Wednesday, April 28, 2010

Wall Street v. Elm Street

Critics of Congress and the Bush and Obama Administrations want to say that they have favored Wall Street over Main Street with the bank bailouts and loans. The critics have it wrong. The real conflict is favoring Wall Street over Elm Street. Elm Street are the home owners, the workers, the retirees, and all of the other people who have seen their lives, homes, jobs, and retirement dreams destroyed by Wall Street bankers, investment houses, and brokers who gambled with their money and lost. Residents on Elm Street saw trillions spent to help Wall Street, while they were neglected. Now they see the CEOS raking in bonuses and Wall Street making billions, yet little has been done to help them directly.

Three problems directly hurt the residents of Elm Street.

The first problem is an official unemployment rate of 9.7%, with estimates of underemployment hovering at 18%. It is unlikely the 9.7% figure will change much as the economy grows. The reason for this is that all indications are that the recovery might be a jobless one. Companies have improved efficiencies and reduced staff to maintain profits. Unless there is a surprising increase in consumer demand, there is little indication that re-employment will occur in significant numbers. Moreover, as economic capacity increases, new individuals will enter the workforce with the hope of finding work. The result is that high unemployment numbers are probably a feature for the foreseeable future. Finally, because of the high unemployment rate, real wages and income are also unlikely to increase in the near future, again thereby depressing consumer demand.

Elm Street residents are unemployed and if lucky to find a job, are not gaining in income.

The second problem facing Elm Street is the enormous federal budget deficit. The classic Keynesian solution to addressing high unemployment is to stimulate economic demand in the economy. This would necessitate short term deficit spending. However, the bank bailouts and previous stimulus bills have driven the federal deficit to over $1 trillion. Predictions that slow economic growth will persist suggest that mere growth out of the deficit will not occur in the short run. What this means is that the ability of the government to sustain long term deficits without running into dangers of inflation, higher bond rates (to encourage investors to purchase USA debt), or downgraded credit ratings (as just happened with Greece and Portugal) is in doubt. There is a need to reduce the debt, but that also runs the risk of hurting economic growth before the economy is sustainable.

Residents on Elm Street know the debt is unsustainable and worry that they are being asked to pick up the price to stimulate an economy not working for their benefit.

The third problem on Elm Street remains the depressed mortgage and real estate markets. The main reason for the economy tanking in 2008 was the collapse of the real estate mortgage market. Perhaps this collapse is the result of the bursting of the housing bubble, subprime mortgage speculation, or fraud and risky financing by Goldman Sachs and other companies. But whatever the reason, when the housing market crashed so did housing prices. Home owners lost trillions in home equity, and it also threw many into default, including the banks and other institutions that financed or collateralized the mortgages.

Residents on Elm Street are losing their homes.

Over the last two years residents on Elm Street have been ignored, and that is why they are angry, manifesting that ire in Tea parties and anti-incumbent fever. As I have argued consistently for the last two years, the biggest mistake of the Bush and Obama administrations was to bail out the banks and not directly seek to prop up the residential housing market. We would have been far better off spending the first $150 billion stimulus in 2008 on helping home owners than in giving general rebate checks that did little to help the economy. Similarly, the $700 TARP should have been directed towards halting foreclosures as opposed to bailing out banks. The bank bailout rewarded those who caused the problems and it did not correct the underlying economic problems driving the bank failures. During the second 2008 presidential debate in October, McCain almost understood this when he suggested that TARP should have been spent to keep owners in their homes. This was the right answer but McCain never returned to this theme. Finally, some of the Obama stimulus bill in 2009 should have also been directed towards helping homeowners.

Think about a twofold policy that should have been adopted. First, I would have taken an idea that Hilary Clinton proposed during the 2008 campaign–adopt a 90 day moratorium on home foreclosures–and extended it to one year. We are better off keeping people in their homes, making sure that more houses are not dumped on the market, further depressing prices. Second, I would have taken the TARP money to help rewrite many loans so that they would be at lower interest rates. In fact, the government should have directly subsidized many of the loans to reduce them to zero or near zero interest. If the Federal Reserve Bank can loan money to banks at near zero interest it should also do the same for homeowners. Reducing the rates would have helped many owners stay in their homes. But TARP and other money could have also been used to help refinance homes whose value had fallen. In cases it makes sense to do the refinancing, others not, but again this refinancing would have helped stabilize the housing market, thereby also addressing some of the underlying losses banks are now facing.

