Archive for May, 2011

The True Powers of the TSA

The_True_Powers_of_the_TSA <== PDF version

The Texas House of Representatives unanimously passed a resolution (HB 1937), which, if it became law, would have required the Transportation Safety Administration to establish probable cause before performing groping searches on travelers passing through airport security.  HB 1937 would have made it a felony in the state of Texas “for security personnel to touch a person’s private areas without probable cause as a condition of travel or as a condition of entry into a public place.”

U. S. Attorney John E. Murphy responded with a letter to state officials, which read in part (he incorrectly referred to the bill as HB 137 instead of HB 1937):

“HB 137 would conflict directly with federal law. The practical import of the bill is that it would threaten criminal prosecution of Transportation Security Administration personnel who carry out the security procedures required under federal statutes and TSA regulations passed to implement those statutes. Those officials cannot be put to the choice of risking criminal prosecution or carrying out their federal duties. Under the Supremacy Cause of the United States Constitution, Texas has no authority to regulate federal agents and employees in the performance of their federal duties or to pass a statute that conflicts with federal law.

“If HR 1937 were enacted, the federal government would likely seek an emergency stay of the statute. Unless or until such a stay were granted, TSA would likely be required to cancel any flight or series of flights for which it could not ensure the safety of passengers and crew.”

When presented in the Texas Senate, the Senate promptly responded to the federal threat to shut down air travel out of Texas by pulling the bill.  The federal government won that battle without a fight.  The important thing for us however, is not how this episode played out, but what powers U. S. Attorney Murphy is claiming in his letter.

First, he is saying that any law passed by Congress automatically supersedes any state law.  The Supremacy Clause (U. S. Constitution, Article VI) states:

“This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, any thing in the constitution or laws of any state to the contrary notwithstanding.”

It is surprising indeed that a U. S. Attorney regards the fondling of airline passengers a legitimate power given to the federal government.

Secondly, he is implicitly claiming that every federal official can commit any violation of any state law so long as he does so in the course of his official duties, and as long as such actions are permitted under a federal law.  (Groping is already illegal in Texas.)  One wonders when that arbitrary power will be extended to all federal employees, whether on duty or not.

Here is a test for the lawmakers in Texas and every other state.  There is no requirement in the federal or any state constitution that requires states to permit federal officials to enter a state-owned building.  It would be a useful experiment for Texas to pass a law requiring all federal officials, and anyone representing a federal agency, to pass through an airport-type metal detector/secondary screening process before being granted entry into any state facility, “in order to ensure the safety of the citizens of Texas.”

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On Tax Subsidies for Oil Companies

On Tax Subsidies for Oil Companies <== PDF version

The U. S. Senate voted on 17 May 2011 against a bill that would have abolished about $20 billion over the next ten years in various tax subsidies to the major U. S. oil companies.  Most of the Democrats favored ending these subsidies, but the bill failed 52-48.

There was a hearing before the Senate on 12 May, in which politicians berated several oil company executives, ostensibly for reporting large profits in the last quarter.  Exxon-Mobil, for example, posted a quarterly profit of approximately $11 billion.  The politicians get away with this nearly-annual grandstanding because $11 billion is a lot of money, and oil companies are easy targets for those looking to score easy points with the public.  After all, the public is not particularly pleased with the price of gasoline at about $3.85 per gallon of regular.  But as usual, in all this posturing, most of the facts about the price of gasoline are left out.  It turns out that a significant fraction of the price paid at the pump is actually federal and state excise taxes.  While the federal excise tax is about 18 cents per gallon (14 cents for the ethanol mixed types), the amount of state excise tax varies by state from 26 cents per gallon in Alaska to 66 cents per gallon in California.  Here is the approximate breakdown of the components that go into a price of a gallon of gas at today’s prices, using a median value of 48 cents per gallon for state excise taxes.

63.5%: the total price of crude oil, including exploration, leases, research and development, production, logistics, royalties, and income taxes on gross profit

12.5%: federal and state excise taxes

8%: transportation (from mining site to refinery, andrefinery to gas station)

9%: refining crude into gasoline (or diesel)

0.5%: gross profit to retailer (out of which he must pay his income taxes)

6.5%: net profit to oil company

We see here that the total taxes imposed by the federal and state governments exceed by a margin of about 2:1 the profit to the oil companies.  Likewise, the oil companies have considerable expenses: they have to pay for the leases, and then the royalties; then they pay income taxes on the gross profit, all of which is of course built into the price of the raw material.

