Misguided Priorities In Sentencing

The 10th Circuit held yesterday, in an unpublished opinion in the case of United States v. Ward, that acquitted conduct (in this case, a murder charge) can be used to enhance a sentence or depart upward using discretionary guidelines, but cannot be used as a basis to order restitution.

What Happened?

The case involved two charges, attempt to manufacturer methamphetamines and murder. The charges arose from a 2003 fire in Oklahoma that killed the defendant's girlfriend and a friend of his, and injured him and another friend, in a trailer which contained a meth lab. The federal courts had jurisdiction over the murder charge because one of the deceased was an enrolled member of an Indian tribe. The jury convicted him of attempting to manufacture meth, but acquitted him of murder.

The amount of drugs for purposes of sentencing was zero, as there was no proof that the drugs ended up being produced, even though the jury agreed that a lab had been constructed for that purpose. The twenty-five year old man (at the time of the offense) was sentenced to 327 months (i.e. 27 years, 3 months) in prison on the attempted manufacture of drugs charge.

Right On The Law

The sentencing and restitution results are consistent with U.S. Supreme Court and 10th Circuit precedent. With respect to sentencing, the cases include United States v. Watts, 519 U.S. 148, 154 (1997) (per curiam) and United States v. Moore, 130 F.3d 1414, 1416 (10th Cir. 1997). With respect to restitution, the cases include Hughey v. United States, 495 U.S. 411, 413 (1990) and United States v. Wainright, 938 F.2d 1096, 1098 (10th Cir. 1991).

The Law Is An Ass

This state of the law, however, is nonsensical. As the Court notes:

Because restitution is not criminal punishment in the Tenth Circuit, Blakely and Booker do not apply to restitution orders. United States v. Westover, 435 F.3d 1273, 1277 n.5 (10th Cir. 2006).

In other words, you have no more constitutional rights with regard to criminal restitution orders than you do in a civil case in the 10th Circuit. A criminal defendants' right to avoid restitution for acquitted conduct flows solely from an interpretation of the federal criminal restitution statute. 18 U.S.C. Section 3663.

In contrast, sentencing decisions, under the U.S. Supreme Court's rulings in Blakely, 542 U.S. 296 (2004), and Booker, 543 U.S. 220, 125 S. Ct. 738 (2005), are protected by a constitutional 6th Amendment right to have "[a]ny fact (other than a prior conviction) which is necessary to support a sentence exceeding the maximum authorized by the facts established by a plea of guilty or a jury verdict [to] be admitted by the defendant or proved to a jury beyond a reasonable doubt."

Yet, despite this lip service to a criminal defendant's right to a jury trial, a judge may ignore the jury's acquittal when setting a sentence with the minimum and maximum ranges allowed as a result of the conviction.

It is hard to see anything more pernious than a system that allows a judge to disallow restitution to the families of the deceased, because the defendant was not convicted of murder (about $11,000), yet permits him to face up to five more years in prison because of the same deaths, as happened in this case.

[T]he district court sentenced Ward to the top of the guideline range. In doing so, the court stated: "I am giving [Ward] the maximum under the guidelines, as I do believe he caused the death of two people." (R. Sentencing Tr. at 12.)

Caveats

The key issue here is the legal principle. The case itself is hardly a cause celebre, for a number of reasons.

Admittedly, this is not the cleanest case of sentence enhancement based upon acquitted conduct. The guidelines range to use was arguably not itself based on acquitted conduct.

One of the key sentencing factors was that the defendant has two prior felonies (each seven years old and committed when he was eighteen years old) when was convicted of a crime statutory maximum sentence of twenty-five years or more. He had "two 1996 convictions for manufacturing and/or attempting to manufacture methamphetamine," a fact that was introduced at trial. The sentence would have been longer (a guideline offense level 37 rather than 34) if he had been convicted of murder as well, so that the acquittal did mean something, however slight. Another sentencing factor related to the deaths didn't factor into the result because it was overshadowed by the prior conviction factor.

But, the deaths themselves were the basis of the selection made within the guideline range of 262 to 327 months. Without the court's belief that he caused the deaths, conduct of which he was acquitted, he might have received as much as five and a half years less in prison.

The maximum sentence imposed likely would have been an abuse of discretion if acquitted conduct were not a permissible factor, although that wouldn't be a sure thing.

One argument at trial had been that the deadly fire was unrelated to the meth lab. But, it isn't clear if the jury could have instead ruled that he lacked an intent to kill and didn't have an available less included offense such as negligent homicide, or if they truly believed that causation was not established. One could sensibly believe that the meth lab did cause the fire, but that it was a result of only non-criminal negligence, rather than criminal negligence, recklessness, knowing conduct or intentional conduct. In that case, it would arguably be permissible to consider the deaths as an aggravating factor, as that wasn't the conduct for which he was acquitted. The trial court's opinion, however, left no indication that it made this fine distinction when it imposed its sentence.

Kill The Infidels and the Moderates.

Welcome to the world of Christian videogames, where those who aren't born again die.

Please die Unity08.

Denver based group Unity08 is trying to launch a temporary third party for the 2008 Presidential election.

My reaction is simple. I hope it will shrivel up and die. Fortunately, given the way the system works, I am likely to get my wish. It has no candidates lined up and not much of an agenda.

While winning the White House is the primary goal, getting Republicans and Democrats to listen to mainstream voters is also high on the list, organizers said.

"We want to force them to pay attention to the crucial issues," said Jim Jonas, chief executive of Unity08.

Those issues, he said, include global terrorism, education, health care, the national debt and nuclear proliferation.

They are different from the "important" issues - gay marriage, gun control and abortion - that Unity08 says should be addressed, but should not dominate the national agenda and campaign rhetoric.

Colorado and the United States already have a political party that cares about global terrorism, education, health care, the national debt and nuclear proliferation. It is called the Democratic party. The party obsessed with guns, gays and abortion is called the Republican party. Unity08 adds nothing to the debate and has nothing to say.

We don't need a spoiler in the next Presidential election that will undermine candidates addressing the issues Unity08 claims to care about, which is precisely what every third party does in our current electoral system. Until either runoff voting, or instant runoff voting is adopted for Presidential electors in Colorado, third parties only hurt their political allies in the existing two party system.

If Unity08 wants to make a positive change, it should sponsor ballot initiatives to change the system to encourage moderation, not run candidates for President and Vice President.

Drug Free Zone Unintended Consequences

Utah has joined the ranks of states where drug free zone laws have proved unfair and problematic. Perhaps most ironically, they encourage cops to set up string operations, dangerous events that can lead to gunfire and the like, near the schools and churches the legislature sought to keep free from that kind of danger, in pursuit of higher penalties.

[P]olice have deliberately set up undercover buys in church or school parking lots, or initiated stops in front of a parking lot to trigger the more serious charge, [wrote] Michael Sibbits, former chairman of the Board of Pardons and Parole.

Also, notably, few of the cases in drug free zones (a first degree felony offense) involve children:

Christine Mitchell, deputy director of the Utah Department of Corrections, looked at 45 first-degree felony cases over a 12-month period. In only three cases were children present when the offense occurred.

Drug free zones sound good in theory, but they simply do not work in practice.

Gay Rights For the Reality Based

Al Knight has an opinion piece in which he argues against a gay rights proposal that will be on the ballot this year backed by Coloradans for Fairness and Equality. In it, he criticizes one of their TV ads for saying that you are born gay.

One ad shows a fetching photo of an infant who, the ad announces, is deprived of a whole series of rights simply because he was "born gay." This claim ignores a large body of evidence suggesting that homosexuality is not merely a genetic issue.

Sorry Al. You are the one whose science is out to lunch. As noted previously at this blog, sexual orientation has a very substantial component that is present, if not genetically, at least, at birth.

"[T]he roots of homosexuality, at least in men, appear to be in place by the time a child is born." Two to four percent of men are born gay. It is probably partially genetic, but as there are gay-straight identical twin pairs, this isn't the whole story. It probably has some component of events that take place in the womb, probably early in a pregancy. Maybe it involves hormone exposure, maybe a virus, maybe something else.

Contrary to Knight's claim, there is no strong scientific evidence that suggests otherwise. If he knows this, he is himself misrepresenting the situation, by omission with the weasel words "genetic" when the claim itself is that you are born gay. If he doesn't, than he is more one bigot basing his main claim on ignorance.

Knight then goes on at some length to argue that domestic partnerships are unnecessary because hospital visitation can be achieved with medical powers of attorney. Great! So, Al, why not abolish civil marriage entirely then? You don't think that's a good idea? I didn't think so.

Denver Happenings

The City has a map (page 8, warning, large file) showing where graffiti takes place. There is, not surprisingly, very little in the area South of 6th Avenue and East of Downning. It is also scarce in Park Hill and all points East of there. West Denver, Five Points, Downtown and Capitol Hill, in contrast, are graffiti hubs.

The same report also has a nice little chart explaining how bad various flood levels (when driven by rain alone) are likely to be, although the report is incomplete as it doesn't even acknowledge that many of the worst urban floods involve the failure of some part of the flood control infrastructure (and this is not just a New Orleans Hurricane issue, we've seen levy failures causing flooding in both mountain towns and Grand Junction, Colorado. In Denver, a high line canal breech could cause real damage).

Finally, the 16th Street pedestrian bridge over I-25 (the Highland Bridge)is under construction (and has its own website). This link, in connection with the existing Millenium Bridge over the rail lines South of LoDo, and the Platte River bridge, will finally establish a dedicated foot and bike connection between Northwest Denver neighborhood of Highland and Downtown, and will effectively extend the 16th Street Mall all the way from Broadway to Northwest Denver. The design, shown in numerous artist's conceptions in the links above, is less high concept than the Millenium Bridge. It is a simple functional suspension bridge with small concrete plazas at each end, with similar materials and style choices (despite its greatly simplified form) to the Millenium Bridge. It will look done, according to the project schedule, with an arch and deck in place, at the end of July. The actual completion date will be in October of this year.

