In a recent conversation with a good friend and self-described liberal democrat, the discussion turned to economics.  My economic position, well-known to my friend, is relatively straight-forward.

• I tend to view income as labor and find appealing the idea of a flat tax for everyone beginning above some threshold.  I don’t have a percentage in mind, but if that comes out to 20%, then everyone is contributing about 400 hours per year to our government even if one person’s 400 hours brings in more revenue than another person’s.  For me, there is something intuitively fair about such a set up.
• In my personal financial life, I avoid non-investment debt and I avoid borrowing money unless I have a clear plan to pay it back.  Consequently, I don’t like deficit spending and I am nervous about the scale of recent borrowing on top of an already huge national debt.
• I am neither socialist nor laissez-faire – and for the same reason: I see both as impractical and ineffective.  If socialism could compete with capitalism in terms of productivity or innovation, I would not oppose it as strongly as I do.  If complete deregulation provided sufficient guarantees against exploitation, I would not oppose it as strongly as I do.
• In an economic sense, I see the nations of the world in a (hopefully friendly) competition for resources.  To the extent that we fail to make wise fiscal decisions, we will fall behind other nations that make prudent economic choices.

The purpose of this article is not really to promote the aspects of my (current) economic philosophy or its application to any particular situation.  I realize that honest, intelligent people can differ regarding optimal spending or monetary supply.  I can oppose bailouts or the stimulus package while still appreciating the arguments from the other side.  My point is actually much simpler: to many people (including my friend), a desire for a fiscal policy along the lines laid out above is not merely incorrect, unrealistic, or impractical… it is radical.  It is viewed as extreme to the point of denigration and dismissal.

And therein lies the problem… a perspective based on understandable axioms that seeks a practical and sustainable solution to our national economic problems is designated (and honestly perceived) as “nutty” or “the fringe” by wide swaths of the American public and unworthy of further consideration.  As if this were not bad enough, the same thing comes up with virtually any issue that is hotly debated today.

On July 17th, Senator Jim DeMint (R – South Carolina) famously said about Obamacare:

“If we’re able to stop Obama on this, it will be his Waterloo. It will break him.”

Senator DeMint is wrong.  Universal Health Care / Coverage will not be the end for Obama in the sense that Waterloo was the end for Napoleon.  Tonight’s speech could go a long way to determining if Obamacare will be his Russian Winter, however.  Failure on this issue… or worse, a tragic success… could weaken this administration leaving them ineffectual and ultimately doomed in the 2012 election.  Tortured analogy aside….

In mid-June 1812, Napoleon crossed the Niemen, beginning his invasion of Russian Poland.  In mid-June of this year, Obama gave his “ticking time bomb” speech to the AMA where he emphasized the need for a public option (while simultaneously ruling out tort reform).  Next Monday is the 197th anniversary of Napoleon’s disastrous capture of Moscow.  By the end of that year, the Grand Armee’ had been expelled from Russian territory.  If history repeats itself on health care, we could see a disastrous success by the Democratic party which leads to a large-scale collapse of public support as early as Christmas.  Napoleon’s Waterloo was still 3 years away and it’s 197th anniversary will be in the height of election season: June of 2012.

There are two fundamental issues with regard to universal health coverage: the practical issues involving costs and quality, and the moral issues involving who should be covered.  For most supporters of universal health care, the moral issues trump the practical.  Further, for many opponents of universal health coverage, moral issues are historically common and powerful motivations for their support (abortion, for example).

I understand and appreciate the moral argument for universal health coverage.  What I struggle with is the asymmetry associated with Congress’ addressing of this particular moral imperative.  Katrina’s devastation created just such a moral imperitive; a humanitarian need that honest, hard-working people from every walk of life rallied around and addressed.  Taking the President at his word, why is this moral imperative different?  Why does the burden, in terms of tax rate, fall disproportionately upon those with greater income?  And by disproportionately, of course, I mean exclusively (at least for now)?

On complicated issues, I often try to reduce things to the simplest analogue I can find.

Consider a small town of 20 people.  Three of these people are elderly, 5 are either infirmed or children and two others who are not providing for themselves something considered critical… say, clean water.  The argument is raised that having clean water is a moral imperative and the town should provide it for everyone.  Everyone agrees that clean water is important for everyone, but when the town begins to discuss who should carry the water to those who cannot (or chose to not) carry the water for themselves, different arguments arise.  In one camp, people feel that those who are the strongest should carry the water.  In the other camp, people feel that its ok to help the elderly, infirmed and children, but if the remaining two people above want water, they can contribute to the effort.  Further, the work should generally be divied up so that everyone who is able, works the same amount even if the amount each person carries differs.

