Legal

In the recent court decision declaring Obamacare unconstitutional, the Judge wrote the following on page 75 of the opinion: “[T]he award of declaratory relief is adequate and separate injunctive relief is not necessary.” This statement was regarding whether to order an injunction stopping the federal government from implementing Obamacare. Using crystal clear language, the Judge argues that the government should not enforce a law that a judge declares unconstitutional. Mark Levin has argued this point earlier in the week.

Sadly, the Obama administration appears willing to ignore the court’s decision and continue to enforce the law. So, in light of the federal government’s decision, what is the point of have the Constitution or a legal system at all? The Congress and the President passed a law that was clearly unconstitutional. A judge declares it so and says that he doesn’t even need to grant an injunction because the government cannot implement unconstitutional law, and yet, we continue as if nothing happened.

Using words like tyranny often turn off people who consider themselves willing to disagree without being disagreeable. But, what else would one call this? We have a government currently enacting policy with no checks and balances, and no system with which people can predict their legal standing. How else does one define what has taken place this week?

After Obamacare was passed into law, those who articulated conventional wisdom argued that “repeal” would be impossible. Instead, we heard that the best anyone could hope for is that sections the law would be reformed. We also were told that the public would totally reject “taking away” healthcare benefits from those who just received them after the law’s passage. A clear warning was sent to Obamacare opponents to move slowly.

Originally, the pragmatists seemed to have history on their side. There is little precedent for an enormous government entitlement being scrapped, and George W. Bush learned how difficult it was to reform an entitlement like Social Security. Overall, politicians prefer to buy votes with other people’s money.

However, a federal judge in Florida today struck down Obamacare, and according to Senator Jim DeMint, all Republican Senators have cosponsored a bill to repeal Obamacare S.192. This comes just a few weeks after the House of Representatives voted to repeal the law, placing the momentum clearly on the side of repeal.

If repeal is ultimately successful, it will not just be a temporary win for small government libertarians. Instead, it will likely galvanize many proponents of limited government to throw conventional wisdom out the window and fight together.

Moreover, if Obamacare is repealed, its ramifications will likely extend beyond Obamacare itself. It would mean that all entitlements are on the table when future budget cuts are proposed, and it will create the precedent necessary to give confidence to those who want to reject the conventional wisdom.

A major scandal has arisen in the biggest environmental lawsuit in history – the $27 billion lawsuit against Chevron oil company brought by a lawyer representing citizens of Ecuador.

As reported in Tuesday’s New York Times, Chevron has released video implicating Ecuador government officials close to the president in a massive bribery scheme.  Chevron claims its covertly recorded videos “reveal a $3 million bribery scheme implicating the judge presiding over the environmental lawsuit currently pending against Chevron and individuals who identify themselves as representatives of the Ecuadorian government and its ruling party.”  The president responded, in part, by threatening to shut down a television station that aired the videos.

In a Forbes commentary this summer (“Toxic Revenge“), CEI journalism fellow Silvia Santacruz explained why the lawsuit was unjust in the first place (exempting the state-owned oil company, for example).  She noted that Ecuador lawsuits targeting international companies face a court system rated corrupt by the United Nations, the International Bar Association and the U.S. State Department.

Santacruz also explains why such lawsuits, along with a 50% “windfall profits” tax, have directly harmed the people of Ecuador, scaring away foreign investment.  Lago Agrio, where the lawsuit against Chevron was brought, is poor in literacy levels and in basic needs, like running water.  In fact, Santacruz produced a YouTube video, UnderMining Prosperity, to call attention to the plight of Ecuadorian people.

Today, Wall Street Journal reports that a Miami court has set meeting Friday between the IRS and UBS to look at where they are in settlement negotiations over the case of the IRS demanding that the Swiss bank turn over the names of more then 50,000 U.S. citizens alleged to be tax evaders.

