Are These Words in Your Vocabulary?

We have had two centuries of the Federal Government overstepping its proper authority in all three branches. There have been various protests, and at present, people are still mostly free to express their opinions. In the years since Ronald Reagan, the trend toward growing government authority has been very noticeable, but under the administration of Barack Obama, this trend has been very forcefully advanced. Now we occasionally hear the once virtually forbidden words nullification, interposition, and secession in connection with the relationships of states to the Federal Government. We are going to be hearing, and possibly using, these words frequently over the next few years.

The Federal Government was established, by the states as states, as an agency of the states. The Federal Government does not have the power to be the final arbiter of the Constitution, nor does it have the power to act beyond its enumerated powers. The Tenth Amendment means what it says.

Governor Rick Perry of Texas raised eyebrows and drew criticism for mentioning secession in some of his Tea Party speeches. He did not advocate it, but just the mention of the word was enough to get attention. Debra Medina, Texas gubernatorial candidate in the Republican Primary of March 2 (Texas Independence Day, by the way), unapologetically holds out nullification and interposition as appropriate state responses to federal laws and actions deemed unconstitutional.

The first two sections of the Texas Constitution’s Bill of Rights, which is similar to other states’ statements, is as follows:

“THE TEXAS CONSTITUTION

“ARTICLE 1. BILL OF RIGHTS

“Sec. 1. FREEDOM AND SOVEREIGNTY OF STATE. Texas is a free and independent State, subject only to the Constitution of the United States, and the maintenance of our free institutions and the perpetuity of the Union depend upon the preservation of the right of local self-government, unimpaired to all the States.

“Sec. 2. INHERENT POLITICAL POWER; REPUBLICAN FORM OF GOVERNMENT. All political power is inherent in the people, and all free governments are founded on their authority, and instituted for their benefit. The faith of the people of Texas stands pledged to the preservation of a republican form of government, and, subject to this limitation only, they have at all times the inalienable right to alter, reform or abolish their government in such manner as they may think expedient.” [1]

The Jeffersonian tradition holds that federal laws that are unconstitutional are null and void, and states may declare them so, and thus make them of no effect within the state so declaring. The Kentucky Resolutions of 1798, written by Thomas Jefferson, asserts this power of states. The Virginia Resolutions, around the same time, written by James Madison, express similar things. The Alien and Sedition Acts, which the opposition party found oppressive, were answered by these resolutions. Jefferson used the word “nullification,” while Madison said the states should “interpose” between their citizens and the Federal Government. Nullification and interposition are basically the same thing. [2] For the full, very interesting lecture by Thomas Woods, author of The Politically Incorrect Guide to American History, Mises.org has audio here. This is also linked from SovereignStates.org, a good website of sources on these topics.

The Texas Secede! Website notes in their FAQ section, that the Texas Constitution says the state is subject only to the Constitution of the United States, not “subject to the President of the United States,” and similarly not subject to the Congress of the United States, nor any other state or group of states. [3]

The website FAQ section further states as follows, with clear logic:
“Where the Constitution does speak to the issue of powers, they resolve in favor of the states unless expressly granted to the federal government or denied to the states. No power to prevent or reverse secession is granted to the federal government, and the power to secede is not specifically denied to the states; therefore that power is retained by the states, as guaranteed by the 10th Amendment.” [4]

Secession is understood to be the action of last resort, when the situation is intolerable and no other remedy will suffice. Even this could be done amicably. But nullification and interposition serve the purpose of checking the illegal acts and laws of the federal government, while still preserving the Union.

The existence of three branches of government is not in itself a sufficient check on federal power. Nor is the U.S. Supreme Court the final arbiter/interpreter of the Constitution. The Constitution is a compact among the states, as states, and gives the federal government specifically enumerated powers. The Tenth Amendment, which Thomas Jefferson said is the cornerstone of the Constitution, has been almost swept away, but efforts are underway to restore it to its proper place.

Why are we hearing such words now, when we haven’t heard them much in recent memory? People now are sensing a strong federal effort, on the part of the Obama Administration and the Democrat-led Congress to change our government by great expansion, and to obligate our country to monumental debt, thus threatening our freedom at many levels, and destroying our prosperity and economic power.

The main agenda items of the Administration are unconstitutional on their face, yet Democrats claim that the Interstate Commerce Clause, the General Welfare Clause, and the Necessary and Proper Clause give them a virtually blank check to do whatever they wish, provided that they claim it serves a purpose under any of these clauses. Not so. The federal government is limited to its enumerated powers. The states have the power to decide whether the federal government’s laws and actions are allowed under the Constitution. The Federal Supremacy Clause makes the Constitution the law of the land, but anything unconstitutional is not the law of the land.

