Morning Report: Grexit Imminent? 6/29/15

Stocks are down worldwide as Greece imposed capital controls and China enters a bear market. Bonds and MBS are up.

We have a short week coming up, with markets closed on Friday for the 4th of July. The jobs report has been moved up to Thursday. Liquidity could be lighter than normal this week as traders head to the Hamptons for a long weekend.

Greece and their creditors are at an impasse, with the Greek government scheduled a vote to determine whether to accept the creditor demands. The European Central Bank froze their Emergency Liquidity program at the same level as last week, making the Greek banks more or less insolvent. ATMs are out of money and the banks will be closed for the next six days. If they cannot get a deal with creditors, Greece will have to start printing money in order to keep the banks solvent, which would pave the way for their exit from the Euro.

While the Greek economy is only about 2% of the Eurozone (in reality, about the size of Milan or Dusseldorf) their exit will probably be bond bullish. Why? In order to support European banks which hold Greek sovereign debt, the ECB will probably announce further measures to support the banking system, and that means more QE. This will cause the Bund to rally, and relative value trading will pull the US 10 year along for the ride.

ICYMI: Puerto Rico can’t pay their debts, either.

TBAs got clobbered last week, with the Fannie TBA and the Ginnie TBA losing well over a point. This sent mortgage rates up. It may have been an overreaction to the strong personal spending data we got on Thursday, or fears of volatility over the Greek situation, but it is something to keep an eye on.

Pending Home Sales rose .9% in May, which is the highest level in over 9 years. Home Price Appreciation continues to rise about 4 times wage growth, which is an issue.

The Supreme Court ruled that the CFPB could use the “disparate impact” theory in housing discrimination cases. This was unexpected. It no longer matters whether a lender intended to discriminate, all that matters is the numbers. While the Court tried to explain that this doesn’t mean lenders just got quotas, for all intents and purposes, they just did.

107 Responses

  1. I was listening to NPR’s “Market Watch” on Friday and the panel took it as an article of faith that Greek bondholder were going to take a huge haircut. They felt it was a stupid question to even ask.

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  2. The funny thing is that most of this debt doesn’t come due for 15 -20 years and the interest rate is only 1% – 2%. It isn’t like this debt is usurious or anything..

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  3. It’s like the U.S. debt, the sheer size of it makes it unpayable, so it wont be.

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  4. The biggest holders of it are more or less governments and government entities. If Greece exits, it will have to nationalize all its banks, which means it will be mainly held by the Greek government, the IMF, and the ECB.

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  5. I suspect the debt will be nullified by the Greeks. If you’re gonna exit the EU, do it right as no one but the Ruskies and the Chinese are going to loan you money for a while regardless of whether you accept the debt or not.

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    • The ACLU, famous for defending the Nazi’s right to march in a Jewish neighborhood, will no longer defend religious freedom.

      http://www.washingtonpost.com/opinions/congress-should-amend-the-abused-religious-freedom-restoration-act/2015/06/25/ee6aaa46-19d8-11e5-ab92-c75ae6ab94b5_story.html?postshare=6371435345896586

      This is the addle-brained reasoning of the clowns at the ACLU:

      These cases differ fundamentally from Singh’s. Accommodating his faith doesn’t hurt anyone else; it just requires making an exception to a rule of uniformity that was never truly uniform. Not so in these other cases. Hobby Lobby employees are harmed because they now lack a benefit guaranteed by law. People turned away by an inn or bakery suffer the harm of being told that their kind isn’t welcome. And a teenage immigrant is harmed by not being provided care or even told about other health-care options.

      Quite how the “harm” of being told that their kind isn’t welcome” (which is itself a complete mischaracterization of what those bakeries are saying) differs from the harm of a holocaust survivor being treated to a parade sponsored by a group defined by their hatred of Jews isn’t explained.

      And then of course there is this demonstration of complete and utter lack of self-awareness.

      Yes, religious freedom needs protection. But religious liberty doesn’t mean the right to discriminate or to impose one’s views on others.

      Hmm. Just who is “imposing” what on whom?

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      • Religious Liberty:Homophobia::States’ Rights:Racism

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        • yello:

          Religious Liberty:Homophobia::States’ Rights:Racism

          An apt analogy, I suppose. Religious liberty is a concept fundamental to our constitutional order, but is being destroyed by progressives under the pretense of stamping out “homophobia”, just as state’s rights is a concept fundamental to our constitutional order, but is being destroyed by progressives under the pretense of stamping out racism.

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        • An apt analogy, I suppose.

          It does work at several different levels.

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  6. “But in a strongly-worded dissent, Chief Justice John Roberts and three of the court’s conservatives said, essentially, that “Legislature” means “Legislature,” and that the other justices were performing “a magic trick” to pretend otherwise.”

    http://www.vox.com/2015/6/29/8845275/supreme-court-arizona-redistricting

    Sort of like State means State, unless a magic trick is used to pretend otherwise?

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  7. Written as if you actually believe it. Kudos.

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  8. Religious Liberty:Homophobia

    no more complaints and/or faux-concern over burned churches

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  9. i wonder when progressives will turn on religious freedom entirely. oh right. that’s today. the ACLU would rather torch it’s principles than defend those icky uncouth folks from flyover country who aren’t even interesting. probably eat at applebees. don’t they know religious liberty is being about to go a place for a few hours. provided they don’t actually follow through on what they say and believe, no problem at all.

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  10. What is the left going to think about the Pope when they sue the Catholic Church to perform SSM and he resists?

    My guess is that he’ll be right back on the shit list.

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    • Brent, I assume some idiot pair will sue to have a church or synagogue SSM where it is an unwelcome aberration.

      I think the idiot pair will lose. I think no amount of pressure will suffice to break down the church wall of doctrine within the faith.

      The notion that SSM is lawful and cannot be prohibited by a state is no precedent for a successful suit against the Pope [even forgetting, for a moment, that he is the head of state of a foreign government].

      However, I do wonder about the pressure to withdraw the tax exempt status.

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      • Mark:

        I think the idiot pair will lose.

        Do you rate it more or less likely than you rated the possibility, say 25 years ago, that same-sex marriage would be construed by a majority of the Supreme Court to be a constitutional right?