The current health care bills in Congress are from the first camp.  As I said, I am sympathetic to the moral argument, but I can only see it from the second camp.  Everyone works, everyone drinks.

It sounds as though the Public Option is no longer an indispensible piece of the Obama Administration’s health care plan.  If this is true, to many observers of the health care debate, this represents a substantial shift in policy from only a month ago.

“Any plan I sign must include an insurance exchange: a one-stop shopping marketplace where you can compare the benefits, cost and track records of a variety of plans – including a public option to increase competition and keep insurance companies honest – and choose what’s best for your family.” (from July 17)

“The public option, whether we have it or we don’t have it, is not the entirety of healthcare reform,” Obama said at the town hall event in Colorado. “This is just one sliver of it. One aspect of it. And by the way, it’s both the right and the left that have become so fixated on this that they forget everything else.” (from August 15)

Whether or not a “good plan” (however that is defined) requires a public option is not the point here so much as the political fallout from such a change.  Is this Obama’s “read my lips” moment?  Hard to say, but even harder to dismiss.  Is the Obama Administration in real trouble on health care and how did they get to this point?

I believe failure on health care reform would be a serious problem for any administration that made it a priority, though not necessarily insurmountable.  What motivated opposition to his plan may be much more serious – both in 2010 and 2012.  So why did he fail?  In a single word: TRUST.  There are two kinds of trust in American politics: (1) trust that you are trying to do the right thing, motivated by principle, in the best interests of the American people, and (2) trust that regardless of your motivations, you are competent to make the things you promise actually happen.  The American people stopped trusting the Bush Administration on both counts over involvement in Iraq, the handling of aid following Katrina and ultimately the economic collapse of 2008.  Whether or not it was deserved, the Bush Administration lost the trust of the public and this lead directly to the powerful performance of the Democratic party in the 2008 elections.  The conveyed message to the voting public was: “If you don’t trust Bush and his cronies, put someone else in charge.”  The public didn’t and so they did.

With their victories, the Democratic party held the Presidency with a popular, charismatic new leader, the House with a substantial majority, and (after Arlen Specter’s party switch and Al Franken’s seating) a “sort-of” fillibuster-proof hold on the Senate.  There was talk of a permanent Democratic majority powered by a shift in public support (if you like the Democrats) or massive pandering to their political supporters (if you don’t).  There is still a long time between now and the 2010 elections, but the invincibility of the Democratic Party is no longer a foregone conclusion.

During the campaign, Obama established himself as a uniter who would reach across party lines and lead in a bipartisan way.  With the economy as the overwhelming issue, the Obama Administration claimed that by passing its stimulus package, unemployment would be capped at 8% while failure to do so could lead to 9% unemployment.  This danger, the public was told, required fast approval of enormous funds which Congress passed in an essentially party-line vote – losing a small amount of trust in his sincerity about bipartisanship.  When unemployment climbed past 9.5% and the President was forced to admit that it could cross 10% despite the stimulus package, he lost significant trust in his team’s competence.

Distrust in both his motivation and competence were fanned during the government bailouts of Chrysler and GM.  By assuring the public that bailout funds provided the best chance of avoiding bankruptcy, the Administration built expectations from the public that would ultimately prove disappointing.  At the same time accusations were made claiming he wanted (1) government running business to support his alleged socialist view of the world and (2) he intended to use this crisis to make large payoffs to his supporters – in this case the Unions.  Among his detractors, either or both allegations “stuck” when the final deals came down, selling out those with senior claims on the car companies’ debt and granting large shares to both the government and the unions.

Other issues arose, as they always do, but in my opinion played only a confirming role in the distrust equation.  Professor Gates, Justice Sotomayor, the Iranian elections, and even Cap and Trade had comparatively little effect on the public’s view of the administration.

Then came Health Care.  As with the stimulus package, the Administration claimed that this was an emergency of such magnitude that it had to be done immediately regardles of pricetag or opportunity for debate.  Despite claims of long-term savings, those suspicious of the President’s and the Congress’ competence (recalling the now-recanted unemployment claim) had only to look at the Congressional Budget Office’s numbers which seemed to disagree with his rosy projections.  For those now inclined to be suspicious of Obama’s motivations, there was even more fuel for the distrust fire… If this plan were so good, why did Congress insist on exempting themselves?  If this plan were so important, why had so few members of Congress actually read the details before being pressured to vote?  Why does it look like the President is cutting backroom deals with Big Pharma in order to gain their support?  Here, the flubs were substantive… claiming the AARP supported their plan only to be corrected… dramatically over-stating the contribution from the AMA only to be corrected… and prior to the backroom deal above, suggesting that Big Pharma would provide an $80B contribution and allow the government to negotiate down their drug costs only to be corrected.

