Middle Class Income Tax Rates At Roughly 40 Year Lows

Average and marginal income taxes for those making the median income and twice the median income are mostly at forty year lows.  Taxpayers making half the median income have never paid less in income taxes (the average income tax rate is a negative percentage of income), but have the highest marginal income tax rates of all taxpayers, due to the effects of various refundable tax credits, the standard deduction and personal exemptions.

The bottom line, here, and across the board in the area of federal taxation, is that in a time period where we have federal budget deficits, it has never made less sense to close those deficits entirely or mostly through spending cuts.  We have large budget deficits, at the federal level, and have almost overconstrained state budgets in Colorado that have forced painful cuts, mostly because we made deep tax cuts during an economic boom while fighting two regional wars, without paying for them.

From the perspective of overall economic growth and the employment situation, we should be spending more in the public sector, at a time when private sector demand is anemic and investment activity is tepid.  Instead, we are cutting back on public services at a time when our economy has massive amounts of slack resources and above average demand for public services.

Also, our current extremely generous tax code is full of special interest tax breaks that constitutes autopilot meddling with private economic decisions that picks winners and losers in the business world, rather than letting the marketplace carry out that function, continues to be a force driving increasing systemic risk in our economy, and dramatically increases the dead weight transaction costs associated with tax code compliance and tax planning that its one of the regulatory costs of government that truly does hit small businesses the hardest.

Accumulated tax code crud is inevitable.  A tax code will never be ideal once and for all.  Revenue needs change, new kinds of transactions are invented, politicians are compelled to respond to urgent cries from the public for tax tweaks great and small to be responsive.  But, like a garden, the tax code requires continuous weeding of provisions that damage the whole and planting of improved provisions if it is to satisfy the public need for revenue in a way that doesn't do unnecessary harm to the economy.  Congress has put off that unpleasant task for too long, and the result has been ugly.

But, the solution is not to shut down the IRS, to hire private collectors, to pass further special interest tax break, to pass a consumption tax, or to mimic sometimes lower foreign corporate tax rates without expanding the tax base as countries with lower corporate tax rate do.  Instead, it is to take on the unpleasant business of repealing a great many tax breaks, in a way that increases the amount of revenue produced by the income tax, makes the tax code more economically neutral, and reduces the complexity and tax planning opportunities that great dead weight drags on the economy.

From the Management

Note: Comments with spam links in the name of commenting person will be summarily deleted no matter how substantive the content.

Employment And Divorce

A new study to be released in the American Journal of Sociology by Liana Sayer of The Ohio State University looking at 3,600 couples surveyed in 1987-1988, 1992-1994, and 2001-2002 shows "how employment status influences both men's and women's decisions to end a marriage.

[A] woman's employment status has no effect on the likelihood that her husband will opt to leave the marriage. An employed woman is more likely to initiate a divorce than a woman who is not employed, but only when she reports being highly unsatisfied with the marriage. . . .

For a man, not being employed not only increases the chances that his wife will initiate divorce, but also that he will be the one who opts to leave. Even men who are relatively happy in their marriages are more likely to leave if they are not employed[.]

The finding seems to reflect data that I've cited in the past on the subject that appear to show that economics is still probably the strongest tie that holds marriages together and the biggest influence on recent trends in divorce rates, but that the dynamic is complex. In a nutshell, the key economic factor seems to be the economic dependence of women on men in a marriage. When it is present, divorce is rare. When it is absent, marriages tends to survive in good times, but not in bad ones.

I've hypothesized in previous posts that the driving factor behind the divide in divorce rates between college educated and non-college educated couples is that college educated women relative to non-college educated women (1) have more to gain economically from their husbands (who have better incomes and often benefits like favorably priced health insurance and defined benefit pension plans), (2) sacrifice more of their earning potential by being married and having kids (first, because they actually stay at home as a result, and second, because experience matters much more in professional careers than in blue collar jobs), and (3) have lower expectations that they will be able to secure a match or new job that puts them in at least as good a position as they are in when married (because they have more room to do worse and less room to improve, and because the better men tend to stay married while the less desirable ones do not, on average).

Thus, even though college educated women (at least when they have children and are married to college educated men) generally have more earning capacity than non-college educated women (at least when they have children and are married to non-college educated men), also tend to have a greater economic dependency upon their husbands.

Other data have tended to show in multiple countries that an important factor in divorce rates of couples relative to each other within countries is the ratio of a husband's income to a wife's income. Marriages in which wives have more earning power relative to their husbands are more likely to end in divorce.

A Father's Day column by Vincent Carrol in the Denver Post questioned this economic interpretation for a rise in divorce rates, noting that job prospects for men aren't that much worse than they were in the 1960s and that in absolute terms couples are strong married in hard economic times because they can pool income and reduce expenses than they are when they are not together. But, his analysis paints with too broad a brush.

The men who are most likely to get divorced, those who lack college educations, have faced four straight decades of near total economic stagnation, sharing in almost none of the economic growth of that overall prosperous era, while better educated professional men have shared in that economic growth. Meanwhile, the economic prospects of women have improved dramatically in those four decades in all social classes.

But, while much better than they were in the early 1960s (when women made up single digit percentages of most professions and often remained unmarried and childless if they chose to do so at all), the economic gains for higher level women professionals who marry and have kids have consistently shown the greatest lag behind men in the same professions. The "mommy track" career pattern, of choosing to take time off from work to raise young children and to take positions within a profession that provide a better work-family balance to a greater degree than men, as much as more blatant discrimination in compensation between men and women, accounts for a very large share of the enter gender gap in compensation today. Women who don't marry and have kids and have college educations have incomes very similar to men with college educations (even if they have married and/or had kids).

The "mommy track" gap is very top heavy. Low skilled jobs of women with no college education tend not to have very seniority and experienced based pay scales. The seniority and experience factor for women who are lawyers, and doctors and business chiefs, in contrast, as illustrated with data like the University of Michigan Law School alumni survey, can be intense.

Considering policy responses to this situation is beyond the scope of this post. Obviously, nobody is seriously proposing that we should return to the 1950s regime when women were all but barred from almost all professions by school teaching, nursing and secretarial work (and professional such as laundry work and child care that constituted outsourced forms of homemaking). Neither do we want to return to the Baby Boom era barefoot and pregnant model in which economic dependence that strengthened marriages flowed from having children early and often. 

It may be that marriages that are too strong aren't even desirable.  The stronger a marriage is, as a result of economic dependence, the more an economically dependent wife will tend to tolerate mistreatment in that marriage, up to and including domestic violence, a husband that engaged in incest with her children, affairs, and so on.

But, it is also the case that we either have to learn to find ways to make a reality with less stable marriages work better, or rethink the economic incentives within marriage and the way that women choose to be involved in the workforce, if we wish to improve the status quo.

Addressing issues that aren't driving the problems won't produce solutions.  Even changing the standards under which marriages are entered into, or divorce is available wouldn't necessarily work.  In the era well before no fault divorce, when economic trends weakened marriages arose, divorces and de facto divorces became more common and changes in the law regarding the availability of divorce, followed rather than preceded this trend.  Likewise, parallel to the trend of high divorce rates in recent decades (although they have started to fall again) is the increasingly widespread trend of couples never getting married in the first place.

Second Circuit Rejects Hot News Doctrine In New York State Case

Thwarted in their efforts to use copyright law to legally prohibit others from referencing the content that they produce, some newspapers and news services have been attempting to reinvigorate the common law "hot news" doctrine to make their publications truly "exclusive" for a little while at least.

A ruling released yesterday in the case Barclays Capital, Inc. v. theflyonthewall.com, Inc., from the United States Court of Appeals for the Second Circuit, in which the trial court had issued an injunction protecting Wall Street analyst newsletters based upon the doctrine, dealt a serious blow to that theory.

The core holding of the case is that:

We conclude that under principles that are well established in this Circuit, the plaintiffs' claim against the defendant for "hot news" misappropriation of the plaintiff financial firms'recommendations to clients and prospective clients as to trading in corporate securities is preempted by federal copyright law.

The ruling does not hold that the "hot news" tort is unconstitutional, or even that it is always pre-empted by copyright law, although the analysis does give the First Amendment considerations weight in determining the scope of copyright pre-emption of the doctrine. But, it does dramatically narrow the class of "hot news" cases that are not pre-empted by copyright law from what the leading "hot news" precedent in the Second Circuit, National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), had been understood to provide. It distinguishes and greatly narrows NBA, rather than overruling it.

Since the NBA case is the leading precedent in any United States Court of Appeals Circuit holding that the "hot news" doctrine is neither unconstitutional nor fully pre-empted by federal copyright law, the ruling deals a serious blow to the litigation strategy of traditional media outlets seeking to use the doctrine to restrain online news reporting that used traditional media sources.