        Do you rate it more or less likely than you rated the possibility, say 10 years ago, of a baker being successfully sued for refusing to bake a cake for a gay wedding?

        Given this twilight zone of a constitutional order we now live under, I don’t think I would ever predict that the court would never do something.

        However, I do wonder about the pressure to withdraw the tax exempt status.

        Seriously, is there really any doubt that this will eventually happen? Or that priests will be eventually be de-licensed from performing legally binding marriage ceremonies for their refusal to “marry” gays?

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        • Do you rate it more or less likely than you rated the possibility, say 10 years ago, of a baker being successfully sued for refusing to bake a cake for a gay wedding?

          The cake baker’s clearly fall under public accommodation civil rights laws.

          Religious institutions will be immunized against their doctrines within their religious activities. Nobody is going to force a Catholic priest to officiate a gay wedding against his will.

          The battleground will be in the plethora of religiously affiliated secular endeavors such as hospitals and universities. They will be forced to recognize SSM for visitation rights, access to married housing, etc. with federal funding being the cudgel used. This will make the battle over covering contraceptives look like small potatoes.

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        • yello:

          Nobody is going to force a Catholic priest to officiate a gay wedding against his will.

          Of course not. But plenty of people will want his license to perform normal marriages revoked. My bet is you are one of those people.

          The battleground will be in the plethora of religiously affiliated secular endeavors such as hospitals and universities. They will be forced to recognize SSM for visitation rights, access to married housing, etc. with federal funding being the cudgel used. This will make the battle over covering contraceptives look like small potatoes.

          And you think that cudgel should be used, don’t you?

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  11. tolerance, bagger

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  12. @yellojkt: “Religious Liberty:Homophobia::States’ Rights:Racism”

    I think the problem there is that arguments of religious liberty aren’t always, obviously, about homophobia (and, indeed, when did homophobia become the word we use to describe prejudice based on sexual orientation, which could as easily be done out of jealousy or anger or irritation or disgust or even love, and thus hardly phobic) just as arguments of States rights aren’t always about race (sometimes they are Xenophobic! Sometimes it’s class! Some times it’s pedantry! Sometimes it is a persona vendetta!) so I’m not sure it works in a universal sense except as a representation as to how one set of ideologues sees another and their issues.

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  13. “The cake baker’s clearly fall under public accommodation civil rights laws.”

    a cake is not and will never be a public accommodation.

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  14. @yellojkt: “The cake baker’s clearly fall under public accommodation civil rights laws.”

    How far down are we going to unpack that? I mean, right now, we’ve got a few people looking to “make a point” and publicly refuse to cater a gay wedding because of penises touching. Eventually, it will be a fairly easy matter for a particular caterer to be booked up when it comes to a particular event, so what sort of resources are going to be spent proving discrimination on the part of the recalcitrant baker?

    While you say nobody will force a Catholic priest to officiate a gay wedding against his will, I would not be surprised to see some effort made to have that happen. They may not be successful, but I expect it will happen.

    I not only think people should be able to refuse jobs they don’t want to take for whatever reason (if I’m a contractor and I don’t want to take a job, I shouldn’t have to take that job, it’s the whole point to being a contractor) and let the market decide. At the same time, if I were a cake baker I’d bake cakes for homosexuals and polygamists so long as they could pay me for them. And side with anyone who didn’t want to do so, because, heck, why shouldn’t they get to choose their customers?

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    • KW:

      …so what sort of resources are going to be spent proving discrimination on the part of the recalcitrant baker?

      A lot. If you think it is about an individual instance of actual service, you are hugely mistaken. It is about cultural conformity and intolerance of dissent. There are a lot of forces with a lot of money behind that movement.

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  15. @novahockey: “a cake is not and will never be a public accommodation.”

    I’m pretty sure we’re going to find that we all have a constitutional right to cake in the penumbras and emanations any day now.

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  16. I think the problem there is that arguments of religious liberty aren’t always, obviously, about homophobia…just as arguments of States rights aren’t always about race

    Like I said, the analogy works at a lot of different levels.

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  17. a cake is not and will never be a public accommodation.

    A cake, with or without a wedding greeting, on it is a commodity that a business must sell to all willing qualified buyers.

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    • yello:

      A cake, with or without a wedding greeting, on it is a commodity that a business must sell to all willing qualified buyers.

      Baking a cake is a service, not a commodity. No baker as far as I know has refused to sell an already-made cake to gay couple. If you think a baker should have to bake whatever cake someone asks them to, then you must also think that an artist should have to, say, paint whatever someone asks them to.

      edit: Actually it isn’t true that you must think so. In fact you almost certainly don’t. It is just the case that you must think so to have your position be even remotely coherent.

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  18. Considering the Catholic Church’s constant declaring of MOAR Government Spending I’m not sure they should be exempt from footing the bill. I honestly can’t think of an argument why they shouldn’t.

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  19. you have to prove harm. and there is none. i could argue i’m doing you a favor by not selling you a cake.

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  20. Should a black baker be legally required to bake a confederate flag cake for a couple desiring to marry? If not, why not?

    Should a Jewish caterer be legally required to cater a wedding of Nazi’s? Again, if not why not?

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  21. No. you can’t compel political speech.
    but you can’t deny a service based on your religious objections. and if you consider a cake for a gay wedding political, you are wrong. it’s not speech. you’ll know what is/isn’t speech based on this list of approved speech.

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  22. I agree. The people behind this have infinite resources and have a score to settle.

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  23. it’s really — are we going to tolerate religious minorities in this country. and yes,those who would fall on their sword over this are that.

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    • nova:

      it’s really — are we going to tolerate religious minorities in this country.

      It is increasingly clear that the left’s answer to that question is a resounding “No”, at least to the extent that “religious minorty” means someone who does not accept the progressive cultural agenda.