And, while the construction projects are all exciting, this doesn't mean that everything is humming in Denver's City government. While Mayor Hickenlooper has taken many positive steps to improve Denver, one of the items he campaigned upon, improving the permit process, remains unfinished, as he has himself admitted in interviews with the press. The concrete impact of that is that I personally have encountered three different businesses who have been seriously harmed by delays in the permitting process. Two failed with resulting substantial financial hits to the prospective entrapreneurs. One finally managed to get up and running, but at great cost to the business people involved. The problem is not that the process is too expensive, indeed, it may very well be too cheap, since it doesn't seem to be funding the necessary staff. The problem is delay. A typical new business loses tens of thousands of dollars of revenue for every month of delay, and new businesses tend to lack the working capital before the begin to suffer this delay with equaniminity.

I am not anti-regulation, and neither is Mayor Hickenlooper. But, a process that takes a long time simply discourages voluntary compliance with the rules, even by people who are more than ready to comply with those rules, and to the extent that these delays are not substantively necessary but merely the result of red tape, do not advance any public purpose.

This may be a case where the main problem is not really the process, although those timelines could be trimmed. This may be a case where simply increasing staffing, at entrapreneur expense through higher permit fees, may be all that is necessary to make a big dent in the problem. Also, as new regulation is enacted, the City needs to think twice about proposing permit based solutions. Often, this don't work anyway, as a recent case where an unpermitted limo driver with a DUI conviction who was a registered sex offender ran over a young woman going to prom, costing her leg illustrates. Reports on the case indicated that most limo drivers, knowing that the fine for non-compliance was only $100, simply ignored it, and in most cases, where the permit is simply another tax, why shouldn't they. Laws that simply make it illegal to have a driver who is not in compliance and impose civil and criminal liability for the failure, combined with business based auditing, might be just as effective, if not more so, even in the absence of a permitting process.

Life Without Harm Reduction

Drugs cut with poisonous impurities don't kill people in Switzerland because it employs a harm reduction approach to heroin addition. In Detroit, this approach isn't used. In the last week and a half, bad heroin in that city has killed at least 48 people. There have been about 150 deaths from heroin, mostly mixed with poisons, since September in the Motor City.

Energy Conservation

Energy production is centralized and engineers have made power plants very efficient. There is only so much more that can be squeezed out of that part of the larger power system. Energy conservation, in contrast, has considerable room for improvement.

Consider the question of household and commercial lighting (paid registration may be required):

In the United States, for instance, $55 billion worth of electricity—some 22 percent of the nation's total—goes annually to light homes and businesses. That sum is roughly equivalent to the output of 100 large power plants. Pollution associated with the energy needed for lighting is also large: Annually, about 450 million tons of carbon dioxide and 3 million tons of smog-generating nitrogen oxides and sulfur dioxide.

Step one is converting from high wattage conventional bulbs to lower wattage alternatives. The flourescent bulb in my office, for example, draws 26 watts and provides the same level of illumination as a 100 watt conventional bulb.

Incandescent bulbs, including halogen types, are energy hogs: Typically emitting as light only 5 percent of the energy they use, they convert the rest to heat. Because incandescent bulbs are cheap, their light can seem less expensive than a fluorescent tube's. However, incandescents put out only 15 to 20 lumens per watt, less than one-quarter the output of fluorescent tubes. And an incandescent lasts only about 750 hours, some 8 percent of the typical fluorescent tube's life.

Organic and non-organic LEDs (light emitting diodes) are another story. Currently they are a niche application. Traffic lights and automobile tail lights are two of the biggest uses. But, they have great potential.

LEDs are already in the efficiency range of fluorescent tubes, and researchers predict that they'll ultimately deliver about 150 lumens per watt in commercial applications throughout a projected lifetime of at least 70,000 hours. Smaller than a fingernail, these solid-state devices directly convert about 20 percent of the incoming electrical energy to light. They dissipate the rest as heat, although they don't become hot to the touch.

Let's review:

Incandesent Lights 750 hours, 15-20 lumens per watt
Flourescent lights 6,000 hours, 60-80 lumens per watt
LEDs 70,000 hours, 150 lumens per watt (projected potential)

OLEDs can be made to be flexible, and LEDs work well with task lighting that lights only the area where you need light, rather than an entire room, and are well suited to low voltage, off the grid applications.

Another development uses fiber optic fibers to deliver outside sunlight to interior spaces, with each fiber carrying the equivalent of a 30 watt incandescent bulb of sunlight.

The bottom line is the new lighting technologies, most of which are actually cheaper in total non-energy costs than conventional systems as well, could reduce U.S. demand for electricity by the equivalent of 80-90 power plants worth.

This isn't the only area where major gains can be secured with energy conservation. In dry climates, favoring evaporative coolers over conventional air conditioning can save an immense amount of electricity. Improved building insulation cuts both air conditioning costs and heating costs. One area window installer was willing to guarantee in writing that my home heating costs would fall 50% in the first year after they were installed, if I replaced my single pane, metal framed windows with their product. Improved clothing washers, dishwashers and more efficient water heating systems of various kinds all reduce water heating costs. And, of course, more fuel efficient choices of commuting vehicles can have an immense impact.

Certainly, there is room for improvement on the supply side of energy policy, as well as the demand side. But, while we are increasingly seeing diminishing returns in new oil exploration efforts, as the easier to exploit reservoirs are depleted (oil shale, one commonly discussed exploration alternative has less energy per volume than breakfast cereal), conservation gains look like a more promising focus for our policy efforts.

Do We Need A Council of Wizards in America?

I was freshly reminded of the power of religious symbolism by National Public Radio's coverage this morning of the Shi'ite Muslim story of the hidden 12th Imam and the influence of that story of Iranian politics. The intense interest in a not terribly well written book and ill executed movie, the Da Vinci Code, which is fundamentally about religious symbolism, also highlights this power.

The real power of the supernatural, of course, is not the power to bend spoons with your mind, or turn people into frogs. It is the power that belief in the supernatural has to influence human behavior. No one has ever broken their mother's back by stepping on a crack, or endured seven years of bad luck for breaking a mirror, but millions of people act, at least some of the time, as if these events had that effect. Of course, mere folk superstition is not the most powerful supernatural influencer of people. It is religion. Religious symbolism, and indeed, symbolic messages more generally, can move people and influence their opinions. For example, religious belief is a relatively good predictor of political opinion.

President George W. Bush, whose real introduction to politics was as a liaison to his father's presidential campaign for the conservative Christian community knows this as well as anyone.

But, all politics are local, and as a result, our leadership in Washington D.C. is perennially parochial in its worldview. Even national leaders made it to their place in the spotlight mostly from local political scenes, not national or international elites. Today's appointment of Treasury Secretary Hank Paulson the CEO of nationally known brokerage Goldman Sacks, is the exception that proves the rule. The result is a class of political leaders with a keen ear for the symbolism of the political romping grounds that brought them to power and an acute tone deafness for the symbolic sensibilities of the wider international stage.

The diplomatic corps, particularly the newly emphasized (if less than successfully prosecuted) concept of public diplomacy, has some impact here. But, only a little.

The ambassadors who channel information about world opinion are too often political appointees receiving their just rewards for a lifetime of loyalty to the cause with little diplomatic expertise or experience. The Bush Administration appointment of David Wilkens, who was the Republican Speaker of the South Carolina House of Representatives, as ambassador to Canada, despite the fact that he had only visited the country once three decades earlier, while in the National Guard, is typical.

Likewise, Undersecretary of State for Public Diplomacy Karen Hughes has been less than effective in her post. It is hard to recall a time when the United States has been held in lower esteem abroad. This isn't surprising given her background, which her official biography describes as follows:

A longtime advisor to President Bush, Ambassador Hughes served as Counselor to the President for his first 18 months in the White House. As Counselor, she was involved in major domestic and foreign policy issues, led the communications effort in the first year of the war against terror, and managed the White House Offices of Communications, Media Affairs, Speechwriting and Press Secretary.

Ambassador Hughes returned to Texas in 2002 but continued to serve as an informal advisor to the President and was a communications consultant for his 2004 re-election campaign. She is the author of Ten Minutes from Normal, the story of her experiences working for President Bush, and she helped write the President's autobiography, A Charge to Keep.

Ambassador Hughes is a former Executive Director of the Republican Party of Texas and a former television news reporter for KXAS-TV, the NBC affiliate in Dallas/Fort Worth. Mrs. Hughes is a Phi Beta Kappa and summa cum laude graduate of Southern Methodist University, where she earned a Bachelor of Arts degree in English and a Bachelor of Fine Arts degree in Journalism. She is a wife and mother and an elder in the Presbyterian Church.

Is Ms. Hughes a loyal and effective political aide and spokesperson? Absolutely. Is there anything in her background that would suggest that she has a scintilla of expertise in discerning how U.S. actions will be interpreted abroad? Not much. Her foreign policy experience began in the White House, rather than being the force that drove her there. Had she spent a semester abroad or engaged in foreign journalism before joining the President's diplomatic team? It isn't clear that she had.

Thus, rather than insulating the United States from its parochial tendencies abroad with helpful feedback to the President, the ambassadorial corps more often serves to emphasize those tendencies.

But, the job of managing the symbolism conveyed by U.S. policy makers abroad remains a vital task, even if those formally charged with carrying out that task are grossly incompetent at it, and for institutional reasons going back centuries, are likely to remain so. Managing symbolic messages received abroad from the U.S. government is a job that must be close to the President, for symbolism is so intimately intertwined with an administration's political message that it must be managed from the top, and yet sufficiently low profile that the temptation to appoint politicians is overshadowed by the need for experts. It is also a task ideally carried out in private, to avoidembarrassingg the administration, something that line officers in the state department, who must testify on demand in the face of Congressional inquiry is ill suited to carry out. In short, the ideal location for this function is not the State Department, but the Executive Office of the President which is also home to the Council of Economic Advisors, Council on Environmental Quality and the National Security Council, as well as the various officials dubbed "czars" by the media like the Office of National Drug Control Policy a.k.a. the "Drug Czar". The Executive Office of the President is also home to Karl Rove, who as deputy chief of staff, evolved into President George W. Bush's chief political advisor and head message maker.

Hence, the Council of Wizards. Now, why do I call them wizards, which, of course, could not be the official title of the post. Something like the "Council On International Understanding" or "Public Diplomacy Council" or even "Council of Spiritual Advisors" might be a better fit, although the latter name seems destined to be filled with evangelical clergy. But, just as individuals with broad interdisciplinary authority in the Executive Office of the President are generally called "czars", these officials could use a popular name, and "wizards", who would be professional manipulators of public belief in the supernatural in furtherance of state interests, seems an apt shorthand for the job.

