Friday, February 27, 2009

Compare and Contrast

Set aside any difference in the merits of the Constitutional deviations alleged of the Bush Administration and soon to be signed by the Obama Administration. The latter questioned the applicability of habeas corpus to enemy irregular insurrectionists (these being non-citizens, captured in locations outside and remote from the government's sovereign power, while operating against US troops and civilians of various nationalities). The latter question a plain language reading of "State" that has prevailed in common usage for more than two centuries.

Focus on their effects. Bush's Constitutional "deviations" operated against a dangerous and novel enemy. The Democrat's operates to increase their political power in the House (the Utah seat being ephemeral), and sets precedent for further increases of their power in the Senate, and rewards a key constituency.

Democrats argue the correction of political inequality overrides the plain language of the Constitution. But this negates the premise and strategy of that Constitution. If the meanings of terms like "justice" were obvious, our Constitution wouldn't require all these checks and balances. The Founders rejected simple majority rule for a complex of divided powers, and so denied the reliability of any understanding of "justice" prevailing in any particular election.

This focus on procedure is not new. No Constitutional inconsistency was egregious as slavery. Our forefathers still acted as if justice was best served by reforming that monstrosity with nice attention to the Constitutional powers of the Executive and proper procedure for amendment.

Maybe Bush was wrong about habeas corpus for al-Qaeda, but if so he wasn't contradicting the fundamental nature of our governing charter.

The Constitution does not establish equality, or seek to advance it. It presumes, rather than creates, its citizens' equality and individual rights. "Progressive" in its improvement over prior governments, it does not seek to create some quality or quantity that would not exist without it. While it imagines more perfect recognitions of liberty and equality, and is perhaps "progressive" in its inspiration, it leaves these improvements to a political process governed by its procedures.

The procedural protections of the Constitution have been eroded by the recognition of unstated purposes like "privacy rights", the elevation of equality among its purposes, and increasingly contemporary understandings of terms like "church" and "arms". I think we're now seeing that these procedures cannot be trumped by its unstated but implied purposes without installing the majority rule it explicitly rejected. And that majority will rule to further secure that rule.

Don't Govern Angry!

"But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment." President Obama, Address to Congress

In fairness, the President said this in reference to public anger at the prospect of bailing out the banks.

But he saw fit to speak to this, not after Maxine Waters shrieked at the banks' CEOs or Rep. Capuano called for their imprisonment, and not after weeks of general pillorying of Wall Street, but after people began protesting at paying the mortgages of people who overextended themselves.

Wednesday, February 11, 2009

Take Notice

We're only an hour into the bank CEO testimony before the House Banking committee, and we've already seen two clear examples of the real political power of Congress.

Chairman Frank urged all the banks to voluntarily adopt a moratorium on foreclosure until the Treasury Department can announce its foreclosure relief program. This makes a certain amount of sense, if that program is imminent -- but it's also problematic. How long will it be before Treasury makes its announcement? Once the banks stop foreclosures, won't they expose themselves to criticism if they resume them? Won't the precedent become, forebear until we can fix this or that? Outside the banks, an indefinite foreclosure moratorium stops the only process currently in place to work the real estate markets to a more stable basis. The overhang of housing approaching foreclosure is a substantial discouragement to buying and investing in housing.

Likewise, the Chairman told the banks that while Treasury can't retroactively change the terms of the capital infusions, the banks can voluntarily comply with new requirements on items like compensation. And if they don't like those terms, they can return the capital. Perhaps Treasury doesn't think such returns a good idea? After all, the initial infusions were widely distributed to minimize the negative reputational affects of accepting that capital, with a view to enabling those that really needed the funds to accept them.

The Chairman will control the flow of enormous wealth through his influence over the coming revision of these banks' regulations and the Treasury's deployment of substantial funds to address the industry's problems with losing assets. Banks resist his "requests" at their peril.

Maybe these various ideas of his are sensible. But I don't notice any institutional check on them, beyond public notice, public consideration of their merit, and public speculation as to the Chairman's motives. And of course, there is the possibility of "requests" that are not publicly reported or disclosed.

Wednesday, February 4, 2009

Tea Leaves

Senator Daschle's withdrawal yesterday was surprising. His unpaid taxes were larger than Geithner's, but the underlying error -- confusion over imputed income -- is much more plausible. The stories about his lobbying/advisory income were embarrassing, but surely all of that was disclosed in vetting and to the committee and didn't constitute real news. Killefer's withdrawal put him in an awkward place, but her issues seem trivial and the Administration could have chosen to stick it out with her, too. Daschle seemed personally important to the President, and could expect tremendous sympathy on the Hill. What happened?

The key event seems to be the Times editorial calling for his withdrawal. Obama benefits from extraordinarily generous coverage, which has helped through many tight spots. He can't afford to hurt that relationship, and he can't afford to let an opinion leader like the Times get the idea that he might not be so very new. He certainly doesn't want to invite scrutiny of every nominee going forward.

