Archive for June, 2009
Support for Federal Reserve Audit Increasing
Last week Cato hosted a policy forum on “Bringing Transparency to the Federal Reserve,” featuring Congressman Ron Paul. As mentioned in CQ Politics, Rep. Paul’s bill, HR 1207, has been gaining considerable momentum in the House, with currently 244 co-sponsors, ranging from John Boehner to John Conyers Jr. In fact, the Senate companion bill was introduced by Senator Bernie Sanders.
Fed Chairman Ben Bernanke discussed the very topic of Federal Reserve Transparency at Cato’s annual monetary conference in the Fall of 2007.
After praising moves toward greater transparency at the Fed, Bernanke argued that “monetary policy makers are public servants whose decisions affect the life of every citizen; consequently, in a democratic society, they have a responsibility to give the people and their elected representatives a full and compelling rationale for the decisions they make.”
Chairman Bernanke also goes on to argue that “improving the public’s understanding of the central bank’s objectives and policy strategies reduces economic and financial uncertainty and thereby allows businesses and households to make more-informed decisions.” Bernanke’s full remarks can be found in the Spring 2008 issue of the Cato Journal.
Over the last two years, we have seen an almost tripling of the Federal Reserve’s balance sheet to $2.3 trillion, resulting from the bailouts of AIG and Bear Stearns and the creation of 14 new lending programs.
Our recent forum, and Rep. Paul’s bill, bring much needed debate and focus to the issue of Fed’s inner-workings.
Filed under: Finance, Banking & Monetary Policy; Government and Politics
Gift Cards: What Congress Gives, the States Take Away
Little noticed in the recently enacted credit card bill was a provision prohibiting retailers and financial institutions from issuing gift cards that expired with a set time, except under certain circumstances. While card issuers had been using expiration dates to estimate and manage their liabilities, many States had been “collecting” the value of these unused cards as “abandoned property”, as discussed in today’s Wall Street Journal.
Some states have even been going after cards with no expiration date, arguing that if you leave that gift card sitting around your house or in your wallet for too long, then you’ve abandoned. What’s next, funds sitting unused in your bank account will next be considered abandoned. The States that require unused gift cards, or unused portions, to be turned over require retailer and card processors to maintain databases tracking card amounts and usage.
There is some comfort, however, in knowing that some States do allow you to re-claim your “abandoned gift dollars,” for instance of the $9.6 million collected by New York State last year in unused gift cards, rightful owners were able to recover $2,150.
Consumer Financial Product Commission Distracts from Real Reform
Today the Obama Administration released a 152-page draft bill to create a new Consumer Financial Product Commission. While intended to protect against consumer confusion and reduce the likelihood of future financial crises, the proposed agency will at best have little impact and at worst contribute to the next financial crisis, with the added effect of decreased homeownership and increased litigation.
The president promises that “those ridiculous contracts with pages of fine print that no one can figure out – those things will be a thing of the past,” The president ignores that those “ridiculous contracts” and “fine print” are the result of previous rounds of so-called consumer protections. The disclosures one receives with a mortgage or a credit card are those mandated by some level of government. They don’t call those credit card disclosures a “Schumer Box” because they were invented by a baron of industry. In addition to the government-mandated disclosures that have failed, are the endless amount of fine print added to protect companies from frivolous litigation. The Obama approach to that problem is to increase the amount of litigation.
If the president were serious about avoiding the next housing bubble and financial crisis, he would propose eliminating some of the various federal policies that contributed to the housing bubble. For instance, how about requiring real down payments when the taxpayer is on the hook – as with Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA). Talk about bad incentives; under FHA, a borrower can put almost nothing down and if the loan goes bad, the government covers the lender for 100 percent of their losses. No wonder we had a housing bubble. In addition, the proposed agency does nothing to address the underlying causes of any type of credit default: unemployment, unexpected health care costs or divorce.