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      • Great column from Kevin Williamson:

        http://www.nationalreview.com/article/420406/john-roberts-decision-kevin-d-williamson

        Highlights:

        It is uncomfortable to think about, but our Supreme Court functions in much the same way as Iran’s Guardian Council: It is a supralegislative body of purported scholars, distinguished by ceremonial black robes, that imaginatively applies ancient doctrines “conscious of the present needs and the issues of the day,” as the ayatollahs over there and over here both put it, deciding — discovering! — what is mandatory and what is forbidden as the shifting currents of politics dictate. The main difference is that the Iranians take their sharia rather more seriously than we take our constitutional law: John Roberts’s opinion in Burwell wasn’t just wrong — wrong can be forgiven — it was embarrassing, craven, and intellectually indefensible. Antonin Scalia was right to let him have it with both barrels, but he’d do better to resign from the Supreme Court — it is difficult to see how an honorable man could be associated with it.

        And also:

        I am in favor of arranging the laws to permit gay couples to arrange their domestic affairs in whatever way they see fit, and to have those affairs blessed by whatever authorities are inclined to bless them: Episcopalian church, Sam’s Club, Taylor Swift, Grand Mystic Royal Order of the Nobles of the Ali Baba Temple of the Shrine — it’s a free country, Sunshine. Unlike Barack Obama, I did not arrive at my views on same-sex affairs recently and at a moment of political convenience. But, that being said, the idea that lurking in the penumbras of our 18th-century Constitution is a fundamental national right to gay marriage is simply preposterous. It is not there. It is a fiction, and, just like the Harry Potter novels, the fact that it is very, very popular does not mean that it is not fiction.

        And finally:

        Asked what he thought about Western civilization, Mohandas K. Gandhi supposedly quipped that he thought it would be a good idea. Conservatives, if we’re being honest, might say the same about the rule of law. It would be a good idea, at least an interesting experiment. For the moment, though, there’s only power, the men who have it, and the things they do with it.

        Depressingly true, that.

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        • John Roberts and Anthony Kennedy will, if the goblins in their heads are sufficiently insistent, ratify whatever Starbucks-customer consensus exists for 80 miles on either side of Interstate 95.

          Who let those RINOs on the bench?

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        • yello:

          Who let those RINOs on the bench?

          Well, if you recall, Kennedy was actually the 2nd alternate, so I think the lyin’ left, led by drunkard Ted Kennedy, can take credit for him. Bush the younger, that hard line neo-conservative nazi, gets full responsibility for Roberts.

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        • The gentlemen who wrote the Constitution did not get around to enfranchising women or abolishing slavery, but they snuck in a constitutional right to gay marriage that we’ve somehow overlooked for 228 years or so:

          He’s got his timeline a little messed up. The 14th Amendment was ratified a scant 147 years ago.

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        • yello:

          He’s got his timeline a little messed up. The 14th Amendment was ratified a scant 147 years ago.

          Yeah, I noticed that too, although his point doesn’t really suffer for the error. Besides, be honest…if Kennedy and his merry band of progressive pals hadn’t miraculously discovered the right to SSM in the 14th, it would have been just as self-evident to you that it existed elsewhere in the document. The relevant thing isn’t where it can be found in the constitution, but rather that you really, really want it to be there. And to want something to be true is, to a progressive, the same as it being true.

          Hence, eg, Caitlyn Jenner.

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  24. The left has even alienated Judy Blume:

    http://reason.com/blog/2015/06/29/judy-blume-bashes-trigger-warnings-a-lot

    Hello God, It’s me, Tim Hunt

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  25. Yeah, Bush was a super, small government Libertarian demagogue, AmIRight?

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  26. see ace today. calvinball is right.

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    • nova:

      calvinball is right.

      Yup.

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      • Heh….just saw this over at NR. In his SSM opinion Kennedy lists 4 principles which ““demonstrate that the reasons marriage is fundamental under the Constitution apply with equal force to same-sex couples”. One of those principles is that the right to marry:

        “…safeguards children and families and thus draws meaning from related rights of childrearing, procreation, and education.”

        Rights of procreation apply with “equal force” to same-sex couples? Methinks Justice Kennedy is in need of a biology lesson. What a clown show.

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  27. “yellojkt, on June 29, 2015 at 12:26 pm said:

    Nobody is going to force a Catholic priest to officiate a gay wedding against his will.”

    You would.

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  28. @yellojkt: “Like I said, the analogy works at a lot of different levels.”

    I see what you did there.

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  29. Colbert is pissed at Scalia and dared him to be on his show….

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    • Mark:

      A question for you.

      If the equal protection clause prevents a state from defining marriage as a union between a man and a woman, as you seem to think, how is it that it does not also prevent a state (or the federal government) from imposing progressive taxation on citizens?

      The argument that progressive taxation laws apply equally to everyone fails in light of the SSM argument, since the law defining marriage as a man/woman union also applies equally to everyone, ie homosexuals are also allowed to legally marry someone of the opposite sex, and heterosexuals are also prevented from legally “marrying” someone of the same sex. The law applies equally to everyone. Yet somehow it is in violation of the equal protection clause.

      Accepting that as the case, how is it then that forcing different people to pay different tax rates is not an obvious violation of the equal protection clause?

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      • If the equal protection clause prevents a state from defining marriage as a union between a man and a woman, as you seem to think,

        I don’t have a clue why you would “think that I think that”.

        As I have consistently written, I would have voted in the minority, but would have said, that as with age rules, FF&C applied. I would also have rolled back every state where the bar to SSM was dropped by a federal court. However, I would have said that marriages lawfully entered into could not be dissolved without a divorce or annulment proceeding.

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        • Mark:

          I don’t have a clue why you would “think that I think that”.

          My apologies. I interpreted your attempts to explain how Kennedy’s opinion could be fixed to be an endorsement of the fix. Plus you explicitly said that the equal protection clause defeats a state desire to define marriage as a man/woman union. (Which I still don’t understand, especially now in light of your disavowal of the equal protection argument.)

          So ignore the “as you seem to think” and read my question as if it weren’t there.

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        • A legit equal protection argument, as in Loving, trumped miscegenation laws. Obviously, equal protection argument has to be s t r e t c h e d to fit this case.

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        • Mark:

          A legit equal protection argument, as in Loving, trumped miscegenation laws. Obviously, equal protection argument has to be s t r e t c h e d to fit this case.