Some central stated motives for the broader reading of pre-emption doctrines were both (1) the lack of protection afforded the underlying facts that suing media outlets reported, which were historical facts or financial market data, and (2) the concern that media outlets that are targets of "hot news" suits are often Internet based media ventures with sources in many states who would be unfairly subject to state law versions of the common law doctrine that differed materially from state to state, undermining the policy of uniformity that the federal copyright laws were intended to establish.

The blow this ruling presents to litigation strategies designed to give one media outlet exclusive intellectual property rights to a story is particularly great given the surprisingly blog friendly rulings that courts gave to websites republishing substantial parts of newspaper stories on the web under the copyright law's fair use doctrine, sometimes finding that it applied even in verbatim reprints of medium sized news stories or entire news photographs when other favorable conditions (like the limited negative impact a republisher was likely to have on the market for the original work).

SCOTUS Dislikes Class Actions

Today, a conservative majority of the U.S. Supreme Court in a 5-4 decision, held that a sex discrimination case against Wal-Mart on behalf of its 1.5 million female employees could not be certified as a class action lawsuit. (There was wide agreement that the backpay due in the case could not be handled on a class basis, but there was deep dispute over whether the existence of gender discrimination at the company could be litigated in that manner.)

This is the latest of a string of cases that have disfavored class actions, such another this term that held that the right to conduct a class action arbitration could not be implied from a simple arbitration clause and that the fact that an arbitration clause expressly prohibits class actions could never be sufficient to render it unconscionable under a provision of the federal arbitration act that allows arbitration clauses to be invalidated if they would be unconscionable under state law.   The rulings have largely been statutory or based on court rules, thus they are more easily overriden than rulings based on constitutional grounds, but the rulings are colored by a deep distrust of the class action generally.

Concerns about class actions have also been a central to the tort reform movement, and have been an area where the movement has achieved more than one significant victory, by imposing major procedural limitations on securities law class actions, and by giving the federal courts jurisdiction over many class actions arising under state law that would not qualify for diversity jurisdiction.  Today's ruling, interpreting the class action rule in the federal rules of civil procedure, thus, has wider implications for class actions generally, than it would have a couple of decades ago, because more kinds of class action lawsuits are confined to the federal courts.

To some extent, the distate of big businesses for class actions, and plaintiff friendly group's support for them is simply a matter of mathematics.  In a situation where there are many people with small claims against a single business or small group of businesses, large numbers of people with claims will never choose to bring valid lawsuits because the litigation cost economics don't make sense, and except in the very clearest cases, the verdicts will be a mixed bag.  In contrast, a win in a class action will afford a remedy to everyone with a claim (or a proxy for them) and a win on behalf of all claimants is possible even when a win on the liability issue isn't a sure thing in any given isolated case.

There is also considerable controversy over the fact that "coupon settlements" and contributions to non-profit caues often replace money awards as typical class action remedies, that class actions are expensive to litigate and rarely result in a resolution on the merits by a judge, that there are often multiple competing class actions that must be consolidated arising from single incidents, that forum shopping can be especially problematic in these cases, and that the cases can seem to be attorney driven rather than focused on providing a remedy for a client.  The high cost and long litigation times involve in class action litigation don't speak well for a process which was invented to reduce litigation costs and handle numerous related small claims more efficiently than traditional litigation efforts.

On the other hand, class actions can put pressure on big businesses to comply with the law even when the state regulators of an industry are asleep at the switch, underfunded, run by a political appointee hostile to the agency's purpose, or are the victim of capture by the regulated industry.  Class actions can close the gap between the laws on the books regulating an industry or practice,  and the law as actually enforced.  It can function as a remedy to corrupt administration of regulatory laws.  Class actions are also an arguable preferrable way to regulate industries through decisions by private individuals rather than actions by state officials whom many people who are inclined towards libertarian political ideologies may distrust.

In employment cases, the key attraction of a class action is the question of proof.  It may be much easier to establish discrimination on a statistical basis than it is to prove that it was present in an individual case, and it may be easier to fashion an affirmative action remedy in response to statistically proven discrimination than it is to wade through the details of a money damage remedy on a case by case basis.

But, class action cases can appear to grant legislative or regulatory type authority to courts whose procedures are primarily geared towards resolving disputes that involve only narrow disputes between small numbers of people.  This tendency is particularly apparent in false advertising claims where very large numbers of people are exposed to advertising claims and considerably numbers of people may buy products that are falsely advertised, but the individualized consumer harm may be modest.  Negotiations between alleged wrongdoers and alleged victim's representatives may also lead to court sanctioned remedies, such as certain forms of affirmative action, that could never be approved as legislation in the absence of a violation of the law that is never provided on the merits in court.

The trend seems contrary to the trends in our economy, in which big corporations whose mistakes routinely impact large numbers of people in incidents with a common source, rather than isolated incidents of wrongdoing, are increasingly the norm.  If a big money center bank calculated interest rates on loans, or forecloses on houses improperly, it will usually be because some system has gone wrong or some computer program had an incorrect rule, with the error affecting hundreds of thousands of people nationwide, rather than because there was some isolated defect in one customer's particular case.  Serious misrepresentations to consumers in commerce not infrequently involve massive advertising campaigns rather than an isolated vendor and purchasers in an open air marketplace.  Serious discrimination in employment practices frequently flows from bad leadership at the top of an organization that guides subordinate managers, rather than individualized misconduct by low level managers.  In our modern era of quality control systems in manufacturing, systemic defeats in mass manufactured products are more likely to cause harm than isolated duds that aren't successfully removed from the assembly line: most defective products are the result of a design defect, either in the product itself or the manufacturing process.  An inability to remedy systemic wrongdoing by a big business in a collective way is out of step with an economic reality in which a large share of all wrongdoing has a systemic source.  In the long run, it may be more important to the functioning of our economic to solve systemic problems than to remedy the one off screw ups that can never be completely eliminated.

For what it is worth, big government agencies, like the I.R.S., have many of the same weaknesses in offering remedies to systemic errors that put individuals in low stakes cases in bind, that big businesses do.

Some problems in the way that big businesses and big government operate, may be flaws in how they do justice between third parties who deal with them, rather than actually benefitting these entities themselves.  For example, most securities fraud involves cases where a misrepresentation by a business causes a stock price to fail to reflect the truth for some period of time, which benefits some secondary market stockholders to the deteriment of other secondary market stockholders, while having little or no direct economic impact on the company itself and where only a tiny part of the benefit or harm accrues to company insiders.  Often the beneficiaries and victims of the misrepresentation have no knowledge that they are acting in the basis of a misrepresentation until after the harm has been done. 

Yet, if misrepresentations with immense economic consequences for stock traders routinely lead to no repurcussions for the parties who make them, the soundness of our financial system is seriously undermined.  Some of the parties most responsible in fact for the financial crisis, the major credit rating companies, had very little other than their pitiful compared to the amount at stake in the economy fees, in their decisions, and will bear no consequences for their mistakes, and there is a movement in the securities law world to treat accountants the same way.  Yet, if the people whose observations drive the market have little stake in being accurate, the financial markets are certain to repeat its world economy shaking mistakes.  Millions of people are out of work and have been for many, many months, in substantial part because the tiny number of people on Wall Street who determined how creditworthy bond issuers were had an insufficiently compelling incentive to get their decisions right.

Part of the barrier to the problem is that power dynamics and self-interest driven policy stances are often so transparent in the tort reform area and in the area of class action litigation in particular, that it is hard to separate and address sincere and legitimate concerns from merely self-serving ones in the policy arena.  Also complicating the effort to find a fair way to deal with the cases that drive class action litigation is that extremely loose class action standards and substantive law claims that can be brought as class actions in a handful of states like California create extremes of the process that suggest solutions that aren't necessarily appropriate for the more strictly regulated federal courts or courts in states like Colorado where class action litigation isn't nearly so common.

Counsel Sometimes Required In Civil Contempt Cases

The U.S. Supreme Court held today that there is sometimes a right to counsel in civil contempt case, typically brought to secure compliance with child support orders by imprisoning self-employed people or people who have access to assets beyond the reach of the court's jurisdiction (such as funds in an asset protection trust) by incarcerating them until they comply.  Civil contempt remedies are available in a wide variety of civil cases, but is rarely permitted in ordinary debt collection cases and in other cases (typically involving alleged violations of court injunctions), the parties typically are not indigent and have or have access to legal counsel.


Typically, in these cases, the critical issue is whether there is an ability to comply with the court order.  Incarceration for non-payment when there is a mere inability to pay (a remedy once called "body execution") is an unconstitutional debtor's prison remedy. 

The existence of the child support judgment and the fact that it has not been paid is typically self-evident from the record.  But, the existence of income not succeptible to garnishment, or of assets that cannot simply be levied upon with a writ of execution is often hotly contested.  The fact that a mistake on this point renders the incarceration not just inaccurate but unconstitutional makes the stakes particularly important.