Keep in mind that the U. S. consumption of gasoline is about 140 billion (140,000,000,000) gallons of gasoline per year.  When you think of it, this is a lot of work.  The oil companies and the others in the supply chain have to locate it, drill it, transport it in special ships or pipelines, refine it, then store it and ship it again in special containers.  If gas is $4.00 at the pump, the oil company net profit is about 26 cents.  But it comes to seemingly big oil company profits; 26 cents on 140 billion gallons is $36 billion annual (on sales of gasoline alone).

Senator Harry Reid admitted that repealing these $4 billion annual subsidies will have little short term affect on the price of gas, which seems certain.  It seems to me that these tax subsidies should be repealed, but not out of envy at oil company success or some nebulous populist sentiment that the Democrats continue to advance.  I favor a repeal of these simply because in the long run, they serve to distort the true price of a gallon of gas.  First, they no doubt come with a long series of conditions and regulations, which may serve to distort the priorities of the oil companies.  It is no secret that many decisions are made with a view to how a corporation’s tax position will be affected, even if those decisions are contrary to what is in the long-term business interest.  If the long-term interest of the oil companies is to provide reliable energy at a sustainable profit, it seems that the interest of the people coincides with the oil companies, since a profitable economy depends on energy. Second, a general support by the taxpayer distorts the true return on investment; it may affect the allocation of research and development, which in turn may cause the oil companies, experienced in many aspects of energy production, from developing alternates.  Third, these subsidies politicize the basic function of capitalism; if the taxpayers end up subsidizing corporations, their representatives (Congress) will assume powers to inordinately regulate their businesses; I refer to the political game of what public leases can and cannot be developed.  It is not certain that such meddling benefits the taxpayer (witness the present price of gas).  Last, I am opposed to any corporation using its influence to weasel special favors from the politicians at taxpayer expense; why should a corporation receive welfare payments from the taxpayer?  But I make this statement in general for all corporations, not just the oil companies.

I mentioned “grandstanding” earlier, and now I give an example.  At one point in the 12 May 2011 hearings, Senator Jay Rockefeller told the oil company executives that they were “out of touch”: that although they were “good people”, flying around on Lear jets and the like resulted in those oil executives becoming too isolated from the sentiments of his constituents, namely the average folk of West Virginia.  This is a rather odd charge from the great-grandson of John Rockefeller of Standard Oil fame.  But in his defense, at least he did not accuse the oil company executives of engaging in every kind of corrupt practice and driving all the honest competitors out of business the way his great-grandfather did.

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On the General Welfare Clause

On the General Welfare Clause <== PDF version

Mr. Mike Wallace of Fox News interviewed Representative Ron Paul of Texas on 15 May 2011.  In the course of the interview, the topic of the meaning of the “general welfare” clause of the U. S. Constitution came up.  Mr. Paul’s view was that the Constitution did not grant the government to do anything it  wanted under a justification of “general welfare”.  Mr. Wallace cited the 1937 Supreme Court case “Helvering v. David”, which ruled that Social Security was permitted under the powers of Congress called out in Article 1 Section 8 of the U. S. Constitution.  By extension, therefore, in Mr. Wallace’s view, the Supreme Court has ruled that Congress may pass laws it claims to further the “general welfare”.  Mr. Wallace did not explain how payments to individuals, that is, laws that promote “individual welfare”, can actually be the same as “general welfare”.

What is the true meaning of the “general welfare” clause?  It appears in two places in the Constitution: a) the Preamble, and b) Article 1, Section 8.  The Preamble reads:

“We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”

Article 1, Section 8 reads: “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States”; whereupon follows 17 clauses calling out a list of specific enumerated powers granted to Congress.

To see the intent of the founding fathers, it is necessary only to review three passages of the Federalist Papers.  The first is Federalist #23, in which Hamilton refers back to the Articles of Confederation, where the phrase “general welfare” was first used.  He is discussing the principle that powers must be granted to governments commensurate with the ends desired, as follows:

Defective as the present Confederation has been proved to be, this principle appears to have been fully recognized by the framers of it; though they have not made proper or adequate provision for its exercise.  Congress have an unlimited discretion to make requisitions of men and money; to govern the army and navy; to direct their operations.  As their requisitions are made constitutionally binding upon the States, who are in fact under the most solemn obligations to furnish the supplies required of them, the intention evidently was that the United States should command whatever resources were by them judged requisite to the “common defense and general welfare.”  It was presumed that a sense of their true interests, and a regard to the dictates of good faith, would be found sufficient pledges for the punctual performance of the duty of the members to the federal head.