          Which case, SSM or progressive taxation? I know why SSM it totally different from Loving. But I don’t see how progressive taxation laws are different from Loving. Each law makes it a criminal act for some citizens to do exactly what it is perfectly legal for other citizens to do. Easy to see as a violation of equal protection.

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        • Taxation and equal protection is a blind spot for you, I think. All taxpayers are treated alike, theoretically.

          Supposedly the distinctions we make among different sorts of dollar incomes are rationally based. Thus we can have brackets for “earned income” and deductions and exclusions and capital gains treatment and qualified dividends and all sorts of other rules. But be comforted: if anyone earns the same amount as you from the same sources and has the same number of deductions and exclusions, why then, she will pay the same tax. See?

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        • Mark:

          Taxation and equal protection is a blind spot for you,

          I think it is a blind spot for you, probably because as a practicing lawyer you have had to be totally focused on how a court will rule rather than on what the law actually does mean.

          All taxpayers are treated alike, theoretically.

          They really are not, neither in practice nor theoretically. The whole point of progressive taxation is to treat high income earners differently than low income earners. I really can’t see how this is disputable.

          Supposedly the distinctions we make among different sorts of dollar incomes are rationally based.

          Well, as soon as you start talking about “rationally based”, you are departing from the actual equal protection clause and applying some SCOTUS invented standard that has nothing to do with the constitution. Once we do that, literally anything goes.

          But be comforted: if anyone earns the same amount as you from the same sources and has the same number of deductions and exclusions, why then, she will pay the same tax. See?

          We’ve had this discussion before. If you would not say to Loving “Be comforted: if anyone who wears the same skin color as you, why then, he will be be disallowed from marrying the same woman,” then I have no idea why you think the same formulation should apply to me. Besides, the equal protection clause says equal protection for all citizens, not equal protection for citizens who make the same amount of money as each other.

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        • Besides, the equal protection clause says equal protection for all citizens, not equal protection for citizens who make the same amount of money as each other.

          Marriage equality requires that only capitation taxes are constitutional. Q.E.D.

          You convinced me. Hire the lawyer. Michael Carvin probably doesn’t have much to do now that he’s lost the Burwell case.

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        • Alito on the loosy-goosiness of Kennedy’s due process argument for SSM:

          Alito Critiques Gay-Marriage Ruling, Defends Citizens United

          In interview with Bill Kristol, the justice opens up about the high court.
          July 20, 2015 10:00 AM EDT

          In a rare interview, posted online on Sunday, U.S. Supreme Court Justice Samuel Alito Jr. criticized the court’s June 26 ruling declaring a right to same-sex marriage, warning that “we are at sea” in defining the limits of constitutional protections of liberty.
          The court majority, Alito said, has adopted a “post-modern” concept of liberty protected by the 14th Amendment’s due process clause. Alito described that concept as: “It’s the freedom to define your understanding of the meaning of life. It’s the right to self-expression.”
          With that broad understanding of liberty, Alito said, a future libertarian justice could attack minimum wage and zoning laws, and a socialist justice could argue in favor of a guaranteed annual income or free college education for all.
          “There’s no limit,” Alito told conservative commentator Bill Kristol in the latest of Kristol’s online conversations with political and legal figures. Kristol is editor of the Weekly Standard magazine. The New York-based Foundation for Constitutional Government is the producer for the series.
          Alito’s comments echoed his dissents in last month’s Obergefell v. Hodges, the same-sex marriage ruling, and its precursor, the 2013 decision in U.S. v. Windsor. In the interview he offered specific examples and a broader critique of what Justice Anthony Kennedy wrote in the majority opinions in both cases.
          The Rehnquist Court, Alito said, had limited the scope of “liberty” under the 14th Amendment, confining it to “rights that are deeply rooted in the traditions of the country. So you had to find a strong historical pedigree for this right.” Alito added: “But the Obergefell decision threw that out, did not claim that there was a strong tradition of protecting the right to same-sex marriage. This would have been impossible to find. So we are at sea, I think. I don’t know what the limits of substantive liberty protection under the 14th Amendment are at this point.”
          Alito went on to say that a limitless 14th Amendment will damage the court in the long run. “If it’s just whatever I as an appointee of the Supreme Court happen to think is very important … it raises questions of legitimacy, it raises practical questions because the more the court does this sort of thing, the more the process of nomination and confirmation will become like an election. It will become like a political process.”
          Kristol’s 80-minute interview touched on other topics, including Alito’s views on the Citizen United campaign-finance ruling, his law school experiences and how the court decides cases.
          Read the full transcript here. What follows are several highlights from Kristol’s interview.
          Citizens United decision: “In the cases that we’ve had that I think involve core free speech, the chief example that I would give from my time on the court is the Citizens United case. The court came out five to four, protecting the right to freedom of speech, but it was five to four. And it remains very controversial. My former colleague John Paul Stevens has written a book recommending a number of constitutional amendments to correct the decisions he really disagreed with during his time on the court and that’s one of them. He wants an amendment to the First Amendment, which is pretty remarkable, to overrule the decision in Citizens United. Citizens United, I think, is core political speech. It is a video about a candidate for the presidency of the United States. If that’s not protected by First Amendment free speech, by the First Amendment free speech guarantee, I don’t know what is.”
          Attending Yale Law School in the 1970s: “I think the students were overwhelmingly liberal. But there were a few of us conservatives, kind of hiding. Clarence Thomas was there at the time. John Bolton was there. The classes in those days—this was true in colleges as well as in law school—were not highly politicized and much less so than today.”
          The deliberative process: “In the typical case, I will not talk to any of my colleagues about the case before we hear the argument. There’s no rule against doing it, but it’s just generally not done as matter of tradition or practice or efficiency. But usually I will prepare for the argument, I’ll read the briefs and everything else that’s relevant and I’ll talk about the case sometimes pretty extensively with my law clerks and then we’ll go into the oral argument and I’ll get a sense of where my colleagues are on the case. On the Supreme Court, the law clerks are very free to talk to each other so my law clerks usually have a sense of what the law clerks in the other chambers are thinking about the case but that’s not necessarily the same thing that the justices are thinking about the case.”
          Arguing before the Supreme Court: “It is very, very challenging. It’s a very unusual format, and when nonlawyers or lawyers from other countries see an appellate argument in the United States, they are somewhat shocked by it. We had a group of judges from the European Court of Human Rights come to have a little conference in Washington a couple of years ago, and before the conference they sat in on one of the morning argument sessions. At lunch, I was sitting next to one of the justices, and she was being very diplomatic and polite, but basically what she was saying was that she was shocked by the way the argument was conducted. She said the judges are interrupting the lawyers, they’re interrupting each other, they’re saying things that reveal what they’re thinking about the case. Because the standard practice on the continent of Europe is for appellate judges to sit there and listen and that’s it.”
          Limited role of oral argument: “Usually when there are editorials or articles or speeches in Congress about televising Supreme Court arguments, what is said is the people have the right to see the court at work and really if the people, if the public saw us at work, what they would see, for the most part, is a justice sitting at a desk or in a chair reading a brief or typing on a word processor. That’s most of the work. The oral argument is really a small part of it.”
          On writing opinions: “If it’s assigned to me, I will begin writing and working with my law clerk, and I’ll do a lot of work on this before I circulate it to the court. Once I’ve drafted something—again keeping in mind both what I would like to say and what I think I can get a majority for. And sometimes you need to think about whether you want to aim just for five, or do you want to write something that will get six or seven or eight or nine—there’s a little bit of flexibility there. But once I’ve drafted something that I’m satisfied with, then I will circulate it. This is what everyone does, we’ll circulate it to all the justices, and what I hope for … is that I will very quickly receive eight memos saying, ‘This is perfect, you know, don’t change a word.’ And it doesn’t always work out that way.”