I've handled both sides of such disputes for clients myself, and while the black letter law of contempt proceedings is fairly clear, judges and the sheriffs who manage the incarcerations are often confused by them because they are outside the ordinary criminal procedure mold that governs the vast majority of incarceration cases.  The contempt of court remedy is often a critical safeguard in securing compliance from the most evasive and dishonest child support debtors, but is sometimes applied inappropriately to punish people who truly are simply unable to pay, rather than merely unwilling to pay.  For whatever reason, child support debtors are among the most common to refuse to personally acknowledge and concede that they owe a debt even after court rulings to the contrary, so these cases are among the most contentious forms of debt collection actions.

The high court found that while incarceration of people for civil contempt can be allowed in some court systems where there is pro se party friendly environment that calls attention to the critical issues at the hearing and provides a simple form driven way for the unrepresented person to participate in the process, that such incarceration is unconstitutional without a right to counsel provided at state expense when the court system is no friendly to pro se parties or is too complex for an unrepresented person to handle.

Thus, while the South Carolina civil contempt process at issue in  the case before the U.S. Supreme Court failed the test, it is entirely possible that the due process protections for the same kind of proceeding in Colorado might meet the high court's due process standards.

The 5-4 ruling is a departure from most past rulings of the U.S. Supreme Court on procedural due process requirements, which have typically imposed a clear bright line rule in a class of cases, rather than setting forth a more generalized standard to apply on a court system by court system, or even case by case basis.  The conservative dissenters would have found that there was no right to counsel in these cases.

Since state governments, almost to a one, are currently in a very tight fiscal situation and would be hard pressed to pay for court appointed counsel in these cases, the likely response to the ruling will be for state court systems to develop pro se party friendly court procedures for run of the mill child support contempt of court cases.

There's A Prophet In The House, But Maybe Not Me

I like flowers, a lot. I'm not very knowledgeable about them, but ever since I spent about four months living with a florist as an exchange student in high school, I've been hooked. Every time I drive to work, or take the kids to soccer, or drive to the grocery store this time of year, I can't help but to ooh and ahh at the summer flowers that have come into their seasons peak, now that the bulbs and annuals of earlier in the spring have receded into the background a little. In particular, I am awestruck by the amazing rose bushes that dot the landscape of Denver's urban residential neighborhoods.

Indeed, roses are one of the few truly unifying themes of Denver's flora. The presence or absence of trees in a neighborhood turns out to be as accurate a measure of a neighborhood's prosperity in this city as payday loan shop frequency. New developments sport fancy, water efficient grasses and wildflowers as part of xeriscaping efforts. Institutional office building owners tend to have a thing for geraniums and mums. But, roses are ubiquitous, from West to East, North to South, almost all of Denver's neighborhoods have them, dotted irregularly in select houses placed prominent in front of houses, on boundary lines and climbing up back fences. Pink ones, red once, orange ones and yellow ones. Compact bushes and sprawling abundant vines. The rose bushes at the Byers-Evans house next to the Denver Art Museum are more than a century old.

Rose are to flowers what jazz is to music. Growing them isn't necessarily trendy, just as jazz isn't necessarily cutting edge, but it has appeal with every ethnicity and with people from 11 to 101. They are enjoyed by conservatives and liberals, but modernists and traditionalists, and just about anyone else.

The trouble is that in addition to not being very knowledgeable about them, I also don't have much of a green thumb.  More often than not, my gardening efforts are epic fails, despite the encouragement and help I receive from my more talented neighbors.

My dear wife is a better gardener than I am, but has different preferences. Practical woman that she is, she prefers herbs and vegetables to flowers. Flowers just aren't her thing and she isn't inclined to devote much effort to my frivolous decorations.

So, once or twice every year, I am the one who makes an effort to plant some flowers with varying degrees of success. Some years it is pansies and marigolds. On two previous occasions it has been rose bushes which promptly died. Every once and a while I have a little success that keeps me going. Last fall, I planted bulbs and all but one of them actually bloomed this spring.

This year we'd been preoccupied earlier in this spring. Our lawn was eventually fertilized and mowed a few weeks behind schedule. Our vegetables and herbs had finally gone in the week before. And, this year, for father's day, I figured that instead of going on a hike in the mountains, or watching a movie with the kids, we'd plant rose bushes. Planting rose bushes that might still be their when they have kids of their own would certainly be more memorable and would also be a better quality way to spent time with them.

So, we spent the morning traipsing across town to find our treasures. But, my daughter, ever the prophet of doom, having not forgotten the debacle of last year's effort in which our dainty new collection of freshly planted flowers was destroyed by the first bad hail storm of the year informed me:

"Dad, it's going to hail and tear all the petals off your roses. It's karma."

The weather, while clouded, wasn't that foreboding in the morning, I'm not that superstitious, and I was more worried about whether our BBQ plans would be rained out than a hail storm. So, I ignored her dire warning, and by early afternoon our two beautiful rose bushes were nicely settled in the garden plot in front of the front picture window in our living room.

Needless to say, four hours later, the hail came down with a vengeance in raisin to almost acorn sized lumps for a good half an hour or so, followed by about twenty-eight hours of rain (notwithstanding the protestations of our newspaper of record which claims that there was no measurable precipitation on Sunday).

The rose bushes survived, badly battered, and perhaps the rain will allow them to recover and last in the long run. But, given the circumstances, maybe I'm wrong about who in our household is the real "Wash Park Prophet."

Righthaven Suffers Potential Death Blow To Business Model

In a post yesterday, Technology and Marketing Law professor Eric Goldman summarizes a judge's June 14, 2011 order dealing a major defeat to Righthaven, a Internet copyright violation litigation company with the parent companies of the Denver Post and Las Vegas Review-Journal as major clients that has employed a very aggressive litigation strategy against bloggers who quote newspaper reports in their posts. 

An ongoing dispute over a cease and desist letter sent by Righthaven on behalf of the owner of the Denver Post to Colorado Pols, asserting rights in excess of those legally available to the newspapers under copyright law and largely complied with by the Colorado Pols blog to the detriment of the newspapers has earned Righthaven infamy in Colorado's political blogosphere.

The judge found that Righthaven didn't own the copyrights it claimed to be suing under its contract with the media company, and according to Goldman that judge ruled "that Righthaven can't fix the existing contract defect for the existing litigation because standing is measured when the complaint is filed. This could lead to dismissal of all pending Review-Journal litigation and, depending on the exact wording of the MediaNews contract, possibly the Denver Post litigation as well."

The ruling is a blow to Righthaven's entire business model:

"If Righthaven can't get this opinion reversed on appeal and other judges defer to this opinion on the standing question (which I think it likely), Righthaven may be back at square one with its entire business. Thus, I assume Righthaven will appeal this decision. However, this is a pretty well-constructed opinion, so Righthaven will have an uphill battle overturning it on appeal."

The judge also severely criticized Righthaven's litigation conduct and is likely to impose sanctions:

* the judge rejects Righthaven's basic substantive argument as "flagrantly false—to the point that the claim is disingenuous, if not outright deceitful."
* . . . "the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court."
* the judge then goes on to lambaste Righthaven for not identifying [Las Vegas Review-Journal Owner] Stephens Media as an interested party in the lawsuit, calling that omission "brazen" and "egregious."

[As the order explains: "not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court."]

The judge requires Righthaven to explain why the judge should not order sanctions. Given the tenor of this opinion, it seems like a sanctions order is inevitable. The opinion also hints that Democratic Underground may get its attorneys' fees. All told, this case is probably going to cost Righthaven dearly. And after a ruling like this, Righthaven's entire enterprise is on the ropes.

Since standing goes to the subject-matter jurisdiction of the federal courts in which Righthaven has already obtained judgments and settlements resulting from federal court litigation, it is not impossible that litigation to set aside those ruling and even to obtain restitution of the settlements paid based on litigation premised on misrepresentations to the Courts by Righthaven could be brought successfully if this judge's order survives attempts to set it aside on appeal.

The Electronic Frontier Foundation, which provided a legal defense to the Democratic Underground also noted that:

"The Court permitted Democratic Underground's counterclaim to continue against Stephens Media -- the publisher of the Review Journal -- allowing Democratic Underground to show that it did nothing wrong in allowing a user to post a five-sentence excerpt of a 50-sentence article."

More details are found in my diary at Colorado Pols on the subject and the comments therein.

Three Hots, A Cot, Medical Care and Safety

One of the foundational ideas of criminal justice is that the threat of incarceration discourages crime because it is worse to be in prison than to not be in prison. For most Americans, this is an accurate statement. For many young black men in the United States, this is a closer call.

