloyal or hostile intelligence community could help give Trump cover to launch a purge within the agencies and install his own loyalists.

That might be the truly worst-case scenario. The career bureaucracy of the intelligence agencies, whatever its own biases and pathologies, constitutes in practice one of the few real bulwarks against the twin threats of politicized intelligence and abuse of surveillance powers. Congress, the secret FISA Court, and the ICs Inspectors General conduct largely reactive oversight over the intelligence agencies, typically relying on internal reports of problems or some public scandal to spur them to action. Day-to-day, the primary guarantor we have that intelligence powers are being used lawfullyand that intelligence products reflect a sincere attempt to assess the truth rather than provide cover for an administrations agendais the culture within the intelligence agencies, maintained largely by the middle-tier of career professionals who normally serve across multiple administrations. In what Ive somewhat crudely called the Hoover Scenario, the intelligence establishment can become a kind of unaccountable double government free to serve its own interests and agendas. But that may be the lesser evil when compared with an intelligence bureaucracy that istoo completely the tool of the political branchesmore loyal to the president to whom they owe their careers than to the norms and mission of their agencies, and more concerned with keeping him satisfied than telling uncomfortable truths.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 03:02:46 PM mt

Not Just the Press



How can unelected judges limit the power of an elected official like the president? Two political scientists offer some answers in The Washington Post.

First, the public should broadly agree about the basic legitimacy of the procedures used to review the powerful. Second, the public needs accurate information about the behavior of public officials.

The authors say a free press should and does provide that information in various ways. Thats a good answer as far as it goes, but it does not go nearly far enough. Many other parts of our polity have the power and responsibility to provide information about government. To name a few: interest groups, bloggers, think tanks, professors, leakers, labor unions, trade associations, grassroots groups, and many others who might spring to mind with more reflection.

The media does not have a monopoly on informing the public. The freedom of speech and of the press belongs to all Americans. This diffusion of power seems especially valuable at a moment when the media lack credibility for so many Americans.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 07:30:33 AM mt

Court: IRS Unlike Caligula May Punish Only Under Well-Proclaimed Law



Judge Jeffrey Sutton, writing for a Sixth Circuit panel, has reversed a Tax Court ruling in an opinion [Summa Holdings v. Commissioner of Internal Revenue] beginning thus:

Caligula posted the tax laws in such fine print and so high that his subjects could not read them. Suetonius, The Twelve Caesars, bk. 4, para. 41 (Robert Graves, trans., 1957). Thats not a good idea, we can all agree. How can citizens comply with what they cant see? And how can anyone assess the tax collectors exercise of power in that setting? The Internal Revenue Code improves matters in one sense, as it is accessible to everyone with the time and patience to pore over its provisions.

In todays case, however, the Commissioner of the Internal Revenue Service denied relief to a set of taxpayers who complied in full with the printed and accessible words of the tax laws. The Benenson family, to its good fortune, had the time and patience (and money) to understand how a complex set of tax provisions could lower its taxes.

And taking issue with the IRS Commissioners decision to disallow the combined use of two Congressionally approved devices, the Roth IRA and DISC (domestic international sales corporation), in a way said to trigger the so-called substance-over-form doctrine:

Each word of the substance-over-form doctrine, at least as the Commissioner has used it here, should give pause. If the government can undo transactions that the terms of the Code expressly authorize, its fair to ask what the point of making these terms accessible to the taxpayer and binding on the tax collector is. Form is substance when it comes to law. The words of law (its form) determine content (its substance). How odd, then, to permit the tax collector to reverse the sequenceto allow him to determine the substance of a law and to make it govern over the written form of the lawand to call it a doctrine no less.

[cross-posted from Overlawyered]

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 07:30:33 AM mt

On Shrinking the Fed's Balance Sheet



If youre a regular Alt-M reader (and may the frost never afflict your spuds if you are), I neednt tell you that Im the last person to exalt the pre-2008 Federal Reserve System. Among other things, I blame that system for fueling the 2003-2006 boom, and for creating a credit famine afterwards. I also blame it for contributing to the dot.com boom of the 90s, for the rise of Too Big to Fail in the 80s, for the inflation of the 70s, and for the disintermediation crisis of 1966, to look no further back than that.