Once again, when given the opportunity to address the real flaws in our financial system, the administration chooses to appease the special interests and provide a distraction from the underlying causes of our current financial crisis.
The Roberts Revolution to Come
As I mentioned yesterday, the U.S. Supreme Court surprised many people by ordering a reargument in the case of Citizens United v. Federal Election Commission. Specifically, the Court called for the parties to the case to address the question of overruling Austin v. Michigan Chamber of Commerce.
The Court decided Austin v. Michigan Chamber of Commerce in 1989. The state of Michigan had prohibited corporations from spending money on electoral speech. In the case in question, the Chamber of Commerce wished to pay for an advertisement backing a candidate for the House of Representatives. The Chamber took this action on its own and not in tandem with the candidate or his party. Paying for the ad was a felony under Michigan law.
A majority of the Court in 1989 said the Michigan law did not violate the First Amendment. However, the majority had a problem. Previous cases permitted limits on funding electoral speech only in pursuit of a compelling state interest: the prevention of quid pro quo corruption or its appearance. The Court had also ruled that independent spending by groups could not corrupt candidates.
So the majority needed a novel rationale for approving Michigan’s suppression of speech. The majority concluded that speech funded by corporations would distort the democratic process and that the state could prohibits such outlays to prevent harms done by “immense wealth.” In other words, the Austin majority tried to redefine “corruption” as “inequality of influence.” That revision had its own set of problems. Buckely v. Valeo, the Ur-decision in campaign finance, had excluded equality as a compelling state interest justifying regulation of campaign finance.
It is easy to see why the Buckley Court had rejected equality of influence as a reason for restricting political speech. Imagine Congress could prohibit speech that had “too much influence.” But how could that be determined? A majority in Congress would be tempted to suppress speech that threatened the power of that majority. Paradoxically, the equality rationale would strengthen those who already held power while vitiating representative government. The First Amendment tries to prevent that outcome.
In last year’s decision in Davis v. FEC, the Court again rejected the equality rationale for campaign finance laws. More and more the Austin decision is looking like bad law.
Justices Kennedy and Scalia, both current members of the Court, wrote dissents in Austin. Justice Thomas has called for Austin to be overruled in other contexts. Neither Justices Roberts nor Alito is likely to vote to uphold Austin (or the relevant parts of McConnell v. FEC for that matter). But it would seem that either or both of them were unwilling to strike down a precedent without a formal hearing. That hearing will come on September 9 with a decision expected by Thanksgiving.
Almost six years after the Court utterly refused to defend free speech in McConnell v. FEC, the Roberts Court may be ready to vindicate the First Amendment against its accusers in Congress and elsewhere.
Filed under: Cato Publications; Government and Politics; Law and Civil Liberties
Private School Productivity Off the Charts
A new study of Florida’s tax credit scholarship program was announced yesterday, reporting test scores both for private school students in the program and for low-income public school students. The report notes that scholarship kids were much more disadvantaged than even the low-income public school students, and it wasn’t able to control for those differences, so it produced no really meaningful findings. In other words, it didn’t have the data to find out what impact the scholarships are having academically.
By reporting the unadjusted test scores (and the lack of a significant difference between them for public and private school kids) it has raised some eyebrows. Jay Greene has a good explanation of why we should just wait until the study’s author, David Figlio, has some meaningful data before getting too excited.
For me, a key point is that the scholarship kids are receiving a maximum of $3,950 while Florida public schools spent upwards of $11,150 per pupil in 2007-2008. Public schools are spending nearly three times as much per pupil and have nothing to show for it. Is Florida doing so well economically that they can afford to blow tens of billions of dollars for no reason at all? Every year? I had no idea….
Incidentally, I calculated the per pupil spending figure myself from the published spending and enrollment data on the Florida DOE’s website. The St Petersburg Times story by Ron Matus quotes a public school figure of $7,000 per student, which is one of those make believe numbers that politicians and officials come up with that only represents a fraction of what is spent. I’d be surprised if the Times keeps reporting that number in the future, given how detached it is from reality.