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  30. Breathtaking from the NYT.

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  31. Krugman will go ballistic that debt & borrowing is being considered a source of the problem.

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  32. @Scottc1: “Accepting that as the case, how is it then that forcing different people to pay different tax rates is not an obvious violation of the equal protection clause?”

    I assume the argument would be one of burden, arguing that if anything the burden of progressive taxation is still on those who pay the lowest tax rates, while those who pay the highest tax rates still have much more money. Thus, they are not being damaged or mistreated or otherwise unfairly or unjustly targeted by progressive taxation, the way homosexuals were previously being discriminated against by not being allowed to sign away half their wealth to divorce lawyers, a tragic error that has now been corrected.

    There is also the case of the tax rates being marginal, so the argument would be (and I find this reasonably compelling) that we all pay the exact same rate on the first $30k of income, and if we make more we may pay higher rates on the additional income, but anyone who steps up into the higher bracket will also pay that higher rate. So everybody is being treated the same, as well all pay the same rate on the first dollars of income, no matter how much income we ultimately make, and we all start paying more on income over a certain rate whenever we hit that next level of income.

    Though that regards progressive taxation. I suppose there is some argument to be made that certain classes of people enjoy tax benefits that others do not, such as the employed versus contractors, married vs. single, etc. There may be an argument that it is discriminatory to allow people with children to take deductions. Not sure what the court would do with such a case, however. It’s one thing to bring marriage to all people everywhere (yay!) and quite another to say “you no longer get to claim a child as a dependent or deduct interest on your mortgage”.

    Like

    • KW:

      I assume the argument would be one of burden, arguing that if anything the burden of progressive taxation is still on those who pay the lowest tax rates, while those who pay the highest tax rates still have much more money

      I don’t think the equal protection clause mentions the word or concept of “burden” anywhere. Besides, the notion that someone who pays a lower income tax is carrying a greater tax burden is absurd on its face.

      So everybody is being treated the same, as well all pay the same rate on the first dollars of income, no matter how much income we ultimately make, and we all start paying more on income over a certain rate whenever we hit that next level of income.

      As I explained above, that is precisely the argument that fails in light of the SSM ruling. (It fails for other reasons too, but for the purposes of comparing it to the logic of SSM we don’t need to go into those.)

      Not sure what the court would do with such a case, however.

      I am no longer that interested in predicting what the court would do in any particular case about anything. I can’t pretend to understand the political policy preferences of the sacred 9, which is the basis on which they now rule. I can only read the constitution and decide how they should rule, which is what interests me most.

      But, in any case, as you suggest, the tax code is chock full of instance of the government’s failure to provide equal protection to all citizens.

      Like

  33. @Scottc1: “Rights of procreation apply with “equal force” to same-sex couples? Methinks Justice Kennedy is in need of a biology lesson. What a clown show.”

    I assume he does not distinguish between surrogate parentage or sperm donors (it’s not difficult for one or both lesbians in a lesbian marriage to get pregnant) or children from a previous marriage, as more than one SSM is going to be one where the partners have children from a previous hetero marriage or relationship.

    I’m still not sure where they made the case that the state has a reason to be the final arbiter of who gets married, beyond assuring age-of-consent, perhaps.

    Like

    • KW:

      I assume he does not distinguish between surrogate parentage or sperm donors (it’s not difficult for one or both lesbians in a lesbian marriage to get pregnant)

      It is impossible for them to procreate as a couple, which is the implication of Kennedy’s flimflammery.

      Like

  34. @Scottc1: “It is impossible for them to procreate as a couple,”

    Well, it is now. That’s unlikely to always be the case, though it will take medical intervention for two lesbians to combine their DNA and would still require a surrogate mother for two men to do the same, though their offspring would still be theirs as if by unassisted procreation.

    But he doesn’t specific that the two people in question procreate together, merely that procreation happens. 😉

    I think I’m ready to start writing opinions for SCOTUS.

    Like

  35. @Scottc1: “I don’t think the equal protection clause mentions the word or concept of “burden” ”

    I’m pretty sure it’s implicit in one of the penumbras.

    Like

  36. @kevinwillis1:

    I think I’m ready to start writing opinions for SCOTUS.

    Yours would be eminently more readable.

    Like

  37. I was just pointing out that yello referred to Michael Cannon when he wrote that “Michael Carvin” won’t have much to do post Burwell (he and Adler designed the legal strategy.). He didn’t have anything to do with Gay Marriage. He supports it by the way.