The wizards would supply expertise about Islam, Hinduism, Buddhism, Shinto and any other unfamiliarspirituall, religious and superstitious sensibilities abroad which would address administration lack of expertise, and suggest ways in which the administration could act symbolically and craft its message to better respond to those sensibilities. They might be people with PhDs, or people who grew up abroad and have first hand experience with foreign public opinion. They would be assigned to worldviews, rather than countries or policy areas (not unlike the President himself in his father's campaign.) Unlike CIA operatives, they would have little or nothing to do with information obtained from covert sources. There is more than enough ignorance to go around in Washington, and simply filling the part of the gap that can be filled from publicly available sources would be a welcome improvement.

Sometimes the suggestions would be designed to avoid gaffs. Don't name your next major weapons system the Crusader, something that the U.S. Army, U.S. Navy, and British Army have all done in recent history, and by all means, do not call war on terror a crusade. Avoid images of afternoons of beer, pork roasts and scantily clad women associated in any way with the U.S. government, especially during Ramadan, especially in or near U.S. interests in the Islamic world.

At other times, the wizards could identify opportunitiess for the administration to make a positive statement. For example, Middle Eastern leaders of all political stripes have long made it a point to provide for widows and orphans of suicide bombers, in an act that has drawn on Koranic injunctions to provide for widows and orphans. The United States Department of Defense, in fighting wars in Iraq and Afghanistan, ought to consider having the President make high profile similar gifts both to victims of its own actions and the widows and orphans of Iraqi police trainees and security forces killed by insurgents, assuming obligations customary in Islamic sensibilities.

Sometimes, the wizards would influence policy. For example, the U.S. prison in Guantanamo Bay, Cuba is fundamentally a symbolic operation. Its 500 or so inmates are only the tip of the iceberg, most like important intelligence, and the new detainees have long sense been diverted to a separate secret CIA gulag. The intended message of Gitmo, as much for domestic conservative supporter's consumption as abroad, is that the U.S. will be tough and go after terrorist unhampered by the fine points of the law, so you better not mess with the United States. The message received has been rather different, something along the lines of the United States is an evil empire that doesn't care about justice so you need to consider joining the jihad and signing up as a suicide bomber. The wizards might help prevent symbolic miscalculations of historic proportions like this one.

At other times, the wizards would work to develop an alternative narrative of what the United States is doing abroad, often simply by getting out the truth. The world is awash with widely believed, yet highly implausible conspiracy theories about U.S. foreign policy. Many people, particularly in the Islamic world, honestly believe that the U.S. or Israel was behind 9-11. In other parts of the world, it is more comfortable to believe that the U.S. is out to get you than it is to believe that the U.S. is simply oblivious to you, which is more often than not the truth. But, it takes only a few symbolic acts and statements to turn a reality of indifference into a myth of respect for foreign sovereignty, autonomy and development, something that the French, in particular, have managed well, despite a record of military involvement in foreign colonies as long as the track record of U.S. military involvement in Latin American and the Caribbean.

Ultimately, the only path to good policy is good leadership, but a Council of Wizards in the White House could, at least, provide a resource that might allow U.S. public diplomacy to be a little less tone deaf to the symbolic impact of its acts and statements abroad.

UPDATE: The one bad thing about the whole Council of Wizards name (my mind is usually more in the SF world than the ugly side of reality) is the association with the KKK. Enough said. Except for one thing. The second KKK (the one that swept Colorado in the 1920s) is actually an incredible historical event in the power of the media. It is one of the few, if not the only, widespread political movements attributed largely to a movie -- the Birth of a Nation. Thus, it shows the immense power of symbolic messages to spur political consciousness.

Quote of the Day

A lying law enforcement officer is as much a slime dweller as any criminal defendant.

- District Judge Graham Mullen at the 2002 U.S. Attorney's Office.

Immigration Courts Still Broken

The nation's 225 immmigration judges and the 17 judges on the Board of Immigration Appeals are still doing a miserable job, as chronicled by the St. Petersburg Times. As a result of deficient decision making, the U.S. Circuit Court of Appeal have seen appeals from the BIA to the federal courts go from 3% of the caseload to 17%. Most of this disaster is the fault of the actions of former attorney general John Ashcroft.

Posting Etiquette

Blogger allows you to comment anonymously and I have no problem with anonymous comments. I've always quibbled with the part of identity politics that says that a statement mean nothing if you don't know its author of a statement.

But, a recent post (Against Housing) in which there was more than one person commenting under the anonymous tag illustrates how hard it is to keep a dialog straight when different voices can't be separated out and are having a conversation with each other as well as me. As a result, it would be helpful if anonymous commenters would sign their comments with a tagline (snarky if fine, "Disgruntled" or "Progressive Idealist" would both be perfectly acceptable, for example).

To be clear, I don't expect your tagline to be consistent from post to post, and don't expect you to provide any identifying information, but I would appreciate your cooperation in keeping comment discussions clear.

Memorial Day 2006

School is out in Denver. The semi-annual excusion to the roof for swamp cooler maintenance has revealed a dead pump, yuck! A flag is flying from my porch and many others up and down my street.

The memory of fallen soldiers is not coming coated with saccarine, as it so often does. NPR this weekend featured the fallen soldier whose death set off the war crime by U.S. troops in Iraq covered in this space two months ago, an event that is only taking hold in the mainstream media now that U.S. forces are investigating it, even though it was public knowledge in the U.S. last March, and happened last November.

We remember the valiant dead. They sacrifice for our country without asking why. The animals that perpetrated Abu Grahib and the massacre of Haditha, are the exception, although they have stained the honor of the forces they are a part of. Most of the fault for atrocities lies higher up the hierarchy, where widespread abuse was authorized and encouraged. The task of asking why is left to the rest of us. The answers have been ringing hollow for a long time, certainly, at least since almost all of the justifications for war in Iraq have proven to be based upon lies. The most compelling reason for our continuing presence there is that we created this situation and have an obligation not to let all hell break loose as we depart.

UPDATE: The BBC reported late last night Colorado time, that the U.S. military has agreed that a war crime was committed in Haditha, is preparing to charge U.S. servicemen with crimes including murder, and is currently engaged in an intentional scheme to leak information to get the U.S. public ready for its conclusions. Courts Martial have very high conviction rates once commenced. The real question is the sentence. The U.S. military has a long track record in this conflict of convicting its soldiers of serious abuses, often causing death, and then imposing only slap on the wrist penalties for the crimes committed.

Realignment?

Democracy in Progress takes on the big question of the evolving coalitions behind the Democratic and Republican parties respectively, seeing the Democrats trending towards "maximizing the power and opportunity of the individual" like libertarians infused with an anti-corporate impluse, while Republicans buy into "ideologies are consistent with valuing large, powerful, centralized organizations that simplify the world for us."

The think piece is worth reading, although I'm not sure that it is descriptive of what is going on in the parties. While the Republican coalition is showing fault lines, largely between Christian conservatives (who are concerned with abortion, God and gays) and economic conservatives (i.e. the tax-cut, no regulation, no liability crowd), the big government trend among Republicans is more a product of our current President and an intense focus on defense and homeland security, than it is a product of a change in Republican ideology. The rank and file Republican opposition to Referenda C and D is proof as good as any of continuing Republican skepticism of big institutions, and while Christian conservativism does call upon a sort of "group think", conservative Christianity is institutionally far more decentralized than mainline and liberal Christianity.

Meanwhile, Democrats have certainly not rejected large, powerful centralized organizations that simplify the world for us. Democrats remain the champions of the existing welfare state, having stopped President Bush's attempt to privatize social security cold, and a large subset of Democrats champion the replacement of our existing health care system with a single payer system which is the eptiome of a large, powerful centralized organization that simplifies the world for us.

This isn't to say that there isn't realignment going on in both parties.

Republicans are deeply divided between a law and order, hawkish, xenophobic wing that opposes immigration, and the free market and pro-small business wings of the party that favor a more open immigration policy. The gun lovers in the Republican party have reached the point where the often Republican leaning forces of law enforcement are uncomfortable with them. The banner of strong property rights doesn't sit well with country club Republicans who believe that they have a God given right to end blight, at least in their own backyards. The same Republicans who decry "unpatriotic speech" find themselves rushing back to the protections of the First Amendment for their own hateful threats, sometimes only thinly veiled.

Democrats also aren't entirely at peace within their own coalition. While Southern Democrats and Republicans are deeply divided on class lines, outside the South, the Democratic party has received an infusion of support from the professional and big business classes, while support from unions has waned with the unions themselves.

Blue collar Reagan Democrats have long been uncomfortable with gay rights, pro-immigration policies, abortion rights and much of the social liberal agenda. This reached a boiling point when Democrats mostly supported NAFTA and the WTO. Free trade and immigration are divisive within the Democratic party as well as the GOP, even though the Democrats have managed the conflict better.

While Democrats remain concerned about the environment, public health and public safety, the single minded regulatory orientation that drove the party in the 1970s, back when Ralph Nader was one of the parties young Turks, rather than a spoiler of party ambitions, has ebbed. Democratics have gone from being ideological on the economy, to being pragmatists who are united mostly in their desire to end giveaways to the superrich whether they take a regulatory form, or the form of tax cuts.

By 2000, Democrats had virtually lost the farm vote entirely. Blue blodded Bostonian Presidential candidate John Kerry was lucky to get one vote out of six in rural American counties. But, the brothers Ken and John Salazar in Colorado, and our neighbors to the North in Montana have showed us that this piece of the New Deal Democratic Party coalition is not irredeemably lost. Democrats lost a Senator in South Dakota, but gained a Congresswoman. Neo-conservatives have gained the upper hand in the Republican party to end farm subsidies, and the religious right is finding that its return on its political investment in the GOP has been meager.

Where we're going nobody knows, but the trip is turning out to be an interesting one.

Tolls, Trains and Traffic Studies

Experts are not always neutral. Traffic studies predicting toll road traffic are consistently too high, in Colorado's experience, dramatically so. Meanwhile, traffic studies predicting light rail ridership are consistently too low, in Colorado's experience, dramatically so.

As Colorado, other states and federal officials increasingly look to toll roads to spur growth or clear clogged highways, a review of 23 new turnpikes nationwide shows that a clear majority are failing to meet revenue projections to justify their costs.