Yet for all its flaws that old-time Fed set-up was a veritable monetary Shangri-La compared to the one now in place. For while the newfangled Federal Reserve System is no less capable of mischief than the old one was, it also has the Fed playing a far larger role than before in commandeering and allocating scarce credit.

Monetary Control, Then and Now

You see, back in those (relatively) halcyon days, the Fed got by with what now seems like a modest-sized balance sheet, the liabilities of which consisted mainly of circulating Federal Reserve notes, supplemented by Treasury and GSE deposit balances and by bank reserve balances only slightly greater than the small amounts needed to meet banks legal reserve requirements. Because banks held few excess reserves, it took only modest adjustments to the size of the Feds balance sheet, achieved by means of open-market purchases or sales of short-term Treasury securities, to make credit more or less scarce, and thereby achieve the Feds immediate policy objectives. Specifically, by altering the supply of bank reserves, the Fed could influence the federal funds rate the rate banks paid other banks to borrow reserves overnight and so keep that rate on target.

Today, in contrast, the Fed presides over a vast portfolio, with assets consisting mainly of long-term Treasury securities and mortgage-backed securities, instead of the short-term Treasuries it once held; and that portfolio is funded more by banks holdings of substantial excess reserves than by circulating Federal Reserve notes. Yet instead of enhancing the Feds conventional powers of monetary control, the ballooning of the Feds balance sheet has sapped those powers by making it unnecessary for banks to routinely borrow from one another in the federal funds market to meet their legal reserve requirements. Consequently, the Fed can no longer target the effective federal funds rate, and influence other short-term interest rates, just by making modest changes to the stock of bank reserves.

So how does the Fed control credit now? Instead of increasing or reducing the availability of credit by adding to or subtracting from the supply of Fed deposit balances, the Fed now loosens or tightens credit by controlling financial institutions demand for such balances using a pair of new monetary control devices. By paying interest on excess reserves (IOER), the Fed rewards banks for keeping balances beyond what they need to meet their legal requirements; and by making overnight reverse repurchase agreements (ON-RRP) with various GSEs and money-market funds, it gets those institutions to lend funds to it.

Between them the IOER rate and the implicit ON-RRP rate define the upper and lower limits, respectively, of an effective federal funds rate target range, because most of the limited trading that now goes on in the federal funds market consists of overnight lending by GSEs (and the Federal Home Loan Banks especially), which are not eligible for IOER, to ordinary banks, which are. By raising its administered rates, the Fed encourages other financial institutions to maintain larger balances with it, instead of trading those balances for other interest-earning assets. Monetary tightening thus takes the form of a reduced money multiplier, rather than a reduced monetary base. The counterpart of that reduced multiplier is an increase in the Feds overall command of the publics savings, for its the public that ultimately supplies the funds that financial institutions in turn hand over to the Fed, by holding those institutions IOUs.

Confiscatory Credit Control

As no one has yet come up with a catchy or at least convenient name for this new arrangement for credit control, allow me to propose one: confiscatory credit control. Why confiscatory? Because instead of limiting the overall availability of credit like it did in the past, the Fed now limits the credit available to other prospective borrowers by grabbing more for itself, which it then passes on to the U.S. Treasury and to housing agencies whose securities it purchases. When the central banks of other, and especially poorer, nations do this sort of thing, economists (including some who work for the Fed) refer to their policies, not as examples of enlightened monetary management, but as instances of financial repression. So it seems only fair to characterize our own central banks similar policies in a like manner. Although its true that financial repression has traditionally been practiced using the stick of high mandatory reserve requirements, whereas the Fed has instead been employing carrots in the shape of ON-RRP and IOER interest incentives, the ultimate result more credit for the government, and less for everyone else is the same. And though banks and bank depositors are better compensated for the governments takings, that compensation comes at taxpayers expense, because it translates either into an immediate reduction in Fed remittances to the Treasury or (as has been the case in fact) in an enhanced risk of reduced remittances in the future.