    I’m assuming the “Michael Carvin” was an autocorrect.

    Like

  38. @scottc1: “The whole point of progressive taxation is to treat high income earners differently than low income earners. I really can’t see how this is disputable.”

    I think the dispute lays in the difference between everybody in the same situation (i.e., income level) getting treated the same and between everybody getting treated the same no matter what their circumstance. Does equal protection mean everybody is treated the same no matter their circumstance, or does their circumstance inform how they are treated? While felons are generally treated the same (they cannot vote) all people are not treated the same. The same with age, as while all adults may be treated the same over the age of 21, all people are not treated equally at every age.

    The only way to treat everybody identically would be a flat fee, rather than a tax, as a percentage would still penalize high earners over low earners.

    Like

    • KW:

      I think the dispute lays in the difference between everybody in the same situation

      Again, the equal protection clause doesn’t say “equal protection for citizens only in the same economic situation.”

      While felons are generally treated the same (they cannot vote) all people are not treated the same.

      If all people who commit felonies are denied the right to vote, then yes, all people are being treated the same. However, if felons who make less than $50k per year are denied the right to vote only half the time, while felons who make more than $50k are denied the right to vote all of the time, then that too would be a clear violation of equal protection.

      The same with age, as while all adults may be treated the same over the age of 21, all people are not treated equally at every age.

      I will grant you that the rights of children represent a special case.

      The only way to treat everybody identically would be a flat fee, rather than a tax, as a percentage would still penalize high earners over low earners.

      No. Charging everyone a flat percentage of income would clearly be equal treatment.

      Liked by 1 person

  39. Capitation taxes are explicitly mentioned in Article I of the Constitution:

    “No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”

    However, the 16th Amendment gave Congress the ability to tax income:

    The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

    An Equal Protection argument against progressive taxation is going to be a steep uphill battle.

    Like

    • yello:

      However, the 16th Amendment gave Congress the ability to tax income:

      I don’t dispute the constitutionality of an income tax. I dispute the constitutionality of a progressive income tax, which was not explicitly authorized by the 16th amendment, and is pretty much explicitly in violation of the 14th. If forcing different people to pay different income tax rates can be construed to be “equal” protection, then the words have no meaning.

      An Equal Protection argument against progressive taxation is going to be a steep uphill battle.

      It is an impossible battle. The courts would never uphold such a challenge. But not because it isn’t a legitimate one.

      Like

  40. Michael Carvin did the actual oral arguments in front of the Supreme Court.

    http://www.politico.com/story/2015/03/donald-verilli-michael-carvin-obamacare-115719.html

    Michael Cannon is the Cato Institute Director of Health Care Policy who spearheaded most of the anti-ACA lawsuits.

    http://www.cato.org/people/michael-cannon

    Like

  41. Cannon by the way was pleased with the Obergefell decision:

    But failing to recognize same-sex marriages singles out an identifiable group of people and says to them, “You are not equal. You are second-class citizens.” The fact that banning gay marriage creates an explicit form of inequality (I think) makes it worse than the more hidden and random form of inequality the Court countenanced in King.

    RINO.

    Like

    • yello:

      RINO

      No, libertarian, albeit a wrong headed one on this issue. His argument is entirely specious. To be consistent, he should argue either that no marriage should be recognized by the state, or that all marriage entitlements be granted to anyone who wants them, regardless of marriage status. After all, by requiring a person to be married to get the entitlements, the state is singling out an identifiable group of people – ie single people – and says to them “You are not equal. You are second class citizens.” Since he doesn’t argue that, then he really doesn’t believe his own claim and so neither should anyone else.

      Like

      • BTW, his framing is disingenuous too, since no place has “banned” gay marriage. Gays can get “married” whenever and wherever they want, if they can find someone willing to perform one. No one will go to jail for performing one or participating in one. The state simply won’t recognize it for the purposes of state law.

        Like

        • In light of the prominent role that Justice Kennedy has played in casting aside our constitutional order, it is worth noting that today is the anniversary of Ted Kennedy taking to the Senate floor to slander Robert Bork with lies in order to derail his nomination to SCOTUS, eventually leading to the rejection of Bork’s nomination, and the elevation of Anthony Kennedy to the high court.

          Like

        • James Taranto’s Best of the Web yesterday pointed out this notable tidbit from a NYT article on Hillary’s e-mail problem (buried in the 6th paragraph of an article itself buried on page A18:

          State Department officials then crosschecked the emails from Mr. Blumenthal with the ones Mrs. Clinton had handed over and discovered that she had not provided nine of them and portions of six others.

          Um…portions of six others? Doesn’t that prove that the e-mails were not just overlooked (a possible but dubious explanation for the 9 totally missing e-mails) but were in fact known and edited before handing them over? Isn’t this rather an important story?

          Like

  42. Ah, got it. My bad.

    Like

  43. @ScottC: “To be consistent, he should argue either that no marriage should be recognized by the state,”

    This. Arguably, any marriage should be recognized by the state where necessary, as a contract between two people, I suppose. But otherwise there should be no issue who is married to whom, because the state offers no special benefits or exacts special penalties for a marriage contract between two people.

    Like

  44. @Scottc1: “Um…portions of six others? Doesn’t that prove that the e-mails were not just overlooked (a possible but dubious explanation for the 9 totally missing e-mails) but were in fact known and edited before handing them over? Isn’t this rather an important story?”

    Silly bagger! Trix are for kids! And investigative reporting and sounding the alarm is for conservatives.

    Like

  45. @Scottc1: “If all people who commit felonies are denied the right to vote, then yes, all people are being treated the same. However, if felons who make less than $50k per year are denied the right to vote only half the time, while felons who make more than $50k are denied the right to vote all of the time, then that too would be a clear violation of equal protection.”

    My point was that the dispute would be about what constitutes equal treatment, I would think. In this case, since everybody in the same circumstance is treated equally (all people at the same income are charged the same rate), it is considered equal treatment, whether it’s equal in a more universal sense or not, and I would expect it to be adjudicated thusly. Others would argue that it has to be in some way identical treatment for all people regardless of circumstance to be truly equal. Such an argument would also lead, IMHO, the conclusion that felons should have the right to vote, due to the universality of equal protection.