Even with adjustments for the break-in period in the opening years, 86 percent of new toll roads in eight states failed to meet expectations in their first full year.

By year three, 75 percent - 15 of the 20 that have been open that long - remained poor performers. . . .

The $416 million, 11-mile [Northwest Parkway] from Broomfield to E-470 has attracted just half the cars forecast since it opened in 2003.

Its director, Aurora City Councilman Steve Hogan, said that before seeking outside investors in the road, he didn't believe the optimistic forecasts for its profit potential. But, he said, he treated those estimates as a tool to persuade bond experts to give the debt a favorable rating, not as a solid predictor.

From here.

(For all those securities fraud litigators out there, I will leave it is an exercise to determine if the Northwest Parkway bond offering is protected by governmental immunity, or simply not covered by the securities laws. If the answer is in the negative, the next step should be obvious.)

While toll road traffic predictions are consistently high, however, this is not, as the article from the Denver Post implies a failing common to all traffic prophets. When it comes to light rail, the errors are consistently in the other direction. For example, actual ridership on Denver's Southwest rail line was 66% above the levels projected by experts in advance of the project (see also here).Under estimates were also made in Dallas, Salt Lake City, St. Louis, and Portland. Ridership doubters were also disproven in San Diego (see also here).

As of 2001, shortly after the Southwest Corridor opened, downtown Denver through a combination of HOT lanes favoring carpools, a downtown housing explosion and a healthy public transportation system, already had a remarkably low level of automobile use.

Of all commuters into downtown Denver, 25 percent use transit, while an additional 15 percent carpool, bike or walk.

The light rail line built as part of the T-Rex construction project, alone I-25 providing a link that connects downtown Denver to the Denver Tech Center in the Southeast will no doubt significantly increase that percentage when it opens in December of this year. The Western Corridor rail line, which will connect downtown Denver to Jefferson County's Taj Mahal (the court house), will likely have another big impact when it opens in about seven years.

The bottom line is that metroplitan Denver residents should pat themselves on the back for voting in favor of FasTracks, which has committed the metropolitan area to a dramatic light rail expansion over twelve years, while area governments should think twice before supporting the Northwest Corridor plan through Golden which would complete the E-470/C-470 out loop around Denver.

Java Guru

Perhaps your life is in the balance across I-25 at the Douglas County Justice Center. Perhaps you have just been down the street shopping at Wal-Mart and feel dirty. Perhaps you have dropped the kids off at soccer practice at the nearby recreation center, which is still trying to establish its grass (it does have a higher end modern playground for those with little ones) and are wondering how you ever ended up turning into a soccer mom. Perhaps you simply have the mixed fortune to live in Castle Rock, Colorado, a county seat known for its outlet malls, its burgeoning bedroom communities, its faux historic downtown, and its absence of poor people.

There are any number of reasons that you might end up burdened with existential angst in the vicinity of Java Guru which is located at the end of a spiffy new strip mall at 4284 Trail Boss Road #100. Entering its doors (after 6 a.m. every morning, and before 8 p.m. M-R, 11 p.m. F-Sa, and 4 p.m. Sunday), offers an opportunity to relieve this strain. While first appearances may lead you to believe that Crate and Barrel and Pottery Barn have a new competitor, the spacious venue is in fact a coffee house that also offers alcoholically enhanced coffees, cocktails (not cheap), a small selection of beers (Bud on tap for the truly downtrodden, Guinness for the more existentially affected), and a modest wine list. They also have provide an eclectic selection of food offerings for breakfast, lunch and dinner -- will it be the grilled cheese sandwich or the caviar?

Agents take note that they also book live entertainment every week.

And, about the existential angst? When in doubt, ask the Guru.

Enron Sentencing

Kenneth L. Lay and Jeffrey K. Skilling were convicted of multiple felony counts in connection with Enron's collapse.

Lay is 64 years old with a life expectancy of about 19 years. One of Lay's crimes carries a maximum sentence of five years, five carry a maximum sentence of ten years, and four carry a maximum sentence of thirty years. A twenty year sentence would probably end up being a life sentence. A thirty year sentence would very likely end up being a life sentence.

Skilling is 52 with a life expectancy of about 28 years. One of Skilling's crimes carries a maximum sentence of five years, and eighteen counts carry a maximum sentence of ten years. A thirty year sentence would probably end up being a life sentence. A forty year sentence would very likely end being a life sentence.

Under the U.S. sentencing guidelines, one doesn't have to stretch too much to determine that a life sentence would be appropriate, to the extent that the statutory maximum sentences permit, for each man.

Arguing that some or all of the sentences should be served concurrently, or that more lenient versions of the sentencing guidelines in place when many of the offense occurred should be applied, could mitigate the ultimate sentence imposed. But, the court is unlikely to sentence Lay or Skilling more leniently than cooperating Mr. Fastow, who was sentenced to ten years in prison, and even the old sentencing guidelines called for tough sentences in a case as extraordinary as Enron's.

The biggest point that this case, like so many other cases in the real world do, is that the single biggest factor in a great many criminal cases from a sentencing perspective is whether sentences are served concurrently or consecutively. This is especially true in the white collar area where the number of offenses committed often boils down to a matter of prosecutorial discretion. Yet, statutory law gives the issue fairly short shrift.

Legislators like to think about the maximum and minimum lengths of a sentence for an individual crime, but devote little attention to the appropriate sentence when multiple counts are involved. The legislators who enacted the securities fraud laws likely envisioned the typical securities fraud case involving a single count of securities fraud for which the white collar criminal was sentenced to up to ten years in prison, and the likely bank fraud case likewise involve a single count of bank fraud for which the white collar criminal was sentenced to up to thirty years in prison.

Do twelve counts of securities fraud really merit a punishment twelve times a bad as one count of securities fraud? Should it matter how much money was at stake in the respective cases? There is no single count white collar offense on the books in the United States which has a one hundred and twenty year maximum sentence.

The United States Sentencing Guidelines appropriately do, to some extent, mitigate this conundrum, by looking at cases like Enron's in a more global fashion. But, it would be better is statutory criminal law better came to terms with the issue.

Generally speaking, sentencing a criminal defendant to consecutive sentences for incidents sufficiently related to each other as part of a larger scheme or course of criminal conduct that they can be fairly presented in a single trial is almost always unduly harsh.

For example, twelve counts of committing a felony for which the maximum sentence is three years (e.g. theft of rental property worth $500-$15,000 in Colorado), is almost always less serious, in a common sense justice view, than one count of a felony for which the maximum sentence is thirty-six years (e.g. second degree murder or kidnapping in connection with a rape or robbery). Indeed, in Colorado, if a thief steals a single item on a single occasion worth more than $180,000 (more value than could be possibly stolen in twelve separate counts of theft involving $500-$15,000), the maximum sentence is twelve years (the same as it would be for any theft in excess of $15,000), and Colorado expressly provides for aggregation of all thefts in a certain time period into a single sentence by statute.

While thieves who commit multiple offenses get a break in Colorado (although a misdemeanor felony whose offenses are aggregated into a felony may not see it that way), other minor felons who commit offense that qualify as multiple counts, do not. Taken to the greatest extreme, in a case previously blogged here, a man was charged with a separate child pornography felony for each image in his possession.

The federal courts are even worse than almost every state on this count. Yes, multiple criminal counts which are part of the same criminal enterprise to produce sentences may be served consecutively, in federal court, just as they are in state courts. But, in federal court, it is also that case that when multiple felonies are entered at the same time, that the counts which are first in time may be considered part of a prior criminal record of the defendant with respect to later in time offenses prosecuted in the same trial. Thus, you can walk into federal court with no prior criminal record at all, not even a prior arrest, and depart as a three strikes habitual felon. Very few states that impose enhanced sentences for repeat offenders permit different convictions in the same trial to have this effect.

Indeed, it is entirely likely that Lay and Skilling will come within some repeat felony rule in this case, not that it makes much difference for them, given their ages and the severity of the crimes of which they have been convicted.

Certainly, at the very least, criminal defendants convicted of multiple felony counts in a single trial should be eligible for punishment at least as great as that of the most serious offense for which they were convicted. Indeed, to the extent there are more counts, the sentence imposed should be, at least, closer to the maximum sentence for the most serious offense of which the defendant was convicted.

It wouldn't be unreasonable to punish someone more severely that the maximum punishment for the most severe offense involved. Colorado's approach to aggregating multiple theft counts into a single dollar figure that determines a maximum sentence for the multiple instances taken as a whole is a good model which could be applied more broadly to aggregate all non-violent offense involving harms to property. But, it is less obvious how to engage in similar aggregation in cases such as drug cases involving different types of drugs, or multiple less serious violent felonies, or multiple counts which are entirely different in type.

Perhaps aggregate sentences for multiple felonies in a single trial ought to be capped at a level equal to an offense one or two notches up the felony scale (perhaps depending upon the number of offenses or incidents or victims involved) than the most serious offense charged. Thus, multiple counts of a fifth degree felony should perhaps, be subject to no more serious a sentence than the sentence which would be imposed for a fourth or third degree felony.

This kind of rule wouldn't make much difference at all in a case like Enron's, which in Lay's case, the most serious offense charged carries a thirty year sentence (implying that a notch higher would mean forty or fifty years in prison for an already old man), and in Skilling's case, the most serious offense charged carries a ten year sentence (implying that a notch higher would probably mean a twenty or thirty year sentence for an already middle aged man). But, they could make a huge difference in cases involving multiple counts of far less serious crimes.

Statutes should provide some reasonable guidance to judges and prosecutors regarding what kind of sentence is appropriate when a number of minor felony counts are involved, and by and large, right now, they don't.

Vetoes in Colorado

By my count, we are at 34 vetoes this session. In today's Memorial Day Massacre (see here, here, and here) designed to avoid press coverage by making them on the Friday before a long weekend, Governor Owens vetoed 18 bills today. This year, the General Assembly adjourned on May 8, 2006, so bills passed on April 29, 2006 or later, can be vetoed at any time through June 7, 2006.

While end of session bills cannot have vetoes overridden by the General Assembly, not a realistic chance this year, in any case, with a closely divided state house and state senate, Colorado does not have the pocket veto found in the federal government. In Colorado, every veto must be affirmatively made to be effective. Laws cannot be vetoed simply by not signing them within a specified time period, at a time when the legislature is no longer in session.