Using data from the U.S. Bureau of Justice Statistics and Census Bureau, I estimate death rates of working-age prisoners and nonprisoners by sex and race. Incarceration was more detrimental to females in comparison to their male counterparts in the period covered by this study. White male prisoners had higher death rates than white males who were not in prison. Black male prisoners, however, consistently exhibited lower death rates than black male nonprisoners did. Additionally, the findings indicate that while the relative difference in mortality levels of white and black males was quite high outside of prison, it essentially disappeared in prison. Notably, removing deaths caused by firearms and motor vehicles in the nonprison population accounted for some of the mortality differential between black prisoners and nonprisoners. The death rates of the other groups analyzed suggest that prison is an unhealthy environment; yet, prison appears to be a healthier place than the typical environment of the nonincarcerated black male population. These findings suggest that firearms and motor vehicle accidents do not sufficiently explain the higher death rates of black males, and they indicate that a lack of basic healthcare may be implicated in the death rates of black males not incarcerated.

From Evelyn J. Patterson, "Incarcerating Death: Mortality in U.S. State Correctional Facilities, 1985–1998," Demography, Volume 47, Number 3, August 2010, E-ISSN: 1533-7790 Print ISSN: 0070-3370, DOI: 10.1353/dem.0.0123.

Tough Times For Law School Graduates

The law school class of 2010 . . . set a new record--only 68.4 percent of them are in jobs that require them to pass the bar exam, the lowest share since the Association for Legal Professionals began collecting data.

Another 10.7 percent of the class of 2010 are in jobs that require or prefer a J.D., while 8.6 percent have jobs that require neither a law degree nor bar passage. The class' overall employment rate--for jobs in and out of the legal profession--is lower than it's been for any class since 1996, at 87.6 percent. So counting unemployed new graduates, the actual percentage of those in jobs that require bar passage is even lower, at 60 percent.

From here.

Median debt loads for law school graduates are little under $100,000.

In not unrelated news, leading Denver law firm Isaacson Rosenbaum, which until recently had 40 attorneys, and has 23 shareholders and 5 associates at the time of the announcement (and includes the author of the Colorado Appeals Blog), will disband at the end of the month after more than fifty years in business. The financial crisis slump did in this real estate deal heavy firm. Many of the remaining attorneys are landing positions with other firms around town, however.

State Securities Law Class Actions In Colorado

Colorado had somewhere from 12 to 16 state court securities law class action lawsuits in the fifteen period from 1996 to 2010, six in the first five years, zero to four in the next five years, and six in the last five years. State securities law class action suits most often arise in states with many publicly held corporations headquartered there (Delaware, California, New York, and Texas) and most frequently involve merger and acquisition deal disputes. The highest number of suits was in 2009, with four, but other years had just zero or one or two filings.

Estate and Tax Planning For Same Sex Couples In 2011

SSRN has a new paper entitled "Planning For Same Sex Couples in 2011" that provides a nice overview of the estate planning and tax issues involved, including a state by state survey that covers recent legislative changes in this area.

SCOTUS Win For Janus Capital

Janus, a Denver based mutual fund group with its headquarters across the street from the Cherry Creek Mall won a major victory in the U.S. Supreme Court today. In the group, different mutual funds are organized as separate legal entities owned by their investors, and each fund has a management and control arrangement with the master entity. The ruling was a 5-4 decision for Janus along the usual conservative-liberal lines with the conservatives prevailing.

One of the funds made a statement in a prospectus that gave rise to securities fraud liability. The issue was whether the master entity could be held legally liable for the statement made only in the name of the individual fund because it provided management services and had effective control of the entity. Continuing a trend of the U.S. Supreme Court to limit secondary liability for securities fraud (e.g. disallowing aiding and abetting liability in private securities litigation), the court ruled that only the fund was legally responsible for the mistatement made in its prospectus about its fund. As a result, the damage is confined to a single entity and since there is substantial identity between the people hurt by the misstatement and the owners of the fund, the amount of financial gain available to the people bringing the suit may be modest.

The fund might have legal recourse against the master company for a breach of duty in the management of the fund that caused the misstatement to be made and caused the fund to incur liability, but given the pervasive control of that relationship by the master company, it is unlikely that such a suit will be brought in the absence of a derviative action (i.e. a suit against a third party in the name of the company brought by the owners of the company because the company itself refuses to act) by the fund owners, and such actions rarely prevail. The U.S. Supreme Court ruling, however, means that in this and many similar arrangements, the master company will have no liability for statements made in the name of a mere fund in a prospectus.

Essentially, the U.S. Supreme Court held that involvement in ghost writing a document does not suffice to pierce the corporate veil for private securities fraud lawsuit purposes.

Is Colorado Revised Statutes Section 14-2-205 Still Good Law?

Wife's land subject to judgment. When any woman against whom liability exists marries and has or acquires lands, judgment on such liability may be rendered against her and her husband jointly, to be levied on such lands only.

- Section 14-2-205, Colorado Revised Statutes.

The statute above, part of the Married Women's Property Act passed very early on in Colorado's history (actually a few years before its admission to statehood when it was under the territorial legislature rather than the state legislature), remains on the books exactly as it read when it was enacted in the late 1800s as part of a general package of legislation that reformed the common law rule that a married woman was subsumed as one person with her husband who was vested with all of her property, upon marrying and ceased to have an of the legal rights of an adult person. Most of the sections of the act had that effect.

But, this section, by its terms (despite the fact that the heading for the section doesn't give a clue that this is the case), this section would suggest that if a woman had an unpaid debt from before the marriage, married, and then, for example, acquired a home which she and her husband co-owned, that both the half of the home owned by her, and the half of the home owned by him would be subject to liquidation for payment of the debt, despite the fact that it was her sole pre-marital debt that he wouldn't otherwise have any personal liability upon, and that the reverse (in the case of a man with premarital debts) would not be true. This gives creditors access to more assets than they would otherwise have available to them from which to collect debts of recently married women.

While some debts contracted for "necessities" by a married person in a single spouse's name may be the responsibility of the other spouse, and a spouse may be responsible for the other spouse's automobile accident liability under the "family car doctrine," the general rule is that a spouse is never legally responsible for the other spouse's sole debts and that one spouse's interest in land cannot be seized for the other spouse's debts in the absence of a fraudulent transfer.

The statute surely violates the intermediate scrutiny test for gender distinctions under the 14th Amendment's equal protection clause, but normally the remedy would be simply to say that wives who co-own real estate with their husbands have responsibility for their husbands' pre-marital debts just as husbands do for their wives under this statute.

This is the standard way that statutes that use masculine language only are interpreted and the reverse ought to be true, even though this is a case where the original intent of the statute (enacted when the 14th Amendment didn't apply, interestingly) was probably not to do so, because it was enacted in response to previously unequal treatment of the pre-marital debts of husbands and wives.

The law in Colorado's case, however, probably due to wholesale copying from the laws of some other state, corrected a problem that Colorado didn't have. Unlike some states in the Eastern United States, Colorado has never had the doctrine of tenancies by the entireties that prohibited judgment liens against a single spouse from attaching to a single spouse's interest in real property co-owned by a husband and wife. So, a husband and wife purchasing real property as co-owners does not impair the ability of a wife's pre-marital creditors to collect from her as it would, for example, in Boston where the tenancies by the entireties doctrines survives.

But, there is no obvious constitutional principle that would prohibit the law from making all of real estate jointly owned by spouses subject to the pre-marital claims of one of the spouses, and the general rule is that statutes are given effect according to their plain language. In order to escape the claim of a creditor that this expands their collection rights, a debtor husband would have to argue that the law doesn't really mean what it seems to say on its face, given the larger intent of the Married Women's Property Acts to simply treat married women the same way that unmarried women are treated in private law. This argument could be made, and its disuse suggests that there are widespread assumptions that creditors don't have this right, but such an argument would hardly be a slam dunk. Moreover, most individual consumer debt collection defendants (and some of the lawyers who represent them) aren't legally sophisticated enough to make that kind of argument.

Interestingly, there is not a single reported case that has ever discussed this statute in the entire history of Colorado, despite the fact that this would be a rule that would seem to favor creditors in debt-collection actions that could benefit that class of creditors thousands of times per year. The leading treatise on debt collection law in Colorado, by Stephen W. Siefert, "Colorado Creditors' Remedies - Debtors' Relief," doesn't ever mention the statute once. Neither does the treatise, "Colorado Family Law and Practice," by Frank L. McGuane, Jr. and Kathleen A. Hogan. While this could simply be a function of the law being unambiguous, the more likely reality is that it is forgotten and not utilized because it doesn't make logical sense in the context of the contemporary was that we think about the property rights of married people. Most lawyers don't expect it to be there and therefore don't look for it, and don't expect it to work, in the rare cases where they do know about it and it does apply by its terms to a case.

Sizing Up The GOP Presidential Field

[Sarah] Palin, the party's vice presidential nominee in 2008, had the support of 22 percent of the Republicans surveyed. The former governor of Alaska has not said whether she will run for president next year.

Romney, who failed in a 2008 presidential bid, had 20 percent support.

Representative Ron Paul, a libertarian Republican from Texas, and former pizza executive Herman Cain were tied for third with 7 percent each. . . .