Appointing Another Supreme Commander of NATO
The Obama administration has just carried out one of its standard rituals — choosing a new commander of NATO. But why are we still in NATO?
When Adm. James G. Stavridis took over the military’s Southern Command in late 2006, his French was excellent but he spoke no Spanish. Not content to rely on interpreters, he put himself on a crash course to learn the language.
Over the next three years, his fluency was measured not only in the high-level meetings he conducted in the native tongue of his military hosts. He also read the novels of Gabriel García Márquez, the Nobel laureate from Colombia, in the original rich and lyrical Spanish.
Now Admiral Stavridis’s boss, Defense Secretary Robert M. Gates, has given him a new assignment, which starts Tuesday.
“Jim must also learn to speak NATO,” Mr. Gates said.
As the new American and NATO commander in Europe, Admiral Stavridis, 54, becomes the first naval officer appointed to a position previously held by famed ground-warfare generals.
It is two jobs in one, as he oversees all American forces under the United States European Command and — far more important today — serves as the supreme allied commander, Europe, NATO’s top military position. He takes the NATO command as the future viability of the alliance is tested by whether he can rally members to make good on their promises to the mission in Afghanistan.
Adm. Stavridis obviously is a talented officer. Alas, his chance of winning more meaningful support from the Europeans for the mission in Afghanistan is nil. The Europeans don’t want to fight, especially in a conflict which they don’t view as their own.
But the most important question these days should be: why does NATO still exist — at least, a NATO dominated by America? No one, not even Russia, threatens “Old Europe.”
Moreover, Europe is well able to defend itself. The continent has a collective GDP more than ten times that of Russia, and even larger than that of America. Europe’s population, too, is bigger than those of both Russia and the U.S. The Europeans needed America’s military aid during the Cold War. But no longer.
What of the Eastern Europeans, who worry more about Moscow? We should wish them well, but we have no cause to threaten war on their behalf. Security guarantees should not be distributed like party favors, inexpensive gifts for friends and acquaintances alike. Rather, security guarantees should be issued to defend America. It is hard to make the argument that, say, Albania, is relevant to America’s security, let alone vital to it. Two decades after the end of the Cold War, we should start reshaping our alliance commitments to reflect our vital interest.
Attention GM Shareholders (That Means You!)
As my colleague Doug Bandow pointed out this morning, today’s Washington Post has an analysis about the uncertain prospects of GM ever making taxpayers whole again. It is a very similar analysis to the one I gave in this L.A. Times Dust-Up installment four weeks ago, although I find prospects unlikely, rather than just uncertain.
If GM emerges from bankruptcy next month in accordance with the pre-packaged Obama plan (as expected), taxpayers will be on the hook for $50 billion. That $50 billion will buy taxpayers a 60 percent stake in the company, which according to the laws of mathematics means that GM has to be worth $83.33 billion for the taxpayers to get their equity back without making a dime in capital gains or interest. In the L.A. Times, I asked:
How and when will that ever happen? At its peak in 2000, GM’s value (based on its market capitalization) stood at $60 billion. Thus, the minimum benchmark for “success” will require a 38% increase in GM’s value from where it was in the heady days of 2000, when Americans were purchasing 16 million vehicles per year. U.S. demand projections for the next few years come in at around 10 million vehicles. Taxpayer ownership of GM is something we should all get used to, and the “investment” is only going to grow larger. Think Amtrak.
Obama’s Back-Door Tax Hike on American Workers
A column in the Washington Post makes an excellent general observation about how taxes on business are actually paid by people. The piece also cites a couple of examples, including an explanation of why the Administration’s big tax hike on American multinational firms will backfire – which is the same argument I made in this video. The moral of the story, of course, is that a bigger burden of government is good for politicians, but bad for regular people.