My point in discussing the above is that helping Wall and not Elm Street was the road not taken. It was helping Wall Street and abandoning not so much Main Street as it was Elm Street. The government simply directed its resources in the wrong direction and while Wall Street is happy, residents on Elm Street are not.

Moving forward, the task for Congress and the president is more than simply regulating banks. Yes this is needed. But it is also doing something significant for Elm Street. It is not too late to address foreclosures, unemployment, and the huge federal debt. But to do that may mean asking the residents on Wall Street to pay for the damage they did to those living on Elm Street.

Monday, April 26, 2010

One Convention Down, One to Go

The Postmortem on the DFL Convention

With the Minnesota DFL (Democratic) convention done but the nomination far from a done deal, it is time to offer a few thoughts on it.

As suggested in the last blog the convention was a brokered one. It was brokered in the sense that the first vote did not produce a nominee and instead, one had to look to the minor candidates to see where they asked their delegates and supporters to go. Perhaps the critical point in the convention came with John Marty asked his delegates to support Kelliher in exchange for her commitment to push for single payer health care within two years of being elected. His switch, along with Rukavina’s, seemed critical to bringing the endorsement over to the Speaker. What resulted then was that the Convention was an insider’s event that favored established party players such as Kelliher over outsiders such as Rybak. As described last week, the battle between Rybak and Kelliher was a replay of Obama and Clinton, only this time the battleground favored the inside player and not the outsider.

But the convention may be meaningless. Ultimately, the August 10, primary is critical. Here Anderson faces the big money and name recognition of Mark Dayton and Matt Entenza. DFL convention-endorsed candidates have a mixed record of success in primaries, and the same will be true again this year. An early primary when fewer individuals are paying attention, the role of big money, the inability of Kelliher to raise much money compared to Dayton and Entenza, and the remaining days of the legislative session may all make life difficult for Kelliher.

Previewing the MN Republican Convention

Now the Minnesota Republicans take the stage. They have a choice between Tom Emmer and Marty Seifert. Both candidates have pledged to honor the convention endorsement, meaning that by the beginning of May the GOP can unite behind one candidate, raise money, hone a message, and narrative, and wait for the DFL to hold a primary. All of these factors give the Republicans significant advantages over the DFL candidate.

But more importantly, one looks to see what the GOP will do to Kelliher in the remaining weeks of the Minnesota Legislative session. As speaker, Kelliher is both the face of the legislature and of the DFL. In the last couple of years the GOP and Governor Pawlenty have made life difficult for her and she has not done well with negotiations on the budget. Pawlenty’s $2.7 unallotment in 2009 was in part a result of the governor outmaneuvering Kelliher. Look to see little cooperation among the GOP and governor between now and the end of the session. There are many incentives for Pawlenty not to cooperate with the DFL, painting Kelliher into a box that makes her look weak and ineffective. Kelliher wants to run on the theme of leadership. Look to see the GOP try to make her look weak and not like a leader.

The real question now is how hard should the Republicans go after her. The GOP really wants her as the candidate to face in November as it will be easy to blame her, the leader of the legislature, for all types of problems. Should the Republicans go after her now and bring her down by August 10, and thereby face the prospect of a stronger candidate, or hold off until after then, hope she wins the primary, and then go after her? My guess is they will make life hard for her in the remaining weeks of the session but then hope she survives August 10.

One lesson the Republicans should have learned from the attacks on Franken in 2008: Don’t unleash the attacks too soon otherwise by the time of the general election the voters will not care any more. In 2008 Coleman slung the mud early and by October there was nothing left to say. The impact of the early attacks wore off, Franken had time to respond, and then he made an effective counterattack that was fresh.

Monday, April 19, 2010

Handicapping the DFL Convention

The Minnesota DFL convention is only a few days away. The convention is both big news and perhaps irrelevant at the same time. Big news because it will decide for now who gets the endorsement, irrelevant because there will be a August 10 primary that does not necessarily favor the endorsed candidate.

