Economy & Business

How the Constitution Limits State Taxes

Must a company have a physical presence in a state for that state to require it to collect taxes? The Supreme Court is considering that question, which has grown more important as online sales have taken off. The Competitive Enterprise Institute has submitted an excellent brief arguing that the answer is yes, at least in the absence of congressional authorization for states to ignore that limit.

The CEI brief tries to overcome a tricky problem: While there is a solid constitutional argument for a default rule that limits states’ taxing power to their territory, and precedent is on that side as well, the constitutional argument and the precedent don’t sit well with each other. The former relies on constitutional provisions that the Court has largely interpreted away, from the compact clause to the import-export clause; the latter on the “dormant Commerce Clause.”

CEI’s answer: If the Court is going to rethink its precedent on extraterritorial taxation, it should rethink all the relevant precedents, and rethink them in a way that accords with the Constitution’s actual structure and purposes.

The brief makes two of its best points in passing. The first is that the fact that states that wish to tax outside their jurisdictions have banded together to create taxing arrangements by itself demonstrates that what they are trying to do impinges on commerce among the states. The second is that whether letting states have the taxing power many of them seek would be efficient ought to be beside the point for the justices. Arguments about efficiency “are little more than efforts to drag this Court into an inappropriate policy-making role and have no constitutional warrant. Just as efficiency is manifestly not the point of the separation of powers, technical efficiency likewise is not the point of federalism.”

I hope the justices listen.

Economy & Business

Ten-Year Bond Yield Creeps toward 3 Percent

Statue of George Washington overlooking Wall Street (Mike Segar/Reuters)

Does it matter if the the ten-year bond yield hits 3 percent? We might be about to find out.

At this writing, the yield on a ten-year U.S. treasury bond had reached 2.957 percent, its highest level since January 2014. That caps off the worst week for bonds since February 2, which happens to have been the week before the February stock-market correction (when equity markets shed a significant chunk of their value, putting an end to months of low market volatility).

The ten-year bond yield reflects market expectations for the future level of inflation and future path of monetary policy. Higher bond yields also mean higher borrowing costs for corporations. For these reasons, and others, the financial world has been anxiously awaiting the day that the ten-year yield reaches 3 percent. If it gets that high, the economy could be in trouble, many fear. In January, Bloomberg warned that “market euphoria may turn to despair” if the yield reaches 3 percent. Trader Art Cashin told CNBC in February that the mark is like the “third rail” and touching it could mean “all hell breaks loose.” Investor Jeffrey Gundlach told his clients in March that reaching the 3 percent mark would end the bull market in equities. Are we hurtling toward disaster?

Probably not. By every measure, nothing significant has changed about the underlying health of the economy within the last week. Financial journalists and bombastic traders have a tendency to make mountains out of molehills when it comes to financial markets. Even plenty of market observers dismiss the notion that the 3 percent yield is a magic number. Still, over the coming weeks, it will be worth watching to see whether the ten-year yield hits 3 percent — and whether that matters.


Media Outlets Ignore Key Data in New Abortion-Attitudes Survey

Pro-life activists gather outside the Supreme Court for the National March for Life rally in Washington, DC, January 27, 2017. (Aaron P. Bernstein/Reuters)

A new poll on abortion attitudes by the Public Religion Research Institute (PRRI) has received a considerable amount of media coverage this week. Interestingly, the survey asks not only about attitudes toward legal abortion but also asks respondents to self-report whether or not their attitudes toward abortion have shifted in recent years. Respondents in their late teens and twenties indicated that, during the past five years, they have become more sympathetic to legal abortion. This poll has been covered by a number of media outlets including NPR, Reason, and ThinkProgress.

It is unsurprising that people might become somewhat more sympathetic to legal abortion in their twenties. Many polls have found that attitudes toward abortion are correlated with attitudes toward premarital sex — if one views the latter as acceptable, he is more likely to find legal abortion acceptable. In addition, data from both the National Survey of Family Growth (NSFG) and the National Youth Risk Behavior Survey (YRBS) find consistent declines in sexual activity among minors. Since more people are becoming sexually active for the first time in their late teens and early twenties, it is unsurprising that those in this age cohort might also report becoming more accepting of legal abortion.