The Federal Government, almost from the beginning of our nation, has sought to expand its authority and usurp that of the states and the people, and with few exceptions, states and people have acquiesced. I am reminded of the statement in the Declaration of Independence that “Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.” Virtually all government agencies, committees, or other bodies normally seek ways to expand their power, and thus constant vigilance is required, as they will soon exceed their actual authority.

But a point can be reached where abuses are no longer tolerable. Under the present socialist-Marxist-fascist administration, virtually everything being done in domestic policy is unconstitutional. Unconstitutional laws and actions which have been done under previous administrations are not only continued, but made worse, and proposals are in the works that would greatly exacerbate the situation, notably “health care reform” and cap and trade. In taxes and regulations, the government has a virtual stranglehold on our society. In unprecedented and unnecessary spending with almost incomprehensible debt, the government is seriously damaging America financially.

There is no support among conservative or libertarian leaders for any kind of violent “revolution,” but there is considerable support for nullification in the more serious constitutional violations by the Federal Government. In the following video, Judge Andrew Napolitano of Fox News Channel and Lew Rockwell, founder of the Ludwig von Mises Institute, discuss the concepts of nullification, interposition and secession:



Why should not states firmly assert their sovereignty, and respond with threatened or actual nullification laws? States have already, in effect, nullified the “RealID” law, to the point that it is not being enforced. Probably, it will never be enforced.

These issues are the basis of the Tea Party Movement, and a lot of activity not specifically identified with the Tea Party movement. Possibly the best spokesman for such principles is Congressman Ron Paul (R-TX), who recognizes the unconstitutionality of so much that the Federal Government is doing, as well as the massive Ponzi schemes and, as some say, counterfeiting operation being run by the government and the Federal Reserve.

The idea of nullification of unconstitutional Federal laws by states is gaining traction throughout America. If the Federal government continues on its present path, we’re going to be hearing a lot more about it. After the 2010 and 2012 elections, we should be seeing a more responsible and responsive government in Washington.


[1] Texas Constitution and Statutes.

[2] Thomas Woods on The Kentucky and Virginia Resolutions of 1798 and 1799, Mises.org

[3] and [4] Texas Secede! Website FAQ

The Tea Party Movement Is a Force To Be Reckoned With

In spite of all the elitists’ dismissing of the Tea Party Movement, the liberals are going to awake to find that this movement has changed the political landscape of America. America is not Europe. Americans don’t accept European-style socialism, which is visibly failing, and they do not accept would-be dictators. President Barack Obama is likely to find his next three years fraught with political difficulty.

So far, the president has resisted public protests against his policies, which consist largely of liberty-destroying programs, massive spending, and vague talk of future deficit cutting, while planning even more big spending. The unemployment, deficit, or inflation figures will not stay this administration from their micro-managing, tax-and-spend, socialist-fascist agenda.

Congressional Democrats are beginning to get the message that Obama wants them to support all this despite their likely loss of reelection in many instances. He thinks they should sacrifice their political careers and the representation of their constituents in favor of his radical “change” projects. Some are retiring (Bayh, Dorgan, Kennedy and Dodd), and others will soon have decisions to make. Republicans are seeing a great opportunity to expand their numbers in Congress, but it remains to be seen whether they will be able to govern accordingly if they win more seats.

That’s where the Tea Party Movement becomes critical. Their strategy should involve moving the Republican Party closer to their constitutional and libertarian principles and away from big-government, big-spending, and high-tax policies. They need to strongly oppose further government takeovers in the private sector and more government supervision of Americans’ daily lives and major decisions. Republicans who won’t support conservatism should expect to be replaced by some who will. The Tea Party movement finds problems in both major parties, but a third party is not the answer.

The New York Times reports that Obama is preparing to use more executive power to get around frustrating difficulties with Congress. The newspaper reports, for example, “Mr. Obama has already decided to create a bipartisan budget commission under his own authority after Congress refused to do so.…” Also, the Administration seeks to affect gays-in-the-military cases without waiting for Congress to act. “And the Environmental Protection Agency is moving forward with possible regulations on heat-trapping gases blamed for climate change, while a bill to cap such emissions languishes in the Senate.” [1]

If Obama can’t get his way on “health care reform,” what executive actions is he prepared to take? On this and other items, he is seeking to override not only Congress, but the American people. His “summit” on health care with Republicans participating shows he has not given up trying to enact a plan that is opposed by the American people. It’s a cornerstone of his “change” agenda. Unconstitutional, too.