Don’t Count on Getting Your “Investment” Back from Government Motors
The president and his appointees have expressed their hope that Government Motors will eventually pay back taxpayers for their “forced investment” in the company. But there aren’t many cases of this sort of lemon socialism actually paying off.
Now most everyone connected with GM is admitting the same thing. Reports the Washington Post:
If a new General Motors emerges from bankruptcy as planned, U.S. financial aid for the company will expand to nearly $50 billion, but neither the government nor the company is forecasting how much of the public money will be repaid.
It’s sure to be a stretch. For the United States to fully recover its investment, the value of General Motors stock will have to reach levels it has never before attained.
“I’m not going to predict it — that’s not my job today,” GM chief executive Fritz Henderson said in a recent interview.
“I don’t know how much we’re going to recover,” a senior Obama administration official said as the company headed into bankruptcy last month.
This uncertainty stems from the difficulty in valuing the 60 percent GM stake that the United States will receive in exchange for the public investment. The government also gets preferred shares and other compensation.
The stake will be worth enough to fully cover the government’s direct investment only if GM’s stock rises above $68 billion. Even at its recent 2000 peak, GM’s stock was worth only $56 billion.
“I don’t see GM hitting those benchmarks in a very long time,” said Maryann Keller, a veteran automotive analyst and author of “Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors,” which was published in 1989.
She noted that global competition will continue to squeeze American automakers. Though the world’s factories can produce about 100 million vehicles a year, demand for them only stands at about 55 million, and the gap will push prices and profits down, she said.
“It’s very unlikely” that the government will recover its money, said David Whiston, auto equities analyst at Morningstar. “GM will be a smaller company after the bankruptcy and there are going to be more foreign automakers entering the market that will make GM’s efforts more difficult.”
Oh, well. As they say, it’s only money!
Filed under: Finance, Banking & Monetary Policy; Tax and Budget Policy
Some Thinking on “Cyber”
Last week, I had the opportunity to testify before the House Science Committee’s Subcommittee on Technology and Innovation on the topic of “cybersecurity.” I have been reluctant to opine on it because of its complexity, but I did issue a short piece a few months ago arguing against government-run cybersecurity. That piece was cited prominently in the White House’s “Cyberspace Policy Review” and — blamo! — I’m a cybersecurity expert.
Not really — but I have been forming some opinions at a high level of generality that are worth making available. They can be found in my testimony, but I’ll summarize them briefly here.
Iraq’s Future Is Up to Iraqis
The U.S. is not yet out of Iraq, but American forces have pulled back from Iraqi cities. Iraq’s future increasingly is in the hands of Iraqis. And most Iraqis appear to be celebrating.
This is no longer America’s war.
Iraqis danced in the streets and set off fireworks Monday in impromptu celebrations of a pivotal moment in their nation’s troubled history: Six years and three months after the March 2003 invasion, the United States on Tuesday is withdrawing its remaining combat troops from Iraq’s cities and turning over security to Iraqi police and soldiers.
While more than 130,000 U.S. troops remain in the country, patrols by heavily armed soldiers in hulking vehicles as of Wednesday will largely disappear from Baghdad, Mosul and Iraq’s other urban centers.
“The Army of the U.S. is out of my country,” said Ibrahim Algurabi, 34, a dual U.S.-Iraqi citizen now living in Arizona who attended a concert of celebration in Baghdad’s Zawra Park. “People are ready for this change. There are a lot of opportunities to rebuild our country, to forget the past and think about the future.”
On Monday, as the withdrawal deadline loomed, four U.S. troops were killed in the Iraqi capital, the military announced Tuesday. No details about the deaths were provided. Another soldier was killed Sunday in a separate attack.
The Bush administration never should have invaded Iraq. The costs have been high: more than 4,000 dead American military personnel. Tens of thousands more have been injured, many maimed for life. Hundreds more military contractors and coalition soldiers have died. And tens of thousands of Iraqis — certainly more than 100,000, though estimates above that diverge wildly.