In the Reuters/Ipsos poll, the other Republican contenders fared even worse than Romney's 13-point gap in a match-up with Obama. Palin trailed Obama by 23 points and former Minnesota Governor Tim Pawlenty was behind by 19 points. . . . The poll, conducted Friday through Monday, surveyed 1,132 adults nationwide by telephone, including 948 registered voters. The margin of error is 3 percentage points.

From here.

The story also notes that: "Other surveys have shown Romney in a stronger position. A Washington Post-ABC News poll earlier this week gave Romney a slight lead over Obama among registered voters."

The fact that two polls in the same week have a 14 point plus gap in an identical Obama-Romney matchup each among registered voters suggests that one or both of the polls have far less accuracy than their sample size based margins of error would suggest. An average of the margins in the polls, which would give Obama an approximately six point lead over Romney in a head to head matchup with this, the most competitive of the possible Republican Presidential nominees, is probably a more realistic state of the 2012 Presidental race right now.

Historical reviews of the GOP field by pundits in recent months have noted that lack of a strong front runner this early in the 2012 field compared to other post-war Presidential primaries.

Bank of America Still Stupid

It takes a really poorly run bank to first foreclose on a property that has on that has no mortgage, and then to ignore a judgment entered against it from the same lawsuit until the sheriff's deputies are on its door. Alas, this is one of the half dozen largest banks in the United States, and probably the world.

Bank of America mistakenly filed a foreclosure claim against [Warren and Maureen Nyerges] even though they had no mortgage at all. The couple fought the case in court and won, but then asked Bank of America to pay for $2,534 in attorney fees. A Collier County judge ruled the bank should pay, but the bank never did.

On Friday, the couple's lawyer went to a Bank of America branch with two sheriff's deputies. He was prepared to take possession of furniture inside the bank to pay the debt.

One hour later, the bank wrote a check for $5,772.88 to satisfy the original debt plus other fees.

From here.

In truth, the consequences for the Bank of America in this Florida case were probably entirely too lenient.

Dispatches From Turtle Island

I've talked in the past about splitting up this blog into two parts, each with more focused coverage. I started this on a beta-test basis in May. Now, a few weeks before the 6th anniversary of Wash Park Prophet, I'm making this post to publicly announce the split. My intent is that my combined output in both blogs be a bit lighter than my recent posting pace at Wash Park Prophet.

The new blog is called "Dispatches From Turtle Island," a play on one of the pre-Columbian Native American names for America, and takers a longer term view not simply focused on Denver. It focuses on issues that transcend law and politics.

I'll also be adding a link to this sister blog in the sidebar soon. For logistical convenience, I decided to keep it on the same blogging platform as Wash Park Prophet.

Columbus, Ohio Builds Perv Friendly Courthouse

Somebody forgot that in engineering, function should always trump form, particularly functional aspects that matter to your key constituents. The snafu in a $105 million court house in Columbus, Ohio was clear when it opened on Monday.

The central stairs of the new Franklin County Common Pleas Courthouse seem almost to float up from the ground floor, suspended in a foyer of light and glass.

However, the aesthetic appeal of the stairway has an unfortunate side-effect in a building where judges sentence sex offenders: People can see up a woman's skirt from the busy walkway under the stairs.

"If you wear dresses, you're on notice that you might want to take the elevator, as I will be doing," said Judge Julie M. Lynch, who wears dresses exclusively to work.

Although it's probably best not to advertise the issue for fear of abuse, people partial to skirts, dresses and kilts have a right to know about the risk, Lynch said.

From here (the Court of Common Pleas in Franklin County is the court of general jurisdiction handling felonies and large claim civil cases in Columbus, Ohio).

The problem is particularly unimpressive because the issue is a familiar one in new public building projects. I'd be willing to guess that there weren't any women or acrophobics on this engineering design team.

The county is aware of the issue and has discussed whether anything needs to be done, said Jim Goodenow, director of public facilities management.

For now, security guards have been told to keep an eye out for people craning their necks. If the design becomes a problem, the county can adjust the glass to make it less transparent, but officials are hoping not to disrupt the artistic integrity of the building. . . .

When glass stairs and walkways first came out, [one of the engineering executives who builds them for Apple computer properties] Zorn said, he remembers looking up at an elevated walkway at an airport and wondering how the designers had missed the fact that skirts were going to be a problem. Most engineers know enough to use some well-placed opaque glass and careful design to avoid the problem, he said.

A similar design for a recent renovation at nearby Ohio State University's main library was nixed at the design stage for this reason and because of "the fear some people have of standing on clear glass."

Hancock Elected Mayor, Johnson Elected Clerk & Recorder

As a result of the Denver's municipal runoff election, Denver's new mayor is Michael Hancock, in a landslide, and its new clerk and recorder is Debra Johnson, by a nose. In both races, the winner of the runoff was the second place finisher in the first round.

Hancock brings a neighborhood oriented investment agenda and a commitment to ending abuses by the City's police force that have cost the city millions in settlements. He inherits a tight city budget and decades of wise municipal leadership that left Denver less hard hit in the financial crisis than many of its peers.

His personal biography is one of a man who has risen from humble circumstances as a black man in a poor Denver neighborhood from a family whose other members have not always stuck to the straight and narrow who has risen to lead his city, more or less the opposite of the life story of Chris Romer, his runoff opponent. He is also the second black Mayor of a mostly white and Hispanic city that had a KKK supported Mayor in the 1920s (Mayor Stapleton). Mayor Wellington Webb, Denver's first black Mayor, was a critical advisor in his campaign.

Most recently Hancock has served as the President of Denver's City Council, and endorsement from city council members who withdrew from the race or failed to make it to the second round of the election were key to his runoff round victory.

Voter turnout in the second round was about five thousand more (about 40% of ballots mailed were returned and considered valid) than in the first round, but runoff voters tended to return their ballots sooner than the first round voters who had more decisions to make and more candidates to choose from than in the runoff.

Denver Daily News Done

While the demise of the Rocky Mountain News wiped out most of the competition with the Denver Post, Denver still had one competing daily paper - the free Denver Daily News, which had been in business for a decade. But, the rising cost of newsprint put it out of business, truly leaving Denver with only a single daily newspaper in print. There is little doubt that this is not good news for Denver.

It also doesn't help that the strongest television news outlet in the market, 9 News, has a partnership with the Denver Post, and the publisher of the Denver Post also owns many of Colorado's other leading daily papers. Since the Rocky's demise, the Denver Post has had no pressure to keep its subscription prices low and the product itself has gotten thinner and thinner. The lack of competition also makes the potential for suppression of stories from big ticket media must greater.

Yes, there are still a number of Denver based weekly and monthly periodicals in the market (although one of those just went under recently as well), at least a few of which do original reporting of "hard" news, and yes, there are a number of Denver based internet and television media sources, although only a handful provide much in the way of original news reporting. Colorado Public Radio has emerged as the most robust source of original daily local news reporting that is independent of the Denver Post.

Quote of the Day

While an appellate court may have the opportunity to reverse any individual trial judge every few years, I know that trial judges, in their numerous workday rulings, reverse appellate courts every day.

- Gregory Kellam Scott, “Judge-Made Law: Constitutional Duties and Obligations Under the Separations of Powers Doctrine,” 49 DEPAUL L. REV.517 (1999) (a former Colorado Supreme Court justice) via 39 Marc Galanter, “The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts,” 1 J. EMP. LEGAL STUDIES (2004) 459, 519.

Last Day To Vote In Denver's Municipal Runoff Election

Ballots must be received today by 7 p.m. Mountain Daylight Savings Time in Denver's Municipal Runoff Election to be counted. Drop off locations can be found here. Through Saturday, 84,655 ballots had been validly cast, and 193,736 ballots were still unreturned (1,636 ballots were rejected as invalid and 20,026 were returned as undeliverable). Of the ballots outstanding 69,764 were sent to voters whose registration were deemed inactive for failing to vote in the past. Those turnout figures exclude Monday and today's returns.

About half of the voters receiving ballots were Democrats, about a sixth were Republicans, about 1% were registered with third parties and the rest were unaffilated.

The turnout so far in the runoff election is well above turnout in the first round at this point in the election. In the first round of voting in Denver in this year's municipal election, 113,845 ballots were validly cast, including 47,483 on the last Monday and Tuesday. Thus, prior to the last two days, only 66,362 ballots had been validly cast in the first round.

The Mass Migration Of The Late 19th Century

On average, 5 percent of the populations of Britain, Ireland, and Norway emigrated every decade between 1850 and 1910, which increased to 14 percent of the Irish population emigrating between 1890 and 1910. By the turn of the century, Italy, Portugal, and Spain recorded similar emigration levels... The Swedish population fell by 44 percent in the twenty-year period from 1871-1890.

