January 08, 2005

Stupid Warning Labels

CNN via Marginal Revolution (Cowen) tells us (with some editing by me):
The Michigan Lawsuit Abuse Watch, M-LAW, whose main mission is to reveal how lawsuits and anxiety over lawsuits have created a need for overly obvious warnings on products, sponsors the The Wacky Warning Label Contest each year. Here are some top entries:

-- A scooter with the warning "This product moves when used." p> -- An electric blender used for chopping and dicing that reminds users to "Never remove food or other items from the blades while the product is

operating." -- And a three-inch bag of air used for packaging that read "Do not use this product as a toy, pillow, or flotation device."

A toilet brush that says "Do not use for personal hygiene"

So much of the cost of regulation is overreaction. There is a systematic bias to overreact, even from the point of view of private costs. Or is it just an accurate response, given risk and risk aversion?

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December 29, 2004

Suppression of Free Speech in the Netherlands; Islam v. Christianity

The Nov 29, 2004 National Review tells us
On November 2, the day on which Americans gave their verdict on the president, the people of the Netherlands received, through the murder of filmmaker Theo van Gogh, a horrific reminder that no country anywhere can be truly be said to be immune from the threat posed by Islamic extremism. In Amsterdam that day, an assassin shot Van Gogh, stabbed him, and then butchered him like a sacrificial animal. By making the film Submission, a caustic attack on Muslim misogyny, Van Gogh had transgressed the code of the fanaticism that has, alas, made its home in Holland too. And for that he had to die. In the aftermath, there was tough talk from the Dutch government, but the best clue as to what will happen next comes, probably, from Rotterdam. There, a local artist reacted to the murder by painting a mural that included the words "Thou Shalt Not Kill." Fair comment, you might think. Apparently not. The head of a nearby mosque complained. The police showed up. City workers sandblasted the inconvenient text into oblivion. "Thou Shalt Not Kill." Erased, obliterated, unacceptable. Much like Theo van Gogh. R.I.P.
This reminds me of the people in Saskatchewan and Sweden who got into trouble with the law for quoting Scripture on the subject of homosexuality. Homosexuals and Moslems are both good at being pressure groups, using political heft, simple complaining, and the threat of court coercion. Moslems, in addition, have used the threat of violence effectively.

(Looking back at my previous posts, I see that I have one on Canada generally too and that the prominent pro-homosexual politician in this debate, Svend Robinson, is the same man who in 2004 resigned after being caught stealing a valuable diamond ring. )

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December 16, 2004

The Barnes Case: Overturning a Will's Restriction on an Art Museum

Indiana Prof. L. Lenkowski has an op-ed in the WSJ on violating the will of someone who left paintings to set up an art museum.
This week's decision by Judge Stanley Ott of Montgomery County Orphans' Court to approve a request by the trustees of the Barnes Foundation to relocate its multibillion-dollar collection of artworks to downtown Philadelphia from suburban Merion, Pa., would seem to put an end to a decadelong legal battle over the organization's future. But the repercussions may continue to be felt for some time to come.

The court proceedings involved a challenge to the will of the foundation's benefactor, the pharmaceutical magnate Albert C. Barnes, which stipulated that the collection's arrangement embody Barnes's own, unconventional ideas about how art should be viewed. In fact, Barnes looked upon the foundation as more of a school for teaching about art than a museum, and he limited access to it accordingly. But longstanding financial problems, coupled with poor management, endangered its survival.

That is why its trustees, backed by the Pennsylvania attorney general (who is responsible for overseeing charities in the state), sought to move the foundation from the suburbs to become part of a new museum that would be more accessible to ticket-buying visitors. Three Philadelphia foundations also pledged $150 million to help erect a new building and create an endowment for its masterpieces, if the Barnes were allowed to move.

Like the increasingly frequent cases of cities using their power of eminent domain to force sale of property by one private landowner to another, the Barnes case seems to pit efficiency against property rights. I feel unhappy about not being able to come down solidly for one or the other-- as an economist, I should be able to advise people about precisely this sort of hard case. Whatever the legal arguments may be, the essence of the Barnes case is that people think Barnes imposed inefficient restrictions on the museum he set up, and they want to get rid of them. This is not too far different from someone doing silly things with his property while he is alive, and we taking it away from him as a result. I suppose that forcing the takers to go through a formal public process helps a lot to make sure that the takings are desirable. But some of the eminent domain cases I've heard about do not seem to present clear efficiency gains, and smell more of government failure.

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December 08, 2004

What is Law? The Holmesian "Bad Man"

Orin Kerr writes
First, the law. No one actually knows what kind of U.S. constitutional rights the detainees at Guantanamo have, or, to the extent that there may be other sources of rights for them such as the Geneva Convention, whether those rights are binding in federal court. We know from the Supreme Court's decision last summer in Rasul v. Bush that the federal courts have jurisdiction to consider the question, but we just don't know what the answer is. Why is that? It's because there are surprisingly few opinions on the constitutional rights of non-citizen detainees outside the United States as a general matter, and those opinions that shed any light at all on the issue here--cases that plausibly might include United States v. Verdugo-Urquidez, Reid v. Covert, and Johnson v. Eisentrager --- are generally too splintered, unsatisfying, factually different, and (in some cases) too dated to tell us a lot. No one really knows how the courts (and the Court) are going to answer these questions. If you take the Holmesian view that law consists of "prophecies of what the courts will do in fact", right now this area of law is a big question mark.
A law professor would say that the Holmesian "bad man" view of the law is the question of the law is as a prediction of what courts would do if they judged the case. I haven't looked back at Holmes's essay, but whatever he says, the logical extension of his idea is that the law is what will happen to the bad man who takes the action. If nobody will prosecute, the action is legal. If the executive branch would ignore whatever the courts say anyway, its actions are legal.