The U.S. has squandered hundreds of billions of dollars and the ultimate cost is likely to run $2 trillion or more, as the government cares for seriously injured veterans for the rest of their lives. America’s fine fighting men and women have been stretched thin and America’s adversaries, most notably Iran, have been strengthened. Yet another cause has been added to the recruiting pitch of hateful extremists seeking to do Americans and others harm.
Nevertheless, let us hope that Iraqis take advantage of the opportunity they now enjoy. It will take enormous statesmanship and restraint to accommodate those of different faiths and ethnicities, forgive past crimes committed by Sunni and Shia forces, eschew violence for retaliation and revenge, resolve even bitter disagreements peacefully, and accept political defeat without resort to arms.
Other peoples who have suffered less have failed to surmount similar difficulties. But it is no one’s interest, and especially that of the Iraqis, to lapse back into sectarian conflict and political tyranny. Let us hope — and dare I suggest, pray? — that they prove up to the challenge.
Citizens United Case to Be Reargued in Supreme Court
The U.S. Supreme Court has decided not to decide in its current term the campaign finance case, Citizens United v. Federal Election Commission. Instead, the Court issued an order that the case should be reargued. The parties in the reargument should address the question of whether the Court should overrule two of its earlier decisions. In the Austin v. Michigan Chamber of Commerce, the Court held that state legislatures may prohibit spending by businesses on electoral speech. In McConnell v. Federal Election Commission, the Court validated limitations on electoral speech in McCain-Feingold.
The Court could have decided Citizens United on relatively narrow grounds. Instead, it has explicitly drawn into question two of its precedents upholding limitations on political speech. It seems likely that five members of the Court are prepared to overrule both precedents, but at least one justice was unwilling to do so without a formal argument.
We appear to be on the brink of a significant liberalization of campaign finance law.
For more on this important case, see below:
Finally, an Ally That Doesn’t Wait for America
Washington’s willingness to toss security guarantees about the globe like party favors has encouraged other nations to do little for their own defense. From the European, Japanese, and South Korean standpoint, why spend more when the Americans will take care of you?
But it looks like Australia takes a different view, and is willing to do more to defend itself and its region. Reports the Daily Telegraph:
The latest defence White Paper recommends buying 100 advanced F-35 jet fighters and 12 powerful submarines equipped with cruise missiles, a capability which no other country in the region is believed to possess.
The “potential instability” caused by the emergence of China and India as major world powers was cited as the most pressing reason for this military build-up. In particular, Australian defence planners are believed to be concerned about China’s growing naval strength and America’s possible retreat as a global power in the decades ahead.
Chinese officials say their country’s growing power threatens no-one. Behind the scenes, Beijing is thought to be unhappy about Australia’s White Paper, with one Chinese academic saying it was “typical of a Western Cold War mentality”.
But the Chinese navy has almost doubled the number of secret, long-distance patrols conducted by its submarines in the past year. The reach of its navy is extending into Australian waters. China is also acquiring new amphibious assault ships that can transport a battalion of troops.
So instead of calling Washington to deal with Beijing, the Australians are building up their own navy. Novel approach! Now, how can we implant a bit of the Aussie character in America’s other friends around the globe?
Honduras’ President Is Removed from Office
Honduran President Manuel Zelaya is just the latest democratically elected Latin American leader to violate his country’s constitution in order to achieve his political goals. Both he and the practice of democracy in Honduras are now paying the price.
The removal from office of Zelaya on Sunday by the armed forces is the result of his continuous attempts to promote a referendum that would allow for his reelection, a move that had been declared illegal by the Supreme Court and the Electoral Tribunal and condemned by the Honduran Congress and the attorney general. Unfortunately, the Honduran constitution does not provide an effective civilian mechanism for removing a president from office after repeated violations of the law, such as impeachment in the U.S. Constitution. Nonetheless, the armed forces acted under the order of the country’s Supreme Court, and the presidency has been promptly bestowed on the civilian figure — the president of Congress — specified by the constitution.