Many in the media have used the results of this poll to cast doubt on previous surveys showing high levels of pro-life sentiment among young adults, but such analysis is faulty for a few reasons. First, the new PRRI poll provides information about self-reported changes in sentiment — not levels of sentiment — among various age groups. Even if the pro-life position loses some ground as teenagers get older, overall levels of pro-life sentiment could still be higher among Millennials than previous generations of young adults.

Furthermore, there is a substantial body of survey evidence showing that the current generation of young adults is far more skeptical about abortion than their predecessors. Polls taken by the General Social Survey (GSS) in the 1970s found young adults (18-29) were the age cohort most supportive of abortion rights, but beginning in the 2000s, the same survey questions found that young adults had become the age cohort least supportive of legal abortion. Other polling data shows young adults are more likely than older Americans to support both the Department of Justice investigation of Planned Parenthood and a range of incremental pro-life laws including 20-week abortion bans, waiting periods, and parental-involvement laws.

Interestingly, nearly all the media coverage of this PRRI poll ignores trends that are positive for pro-lifers. For instance, the poll shows substantial gains in pro-life sentiment among both senior citizens and people between the ages of 30 and 49. More important, the poll also shows that there has been a sizable gain in pro-life sentiment during the past two years. Since September 2016, the percentage of adults who think abortion should be illegal in all or most cases increased from 37 to 43 percent. This is significant because there is some evidence that pro-life sentiment has weakened during past Republican presidential administrations. Of course, positive pro-life trends such as these typically receive scant attention from the mainstream media.

Science & Tech

Facebook Changes Are Far from Straightforward

Facebook’s critics often seem to suggest that there are easy and straightforward solutions to the tech giant’s challenges.

For example, it is often argued that Facebook should simply label political and issue ads and show who paid for them. This sounds easy, but it faces a perennial challenge in regulating political speech: Namely, what counts as political speech? And in the case of Facebook, the matter is further complicated by the involvement of foreign entities.

I offer some thought experiments designed to illustrate the complexity behind supposedly simple changes to Facebook policy in my Bloomberg column:

If a foreign public health organization buys Facebook ads to raise awareness about, say, malaria vaccinations, should Facebook label them as engaging in political activity? If users in the U.S. see the ad while foreign aid is an election issue, does that count as foreign interference? If a U.S. university buys ads to promote the research of its faculty, and that research is on politically salient issues like the minimum wage, should the university be labeled as politically active? What if a religious organization does the same on social issues?

Likewise, the issue of user verification is not straightforward. If, for example, Facebook requires all users to have government-issued ID, then it is effectively disallowing individuals without ID from opening Facebook accounts. And do we want Facebook to have copies of all of our driver’s licenses? There are similar complexities with seemingly simple regulations designed to increase competition among social-media companies, such as allowing users to take their content with them from Facebook to a competitor.

I go into more detail over at Bloomberg. Your comments, as always, are very welcome.


The Scholarship/Activism Balance — A Rejoinder

Former University of Missouri professor Melissa Click. (Photo: Wikimedia Commons)

The Martin Center recently published an article by sociology professor Fabio Rojas, in which he argued that professors should maintain the right balance between their teaching and scholarship on the one hand, and activism on the other. In today’s article, the Center’s Jay Schalin pushes back somewhat.

Schalin writes,

Rojas attempts to finesse the stricture against teaching opinions by saying that it is acceptable if the professor explicitly declares that he or she is doing so, rather than providing research-based information. At first glance, this may seem to be a reasonable solution. Yet it brings a whole host of problems. For one, it can be used by the professor to subtly signal his or her preferences to the class (or can be taken by students that way regardless of the professor’s intent). It also enables the teacher to express his or her preferred opinions without providing alternate valid perspectives. And doing so repeatedly can cloud the difference between information and opinion.