Still, Professor Kerr's approach is a useful one. There are three questions that are all worth answering:
1. What does the law say?
2. What will the courts do when confronted with a case (which can be different because of honest disagreements, corruption, or judicial arrogance)
3. What can a person do and not get punished for under this law? (because courts, prosecutors, or police won't go after him)

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December 03, 2004

Refereeing and U.S. Trade Embargoes

This 2003 Treasury letter saying that an American editing a book for an Iranian author is a violation of the U.S. ban on trade with Iran has been causing quite a fuss. The ban explicitly exempts "information and informational materials", but that leaves open the question of helping Iranians create information. The Treasury ruling says that it woule be OK to publish an Iranian book, but not to alter or enhance it, or provide "marketing and business consulting services".

The issue comes up for professors because some people fear that this rules out refereeing and editing articles for scholarly journals, even though there is no payment to authors for those articles. But this fear was unfounded, and the policy has been clarified. An April 16, 2004 Chronicle of Higher Education article ($) says,

The U.S. Treasury Department has ended months of confusion among scholarly publishers by ruling that an engineering society may edit, without restriction, articles written by authors in countries under trade embargoes.

The apparent reversal of government policy, which previously had forbidden editing without a special license, should also allow other scholarly publishers to edit articles written by authors from countries such as Cuba, Iran, Libya, and Sudan, according to a Treasury official....

In 1988 Congress exempted "information or informational materials" from trade embargoes, but the Treasury Department's Office of Foreign Assets Control, known as OFAC, took a narrower view, exempting only those materials that had been "fully created" by people in the embargoed countries and that had not been significantly altered in the United States....

OFAC ruled last fall that "the reordering of sentences, correction of syntax, grammar, and replacement of inappropriate words by U.S. persons, prior to publication, may result in a substantively altered or enhanced product, and is therefore prohibited." At the same time, the office ruled that peer review does not alter or enhance a manuscript, and therefore is not restricted by trade embargoes....

The Treasury official stressed that the new ruling came as a result of OFAC's understanding the editing process better and, with that understanding, being able to conclude that editing does not significantly alter the manuscripts.

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November 30, 2004

Rights: "The Patient's Right Not to Sue"

James D. Miller's ($) "The Patient's Right Not to Sue" from The Weekly Standard has a good idea captured in the first two paragraphs:
I DON’T WANT THE ABILITY to sue my health insurance company. Lawyers are expensive, so if my insurance providers know that I might sue them, they’ll charge me more. Other people, in contrast, might want to pay for the ability to sue. A true patients’ bill of rights would give all of us the choice.

Unfortunately, the congressional sponsors of the patients’ bill of rights now heading for a House-Senate conference this fall seem to have forgotten the difference between rights and obligations. They want to force everyone to pay higher health insurance premiums in return for the ability to sue. But if I hate broccoli, forcing me to buy it increases my obligations, not my rights.

So many laws presented as giving people rights are, instead, taking them away-- the right to social security (meaning you have to pay payroll taxes) and medicare (ditto), or to an 8-hour day (meaning you have to accept that length of day) or to unionize (meaning, in many states, that if your company has a union, you must join it).

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November 07, 2004

Prostitutution Enforcement Priority Propositions in Berkeley Defeated

Via Prof. Leitzel, the Oakland Tribune reports on the failure of a Berkeley ballot proposition to relax prostitution laws:

After receiving national attention, Measure Q, which would have made enforcing prostitution laws the police department's lowest priority, lost by a 63.9 to 36.1 percent margin. It needed a simple majority to pass.

This is interesting for several reasons. First, even leftwing Berkeley is unwilling to make prostitution easier. Second, this is the first time I've heard of a law that would rank law enforcement priorities. Ordinarily, that is up to the prosecutor and the police chief-- a huge and unnoticed power of those offices. I'm not sure how Measure Q would have been enforced if it had won, though one way is simply by declaring to the police chief, whose job is, I expect, ultimately up to the pleasure of the voters, what his masters' desires are.

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October 30, 2004

Baron Hill Lying about His Liberalism-- Hiding behind Courts

One thing I hate about liberals is how they use the courts to subvert the Constitution and then claim they are just defending the Constitution and "separation of powers". There is a large class (majority? 90%?) of law professors who do not even acknowledge the fact that the Supreme Court can act unconstitutionally-- for them, what the Supreme Court says is what the Constitution says, by definition. Our U.S Rep. here in Bloomington, Baron Hill, is doing the same. He claims he is against various judicial atrocities, but then he votes against any attempt to prevent them, and claims his opponents are lying when they say he favors what the courts are doing. It's sickening. I heard one of his ads this morning on the radio. It claimed he represented traditional values-- which he clearly does not. If only liberals would admit to their views! Here's what the Herald Times has to say ($) about Baron Hill.

The signs accuse Hill of supporting gay marriage and flag burning and wanting to "take God out of the Pledge of Allegiance."