Restoration of stable democracy in Honduras could benefit from two things: one, the Electoral Tribunal and Congress calling for general elections earlier than they are scheduled in November; and two, an international condemnation of moves by strongarm figures like Zelaya to undermine democratic institutions and the rule of law.
Filed under: Foreign Policy and National Security; International Economics and Development
Spinning…When a President who Seeks Dictatorial Powers in an Illegal Move Is Removed by the Congress and by the Supreme Court, Is it a “Military Coup”?
The media discussion of events in Honduras is remarkably confused. Here’s CNN:
The president of the U.N. General Assembly scheduled a noon session Monday to discuss the situation in Honduras, following a military-led coup that ousted the sitting president.
and
Micheletti, the head of Congress, became president after lawmakers voted by a show of hands to strip Zelaya of his powers, with a resolution stating that Zelaya “provoked confrontations and divisions” within the country.
….
The coup came on the same day that he had vowed to follow through with a nonbinding referendum that the Honduran Supreme Court had ruled illegal.
Imagine that George Bush, Barack Obama, Bill Clinton, Ronald Reagan or some other American president had decided to overturn the Constitution so that he could stay in power beyond the constitutionally limited time. To do that, he orders a nationwide referendum that is not constitutionally authorized and blatantly illegal. The Federal Election Commission rules that it is illegal. The Supreme Court rules that it is illegal. The Congress votes to strip the president of his powers and, as members of Congress are not that good at overcoming the president’s personally loyal and handpicked bodyguards, they send police and military to arrest the president. Now, which party is guilty of leading a coup?
This is another example of populist, dictatorial, anti-democratic thought parading as “democratic.” I discuss the issue in my recent lecture on enduring democracy in New Delhi.
Beginning of the End for Bernanke
Fed Chairman Bernanke’s term as Chair ends in January 2010. So far President Obama has offered Bernanke praise for his performance, but little else. After last week’s House Oversight Committee hearing focusing on Bernanke’s role in Bank of America’s purchase of Merrill Lynch, it is now readily apparent that the Chairman has few supporters on Capitol Hill. While his nomination will not be subject to the approval of the House of Representatives, or any of its Committees, the Senate Banking Committee’s reaction to Treasury Secretary Geithner’s plan to extend the Fed’s power serves as a useful proxy in gauging that Committee’s view of the Fed’s recent performance.
Several recent polls show President Obama to be broadly popular with the American public, while the public holds some concern over the scope and cost of his policies. His policy that garners the least support has been his bailout and support for the auto industry. It is no secret that the American public was not enthusiastic about the bailouts at the time, and is even less so now. With Hank Paulson having left the stage, Bernanke is now the public face of corporate bailouts. While having Bernanke around may offer President Obama a convenient target for the public’s anger over bailouts, re-appointing Bernanke would finally force Obama’s hand — so far he’s managed to support the bailouts with little fallout, as Bush and others have taken the blame. Re-appointing Bernanke makes him Obama’s pick.
In addition to political risk to President Obama, one can assume that many Senate Democrats are not looking forward to having to vote for the man who bailed out AIG. It is a fair bet that many Republican Senators would not vote for Bernanke’s re-appointment, leaving it up to the Democrats to secure his re-appointment.
Whatever the merits, or flaws, in his performance as Federal Reserve Chair, support for Bernanke’s re-appointment is becoming a proxy for one’s support, or opposition, to corporate bailouts.
Fixing Detention
The Obama administration performed another Friday afternoon Guantanamo news dump last week, indicating that it will probably maintain administrative military detention of combatants under a forthcoming executive order.
This is unnecessary executive unilateralism. As Benjamin Wittes and Jack Goldsmith point out in today’s Washington Post, this is a debate that ought to be held in Congress.