I think that’s right. Many professors take advantage of their positions by loading the dice in favor of their own opinions. Few students will dare question them; most will just absorb whatever the prof tells them. If the prof says, “It’s my opinion that raising the minimum wage does not cause unemployment and those who use that argument are against helping the poor,” that idea is going to stick in the heads of numerous students.

Shouldn’t we trust profs to strike the right balance? Schalin doesn’t think so, writing, “Rojas, in defining his ‘scholarship-first, activist-second’ paradigm, suggests that a professor should exercise ‘moderation, self-restraint, and professionalism’ concerning classroom activism. Unfortunately, this admonition is too vague to provide much guidance.” Yes, and that invites the zealots who have invaded so many academic departments to push the boundaries.

Schalin concludes,

It is unfair to taxpayers to have their money taken from them so that activist faculty can promote activism against their interests. Just as it is unfair that students who pay tuition are taught opinions rather than scholarship when their expectations are the opposite.

Politics & Policy

Flipping Out

Allies of President Trump are all over the media, as Josh Barro notes, worrying that Trump lawyer Michael Cohen will “flip” on the president. This is odd, as he also points out, since “flipping” on someone is usually taken to mean divulging the truth about his criminal activities.

My own free p.r. advice for Trump allies when asked whether Cohen would flip would be to answer: Obviously there is no reason to believe the president has engaged in any law-breaking and therefore there is nothing for Cohen to flip on. And surely the president has not been associating closely and for a long time with someone who would pretend he has broken the law in order to get himself out of a jam.


Friday Links

Here’s what happens when you crack your knuckles, including the researcher who cracked the knuckles in one hand only for over 60 years to see if he’d get arthritis. Related: The Science of Knuckle Cracking.

How a Guy From a Montana Trailer Park Overturned 150 Years of Biology.

The legend of Blackbeard’s silver-plated skull. Kind of related: The Swashbuckling History of Women Pirates.

April 22 is Earth Day: Here’s the story of the co-founder who killed then composted his girlfriend.

Inside the FBI’s Colossal Pre-Computer Fingerprint Factory.

Artificial Heart Update: A simple artificial heart could permanently replace a failing human one.

ICYMI, Wednesday’s links are here, and include the anniversary of the 1906 earthquake and fire that destroyed 80 percent of San Francisco, that time Kansas locked up more than 5,000 women and girls for having STDs, why it’s almost impossible to throw a 110 mph fastball, and “T’was the eighteenth of April in seventy-five”: the midnight ride of William Dawes and Samuel Prescott (and Paul Revere).

National Review

We Happy Few: The NR 2018 Spring Webathon Needs Your Participation

The Defence of Rorke's Drift, by Alphonse de Neuville
The Defence of Rorke’s Drift, by Alphonse de Neuville (1880) (Art Gallery of New South Wales)

Here, grab my hand and I’ll yank you up atop the ramparts with us so you can join the fight against the enemies of all we hold dear. Of course, we’ll need some ammunition: Can you spare some? National Review’s fight is your fight: It’s a grim one without the participation of a full complement of that band of brothers and sisters, of the selfless souls who despise the thought of being spectators, of the committed men and women who know they have a role in the battle to preserve conservative principles. Our just-begun 2018 Spring Webathon is seeking to raise some $210,000 to underwrite a number of strategic efforts that, we contend, will not only truly support NR on the front lines, but also help us put this business into a strong position that – mirabile dictu – one day, sooner than later, will dry up the red ink that has tormented us for six decades.

I am asking you – yes, you – to please donate. Can you do $10 or $25? $50 or $100? What if just this once you added a zero (right before the decimal point) to those numbers? Let the mood strike you: Add another zero — if you’re capable of contributing $2,500, or maybe even dare I say $25,000 (hey, it’s happened). There is no time like the present. You can make that donation here. Do you prefer PayPal? If so, send your help to NR here. Old school? That’s cool: Mail a check (payable to “National Review”) at 19 West 44th Street, Suite 1701, New York, NY 10036. We remain deeply appreciated to any and all who generously help.

