Social Security Tax (Interim) Post-Mortem

The government has agreed to a two-month extension to the payroll tax rate.  It is to be funded by increasing fees at Fannie Mae and Freddie Mac.  I’m going to be very blunt here.  Though this is better than no deal, I hate this deal and I think everyone is a loser, with the biggest loser being the American people.  Even though the Democrats can claim victory for this little battle, it’s hard for me to call them winners.  Instead, I’m inclined to say they simply loss less than the GOP.  I’ll come back to that in a bit. 

One of the worst details in this deal is that it sets a very dangerous precedent of the government plundering Fannie and Freddie for funds.  Sure, maybe it’s not an entirely new precedent considering how they’ve already plundered the Social Security Trust Fund (SSTF) and replaced it with Treasury notes, but Fannie and Freddie are new targets as far as I know.  The politicians claim that this is a one-time thing, but we should not believe them if history is any indication.  They’ll do it again sometime, possibly as soon as February.  The increased fees at Fannie and Freddie will be an even further headwind for housing, but hopefully they will only be in effect these two months.  Housing doesn’t need more and/or stronger headwinds.  It trouble enough to begin with and it’s a major albatross on the economy.  I suppose there are worse sources to fund this from, but not by much.

The fact that it’s only two months bugs me, too.  They just wanted to be able to go home for the holidays, but they shouldn't have ended up in this rush at the end.  One of my arguments advocating a one-year (ideally longer) extension is so that we won’t have to fight the battle again and create that sour mood that saps confidence in both our personal financial situations and our government.  I was hoping we’d be able to move onto other issues, but that’s not the case.  This just gives the government another chance to screw it up, which worries me.  This risk and sour mood are the core of my rationale for viewing the American people as the biggest loser.  Suffice it to say, I’m not looking forward to this fight again next year.

I still favor a multi-year extension and reduction in the personal payroll tax rate.  I’d like to see it get taken down to 3.1% and locked in for multiple years.  I’d also like to see it expanded to businesses.  I think locking it in for several years and expanding it further would turn it into even stronger economic stimulus.  Yes, I know that would worsen Social Security’s already weakened state.  For me personally as a guy under 30, I write off any money I put into Social Security from my paycheck as a 100% loss, whether it comes from me or my employer, so I also view this as a chance to reduce my losses in addition to economic stimulus (I’m just being honest about my financial interests).  I don’t think my vision will happen since they can’t even agree on a one-year extension of the current rate, but I can hope, right?

Onto the politics.  As I said above, I think both parties are losers, but the Democrats are less of one for now.  The Democrats can high-five themselves all they want now for winning this battle on the issue, but if history is any indication, I would not be surprised to see them find a way to lose the war in February because they’re good at inventing ways to lose.  They dug in and held their ground with a bipartisan compromise.  They’re right to high-five themselves, but they would be foolish to get complacent here.

The GOP may be divided, or it may be more motivated not to give ground next year.  We’ll know better about that next year, but I think the latter is more likely than the former.  The GOP was the clear loser here not just because they caved, but because they didn’t do a good job of making the argument that we should just do a one-year extension now.  They also didn’t do themselves any favors with the funding they proposed.  Interestingly enough, the Democrats were able to outflank the GOP on the right here, which doesn’t often happen. 

I’m still sticking with my prior prediction that a one-year deal gets done, meaning we get this through all of 2012.  My expectation remains a straight extension versus an expansion.  I’m wrong for now, but I think I’ll be right in the end.  We’ll see in a couple months. 

A Look at How Peaceful Occupy Wall Street is and the Escalation of Tactics

It’s a very simple question.  Just how peaceful is Occupy Wall Street (OWS)?  Before we start, let’s level-set some words.  ‘Peaceful’ is not equivalent to ‘lawful’ and there are multiple antonyms to ‘peaceful’, including both ‘violent’ and ‘disturbed’.  Supporters claim they are a fully peaceful group exercising their 1^st Amendment rights and non-violent civil disobedience (see here for a great write-up about the limits of the 1^st Amendment; hint – 1^st Amendment rights are not absolute and do not allow infringement on the rights of others).  Opponents claim they are a violent, disruptive, and lawless mob that has no regard for the rights of others including property rights.  I suspect that one of the disconnects in the argument for/against OWS’s peacefulness is whether it’s in relation to violence or disturbance.  Supporters seem to think in terms of only the former while opponents seem to think in terms of both.  In other words, supporters believe OWS can be simultaneously peaceful and disruptive while opponents disagree.