Let us look at the convention and handicap it. It appears to be the mayor versus the speaker, Mayor RT Rybak of Minneapolis versus Speaker of House Margaret Anderson Kelliher. The caucuses produced a virtual tie between the two and all indications are the two are also tied this week. However, each brings to the convention certain advantages.

Kelliher brings an enormous array of endorsements and favors due to her because of her role as speaker. She is the insider’s candidate. With no clear front runner, look to see how her insider status helps her at the convention.

Rybak is somewhat the outsider. He does not have the same number of insider connections but he has done well in terms of getting convention delegates out and he has the excitement of his supporters. Passion is always important and the passion is there for him.

I see parallels between Rybak and Kelliher that remind my of the Obama/Clinton contest in 2008. Rybak was the Obama person in Minnesota and both come from community organizer backgrounds. Both are bringing these skills to their campaigns and are taking on the insider candidate Kelliher/ Clinton. Clinton did well among party leaders and traditional conventions or primaries, Obama did better with caucuses. One wonders if the same will occur here. Rybak did well in the caucuses but the convention is the place where the real insiders often thrive. The convention has the superdelegates and elected officials, not just the caucus attendees.

This mixture should favor Kelliher. However, one also wonders how many of the Kelliher endorsements reflect real passion for her versus groups and people feeling that must support her because she is speaker? Similarly, can Rybak translate passion into convention mobilization and convince delegates he can win in November? Both candidates need to move super delegates in their direction, but how?

I think the convention will be marked by several ballots and the outcome will be determined by several factors. One will be to look to the role that other DFL candidates have at the convention. Who will they eventually support and what role will they encourage their supporters to take? Second, look to see the role the super delegates play. They will be moved by the candidate speeches and the enthusiasm they generate. Finally, the concept of picking a winner will be on the minds of many. The year 1986 was the last time the DFL elected a governor. They want a winner.

Look to see this convention be a brokered one that looks like an old-fashioned convention. Superdelegates, background deals with the minor candidates, and other insider activity will determine who get the convention nod. I think it is unlikely that there will be no endorsement.

But what does the endorsement mean when there is a certain primary on August 10. Rybak and Kelliher have said they will honor the endorsement, meaning one of the them will face Dayton, Entenza, and Gaertner on August 10.

There are three big questions looming: What role will the big money of Dayton and Entenza have? What will the turnout be on August 10, and who does the early primary favor? Finally, what about name recognition?

Dayton has the best name recognition based on being a senator, auditor, and for some, the Dayton store name (which is fading for a new generation of voters). Name recognition may be a big issue and all of the candidates struggle with it at they move to August 10.

Second, the start of the election season in MN generally begins with voters eying the candidates at the state fair in August. Now the primary comer before the state fair and in August when few voters are thinking about politics. Visions of cabins and walleyes are on the minds of most. One has to assume August turnout, at least this year, will be less than a September one. Who will turn out? Will it be party faithful, the elderly, or will it favor those who can best organize or develop name recognition? Again all good questions.

However, this is where the wealth of Entenza and Dayton come it. I doubt the convention endorsee can raise more than $300,000-400,000 between the convention and primary. Conversely, Dayton and Entenza can self-finance millions. Can they spend effectively to buy name recognition and mobile for themselves? Good question. Think about it. My sense is that the August 10, primary winner needs 75,000-100,000 votes to win the primary.

This is a not a lot of votes. Can money prevail or will August 10, favor the party endorsement? Recent history with the DFL gubernatorial convention-endorsed candidate does not necessarily favor that person, it is more of a mixed bag. My guess is that whoever wins the endorsement this week, that person faces a tough battle in August.

Final thoughts. Endorsements and money are important but so is the political narrative each candidate offers. Candidates need a compelling narrative that describes who they are, their vision for the state, and the vision for what they want to do in office. Narratives are always connecting candidates to the future. Thus far I have yet to see any of the DFL candidates offer a compelling narrative. Kelliher’s April 19, Star Tribune editorial was the first effort I had seen of hers to provide the narrative. It had some nice folksy language but it was vague on the future and not very compelling. One hopes she and the other candidates will hone their narratives and deliver them at the convention and then prior to the August primary.