White House

Conflicting Reports on What Rosenstein Told Trump

Deputy Attorney General Rod Rosenstein at the Justice Department, October 2017. (Yuri Gripas/Reuters)

At a White House meeting last week, Deputy Attorney General Rod Rosenstein reportedly told President Trump that he is not a target of an investigation. What’s not clear is which investigation.

Bloomberg reports that that the president was told that he is not a target Special Counsel Robert Mueller’s investigation, which involves Russia’s interference in the 2016 election, possible Trump campaign collusion therein, and possible obstruction of that investigation.

On the other hand, Fox News reports that Rosenstein assured the president that he was not a target of the Michael Cohen investigation, which is led by the U.S. attorney’s office for the Southern District of New York (the SDNY, headquartered in Manhattan). That investigation reportedly involves the activities of the president’s sometime-lawyer and self-described “fixer,” and includes but is not limited to non-disclosure agreements in the run-up to the 2016 election with women who claim to have had sexual liaisons with Trump a decade ago.

I’m not in a position to know which of these reports is more accurate. I’d note that the White House meeting, at which it is said that Rosenstein brought up the subject of the president’s status in at least one investigation, the emergent issue was the raid on Cohen’s office and residences, which had Trump incensed. Since then, the president has piped down noticeably on that matter. It is also worth remembering that, reportedly, Mueller had already told Trump’s private attorneys that he was not a target of the Russia probe a few weeks back.

Regardless of which investigation(s) the president and the deputy attorney general may have discussed, I will reiterate what I explained over a week ago about the investigative term-of-art target:

In every investigation, a prosecutor drops relevant people in one of three buckets: target, subject, and witness. The two extremes are the easy ones to grasp. A “target” is virtually certain to be charged with a crime. A “witness” has relevant knowledge but is not suspected of any wrongdoing — think of the victim in a robbery. A defense lawyer always hopes the prosecutor will think of his client as a mere witness. While “target” is clearly the worst-case scenario, at least your choices are clear: Either cut a plea deal or fight the case at trial — no target is going to talk his way out of being charged.

“Subject” is the fuzzy category. A “subject” is someone whose behavior is being evaluated by the prosecutor and the grand jury. Usually, there is not enough evidence to charge . . . yet. As long as the investigation continues, a subject can become a target, and then a defendant, at any moment.

That is the limbo where Trump sits.

I do not mean to suggest that being informed one is not a target is insignificant. Still, whatever comfort the president derives from what Rosenstein has told him should be balanced by the fact that he is still a subject of investigations in which his behavior, and the behavior of others acting on his behalf (although some allegedly without his knowledge), is under scrutiny.

A subject can become a target in a hurry. The president should bear that in mind if, as some reports I’ve heard today suggest, he is still open to the idea of submitting to an interview by Mueller. I continue to believe that would be a mistake, not just for the president personally but for the institution of the presidency. The president’s job is too important to be disturbed by a prosecutor unless there is a serious crime, strong evidence that the president is complicit in it, and circumstances in which the information the prosecutor seeks is unavailable from other sources.

Film & TV

Pro-Life Feminist

My paisana at the Human Life Review are hosting an event in NYC on Thursday, May 3, at the Sheen Center (18 Bleeker Street) for the airing of director Jim Hanon’s half-hour documentary, Pro-Life Feminist. After the viewing, he’ll join the trio of castmates — Destiny Herndon-De La Rosa, Aimee Murphy, and Christina Bennett — for Q & A and a lively discussion. It all begins at 7:00 p.m., and the price is only $17.00. Do come. Get complete information and reserve your ticket here.

National Review

My City by the (Green) Bay

There’s something about the Packers’ hometown that has a hold on us. Fregsample . . . editorial bad boy Bobby VerBruggen and NRI’s Alexandra Rosenberg hail from its precincts. And now there is this must-attend event that you simply must, well, attend: On Wednesday, May 2, National Review Institute and the Wisconsin Institute for Law and Liberty are jointly hosting NRI senior fellow David French (from 5 p.m. to 8 p.m. at the Green Bay Distillery, 835 Mike McCarthy Way in Ashwaubenon) for a talk titled “The Kids Aren’t Alright: The Collapse of Free Speech from the Ground-up.” The shebang kicks off with a little reception, the talk commences at 5:30 p.m., there’ll be Q & A, and then time for post-talk schmoozing and picture-taking. All for just $10. To all my Badger friends: You can’t not come. Sign up here.