Really, it depends on how much emphasis you are willing to put on the actions of the worst in the crowd.  I’m generally an advocate of not demonizing a big group based on the actions of a small number of problematic people and I recognize that many OWS protesters are of the non-violent variety, but that does not mean we can simply overlook the bad actors, who have become too egregious and too numerous to ignore.  I’d like to do that here from a couple different perspectives.

I follow @OccupyArrests on Twitter as my source for OWS arrest information and they are currently showing over 5,600 arrests since this whole thing started about three months ago.  Their numbers are higher than my own informal tracking, but I suspect this is because people are actually actively giving them more accurate information than what I’m able to find and they’re clearly spending more time tracking it than I can.  Because of that, they’re doing a better job picking up accurate numbers and the smaller incidents than I am, so I defer to them.

Their numbers show that, while a good portion of the arrests occurred in high-profile incidents in which hundreds, were arrested, such as the Brooklyn Bridge, Oakland riots, and big demonstrations from California, Chicago, and Boston, most of the arrests stem from smaller incidents.  Unsurprisingly, there are far more numerous smaller incidents in which the arrest count remained in single digits or the teens.  The big incidents account for maybe a quarter or a third of the arrests to this point. 

It’s one thing to look at arrest numbers, but we need to go a bit deeper than that, and we start to see an escalation.  Early in the movement, within say the first few weeks, there were really no single incidents that were making headlines aside from the Brooklyn Bridge.  Of course, we’ve seen pictures of off-the-wall stuff like defecation onto a burning American flag and a police car, but these were (relatively) benign actions.

As a couple weeks more passed, we started to see some pretty robust vandalism, which was sometimes followed by a note or even further graffiti stating that said act of vandalism was not approved by the General Assembly.  I somehow doubt that makes the victim feel any better because they’re still out the cost to repair the damage, and if OWS really wants to make it right, they’ll pay for the damage instead of using the money to buy TV commercials.  But, I digress.

Within the past few weeks or so, we’ve seen the escalation continue because now we’ve had multiple reports of sexual assaults.  That situation even prompted some groups to create woman-only areas and formalize procedures for dealing with troublemakers.  Also, there have been multiple drug overdose incidents, gunshot incidents, and even a Molotov cocktail. 

More recently, several OWS camps have been broken down due to public health, fire hazard, and law enforcement concerns.  This was sometimes done in the middle of the night to minimize the number of people in the camp and minimize their ability to coordinate resistance, such as in NYC.  In the days following the camp breakdowns, we’ve even seen injuries inflicted on both protesters and law enforcement as tensions rise. 

But, wait, there’s more.  OWS has even been responsible for some rioting and is actively attempting to disrupt commerce by occupying several seaports.  This is a noteworthy escalation because it has a more global impact.  Camping out in a city is really just an inconvenience for that city’s residents and visitors.  Blocking ports, however, is disruptive throughout the business chain as delivery schedules are thrown off.  When delivery schedules are thrown off, payment schedules are often impacted, creating problems with things like cash flow and inventory management.  As with the victims of vandalism above, I somehow doubt the entities losing money due to the port disruptions are very happy about this, be they workers or businesses.  These are the ports of the 100%, not the 1%. 

As if trying to shut down ports wasn’t enough for one week, OWS escalated things further still over this past weekend when OWS attempted to take over a vacant lot owned by the Trinity Church.  Essentially, OWS figured that since the church wasn’t using it, they could take it. 

As incidents like these stack up, the narrative of a peaceful OWS, whether in relation to violence or disruption, is very much challenged.  If they want their movement to be successful, they need to quickly slow and reverse this escalation.  They also need to shake what I see as a blatant disregard for collateral damage and the rights of others, as evidenced by the sexual assaults, violence, occupations, vandalism, rioting, port disruptions, and attempts to take over a church’s property.  OWS is trying to get the general populations’ attention and rouse them into pressuring their elected officials.  However, I don’t think the little attention they’re receiving now is good attention and OWS is running the risk that the people will not push lawmakers to address OWS’s issues, but OWS itself.