"All of it is lies," said Hill, who faces Republican Mike Sodrel in a heated re-election battle. "It's really disturbing to me that somebody would just blatantly lie about my views."


Bernitt issued a news release Friday that denied lying about Hill, and said it's the congressman who is deceiving the public. He cited Hill's vote in September against the Pledge Protection Act, which says courts should have no say in whether language in the pledge is constitutional. The House passed it, 247-173.


"Baron Hill's vote was so out of step with Hoosier values that we couldn't sit by and let him get away with hiding this secret," he said in the release.

Bernitt would not answer questions about the group's funding, who is involved with it and the fairness of its claims. [note the bias of the Herald-Times here-- Bernitt addressed fairness just above here, in the same story!]

Hill said he voted against the pledge bill because it was unconstitutional.

"We have this thing in the Constitution called separation of powers," he said.

As for other issues targeted by the billboards, Hill said he voted against denying courts jurisdiction over marriage for the same reason and opposed an amendment to ban flag burning because he is leery of changing the Constitution.

Hill said the billboards go beyond disagreement on issues and misrepresent his values.

"This is personal," he said. "It's challenging my character. I hope people will see through it."

Yes, it is challenging his character. That's the point. He is not just a liberal, but lies about it.

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October 13, 2004

The Dewey Ballantine Contract Typo Case

At the Midwest Law and Economics conference this weekend I learned about "the Dewey Ballantine Case", Prudential Ins. Co. of Am. v. Dewey Ballantine, Bushby, Palmer & Wood, 80 N.Y.2d 377 (1992). It is an example of a serious typo-- or boobytrap-- in a large commercial contract, one that I might have used in my article, "Explaining Incomplete Contracts as the Result of Contract-Reading Costs." Here is what happened. Mr. Gilmartin, a lawyer from the Dewey Ballantine law firm representing U.S. Lines, wrote a letter for Prudential to assure Prudential that the documents were all in order.

... Gilmartin, at the specific direction of U.S. Lines, thereafter drafted and delivered an opinion letter to Prudential. The opinion letter contained an assurance that the mortgage documents that were to be recorded in connection with the debt restructuring, and which, incidentally, had been prepared by other counsel, represented "legal, valid and binding" obligations of U.S. Lines. Moreover, according to Gilmartin's letter, neither federal nor state law would interfere "with the practical realization of the benefits of the security intended to be provided" by those documents. Prudential ultimately accepted Gilmartin's opinion letter as satisfactory, and permitted the recording of those mortgage documents. Prudential later learned that one of the recorded documents erroneously stated the outstanding balance of the first preferred fleet mortgage securing the debt as $92,885, rather than the correct sum of $92,885,000. As a result, Prudential suffered significant losses when U.S. Lines subsequently filed for bankruptcy.

Leaving out the 000 looks to me like an unintentional mistake rather than a trick. Notice that in the end, Prudential lost out not to U.S. Lines,but to its other creditors-- though U.S. Lines would have benefited if it had pointed out to later creditors that it didn't owe much to Prudential.

At any rate, Prudential couldn't collect much from U.S. Lines, and went after Gilmartin instead, on the theory that he had misled them. The law gets complicated at that point (Gilmartin wasn't Prudential's lawyer!). Here's what the court decided:

In sum, a duty of care was owed to Prudential in these circumstances, and the facts do not prove a breach of that duty. In preparing the opinion letter, Gilmartin represented that it took the particular procedural measures, as discussed above, in investigating and substantiating the mortgage documents in question. After taking those measures, Gilmartin made certain general assurances to Prudential in the opinion letter. Those assurances did not set forth a specific dollar amount as securing the debt. It was agreed that the letter was to be in a form satisfactory to Prudential, which condition was satisfied when Prudential accepted the letter containing no more than general assurances.

That seems reasonable. Gilmartin missed something in the documents, but the court decided it was not so sloppy a job he did as to justify holding him liable for his mistake.

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October 06, 2004

Plastic Guns and Cop-Killer Bullets as Fiction

I just saw an op-ed by John Lott, "Gunning for Cheney", which says....

...No guns have ever been produced without metal in them, nor is there any evidence that such guns can be made. At the time of the vote in 1984, no gun had less than 3.5 ounces of metal.

So what did this supposedly crucial law do? It had nothing to do with Glocks. The minimum metal requirement for a gun to be considered legal was set at 3.2 ounces -- less than a fifth of the metal contained in the then controversial Glocks and less than any other gun.

The standard was picked because it did not affect anything, not because evidence suggested that some threshold was necessary for public safety. Gun control groups got their hysteria, while politicians were able to posture that they were "doing something."

During the 2000 election, Cheney was also attacked for his earlier vote on so-called "cop-killer" bullets, but the discussion was just as misleading. The bullet was invented by police officers in the 1960's to fire at suspects hiding behind objects or wearing bullet-resistant vests. These specialty bullets were only sold to police and were not available in stores anywhere in the United States.


Despite the phrase "cop-killer," only police used these bullets, and even then extremely rarely. No officer has ever been shot at, let alone killed, with such a bullet.

Erik Helland had a working paper on "placebo laws" for gun control sometime in the past year, I think. Vice laws are often like this, too,-- passed to satisfy one group, but then not enforced, to satisfy another group. These also, however, illustrate how bills may be proposed just to get people on record as opposing them. Cheney, it seems, has principled objections to gun control laws, even ones that are largely symbolic.