Massive immigration dramatically impacted the economies of countries in the New World, which had relatively small populations. Between 1880 and 1910, Argentina received the equivalent of 20 percent of its population per decade; the United States between 5 and 10 percent per decade; and Canada between 5 and 15 percent per decade. Immigration in this age of mass migration accounted for around 50 percent of Argentina's population increase, and about a 30 percent increase for the United States and Australia.

From here quoting this book. A comment to the linked post references regarding immigration politics of the time: Goldin, C, “The Political Economy of Immigration Restriction in the United States, 1890 to 1921.” In The Regulated Economy: A Historical Approach to Political Economy, ed. C. Goldin and G.D. Libecap, 223-258. Chicago: University of Chicago Press.

What was so awful in Europe that everyone wanted to get the heck out of there? Stories of misery and poverty driving people to leave Ireland after the potato famine and Southern Italy are familiar from immigrant narratives. But, I'm not familiar with any similar narrative for late 19th century Sweden. Yet, surely you wouldn't see a 44% exodus of Swedes from their homeland in twenty years if everything was fine and dandy in Sweden. Sure, the northern Midwest is full of Swedish Lutherans, but it had never occured to me that they would have emigrated in such large numbers relative to the population of Sweden. I'd always imagined that event as something more like a small subculture young people who set out to seek their fortune because the grass was reputed to be greener across the Atlantic, answering a call that most people ignored.

My own family history recounts the looming war of 1848 as a push factor in the migration of my patrilineal ancestor to the United States from Germany.

But, the story of my maternal Swede-Finn ancestors' migratration from Finland to the Upper Pennisula of Michigan a few decades later as teenagers isn't accompanied by a narrative that would suggest any push factor that dramatic. (Finland was a Grand Dutchy within Russia from 1809 to 1917, having been acquired in resolution of a war between tsarist Russia and Sweden, and was previously a part of the Swedish empire; Finnish emigration peaked around 1900, a bit later than than Swedish neighbors, perhaps because it industrialized a little later.)

According to Wikipedia:

Sweden—much like Japan at the same time—transformed from a stagnant rural society to a vibrant industrial society between the 1860s and 1910. The agricultural economy shifted gradually from communal village to a more efficient private farm-based agriculture. There was less need for manual labor on the farm so many went to the cities; and about 1 million Swedes emigrated to the United States between 1850 and 1890. Many returned and brought word of the higher productivity of American industry, thus stimulating faster modernization.

The late 19th century saw the emergence of an opposition press, the abolition of guild monopolies on craftsmen, and the reform of taxation. Two years of military service was made compulsory for young men, though there was no warfare.

Health

The steady decline of death rates in Sweden began about 1810. For men and women of working age the death rate trend diverged, however, leading to increased excess male mortality during the first half of the century. There were very high rates of infant and child mortality before 1800, Among infants and children between the ages of one and four smallpox peaked as a cause of death in the 1770s-1780s and declined afterward. Mortality also peaked . . . due to other air-, food-, and waterborne diseases, but these declined as well during the early 19th century. The decline of several diseases during this time created a more favorable environment that increased children's resistance to disease and dramatically lowered child mortality.

Thus, rather than war or disease, the push factor appears to have been an increased supply of young people as mortality fell with modernity accompanied by a declining job market due to the mechanization of the economy. There are parallels to the enclosure movement in Britain as well as to the mass displacement of tenant-farmers in Japan referenced in Wikipedia. The coincidence of the imposition of compulsory military service and the mass migration is also notable.

This example also suggests give the very large percentages involved relative to the populations involved on both ends of the journey that there was a strong potential for population genetic selection in the New World for any trait that would predispose someone to make a migration and in the Old World for any trait that would predispose someone to not making a migration.

New Probate Judge Appointed In Denver

Per Law week June 1, 2011 via the Trust and Estate Section of the Colordo Bar Association:

DENVER — Wednesday, June 1, 2011 — Gov. John Hickenlooper announced today the appointment of Elizabeth Leith to serve as a probate judge in the 2nd Judicial District (Denver County). Leith will replace the Honorable C. Jean Stewart, who is stepping down June 30.

Leith, of Denver, is currently Magistrate Judge for the 2nd Judicial District, where she has served since 1999. Issues that come before her include civil discovery disputes, liquidation of damages, foreclosure issues, child support, post-decree related matters and other issues. Before becoming a magistrate, she was an Assistant City Attorney for Denver, Human Services Section (1991-1998); Deputy District Attorney for the 4th Judicial District, Child Enforcement Unit (1989-1991); private practice attorney (1989); and associate attorney for Sandra J. Plaff, Esq., (1988-1989).  Leith earned a bachelor’s degree from Metropolitan State College of Denver (1982) and a law degree from the University of Denver College of Law (1988).

Leith’s appointment is effective July 1.

The other two finalists for the position also had backgrounds as magistrates. One was the recently sitting Denver Probate Court magistrate (who was previously a magistrate in a court other than the probate court in Colorado who also lacked substantial probate experience), and another was a previous Denver Probate Court magistrate. The selection committee clearly felt that generalized judicial experience was more important than substantive law experience in the areas within the jurisdiction of the court.

Leith comes to this specialized post with very little probate experience, and what little experience she has in the field is at a very junior level when she was fresh out of law school, and is more than twenty years old, but this isn't necessarily a fatal flaw, even on this subject matter specialized court, because very few of the contested cases at the Denver Probate case actually involve the probate of wills. The vast majority of the contested cases involve guardianships and conservatorship which calls for talents similar to that involved in domestic relations cases. The vast majority of decedent's estate cases are handled administratively by court staff without ever reaching the judge.

Leith's appointment is the only one of the three nominees that makes a clean break with Judge Stewart's tenure (judges appoint magistrates), which several Denver Post stories had seriously criticized, despite her retention by the voters in 2010 with an overwhelming majority of the vote.

I wish Judge Leith the best of luck in her new position.

Recall Elections Of Six Republicans Go Forward In Wisconsin

Public sector union supporters have successfully gathered enough signatures to force six Wisconsin legislators to face recall elections triggered by the controversial effort of Wisconsin legislators to deny public employees unions in the state collective bargaining rights. Notably, form a political perspective, Republicans has not made eliminating meaningful public sector unions a major point in their 2010 campaign effort which had focused on budget cutting measures, so it isn't unreasonable to expect that independents and Republicans who have some sympathy with the cause of public sector union workers or aren't happy with the fact that Republicans have pushed such a controversial issue in a way that created a media circus could vote to recall Republican state legislators whom they voted for last November.

A state judge in Wisconsin has also ruled that the public employee union law was passed in violation of the state's open meetings law and hence is void.

Thus, while Republicans won the battle to bust public sector unions in Wisconsin, they risk losing the war if voters use the recall elections to hand control of the state legislature, which Republicans won in November's election, back to Democrats. Another fight brought to the voters that was colored by the union busting legislation was, an electoral fight between a conservative and liberal candidate for the state supreme court that had previously been a non-issue that almost assured the incumbent conservative judge's re-election was won by the incumbent by only by a nose after a recount. The recall fights, however, are more directly related to the union busting legislation which they personally voted to enact.

The amount of grass roots support for a recall necessary to get one on the ballot in Wisconsin is suggestive of the amount of political energy and momentum that recall supporters have in this fight:

At no time in U.S. history have attempts been made to recall so many legislators at the same time over the same issue. To recall a senator in Wisconsin, recall organizers had to gather signatures from voters in each district equivalent to 25% of the number of people who voted for governor in November. That meant staff for the board had to review more than 18,000 signatures for each recall attempt.

Keep in mind that these signatures are being gathered in state legislative districts that elected Republicans within the last year, not safe Democratic seats. Also, the level of organization and political intensity displayed by union supporters against Republicans now may decisively influence Wisconsin's vote in the 2012 Presidential elections in favor of Democrats. The union busting move of Wisconsin's Republican leadership has activated vast numbers of otherwise apathetic or only slightly active union members and union supporters in the state, turning them into a political force to be reckoned with, regardless of the outcome of these particular recall efforts. And, if many of the recall elections are successful, it would also pop the balloon of any mandate in popular opinion that Republicans could have claimed based upon their 2010 electoral sweep, only about a year before the next state legislative and Presidential election. Voters, campaign contributors and political campaign volunteers don't like political losers; they want to vote for someone who can win and may lose faith when a candidate's prospects seem diminished.

The Wisconsin legislation inspired copycat efforts in a number of other states, some successful, that face a less imminent threat of being overturned after the fact than the Wisconsin legislation.

Is The Debt Ceiling Constitutional?

Congress enacts our tax laws.  Congress appropriates funds by law.  Congress passes a statute called the debt ceiling.  The U.S. Constitution gives Congress the enumerated power to tax, to spend, and to incur debt.  The U.S. Constitution also forbids Congress from passing laws that impair rights under government contracts.  The Constitution calls upon the President to faithfully execute the laws and constitution of the United States and the President has long been understood to have the authority to resolve based upon legal advice from the executive branch situations in which one law seems to be contradicted by another law or the United States Constitution.  The judicial branch is also understood to have that authority.