Links:

http://revmagdalen.blogspot.com/2011/12/occupy-wall-street-1st-amendment-is-not.html

GOP Iowa Debate Review

The GOP held a debate in Iowa on Thursday.  I’ve skipped most of the debates, but this one was a big deal because it was the last one before the Iowa caucus in early January.  It did not disappoint.  There were only seven candidates on stage this time – Michele Bachmann, Newt Gingrich, Jon Huntsman, Ron Paul, Rick Perry, Mitt Romney, and Rick Santorum.

I did live-tweet it (shameless plug - @TimABRussell).  Unlike my live-tweeting last night, I’ll try to sharpen the line between my observations and my opinions.  It’s hard to pick a clear winner or loser last night because most of the candidates took some serious damage (inflicted both by others and themselves) and/or failed to do anything stellar.  Also, it’s hard to define ‘winner’ and ‘loser’ in this context.  I try to do so at the end, but without further ado, here comes each candidate in 100 words or less.

Bachmann was in attack mode last night.  She absolutely hammered Gingrich on Fannie/Freddie and had a spirited exchange with Paul on Iran.  Bachmann was the clear winner in both exchanges in that she really hurt both counterparts on topics each needed to avoid.  She also got to tout her social conservatism and build herself out a bit, but not enough.  I still don’t see her as a viable winner for the primary or general election (maybe as a VP or cabinet member), but she helped her cause last night by doing so much damage to everyone else.

Gingrich got pounded on Fannie/Freddie by Bachmann.  Also, I think his proposed judicial changes really hurt him, as Paul and Romney did a great job of showing why they’re a bad idea.  Overall, I think Gingrich was a big loser on the night because he took a lot of serious damage and wasn’t able to play offense.  He wanted to focus on policy, but couldn’t, and when he could, he didn’t do that well.  He’s still in the hunt (and would be viable for VP or a cabinet seat), but he took damage on top of already dropping coming in.

Huntsman had, in my opinion, the overall strongest performance in terms of doing something stellar for oneself.  His advocacy for a bottom-up versus top-down approach to dealing with China and discussion of creating shared values reflected some great insight and new ideas.  He also discussed strengthening our core at home, term limits for Congress, and too big to fail.  His restoration of trust campaign theme is excellent.  I think he’s a long shot for winning the primary, but would make a great VP or cabinet member.  If he gets his name out there better, he has promise in the future.

Paul had a mixed night.  Because his foreign policy is so different from the GOP (and even most Democrats), he wanted to avoid being drawn into a foreign policy discussion.  He could not, and Bachmann hit him on it hard.  Paul did a great job countering Gingrich’s ideas on the judiciary and even pitched that he wouldn’t be a power-hungry president.  He has a small, vocal, and devoted following, yet Paul struggles to expand beyond it.  Maybe the Libertarian ticket is the place for him because I don’t see him winning here or getting the VP or cabinet positions.

Perry was largely irrelevant last night, in my opinion.  Aside from comparing himself to Tim Tebow and discussing throwing mechanisms, he really didn’t say that much of interest.  He talked about having Congress work less and some other issues.  When listing the seven candidates at the start of this post, I kept forgetting Perry (true story).  That’s how forgettable he was.  I don’t see how Perry could win the nomination and I question whether he’d even be a viable consideration for VP.  Perry just doesn’t have that presidential aura.

Romney’s biggest enemy wasn’t on stage.  Chris Wallace absolutely pounded Romney on flip-flopping or evolving views or political expediency or whatever you want to call it on abortion, gay rights, and gun control.  Wallace was brutal by moderator standards.  Outside of that, Romney had a solid performance and demonstrated some great economic leadership and competence.  He also hurt Gingrich on judicial issues.  I think last night was overall a net positive for Romney and he’s reestablished himself as the one to beat, partly due to Gingrich’s damage from last night and partly due to Romney’s mostly strong performance.

Santorum was pretty quiet last night.  Aside from his tiered approach to repatriation of overseas cash (5.5% normal, 0% if invested in America to create jobs), we really didn’t hear much from him.  He touted his record as a social and economic conservative, but failed to bring much new to the table.  He didn’t improve his (already slim) chances of victory last night and should consider seeking either the VP spot or cabinet positions.  Like Perry, Santorum lacks that presidential aura.