Unfortunately for the Administration, this distrust – along with some help from those ideologically opposed to this brand of reform – manifested itself in increasingly vocal media events.  The President, members of Congress, and independent commentators fundamentally missed (or ignored) the point of these protests – describing the participants as crazy, Nazis, racists, selfish, greedy, manipulated or simply ignorant – and couched their arguments accordingly, inflaming the opposition even more.

Ultimately, I believe, the issue for the majority of protesters was simple, if not always stated:  “We’ve seen what you’ve done so far… even if we agree that there are some problems with our Health Care System, why should we trust you to fix it?”  Answers that are limited to, “The Republicans don’t have a solution” or “We can’t keep going the way we are going” can never address this concern.  I think this is a question the Obama Administration cannot accept as honest.  When you want the support of someone who doesn’t trust you, the first thing you have to do is understand that they really don’t trust you and then  establish yourself (or at least your process) as open and honest.  To that end, in the interest of saving his health care reform and the Democratic party’s chances in the upcoming elections, I would advise the President and Democratic Congressional leadership to do the following:

1. Simplify the bill, make it public, and require every member of Congress to read it
2. Give the public and independent sources time to discuss its merits and alternatives
3. Remove any and all special interest perks or exceptions from the bill
4. Set objective standards for measuring success and provide a sunset clause should it fail

I don’t know if this would be enough to win back the trust of the opposition, but it would be a start.  The Administration can’t afford to keep going down the path its on.

In most tellings of the Robin Hood story, the hero and his Merry Men were attempting to stop runaway taxation upon the public.  Robin Hood “stole” from Prince John and (depending upon the tale) either returned the money to the unfairly taxed or held it for the absent King Richard.  Fundamental to the moral of this fable is the idea that those whom Robin Hood robbed deserved their punishment for their wicked ways – the government was robbed, but not honest merchants, farmers, or craftsmen who happened to be successful.  To accept the application of this aphorism to universal health coverage, we must accept that those who will be taxed higher have unjustly taken from the poor who will benefit.  To see the government as Robin Hood, we would have to see a medical doctor husband and attorney wife as the analogies to Prince John and the Sheriff of Nottingham.

A more honest analogy (and not necessarily a pernicious one) would be to paint the administration as “Slick Willie” Sutton.  Sutton was another notorious thief who was asked by reporters why he robbed banks.  Sutton allegedly replied, “Because that’s where the money is.”  I have no idea how well this level of honesty would play with the public (“We intend to increase taxes on the wealthiest Americans, fair or not, because we really want universal health coverage and we can’t think of another way to pay for it that the majority of the public would accept.”) but I’d love to find out.

It can be intelligently debated whether or not increased taxation on the wealthiest Americans is necessary to pay for universal health coverage or even if it is a desirable thing.  It is, however, dishonest to both the moral and the story to claim that increased taxation on the wealthiest Americans to pay for health care is “just” in the sense of Robin Hood.  In the present case, it seems that the Robin Hood analogy is the precise opposite of the picture the administration wants to paint.  Then again, it’s catchy and easily spun which really is the point of soundbites, afterall.  And it’s almost certainly better than the soon-to-be spun, “Give unto Washington what belongs to Washington.”

Since you are reading this, you probably have some interest in politics or at least are concerned about what is going on in Washington D.C. these days.  Knowing only this, it is likely that you are less enthusiastic about the current administration’s performance than your politically disinterested friends.

The above chart was constructed from the polling numbers for President Obama as collected by RealClearPolitics.  Blue dots are for polls taken from All Voters, Yellow dots are from Registered Voters and Red dots are from Likely Voters.  Solid dots represent Approval numbers while Open or Empty circles represent Disapproval numbers.

President Obama’s numbers have naturally come down some since his inauguration (day 0).  What I find interesting is where he maintains his support.  In a sense, the less you follow politics – as measured by how likely you are to vote – the better this administration appears to be doing.  In the most recent polls, his (Approval – Disapproval) Spread is +31 for All Voters (reported by Gallup), +24 for Registered Voters (reported by Quinnipiac) but only +7 for Likely Voters (reported by Rasmussen).