It is important to recall that the purpose of the Articles of Confederation was to manage the war effort against Great Britain.  Therefore, in the Federalist #23, Hamilton asserts that the general welfare consisted of maintaining that war effort.  His complaint here is that Congress under the Articles was too weak to force the states to uphold their end of the financial obligation.

The Constitution was formed as a union of the states into a system that is partly national and partly federal.  The powers granted to the government were greater than were granted by the Articles, in order to meet the needs of a compact union; i.e., to ensure that the union of the states functioned as a true nation, not as simply a federation.  In other words, the government under Constitution would have greater powers to promote the general welfare than the Articles which it replaced.  James Madison explained what these powers of “general welfare” are in the Federalist #41, as follows:

“Some, who have not denied the necessity of the power of taxation, have grounded a very fierce attack against the Constitution, on the language in which it is defined.  It has been urged and echoed, that the power “to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States,” amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare.  No stronger proof could be given of the distress under which these writers labor for objections, than their stooping to such a misconstruction.

Had no other enumeration or definition of the powers of the Congress been found in the Constitution, than the general expressions just cited, the authors of the objection might have had some color for it; though it would have been difficult to find a reason for so awkward a form of describing an authority to legislate in all possible cases.  A power to destroy the freedom of the press, the trial by jury, or even to regulate the course of descents, or the forms of conveyances, must be very singularly expressed by the terms “to raise money for the general welfare.”

But what color can the objection have, when a specification of the objects alluded to by these general terms immediately follows, and is not even separated by a longer pause than a semicolon?  If the different parts of the same instrument ought to be so expounded, as to give meaning to every part which will bear it, shall one part of the same sentence be excluded altogether from a share in the meaning; and shall the more doubtful and indefinite terms be retained in their full extent, and the clear and precise expressions be denied any signification whatsoever?  For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power?  Nothing is more natural nor common than first to use a general phrase, and then to explain and qualify it by a recital of particulars.  But the idea of an enumeration of particulars which neither explain nor qualify the general meaning, and can have no other effect than to confound and mislead, is an absurdity, which, as we are reduced to the dilemma of charging either on the authors of the objection or on the authors of the Constitution, we must take the liberty of supposing, had not its origin with the latter.”

It is obvious therefore, that the powers conveyed to Congress for the purposes of common defense and general welfare are the enumerated powers listed in the 17 clauses immediately following the main heading of Article 1, Section 8.  If you look them up, no where will you find anything resembling the “social programs” currently in force at the federal level.

Last, Hamilton alludes to this principle briefly in the Federalist #62, as follows:

A good government implies two things: first, fidelity to the object of government, which is the happiness of the people; secondly, a knowledge of the means by which that object can be best attained.  Some governments are deficient in both these qualities; most governments are deficient in the first.  I scruple not to assert, that in American governments too little attention has been paid to the last.  The federal Constitution avoids this error; and what merits particular notice, it provides for the last in a mode which increases the security for the first.

Here we see from his last sentence that the U. S. Constitution provides the means, that is, the legitimate powers, by which the happiness of the people is to be secured, which is the object of government.  Since all legislative power is vested in the Congress per Article 1, Section 1, it seems that Hamilton is referring to the same list of powers as contained in Article 1, Section 8.  He also mentions “knowledge of the means by which that object can be best obtained”.   He was discussing the Senate in the Federalist #62; but here is a case where all of us would do well to examine the powers granted in Article 1, Section 8 so we can see for ourselves the legitimate powers of government conducive to liberty, security, and the general welfare.

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On Unprivileged Enemy Belligerents

On Unprivileged Enemy Belligerents <== PDF version

The U. S. Senate has now before it S. 3081, “The Enemy Belligerent Interrogation, Detention, and Prosecution Act of 2010″, which would allow the President to assign a certain designation to persons, and thereby authorize they be detained indefinitely without trial.  The provision reads, in part:

An individual, including a citizen of the United States, determined to be an unprivileged enemy belligerent under section 3(c)(2) in a manner which satisfies Article 5 of the Geneva Convention Relative to the Treatment of Prisoners of war may be detained without criminal charges and without trial for the duration of hostilities against the United States or its coalition partners in which the individual has engaged, or which the individual has purposely and materially supported, consistent with the law of war and any authorization for the use of military force provided by Congress pertaining to such hostilities.