Overall, I’d say Huntsman had the strongest performance in terms of building oneself, Romney was best at holding ground, and Bachmann clearly did the most damage to other candidates, so I guess we can call them winners.  I think Gingrich was the biggest loser because of the damage he took and inability to effectively play offense.  Paul was a loser similar to Gingrich in both regards, but not as bad.  Perry and Santorum were really just kind of there and neither did anything big.  We’ll see soon how accurate my assessments are.

The Financial Crisis Blame Game

Personally, I’ve grown weary of the blame game for the causes of the US financial crisis of 2008.  Some place the blame entirely on the private sector.  Others place the blame entirely on the government.  The pattern I’ve noticed is that one’s political orientation tends to determine who blames whom.  In other words, if you’re left-leaning or Democrat, you’re more likely to blame the private sector and if you’re right-leaning or Republican, you’re more likely to blame the government. 

The blame game is ridiculous and it misses the whole point because the debate is inherently flawed.  It’s not an either/or proposition because both the public and private sectors deserve blame (if I had to make the choice between the two, I’d blame the government more than the private sector, but I don’t have to).  So, both sides are actually right, however they still don’t tell the complete story.  Consider your mind blown. 

I’m not denying the private sector had major responsibility here.  We know they relaxed their 3C’s of credit (collateral, character, and capacity) and thereby relaxed their historically-effective lending standards.  We know they overleveraged.  We know they bundled derivatives and other creative products that were dysfunctional from the start, be it due to the actual design of the product or its constituents.  We know the ratings agencies were asleep at the wheel and managers failed to do their own due diligence.  I’ve written about all of this before, so I’m not going into much more detail here. 

I want to take some time to look at the government’s role in the crisis because, in order for the private sector to do what it did, it had to be allowed, maybe even encouraged, to do so by the government.  At a minimum, the private sector needed the government to look the other way, and at worst, it needed the government to actively encourage and facilitate such activity.  Note that these topics could easily be whole posts in and of themselves.

The natural counter is that the private sector bought the government.  Even if true, it doesn’t change the fact that it’s the government’s collective job (as legislators, regulators, judges, etc.) is to be the ‘adult in the room’ and remain vigilant against danger.  The government is not supposed to be an enabler, facilitator, and/or cheerleader here.  It is the government’s job to look out for the well-being of the nation at large.  In this sense, the government deserves blame and failed to do its job.  We can’t absolve the government from responsibility by saying they were bought out. 

So, what did the government do to deserve its share of blame?  The repeal of Glass-Steagall is really what set this in motion because it broke down the divide between commercial and investment banks.  A commercial bank is where you and I go for a mortgage or car loan or a checking/savings account while an investment bank is where a company goes to sell bonds or stock to the market.  Glass-Steagall was passed during the Great Depression by FDR to separate commercial and investment bank activity and it was a good thing to have in place.  It’s one of the few things FDR actually did right in the New Deal, but I digress. 

There were also various other lapses in regulatory judgment.  These include the Securities Exchange Commission (SEC) allowing the big five investment banks (Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns) to expand their leverage to very high levels, which I’ve discussed previously.  We’re talking 30-1 or worse in some cases.  There was also the unwillingness to regulate derivatives and various non-bank lending institutions, of course.  Additionally, there were breakdowns regarding interstate banking restrictions.

The government not only did its part to undo key regulations like Glass-Steagall and turn a blind eye on derivatives and non-bank lenders as discussed above, but the government also encouraged the reckless behavior.  It was very clear that the government wanted to see the homeowner percentage elevated from its historical norm.  Various statements and reports from Fannie Mae, Freddie Mac, Congress, and the White House (under both Clinton and Bush Jr.) show this pattern. 

Clinton wouldn’t have expanded Jimmy Carter’s Community Reinvestment Act (CRA) if the goal wasn’t to break down barriers to home ownership, for example.  We can’t fully ignore the CRA’s role in the crisis because, even though some are quick and correct to point out that the non-bank lenders were often not subject to the CRA, many of the banks that ended up with the non-bank loans were subject to the CRA.  It was at the bank’s discretion whether or not it wanted to try to treat the non-bank loans as CRA loans, thus creating an incentive for the non-CRA lenders to ensure their loans could be counted under the CRA. 