If these trends continue, the Obama Administration has two options: (1) address his sliding numbers among those most likely to participate in upcoming elections or (2) rely upon non-traditional voters.  The other possibility, of course, is that these trends do not continue; either because Obama’s policies begin to resonate with large numbers of traditional voters or because the linear decline is not maintained.  If it does continue, however, he projects to go negative with Likely Voters around the end of this August and with All Voters by mid-March 2010.

I would humbly ask: why even have a Constitution at all — save for some cursory document which outlined the branches of government and procedure for passing legislation?

Isn’t your proposal nothing more than a procedure for passing legislation (with a hefty crime attached for show)??

In any case, to respond to your humble question, the Constitution also designates certain individual rights for protection against the Tyranny of the Majority.  The key distinction from your proposed Amendment being that if my rights alone, uniquely are trampled upon by the legislature I can’t realistically effect change through the voting process.

If members still couldn’t digest the bill, perhaps they shouldn’t be making the laws.  Just a thought.

Fair enough, and you are certainly entitled to your opinion.

For my money, the ultimate measure of any proposed Amendment is its actual effect.  Prohibition was not a failure because it lacked good intentions, serious consequences, or even good ideas… it was a failure because it failed.  A Constitutional Amendment such as this would definitely feel good but it would very likely have little or no practical effect.  Fear of incarceration is unnecessary to compel legislators to read everything they vote on as the ultimate check and balance already exists: the American public has the power to vote out their legislators if they feel those persons are not performing competently or that their interests are not adequately represented.  The fact that they choose not to do so in such overwhelming numbers means that they are getting precisely the democracy they deserve.  Is this a bad way to vote?  I certainly think so.  But you can’t protect people from such voluntary ignorance through legislation.

Passing this Amendment without educating the public will get no real change.  Educating the public without passing this Amendment can’t help but get meaningful change.  Education trumps Legislation.

This reads a lot like the “Read the Bill Act” from Downsize DC.

Making it a Constitutional Amendment gets around the Constitutional issues arising from the Speech or Debate Clause (Art. I, Section 6, Clause 1), but leaves it vulnerable to the Law of Unintended Consequences.  While this is precisely the way I would conduct myself were I to ever hold a seat in Washington, I’m not sure it’s a standard that should be applied universally.  This might effectively remove from service an otherwise qualified candidate who is dyslexic or otherwise has difficulty reading, ultimately disenfranchising their electorate.  A legislator who reads everything just to satisfy this requirement may comprehend far less than a colleague who relies upon their staff to help analyze legislation (kind of like ‘teaching to the test’).

These are (to paraphrase the Bard) some of the Known Unknown consequences… what of the Unknown Unknowns?

On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.

- President Barack Obama (Inauguration Speech)

The idea of choosing hope over fear has a decidedly positive, optimistic feel to it.  As with most other people, this phrase washed over me as part of the greater euphoria of the day.  We WERE fearful.  We ARE hopeful.  We weathered the storm and the future looks bright again.  When I asked Obama supporters about what I saw as troubling policies, I was frequently reminded: “You have to think positively; trust that things will work out in the end.”

Hope over fear.  By sheer coincidence, I had an opportunity to witness this epic battle on a small scale recently.  I had gone to a local card club with a college buddy and we split up to play different games.  When I went to find him later on, he was in the middle of a hand of Texas Hold’em, sitting on two pair and looking very uncomfortable as he waited to see the River card.  His opponent looked equally uncomfortable but of a different flavor.  As I took in the situation, my friend was raised and he volunteered, “I’m screwed.  I’m pretty sure he has a Straight, but I have to call because… what if my card comes up?”

As I watched the hand play out, I also got a glimpse of the psychology behind Hope (my friend’s) and Fear (his opponent’s).  The distinction between the two is not about optimism or pessimism, it is about where you see yourself when you become subject to events beyond your control.  Play incorrectly, irresponsibly or foolishly and you find hope that the last card can fix your mistakes.  Play wisely and correctly and all you find is fear that your efforts will be wiped away by chance.  To a large extent, I think this encapsulates the view of the Right: “If you work hard and avoid foolish mistakes, you won’t need to hope for good luck because you’ve set yourself up to succeed.”

A change in one key detail illustrates the view from the Left.  If the dealer is working against you, you may believe that regardless of how wisely you play, you have no hope of winning as the deck is literally stacked against you.  If it is announced that the dealer is going to be replaced and the game will be restarted, the fearful person may suddenly become hopeful that their situation is bettered through an even playing field.