As I have said in past posts on this issue (in which I have been admittedly hard on UBS-but with a purpose), and as UBS seems to now be reiterating, turning over those names would be in contradiction of  Switzerland’s banking privacy laws and its legal view of tax evasion.  Banks in Switzerland are not required to ignore their country’s banking secrecy laws simply because another nation requests them to do so.  This is a sticking point for the IRS, who is using the DoJ to try and get after UBS.  Another factor in the fight to get UBS to crack is the growing pressure from other nations and international NGOs like the Organization for Economic Cooperation and Development (OECD) with its agenda, and Financial Action Task Force (FATF) with its “retaliatory measures,” mentioned in earlier posts. These groups are using the straw men of money laundering and terrorism to force Swiss capitulation.  It has reached a point of absurdity.  Aside from the U.S. government’s attempts at intimidation, the German government even suggested placing Switzerland on the international blacklist.  I guess “Everybody Hates Switzerland” now, until they can get their hands on that money.

Of course, the average citzen is not concerned about the rights of those who can afford to have swiss bank accounts.  Although they should be.  This not only raises concerns about financial privacy, it also raises concerns about sovereignty, civil rights, and a host of other things.  A person’s financial records should be considered as sacred as their medical records.  However, we may soon be entering an era where both are collected and archived by the government.  Only a person who believes Stalin was an OK guy would think that was a good idea.

CEI Information Policy Analyst Ryan Radia responds to Jonathan Zittrain’s “Lost in the Cloud” in today’s New York Times.  Read it here or see below.

To the Editor:

In discussing the privacy risks that have accompanied the growth of the Internet, Prof. Jonathan Zittrain rightly bemoans the willingness of governments to violate individuals’ privacy rights. Unfortunately, he proposes new legal restrictions that would stifle online innovation while doing little to enhance consumer privacy.

Mr. Zittrain proposes a “fair practices law” that would require companies to release personal data back to users upon request. Such a rule may sound workable, but purging specific data across globally dispersed server farms is no simple endeavor. Who is to pay for the implementation of such privacy procedures – especially for free services like Facebook or Twitter that have yet to turn a profit?

A better approach to online privacy is to educate users on safeguarding personal information. Ultimately, however, the only foolproof approach to protecting sensitive data online is to simply not disclose it.


Below see CEI President Fred Smith’s comments on Jonathan Hillel’s piece in the San Jose Mercury News:

Hillel’s piece raises the very interesting question of whether the use of copyrighted materials must forever remain out of reach of most people.  The vast majority of creative works disappear from public view within a very short time of their release.   Few books or records are best sellers, many magazines (especially specialized magazines and journals) go out of existence in a decade or so.  Yet, the information and enjoyment value of these works might enrich millions of people in our new e-world.  Currently, the length of copyright and the reluctance of any one to devote the resources to bring them back into view mean they’ve been taken from the world’s “library” and “record/CD/DVD” shelves.

One way to think through this topic is to consider how real (as opposed to intellectual) property that has been “abandoned” is treated.  Land, for example, remains in the hands of the original owners unless (as is very often the case) no one has paid the property taxes for a number of years (in political jurisdictions without property taxes – there must be some – I have no idea what is done) and then these lands are sold to compensate the jurisdictions for the unpaid taxes.   In another case, individuals may open a financial account in some institutions and then for some reason (death, forgetfulness, small balance) simply abandon it.  Since some costs are incurred in maintaining such accounts, some private institutions will simply close the account and absorb whatever assets are in that account (airline loyalty programs, for example) although generally an effort is made to warn the user that such action is imminent.  Banks, being regulated and subsidized, take various approaches to what, in that context, are called “dormant accounts.”  After a period of inactivity, the banks post notices and, if no response is received, any funds (less management fees) are generally transferred to the state in which that account exists.  (Depending on state law, one may be able to recover the funds even after this transfer if adequate documentation can be provided.)  In some jurisdictions, however, the financial institution simply retains the funds and uses them as part of their reserves, while still honoring the obligation to repatriate the funds (perhaps with interest) if a qualified owner eventually turns up.

Whether the shift of “orphan” copyrights to the state or a creative party and, in either case, what obligations should exist if the owner does appear after some period of time, is an interesting question.  The Google “answer” seems both equitable and fair.

In today’s Forbes, CEI Warren Brookes Fellow Silvia Santacruz talks about the lawsuit against Chevron-Texaco in Ecuador. Read it here.

CEI Director of the Center for Investors and Entrepreneurs, John Berlau, released a statement on former Treasury Secretary Henry Paulson’s testimony before Congress (prepared version) on his alledged strong-arming of Bank of America during last year’s bank bailouts. You can read the original release here or see below.