Good narratives sell candidates. Narratives are the basis of sales and marketing for everything, including politics, and narratives must be about the future. Annie (of the musical) was right–it is always about tomorrow–and good narratives are always about a better day tomorrow. Mondale lost to Coleman in 2002 because he talked about the past and Coleman about the future. Similarly, McCain and Clinton lost to Obama because both talked about the past and not tomorrow. Narratives must always speak to the better tomorrow we all hope for. The task for the DFL candidates will be to find the narrative for the convention, the August 10, primary, and the general election.

Thursday, April 15, 2010

Twins Fever Infects the Minnesota Legislature

With the Twins’ home opener at target field this week talk of a deal on a new Vikings stadium at the State Legislature emerged. By Thursday Governor Pawlenty described the prospects for a publicly supported stadium possible but unlikely.
Regardless of the Governor’s prognosis, why are we even talking about public commitments for a stadium when the state is billions in the hole?

Perhaps the biggest argument made for the stadium is done so on economics. Does it make sense for a city or community to fund the construction of a new sports stadium in order to stimulate economic development? Listening to sports reporters, team owners, and many elected officials, the answer is yes. Yet while it may be fun to root, root, root, for the old ball team , does it make economic sense for the public to provide tax dollars to pay, pay, pay to for new stadiums? What are the facts and what do we know about the impact of sports stadia on economic development and urban revitalization? The overwhelming evidence is that the public use of tax dollars for a sports stadium is economically inefficient and a bad investment that produces no real net economic benefit to a community. In short, giving money to building stadia is simply sportsfare—welfare for sports.

In general, as one surveys local debates about stadium construction in the United States, three basic arguments are employed to support using public money to build sports stadia. First, proponents claim that building a new stadium will have a big impact on the economy, generating many new jobs and bringing new businesses to the area. However study after study has demonstrated that advocates of public spending on stadia consistently exaggerate the benefits of sports to a local economy.

A 1996 Congressional Research Service (CRS) report, “Tax-Exempt Bonds and the Economics of Professional Sports Stadiums” concluded that sports stadia represent a small percentage (generally less than 1%) of a local economy. It also stated that there is little real impact or multiplier effect associated with building sports stadia. By that, if one looks at the economic impact of the dollars invested in sports stadia, the return is significantly smaller than compared to other dollars invested in something else. Moreover, the building of stadia merely transfers consumption from one area or one type of leisure activity to another, and that overall, sports and stadiums contribute little to the local economy and instead represent an investment that costs the public a lot while failing to return the initial investment. Dollar for dollar, the opportunity costs of investing in sports stadia is a terrible option if the goal is economic development, job development, or producing new economic development in a community. In short, the nearly $3 billion in sports subsidies it documented produced little, at the cost of over $120,000 per job.

Literally hundreds of other studies and books by individuals such as long-time sports economists Arthur T. Johnson in Minor League Baseball and Economic Development (1995), Mark Rosentraub in Major League Losers (1997), Kenneth Shropshire in The Sports Franchise Game (1995), and Roger Noll and Andrew Zimbalist in Sports, Jobs, and Taxes (1997), and Michael N. Danielson in Home Team (1997) reach the same conclusion—public support of professional and minor league sports is a bad investment. In practically none of the cities these studies examined did new sports stadia lead to any significant new private investment or provide for any significant economic benefits to the local economy besides the jobs generated by the initial capital construction of the stadia. More importantly, the new stadia generally were not even profitable or self-financing.

Nor could cities point to rising land prices or economic development in the surrounding community. Even as tourist attractions, the stadia either simply transferred sales from somewhere else, failed to demonstrate that the local hotels were filled as a result of the sports events. Finally, in terms of the much ballyhooed job production, outside of initial construction and the salaries for the players themselves, part time, seasonal, and no benefit beer and peanut sales jobs were the fare for what the billions of public dollars produced.