And so we come back to Obama’s original phrase.  During his campaign, many people who felt the game was stacked against them all along saw him as their chance at a fair game.  On the other hand, at the time of his election, many hard-working people (who felt that the game was fair all along) were watching their years of effort disappear as the stock market crashed.  The result is the brilliance of Obama’s statement: HOPE over FEAR.  It doesn’t matter what you HOPED for (an end to intolerance or a return to normal markets), what you FEARED (ongoing corruption or acts of terrorism), that sometimes FEAR is preferable to HOPE or that the HOPES of some will be the FEARS of others!

To be sure, the Left agrees with his policies more than the Right, but he seems to be playing the middle just enough to keep his popularity sky-high.  It is as brilliant a political promise as I have ever seen – at once unfulfillable and irrefutable – whose true meaning will only be known to historians!  Paraphrasing Joseph Heller:

[Obama's promise of hope over fear] did not exist… but it made no difference. What did matter was that everyone thought it existed, and that was much worse, for there was no object or text to ridicule or refute, to accuse, criticize, attack, amend, hate, revile, spit at, rip to shreads, trample upon or burn up.

The day that Barack Obama was sworn in as President of the United States, the Dow Jones Industrial Average closed at 7,949.09 and the S&P500 was at 805.22.  These two indices are used, often blindly, to gauge the “health” of the US business environment.  On March 9th, 2009 these indices both reached their recent lows closing at 6,547.05 and 676.53 respectively and we heard reports of $11T losses.  Today, the markets are at 8,500.33 and 919.14 suggesting that the $11T that had gone missing in the wilderness by March had wandered back to civilization dragging a few new friends with them.  Putting aside for the moment the joyous reunion with our prosperity and not worrying about who is at fault, how are the markets really doing so far during the Obama presidency?

The DJIA dropped over 17.5% between January 20th and March 9th and then rose nearly 30% from March 9th to today for a net gain of 6.93% during this administration.  Similarly, the S&P 500 dropped 16% before gaining 36% to net a 14.15% gain.  The natural conclusion is that things have improved substantially since President Obama took office.  You can’t blame him for what happened before he took office and who wouldn’t want their investments to grow 7-14% in such a short time?

The problems with this conclusion are legion, but the one I want to focus on is PERSPECTIVE.  To American eyes which measure in U.S. dollars, the market has grown 7-14% so far.  But the value of the USD also fluctuates; it is a measuring stick marked on a Slinky.  By the time of the March 9th bottom, the USD was relatively strong compared to just about every other measure and it has weakened substantially against them since.  So how do the eyes of the rest of the world view our markets?

The POUND is up more than 15% against the USD since Inauguration Day.  Consequently, to British eyes the recovery we’ve witnessed since March 9th only appears to be one-third to one-half as robust.  Overall, our friends on the Blessed Rock disagree completely about the DOW under Obama: we think it has grown 7% but they think it has fallen 7.6%!  Similarly, while we think the S&P 500 has grown 14%, they feel it has shrunk 1.35%.

The Continent takes an intermediary view.  With the USD down 9.3% to the EURO, the DJIA measured in EURO is down 2.2% while the S&P 500 has grown only 4.43%.

Not everyone takes such a dismal view of our markets.  To Japanese eyes, both the DOW (up 13.34%) and the S&P 500 (up 20.98%) are booming!  Of course, this is driven by the fact that the YEN has fallen over 5.6% to the dollar.

So who is right?  In a sense, everyone is.  Or more accurately, the idea of measuring something tangible (parts of corporations) against fiat currencies is inherently misleading.  But we can also measure these indices against other tangible things, like commodities.

On January 20th, an ounce of GOLD would buy a little more than 1 unit of the S&P 500 and that’s about what it costs today.  Similarly, a unit of the DOW cost 9.3 ouces of GOLD then but only 8.7 ounces today – a drop of 6.47%.  In ounces of SILVER, the DOW has fallen 22% and the S&P 500 almost 17%.  Against PLATINUM the drops are 14% and 8% respectively.  Then there’s OIL.  The price of OIL has risen dramatically this year.  Measured in barrels of OIL, the DOW is down 37.5% since Obama took office and down 7.8% during the recovery.  The S&P is likewise down 33.3% against OIL for the year and down 3.5% since March 9th.  If your paydays for 2009 involve you receiving compensation in barrels of OIL, you’re a happy person right now.  Not so much if you get paid in YEN.

Measured against the USD or especially the YEN, the U.S. Markets appear to be doing well under Obama.  But measured against other currencies like the EURO or POUND they do not seem to be doing particularly well and against other tangible assets they are doing quite poorly.  This, in my opinion, is a critical point that is lost in the rhetoric surrounding the current financial crisis – we are measuring our markets with an ever-shrinking stick.  As more dollars enter circulation, we can expect to see the price associated with our markets rise and people will rejoice in the good news reported – even while others around the world wonder what all the fuss is about.