Whatever you call it, the Feds new monetary control framework involves a dramatic increase in the Feds credit footprint. To grasp the extent of the increase, have a gander at the chart below, showing the value of the Feds assets expressed as a percentage of total commercial bank assets. Whereas in the months prior to June 2008, Fed assets amounted to less than 8 percent of those held by U.S. commercial banks, its relative size has since increased five-fold. Of this overall increase, $2.5 trillion has gone into Treasury notes and bonds, while $1.75 trillion has been invested in MBS and housing-agency debt securities.

Thanks to the combined effects of LSAPs, IOER, and ON-RRP, among other Fed programs and policies, the Fed now lords over a far greater share of the publics savings than it has at any time since World War II, when it resolved to use its powers to assure at all times an ample supply of funds for financing the war effort.Even allowing, as many authorities do, that the Great Recession was a national crisis warranting a similar expansion of the Feds role, that fact alone can hardly continue to justify the Feds vast expansion now that the recovery is well-nigh complete.

Why should we mind a permanently enlarged Fed footprint? We should mind it because the Feds mandate doesnt include commandeering a huge chunk of the publics savings; and we should mind it because the Fed isnt designed to employ our savings efficiently. Its business, like that of all modern central banks (but unlike that of, say, the Gosbank), is that of keeping the overall scale of credit creation within bounds consistent with macroeconomic stability, while leaving private financial institutions as free as is consistent with preserving that stability to decide how best to employ scarce credit.

The bigger the Feds credit footprint, the more it interferes with the efficient employment and pricing of credit. By directing a large share of savings to purchases of longer-term MBS and Treasury securities, for example, the Fed has artificially raised both the prices of those securities, and the importance of the housing market and the federal government relative to the rest of the U.S. economy. It has also dramatically increased its portfolios duration gap and, by so doing, the risk that it will suffer losses should it sell assets before they mature. In other words, the Fed has undermined its own flexibility, by increasing the likely cost, directly to the U.S. Treasury and indirectly to itself, of using open-market sales to tighten credit. Finally, by flattening the yield curve, the Feds purchases have harmed commercial banks, the profits of which come mainly from borrowing short, lending long, and pocketing the difference.

Promises, Promises

The presumption that the Feds credit footprint should be as small as possible was once shared by most experts, including Fed officials. For that reason, when QE was just getting started, and for some time afterwards, those officials were anxious to assure everyone that the Fed s growth was only temporary.

In speaking at the LSE back in January 2009, for example, Ben Bernanke promised that

As lending programs are scaled back, the size of the Federal Reserves balance sheet will decline, implying a reduction in excess reserves and the monetary base. As the size of the balance sheet and the quantity of excess reserves in the system decline, the Federal Reserve will be able to return to its traditional means of making monetary policy namely, by setting a target for the federal funds rate.

Later that same year Fed Vice President Donald Kohn, speaking at a Shadow Open Market Committee meeting held here at the Cato Institute, complained that the large volume of reserves is contributing to the loose relationship of our deposit rate and market rates, while assuring those present that the Fed would eventually drain the banking system of excess reserves for that reason.[1] In their April 2010 meeting, most FOMC members hoped that the Fed would dispose of all its QE1 assets within 5 years of its first post-crisis rate hike, while a few wanted it to start selling assets before its first rate increase. A year later the FOMC was still committed to having the Fed dispose of its agency securities rapidly, so as to minimize the extent to which the Federal Reserve portfolio might affect the allocation of credit across sectors of the economy.

Finally, when, in 2014, the Fed began to increase the magnitude of its ON-RRP operations, some FOMC members worried about that facilitys influence on credit allocation. Nor were their concerns unwarranted.According to a study prepared by a group of Fed economists some months later, an enlarged ON-RRP program would expand the Federal Reserves footprint in short-term funding markets and could alter the structure and functioning of those markets in ways that may be difficult to anticipate. Among other things, Fed experts feared that, by substantially increasing the Federal Reserves role in financial intermediation, the new facility might magnify strains in short-term funding markets during periods of financial stress.