When the United States government bumps up against a debt ceiling passed by Congress, we are overconstrained and the way to faithfully executed the law and the United States Constitution becomes non-obvious.  No one suggests that the President or the Courts may increase revenues by imposing new taxes without Congressional approval.  But, faced with laws enacted by Congress appropriating discretionary funds, earlier passed legislation by Congress establishing a debt ceiling, legislation passed before the debt ceiling was enacted providing for non-discretionary spending, and the constitutional obligation of the United States government not to default on its contracts, either by failing to pay its national debt obligations or failing to honor contracts it has entered into with its employees and government contractors, what is a President who has a Congressional mandate to spend funds and a Congressional mandate not to borrow enough money to spend the funds appropriated to do?

According to current predictions from the United States Treasury Secretary, if legislative gridlock persists, we will have a constitutional crisis that will force the President to resolve this issue some time around August 2 of this year.

At least since President Nixon, there have been some who have argued that the mere fact that Congress has authorized the President to spend money in an appropriation doesn't mean that the President doesn't have to spend those funds, in a sort of back door line item veto that is not subject to legislative review (despite clear U.S. Supreme Court authority that Congress cannot create a line item veto by statute).  But, the President's freedom of action is less obvious once government contracts (particularly multi-year appropriations for navy purchases expressly authorized by the constitution) have been inked, in cases of non-discretionary spending, and in cases where the language of a specific appropriate classified as "discretionary spending" does not on its face have language that is susceptible to being read as giving the President the option not to spend it.

Looking at the issue politically, it also isn't obvious why the constitution, which is at its heart a political document, should be interpreted in a way that allows Congress to demand the impossible in an overconstrained budget by forcing the President to make politically painful choices on what to cut from Congressionally authorized appropriations by providing the President with neither the tax revenues nor the borrowing power to spend the funds appropriated.

In the absence of a debt ceiling statute, the President would almost surely have the inherent authority, implied from the appropriations and the lack of tax revenues sufficient to fund all of the appropriations made by Congress to borrow money on the full faith and credit of the United States in order to carry out the appropriations authorized by Congress.  So, one of the easier options for a court faced with resolving a situation in which the President is presented with a choice of evils that leaves it mathematically impossible for him to faithfully execute all of the laws that Congress has deemed fit to adopt would be to declare that the debt ceiling is unconstitutional, or at least, that the President may lawfully resolve the overconstrained situation by ignoring it until the nation's budget ceases to be overconstrained.  This has the virtue of keeping the courts out of the policy laden minefield of figuring out which spending programs should be cut and which should not be cut and how much each program should be cut.

The alternative would be for a court to determine that the President has the power to resolve the situation by not spending appropriated funds, or indeed, a court could even hold the that President is not allowed to spend even appropriated funds if tax revenues and the amount of spending available to the President as a result of the debt ceiling are insufficient to pay for the appropriated spending.

 But, here, the devils are in the details.  Since spending is authorized by myriad different pieces of legislation and government revenue is organized into many dedicated funds from which spending for particular programs flows, the analysis for each little bit of appropriated spending is not so simple.  In each case it is necessary to determine what legislation authorizes the spending, whether the spending comes from the general fund or from a trust fund that is still solvent, whether the spending is discretionary given the language of the appropriation, and how the general law of resolving conflicts between statutes such as interpretive provisions based upon specificity, connection to larger statutory schemes and the preference to be given to the later enacted statute (a rule that leaves unclear what weight to be given to the non-binding budget passed by Congress in advance of binding appropriation and tax bills should be given in terms of prioritizing statutes that conflict with each other) should be given.  The constitution is not a suicide pact, and the President cannot ignore in an overconstrained budget situation the fact that some appropriations are for essential government operations that have irrevocable life and death consequences if suspended even briefly while the President and Congress work out deals on spending cuts and the debt  ceiling.

Congressionally appropriated funds as he deems fit, and does not have any constitutional obligation to make the cuts from appropriations that are determined to yield in a conflict of statutes to the debt ceiling equally across the board or according to any other predetermined formula.

Similarly, even if it is determined that there are some appropriations that can be cut by the President that yield in a conflict of statutes to the debt ceiling, if all of these potential cuts in appropriations combined still make it necessary to exceed the debt ceiling in the budget year, it isn't legally obvious whether those cuts must all be made, extending the collision with the debt ceiling until the latest possible date before which Congress might act to increase the debt ceiling legislatively, or if the President may take note of the inevitable and abrogate the debt ceiling immediately upon determining factually that the debt ceiling can't be reconciled with the funding that has been appropriated by Congress and prevails in a conflicts of statutes with the debt ceiling.

But, if the President does not exercise his discretion to refrain from spending appropriated funds in an amount sufficient to avoid exceeding the debt ceiling, and if a court has the authority to look at spending statutes on a case by case basis to determine which may and which may not yield to a debt ceiling law when the aggregate amount of spending appropriated by Congress conflicts with the debt ceiling that it has enacted (something that is arguable a non-justiciable political question), these matters generally come to the courts when the clock is ticking and complying with all of the budget related laws enacted by Congress has already become impossible or will become impossible imminently. So, a court may lack the time to conduct the analysis necessary to come to a legally principled resolution of the question of when appropriated spending is not required by law before an immediate resolution of the conflict is required. Faces with a choice of evils, a determination that the debt ceiling is unconstitutional may be the only practicable resolution available to a court if it is called upon the resolve the crisis as a matter of law, because elected officials have failed to do so.

After all, a court determination that the United States government has a legal obligation to pay for appropriated spending, even if that means that the United States government has to incur a debt liability as a result, isn't really all that different from the routine practice of courts that under judgments against the United States government in a legal case that are by their very nature debts of the United States government that are not authorized by Congress in advance.

UPDATE:  Some have argued that the "no debt shall be questioned" language of the 14th Amendment makes the debt ceiling unconstitutional.  I'd argue the opposite.  The duty to pay the government's obligations comes from the contracts clause of the original constitution.  It applies to everything from contracts to build roads to Treasury bonds.  The 14th Amendment, by limiting its validation of the national debt (and with a current focus on the Civil War debt obligation of the Union which was validated in contrast to that of the Confederacy which was not) limits that validation to debts authorized by law.  But, the debt ceiling arguably makes the point that debts in excess of that amount are not authorized by law, buttressing the argument that Congress, in general, is the branch that authorizes debt to be incurred under Article II, Section 8.  Debts in excess of the ceiling, which are not authorized by law, are arguably subject to question under the 14th Amendment in a way that debts under the ceiling are not.

But, the 14th Amendment language still doesn't elucidate one way or the other the way we must proceed when we have multiple laws, one group authorizing spending, another authorizing the collection of federal reveneus from sources other than debt, and a third limiting the amount of the debt that may be incurred.  When they can't be reconciled, something has to give.  If it is not an imposition of executive order imposed taxes, it must be legislatively authorized spending or the legislatively imposed debt ceiling.

In practice, so much of the spending, like Social Security, Medicare, unemployment benefits, etc. is non-discretionary, and tax revenues are so low, that once the debt-ceiling is reached, truly draconian cuts on that portion of discretionary spending that the government is not already obligated to pay as a result of government contracts with private parties may be impossible, at least as a practical matter.  For example, we can't simply put the entire U.S. military on furlough, and the Department of Defense is the singled largest discretionary spending line item.

So, faced with a choice of evils, it may simply be impossible to do anything but to ignore the debt ceiling, which in one piece of legislation, in favor of the appropriations legislation for the nation's spending, which is another piece of legislation.

Denver's Municipal Election Round Two

Ballots must be received in Denver's runoff election on Tuesday. Today is that last day the a mailed in ballot has a reasonable chance of arriving; delivering a ballot to a designed drop off (the instructions in your ballot have locations and hours of operation) is a better bet after today.

The Mayoral Race

The marquee race for mayor is between Chris Romer and Michael Hancock. I made a choice and voted, but honestly, I am as ambivalent as I've ever been in an election. I'm not alone in this; Vincent Carroll at the Denver Post wrote a column saying the same thing.

Polling shows Hancock with the lead, although not an insurmountable one, despite the fact that Romer had the most votes at the end of the first round.  Voting in the Mayor's race once again closely followed ethnic lines in the first round, with predominantly Hispanic neighborhoods favoring Meija, predominantly black neighborhoods voting for Hancock, and white neighborhoods voting for Romer.  Most of the leaders in the Hispanic community have backed Romer in the runoff following the lead of Meija, but many of the runner up white candidates in the Mayoral race have backed Hancock.