But the Times' piece is itself surprising. Daschle's steady, prudent advancement of the welfare state is just their sort of thing; and while he might be cozy with the very companies he would regulate, that sort of thing is nothing new. It's very unlikely that any Obama proposal would seriously damage that industry. Perhaps the Times realized the conflicts in the Senator's work history, but frankly these are judgement calls and I would have expected the Times to look the other way.

I have two speculations. One, Daschle's dual appointment in the White House and at HHS was very unusual. This would have given him control over the information on health finance emerging from HHS, and over the flow of that information in the White House. While no one can lock down the information stream from an institution as large as HHS, Daschle's White House spot positioned him to know of "back channel" flows, and either stem them or counter them. This would have given him extraordinary control over the shape of the health care debate, and would have starved rival opinions of the raw data needed to shape arguments.

That information advantage would have threatened all sorts of people. For example, the WH chief of staff, whose influence derives from controlling information himself and whose job requires presenting the President with alternatives. And anyone hoping to play in the health care debate -- OMB, Treasury, the National Economics Council, the Domestic Policy Council -- would need information ultimately sourced from HHS. It would also have threatened the Times, whose reporters depend on leaks from these various sources to do their jobs. It's possible that this moved the Times. It's also possible that the President didn't really understand the position he'd conferred on Daschle by acceding to this dual arrangement, discovered the problem as he began building his management structure, and didn't mind so much letting this issue remove the problem. If so, the Times editorial could well have been cued from the White House.

Or, the Times had an ax of its own to grind. We read in the Washington Post:

"Daschle has frequently weighed in on communications policy and Adelstein [former Daschle staffer on the FCC] has often expressed the same views. In 2004, for example, Daschle sent an aide to an FCC hearing chaired by Adelstein in South Dakota to register his opposition to rules proposed by a Republican member that allowed owners of television stations to purchase newspaper and radio stations in the same town.

"Hindery [Daschle's sponsor at InterMedia], the former chief executive of AT&T's broadband and telecommunications division and New York regional sports channel the YES Network, also opposed the proposed rules, which would favor large companies such as Newscomm or Viacom over the smaller firms in which InterMedia had invested. The rules drew criticism from other Democratic lawmakers and Adelstein. "

(See here.)

It isn't hard to imagine the New York Times, itself a pretty large media company, objecting to rules that limit its ability to buy things like local TV stations, or to sell itself to companies that do. I know nothing of the media business, but it's at least worth asking if the Times worried that Daschle's reach might extend into shaping telecommunications policy to the advantage of (apparently) smaller players like InterMedia to the detriment of larger ones like the Times. If so, the Times' is important enough to the President that their signal of displeasure was surely enough to decide the matter.

In short, I am not convinced we have the full story here. Daschle had issues, but they were subject to interpretation and didn't constitute anything new. The whole thing could have gone either way, and Daschle is the sort of figure for which double standards were invented. Obama's supporters and progressives will surely be satisfied by the "things are changing" explanation, and maybe they are. But I think that explanation assumes that people will stop acting in their own interests, which I think unlikely, and thus isn't as simple as it looks.

The other nugget in this is the importance of media opinion leaders like the Times. Obama has surely benefited from their coverage, and surely can be expected to set the agenda. But the media do control their own standards, at least at the margin, and the Administration can't afford a fight with them. The demonstration of that importance could be a third candidate for explaining the Times' piece.

Tuesday, February 3, 2009

Obama: "I Made A Mistake"

Obama: "Ultimately, it’s important for this administration to send a message that there aren’t two sets of rules, one for prominent people and one for ordinary folks who have to pay their taxes.”

Unfortunately, events don't parse that way. The nomination wasn't pulled after learning of the problems, it was pulled after growing criticism. From the article:

"I read the New York Times," Daschle told Mitchell, adding: "I can't pass health care if it's too much of a distraction ... so I called the president this morning."

It is by no means clear whether the standard is a Presidential view of integrity, or a political view of what the market will bear.

Exeunt Daschle

The Senator has removed his name from consideration for Secretary of HHS.

I find this a little surprising, in that Daschle is far better connected than Geithner, and overlooking an "imputed income" item like a car and driver is more understandable to than signing a document saying "these funds are for my payroll tax" and then not paying the tax. But the argument for the urgency of a Treasury Secretary, and Geithner's unique familiarity with the present crisis, wasn't there for Daschle at HHS. And the Times was displeased with Daschle's work on behalf of the various health care interests he would regulate.

The conservative blogs are beating up for Obama lax standards, but I don't think this is quite right. The problem isn't guys like Daschle, but Obama's pious promise that his Administration would be different. It is just a fact that you need knowledgeable people to run government, and those people generally use that knowledge to make money. I don't think Obama understood the complexities of "reforming" the lobbyist/government relationship.

The larger problem is the presumption that these conflicts of interest can be managed. They can't. Tom Dachle had a long career building up the welfare state, and then he made considerable money explaining it and navigating it. The temptations for any one holding office, and their implications, are obvious. But the problem can't be "managed" by regulation. If you really believe career paths like Daschle's corrupt the formation of policy, you have to curb the size of govermnet to limit the value of government expertise to remove the temptations.

Power always corrupts. If you want less corruption, you need either more checks, or less power. If you can't have checks, then you have only one option.