Paulson Must Be Held Accountable for Alleged Bank of America Threats

Statement by CEI John Berlau

Washington, D.C., July 15, 2009—Former Treasury Secretary Henry Paulson is set to testify July 16 before the House Oversight and Government Reform Committee on whether he pressured Bank of America about the bank’s deal to buy Merrill Lynch.  Bank of America (“BofA”) CEO Ken Lewis has testified that he felt pressured to do the deal by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson.

Statement of John Berlau on testimony tomorrow of former Treasury Secretary Henry Paulson before the House Oversight and Government Reform Committee.

As much as President Obama is criticized, legitimately, for federal meddling in business and dictating who should serve on the auto industry boards, conservatives and others must never forget that it was Bush administration Treasury Secretary Henry Paulson that made the federal government go where it had never gone before in its dealing with private corporations. It is heartening that the House Oversight and Government Reform Committee is having a bipartisan hearing tomorrow in which Paulson will testify on these actions

Paulson exceeded his authority as Treasury Secretary on numerous occasions. When the government took over AIG in September, longtime company leader Hank Greenberg was locked out of negotiations, and Paulson replaced AIG’s CEO with Edward Liddy, who Paulson served with on the board of Goldman Sachs when Paulson was CEO.

Reports also indicate that Paulson strongly pressured healthy banks to take government money and give the government ownership stakes in the institutions, implicitly threatening negative regulatory actions if they didn’t take the deal. A set of Paulson’s “talking points” from a meeting with bankers, obtained through a Freedom of Information request by the group Judicial Watch, has him emphasizing to bank CEOs that “if a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance.”

But the most disturbing allegation is the one that the committee will be exploring that Paulson and others including Federal Reserve Chairman Ben Bernanke pressured Bank of America CEO to deceive his shareholders and not report the extent of losses at Merrill Lynch at the time BofA was attempting to acquire it. According to testimony before New York state Attorney General Andrew Cuomo, Lewis was seriously considering backing out of the deal, under a “Material Adverse Change” clause in the merger agreement, because of bigger losses than predicted on Merrill’s balance sheet. According to Lewis, Paulson said, “we would remove the board and management” if BofA did so. So Lewis and the BofA board backed down.

Lewis obviously failed his shareholders by not standing up to Paulson, but Paulson’s alleged actions were the most outrageous. Paulson had no authority to remove a board and CEO of a private company – that’s for shareholders to decide.

According to Cuomo’s report, “Paulson largely corroborated Lewis’s account.” Paulson will have a chance to give his side tomorrow, but his actions, if true, cannot be excused by any counterfactual of what would have happened if the merger had not gone through. The financial crisis was largely caused by breakdown in trust, and fostering mistrust at the government level will only prolong the crisis in confidence.

Paulson and others need to be held accountable, and the rule of law must be honored. If the allegations are true, Paulson probably violated many of BofA shareholders’s constitutional rights, including the 14th Amendment’s guarantees of due process and equal protection under the law.  A Bivens lawsuit, which is filed against government employees who abuse their authority and violate constitutional rights, may be appropriate for BofA shareholders to file against Paulson and others who allegedly threatened Lewis with removal if he didn’t deceive investors.

Arturo Valenzuela, Obama’s nominee to be Assistant Secretary of State, falsely claims it was an illegal “coup” for Honduras to remove its corrupt would-be dictator, President Mel Zelaya, without providing more “judicial process,” even though courts said it was perfectly legal. Obama has joined Cuban dictator Castro and Venezuelan dictator Chavez in demanding that Zelaya be reinstated. He nominated Valenzuela despite his reputation as a loud defender of dictator Chavez. Obama, too, claims Zelaya’s removal was “illegal,” even though it was carried out on orders of Honduras’s supreme court, and ratified by Honduras’s Congress, pursuant to Articles 239 and 272 of the Honduran Constitution.