    I am dubious of the value of the 14th amendment in the present day. I do not think all people in all circumstance need or require identical protections, or should be treated identically. Should we have a draft again, I don’t want the disabled or infirm or elderly drafted under some notion of universal equality. Seems a poor rational for the normalization of gay marriage (which should have been federal legislation, if we’re going to have to have the federal government’s blessing).

    Like

    • KW:

      In this case, since everybody in the same circumstance is treated equally (all people at the same income are charged the same rate), it is considered equal treatment

      I understand, but again the equal protection clause does not say “equal protection for people with equal incomes”. Just as it doesn’t say “equal protection for people the same skin color”. If the equal protection clause prevents disparate income tax rates based on skin color, why wouldn’t it prevents disparate income tax rates based on income, too? Or literally any other difference in individuals?

      Such an argument would also lead, IMHO, the conclusion that felons should have the right to vote, due to the universality of equal protection.

      There is no reason to think that applying laws equally to all people would prevent the government from punishing criminals. It would, presumably, prevent them from mandating different punishments for the exact same crime, based on the income level of the criminal.

      Should we have a draft again…

      We shouldn’t.

      Like

  46. Gays can get “married” whenever and wherever they want, if they can find someone willing to perform one. No one will go to jail for performing one or participating in one. The state simply won’t recognize it for the purposes of state law.

    This is almost as silly a statement as yours that gays can marry anyone they want to, as long as they’re the opposite sex.

    Like

    • Mich:

      This is almost as silly a statement as yours that gays can marry anyone they want to, as long as they’re the opposite sex.

      Care to elaborate, or do you remain content to play the part of a peanut gallery heckler?

      Like

      • Care to elaborate, or do you remain content to play the part of a peanut gallery heckler?

        I gotta be on Michi’s side here. It’s a pretty bizarre legal theory that the Equal Protection Clause invalidates progressive tax rates (and please don’t elaborate again, I understand what you are saying, just not why).

        Is this your own private brainstorm or is there a deeply subterranean school of thought advancing this concept? Because a lot of ideas I thought were completely whacko seem to becoming more and more mainstream.

        Like

        • yello:

          It’s a pretty bizarre legal theory that the Equal Protection Clause invalidates progressive tax rates (and please don’t elaborate again, I understand what you are saying, just not why).

          The progressive notion of a “bizarre” legal theory is one which results in something he doesn’t like. It would be somewhat a breath of fresh air if progressives would stop pretending that they think the law and especially the constitution have any objective meaning at all, or that it was meaningful beyond its utility as a tool to advance political agendas.

          In any event, if you understood what I am saying, you would know why I am saying it, even if you thought I was wrong for some reason.

          Is this your own private brainstorm…

          I haven’t read about it anywhere else, but I doubt it is an original idea.

          Because a lot of ideas I thought were completely whacko seem to becoming more and more mainstream.

          I know exactly what you mean.

          Like

        • I was right…it is not an original idea.

          Not that surprising since, if one reads the constitution for what it says, rather than in the context of what SCOTUS has always allowed and told us it says, then the case becomes pretty obvious.

          Like

        • This is from Wikipedia:

          Another argument raised is that because the federal income tax is progressive, the discriminations and inequalities created by the tax should render the tax unconstitutional under the 14th Amendment, which guarantees equal protection under the law. Such arguments have been ruled without merit under contemporary jurisprudence.

          Heh. A simple declaration that it is “without merit” should come with a parenthetical, (dismissed without reason.) That pretty much sums up the objections to the argument that I have come across whenever I bring it up. “That’s crazy” and then….crickets.

          Like

        • Has anyone argued that state universities cannot accept based on “merit”, but must take all comers limited only by first come first serve? Or not so limited?

          What about discriminations in the Tax Code NOT based on its attempted progressivity?

          Remember, JNC’s flat tax is more progressive in practice than our current system, and Adam Smith’s was even more so. I love the simplicity of Adam Smith’s flat tax, as I have said many times, and all of us here have agreed that consumption taxes are probably preferable, so we are not truly having to reargue taxation again.

          I, and Kev, presumably, just wonder how in hell equal protection works without rational basis distinctions.

          Like

        • Mark:

          Has anyone argued that state universities cannot accept based on “merit”, but must take all comers limited only by first come first serve?

          Not sure, but what would that have to do with equal protection? As long as the government didn’t impede anyone’s chances of attaining the needed “merit” scores, and allowed everyone to apply under equal terms, I have no idea what argument you are thinking of.

          What about discriminations in the Tax Code NOT based on its attempted progressivity?

          I am quite sure that the tax code is a veritable fount of violations of equal protection. Definitely not limited to its progressivity.

          Remember, JNC’s flat tax is more progressive in practice than our current system,

          Huh? How do you figure that?

          all of us here have agreed that consumption taxes are probably preferable, so we are not truly having to reargue taxation again.

          You and I have, and maybe jnc. I suspect “all” is a significant overstatement. yello?

          Besides, we aren’t arguing about which is the best or proper taxation system. We are arguing about the constitutionality of a particular one. Or at least I am. Others seem to want to avoid the actual arguments.

          I, and Kev, presumably, just wonder how in hell equal protection works without rational basis distinctions.

          The fact that strictly applying equal protection won’t allow the government to do a lot of things you want it to do doesn’t mean it doesn’t “work”.

          Like

        • Huh? How do you figure that?

          JNC does away with all classes of income and all non-business deductions. No CG, no qualified dividends, no carried interest, no charitable deductions, etc. Hedge fund guys and investors pay like doctors. All of us pay like doctors. Maybe no tax free munis – I don’t recall.

          It actually destroys the regressive tax in practice at the top end.

          Like

        • Mark:

          It actually destroys the regressive tax in practice at the top end.

          Please. The fact that some high earners use tax strategies to pay a relatively low tax rate on some of their income does not render our tax code to be “regressive”.

          The main tax strategy used by the high, high end of income earners, like the reviled hedge fund managers, to lower their taxes is to convert their income into long term capital gains. But the long term capital gains rate for the highest bracket, while nearly 20% below the ordinary income tax for the highest bracket, is still 20%, which is above the effective tax rate paid by 90% of income tax filers.