Politics & Policy

Good News for Pompeo

Looks like he’s in, as he should be.

But this fight has been a hint of what life will be like for Trump if the Democrats somehow take the Senate — they’d refuse to confirm anyone for anything.

Politics & Policy

Remember When Andrew McCabe Was a Martyr for Truth and Justice?

Former acting FBI Director Andrew McCabe testifies before a Senate Intelligence Committee hearing on Capitol Hill, June 7, 2017. (Aaron P. Bernstein/Reuters)

Not long ago, Andrew McCabe’s firing was supposed to be a great offense against justice. Here is a pretty good example of the heavy breathing over it. Well, since then we’ve had a devastating IG report about McCabe’s lack of truthfulness. Jonathan Turley had a good summation the other day:

At issue is the leak to The Wall Street Journal about an FBI probe of the Clinton Foundation.

Notably, the report itself belies the allegation of McCabe that he was victim of a witch hunt loyalists.  Not only was Horowitz an Obama appointee but his staff were all career officials. More importantly, the report confirms that opened this review a week before Trump was sworn in. It preceded and had no connection to Mueller.

The report takes apart McCabe’s spin with clinical precision.  It found that McCabe, 50, lied or misled investigators on not one but four occasions.  It also found that these lies were clearly meant to help McCabe alone.  McCabe said that he had full authority to make the disclosures.  The IG found no evidence to support those claims. It also found that there was no evidence that then FBI Director James Comey was informed by McCabe. The IG states:

“[W]e concluded that McCabe’s decision to confirm the existence of the CF investigation through an anonymously sourced quote, recounting the content of a phone call with a senior department official in a manner designed to advance his personal interests at the expense of department leadership, was clearly not within the public interest exception.”

So let’s sum up.  The IG found that McCabe lied on four occasions.  It found that he did so for personal benefit.  He further showed no contrition and allegedly falsely implicated his superior in the improper leaking of information to the media.

Even James Comey agrees with this harsh verdict. Byron York notes this from yesterday:

In an appearance on ABC’s “The View” earlier Wednesday, Comey said he ordered the probe that eventually led to McCabe’s firing, and believes McCabe lied about his conversations with the media.

“The McCabe case illustrates what an organization that’s committed to the truth looks like. We investigated — I ordered that investigation. We investigate and hold people accountable,” Comey said Wednesday morning. “I still believe Andrew McCabe is a good person, but the inspector general found that he lied, and there are severe consequences in the Justice Department for lying as there should be throughout the government.

Finally, all this raises the question why McCabe isn’t facing the same potential consequences as people caught up in the Mueller probe who have lied to the FBI. Turley again:

As noted earlier, Flynn was indicted for criminal false statements on less.  He now faces a prison stint after pleading guilty to a single false statement about a meeting with Russian diplomats during the Trump presidential transition period. While Flynn did not deny the meeting, which was entirely legal, he denied discussing sanctions with the Russians. Mueller charged him with lying or misleading federal investigators under 18 U.S.C. 1001. He did so even though investigators working under former FBI Director James Comey reportedly had concluded that Flynn did not intend to lie and should not be charged criminally for the omission.

McCabe has used the Flynn defense that he was “confused and distracted” but unlike Flynn it appears (thus far) to have worked.

The issue is not as much the crying need to indict McCabe as it is the lack of consistency of how this law is being applied.

Now, comes word that there’s been a criminal referral for McCabe.

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Film & TV

Pro-Life Feminist

My paisana at the Human Life Review are hosting an event in NYC on Thursday, May 3, at the Sheen Center (18 Bleeker Street) for the airing of director Jim Hanon’s half-hour documentary, Pro-Life Feminist. After the viewing, he’ll join the trio of castmates -- Destiny Herndon-De La Rosa, Aimee Murphy, and ... Read More
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