Tea Partiers in various states will probably encourage lawmakers to pass “nullification” laws over Federal legislation and executive orders they view as unconstitutional. This may bring on a constitutional crisis, but maybe it’s time to have this fight. Government officials who try to overpower states on this type of law can probably forget ever getting many votes in these states. The people hold the ultimate power under our system, and they can’t be continuously ignored.

The Democratic leadership has unveiled their radicalism and conspicuously failed to deal with the economic woes of the unemployed to the extent that their policies are very unpopular. Their policies are heading over the cliff. The next “bailouts” we see will likely be more Democrats bailing out on Obama’s ill-advised program. They can cite “gridlock” and “ideology” as their objections, but gridlock is greatly preferable to the Obama agenda, and ideology is what guides Obama. The “pragmatism” he practices is to find what will work to get his radical ideological program installed, not what will work best for the economy, etc.

My caution to the Tea Party Movement is three-fold: (1) Forget a third party; transform the GOP; (2) Emphasize the positive aspects of conservatism (freedom, prosperity, strong defense, limited government, low taxes), well articulated. Anger may temporarily unite, but it doesn’t inspire; and (3) Don’t associate with any groups that sanction any kind of violence or anything that smacks of racism. The Tea Party Movement is about policy. It is already strongly influencing American politics. It is a mainstream movement, not a fringe effort. Its weapons are true and persuasive arguments and the ballot.

[1] Peter Baker, “Obama Making Plans to Use Executive Power,” 02/12/2010, The New York Times.

Further reading: David Barstow, “Tea Party Lights Fuse for Rebellion on Right,” 02/15/2010, The New York Times. I’m surprised to be referring to NYT this much.

Photo: Dreamstime.com

Budget, Bipartisanship, and Jobs

President Barack Obama wants to have a bipartisan “summit” on health care, with the bills already passed serving as a starting point. He says he wants bipartisanship, but by that he seems to mean Republicans getting on board with his attempted government takeover of the health care and health insurance industries. GOP leaders have been warned (if such warning were needed) that this is an Obama political trap for PR purposes. If they attend the meeting, look for plenty of GOP disclaimers beforehand, and no GOP support for Obamacare in its current Senate or House version.

Why does everyone regard “partisanship” as a bad thing? It’s the essence of our political system. People act as though they are “shocked, shocked, to find politics going on in Washington!” If there had not been strong rejection by the GOP and the American people against Obamacare, it would now be a statute passed under cover of darkness with minimal disclosure of what is in the legislation, and plenty of intimidation, threats, bribes and various kinds of payoffs. So far, it hasn’t passed. One can only hope it’s dead and ready for burial.

The Administration’s focus for months has been so much on health care that it is hard to see their failures on foreign policy and, especially, the economy, as anything other than simple neglect. Why else did it take months to decide on a course of action for Afghanistan, even after a relatively recent pronouncement that policy had already been decided? Why else is the Administration closed to any course other than massive, unprecedented, and un-repayable debt as the remedy for the recession?

As a Washington Examiner editorial of February 5, 2010, points out, as the title says, “Recession chugs on except in government.” It is rather startling to me that, as the editorial says, 41 percent of the unemployed have been so for 27 weeks or more. [1] That’s over six months if you don’t want to take time to calculate it.

The main thing that government has done is extend unemployment benefits for more months, and create or “save” government jobs. The economy as a whole dropped 20,000 jobs in January. The stimulus has been an abject failure, and was mainly a very expensive pork bill which has done basically nothing to stimulate the private-sector economy. It seems obvious that the very unpopular “health care reform” has taken top priority, over the main issues citizens are concerned with, jobs and the economy.

Congress will be raising the debt limit to $14.3 trillion, so as not to need another increase before the November elections. Mr. Obama states that we need to rein in the deficits, yet proposes a new $3.8 trillion budget full of tax increases and unnecessary spending. Investors Business Daily editorializes, “As we've noted, the debt that will be added over the next decade or so will break all records. Indeed, by some recent estimates our debt will surge $13 trillion by 2020, more than twice the total debt accumulated in our nation's first 220 years of existence.” [2]

It appears that the appeal of Keynesianism (as interpreted by the current Democratic leadership) is so strong, that it is felt that deficit spending, to whatever degree is desired, is fine, as long as you talk about someday reducing the deficit.