Alas, despite such concerns, and the progress of the recovery, the Fed has yet to take steps to shrink its balance sheet. Instead, it continues to reinvest both the proceeds from maturing Treasuries and principal payments from its agency debt and MBS. More disturbingly still, arguments to the effect that the Fed should make its gigantic footprint permanent, or even increase it, seem to be gaining ground both within and beyond the Fed. (An early convert to the new view was Ben Bernanke himself, who, at a May 2014 conference in which yours truly also took part, declared that There is absolutely no need or requirement for the balance sheet to go back to normal as monetary policy normalizes. The balance sheet could be kept where it is for a very long time if necessary.)

On the other hand, some other Fed officials, including St. Louis Fed President James Bullard, still hope to get the Fed to go on a diet. So, apparently, does Kentucky representative Andy Barr, who favors legislation that would give the Fed no choice but to shrink. Writing recently inInvestors Business Daily, Barr observed that the Feds enormous balance sheet puts taxpayers at risk, especially if interest rates rise, and distorts the free flow of capital that has sorely gone missing from our low-productivity recovery.

The Demand Side of Fed Shrinkage

Barr hopes that pending legislation will include an effective strategy to shrink the Federal Reserves balance sheet and limit its holdings to U.S. Treasuries. If thats what its going to take to cut the Fed back down to size, Im for it as well. But Barrs proposal begs the question, just what is an effective strategy for shrinking the Fed?

Most discussions treat such a strategy as being entirely a matter of setting a schedule, like those the FOMC has toyed with since 2010, for ending or limiting Fed re-investments of maturing securities and dividends, and (in more aggressive plans) for outright MBS sales. But theres more to it than that, because the size of the Feds footprint is ultimately determined, not by the dollar-value of the Feds assets, but by the real demand for its liabilities. The greater the latter demand, the larger the Fed is bound to be in real (that is, inflation-adjusted) terms.

Just before the crisis, the demand for Fed liabilities consisted mainly of the publics demand for paper dollars, about $800 billion of which were outstanding. The demand for Fed deposit balances, including banks demand for reserves, was, in contrast, quite limited. The Treasury and the GSEs kept modest balances amounting in all to about $100 billion, while banks held even less, in reserves barely exceeding minimum legal requirements. Today, thanks to IOER, ON-RRP, and other Federal Reserve programs and powers put into effect during the crisis, the demand for Fed balances has dramatically increased. Unless these special sources of demand are themselves dealt with, shrinking the Feds balance sheet alone wont suffice to reduce the Feds size, either in real terms or relative to the credit system as a whole. Instead, Fed asset sales will, other things equal, cause private financial institutions to reduce their holdings of assets other than balances at the Fed, so as to retain the same ratio of Fed balances to other assets.

The good news is that reducing the demand for Fed balances to pre-crisis levels is relatively easy. Todays exceptional demand is mainly the result of heightened bank liquidity needs combined with the Feds practice of setting the IOER rate above the yield on Treasury securities, and on short-term securities especially. Banks heightened liquidity needs initially stemmed from the crisis itself, but have since been sustained by the Feds liquidity stress testing and, more recently, by the U.S. implementation of Basels Liquidity Coverage Ratio.[2]But these needs alone dont account for banks extraordinary demand for excess reserves, because Treasury securities are themselves high-quality liquid assets, which banks would normally favor over excess reserves for their higher yields. Its only because the Fed has been paying IOER at rates exceeding those on many Treasury securities, and on short-term Treasury securities especially, that banks (especially large domestic and foreign banks) have chosen to hoard reserves. Even today, despite rate increases, the IOER rate of 75 basis points exceedsyields on most Treasury bills. Were it not for this difference, banks would trade their excess reserves for Treasury securities, causing unwanted Fed balances to be passed around like so many hot-potatoes, and creating new bank deposits in the process. Because more deposits means more required reserves, banks would eventually have no excess reserves to dispose of.

Phasing out ON-RRP, on the other hand, would eliminate the artificial boost that program has been giving to non-bank financial institutions demand for Fed balances.