The Colorado constitution, Article IV, Section 11 governs the veto process (after session vetoes are governed by the highlighted text):

Every bill passed by the general assembly shall, before it becomes a law, be presented to the governor. If he approve, he shall sign it, and thereupon it shall become a law; but if he do not approve, he shall return it, with his objections, to the house in which it originated, which house shall enter the objections at large upon its journal, and proceed to reconsider the bill. If then two-thirds of the members elected agree to pass the same, it shall be sent, together with the objections, to the other house, by which it shall likewise be reconsidered, and if approved by two-thirds of the members elected to that house, it shall become a law, notwithstanding the objections of the governor. In all such cases the vote of each house shall be determined by ayes and noes, to be entered upon the journal. If any bill shall not be returned by the governor within ten days after it shall have been presented to him, the same shall be a law in like manner as if he had signed it, unless the general assembly shall by their adjournment prevent its return, in which case it shall be filed with his objections in the office of the secretary of state, within thirty days after such adjournment, or else become a law.

The vetoes in a nutshell so far:

May 26
SB 01 (prescription drug purchasing pool);
SB 46 (education study committee);
SB 47 (allowing special districts to impose sales taxes to pay for health care)
SB 64 (improved state contracting oversight);
SB 65 (capital construction for schools);
SB 69 (tweaked School Accountability Report format and information);
SB 81 (discrimination in employment on the basis of sexual orientation);
SB 105 (elevator and escalator safety regulation);
SB 111 (cultural competency education requirements for health professionals);
SB 138 (minimum percentage of ethanol in gasoline);
SB 198 (prohibits unfair terms in health provider contracts with networks);
SB 209 (higher education task force);
SB 239 (mortician licensing);
HB 1127 (athletic trainer regulation);
HB 1314 (bans mandatory religious or political propaganda from employers);
HB 1331 (landscape architect regulation);
HB 1336 (uniform athletes agent act);
HB 1346 (insurers must cover the children of dependent children living at home).

May 8
HB 1193 (protect patient safety whistle blowers).

May 4
SB 52 (allow counties to impose sales taxes to buy open space);
HB 1021 (require PE teachers to be certified or have alternative qualifications).

April 13
HB 1212 (allow pharmacists to prescribe emergency contraception);
HB 1174 (require everyone on a construction site to have worker's compensation);
HB 1148 (limits risk shifting to non-responsible persons in construction contracts);
HB 1077 (restrict broad form indemnification in construction contracts).

April 11
HB 1056 (healthy snacks in school vending machines);
HB 1010 (governor can't unilaterally join international procurement agreements).

March 31
HB 1374 (capital construction for schools);
HB 1371 (disability services report to legislature and study);
HB 1369 (selected Medicaid reimbursement increases).

March 30
HB 1023 (require three years teaching experience and master's degree for principals);
HB 1005 (allow voters to approve property tax hikes for full day kindergarten).

There are still about 79 enacted house bills still awaiting action from the governor. And, there are about 80 enacted senate bills still awaiting action from the governor.

Last year Governor Owens vetoed 47 bills from the Democratic Party controlled General Assembly. The chances are good that this year's total will be even higher.

The Meaning of Hayden's Confirmation

One of the administration's strongest proponents of illegal warrantless spying on American's phone conversations during his tenure as NSA director from 1999-2005, the four star Air Force General Michael Hayden, has been confirmed 78-15 by the U.S. Senate to the post of CIA director. He is the first military office to fill this civilian intelligence agency leadership post in 25 years. He currently is the top deputy to National Intelligence Director John Negroponte.

He replaces former intelligence committee Congressman Peter Goss who alienated a large share of the career agents at the agency in his brief and tumultuous tenure and was believed to be implicated in scandals involving poker parties with prostitutes designed to influence key government contracts.

Hayden's appointment sends a great many bad signals. It points to a militarization of U.S. intelligence operations, at the hands of someone more attuned to planning air strikes of the type U.S. military planners no doubt have planned as an option for action against nations like Iran or North Korea, rather than someone oriented to the Iraq style counter-insurgency and "War on Terror" style anti-terrorism missions that Marine and Army doctrine make generals familiar with considering. It puts a man whose backgrond is in electronic surveillance and spy satellites at a moment in our history when there is a widespread consensus that the nation needs to remphasize human intelligence (i.e. spies) and recognize the limits of high technology spying. It rewards someone who has shown a manifest disregard for the law and the constitution, signaling that the President intends unlawful covert actions such as extraordinary rendition and torture to continue at the CIA.

Disappointingly, most Democrats backed his appointment anyway, allowing his nomination to move through the Senate with remarkable speed, signaling that they, once again, have chosen not to protect American's civil liberties from a lawless administration a priority. He should have been impeached, not promoted repeatedly.

The intelligence community needs a major overhaul. It has too many agencies. It compartamentalizes access to the information it gathers so closely that the value of the information is diminished -- making the task of "connecting the dots" virtually impossible. It devotes vast resources to gathering information with dubious relevance. And, perhaps most important, for knowing the inside details of operations is always difficult, the community is producing results that are at best uninformative, and at worst, counterproductive.

CIA torture and rendition practices show little if any sign of having produced major results in the "war on terror", but have definitively alienated almost all of our European allies, reducing our ability to obtain cooperation from them. Our most important Iraq War and Afghan War ally, Britain is berating us for our actions. Italy, whose territory is home to our most important air base for Middle Eastern operations, has a warrant our for the arrest of a number of CIA agents.

The CIA failed to get the administration to acknowledge that the intelligence leading up to the Iraq War was wrong. This failure, publicized by incorrect claims touted on a national stage at the United Nations by Colin Powell when he was Secretary of State, has set back CIA credibility for decades. And, the memory of the CIA's utter failure to notice that the Soviet Union was on the verge of collapse in the late 1980s won't be quickly forgotten either.

The leak of the identity of Valerie Plame has revealed an administration willing, indeed, eager, to betray those who reveal blunders like the fraudulent Nigerian uranium claim made in the President's State of the Union address disclosed by Plame's husband. We will never know, but it is entirely possible that covert operatives and sources who worked with Plame may end up dead as a result of the leak.

Yet, while the CIA has been publically muted about the Plame affair, Hayden has been vocal in his fierce desire to punish those who, rather than revealing classified operational secrets, have instead revealed illegal activity by the agency in general terms, allegations that were not appropriately addressed through normal agency channels by supervisors.

John Negroponte has the authority to dramatically overhaul the U.S. intelligence scene. Thus far, it isn't obvious that he's done anything other than to set up house and added an extra layer of bureacracy between the CIA and the President. A far more dramatic shakeup is necessary and he is really the only person in a good position to make it happen. Let's hope that he has vision necessary to make the kind of bold reorganization and remphasis of the intelligence community's operations and doctrine necessary to give the U.S. the kind of intelligence community that our democratic nation needs and deserves. When the dust settles, many organizations, the CIA among them, should probably no longer exist at all.

The appointment of Hayden to the post of CIA director is one more sign that reform within the existing CIA structure is hopeless.

Gunfire At U.S. Capitol

We interrupt your regularly scheduled programming here to inform you that gunfire has been reported at the Rayburn House Office Building coming from the garage, a place I used to work when I was a Congressional intern. Congressional staffers, members and members of the public visiting to testify at committees are sheltering in place and Capitol Police are going from room to room in the building to assess the situation. I'll update this post as I learn more.

1503 Posts

Usually I catch each 100th post and reflect. I wasn't paying attention today, and missed number 1500. This blog is almost eleven months old now.

My efforts to profile every neighborhood in Denver has stalled for the moment, although I will return to it as I am moved to do so.

When I get some gumption, free time and a shortage of creativity, I'd like to do a health science index post.

The downside of live blogging is that without a copy editor, mistakes will be made, but I'm not bothered to go back and correct the state convention posts at this time.

Traffic is up to near record highs.

I was pleased with my "Against Home Ownership" post this week and think that I will do more extended analysis posts along these lines.

As always, comments are welcome. I'm particularly interested in blogs to add to the lists on my blogroll that I frequently scan. LeftyBlogs covers most of the Colorado liberal blogs, but I'd be interested in finding more eurdite, nationally oriented blogs, either domestic or international/national security in orientation, that don't simply repeat the information covered by my usual suspects.

Internal Revenue Code Section 199 Regulations

Section 199 is the part of the Internal Revenue Code that creates the "domestic production activity deduction", one of the most complex parts of the tax code ever enacted, with stunningly broad applicability. Now, the Internal Revenue Service has issued Section 199 regulations to govern it. The IRS notes in its press release that:

The section 199 deduction relating to domestic production activities was enacted in October 2004 as part of the American Jobs Creation Act, and was recently modified by the Tax Increase Prevention and Reconciliation Act of 2005. The deduction generally equals three percent of income from domestic production activities for 2005 and, by 2010, nine percent of such income. The activities eligible for the deduction include not only the manufacture of personal property such as clothing, goods, and food, but also the development of computer software, film and music production, the production of electricity, natural gas, or water, and construction, engineering, and architectural services.

The big problem is that every company that does some "domestic production" must essentially maintain two sets of books, one for the productive part of the business (e.g. Starbucks roasting beans for sale raw in package) and one for the rest of their business (e.g. Starbucks serving lattes to liberals, and selected cultured neo-conservatives). Drawing those lines turns out to be anything but obvious, and the scope of the exemption is such that it impacts industries far beyond the scope of traditional manufacturing, like construction and farming. Usually, complex tax breaks are reserved for large regulated industries, and not small businesses, both corporate and non-corporate, whose owners often prepare their own returns.

Political Blog Polarization

Political blogs are highly polarized into liberal and conservative camps, with little subgrouping within each camp and little linking between camps.

[A] set of 1225 conservative and liberal political blogs [was sorted] based on the network of web links between them. When the network was fed through the algorithm, it divided cleanly into conservative and liberal camps. One community had 97 percent conservative blogs, and the other had 93 percent liberal blogs, indicating that conservative and liberal blogs rarely link to one another. In a further twist, the computer analysis was unable to find any subdivision at all within the liberal and conservative blog communities.

Hat Tip to Coyote Gulch.

Navy News

Missile Defense

The Navy continues to be far more successful in developing missile defense systems that work, largely using existing missiles and upgrades sensors, than the other military services.