The aforementioned section 3(c)(2) reads:

FINAL DETERMINATION- As soon as possible after receipt of a preliminary determination of status with respect to a high-value detainee under paragraph (1), the Secretary of Defense and the Attorney General shall jointly submit to the President and to the appropriate committees of Congress a final determination whether or not the detainee is an unprivileged enemy belligerent for purposes of this Act. In the event of a disagreement between the Secretary of Defense and the Attorney General, the President shall make the final determination.

It was sponsored by Senators McCain, Lieberman, Inhofe, Brown, Wicker, Chambliss, LeMieux, Sessions, and Vitter.

Some critics of the provision have opposed it on the grounds that it violates the fifth and sixth Amendments to the U. S. Constitution.  Actually, it is worse than that: it violates the entire spirit of the Constitution; it violates the Constitution even if the fifth and sixth Amendments had never been passed.

Article 1, Section 9 of the U. S. Constitution, which defines the general powers of the Congress (which possess all legislative powers under the Constitution), reads: “The privilege of the writ of habeas corpus shall not be suspended, unless when in cases of actual rebellion or invasion the public safety may require it.”

Alexander Hamilton, defending the proposed Constitution in The Federalist # 84, which as proposed, did not contain a bill of rights, addressed the importance of the habeas corpus provision.  He notes the provision of habeas corpus, the prohibition on ex post facto laws, and the prohibitions upon conveying titles of nobility in the proposed federal Constitution and points out the lack thereof in the constitution of the state of New York.  He then proceeds to quote from the famous English jurist William Blackstone the underlying importance of the habeas corpus provision.  Hamilton wrote:

“It may well be a question, whether these are not, upon the whole, of equal importance with any which are to be found in the constitution of this State. The establishment of the writ of habeas corpus, the prohibition of ex-post-facto laws, and of TITLES OF NOBILITY, to which we have no corresponding provision in our Constitution, are perhaps greater securities to liberty and republicanism than any it contains.  The creation of crimes after the commission of the fact, or, in other words, the subjecting of men to punishment for things which, when they were done, were breaches of no law, and the practice of arbitrary imprisonments, have been, in all ages, the favorite and most formidable instruments of tyranny. The observations of the judicious Blackstone, in reference to the latter, are well worthy of recital: “To bereave a man of life, [says he,] or by violence to confiscate his estate, without accusation or trial, would be so gross and notorious an act of despotism, as must at once convey the alarm of tyranny throughout the whole nation; but confinement of the person, by secretly hurrying him to jail, where his sufferings are unknown or forgotten, is a less public, a less striking, and therefore a more dangerous engine of arbitrary government.”  And as a remedy for this fatal evil he is everywhere peculiarly emphatical in his encomiums on the habeas-corpus act, which in one place he calls “the BULWARK of the British Constitution.”

If this proposal becomes law, we will have two classes of citizens: the privileged, for whom the writ of habeas corpus still prevails, and the rest of the people, who may be spirited off to jail for the duration of hostilities because some bureaucrat somewhere has convinced the President that doing so aids in the prosecution of hostilities.

It used to be that even traitorous lowlifes got their day in court.  They were vigorously tried based on evidence; a jury decided their guilt or innocence in a fair trial; and they were honorably shot or hanged if convicted. But that process appears to be too much of an inconvenience to the government in these modern times.  So, we see the continual attempts to encroach upon not just the liberty of individuals, but to encroach upon the basic tenets of limited government — that is, a free society.

A supporter of S. 3081 may claim that the cases are different; that the designation of enemy belligerents does not fall under the “arbitrary imprisonments” that Blackstone rightfully complains of, since S. 3081 requires a formal designation by the President. But I say they are exactly the type discussed by Blackstone.  If a medieval English king ordered someone to
be sent to the Tower, did he not first designate that victim by name under some rationale?  Of course – how else would the police know who to arrest, and thus satisfy the tyrant?  The process here is exactly the same, and should be rejected for the same reasons.

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