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September 12, 2004

527's and Campaign Finance Law

There's a delightful paradox in campaign finance law. Some people-- let's call them Limiters-- think political expenditure is bad, because it helps candidate with access to money, and want to limit it. Those people supported the McCain-Feingold Bill, Public Law 107-155 (2002). Other people-- let's call them Expanders-- think political expenditure is good, because it educates the public. Those people opposed McCain-Feingold and sued in court, unsuccessfully, to block it (see McConnell v. FEC(2003)).

Here's the paradox. It has turned out that far from reducing political expenditure, McCain-Feingold has vastly increased it. Far from limiting the freedom to contribute and spend, it has expanded it and money from millionaires is more important than ever. Thus, we really should now see the Limiters wanting to repeal McCain-Feingold and the Expanders saying it was a good thing after all.

I have been trying, not very successfully, to figure out how this came about. I'd like to, since I want to teach campaign finance law this semester and next semester. But it's a hard area of law, and I'm still looking for either a journalist or an academic who has dared to try to explain it....

... The part I want to focus on are the "527's"-- the expenditures by supposedly independent organizations that are exempt from paying taxes (but to whom contributions are not tax deductible). In practice, it seems that these can run exactly the same kind of ads as the candidates do, and be run by the same people as the candidates' campaigns, but they can receive unlimited donations from individuals, labor unions, and corporations, and they have no spending limits. All they have to do is file detailed reports of what they spend and who they get the money from. Also, there is some undefined but lax limit on how close they can be to the candidate's campaign. The candidate's campaign manager cannot be the boss of a 527, though the candidate's party leaders can be the bosses, and the candidate's party can set up and directly fund its own 527 in a building across the street from its headquarters. Also, the candidate cannot directly fundraise for a 527, though he can put a link on his website to direct contributors to a 527 if he has reached his own fundraising limits.

Thus, McCain-Feingold seems to have pretty much repealed the limitations of campaign finance law, although it imposed onerous reporting requirements and transaction costs in terms of multiple websites, buildings, and corporate shells.

The law did not do this explicitly, though, and McCain, at least, seems genuinely outraged. Rather, it seems that the result is due to sloppy drafting and tolerant interpretation by the Federal Elections Commission, which is supposed to enforce it.

Here's what's going on as best as I can tell. We started with a complicated law in 2002, before McCain-Feingold, and McCain-Feingold amended it rather than replacing it. This means you can't just read the 36 pages of McCain-Feingold to know what the law is. In any case, knowing the written law wouldn't help, because what is crucial are the regulations that lay out the law in detail and the court decisions interpreting it. The Supreme Court decision, McConnell v. FEC(2003), is not useful because it is about whether the restrictions of McCain-Feingold are valid constitutionally, rather than what the text means.

Much of this 527 spending might have been legal even before McCain-Feingold, but there was less demand for it then, because "soft money" could be given and spent without restraint by the Democratic and Republican Parties. "Hard money" expenditures, though-- ads which attack candidates by name, for example, was not permitted to the parties, and for some reason 527's didn't do so much of it before McCain-Feingold.

Republicans seem to have thought that campaign finance law limited what 527's could do, and maybe the written law does. Everyone seems to have thought that 527's could do "soft money" sorts of things-- registering voters and suchlike-- but the Republicans didn't think they had much legal "hard money" possibilities-- TV ads attacking candidates. It seems they thought that the law forbade a 527 from running anti-Bush ads, accepting unlimited donations, engaging in unlimited spending, and being run by party leaders. They (and some liberal campaign reform lobbies, I think) complained to the FEC in Spring 2004. The FEC looked at the law, and said that it would permit all that for the 2004 election, but would maybe issue some restrictive regulations for the 2008 election. The Republicans were caught playing catch-up.

I think the FEC interpretation of the law might have been this (but I have not been able to pin this down): 1. A 527 can't coordinate with a political party, but "coordination" means sharing detailed plans and using the same ads, not discussing strategy or being run by the same people; 2. A 527 can't have campaign ads as its only purpose, because it is supposed to have "issues" as its main purpose, but it can nonetheless have campaign ads as its main purpose in any given year. But I'm not sure. I've seen articles saying even the FEC doesn't know what it would permit and wouldn't permit if cases were brought before it.

The Swiftvet ads, by the way, are a very small part of this. Not only has the expenditure on them and the contributions by single individuals been relatively small (in the low millions and hundred-thousands, as opposed to the high tens of millions and 5-20 million dollars for the Democrats), but also the big impact of the Swifvets has not been through their ads, but through their book, website, radio interviews, and so forth, none of which required significant expenditure (I suppose they have a book agent, a webmaster, and a scheduler, but those are trivial amounts and those things could have been done by volunteers if they'd had no cash).

A collection of links and quotes follows.

Top 50 List from Opensecrets. The top 5, the ones over $10 million, are Joint Victory Campaign 2004, Media Fund, America Coming Together, Service Employees International Union, and American Fedn of St/Cnty/Munic Employees. Joint Victory Campaign 2004 is a joint fund-raising committee run by America Coming Together and the Media Fund. Money raised by JVC is split by them.

By sector, Opensecrets reports these 527s

Type Receipts
Democratic/Liberal $126,849,747
Misc Unions $26,156,631
Repub/Conservative $17,224,036
Public Sector Unions $16,045,742
Environment $9,808,198
Bldg Trade Unions $5,231,512
Women's Issues $4,597,346
Unknown $4,455,921
Industrial Unions $4,381,287
Human Rights $4,294,279

Opensecrets has a list of the main 527's and 501's, with a sentence on each to say who they're backing.