A second claim to support public investment in a stadium is that keeping a sports team is necessary to ensure that one remains a first class city. Would the Twin Cities of Minneapolis and St. Paul (which the State Legislature voted in 2006 to authorize a sales tax worth upwards of $300 million for a new stadium) or any city be any worse off by losing a sports team? Without a sports team, most cities would still have parks, museums, zoos, arts facilities, good neighborhoods, schools, and the general quality of life that separates first and second class cities from one another and suburbs.

Moreover, if one accepts this logic of sports being necessary to make a city first class, can we say that New York City became second class when the Giants and Dodgers fled for California in the 1950s, or that Los Angeles became second class when it lost the Angels to Anaheim or the Rams to Saint Louis? The answer is obviously no.
Professional sports are only one small piece of what makes a city first class. Moreover, professional sports are also only a small part of the local entertainment puzzle with many consumers often transferring their consumption to other forms of entertainment, including amateur sports, if pro sports are not available. Similarly, sports are even a smaller piece of the local urban economic pie such that its presence or absence is not significant in the face of other features in a thriving and diverse urban area. In addition, with the cost of attending sports events so high, often approaching or exceeding $200 per game for a family of four, many sporting events are no longer an affordable family entertainment option. Instead, sports owners look to other corporate interests to buy tickets, thereby making sports an aspect of a city’s first class status that is beyond the reach of most of its residents.

Finally, advocates for a publicly-funded stadia say that such funding is necessary to maintain owner’s profits. The issue here is not profitability, but the level or amount of profits the owners want. They want to make more money and who is to blame them for that desire. However, there are a couple of different issues here. First, many owners say that larger stadia with more seats are necessary if they are to make more money. To support that, owners often trot out attendance figures to show declining profits.

Attendance figures tell only part of the story since they are only a small part of the revenue stream for owners. Revenue from luxury sports boxes, corporate sponsorship and ads, television and radio contracts, and promotions make up a far bigger and more profitable part of what owners receive from their sports adventures. Yet even this money is not enough because owners often claim they are not making as much money as other owners and thus, building a new stadium is a key to upping their profits. Clearly the end result of this “keeping up with the Jones” logic is to constantly push up the average profitability of all sports teams such that there will always be some teams below the average demanding financial assistance.

Overall, while communities may choose to invest in sports facilities because of the cultural amenities they offer, doing so for economic development reasons is another stupid public policy and political myth that deserves to die.

The economic case for public subsidies for sports stadiums is simply another political myth and a stupid public policy idea that is constantly recycled and never dies. In future posts I will discuss other stupid public policies and political myths that cost taxpayers money.

Thursday, April 8, 2010

Palin, Bachmann, Rockitics, and Petters

Rockitics in Minneapolis
So yesterday Sarah Palin and Michelle Bachmann appeared together at the Minneapolis Convention Center before a rock concert crowd reminiscent of Obama’s 2008 Target Center appearance. What do we take away from the event?

First, they have learned from Obama. If Bill Clinton and Jesse Ventura were classic politainers who mastered the art of combining politics and entertainment (politainment) then Obama understood how politicians needed to be rock stars to excite the crowds and generate media events. Rockitics is what he perfected. He understood how to use multimedia venues such as social nertworks and Twitter to hype himself and his speeches and rallies further did that.

Politicians as rockitcans simply understood that one of the basic rules of politics is that selling candidates is no more than selling beer–it is creating image, a message, or a narrative, and using multiple opportunities to market the message. Being a rock star with political rallies that feel like concerts venues is simply another way of doing that.
Palin and Bachmann in their respective ways understand that. Palin has mastered the art of the continuous 15 minutes of fame. She is never outside of the public eye, pursuing constant media attention on Fox news, in her own shows, her book tour, and whatever else she does. Similarly, Bachmann has done the same with her multiple appearances. Both have also carved an interesting role for themselves as spokespersons for the Tea Party wing of the GOP. They both say highly inflammatory statements that make Democrats cringe and excite the Tea Party people. Both understand that media coverage is about the outrageous–say the most controversial things and you get covered. No different than Ozzie biting the head off a bat. It was stupid but everyone remembers. Palin and Bachmann understand this and use it to their advantage. Moreover, and the troubling part of all this is that often times their comments are simply and factually wrong, but it does not matter. Politics is a narrative and they have a simple narrative that appeals to many of the faithful.