And, with that, we come to the Federal Reserve.  In the early 2000’s, the Fed cut their rates to a then-historic low of 1%.  They left them there for a while, and in hindsight, we see they left them there too long.  Alan Greenspan’s Fed also was very hands-off about regulating, figuring the self-interest of the market was enough to police itself.  The most dangerous thing the Greenspan Fed did, however, was create an expectation of bailout in the event things went bad.  Easy Al was willing to step up during several incidents, such as the Long Term Capital Management debacle and emerging market bubble of the late 1990’s or the post-tech bubble era of the early 2000’s.  This is known as the Greenspan put (simply, puts are options contracts that can be bought as a hedge against a decline in value or a play on the asset declining in value).  More recently, Big Ben Bernanke has continued this trend, as we saw in 2008 and with the recent coordinated global intervention for Europe.  It’s now known as the Bernanke put. 

Basically, the Fed’s low interest rate and easy money policies caused asset bubbles, and then the Fed used those same tools to address the aftermath of said bubbles, thereby creating a new bubble somewhere else.  Furthermore, they’ve created a culture that expects to be bailed out if things go awry.  If bad actors aren’t allowed to fail, it’s not really capitalism.  This is where ‘capitalism on the way up and socialism on the way down’ comes from because they keep the profits as they rally, but they look for a bailout from the government as we plunge. 

Again, I’m not absolving the private sector of responsibility because it definitely did its part.  All I’m saying is we can’t absolve the government, either.  Sure, we can quibble over which side was more at fault (and we probably will for years to come), but this either/or framework for discussion has done a tremendous disservice to America in terms of our ability to understand and address the crisis.  Oddly enough, the conflict also protects both the government and private sector from meaningful reform efforts.

As I said above, this doesn’t tell the entire story because it’s not just about blaming the government and private sector.  I’ll go into this in greater detail in future posts about the rest of the story, including cultural/psychological aspects that enabled the crises and a simple takedown of the common argument that because the crisis was global, it has to be mainly the private sector’s fault. 

A New Danger to Citizens’ Rights

Once again, the legal rights of American citizens have been endangered by the government.  I’m talking about S.1867, the Senate’s version of the National Defense Authorization Act (NDAA) for Fiscal Year 2012, which passed earlier this week.  The language in question does not appear in the House of Representatives version of the NDAA, which also passed recently.  These bills have both passed their respective houses, but they are not law yet because a joint committee of members from both houses must work to resolve the differences before sending the bill to the President, who would either sign the joint bill into law or veto it, at which point Congress gets to decide whether to try to overturn the veto, revise the bill, or just move on. 

Let’s have a look at the language in question.  We’re looking at sections 1031 and 1032 of S1867.  I’ve provided the full text of these sections at the end of the post with the key excerpts sprinkled throughout the post, as well as links to both the House and Senate versions of the NDAA. 

In general, this is a progression in the recent blurring of the lines between both a US citizen and non-US citizen and the lines between the regular legal and military legal systems.  It’s a very troubling trend that I view as extremely dangerous for individual rights in the USA.  Section 1031goes right along for the ride.  The criteria and the actions read:

(a) In General- Congress affirms that the authority of the President to use all necessary and appropriate force pursuant to the Authorization for Use of Military Force (Public Law 107-40) includes the authority for the Armed Forces of the United States to detain covered persons (as defined in subsection (b)) pending disposition under the law of war.

 (b) Covered Persons- A covered person under this section is any person as follows:

(1) A person who planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored those responsible for those attacks.

(2) A person who was a part of or substantially supported al-Qaeda, the Taliban, or associated forces that are engaged in hostilities against the United States or its coalition partners, including any person who has committed a belligerent act or has directly supported such hostilities in aid of such enemy forces.

(c) Disposition Under Law of War- The disposition of a person under the law of war as described in subsection (a) may include the following:

(1) Detention under the law of war without trial until the end of the hostilities authorized by the Authorization for Use of Military Force.

(2) Trial under chapter 47A of title 10, United States Code (as amended by the Military Commissions Act of 2009 (title XVIII of Public Law 111-84)).