Some webpages:

  1. I found Opensecrets.org's "Basics of McCain- Feingold" unhelpful-- it says what McCain-Feingold limits, but not what it doesn't limit.

  2. A WSJ op-ed that uses the phrase, "law of unintendeded consequences".

  3. "No one understands FEC 527 opinion (including FEC)" says Luke Francl in February 2004.

  4. Moresoftmoneyhardlaw.com talks about the fine points of the FEC decision, but somehow avoids telling us the bottom line.

The Washington Post on July 29, article 1

Flush with more than $60 million in the bank, the Democratic National Committee has set up a separate campaign operation with its own pollster, television consultants and media buyer to run a full-scale "independent" drive on behalf of Kerry. On Saturday, the first week's TV buy, worth $6 million, starts in 20 battleground states.

The first commercial is likely to use film clips of Kerry's acceptance speech at the convention here Thursday. Under federal campaign law, starting Friday, the Kerry campaign may spend only the $75 million it has agreed to accept from the federal government to run its general election campaign.

So an independent campaign can still use film clips of the candidate's speeches, and be funded by his party, and be run by his party!

As envisaged by Congress, the general presidential election would cost a total of less than $200 million -- $75 million in federal grants to each of the two candidates and $16.2 million in "coordinated" expenditures each by the Democratic and Republican national committees. In practice -- with the courts ruling that independent expenditures are legal, the spending of millions more by the parties on field operations and the planned spending by third-party groups, such as the pro-Democratic America Coming Together and the pro-Republican organizations financed by the pharmaceutical industry -- total presidential spending is likely to exceed $750 million, according to a compilation of party and independent-group estimates.


The new form of independent expenditures by the DNC was sanctioned by a 2003 Supreme Court ruling on the constitutionality of the McCain-Feingold campaign finance law. The court declared that the national parties can each spend $16.2 million on activities fully coordinated with the presidential campaigns, and "unlimited independent expenditures" that may not be coordinated with the presidential campaigns. The only restriction on the independent expenditures is that contributions must comply with the federal limit of no more than $25,000 from each individual. Moreover, each campaign cannot be involved in decisions concerning how the money is spent.

The Washington Post on July 29, article 2

Ickes, for example, spent his days in a suite at the Four Seasons Hotel with Rosenthal, Smith and Malcolm, greeting a steady stream of would-be donors to ACT and the Media Fund. The hotel also happened to be the one used by fundraisers for the Kerry campaign and the Democratic Party.

At night, Ickes took off his fundraiser hat and mingled with other Democrats on the floor of FleetCenter as a superdelegate, representing Washington, D.C. Ickes is also a member of the Democratic National Committee's executive committee, which makes him a party official.

Another 527, the New Democrat Network, has counted New Mexico Gov. Bill Richardson on its advisory board. As chairman of the convention, Richardson could be found gaveling open the proceedings. He also appears in anti-Bush ads aimed at Hispanics that NDN has run around the country.

At one point this week, Rosenthal acknowledged that ACT had hired a phone-bank operation owned by the Dewey Square Group, the Boston-based consulting firm run by several key Kerry strategists.

Insight says

Harold Ickes, former deputy chief of staff during the Clinton administration and a member of the Democratic National Committee's executive committee, heads the Media Fund.

"Harold Ickes has even admitted he has told the Kerry campaign what he is doing in his 527 activities," Stanzel said.

Media Fund Executive Director Eric Smith worked with Kerry Deputy Campaign Manager Steve Elmendorf on the primary campaign for Rep. Dick Gephardt, D-Mo., and attorney Bob Bauer serves a counsel both to the Kerry campaign and ACT, Stanzel said.


Late last week the commission also voted in favor of rules closing some of the loopholes governing 527s, including a $5,000 limit on donations by individuals. The rules, however, will not go into effect until 2006.

So it seems party officials can run a 527 and talk about it with other employees at the political party.

Also, it seems the FEC does think it has authority to regulate 527's strictly, but that it doesn't *have* to regulate them.

The Hill says

Several prominent election-law lawyers say a loophole may allow foreign citizens to make unlimited donations to 527s and 501(c)4s, both named after the sections of the tax code under which they are organized.


Congressional reformers modified section 441e of the federal election campaign laws to say that it is unlawful for a foreign national to make a contribution or donation of money or other thing of value in connection with a federal, state or local election; to make a contribution or donation to a political party; or to make an expenditure, independent expenditure or disbursement for an electioneering communication. In the second paragraph of the section, the drafters wrote that it is unlawful for a person to solicit or receive a contribution or donation from a foreign national in connection with a federal, state or local election, or to a political party. However, the section omits a prohibition that election lawyers had expected the drafters to place on soliciting or receiving an independent expenditure or disbursement from a foreign national for electioneering communication, the types of activities that are the purpose of 527 groups.


When the election commission contemplated new rules for 527s this spring, reformers such as Noble urged the agency in written testimony to require the groups to "register as federal political committees and to comply with federal campaign finance laws for their spending, which is clearly for the purpose of influencing federal elections."

However, the election commission could not agree how to determine whether an organizations major purpose is to influence a federal election and issued no rules for 527s.