The real issue will be whether their rock concerts can go mainstream? In the Bachmann case, her district is conservative and there is little chance Democrats can unseat her now. Their hope is to tie her down and then hope redistricting either eliminates one seat in MN (hers) or they can redraw lines and make her vulnerable in 2012. My prediction, if Bachmann is redistricted out in 2012 watch her to run against Klobuchar in the senate and get waxed. Otherwise, she runs against Franken in 2014. For now, Bachmann is safe.

Palin may have high name recognition but one wonders if the swing voters thing she is any more qualified to be President now than she was in 08. I doubt that. She has done little to demonstrate mastery of the issues, preferring to run as a 21st century member of the “know nothing” party.
Sean Hannity suggested it would be “kinda cool” to see a Palin-Bachmann 2012 ticket. A ticket yes to excite the base, no to winning.

The biggest loser yesterday? Pawlenty. The Palin-Bachmann event shows how little excitement there is for him and how dim his prospects.

Petters’ Sentence
Tom Petters gets 50 year for his fraud with parole no soon than 41 years. With it unlikely than he prevails on appeal, Petters never sees freedom again. How do we assess the sentence?
Certainly the sentence is less than the 300+ years the prosecution wanted and more than the 4 years his attorneys requested. Fifty years sounds like a compromise, but it is one significantly dictated by the federal sentencing guidelines which determine prison time by the number and types of crimes committed. In imposing the sentence the quality of mercy was not strained and it did not rain down upon Petters. He is paying for his crimes, but so is the public.

Think about it. It will cost about $50,000 per year to incarcerate him so do the math and taxpayers will pay $2.5 million to punish him. Yes, losing his freedom is punishment, but his acts cost us already $3.6 billion. If Petters was smart enough to swindle all this money might it not make sense to think he might be smart enough this make this kind of money and payoff the victims? Prison in some ways makes no sense, it does little to undo the damage he has done. However we live in such a “lock them up and throw away the key” society that we think jailing everyone is the answer for everything. Few elected officials get elected for proposing alternative sentences for fear of looking soft on crime. As a result, harsher and harsher sentences, more crowded prisons, and more lives thrown away with little hope or effort to redeem. In some states we now spend more on prisons than education.

Petters’ sentence should make us think about these issues, as well as about human nature and how gullible others other to believe in the get rich quick scams proposed by him and Madoff. Come to think of it, perhaps Petters is simply the poster child and personification of the greed of Wall Street and the economic crash of the last few years. All of us want to be Willie Lomans and hit it big. There will be more Petters and the 50 year sentence will not deter them or future victims wanting to score big.

Tuesday, April 6, 2010

Pawlenty v. Swanson: Litigation Politics

On Monday MN Attorney General Swanson informed Governor Pawlenty that not only will she not join him and other states to stop the health care law but that she would actually file an amicus to support it constitutionality. Whatever the larger politics are between Swanson and Pawlenty, she made the correct legal decision.

The law suit challenging the constitutionality of the law is barking at the moon, to say the least. The legal argument to challenge the bill is premised upon a 10th Amendment federalism claim, contending that the federal government has exceeded either its Commerce Clause or taxing power in requiring individual coverage or in requiring states to provide new mandates. There are numerous problems with these claims.

We first start with a standing and ripeness issue. Does a state have the standing to sue the federal government on behalf of its citizens? Specifically, here there is the assertion that states have the authority to challenge the individual mandate for insurance on behalf of their citizens. It is not so clear that can do that. Generally states can sue the feds when they as states have been injured (Take a look at the recent Supreme Court Massachusetts v. EPA decision on this) but it is not so clear states can always sue on behalf of their citizens. Standing is the issue. Standing refers to the ability of individuals to sue in court. One requirement of standing is that one must suffer an injury. Here citizens lacking insurance but who are required to buy it are those potentially facing an injury, not the states. Thus it is possible that the courts would say that the citizens themselves would have to sue, not the states.