Everyone agrees that this course is “unsustainable,” but the Democrats expect us to “sustain” it for a decade or so anyway. As Mark Steyn writes, “But if they're ‘unsustainable,’ what happens when they can no longer be sustained? A failure of bond auctions? A downgraded government debt rating? Reduced GDP growth? Total societal collapse? Mad Max on the New Jersey Turnpike?” [3]

The really discouraging aspect in all this, to me, is not simply the very unfavorable situation we are currently in, but the plain fact that what is being done is making things worse, not better. We may see some interim improvements, but with the government persisting in out-of-control spending for as far as the eye can see, regardless of results, we are truly in danger of, not only another recession, not only another financial crisis, but a true financial collapse.

Obama still wants to pass cap and trade and “health care reform.” At present, there is a strong possibility that neither of these items will pass, but the fact that they are seriously proposed shows either economic ignorance or economic malice of a high degree. The job killing and extreme taxation associated with these things, not to mention the severe loss of freedom, points to the fact that the Obama Administration is leading America toward, not recovery, but financial failure. Then I suppose the proposed answer from the liberals will be more socialism, claiming that capitalism has failed, when it is government that is failing day by day in a huge way. In other words, a continuation of much of what they’re doing now.

Nothing that is being done by the current administration bodes well for the jobs picture. Obama says it’s “hard” and will require “sacrifice,” but he seems to be doing his best to extract “sacrifice,” necessary or not. People have been sacrificing a lot lately. It’s time for some relief, and that will come when a sense of fiscal responsibility is restored and the situation is honestly analyzed. When we have multiple trillions of dollars of unfunded liabilities in Social Security, Medicare, and Medicaid, which can never be paid, and when the government is ready to impose many billions of dollars of unfunded mandates on the states, plus the aforementioned new taxes, a real recovery in the near future is not feasible, and it’s because of government.

The GOP’s main responsibility now is not to “work with Obama to solve problems,” but to stop the Obama economic agenda to the greatest extent possible. Sometimes, being the “Party of No,” is the best course. First, restore sanity, then think about bipartisanship.


[1] Washington Examiner editorial, “Recession chugs on, except in government,” 02/08/2010.

[2] Investors Business Daily editorial, “Collapsing Ceiling,” 02/04/2010.

[3] Mark Steyn, “If 'Unsustainable' Is New Normal, Collapse Is Closer Than We Think,” 02/05/10, Investors Business Daily.

Photo: Dreamstime.com

How’s That War on Wall Street Going?

“The government’s key policy lever should be to make sure that institutions hold enough capital to reflect the risks that they run and the threats that they pose to the rest of the financial system.” – Financial Times editorial [1]

There is broad consensus that regulatory measures should be taken in regard to Wall Street firms in order to lessen the likelihood of a financial meltdown such as we saw in 2008. There are several options ranging from tweaking to government takeover. President Barack Obama has reportedly declared war on Wall Street, and it is doubtful that this approach will end up helping the situation.

Treasury Secretary Timothy Geithner is not the front man for Mr. Obama on his reform effort. Instead, former Federal Reserve Board Chairman Paul Volcker is the spokesman. This leads us to wonder what Geithner’s role is now. Is Volcker the “reform czar”? Obama is championing the Volcker plan that would stop big banks from their proprietary trading, and set up measures to sell or merge “failing” financial institutions.

While these measures seem doubtful of approval, the stated goals are worthwhile: no more bailouts and no more institutions “too big to fail.” This should be the government’s and the Fed’s position immediately. The bailouts of 2008 should never have happened.
Christopher Dodd, Senate Banking Committee chairman, had said the Volcker plan is too ambitious. But what would it be replaced by? Something not so strong, or nothing at all?

Atlantic has an online article by Daniel Indiviglio titled “Dodd’s Resistance To Volcker Plan Should Signal Its Death.” The article states that while Dodd is not opposed to new regulations in theory, he thinks Obama’s plan is too far-reaching and seems to step on the toes of his committee. [2]

While Geithner has reportedly been working with Wall Street executives during and following the bailouts, Obama seems to be undermining his efforts through his populist rhetoric painting Wall Street as the enemy. Obama does his best to play up the executive bonuses as “shameful” as Americans are struggling with unemployment, etc. Several banks were forced to take bailout funds in 2008 (in exchange for government equity positions), fearing this same type of government opposition, and those who wanted the bailouts should have been aware something like this was coming. Government funds equals government control, roughly in proportion to funds provided.

Now that much of the bailout money has been paid back, Obama is still not satisfied and wants to further press control. Regulation is one thing, but putting Wall Street on his enemies list is another. It’s there, along with Fox News and Las Vegas.