Bradley Smith, the chairman of the FEC, said campaign-finance reformers were wrong to blame the possible loophole on the agencys decision to not regulate 527s.

Smith argued that the campaign-finance-reform law passed in 2002 did not ask for new regulations of 527 groups. Smith also noted that the commission has traditionally interpreted restrictions on foreign nationals more strictly than restrictions on other campaign-finance activity.

So Bin-Laden could legally spend $100 million, if he had it, to run anti-Bush ads. (Note that many foreign leaders *do* have that kind of money. It would have been pocket change for Saddam Hussein-- and a good investment for him in 2000! )

The FEC Chairman's position seems to be that McCain-Feingold did not change the law on 527's, and that 527's are pretty much unregulated, except for disclosure requirements.

The Washington Times of March 2004 says

" The Supreme Court stated that in McConnell v. Federal Election Commission that the FEC had 'subverted' the law, issued regulations that permitted more than Congress had ever intended and ... invited widespread circumvention of the Federal Election Campaign Act's limits on contributions," Mr. McCain said.

For his part, Mr. Feingold says he has given up on the FEC and wants it overhauled, saying at yesterday's hearing that effective campaign-finance reform will require another bill from himself and Mr. McCain to restructure the FEC.

"To be successful, campaign-finance reform must be implemented and enforced by an agency that is dedicated to carrying out the will of Congress, not frustrating it," Mr. Feingold said.

The FEC has argued in recent years that "527 groups" are not regulated under the 1974 Federal Election Campaign Act and later refinements, because they are private and nonpartisan and because their primary mission is not to influence federal elections.

It's a bit humorous that Feingold hasn't given up on regulation, after the total failure of his previous bill. He does seem to have learned, though, that changing a law is useless if you don't make sure that the court or agency that interprets the law has to pay attention to what you write.

The Washington Post on August 26, 2004 says

Critics warned that the law would weaken the parties by starving them of cash. Instead, the parties have managed to wean themselves from soft money: According to the most recent figures, each has raised more hard money so far this cycle than they did in hard- and soft-money donations combined four years ago.


As of June 30, the last period for which comparable figures are available, the Democrats' national party committees had collected $230 million in hard money this election, more than double the $102 million they raised in the 2000 race. The Republicans also doubled their tally, raking in $381 million, up from $178 million in the 2000 election.


Of the $154 million raised by groups linked to the presidential race through June 30, $145 million has gone to Democratic organizations. By contrast, the Democratic party committees had raised $126 million in soft money at the same point four years ago.

It's clearly troubling to have groups whose clear intent is to influence federal elections playing by different, looser rules than others involved in the process. The federal election law requires groups to register with the FEC -- and most important, to abide by strict donation limits -- if their "major purpose" is to influence a federal election. It's tough to see how the Swift Boat vets or the Democratic groups don't meet that test. And the involvement of marquee-name politicians in supporting the groups, enabled by the FEC's lax reading of the prohibition on federal lawmakers soliciting soft money for the groups, adds to the risk of such groups re-creating the problems of the old system under a different guise.

That article says that the FEC is simply not enforcing the law, using the wiggle room of "major purpose" (e.g., someone might claim that the major purpose of the Swiftvets is not to defeat Kerry in the presidential race, but to bring out the truth of his Vietnam service, regardless of whether he is elected or not).

MSNBC wrote on August 18, 2004,

According to the non-partisan research group the Center for Responsive Politics, Soros has donated $12.6 million so far to anti-Bush 527 groups.


Under federal law, the 527 groups cannot coordinate their ads with the presidential campaigns. But if they use individual donations, rather than labor union or corporate donations, they can run ads praising or attacking a candidate right up until Election Day.


This year, the 527 groups have taken on a more prominent role, and perhaps a decisive one. So far, the groups have spent a total of more than $200 million, according to the Center for Responsive Politics.

To put this number in perspective, as of June 30, the Kerry campaign had spent $142 million and the Bush campaign, $159 million.


The Swift Boat group is financed partly by Texas Republican donor Bob Perry, who has given to Bushs 2000 campaign and House Majority Leader Tom Delays campaigns, as well as to that of Democratic Rep. Sheila Jackson Lee of Texas.

With more than $600,000 in funds raised, the group is small compared to the Media Fund, which has raised $28 million and run ads assailing Bush, or America Coming Together, which has raised $80 million and is looking to add another $45 million.

So by June 30, pro-Kerry 527s had spent more on the campaign than Bush had. Combined with Kerry's spending, that means Bush was outspent by 2 to 1.

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September 05, 2004

The Retreat to Scripture; Legalistic Antinomianism

This post by Pastor Bayly touches on a special problem for modern evangelicals, what I call "The Retreat to Scripture". By this, I mean a timid though firm defense of beliefs that seem peculiar to the world by saying, "Well, this is pretty weird,
and we won't try to defend it as rational, but Scripture forces us to believe
it." This is firm, because it does confront the world with unpopular beliefs,
but timid, because it hides ashamedly behind Scripture and, more importantly,
because it leads to extreme narrowing of our unpopular beliefs....

Why does it lead to narrowing? Because if you defend nothing that Scripture
does not absolutely force you to defend, you've lost a lot of what God wants
from us in daily life. You are stuck in an interesting sort of "Legalistic
Antinomianism": the principle that unless Scripture explictly prohibits
something, God permits it. This was one of the problems of the Pharisees, and a
big theme in the Sermon on the Mount. See Matthew 5:31-32:

It hath been said, Whosoever shall put away his wife, let him give her a
writing of divorcement: But I say unto you, That whosoever shall put away his
wife, saving for the cause of fornication, causeth her to commit adultery: and
whosoever shall marry her that is divorced committeth adultery.