(3) Transfer for trial by an alternative court or competent tribunal having lawful jurisdiction.

(4) Transfer to the custody or control of the person's country of origin, any other foreign country, or any other foreign entity.

The parts in (a) and (b) are reasonable enough, but (c) is the problem because (1) literally allows for indefinite detention without a trial.  You might think this is referring only to non-US citizens, but I’m not so convinced.  I’m troubled because of the half-hearted protection of American citizens that follows:

(d) Construction- Nothing in this section is intended to limit or expand the authority of the President or the scope of the Authorization for Use of Military Force.

This language does not explicitly state that the provisions of 1031 are not applicable to US citizens, which is what we really need to ensure the proactive protection of our individual rights (yes, we’d still be able to roll the dice on a challenge of the law on constitutional grounds).  All they’re saying is that 1031 isn’t making any change to the government’s current practice.

Here’s the problem.  The Supreme Court, in Hamdi v Rumsfeld, upheld the government’s authority to indefinitely detain US citizens as enemy combatants.  This was a troubling decision at the time and it has come back to haunt us.  The Supreme Court did allow a US citizen to challenge the enemy combatant label, however, so this could have been much worse.  I’ve provided a couple links to greater detail on this ruling.  It was decided in 2004 in a 6-3 decision (Rehnquist, Kennedy, O’Connor, Souter, Ginsburg, and Breyer versus Stevens, Scalia, and Thomas).  With four different justices since then (three from the majority), it’s possible that this language wouldn’t survive in the Supreme Court today or in the future.

Ok, back to the NDAA.  One can argue that based on the wording in 1032, US citizens are protected because they do state that custody for disposition under law of war is explicitly stated to be non-applicable to US citizens:

(b) Applicability to United States Citizens and Lawful Resident Aliens-

(1) UNITED STATES CITIZENS- The requirement to detain a person in military custody under this section does not extend to citizens of the United States.

(2) LAWFUL RESIDENT ALIENS- The requirement to detain a person in military custody under this section does not extend to a lawful resident alien of the United States on the basis of conduct taking place within the United States, except to the extent permitted by the Constitution of the United States.

The problem here is they’re only talking about military custody.  This includes the armed services, but does not include law enforcement (local, state, FBI, etc.) or other Executive branch custody like the CIA.  Law enforcement isn’t the concern as much as the CIA.  I’ve outlined similar misgivings about the general vagueness of the limits of the Executive branch in previously discussions on the War Powers Act. 

Here’s the bottom line.  The Senate just passed a dangerous erosion of our legal rights that was not in the House’s version of the bill.  It’s not law yet, as the language still has to pass the joint committee and avoid a presidential veto.  

Links:

House version:

http://www.govtrack.us/congress/bill.xpd?bill=s112-1867

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR01540:

Senate version:

http://www.govtrack.us/congress/bill.xpd?bill=s112-1867

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:SN01867:

Hamdi v Rumsfeld:

http://www.oyez.org/cases/2000-2009/2003/2003_03_6696

http://supreme.justia.com/us/542/507/case.html

Full Wording of S1867 Sec. 1031 and 1032:

Subtitle D--Detainee Matters

SEC. 1031. AFFIRMATION OF AUTHORITY OF THE ARMED FORCES OF THE UNITED STATES TO DETAIN COVERED PERSONS PURSUANT TO THE AUTHORIZATION FOR USE OF MILITARY FORCE.

(a) In General- Congress affirms that the authority of the President to use all necessary and appropriate force pursuant to the Authorization for Use of Military Force (Public Law 107-40) includes the authority for the Armed Forces of the United States to detain covered persons (as defined in subsection (b)) pending disposition under the law of war.

(b) Covered Persons- A covered person under this section is any person as follows:

(1) A person who planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored those responsible for those attacks.

(2) A person who was a part of or substantially supported al-Qaeda, the Taliban, or associated forces that are engaged in hostilities against the United States or its coalition partners, including any person who has committed a belligerent act or has directly supported such hostilities in aid of such enemy forces.

(c) Disposition Under Law of War- The disposition of a person under the law of war as described in subsection (a) may include the following:

(1) Detention under the law of war without trial until the end of the hostilities authorized by the Authorization for Use of Military Force.