Because phasing out ON-RRP makes more reserves available to banks, while reducing IOER rates reduces banks own demand for such reserves, both policies are expansionary. They dont alter the total supply of Fed balances. Instead they serve to raise the money multiplier by adding to banks capacity and willingness to expand their own balance sheets by acquiring non-reserve assets. But this expansionary result is a feature, not a bug: as former Fed Vice Chairman Alan Blinder observed in December 2013, the greater the money multiplier, the more the Fed can shrink its balance sheet without over-tightening. In principle, so long as it sells enough securities, the Fed can reduce its ON-RRP and IOER rates, relative to prevailing market rates, without missing its ultimate policy targets.

In practice, the Fed may prefer (if it isnt forced) to shrink its portfolio according to a preset schedule, rather than at whatever rate it takes to compensate for a declining demand for Fed balances. In that case, it has another tool it can use to keep a lid on credit: its Term Deposit Facility. As the Federal Reserve Boards own description of that facility explains, by inducing banks to keep term (rather than demand) deposits with it, the Fed drains as many reserve balances from the banking system. So, to the extent that the Feds gradual asset sales fail to adequately compensate for a multiplier revival brought about by its scaling-back of ON-RRP and IOER, the Fed can take up the slack by sufficiently raising the return on its Term Deposits.

And the Feds federal funds rate target? What happens to that? In the first place, as the Fed scales back on ON-RRP and IOER, by allowing the rates paid through these arrangements to decline relative to short-term Treasury rates, its administered rates will become increasingly irrelevant. The same changes, together with concurrent assets sales, will make the effective federal funds rate more relevant, by reducing banks excess reserves and increasing overnight borrowing. While the changes are ongoing, the Fed would continue to post administered rates; but it could also revive its pre-crisis practice of announcing a single-valued effective funds rate target. In time, the latter target could once again be more-or-less precisely met, making it unnecessary for the Fed to continue referring to any target range.

____________________________

[1] Kohn also observed, by the way, that the high volume of reserves evidently has not increased bank lending or reduced spreads of rates on bank loans or other assets relative to, say, Treasury rates, while acknowledging that an increase in lending and narrowing of spreads on bank loans is a necessary and desirable aspect of the return to better-functioning markets and intermediation to promote economic growth. That sounds to me rather like an admission that QE was, up to that point at least, a flop.

[2] The Liquidity Coverage Ratio (LCR) calls for banks to have enough unencumbered high quality liquid assets (HQLA) to meet a 30-day stressed liquidity outflow scenario. Banks that rely heavily on wholesale funding are subject to a higher required LCR than those funded chiefly by retail deposits. The different requirements accounts for the fact that larger U.S. banks hold a disproportionate share of total excess reserves. Although the U.S. first began enforcing Basel-based LCR requirements in January 2015, it appears that U.S. banks that were to be subject to those requirements started accumulating qualifying liquid assets in 2013.

[Cross-posted from Alt-M.org]

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 03:25:40 AM mt

Freedom of Association Takes Another Hit



To see how little is left of one of our most important rights, the freedom of association, look no further than to todays unanimous decision by the Washington State Supreme Court upholding a lower courts ruling that florist Baronelle Stutzman was guilty of violating the Washington Law Against Discrimination (WLAD) when she declined, on religious grounds, to provide floral arrangements for one of her regular customers same-sex wedding. The lower court had found Stutzman personally liable and had awarded the plaintiffs permanent injunctive relief, actual monetary damages, attorneys fees, and costs.

This breathtaking part of the Supreme Courts conclusion is worth quoting in full:

We also hold that the WLAD may be enforced against Stutzman because it does not infringe any constitutional protection. As applied in this case, the WLAD does not compel speech or association. And assuming that it substantially burdens Stutzmans religious free exercise, the WLAD does not violate her right to religious free exercise under either the First Amendment or article I, section 11 because it is a neutral, generally applicable law that serves our state governments compelling interest in eradicating discrimination in public accommodations.

We have here yet another striking example of how modern state statutory anti-discrimination law has come to trump a host of federal constitutional rights, including speech, association, and religious free exercise. Its not too much to say that the Constitutions Faustian accommodation of slavery is today consuming the Constitution itself.