The Pharisees were wrong to take their ethics directly from Scripture. They
were not supposed to contradict Scripture, but they were supposed to go beyond
it. We should not violate the letter of divine law, but we should not violate
its spirit either.

The form this takes nowadays is for evangelicals to shamefacedly say, for
example, that Scripture prevents us from ordaining women as elders, much as we'd
like to, but at least we can elect a woman as mayor, since Scripture doesn't
prohibit it.

I don't object to women as mayors-- I haven't thought it through, so I pretty
much accept the conventional wisdom-- but I object to the reasoning I just gave.
We should not say that the Christian position is obvious just because Scripture
is silent. It is something that needs thinking through, just as Christians need
to think through whether heroin use, unmentioned in the Bible, is morally
acceptable and prudent.

The Retreat to Scripture also closes down what would be the most useful
discussion of many issues: *why* God commands things. On the issue of women as
elders, for example, the discussion is diverted to the meaning of particular
Greek words and away from the actual effect of having women as elders. Not
ordaining women becomes like not eating pork--- a mysterious and arbitrary
divine command that looks stupid but that we trust is for our own good.

Note, too, that Legalistic Antinomianism has a tendency to be a one-way filter,
allowing practices of which the World approves but banning practices of which
the world disapproves. Thus, I think most churches would say that racism is bad,
even though the Bible says nothing on the subject. Here, rather than saying that
we must only condemn that which Scripture clearly condemns, I think people
would either (a) consider Scriptural support unnecessary or (b) search out
passages or principles from Scripture that while not directly on point do show
that God is displeased if we refuse to associate with somebody simply because
his skin is black. And method (b) is correct-- I just wish it were applied more
to beliefs at odds with the World's beliefs.

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August 12, 2004

New Haven Taxing Yale-- Takings Clause

The Takings Clause of the US Constitution has the idea that the government is not supposed to seize the property of individual people or organizations without compensation. Taxes are OK, but a tax is a siezing of the property of a group of people, without singling out any one of them, and, of course, the tax must go through the legislature.

It is common for tax bills to be written to give tax breaks to individual companies, but always in at last mild disguise--"Companies more than 23 years old producing raspberry but not blueberry jam shall be given accelerated depreciation deductions," and such.

What is less common is a tax law written to target a particular person or company and seize their property. This is more threatening to civil liberties, since sticks against critics are more dangerous than carrots to friends. (Of course, bribes to critics are somewhere in between!)

A recent example of an attempt, though, is mentioned in the May-June 2004 Yale Alumni Magazine. For the 5th time since 1990, legislation has been introduced introduced in the Connecticut General Assembly to put a special tax on Yale that wouldn't apply to other universities. This time round it would have imposed property taxes on revenue-producing properties-- that is, the football stadium and the university hospital.

Apparently this attempt was not really concealed. I wonder if it would have been constitutional if it had passed?

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July 22, 2004

Prosecutorial Discretion: Valerie Plame and Sandy Burglar

Juan non-Volokh at the Volokh conspiracy has a post on the question of whether the leaker of Valerie Plame's employment at the CIA should be prosecuted. I had a thought on this and the Sandy Burglar case.

What cases should a prosecutor choose to prosecute? Two prime considerations are "1. Should the person whom I think did X really be punished, or is their conduct excusable, even if illegal?" and "2. Even if I think the person did X and should be punished, do I have enough evidence that I have a good chance of convincing a jury?"

Juan non-Volokh at the Volokh conspiracy has a post on the question of whether the leaker of Valerie Plame's employment at the CIA should be prosecuted. I had a thought on this and the Sandy Burglar case.

What cases should a prosecutor choose to prosecute? Two prime considerations are "1. Should the person whom I think did X really be punished, or is their conduct excusable, even if illegal?" and "2. Even if I think the person did X and should be punished, do I have enough evidence that I have a good chance of convincing a jury?"

I won't discuss (1) here, as applied to either the Plame case or the Berger case, despite its importance. What about (2)? Here, I think the Plame case should clearly be abandoned by the prosecutor. It is crazy that he has not dropped it already. Suppose he thinks he can find out who leaked the information. He still has to convince all 12 members of a jury that all of the following things are true beyond a reasonable doubt:

1. The defendant really is the leaker. Whoever the defendant is, his lawyer will argue that the prosecutor was under pressure to find a culprit and that there are political considerations. It will probably be the defendant's word against one or two witnesses who are heavily political people and who have strong motives for shifting blame from one person to another. Reasonable doubt will be hard to overcome.

2. The defendant knew that Plame not only worked for the CIA but was a covert agent within the past five years (if I remember the statute correctly). Note that Novak did not claim she was a covert agent-- that was leaked later by someone else (was it by someone at the CIA itself-- I forget). Note, too, that she is the mother of twins, has been living in America for some time, and was involved enough in CIA administrative affairs to be writing a memo suggesting her husband for the Niger mission. Proving beyond a reasonable doubt that the leaker knew she was a covert operative would be close to impossible.