Multiple Crews

The idea of having more than one crew for a single ship, to maximize the time that the ship can be at sea called "Sea Swap" in the U.S. Navy, is working well, being used more widely, and can increase the deployable size of the fleet by a factor of 40%. Historically, a few as a third of Navy ships have been deployed at any given time.

Patrol Boats

Cyclone class coastal patrol boats (380 ton boats with a crew of 30), are much smaller than the U.S. Navy's 3000 ton Oliver Hazard Perry class frigates (with a crew of 300), which are in the process of being phased out in favor of three times as large destroyers, or any other combat ship in U.S. service. They had previously been so unpopular that the Navy was trying to pawn them off on the Coast Guard, which didn't want them, or to remove them from service entirely. Now, the Navy brass has decided it likes them and is trying to put as many into U.S. service as possible, which has the positive effect of putting more ships into service for a nominal cost compared to new ships.

This shift in attitude is largely a function of a shift away from a cold war mentality of trying to build a "blue sea" Navy, where the ships were viewed as useless against large Soviet warships. The patrol boats have no missiles or torpedoes (except for defense rocket flares to divert incoming missiles), no capacity to carry helicopters, and their largest standard weapons are a pair 25mm (2") cannons, and a 40mm grenade launcher similar to the largest Army small arms. By comparison there is a 3" naval gun on frigates, a 5" naval gun on destroyers and cruisers, and a 6" naval gun on the proposed DD(X) (now the DDG-1000), in addition to guided missiles and torpedoes and helicopters on each of those ships. Thus, the patrol boats are incapable of sinking any warship or large merchant ship, and are helpless against even a small military submarine.

But, now there is a renewed emphasis on "littoral" activity (i.e. coastal tasks) often called a "brown water" navy or a "green water" navy, where the focus is on stopping small attacking speed boats, checking merchant ships for smuggled arms, and taking on pirates, for which the patrol boats are well suited. They are an order of magnitude smaller than the proposed Littoral Combat ship, which will be about 3,000 tons and have a core crew of 75 sailors, which will be used for anti-submarine warfare, mine sweeping, fire support for coastal troops, deploying special forces, and a variety of other missions with task specific modules that can be switched out in a day or two.

When Drones Attack

Star Wars notwithstanding, clones don't worry me. This probably has something to do with the fact that I don't bet on competitive mule racing (They are pretty, if you're into farm animals.)

Drones are another story. In movies, like the 2005 Columbia Pictures release "Stealth" drones look like jet fighters with a few less windows, and in the movies, and in most of the Pentagon, are expensive systems built and operated by the big budget United States Department of Defense. The real world equivalent, the Navy's experimental X-47, doesn't look all that different:



But, the terrorists who keep me up at night are not the ones trying to buy nuclear weapons from China or North Korea or Iran, or the one's with aircraft purchased from multi-national defense contractors. Their drones are not the multi-million dolar efforts in the pictures above. The terrorists that I'm worried about stock up at Radio Shack and Walmart.

The incidents I'm worried about will look more like this:



The weapons I'm really worried about will look something like this:



The picture above comes with a caption that reads:

Imagine an enemy sniper hearing something behind him and turning around to see a 12-gauge about to send him to his reward. Imagine dozens of these little devils swarming over a battlefield, loaded with FRAG-12 grenade rounds.

Change the caption, and the nightmares begin:

Imagine a secret service agent in Idaho guarding the President giving a speech about his new public lands policy turning around to see a 12-gauge about hold him to his oath to sacrifice himself to save the President. Imagine the shot going through and around him, twenty times in a row, killing the President, the Governor of Idaho, and the Mayor of Boise.

[Note, this is a bipartisan issue. Armed drone technology is a potential threat to any public official or prominent private individual anywhere in the world. Like terrorists flying planes into buildings, it isn't pleasant to consider, but it is better to plan a response than to ignore the threat. I most certainly do not advocate harm to any of the good men and women who serve in the secret service, and please wring the neck of anyone who would commit the vile act that would leave Dick Cheney in charge our country.]

Unlike rogue nuclear bombers, who so far exist only in action movies, there is ample precedent for snipers terrorizing entire metropolitan areas, in recent times, in the United States, and in the not so distant past, one need look back only the John F. Kennedy. Consider men like Ohio freeway sniper Charles McCoy, who was sentenced to twenty-seven years in prison last summer, in exchange for dropping an insanity defense that left a first jury hung, fired on a dozen people over five months, killing one woman, leaving greater Columbus, Ohio is fear for the duration. And, greater Washington DC will not soon forget the Beltway Sniper Attacks over three weeks of October in 2002, that killed ten and injured three more people, committed by John Allen Muhammad and Lee Boyd Malvo with a semi-automatic rifle fired through a hole in the trunk of a Chevy Caprice (and I'm sure they didn't pay full MSRP for a new one).

Real terrorists, for the most part, don't have multi-million budgets. The 9-11 attacks, the largest scale, more elaborate successful terrorist attack in U.S. history cost less than $770,000, a budget that wouldn't buy a single ballistic missile (the going rate is $29 million each), even at a dramatic discount. The London subway bombings cost less than $15,000 to mount. Federal prosecutors in the Timothy McVeigh trial estimated that the cost of mounting that attack was about $5,000 and the training was provided at U.S. government expense by the United States Army.

The era of drone missiles that began when the first Predator reconnaissance UAV was outfitted with a Hellfire missile and used to blow up a car full of alleged terrorist in Yemen on November 4, 2002, has not limited itself to sovereign military forces for long.

Armed militant groups have already tried to use unmanned aircraft, according to a number of studies by institutions including the Center for Nonproliferation studies in Monterey, California, and the Center for Arms Control, Energy and Environmental Studies in Moscow.

In August 2002, for example, the Colombian military reported finding nine small remote-controlled planes at a base it had taken from the Revolutionary Armed Forces of Colombia (FARC).

On April 11, 2005 the Lebanese Shiite militia group, Hezbollah, flew a pilotless drone over Israeli territory, on what it called a "surveillance" mission.

The "good guys" do not have a monopoly on electronics skill or wireless interfaces. Iraqi insurgents are already using improved explosive devices triggered by $100 cell phones. The remote controls necessary for a flying drone are, if anything, less sophisticated. And, not all remote controls can be easily jammed. An infrared remote control for a computer that operates on a line of sight with light waves, making it largely impervious to traditional radio jamming technology, is something an interested hobbiest can build with widely available raw electronics parts can build in a garage.

Of course, infrared remote controls can be jammed too, but you have to be prepared to jam everything that is out there, and a jamming device that works in an airport or living room isn't always useful in open air settings. While the remote controls used in television remotes have a short range of about 100 feet, the laser pointers your biology professor used in a 600 person survey class can reach aircraft in flight implying a much longer range.

We've been lucky so far. McCoy was a borderline crazy with no real agenda. Muhummad and Malvo just wanted a few million of cash. McVeigh had a grudge, not an agenda. But, a small group of determined terrorists domestic or foreign, with a more elaborate agenda and a modicum of technical expertise (certainly not much more than is required to rig up a suicide car bomb, and with less hard to obtain parts) could easily use small airborne drones, armed with conventional firearms to target random or high profile individuals with sniper fire in ways that could require months or years to catch them. And, if those individuals widely disseminated schematics and instructions, via the Internet, or perhaps more low technology approaches like mailing lists (recall the mimograph and mail box method used by the protagnoist in the 1997 movie "Conspiracy Theory"), capturing the perpetrator would not necessarily end the threat.

There isn't an easy solution to this problem. The technology has grown faster than responses to it can be developed. Banning all model airplanes is not the answer (building one from scratch with raw materials is a time honored tradition for serious hobbiests), and banning all firearms is not politically viable. The Beltway sniper attacks and Ohio Freeway sniper incidents illustrate just how difficult it is to take any sort of meaningful defensive measures against this kind of attack. For most residents of Columbus and Washington D.C. respectively, the only choice was to hope that of the millions of people in the area that you wouldn't be a target. Flying drones make traditional secret service tactics, like clearing the roofs of area buildings within firearms range and establishing protective perimeters of only limited value. Even individuals within buildings aren't safe. A drone can fly right up to a top floor office window, even if a desk is well out of sight lines from street level, secure visual contact with a target, and fire. A small drone with a pistol sized weapon might even destroy a window and enter the building, going up and down hallways. A plot like that would be audacious and unprecedented, but it wouldn't be terribly expensive or technologically untenable.

There are solutions. But, political leaders, for example, can't really be effective if they must cower in underground bunkers or heavily fortified compounds with anti-aircraft devices equipped to handle bird of prey sized targets twenty-four hours a day. Yes, public officials can wear flak jackets in public appearances.

But, ultimately, technological defenses to this kind of threat are futile. The first line of defense has to be to create a political environment where no one makes a deliberate effort to make this kind of attack, or at least, where anyone who does is quickly apprehended because there is no silent majority looking the other way in the face of suspicious activity, because while they are not willing to carry out attacks themselves, they don't care enough to stick out their necks to stop them.

Joint Combat Pistol Program Scaled Back

In January, the Department of Defense put out a bid for 645,000 new .45 caliber combat pistols. On March 10, 2006, the order was scaled back to 50,000 and the "Joint" part was removed from the "Joint Combat Pistol" program. Wikipedia explains the development more fully.

The motivation behind the Army dropping out of the program, which would have replaced what lessons learned reports from Iraq have found to be one of the most unpopular military systems in use today, is obscure.

What If Microsoft Had Designed the iPod Box?

What would the iPod box have looked like if Microsoft's marketing department had designed it? Ask Microsoft's designers who produced the video in the linked post, as an act of self-criticism. You'll want to watch it again and again, it's better than Cats!

Pot Doesn't Cause Cancer

A Los Angeles Study has found no link between even heavy marijuana use and cancer (emphasis added):

People who smoke marijuana--even heavy, long-term marijuana users--do not appear to be at increased risk of developing lung cancer, according to a study to be presented at the American Thoracic Society International Conference on May 23rd. . . . The study looked at 611 people in Los Angeles County who developed lung cancer, 601 who developed cancer of the head or neck regions, and 1,040 people without cancer who were matched on age, gender and neighborhood. . . . The heaviest smokers in the study had smoked more than 22,000 marijuana cigarettes, or joints, while moderately heavy smokers had smoked between 11,000 to 22,000 joints. Even these smokers did not have an increased risk of developing cancer. People who smoked more marijuana were not at any increased risk compared with those who smoked less marijuana or none at all. . . . The study found a 20-fold increased risk of lung cancer in people who smoked two or more packs of cigarettes a day. The more tobacco a person smoked, the greater the risk of developing both lung cancer and head and neck cancers, findings that were consistent with many previous studies.