William, regardless of who was at fault, Didden or his lawyer, once the statute of limitations expired Didden’s cause of action was lost according to Sotomayor.  At some point during this whole affair, he had two legal theories available to him:

1. That the taking was wrongful due to pretext, in the sense of Justice Stevens.  The Supreme Court in Kelo found this relevant only to the property’s inclusion in the renovation plan and was ultimately barred from challenge by the expired statute of limitations in Didden.

2. That a taking for a private use due to extortion is unconstitutional.  This was the attempted work around by Didden.  They wanted to distinguish this from Kelo by including the pretext piece here.  The result was that the Court said, “The ‘taking for private use’ part is a constitutional issue which has been settled by Kelo.  Adding fraud, duress, extortion, mental handicap, or mistake does not create a new constitutional issue – these are separate legal issues with existing statutes of limitation.”

I’m not saying that I necessarily agree with the decision, but if the 2d Court of Appeals holds these two positions, it really does make for a short review.  And with that, I’ll give you the last word.

Hector, the parties in Didden submitted their briefing materials to the Second Circuit before Kelo was handed down; but, the Court (Sotomayor) - properly, in my estimation - waited until months after Kelo to issue the Didden decision.  Thus, the attorneys for Didden didn’t have the benefit of knowing what governing standard would be applied to their challenge at the time they submitted their materials to the Court.

In any event, regardless of the adequacies/inadequacies of the briefing materials (and arguments advanced, or not advanced, therein), the Court (i.e., Sotomayor) was duty bound to search the record to ensure the taking in question accorded with the standards set forth by Justice Steven’s opinion in Kelo.

Obviously, Sotomayor was aware that the City of Port Chester’s taking appears to have been consequenced by the plaintiffs’ refusal to pay a bribe.  And, of course, Justice Steven’s cautionary mandate about “pretextual takings” was likewise available to Sotomayor at the time she issued her opinion.  And yet, not only did she fail to connect those obvious dots, she non-chalantly declined to conduct any analysis at all, and summarily sanctioned a seizure of private property for failing to pay extortion money.

In sum, you’re giving a Second Circuit (and, soon to be, Supreme Court) justice with virtually unlimited resouces, including a team of Yale/Harvard/Columbia/NYU -educated law clerks, far too much deference.  If Sotomayor’s decision was actually predicated on substandard advocacy on the part of Didden’s lawyers, she should have said exactly that in her opinion, so the precedential effect of the case would have been clear. 

Instead, her opinion reads as though any State taking in the Second Circuit, even in retaliation for not paying bribe money, is beyond judicial scrutiny.  It’s a horrendous opinion, and falls far below the standards we should expect of a Second Circuit, let alone Supreme Court, justice.

William, I agree that the analysis presented was short, it is not clear to me what more you would have her say on the property rights issue.

Your reading of Justice Stevens’ majority opinion is correct regarding the ‘mere pretext’ standard, but I think it is largely irrelevant.  The question wasn’t whether or not Didden’s property was wrongfully condemned; the question was: if his property were wrongfully condemned, did Didden pursue his rights in a manner that allows the courts to make him whole?  Didden never challenged the development plan as the statute of limitations had expired and so he tried to work around that deficiency by arguing that his property was wrongfully taken for private use.  Judge Sotomayor makes plain her reasoning in Didden when she quotes Justice Stevens in Kelo,

Just as we decline to second-guess the City’s considered judgments about the efficacy of its development plan, we also decline to second-guess the City’s determinations as to what lands it needs to acquire in order to effectuate the project.

Judge Sotomayor never says that the City did the right thing, never says that extortion is acceptable and never expands Kelo.  Didden (or his lawyers) did a poor job in their challenge and Judge Sotomayor simply states (paraphrasing), “You may have been wronged, but you’ve chosen to go about settling your dispute inappropriately.  The right way to handle this, the way that would allow this Court to potentially find in your favor, would have been for you to challenge the inclusion of your property in the renovation plan – not by arguing, as you have, that the Takings Clause prevents the State from condemning your property for private use.  Kelo makes clear that this is not the standard.  If you had challenged your property’s inclusion in the renovation plan, then we could have taken up the question of a ‘pretext’ in its inclusion in that plan.  As you did not do this (or could not do this because of the statute of limitations), you have articulated no basis upon which relief can be granted.”