“‘We have to get this done,’ Obama said at the White House. ‘If these folks want a fight, it's a fight I'm ready to have.’” [3]

Banks Don’t Want a Fight
According to Richard Schmidt’s article of 01/27/2010, “Industry officials said they were stunned. ‘We did not know it was coming, that’s for sure,” said Scott Talbott, a lobbyist for the Financial Services Roundtable, which represents large banks and insurance companies …’

“We don’t want to fight the administration,” said Rob Nichols, whose trade group, the Financial Services Forum, represents the chief executive officers of the largest financial companies. “We just want to sit at the table and have a productive conversation about the kinds of reforms needed to address the real causes of the recent crisis.” [4]

But after Obama’s disappointing loss of a Democratic Senate seat for Massachusetts, he’s putting increased emphasis on some of his populist villains, whom he has characterized as “fat cats.” Not exactly presidential terminology. But politics comes first.

The president has announced plans to recover the TARP bailout money through a new fee on large banks, even including those who have paid back TARP money or never received any. He wants to impose strong new regulations on them, i.e., the Volcker plan. And he wants to severely restrict executive compensation. There is strong opposition to all these plans.

Wall Street and NY Officials Will Fight Back
According to an AP article appearing at CNS News, “Financial industry officials are especially frustrated by a proposed change they see as political and punitive without doing anything to prevent future crises. They say the changes would not have prevented the largest bank failures of the crisis.” [5]

Some New York Democratic politicians are going to oppose Obama on this, recognizing that a large amount of tax revenue (state and city) normally comes from the large bonuses paid to Wall Street executives. Mayor Michael Bloomberg recognizes this, and previously voiced concerns over the state’s proposed “millionaires’ tax,” because much of New York City’s budget is provided by taxes on wealthy people, and increasing them more will motivate many to move out, potentially causing a (more) serious financial crisis for the city.

Henry Blodgett of Business Insider reports as follows: “Mayor Bloomberg said the banks and Wall Street are part of the bedrock of the city's economy, and efforts to slash their business just means less tax revenue for the city, which brings up the dreaded ‘L’ word.

“‘If that's the case then we'll have to lay off people because it will really hurt our industry,’ Bloomberg said…”

“‘Maybe we should hold back their [Congress’s] salaries for a decade or so and see whether the laws they pass work out,’ Bloomberg said.” [6]

To which Politico adds:
“‘They may be an enormous amount of money for one person,’ Bloomberg said last year when Obama proposed capping executive pay, ‘but they are how our people in the city in all industries get paid.’”

New York Governor David Paterson (D) objects to Obama’s plans to restrict Wall Street. “‘In New York, Wall Street is Main Street,’ Paterson told a receptive audience at the Museum of American Finance in December.” He is joined in his objections by Senate candidate Harold Ford, Jr., and Congressional candidate Reshma Saujani, both Democrats. [7]

Wall Street executives are reluctant to complain too much, knowing that their large bonuses don’t attract any sympathy from the public, but they are attempting to defend their interests through lobbying, possible legal actions, and even some public relations efforts. The following video is an example:



Conclusion:
No one appears to be claiming that banks’ proprietary trading caused the financial crisis. On the other hand, such trading seems to lead inevitably to conflicts of interest by undermining the interests of the banks’ customers. This does not seem to be the heart of the issue at hand, although it deserves some attention.

Banks need to be put on notice that they aren’t going to be bailed out any more, and can’t be “capitalist” with profits but “socialist” with losses. They likely have the idea, supported by government bailouts, that they are “too big to fail,” and government will bail them out again if they have big losses. Thus they have less incentive than they should to operate efficiently and safely.

There are several issues of regulatory change for the financial sector that need to be worked out. But there need not be a “war” waged for political purposes.


[1] Financial Times editorial, “A declaration of war on Wall Street,” 01/20/2010.

[2] Daniel Indiviglio, “Dodd’s Resistance To Volcker Plan Should Signal Its Death,” 02/03/2010, Atlantic.

[3] Philip Elliott and Daniel Wagner, Associated Press, “Obama Says He’s Ready for a Fight With Wall Street Firms, As He Calls for New Regulations,” 01/22/2010, CNS News.com.

[4] Robert Schmidt, Bloomberg, “Wall Street Firms Don’t Want to Wage War on Obama,” 01/27/2010, Business Week.

[5] Elliott and Wagner, see [3].

[6] Henry Blodgett, “Bloomberg Blasts Obama's War On Wall Street, Says Congress Salaries Should Be Held In Escrow For 10 Years Until We See How Their Laws Worked Out,” 01/22/2010, Business Insider.

[7] Ben Smith, “N. Y. insurgents stand up for Wall St.,” 01/30/2010, at Politico.

Photo: Dreamstime.com