An abstract of the study can be found here, with similar results were found in a Kaiser Permanente study whose abstract is here, and a third study in Washington State.

The investigators do not know why marijuana smoking does not cause cancer as they had expected based on existing models of harm caused by tobacco. A meta-analysis of a number of studies examining the health impacts of marijuana can be found here.

The results of the study were previously reported in 2005 at the June 26, 2005 annual conference of the International Cannabinoid Research Society (ICRS). The same researcher who conducted the Los Angeles, while not finding a link to cancer, has found a link between marijuana use and other respiratory ailments in another study.

Hat Tip to Coyote Gulch

Heroin Harm Reduction.

Britain is considering the Swiss model of providing heroin addicts, even those in prison, with a safe context in which to take the drugs, rather than criminalizing addicts, an approach known as harm reduction.

The approach is not full fledged legalization:

Participants had to meet strict criteria: age 20 or older; addicted to heroin for at least two years; a history of failure with other types of treatment; adverse effects of drug use on health and social relationships.

It works, according to a study conducted by the Swiss government evaluating the program:

In the first six months of treatment, the number of crimes committed by participants dropped about 60 percent.

The percentage of those with permanent employment more than doubled, from 14 to 32 percent.

Participants saw improvements in physical health and a decrease in psychiatric problems, including depression. Babies born to addicted mothers were normal and healthy.

After withdrawal from the program, addicts' use of illegal drugs increased somewhat "but remained clearly below the initial level." By the end of the first two years, 83 people had decided to give up heroin and switch to abstinence therapy.

In 1994 when the program was commenced in clinical trials, Switzerland had about 400 deaths from drugs themselves and about 300 AIDS deaths of drug addicts. By 1998, the number of deaths from drugs had dropped to 200, the number of AIDS deaths of drug addicts had fallen to 75, and the disruptive illicit use of heroin in public places which was the driving force behind the program had ended.

Drug use appears to be similar to that in other Western countries:

According to the State Department's latest report on global drug trends, marijuana is by far the most commonly used drug here yet is smoked by less than 8 percent of all Swiss -- a rate not out of line with other Western European countries and the United States.

There are a lot of people who believe that a public health/decriminalization orientation can work for marijuana, but not for "harder" drugs. The Swiss experience suggests that this belief is empirically incorrect.


Hat Tip to Talk Left.

Nazanin's Death Sentence.

Iran is one of the few places in the world even more indiscriminate in its use of capital punishment than Texas. In the case of Ms. Nazanin, it seem very likely that she killed a man while defending herself from a rape. But, in Iran, a woman's word isn't worth very much. She was sentenced to death in January. The Iranian Supreme Court will review her case in the very near future. The link has suggestions from Amnesty International on actions you can take that might make a very tiny difference and might help save this woman's life.

Congressman William Jefferson Should Resign

William Jefferson is a Democratic Congressman. There is also overwhelming evidence that he took a $100,000 bribe collected mostly by the FBI. He will be criminally prosecuted. He needs to resign now for the good of the party.

Colorado Democrats handled a far less serious incident involving Deanna Hanna that way in 2006, bringing the ethics charge against one of their own, rather than trying to cover it up. Admittedly, Colorado Democrats were secure in knowning that a vacancy committee of their own party would replace the incumbent. In the U.S. Congress, there are no such assurances. But, it isn't as if the Democrats in Congress hold a fragile minority either, as Colorado Democrats did in the State Senate. Do the right thing trumps any shortsighted idea of political advantage.

If Jefferson does not resign promptly, Democrats should get out front and initiate House ethics committee proceedings aimed at removing him from office, before the Republicans do. It takes a two-thirds majority of the House to remove a member. This is a case where that is appropriate, whether or not Jefferson is indicted or convicted. The sooner this happens, the sooner this matter is behind us. Decisive action in a clear case establishes a strong contrast between the Democratic approach to corruption and the Republican one.

Science Education For Black Children In Colorado

Most of the results of the NAEP 2005 assessment, a national test of representative samples of children in each state in science at the 4th and 8th grade levels, are "ho hum" expected results. Mississippi, as usual, did dismally overall, while Colorado, as usual, did a bit above average.

One result did stand out, however, black fourth graders in Colorado performed better on the NAEP than in any other state with a statistically significant result for black students.

On average 62% of black fourth graders in the nation performed at the lowest possible level on the test "below basic" in science. In Colorado, that percentage was a lower than any other state in the nation at 45%.

On average 7% of black fourth graders in the nation performed at the second highest proficient level and less than 0.5% performed at the advanced level. In Colorado the percentage performing at the proficient level was 10% and the percentage at the advanced level was 1%. Only Kentucky did better by that measure.

At the eighth grade level, black students in Colorado also performed well on the science test. Only Delaware and Washington State had fewer black eighth graders performing at the "below basic" level in science. At the high end with proficient and advanced performance, only Massachusetts, New Mexico, Oregon and Washington State had better performing black eighth graders.

Again, the 8th grade science results for black students aren't really anything to write home about. Nationally, 73% score at the below basic level, while 6% score at the proficient level and less than 0.5% score at the advanced level. In Colorado the numbers are 61% below basic, 11% proficient and less than 0.5% advanced.

The study doesn't cast light on the question of whether this is a result of Colorado's small African-American community being disproportionately affluent, or whether it is a product of a better school system, but good news like this does bear repeating.

Hispanic eight graders did reasonable well by national standards in Colorado, but not nearly so exceptionally well as black students at either grade level, and Hispanic fourth graders in Colorado were further behind than Hispanic eight graders. Colorado also didn't do exceptionally well among students eligible for free or reduced price school lunches.

Catch-22

In certain suits against the United States Postal Service, you have to provide notice by mail first. But, if the United States Postal Service loses your notice to it in the mail, you lose.

Something's Not Right

Hat Tip to Skeptico.

Against Home Ownership

The Low Income Homeowner Problem

In my post on the State Economic Freedom Index yesterday, I noted that Colorado has a record high foreclosure rate and that a quarter of the people in the state can't pay their utility bills (not for the first time on this blog).

An anonymous commentator to that post (I have my suspicions, but the argument speaks for itself) took me to task for failing "to connect the dots in your previous attack (A Cause Worth Fighting For?) on low-income homeowners, who offend your delicate sensibilities by having ugly houses they can't afford repair."

Am I a hypocrite? I think not. And the reason that I'm not, while it takes a while to set forth, is worth exploring.

An abundance of unrepaired homes in Boulder, late utility bills, and high foreclosure rates are all symptoms of the same problem. We have many homeowners who can't really afford to own the homes that they are in.

While it seems harsh, in many cases the real solution is not to cut them extraordinary slack from the forces that threatened their continued home ownership. Banks can't pay depositors or continue to loan money if loan payments aren't made (banks are extremely leveraged organizations with surprisingly low asset to equity ratios). The natural gas and electricity can't continue to serve homes if the utility companies can't maintain the cash flow needed to buy coal and natural gas from third party suppliers at market rates. Broken windows and unrepaired garage doors, along with other kinds of disrepair are bad for neighborhoods and not what homeowners would want for themselves either.

Home Ownership Is Overrated

Home ownership is overrated. Right now, given the nature of our economy, too many people own homes. Not everyone should own a home, and one of the main sources of Colorado's woes of stretched low-income homeowners is that we have many people in this state who were unwisely encouraged to become homeowners.

Simply maximizing home ownership is bad policy, and we are finally starting to realize that now that homeownership rates are at near record highs.

The home ownership rate for 2005 was 68.9%, down slightly from the recent high of 69.0% recorded in 2004. The 2004 rate was the highest rate since the Census Bureau began reporting these statistics in 1965.

Incidentally, homeownership was lower for almost all of the period before 1965, because until the GI Bill, Fannie Mae and Freddie Mac made mortgages with long amortization periods available at reasonable rates, home ownership was far more difficult to achieve. But, the changes wrought by those innovations were more appropriate than the steps we see today. Those institutions largely were important because they created secondary markets that allowed lenders with only modest funds of their own, to provide mortgages to credit worthy people in transactions structured to be extremely safe for any lender. More recent innovations have created homeownership options for low income, low asset, bad credit families who are ill served by owning homes.

The Economics of Home Ownership

What are the differences between home ownership and renting?

Increasingly, so called home ownership looks a lot like renting. Only a small minority of households own their homes free and clear. Most households either rent or have a mortgage. Either way, one must make a hefty monthly payment to a third party to keep a roof over your head. But, the risks and costs associated with the two different ways of providing shelter for a family are materially different.

Renting

Most of us are familiar with the typical residential lease. Typically, the tenant pays a fixed monthly rent in exchange for possession of an apartment or house. Typically in a residential lease, the landlord is responsible for paying property taxes on the premises, maintaining homeowner's insurance on the structure, paying the mortgage, if any, on the premises, and making major mechanical or structural repairs for problems not due to tenant negligence.

Some leases are month to month, one or two year leases are common, and residential leases as long as five years are not unheard of, but rare. Beyond the terms of the lease, there is typically no protection against rent increases and the expectation is that if the rent increases that the tenants will move.

The tenant's security deposit is typically in the vicinity of one or two months rent, and typically is returned at the end of the tenancy with some deductions for damages to the premises, within a couple of months of the tenant's departure, if the rent is current. Any appreciation in the property, or depreciation in the property to due to changing real estate market, accrue to the landlord.

If rent is not paid as agreed, the eviction process takes a month or two, the security deposit is lost, and the tenant may end up subject to a judgment against him or her for a moderate amount of attorneys' fees and unpaid rent. Generally speaking, a tenant unable to pay the rent who can locate a subtenant can avoid all or most of the liability associated with the balance of the lease obligation. Often, a landlord will seize the entire security deposit and not bother suing if the tenant leaves voluntarily, as landlords know that usually the tenant misses rent payments because he or she is unable to pay and uncollectable in the near future, and the amount owed is typically modest compared to the costs of collection.