(2) Trial under chapter 47A of title 10, United States Code (as amended by the Military Commissions Act of 2009 (title XVIII of Public Law 111-84)).

(3) Transfer for trial by an alternative court or competent tribunal having lawful jurisdiction.

(4) Transfer to the custody or control of the person's country of origin, any other foreign country, or any other foreign entity.

(d) Construction- Nothing in this section is intended to limit or expand the authority of the President or the scope of the Authorization for Use of Military Force.

(e) Requirement for Briefings of Congress- The Secretary of Defense shall regularly brief Congress regarding the application of the authority described in this section, including the organizations, entities, and individuals considered to be `covered persons' for purposes of subsection (b)(2).

SEC. 1032. REQUIREMENT FOR MILITARY CUSTODY.

(a) Custody Pending Disposition Under Law of War-

(1) IN GENERAL- Except as provided in paragraph (4), the Armed Forces of the United States shall hold a person described in paragraph (2) who is captured in the course of hostilities authorized by the Authorization for Use of Military Force (Public Law 107-40) in military custody pending disposition under the law of war.

(2) COVERED PERSONS- The requirement in paragraph (1) shall apply to any person whose detention is authorized under section 1031 who is determined--

(A) to be a member of, or part of, al-Qaeda or an associated force that acts in coordination with or pursuant to the direction of al-Qaeda; and

(B) to have participated in the course of planning or carrying out an attack or attempted attack against the United States or its coalition partners.

(3) DISPOSITION UNDER LAW OF WAR- For purposes of this subsection, the disposition of a person under the law of war has the meaning given in section 1031(c), except that no transfer otherwise described in paragraph (4) of that section shall be made unless consistent with the requirements of section 1033.

(4) WAIVER FOR NATIONAL SECURITY- The Secretary of Defense may, in consultation with the Secretary of State and the Director of National Intelligence, waive the requirement of paragraph (1) if the Secretary submits to Congress a certification in writing that such a waiver is in the national security interests of the United States.

(b) Applicability to United States Citizens and Lawful Resident Aliens-

(1) UNITED STATES CITIZENS- The requirement to detain a person in military custody under this section does not extend to citizens of the United States.

(2) LAWFUL RESIDENT ALIENS- The requirement to detain a person in military custody under this section does not extend to a lawful resident alien of the United States on the basis of conduct taking place within the United States, except to the extent permitted by the Constitution of the United States.

(c) Implementation Procedures-

(1) IN GENERAL- Not later than 60 days after the date of the enactment of this Act, the President shall issue, and submit to Congress, procedures for implementing this section.

(2) ELEMENTS- The procedures for implementing this section shall include, but not be limited to, procedures as follows:

(A) Procedures designating the persons authorized to make determinations under subsection (a)(2) and the process by which such determinations are to be made.

(B) Procedures providing that the requirement for military custody under subsection (a)(1) does not require the interruption of ongoing surveillance or intelligence gathering with regard to persons not already in the custody or control of the United States.

(C) Procedures providing that a determination under subsection (a)(2) is not required to be implemented until after the conclusion of an interrogation session which is ongoing at the time the determination is made and does not require the interruption of any such ongoing session.

(D) Procedures providing that the requirement for military custody under subsection (a)(1) does not apply when intelligence, law enforcement, or other government officials of the United States are granted access to an individual who remains in the custody of a third country.

(E) Procedures providing that a certification of national security interests under subsection (a)(4) may be granted for the purpose of transferring a covered person from a third country if such a transfer is in the interest of the United States and could not otherwise be accomplished.

(d) Effective Date- This section shall take effect on the date that is 60 days after the date of the enactment of this Act, and shall apply with respect to persons described in subsection (a)(2) who are taken into the custody or brought under the control of the United States on or after that effective date.

652 Sfmt 6201 E:\

UPDATE: 10 Dec. 2011 I just wanted to add a couple points that surfaced in discussions on Facebook. 

First, there was an argument that 1031 and 1032 are essentially linked because they talk about the same thing.  They don't.  Note the differences in the covered persons criteria.  It is a much lower threshold to qualify as a covered person under 1031 than 1032 because 1031 calls for substantial support while 1032 calls for some participation in an attack. 

