Daily Archives: 13 March 2013

A Cascade

Posted on by
Reply

…that needs to be encouraged.

Since the DC Circuit’s ruling that the Obama “recess” appointments to the NLRB were unconstitutional—the Senate actually being in session at the time—some 87 enterprises, including a few unions, are citing the ruling in their lawsuits to overturn a variety of the NLRB’s actions.  After all, with the board lacking a quorum, it was legally powerless to do anything at all.

The actions these enterprises are seeking include overturning/blocking union elections, undoing penalty payments to fired workers, halting subpoenas, and so on.

Here’s the cascade: 10 or more NLRB regional directors are argued also to be illegally appointed since they were seated by Obama’s unconstitutionally manned NLRB.  Extending from this, those regional boards’ decisions also must be voided, since those rulings were issued by illegally constituted regional boards.

Lafe Solomon, NLRB acting General Counsel, objects.

It’s already having a huge impact.  At every stage…we’re seeing attacks….

Indeed, as the WSJ reports,

The surge of challenges tied to the court ruling is overwhelming the NLRB, a federal agency that referees disputes between companies and employees.  Working through them is delaying resolution of cases alleging unfair labor practices, including whether workers can fairly hold union elections[.]

There’s no doubt the new workload is inconvenient to the Federal government.  That’s just too bad.  The inconvenience of our employee, the government, can never be an excuse for its behaving illegally.  Our employee, through the NLRB, brought the present inconvenience on itself through its patently illegal behavior.

The NLRB—Solomon—is merely blaming the employer for the employee’s own inconvenience.

You Dumb ….

Posted on by
Reply

That’s what New York State Supreme Court Judge Milton Tilling said to New York City’s lame duck mayor, Michael Bloomberg, on the latter’s…ill-advised…”sugary drink” ban.

Tilling opened his opinion by noting, correctly, the irrelevance of Bloomberg’s “obesity epidemic” motive for the ban—the question before him was simply the legitimacy, the legality, of the ban itself.  Motives, say I in expansion of Tilling’s point, are appropriate considerations only in determining sanctions, given a finding of illegality; they never can be justification for the illegality.

[The city does not have authority to] limit or ban a legal item under the guise of ‘controlling chronic disease,’ as the [city’s health department] attempts to do.  One of the fundamental tenets of democratic governance here in New York, as well as throughout the nation, is the separation of powers.  No one person, agency, department or branch is above or beyond this.

[The City Charter does not grant the health department] sweeping and unbridled authority to define, create, authorize, mandate and enforce [health codes governing food establishments and food preparation.  The soda ban] would not only violate the separation of powers doctrine, it would eviscerate it.

The judge’s beef here is that the health department just up and did the ban.  The ban was never approved by the city council.  The city’s elected representatives are the only ones who can create city law.  In fact these representatives had already explicitly rejected similar ban efforts.

Further, the Bloomberg Ban was unconstitutionally vague, capricious, and stupid.  (OK, I added that last part.  There is no Felony Stupid bar in New York’s or our Federal Constitution.)

The plaintiffs in this case pointed out that

…the Rule exempts soy based milk substitutes, but other milk substitutes such as almond, hemp and rice milk are not exempt.  The Rule also does not preclude unlimited free refills or multiple purchases of 16-oz. beverages or providing unlimited sugars after purchase at the regulated businesses….

And so on.  Tilling agreed.

The court finds that the regulation herein is laden with exceptions based on economic and political concerns. … The statement of financial costs related to the chronic epidemic [by the defendants] further evidences a balancing being struck between safeguarding the public’s health and economic considerations.  This is impermissible….

Further (the motive rejection above notwithstanding),

…the stated premise of…the Rule is to address the rising obesity rate in New York City. … The Rule is nevertheless fraught with arbitrary and capricious consequences.  The simple reading of the Rule leads to…uneven enforcement even within a particular City block, much less the City as a whole.  Furthermore…the loopholes in this Rule effectively defeat the stated purpose of the Rule.  It is arbitrary and capricious because it applies to some but not all food establishments in the City, it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories on suspect grounds, and the loopholes inherent in the Rule, including but not limited to no limitations on re-fills, defeat and/or serve to gut the purpose of the Rule.

 

Tilling’s ruling can be read here or here.

Federal Government’s Current Policies

Posted on by
Reply

…and our future.  David Greenlaw, James D Hamilton, Peter Hooper, and Frederic Mishkin, in an op-ed in last Friday’s Wall Street Journal had some thoughts.

Research we have recently presented at the US Monetary Policy Forum leads us to conclude that, as debt grows relative to GDP, rising interest rates could bring the debt-to-GDP ratio up to 176% in 25 years, and even higher under less favorable assumptions about unemployment and the current-account deficit.

They explain:

[C]ountries with gross debt above 80% of GDP and persistent current-account deficits—as is currently the case in the United States—face sharply increasing risk of escalating interest payments on their debt.  This means even higher budget deficits and debt levels and could lead to a fiscal crunch—a point where government bond rates shoot up and a funding crisis ensues.

And

Given the Federal Reserve’s greatly expanded balance sheet…more than $3 trillion today, there is an additional factor that could exacerbate inflation expectations—Fed remittances to the US Treasury.  If interest rates climb higher over the next few years, this could lead to substantial losses on the Fed’s holdings of Treasurys and mortgage-backed securities, losses that could approach several times the size of Fed capital.

Never mind that this bust of capital would violate the Fed’s own rules imposed on non-government banks.  And it would violate Dodd-Frank rules.

But President Barack Obama wants to keep borrowing and to keep inflating private lending—the housing market “recovery,” you see.

Which brings up another risk that Greenlaw, et al., didn’t mention—all that pushed-for private/commercial lending at today’s artificially low rates.  That’s generally long-term lending (those mortgages, and business lending for construction and plant expansion). But when interest rates rise, as they must, those private/commercial lenders will be forced to borrow at tomorrow’s rising interest rates while still locked into today’s low rates on the loans they’ve let.  Can you say, “S&L collapse?”

We really need adult leadership in the White House.