Owning

If you own a home, you typically make a down payment on the house and borrow the balance with what is commonly called a mortgage (in Colorado, the proper name is a deed of trust in almost all commercial transactions). The down payment for first time home buyers usually ranges from 0% to 25%. If the down payment is less than 20%, the mortgage is "non-conventional" and the home owners must pay, in addition to a mortgage payment, "mortgage insurance" which reflects the extra risk the lender is undertaking in a low down payment loan.

Typically, a first time home owner will pay property taxes and homeowner's insurance through an escrow whose monthly payment is included with the mortgage payment and mortgage insurance if any.

Maintenance is the homeowner's responsibility, and while the right is rarely enforced, failure to maintain the property is typically a ground for default under the mortgage, even if the payments are current. Almost no mortgages set aside an escrow or require insurance for maintenance issues. Typically, people assume that owned homes are better maintained than rented homes, and on average they are. This is because owners have a better chance of recovering their repairs than tenants, while landlords have a hard time knowing that their properties will be treated well by tenants and knowing what needs to be fixed. But, the other part of this perception is that traditionally, home owners have been affluent enough to keep their homes in good repair. An landlord is usually better able to make repairs than a low income homeowner with no little or no savings, and only de minimus equity.

A mortgage is generally amortized over a long time period. The norm is 30 years. Shorter term mortgages are available, by first time buyers almost never get a mortgage for a term of less than fifteen years, and mortgages of that length are uncommon. It is now possible to get a loan amortized over as long as 50 years.

Except in the case of reverse mortgage (typically marketed to long time, elderly homeowners with ample equity and inadequate retirement savings), monthly payments cover all current interest due (so interest is not paid on interest) and the amortized share of the principal payment, which very small at first, and the bulk of the payment at the end of the amortization period, in addition to mortgage insurance, and the escrow payment for property taxes and homeowner's insurance. A significant proportion of new mortgage loans are "interest only" with a balloon payment scheduled after a long mortgage term at which point the owner is expected to refinance, to have paid off the principal sooner than required, or sell the property.

Interest rates are a function of the owner's credit, the amount of the down payment, the term of the loan, and whether to interest rate is fixed, variable or a hybrid. A homeowner with excellent credit, a down payment of at least 20%, a 15 year term, and a variable interest rate pays the lowest interest rates of any kind of loan available to anyone. A homeowner with bad credit and a small down payment must pay "subprime rates" which are often only marginally better than financing a home with credit cards.

Homeowners with good credit frequently choose to pay the modest premium associated with a fixed rate. Homeowners who are stretched often get variable interest rates or hybrid interest rates that cause payments to rise (or fall) when interest rates do, in exchange for a smaller initial payment, and an amortization period of at least 30 years.

Loan eligibility is typically governed by a ratio of payments to income. The smaller the payment, by hook or by crook, the more the home owner will be permitted to borrow.

Foreclosures are overwhelmingly concentrated among subprime loans, loans with small down payments and loans where a variable rate or hybrid loan rate increase has caused payments to increase significantly.

Outside of Colorado, almost all mortgages are full recourse loans. This means that if the house appreciates, the benefit goes to the homeowner, but if the house gets "upside down" because the amount owed on the loan is more than it is worth, the homeowner owes the difference if the house is foreclosed upon.

The foreclosure process takes a long time, typically in excess of six months, and if the owner doesn't leave voluntarily, must be followed by an eviction. Selling a house can take a long time as well, often three to six months or more, and usually takes longer in the bad markets when foreclosures are common, than in the good markets when foreclosures are rare. Often securing a quick sale means selling for less than a fair market value price.

Except in the rare cases when a foreclosed upon house has so much equity that it provokes competitive bidding (and metropolitan Denver has a healthy foreclosure market so this does occasionally happen), the bank typically bids the amount of its loan at the foreclosure sale and the owner ends up losing all of his equity if he has any, and owing money to the bank, if the amount of the loan, including typically many months of very high default interest rates and late fees, plus the substantial collection costs associated with the foreclosure, substantially exceed the fair market value of the property.

Also, even when foreclosure is avoided by a home sale, typically more than 7% of the fair market value of the house or more, which may exceed a first time home buyer's equity in the house, may be lost to realtors' commissions, closing costs and repairs that have to be made to make the house marketable.

The ability to avoid foreclosure by selling is also complicated by the psychological reality that while renters are often resigned to moving on if they can't make the rent, that home owners, even when they clearly can't afford their homes, often hang on until the biter end refusing to give up a home that they own, often the only major purchase they have ever made in their lives. In part this is the "my home is my castle" philosophy, and in part this is a perceived loss of socio-economic class as one moves from being a home owners to a renter.

Why Rent?

Why would someone want to rent? The basic reasons are the allocation of risk, financing terms and financial ability.

If a prospective home owner doesn't have the cash on hand for a 20% down payment (plus a little extra for closing costs and a little cash on hand as a modest emergency fund), and good credit, the financing costs associated with being a homeowner are quite high.

Suppose you are buying a $250,000 house (which is a low end starter home in metropolitan Denver). If you can pay $50,000 down and have good credit, you can probably get a $200,000 loan at a fixed rate, for a 30 year term with a 6.5% interest rate. Thus, you are paying $13,000 a year to the bank to live in your home (in addition to property taxes, insurance, maintenance and paying back the principal).

In contrast, if you have bad credit and can only afford to put 5% down on the same house, you will probably pay a 10% interest rate, may only be able to have the rate fixed for three years after which it floats based on some interest rate index (and interest rates are still historically low), and will also have to pay mortgage insurance which could easily be $100 a month or more. Thus, your loan amount may be $212,500, your annual interest payment including mortgage insurance may be $22,450 per year, and in addition to this, you face the real risk that your interest payment will go up in a few years, increasing the cost of home ownership even further.

The market reality is that landlords to not pass on the difference between the good credit rating conventional financing they can obtain, and what it would cost for a tenant to finance a home to the tenant. Indeed, in times when housing prices are in an inflated bubble, monthly rents are typically less than what a landlord with good credit needs simply to cover good credit financing at current market rates and the costs of ownership -- because many landlords see their main source of profit as appreciation in the value of the property itself, and have relatively low financing costs because they financed their purchase for a smaller principal amount when home prices were lower.

Encouraging moderate to low income families with little cash and bad credit to pay a $10,000 a year plus premium over what their landlord can obtain for the privilege of having a residence that is harder to get out of the family's income is disrupted or a maintenance problem or increased utility bills disrupt their ability, and more costly to the family in the event that a substitute occupant of the premises cannot be found, is a no deal to that low income family.

Indeed, the low income family often cannot receive as much of a tax benefit from having tax deductible mortgage and property tax payments, because they are in lower tax brackets than middle class families that qualify for conventional financing. And, they tend to have less stable employment, which is a big concern when you are making a loan that must be paid every single month, on time, if you remain in your home.

For most families who don't qualify for a prime rate loan or don't have enough of a cash cushion to make payments without fail in the event of a maintenance emergency or brief period of unemployment, and for many families who can't afford a full 20% down payment in addition to that emergency fund, buying a home is a bad idea fraught with risk and likely more expensive than renting.

This advice is mitigated in the case of low down payment purchased made when housing prices are soaring, because hot real estate markets create equity, reducing the downside risk of not being able to make payments and having to sell the home, possibly at a loss, but it still rarely makes sense to buy a home when you are paying subprime interest rates and could be renting from someone who isn't paying those rates, particularly because rents tend to be particularly low during hot real estate markets.

At times like the present in Colorado, where the real estate bubble is deflating through stagnate real estate appreciation, the general rule that home ownership really only makes sense for those able to get good financing terms and have a decent financial cushion makes sense.

Conclusion

Many of the economic woes we are seeing right now in the Colorado economy are a product of low income families buying homes they can't really afford. Many were lured into buying houses with subprime loans, low down payments accompanied by mortgage insurance payments, interest only loans, and variable interest rates that have caused monthly payments to surge as interest rates have risen from their previous historic lows. These homeowners, who are often paying more to own a home than they would to rent a comparable home, and who often live pay check to pay check, making them vulnerable to relatively minor bumps in the road like an illness, rising utility and gasoline prices, or repairs that need to be done, find themselves leaving homeownership the hard way and hard pressed to even sell their homes through a realtor and recover their investment of what little savings they have accumulated.

Proponents of the subprime mortgage market argue that they are giving people a chance to be homeowners. But, the reality is, that a very large share of people who answer that call are making decisions that are economically unwise for them. The problem is not that there is anything sacred about a particularly numerical interest rate, but that rational participants in the market would not make the choice and government appropriately protects people who make economic choices primarily because they are ill informed, or, equally often deceived by slick mortgage brokers offering them bad deals.

Let's hope that this issue is mitigated, at least a little, by having Governor Owens sign the widely supported bill to regulate mortgage brokers in this state passed by the General Assembly this session. If criminals are taken out of the mortgage brokerage profession, many of these economically harmful deals for low income consumers might not happen at all. I'm not optimistic, but one can always hope.

Footnote

There is an entirely different set of arguments against homeownership for middle class people who can afford conventional mortgages, not addressed above. But, in this case the argument is not that middle class condominium buyers or those selling them are making unwise decisions given their individual circumstances, but that the tax incentives for homeownership over leasing that drive those transactions encourage ownership arrangements that are not desirable in the absence of tax incentive.

This is particularly true in high rise buildings that go from apartments to condominiums. In these kinds of buildings, the collective action issues associated with homeowner's associations, make favoring home ownership a dubious choice from a non-tax perspective. Homeowner's associations tend to favor maintenance at the level desired by a median homeowner, even if some owners would favor much more maintenance, and require much more effort to make even easy decisions. Landlords, who wants to maximize the rental value of all the units in the aggregate and can make decisions quickly, in contrast, usually make better maintenance decisions in situations, like high rises, where the interests of each homeowner are often quite different. Consider, for example, the issue of elevator maintenance.

The best solution to this problem is to either (1) eliminate the mortgage interest and property tax deductions, or less disruptively, to (2) create a rent deduction and a deduction for casualty insurance on a principal residence. Either approach would create near tax parity between renting and owning and eliminate the kind of individually rational, but economically unwise tax driven decisions that our tax code's bias in favor of home ownership creates.