There is a second issue here about the individual mandate and it relates to ripeness. The federal courts generally do not take cases until ripe for review. Here, the individual mandate does not take place until 2014. Before then the law could be repealed, modified, or who knows what. The point is that no one is injured until 2014. Thus the courts could say either there is no present injury (therefore no standing) or that the case is not yet ripe for review.

Now in terms of the federal government violating the 10th Amendment (federalism requirement), this argument is also tough to make. During the Rehnquist Court both the Chief Justice and Justice O’Connor led the way in terms of arguing that the 10th Amendment placed limits on the ability of the federal government to use its Commerce Clause power to legislate. The couple of cases at the basis of these decisions were unusual and signaled an aberration from the dominant Post New Deal jurisprudence and Court rulings giving the federal government broad authority under the Commerce Clause and its Taxing power to legislate. There is little indication that the Roberts Court is interested in taking on the federalism issues. Instead, in several cases involving questions of whether federal power preempts states from acting, the Roberts Court seems to be favoring federal over state power. It just does not look like this Court is as receptive to federalism claims as was the Rehnquist Court.

Bottom line: State lawsuits are faced with standing and ripeness issues and it is unlikely that the current Court will be favorable to federalism claims. The lawsuits to challenge the new federal health care law look like certain legal losers. However, not all lawsuits are about winning in a court of judges. Some are aimed at the court of public opinion in an election year and as part of an effort to ingratiate oneself with potential presidential supporters.

Monday, April 5, 2010

Justice Klobuchar and Unallotment

April 5, 2010

Amy Klobuchar for the Supreme Court

Easter Sunday morning news shows raised Senator Klobuchar as a potential replacement on the Supreme Court replace Justice John Paul Stevens when it retires this year or in the future. While there are some attractive features to her nomination, the odds are against it.

First the case for her. Klobuchar is a member of the Senate and the belief is that it would be hard for the Senate to refuse one of her own in a confirmation hearing. In addition, she is female and Obama might like the idea of placing another woman on the bench, especially with Ginsburg ailing and perhaps retiring in the future. Third, she is young and if confirmed she could be on the Court for years. As a former prosecutor she also looks good and might appease some of the law and order types. Finally, she really is a moderate and her nomination would not incite the ire of many conservatives worried that Obama was seeking to place another liberal on the bench.

However, while all of these factors make her attractive, there are reasons against her nomination. For one, the recent trends on the Supreme Court are to select from those with lower court experience. Candidates without judicial experience were more common a generation or so ago, less common today. Klobuchar does not have this experience and this suggests against it. Second, while the Democrats will rally around her no matter what, her nomination would not excite liberals and would probably not see her ideologically as replacing Stevens. Finally, for all the reasons that make her attractive it is not clear the Republicans will be happy with anyone Obama selects and therefore it may be overblown regarding how much her assets are really assets.

Reapportionment and Waiting for the Minnesota Supreme Court

On March 15, the Minnesota Supreme Court heard oral arguments regarding Governor Pawlenty’s use of unallotment last July, 2009 to address the budget shortfall. Many are guessing when the decision will be released and what it will be?

I attended the oral arguments. I thought the Court was split 3-3 with Chief Justice Magnuson being the deciding swing vote. He was appointed by the Governor and is a former law partner of his. This leads many to suggest that he will support the governor. I am not so persuaded.
If one can divine anything from oral arguments and questioning, it sounded like the CJ was skeptical of the governor. He asked to tough questions to all attorneys and the direction of the CJ suggested that he found it difficult to accept that delegation of power from the legislature to the governor to use unallotment had sufficient checks on his discretion.

Moreover, the CJ has had to fight the governor hard over cuts to the judiciary and in many ways his stepping down as CJ may have as much to do with exhaustion over this fight than anything else. But given these fights and his resignation, maybe the CJ is free now to defend the courts and issue a decision that will have ramifications for the judiciary. The gov cannot unallot the judicial branch but trimming unallotment may help the courts and public safety none the less.
I give it a 60/40 chance he votes against the governor.

I also think the decision will come this week or next. Any delay will be due to the divided court and the circulating of majority and dissenting opinions and the courting (pardon the pun) of the CJ.