The Obama team’s idea that officeholders have a right to “judicial process” before being removed from office, a right that even trumps contrary provisions in a country’s constitution, is truly staggering. Many elected officials, like California’s governor, can be recalled from office by voters at any time, without any proof of wrongdoing, and without any due process at all. For example, California Governor Gray Davis was duly replaced by Arnold Schwarzenegger in a voter-initiated recall, without any allegation of proof of any wrongdoing. If due process keeps corrupt Honduran leaders from being removed without a trial, then American politicians like Gray Davis logically can’t be removed either.

Unlike the Honduran President, the U.S. president can only be removed by impeachment, but even impeachment does not require either “judicial process” or the “technical rules” required by due process “to protect persons accused of crimes.” Moreover, requiring impeachment before removal is not a civil right or universal human right, but rather a privilege accorded certain officials to promote peculiarly American notions of separation of powers. Nothing in human-rights treaties or customary international law gives elected officials a “right” to remain in office until they are formally impeached, much less given a trial.

Moreover, Article 239 of the Honduran Constitution expressly clear that Honduras’s president loses the right to remain in office, without any need for impeachment, by seeking to perpetuate his time in office, or even merely proposing an end to term limits. To push that illegal referendum, Honduras’s president relied on aid from a foreign dictator, Venezuela’s Hugo Chavez. He also pressured public employees, fired military leaders who refused to help him violate the law (a decision reversed by the Honduran Supreme Court), and threatened citizens with the cut-off of public services if they didn’t support him. His removal from office was clearly legal. (In any event, as a result of recent amendments, Honduras’s constitution does not contain a well-developed impeachment mechanism.)

It is unbelievably arrogant for Valenzuela and Obama (who knows little about Honduran law) to claim that they know more about what is legal in Honduras than the Honduran Supreme Court. It is unbelievably arrogant for the Obama Administration to insist that Honduras reinstate its would-be dictator based on made-up principles of law that are contrary to both U.S. and Honduran law, and nowhere found in international law. It is a truly outrageous form of legal imperialism for Obama to insist that Honduras’s democratic processes be subject to cumbersome restrictions that the U.S. refuses to observe within its own borders.

Obama also claims that Zelaya must be put back in power because of the “universal principle that people should choose their own leaders”. Never mind that even publications that criticized the manner of Zelaya’s removal, like the Economist, have candidly admitted that Zelaya was unpopular with Hondurans, who overwhelmingly back the removal of their president — and that Zelaya was a bullying crook with approval ratings below 30 percent. In the Washington Post, the Wall Street Journal, and other papers, Hondurans have overwhelmingly supported his removal.

Apparently, Obama is determined to saddle Hondurans with Zelaya whether they want him or not, just because they once elected him. (Even though he radically changed his policy positions after being elected). Under Obama’s reasoning, Richard Nixon, who was twice elected president, shouldn’t have been forced to resign over Watergate, because that violated the American people’s “universal” right to choose their ruler. And America’s electoral-college system, which has resulted in four presidents being selected despite losing the popular vote, must be as “illegal,” since it, too, limits the people’s “right” to choose their ruler. Under Obama’s reasoning, the UN and OAS could have slapped sanctions and a trade embargo on the U.S. after our Supreme Court decided Bush v. Gore.

What Obama really means is that presidents, once elected, have a universal right to rule their subjects, and to flout the constitution, as Zelaya did, without being subject to removal. This sounds disturbingly like the “divine right” to rule (without following the law) claimed by medieval kings. (It’s certainly not what Obama and I were taught at Harvard Law School).

But the entire purpose of constitutional checks and balances, is that even elected presidents can lose their right to rule if they violate their country’s constitution or laws. In our constitution’s impeachment process, the Congress removes the president from office for wrongdoing, even if he was elected by a landslide. In Honduras, the Congress voted by 123-to-5 to replace Zelaya, including the vast majority of Zelaya’s own political party.

Honduras did not use a formal impeachment process to remove its president because its constitution does not have a well-developed impeachment mechanism, says Latin American scholar Juan Carlos Hidalgo at the Cato Institute. But its unwieldy constitution does have other, less elegant means of removing abusive presidents: Article 239 bans presidents from continuing to hold office if they seek to extend their tenure, or merely propose an end to presidential term-limits. And Article 272 gives the military the power to enforce those term-limit provisions, which it did by executing a warrant for Zelaya’s arrest issued by the Honduran Supreme Court.