Both are Democrats. Neither was my first choice. Both have political experience. Romer has a background as na investment banker who specialized in municipal bonds and focused a fair amount on out of the box solutions to the state's problems, particularly transportation, while in office in the Colorado General Assembly representing parts of the city including Congress Park. Hancock is our outgoing city council President with strong ties to the community. Neither have experience of CEO of an organization in any way resembling the City and County of Denver in either size or character. Romer has stronger ties to big business and has been the preferred candidate of big Denver names in the Republican party, and his father was a decidedly moderate Democrat while he served as Governor of Colorado. Hancock's natural instincts are to consider the impact of policy on the little guy, but he lacks the connection's to the city, state and national power elites that can help make things happen that Romer has at his disposal.

Romer has waffled on his stand on medical marijuana. Hancock has attacked Romer for taking big donations from strip clubs, equivocated on teaching evolution and is lukewarm about the right to choose. It is hard to tell how this will play out as the City develops policies for dealing with legal and illegal vices. Neither man seems to have an unwavering commitment to the sensible cost conscious, treatment oriented criminal justice and corrections administration reforms that Doug Linkhart has quietly but relentless secured in his tenure on the City Council.

Romer has promised to cut down on land use and licensing red tape, a legitimate issue that Hickenlooper also put on his agenda but never managed to pull off. Hancock seems inclined to refocus city attention on neighborhood level projects rather than big ticket centralized projects that most of his predecessors have focused upon.  But Hancock has less of a business orientation, for example, fumbling his handling of a situation involving the regulation of the city's taxi market in a way that seemed to help keep a new competitor out of the market for no legitimate reason. Hancock had personal involvement in developing the city's new zoning code (which is substantively probably worse than the hodgepodge that came before it despite being statutorily much more clean) and may feel a stronger stake in defending it whether or not it makes sense in a particular case out of respect for the process that created it, than Romer who has far less participation in that process.

Hancock's political style is more consultative, and community involvement is a natural instinct for him, but perhaps as a result, has few signature innovations as feathers in his cap despite the power he held in city council and he offered no substantive reforms other than greater community contract when asked by Colorado Public Radio how the city would look different after a year in his administration. Romer is better at avoiding falling into group think with independent ideas, but while this may show leadership, it also isn't unusual for his proposals to face opposition because he hasn't won sufficient support behind the scenes with all of the players involved before announcing them. He poses a greater risk of embarking on big new ideas that fall entirely flat. Neither man has the game changing capacity to walking into a room and suddenly secure seemingly impossible compromises that our state's most effective politicians, like John Hickenlooper and Andrew Romanoff, share (most recently seen in Hickenlooper's successful legislative battle to secure passage of the bill approving the state's regulations, despite a squabble over pay day lending regulation that he got state house Republicans to give up upon).

Both men acknowledge that need to continue and improve upon the efforts of Mayor Hickenlooper and acting mayor Bill Vidal to be more effective in disciplining bad cops and both have promised to remove a key figure in that process who has been roundly criticized - although under Vidal's administration public discipline has been stepped up; but it is hard to tell who would be more effective at securing that result. The fact that Romer was endorsed by the Fraternal Order of Police and that Hancock has closer political ties to communities that have been on the receiving end of police misconduct tend to tip the balance towards Hancock in my mind on this very important issue.

Romer's personal life has been unnotable. Hancock's personal life has been messier, for example, he didn't publicly acknowledge an out of wedlock child born two years before he married his current wife who is the mother of his two younger children until around the time he started contemplating his current run for office (thereby heading of the potential scandal of a child appearing out of the woodwork), but not in any way that obviously impairs his ability to serve the city as Mayor.

I could have probably dug deeper and found out more about the candidates before I voted and relied to some extent on a variety of endorsement cues and gut feelings rather than taking the time to really gather all the information I needed to make an optimal decision in what is a close call when lots and lots of information is available. But, I didn't have the time and both men are competent enough that I have considerable hope for Denver's future no matter who gets elected.

Also, notably, while some people have grumbled about negative campaigning in the Mayoral race, I'm not one of them. Honestly, I wish there had been more of it. A flawed Mayor can do a great deal of damage, while the difference between what a pretty good Mayor and a blandly competent one can do for the city is pretty marginal. (Neither runoff candidate is out of the park excellent this time around.) If a candidate has a serious flaw, or even does something that might provide a hint that there is a real probability that the candidate has a serious flaw even if it doesn't squarely prove that, I really, really want to know that as a voter. Civility has its place in politics, and untruthful negative advertisements do detract from the process, but truthful negative advertisements are vital to helping voters make good decisions.

The Race To Be Clerk and Recorder

I also looked into the runoff Clerk and Recorder's race again before voting in that race between McCarthy, my neighborhood whom I should have known better when I first posted about the race who had a much better campaign than I had given her credit for having, and Debra Johnson, Aurora's city clerk. The really good news is that two other candidates for the office, whom I sounded criticized in a blog post prior to the first round were defeated (in one case by a margin smaller than the number of people who had read that blog post).

Again, I didn't have as much time to scour the scarce information about that race as I would have liked, and despite having personally spoken at some length with McCarthy and heard interviews with Johnson on the radio, I ultimately drew a blank on the issues that mattered most to me: "what agenda does each woman have to make changes in the office on day one?", and "who is more likely to make the right decisions on close election administration decisions?" Neither woman articulated much of an agenda or really answered the question of what problems they would solve when in office. Both seemed to manage to avoid giving answers on election administration questions in the statements I heard from them and the materials I reviewed that shed much light on how they would handle those issues differently from their competitor.

I ultimately voted for McCarthy, because she seems to have more political sense and more of a sense that she is entitled to use the authority of the office to the fullest, despite the fact that Johnson's experience is more directly relevant and that Johnson seems to have some sensible detail oriented ideas for improving the apolitical aspects of the office's operations. But, as in the Mayor's race, I didn't have a strong preference for either candidate and was voting as much as anything on gut feeling at a time when I felt that I didn't have the time or energy to get enough information to be comfortable that I'd chosen the person most likely to have the right instincts in close cases and to be the most effective manager of the office administratively (for managerial competence can frequently be as important as policy preferences and attitudes in this kind of post).  This was a very close decision.

The Big Picture

There are a few second round city council district races as well, but I have completely ignored them for the selfish reason that those are choices that I am not required to make myself.  The key point is that the first round of the race eliminated essentially all of the bad possiblities and have given voters time to take a closer look with more information available at the two candidates that remain in each of those races.

Four days from now, electoral municipal politics in Denver will be over for another four years and we will have a new team of leaders who have the ability to fix our city's problems and to help up realize its possibilities if they rise to that challenge, no matter who wins. Denver has been blessed by more than two decades of really outstanding mayors and strong municipal leadership on city council and in its other elected offices, that has allowed it to weather the financial crisis better than many peer cities, and to have a lot of neighborhoods that are vibrant and growing after starting from a pretty miserable place in the early 1980s, despite the fact that it is effectively landlocked. I sincerely hope that our next crew of municipal leaders, who have very big shoes to fill, will manage to continue this proud tradition.

Extortion and Insider Trading

There are at least two quite different crimes both involving securing personal gain from other people's secrets. One is a subtype of extortion, where one makes money by promising not to reveal someone else's secret. The other is insider trading, where one makes money by acting on someone else's secret before it is revealed.

Secrets that are the subject of extortion threats are frequently not a crime or even a civil wrong giving rise to liability to publicly disclose. And, revealing a secret from an insider that materially affects the value of its stock to the general public before trading on it is likewise often neither a crime nor a civil wrong. Indeed, in both cases, revealing the secret is often considered a public service and is constitutionally protected. If the person who receives the secret does not act improperly in obtaining it, that person is generally free to disclose it, and even when a secret is obtained illegally, the punishment for the crime is often unrelated to the disclosure or non-disclosure of the secret and is frequently a misdemeanor.

It also isn't necessarily a crime or even civil wrong to profit from revealing someone else's secrets. While it would be a crime to extort cash not to publish information that someone had an affair, making money by selling that story to a gossip magazine or working as a private investigator using only legal means is perfectly legitimate. While trading securities on insider information is illegal, revealing negative inside information about a company in order to get a superior fired so that you can have a shot at that job when the vacancy arises. So it revealing negative insider information about a company so that stock in a competitor of a company becomes more valuable, so long as you already owned the competitor's stock it when you learned the inside information.

Nor is it a profit to keep other people's secrets, even for profit. Lawyers, doctors, mental health professionals, priests, accountants and many government employees are legally required to keep other people's secrets and are paid to do so. However, in those cases, the secrecy is promised in exchange for trust from someone who needs to know the information for reasons that often benefit the person who is the source of the secret, and the profit generally is from the secret's source or from someone who is financially indifferent to whether or not the secret is revealed.

In contrast, extortion and insider trading involve either harm or threatened harm to the source of the secret from others. In the case of both extortion and insider trading, not revealing the secret may harm the public, either because they are denied important negative reputational information about someone, or because they are inaccurately valuing a security and being exploited by someone else as a result of that inaccurate valuation.