Hector, with regard to the statute of limitations predicate, I will assume, without checking, that Sotomayor got that portion of the opinion, and, thus, the actual result, correct.  However, because she weighed into the constitutional issue with more than mere dicta, she provided a legally-binding, alternative holding of the Court…on a very dicey issue without undertaking any actual analysis, which is my biggest gripe. 

While Kelo is both an utter abomination and perhaps the most dangerous decision of the last 50 years, Justice John Paul Stevens, in his majority opinion, at least provided some thresholds standards that the State must meet in order to lawfully seize your property: Justice Steven emphasized that “the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit,” does not constitute “a public use” so as to make a “taking” bona fide.

The most disturbing aspect of Didden, issued just months after Kelo was handed down, is that Justice Sotomayor makes no reference to Justice Steven’s proviso, conducts absolutely zero analysis, and, in effect, treats Kelo as though it held that every government taking is bona fide and completely insulated from judicial scrutiny. 

Of course, what we actually know about Didden is that the taking reeks of pretextualism — Didden’s property was condemned only after, and apparently in retaliation for, Didden’s refusal to pay a bribe to the City’s hand-picked developer to the tune of $800 thousands, plus a share of the business.  And yet, Judge Sotomayor provides an analysis-free imprimatur of what appears to be a patently pre-textual taking of private property by an extortionary private developer.  That Judge Sotomayor will now be rending these types of opinions while sitting on the Supreme Court troubles me greatly.

Briefly, on cert. before the Supreme Court: if the Court is not inclined to hear the case, it’s most likely because there is another (indeed, primary) basis for the decision: the statute of limitations issues, such that the Court’s holding would not ultimately affect the result.  But, that doesn’t give me any more comfort as it relates to Sonio Sotomayor.

William, the McDonald’s analogy was broken out as a second point as it was not intended to address the role of Appellate Courts or how appellate proceedings work, but rather the language used in your summary of Didden.  For example:

Wasser told Didden that he would approve the project only if Didden paid him $800,000 or gave him a partnership interest; failing Didden’s bribe, Wasser threatened to promptly condemn the land and erect a pharmacy himself.

As I mentioned, I had not looked up the Didden case, and I had written my point solely to caution readers that there are nuances in court that are not always found in summaries.  Some witnesses are believable and some are not.  Some evidence is compelling to a jury while other evidence is found less so.  Because of these things, a casual reader rarely has sufficient information to form a sound opinion on a case, in my opinion.  As it turns out, the lower court dismissed an amended complaint in Didden so this particular case may not be relevant, though the larger reader warning stands.

As to the extension of Kelo in Didden, the attorneys for Didden certainly agree with you, using terms like extortion.  However, the Court’s dismissal of Didden’s appeal appears to have been based on two points: (1) regardless of the nature of Wasser’s actions, a challenge to the purpose of a particular condemnation within a larger redevelopment area is not constitutionally cognizable (Didden’s holding was part of a larger renovation project) and (2) the statute of limitations had expired for Didden to challenge the entire redevelopment area.  Didden could’ve challenged the entire renovation project to protect his rights, but for whatever reason failed to do so until it was too late.  As a separate holding, the 2d Court of Appeals found that there was no unlawful exaction.  So while there may be some doubt as to whether Sotomayor knows what extortion is, as a property rights issue it may be irrelevant and misleading to say that Didden is an extension of Kelo to include extortion.

As of this writing, the Supreme Court of the United States has not granted cert to review this decision.  While this alone is not enough to conclude that the Appellate Court was right, it does suggest that the issues involved are not as crucial to the Supreme Court as other cases they chose to hear.

Hector, I want to address/clarify the points you raised below.

At the appellate level, and for purposes of review, the facts of a particular case have generally been stipulated to, and are a matter of record.  True, some hidden, smoking-gun fact(s) may undermine the criticism of a controversial decision.  But, the judge who authors an appellate decision will include in her opinion facts she finds pertinent to the result she reaches.  So, the McDonald’s/hot coffee analogy is not exactly on point, as it relates to appellate decisions.

As a brief aside, appellate decisions are reached based on papers (“briefs” and the “record”) submitted to the appellate court and, sometimes, oral argument before the appellate court.  “Sitting through the trial,” as it were, is not relevant to an appellate decision.

On Kelo, you are absolutely right that it is the law of the land and appellate courts are bound to abide by it.  However, appellate courts are not bound to extend its holding; indeed, where the factual circumstances warrant, courts should “distinguish” Kelo from the cases before them. 