(The military’s law enforcement role is not unique to Honduras: in the U.S., federal troops were used to enforce a court order desegregating the schools in Little Rock in 1957, when the court’s order was thwarted by the Arkansas Governor. When confronted with powerful officials who refuse to comply with the law, the courts cannot rely simply on a handful of U.S. marshalls, but rather must look to federal troops or the national guard).

Honduras removed its would-be dictator, President Mel Zelaya, for violating his country’s constitution by seeking to extend his term in office, and replaced him with a leading Congressman. Zelaya’s removal was authorized by Articles 239 and 272 of the Honduran Constitution, and ordered by his country’s Supreme Court, after he used coercion and aid from Venezuela’s dictator to push an illegal referendum. But Obama has joined Cuban dictator Castro and Venezuelan dictator Chavez in demanding that Zelaya be reinstated.

Originally, Obama’s justification for this demand was his erroneous claim that Zelaya’s removal was “illegal.” But when Honduras’s new president, a veteran legislator, pointed to stacks of court rulings that Zelaya had violated, the fact that the Honduran Congress had voted 123-to-5 to replace Zelaya, and that the military had legally executed a warrant for Zelaya’s arrest, Obama changed his tune.

Now, Obama claims that Zelaya must be put back in power because of the “universal principle that people should choose their own leaders”. Never mind that even publications that criticized the manner of Zelaya’s removal, like the Economist, have candidly admitted that Zelaya was unpopular with Hondurans, who overwhelmingly back the removal of their president — and that Zelaya was a bullying crook with approval ratings below 30 percent. In the Washington Post, the Wall Street Journal, and other papers, Hondurans have overwhelmingly supported his removal.

Apparently, Obama is determined to saddle Hondurans with Zelaya whether they want him or not, just because they once elected him. (Even though he radically changed his policy positions after being elected). Under Obama’s reasoning, Richard Nixon, who was twice elected president, shouldn’t have been forced to resign over Watergate, because that violated the American people’s “universal” right to choose their ruler.

What Obama really means is that presidents, once elected, have a universal right to rule their subjects, and to flout the constitution, as Zelaya did, without being subject to removal. This sounds disturbingly like the “divine right” to rule (without following the law) claimed by medieval kings. (It’s certainly not what Obama and I were taught at Harvard Law School).

But the entire purpose of constitutional checks and balances, and the constitutional impeachment process, is that even elected presidents can lose their right to rule if they violate their country’s constitution or laws. In our constitution’s impeachment process, the Congress removes the president from office for wrongdoing, even if he was elected by a landslide. In Honduras, the Congress voted by 123-to-5 to replace Zelaya, including the vast majority of Zelaya’s own political party.

Honduras did not use a formal impeachment process because its constitution does not have a well-developed impeachment mechanism, says Latin American scholar Juan Carlos Hidalgo at the Cato Institute. But its unwieldy constitution does have other, less elegant means of removing abusive presidents: Article 239 bans presidents from continuing to hold office if they seek to extend their tenure, or merely propose an end to presidential term-limits. And Article 272 gives the military the power to enforce those term-limit provisions. (The military’s law enforcement role is not unique to Honduras: in the U.S., federal troops were used to enforce a court order desegregating the schools in Little Rock in 1957, when the court’s order was thwarted by the Arkansas Governor. When confronted with powerful executives with armed followers who refuse to comply with the law, the courts cannot rely simply on a handful of U.S. marshalls, but rather must look to federal troops or the national guard).

Journalists who romanticize foreign dictators have faulted Honduras for removing Zelaya and kicking him out of the country in his pajamas. But getting rid of tyrants is a messy and difficult process. You can’t get rid of a tyrant by asking him nicely to leave office.

Honduras was far gentler to its menacing ex-president than the U.S. was in the past to people who threatened its democracy or constitutional order. In the Civil War, the U.S. government jailed without trial thousands of suspected confederate sympathizers, some of them innocent, as William Safire has noted, and many of them died in jail. After the Civil War, Tennessee’s Governor “Bloody Bill” Brownloe had to hold racist legislators at gun-point to make them ratify the 14th Amendment paving the way for black suffrage and equality — something that was far less legal than what happened in Honduras.