Second, note that the protections of US citizens were included in only 1032, not 1031.  Because they weren't also included in 1031, we cannot legitimately assume that they apply to 1031.  If Congress just adds protections for US citizens into 1031 like they have in 1032, a lot of the criticism goes away.  Yes, there is a group who will not be satisfied with that because they believe the 5th Amendment applies not just to US citiizens, but all people.

Social Security Tax Action

You know we’ve had a social security tax cut this year.  The normal bite from our paychecks is 12.4%, 6.2% each from the worker and employer or the full 12.4% in the case of a self-employed individual.  These are the levels it will revert to if the government does nothing.  The effective level for this year has been 10.4%.

The GOP generally favors simply extending this tax cut for another year and paying for it by cutting government spending, specifically federal employee benefits and compensation.  The Democrats want to extend and expand it while funding it with tax increases in the upper income brackets. Since both sides agree on at least extending the tax cut, I think the extension will ultimately happen despite Thursday’s failures.  The remaining questions to address are whether to expand it and how to pay for it.  I also think the question of how long to extend it should be on the table, but it doesn’t appear to be because both parties appear to be content to stay at one more year.  This acceptance of one year fails to surprise me because next year is an election year.

Thursday’s failure to pass the bill doesn’t surprise me in the least, either.  This is merely business as usual in Washington.  You know the drill by now.  Politics is show business for ugly people and the politicians’ main focus is obtaining/retaining power, so poll numbers and fund flows dominate.  By creating unneeded drama and tension, they’ve created a crisis that allows them to swoop in and save the day, which helps attract votes and funds.  Crisis creates catchy headlines and a sense of urgency.  They want you to remember that they acted to avert disaster, but forget that they caused the disaster.  Additionally, we have to worry about what they're doing in other matters while the issue in question dominates the headlines and national consciousness.  It’s the same darn story played out over and over.  One of these days, I’ll do a single post explaining these dynamics and just keep linking back to it instead of having to retell the tragic tale once every couple months with minor changes in details (names, dates, issues, etc.).

Personally, I favor a multi-year extension and expansion of this tax cut.  I’d like to see it increase from 2% to 3.1% on a worker’s first $106,800 of income.  I wouldn’t mind seeing the further expansion into the business side.  Regardless of whether it’s kept as is or expanded, I think it would be a more effective economic stimulus if it was extended for more than one year.  The main reason I think it would be more effective with a longer extension period is we wouldn’t have to go through this struggle again next December.  Bracing for a pay cut, even if it doesn’t come to pass, sours a person’s mood and puts a kink in budget planning.  If you think you may have less money in your paycheck next month, you’re going to at least contemplate some budget tweaks.  Extend it for even two years instead of one year and we reduce that psychological and planning dampener effect. 

Extending and/or expanding this tax cut will worsen the long-term state of social security in that it will draw down the Social Security Trust Fund (SSTF) and it will worsen the deficit/debt situations.  By putting less money into the program now, we would be pulling forward the day of reckoning for social security and we would have to make up that money somewhere.  I didn’t want to completely gloss over the long-term considerations because we do have to recognize that this will matter in the future, but I don’t want to spend too much time on them in this post, either.  A discussion of the longer-term picture of social security is a series of posts in and of itself.

The way I see it, there are two choices of how to pay for it.  The GOP wants government spending cuts on federal employee compensation costs and the Democrats want tax increases on the upper class.  Yes, it’s the usual question of funding something by cutting spending or raising taxes.  Some combination of spending cuts and tax increases is the most likely outcome, but I would expect it to lean more on the spending cut side.  Too many in the GOP are trying to stand firm on refusing to support any tax increases, and by paying for a temporary tax cut for some with a tax increase to others, they would likely run afoul of that position.  If the Democrats seriously want to extend and expand the tax rate, then I’d look for an even greater portion (possibly all of it) to be funded by spending cuts over tax increases.

The bottom line is we shouldn’t be too worried.  I expect we will get at least a one-year extension of the tax rate.  That’s a given because both sides agree, in my view.  Any extension beyond one year isn’t really on the table.  Where the bargaining is going to come in is on the questions of whether to expand it and how to pay for it.  Whether the expansion is successful or not, I think the Democrats will have to cede some ground on the funding question.  Obviously, they’ll have to cede more on the funding question if they want the expansion.