          Note that whatever tax shenanigans people may play, the effective federal tax rate, inclusive of even the capped out payroll tax, paid by every single quintile of income earners is higher than the quintile below it. Note also that even among the highest quintile, the effective tax rate of the top .1% is higher than the top 1%, which is higher than the top 5%, which is higher than the next 5%, which is higher than the next 10%.

          Might you be able to find anecdotal evidence of high income earners who have managed to pay little or no taxes? Sure, you probably can. But while it may fit in nicely with our Orwellian times (men are women, exchanges not established by a state are exchanges established by a state, treating people differently under the law is providing them with equal protection) along with populist demagoguery that wishes to demonize the wealthy, to characterize the federal tax system, whether just at the “top end” or as a general matter, as “regressive” is just plain wrong.

          BTW, you should probably know that most of the deductions that jnc’s plan (which I would sign onto in a second) would get rid of are not used by high income earners. Why? Because the tax code phases them out as income increases. Yet another way in which the tax code imposes progressivity – or in other words unequal treatment – through the tax code.

          Like

        • BTW Mark, I was thinking about it a bit more this morning, and isn’t your appeal to the “rational basis” argument with regard to progressive income taxes and the equal protection clause actually an implicit acknowledgement that the treatment is in fact unequal by definition? It seems to me that to dismiss an equal protection claim on “rational basis” grounds is basically just a “yes, but….” argument. Yes it is unequal treatment, but there is a “rational” reason for it, so it should be allowed. If the treatment was in fact equal, it wouldn’t need to be justified (for equal protection purposes) by any reason at all.

          Like

        • OK, Scott, I will accept your numbers.

          Like

  47. nah. legal recognition of a marriage isn’t a right. it’s a benefit. i can’t see how something can be a right if a change in an administrate law can amend and/or eliminate it.

    Like

  48. Paging Fox Butterfield!

    Like

  49. Well, state universities are state issues, no? And doesn’t EqualProtection mean it’s applied, er, equally?

    Like

  50. do you remain content to play the part of a peanut gallery heckler?

    That may be the nicest thing you’ve ever called me! 🙂

    Like

  51. Absolutely accurate left wing view of the institution of government power?

    onservatives might be tempted to think that the Republican-appointed justices disagree so often, and write so frequently, because they take the law seriously while the liberals care only about pleasing the party base. If this is true, however, conservatives might wonder whether they are being well served by their justices. Our society has assigned legislative power to the Supreme Court, authorizing it to settle the hardest political questions by fiat. Gay marriage and Obamacare are now unshakable political facts in America, and will remain so long after the jurisprudential debates among the conservatives have been forgotten.

    http://www.slate.com/articles/news_and_politics/view_from_chicago/2015/06/supreme_court_conservatives_disagreements_make_the_court_more_liberal.2.html

    Like

    • McWing:

      Absolutely accurate left wing view of the institution of government power?

      Interesting if we’ve descended so far that the left doesn’t even feel the need to even pretend anymore that its judges are making legal, not political, decisions. A refreshing change of pace from the usual charade in some ways, but still depressing.

      Like

  52. @ScottC1: “Interesting if we’ve descended so far that the left doesn’t even feel the need to even pretend anymore that its judges are making legal, not political, decisions. A refreshing change of pace from the usual charade in some ways, but still depressing.”

    I think it’s clear that the charade is minimal, and it’s setting the future tone for the court. I feel like Clarence Thomas views the court as a strictly legal body (I know, nobody left-of-center would accept that) but everybody else on the court sees it as a political body, another way to accomplish desirable goals rather than an arbiter of final interpretation, except on those few cases that come before them that have no political dimension whatsoever.

    I still think there will be assertions that whatever latest purely political decision was one of interpretation, with the argument that such broad discovery of things not encapsulated in the language of constitution or law, will still be made. But most outside of the court and/or elected office seem to be pretty candid about viewing the court as a political body there to accomplish political and policy goals.

    Like

    • KW:

      But most outside of the court and/or elected office seem to be pretty candid about viewing the court as a political body there to accomplish political and policy goals.

      Not much of the commentary post Obergefell made any such acknowledgement from what I could see. That Slate article is pretty much the only one I have seen. The view of the progressive commentariat, from amateurs like those at ATiM to the professionals at the NYT, are maintaining the charade that the decision was a fine, even self-evident, application of constitutional principles. Candid is definitely not a word I would use for their characterization of the role the court now plays.

      Like

  53. @gbowden41: “Our society has assigned legislative power to the Supreme Court, authorizing it to settle the hardest political questions by fiat. Gay marriage and Obamacare are now unshakable political facts in America, and will remain so long after the jurisprudential debates among the conservatives have been forgotten.”

    The problems with that are: A: our society did not assign legislative power to the Supreme Court to settle the “hardest” political questions by fiat. They’ve just claimed it, and been feted for making the right decisions in the best social circles, Gay marriage and Obamacare are not now unshakable political facts, as what the Court can make the court can clearly unmake, although they idea that we are stuck with them forever is probably true.

    That being said, huge government involvement in healthcare does seem inevitable. The court is just a tool for adding a veneer of officially to the culturally inevitable. They are sort of notaries to officially document that this is where society was headed anyway. I suppose they are sort of used like a cheat code in a video game to shortcut what otherwise would have taken much longer but been accomplished anyway. Which is not an endorsement of this method: gay marriage should likely have been, as it had become a contentious political issue, decided as a matter of law in congress . . . or at least give us an executive order!

    Even with the supposed Imperial Presidency, it seems to me that the 9 justices of the SCOTUS are actually the Imperial Council, legislating by fiat and issuing more binding executive orders that can contravene traditional legislation with little recourse.

    I feel like, ideally, if the court routinely misinterpreted the law and the constitution, the legislative bodies could pass new laws that clarify and specify, but the court has been given the power to make those laws “unconstitutional” by fiat. Thus granting the SCOTUS the king-like powers our founding fathers were laboring so hard to deprive the office of the president of having.

    Like

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