3. The defendant intended to make the information public. I'm guilty here of not bothering to look at the statute, but would someone be guilty if they told Novak Plame was a CIA agent intending for that to just be background information, not to be published? The defense lawyer could argue that the leaker had not told the world that Plame worked for the CIA, just Novak, and suggest that maybe Novak was the one to blame for actual publication.

Moreover, there is another hurdle: jury nullification. Suppose the judge says that it would be a serious felony for a government employee to reveal Plame's name to Novak even if no harm was done because it was common knowledge in Washington anyway, she hadn't worked covertly for some years, the disclosure was motivated by her misbehavior in pushing her husband for a mission, and the leaker had not intended for the information to be published. Would the jury really vote unanimously to send the leaker to jail? I doubt it.

Thus, I see very little chance that the government could get a conviction. And if I am right, a good prosecutor would say, even before learning the identity of the leaker: prosecuting this case would be a waste of government resources, because we'd lose.

Now switch to Sandy Berger's theft of secret government documents. Again, forget item (1), the item of justice. Could a prosecutor get a conviction? Easily. I'm not sure of the elements of the crime, but at most I expect there are just two (a) Did Berger intentionally take notes and/or take the documents themselves, rather than accidentally dropping certain select documents in his pants on several visits?, and (b) Did Berger know he wasn't supposed to do those things? Both of those seem pretty easy, when we're dealing with a former National Security Advisor. (Probably item (b) is not even a necessary element. You don't have to know that burglary is a crime to be guilty of burglary. But the jury might balk at convicting, say, an ordinary citizen who had never been told that he was viewing secret documents and they weren't free samples he could take home with him.)

The Berger case seems to be a slam-dunk. It might be prudent to appoint a special prosecutor, since the Democrats will scream that the prosecution is politically motivated. But it is actually disgraceful that Berger has not already been indicted, tried, and convicted, since the crime seems to have occurred in the fall of 2003 and it is such a simple case. No wonder people like Berger think they are above the law-- it seems they really are, even when Republicans control the Justice Department!

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July 10, 2004


Eugene Volokh comments on the recent Booker decision of the 7th Circuit, which provides one one of the always worthwhile exchanges between Posner (this time in the majority) and Easterbrook (in dissent). There are two big issues. One is whether a lower court should overrule Supreme Court precedent if it thinks the Supreme Court will, even if the Supreme Court has not yet done it. Posner says yes; Easterbrook says no. I think Posner is probably right on that one-- remembering the caveat of "if it thinks the Supreme Court will". The other issue, the substantive one in this case, is whether the recent Supreme Court Blakely decision means that a jury, not a judge, must make any factual determinations for criminal sentencing. That is harder. The idea is a foolish one, unless judges are to have no discretion at all. Traditionally, judges have looked to all aspects of the severity of the offense and the past history of the defendant-- and, indeed, the jury has not been allowed even to hear any evidence about the past history of the defendant. If the Supreme Court acts consistently with Blakely, it says that somehow nobody noticed over the past 200 years that this practice is unconstitutional and that juries, not judges, must decide facts at sentencing hearings. There would remain a limited role for the judge, but only to apply the law to the fact-finding of the jury.

Note that this will require a big increase in expenditure on criminal courts. Currently, many (most?) criminal cases do not require trial by jury, because a plea bargain is reached. The criminal pleads guilty, so no jury is needed, and the judge imposes a sentence. Now, it seems, the Supreme Court says that a guilty plea is not enough. The defendant must also plead agreement to all the facts that might affect his sentencing. Before, the jury was dismissed after it reaches its verdict, which is usually "guilty". Now, it must be continued for a separate sentencing hearing, or a new jury must be chosen with the entire voi dire process of challenges.

The Supreme Court seems to have been confused on this-- as usual, ruling things unconstitutional without thinking about logical consistency or policy implications. Posner wants to impose the logical consequences of Blakely on them; Easterbrook wants to save them from themselves, and perhaps make them retract Blakely.

Easterbrook notes that the parole system is also overthrown by Blakely if the sentencing guidelines require juries:

Think of the indeterminate sentence: zero-to-life with release in the discretion of parole officials. The federal Parole Commission eventually developed a set of release guidelines designed to ensure consistent treatment of offenders. See United States v. Addonizio, 442 U.S. 178 (1979). Parole- release guidelines might say something like: "Hold bank robbers in prison for 10 years; hold armed bank robbers for 20; hold armed bank robbers who discharge their weapons or take hostages for 30; add (or subtract) time from these presumptive numbers to reflect the size of the heist." If my colleagues are right, then such a system violates the sixth amendment.

Here is what I think is the heart of the substance part (as opposed to the procedure part) of Easterbrook's dissent:
...the only finding that is indispensable to Booker’s sentence is the one specified by statute: did he distribute more than 50 grams of cocaine base? The jury found beyond a reasonable doubt that he had. Where in the resulting statutory range of 10 years to life the actual sentence falls depends on complex interactions among drug quantity, gun use, violence, role in the offense (was defendant the mastermind or just a courier?), cooperation, obstruction of justice, criminal history, and other factors, none of which is a sine qua non in the same sense as the statutory thresholds.
Judges dislike the Sentencing Guidelines intensely-- which is natural enough, since the Guidelines constrain them. Now they'll see part of their power shift to juries, which will no doubt make them even more unhappy. It does seem, though, that judges will still get to grant clemency, and the juries will only be stuck with the task of enhancing sentences for unusually evil offenders.

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