Consider simply the freedom of association right. That liberty in a free society ensures the right of private parties to associate, as against third parties, and the right not to associate as wellthat is, the right to discriminate for any reason, good or bad, or no reason at all. The exceptions at common law were for monopolies and common carriers. And if you held your business as open to the public you generally had to honor that, though you still could negotiate over services.

Slavery, of course, was a flat-out violation of freedom of associationindeed, it was the very essence of forced association. But Jim Crow was little better since it amounted to forced dis-association. It was finally ended, legally, by the 1964 Civil Rights Act. But that Act prohibited not simply public but private discrimination as well in a range of contexts and on a range of grounds, both of which have expanded over the years. The prohibition of private discrimination was probably necessary at the time to break the back of institutionalized racism in the South, but its legacy has brought us to todays decision, where florists, bakers, caterers, and even religious organizations can be forced to participate in events that offend their religious beliefs.

Courts havent yet compelled pastors to officiate at ceremonies that are inconsistent with their beliefs, but we have heard calls for eliminating the tax-exempt status of their institutions. Such is the wrath of the crowd that wants our every act to be circumscribed by lawtheir law, of course. And theyre prepared, as here, to force their association on unwilling parties even when there are plenty of other businesses anxious to serve them. As I concluded a Wall Street Journal piece on this subject a while ago:

No one enjoys the sting of discrimination or rejection. But neither does anyone like to be forced into uncomfortable situations, especially those that offend deeply held religious beliefs. In the end, who here is forcing whom? A society that cannot tolerate differing viewsand respect the live-and-let-live principlewill not long be free.

Amen.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 03:25:40 AM mt

A Reading List for Presidents' Day



As government workers thoughonly about a third of private-sector office workers get a day off Monday for Presidents Day (legally, though not in fact, George Washingtons Birthday), I thought Id offer some reading about presidents.

First,my own tributeto our first president, the man who led America in war and peace and who gave up power to make us a republic:

Give the last word to Washingtons great adversary, King George III. The king asked his American painter, Benjamin West, what Washington would do after winning independence. West replied, They say he will return to his farm.

If he does that, the incredulous monarch said, he will be the greatest man in the world.

Then, of course, Gene Healys bookThe Cult of the Presidency, which argues that 200 years after Washington, presidential candidates talk as if theyre running for a job thats a combination of guardian angel, shaman, and supreme warlord of the earth. Buy it today, inmultiple formats.

Gene updated that argument with a short ebook,False Idol: Barack Obama and the Continuing Cult of the Presidency. As they say, start reading in minutes!

And then you can read myshort responseto Politicos 2010 question, Who were the best and worst presidents? I noted:

Presidential scholars love presidents who expand the size, scope and power of government. Thus they put the Roosevelts at the top of the list. And theyrate Woodrow Wilson the anti-Madisonian president who gave us the entirely unnecessary World War I, which led to communism, National Socialism, World War II, and the Cold War 8th. Now theres a record for President Obama to aspire to! Create a century of war and terrorism, and you can move up from 15th to 8th.

Hmmm, maybe it would be better to just read a biography of George Washington.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 02:35:12 AM mt

The Rights Troubling Patriotic Correctness'



Punishing your own ideological friends for using the wrong words is a problem of both left and right. Alex Nowrasteh describes the Right's trouble with "patriotic correctness. The Right Has Its Own Version of PoliticalCorrectness. Its Just as Stifling.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 02:35:05 AM mt

The Missing Bridge to Vocational Education



Why are public high schools so bad at preparing young people for so many real jobs in the private sector? Jim Stergios of the Pioneer Institute comments.

Likes: Dislikes:
Like Dislike Comment Follow
cato.org
Monday February 27, 2017 @ 02:34:58 AM mt

What States Can Do about Obamacare



How states choose to comply with the Affordable Care Act can make a difference for taxpayers. Sal Nuzzo of the James Madison Institute makes his case.

Likes: Dislikes:
Like Dislike Comment Follow