This would not be a tough push for Obama. The Obama administration already amended its claim of authority in a filing with the District Court for the District of Columbia, the judicial body sorting through the detainees remaining at Gitmo. Convincing Congress to ratify this decision should not be hard; the differences between the Bush administration’s “enemy combatant” criteria and what the Obama administration defines as “substantially supporting” Al Qaeda and the Taliban are minute. As I wrote in a previous post on detention definitions and decisions, the actions proscribed under these two standards and the activities constituting the “direct participation in hostilities” standard used in the case of Salim Hamdan are nearly identical.
The only positive news about the pending announcement is that the creation of a national security court specializing in detention decisions is probably not in the cards. As I have said before, national security court proposals play the propaganda game the way terrorists want to and often revive the prospect of domestic preventive detention of terror suspects, to include American citizens who would otherwise be charged with a substantive crime for domestic acts. The Cato Institute filed an amicus brief opposing this practice in the Padilla case.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
The Ricci Ruling: A Victory for Merit over Racial Politics
Ricci is a victory for merit over racial politics—which is appropriate given that the ruling overturns a lower court panel that included Sonia Sotomayor.
In the blockbuster decision we’d been awaiting all term, the Court reached the correct result: The government can’t make employment decisions based on race. While the city’s desire to get more blacks into leadership positions at the fire department is commendable, it cannot pursue this goal by denying promotions simply because those who earned them happen to have an inconvenient skin color.
This ruling is the latest in a series of steps the Court has taken to strike down race-conscious actions that violate individual rights—and thus is a blow both to the Obama administration (which sided with the city in Ricci) and to the nomination of Judge Sotomayor. Those who bring cases before the courts deserve much more than empathy or even “sympathy”—the word Justice Ginsburg uses in her dissent—they deserve equal treatment under the law.
Supreme Court Rules on Ricci v. DeStefano
In its opinion today in Ricci v. DeStefano, the Supreme Court came down solidly for upholding the equal protection of the law.
The political implications of this decision for the Sotomayor nomination are several, but her refusal to wrestle with the important issues at stake and to side summarily with the city, together with her many statements off the bench about “identity politics,” should make for very interesting confirmation hearings just two weeks ahead.
The Court reversed the decision of the Second Circuit panel on which Judge Sonya Sotomayor sat, which had upheld, summarily, the lower court’s decision to allow the city of New Haven to throw out the results of a racially neutral promotion exam for city firefighters after whites did better than blacks on the exam.
As the Court said, all the evidence suggests that the city rejected the test results because the higher scoring candidates were white. The city’s rationale for engaging in this intentional discrimination was to avoid a suit by black firefighters. But the city could take the position it did only if there were strong evidence that its test was racially biased or not job related or that there was some other equally valid non-discriminatory test that the city refused to administer. There was no such evidence, the Court concluded. Had the city been sued by the black firefighters, it would have won.
Thus, it’s rationale for throwing out the test results will not withstand scrutiny. The city engaged in outright intentional discrimination.
Federal University
There is no official word on this yet, but according to Inside Higher Ed the Obama Administration is putting the finishing touches on a proposed “National Skills College” that will include federally designed — and owned — courses:
The funds envisioned for open courses — $50 million a year — may be small in comparison to the other ideas being discussed. But in proposing that the federal government pay for (and own) courses that would be free for all, as well as setting up a system to assess learning in those courses, and creating a “National Skills College” to coordinate these efforts, the plan could be significant far beyond its dollars.
Darn right it could be significant! Washington would for all intents and purposes be on the way to creating a federal university, and not one like the service academies that is constitutionally justifiable under federal defense powers. No, this one would be completely and utterly unconstitutional, and would unfairly compete with lots effective private — including for-profit – institutions. And, of course, there’s the little matter of how this would be paid for.
I’ll have more on this as details become available.
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