Kelo involved a municipality seizing private property under the extraordinary power of eminent domain so that a developer could use the land to build a strip mall.  Didden involved a municipality re-zoning certain private property under a category of “redevelopment,” and, thereafter, assigning to a private developer what amounted to autonomous control over the designated “redevelopment” property.  After the property owner [Didden] refused to pay the developer an $800 thousand bribe, the developer had Didden’s property condemned and built his own private business on what had been Didden’s land. 

The holding in Kelo certainly does not require an extension of its logic to permit extortion of property owners.  And, perhaps most troubling is Sotomayor’s analysis-free application of Kelo to Didden:

to the extent that [Didden and his partner] assert that the Takings Clause prevents the State from condemning their property for a private use within a redevelopment district, regardless of whether they have been provided with just compensation, the recent Supreme Court decision in Kelo . . . obliges us to conclude that they have articulated no basis upon which relief can be granted.

Two quick points:

I apologize to those for whom this is obvious, but some readers may not be familiar with the roles that judges play at different levels in the United States.  As a Federal Appellate Court Judge, Sotomayor doesn’t really have authority to ignore any United States Supreme Court decision, including Kelo.  Though I haven’t looked up the Didden case, if there were no legal problems with the decision, it’s not her place, generally, to ignore the finder of fact in the lower court.  Sotomayor’s job is primarily judicial review of legal determinations rather than rehearing the facts of a case (there are some exceptions, of course).

Second, without actually sitting through the trial, it is very easy to be mislead regarding the merits of one side or the other.  This doesn’t stop people from making sweeping conclusions based upon them but it probably should.  As an example, everyone is familiar with the woman who spilled coffee on herself at McDonald’s and won a million dollar settlement in a classic case of a run-away jury.  The other side of the story (the woman received terrible burns across much of her body, McDonald’s had been warned that they were over-heating their coffee and that this posed a danger to the public and McDonald’s specifically chose to ignore these warnings as they felt it would be cheaper to litigate than to change their behavior) is rarely heard.  My point is only that hearing one side of a story is generally not enough to draw an informed conclusion.

OP, my only objection to your comment was the misnaming of the fallacy as a straw-man.  The assertion that someone (even an unnamed someone) actually holds the weakened position is a critical requirement for a straw-man argument.  It is not enough that an argument be weak to be a straw-man; behind every straw-man, there must first be a “man”.  You give an excellent example of why Obama’s quote does not qualify.

Had Obama stated:

So, one option is to pick dandelions. We say, well, it’s too expensive for us to make some short-term investments in health care. We can’t afford it. We’ve got this big deficit. Let’s just pick dandelions and hope that fixes the health care system.

it would be clear that this is a red herring and not a straw-man fallacy.

Drudge cuts off Obama’s quote shortly thereafter but the full statement is:

So, one option is just to do nothing. We say, well, it’s too expensive for us to make some short-term investments in health care. We can’t afford it. We’ve got this big deficit. Let’s just keep the health care system that we’ve got now.
Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything. That’s the wrong option.
I think the right option is to say, where are the game changers, the investments that we can make now that are going to reduce costs, even if they don’t reduce them this year or next year, but 10 years from now or 20 years from now, we are going to see substantially lower costs.

The right / wrong distinction makes this sound like a dilemma but is it a false dilemma?  Is there an option that lies somewhere in between “doing nothing” and “finding game changers … that are going to reduce costs”?  Maybe.  In my opinion, his language is sufficiently imprecise to pin this fallacy on him.  Indeed, introducing market reforms may be one such game changer even though it’s not one that he personally supports!  He then goes on to say why he feels his particular game changers will work (including a mis-characterization of the position held by big-Pharma, IMO).

Transcript quoted from: http://www.c-span.org/pdf/obamainterview.pdf

by Hector N. Fertig

A technical point just to get my feet wet on this site…

I don’t think I would categorize Obama’s health care argument (limited to the Drudge article) as a straw-man fallacy as he never says that anyone else holds this position and only hypothetically ascribes it to “we” – though it is close. It sounds more like either a false dilemma or a red herring to me. He begins…

“Well, we are out of money now… If we don’t reduce long-term health care inflation substantially, we can’t get control of the deficit.”

Possible paraphrases of the stanza you quoted:

1. “There are only two possible options, my way or do nothing and here are the consequences of doing nothing.” – false dilemma (assuming there is a third option such as the one you already indicated)

2. “Let me give you an example of an extraordinarily bad approach to this problem…” – red herring (why bring up something like this that no one has suggested?)

By contrast, the stimulus package statement really does sound like a classic straw-man argument to me.