Relevant and even prescient commentary on news, politics and the economy.

NAWRU 1 The totally arbitrary estimated natural rate of unemployment and Euro Block Fiscal Policy

European Commission fiscal dictates are based on outdated economic theory, strange econometrics and arbitrary ad hoc restrictions on parameter estimates. It is not easy to discuss the technique behind that which presents itself as technocracy with a straight face. The ‘cracy part is genuinely powerful, so this matters.

This will be the first of a long long series of posts. It is written to blogging editorial standards, which means I think everything is true, but it’s not as if I were submitting this to a peer reviewed Journal. I will try to present an outline.

A. Allowed deficits under the Stability and Growth Pact as revised in 2005 depend on estimated output gaps — the restrictions on deficits refer to the “structural balance” (SB) which is the cyclically adjusted deficit minus one off expenditures and revenues. These posts will focus on the cyclical adjustment. Allowed spending depends on a “medium term objective” (MTO) which in turn is defined in terms of the SB end update. This means that estimation of potential output are very important as they is step required to apply an international treaty.

B. The European Commission (from now on EC) estimates of potential output are based on a production function and require estimates of the capital stock, total factor productivity and potential employment. This series of posts will consider only the estimates of potential employment. Potential employment is equal to the labor force times the natural employment rate. The natural employment rate is 100% minus the non wage inflation accelerating rate of unemployment (NAWRU). Estimates of the NAWRU are needed to construct estimates of potential output.

C. Another way of putting it is that the estimate output gap is a function of cyclical unemployment which equals actual unemployment minus the NAWRU. This means that estimates of the NAWRU are very important.

D. This means we (in the Eurozone) have a problem. The stability and growth pact requires estimation of the NAWRU which means that it dictates that there is a NAWRU and that, if unemployment is above the NAWRU the rate of increase of nominal wages declines. If the accelerationist Phillips curve does not correspond to reality, the Stability and Growth Pact is like the possibly mythical local ordinance which declared that Pi is equal to 3.0.

E This means that reassurances (to Paul Krugman) that policy makers and staff have moved on to use of Phillips curves with anchored expectations are uh not accurate.

F. There are many many problems with EC estimates of the NAWRU. This is obvious, because estimates of the NAWRU track actual unemployment and are absurdly high — the EC estimate of the Spanish NAWRU for 2014 is greater than 20% (pdf warning) . I will write a post on each of the problems which I have noticed.

1. The theory which implies there is a NAWRU is rejected by the data. The acronym NAWRU implies that there is one and only one unemployment rate consistent with non accelerating inflation. European data from the past 7 years show huge fluctuations in unemployment and extremely stable inflation. There is no falsifiable hypothesis including a NAWRU which has not been falsified. The reaction has been to assume that the NAWRU fluctuates for unexplained reasons so the NAWRU story has no implications for the association between unemployment and inflation.

2. The changes in the NAWRU must be exogenous. It is not just that they are exogenous to the model (not explained) they must be unaffected by policy. This is an assumption. It is assumed that fiscal policy has no effect on the future NAWRU. In other words it is assumed that there is no hysteresis. This assumption is required for calculations of the effects of spending and revenues on the long term debt to GDP ratio (as stressed by DeLong and Summers pdf warning). The vitally important assumption is not tested.

3. The NAWRU is assumed to be an I(2) process — not only does the level shift exogenously but so does the trend. This means that the first difference of the first difference of the NAWRU is stationary. This assumption implies that long term forecasts of the NAWRU, say 100 years from now, are always either greater than 100% or less than 0%. Clearly this is crazy. The original argument for an accelerationist Phillips curve is very explicitly an argument about the long run. There is a fundamental contradiction between the concept of a NAWRU and a time series model of the NAWRU whose long term implications are ignored.

4. The NAWRU is estimated by EC using two time series — the acceleration of wage inflation and the unemployment rate. A model (explained for example in Fioramanti Padrini and Pollastri 2015 (warning same pdf to which I linked above). This model has 4 series of disturbance terms used to fit 2 time series. As one might guess, identification is a bit problematic. However, it is possible to convince a computer to estimate all the parameters.

5. In a last arbitrary ad hoc step, EC imposes limits on three of the parameters of their model. Crucially one of these is the variance of disturbances to cyclical unemployment. This last intervention is not motivated by theory or evidence. It has a very large effect on estimates of cyclical unemployment and allowed deficits.

I think it is clear that point 5 is very interesting. Even the reader who has been patient enough to read this far, might not be patient enough to read posts 1 through 4. I think 2, 3 and 4 will be skipable, but I don’t guarantee that the future post 5 will be comprehensible without reading 1-4 (or even after reading 1-4).

update: the post has been extensively corrected based on comments by Marco Fioramanti.

Comments (1) | |

How prefunding retiree health benefits impacts the Postal Service’s bottom line – and how Brookings got it wrong . . .

invisible hand The author Steve Hutkins is a literature professor who teaches “place studies” at the Gallatin School of New York University. He has no affiliation with the U.S. Postal Service—he doesn’t work for it, nor does anyone in his family. Save The Post Office (his website) provides information about the post office closings and consolidations that are taking place, the historic post office buildings that are being sold off, the efforts people are taking to protect their post offices, and the things citizens can do to save their post office when it ends up on the closure list.

In October, the Washington Post ran a column by Lisa Rein entitled “Should the Postal Service be sold to save it?”

The article was about a recent paper by Elaine Kamarck published on the Brookings Institute’s website. Kamarck is the Founding Director of the Center for Effective Public Management at Brookings, as well as being a Senior Fellow in Brooking’s Governance Studies. Her paper is entitled “Delaying the inevitable: Political stalemate and the U.S. Postal Service.”

Kamarck’s thesis is that the Postal Service is going through a “crisis of obsolescence,” its financial losses are unsustainable, and “the political system is stuck and unable to do anything about it.” The thing to do now, concludes Kamarck, is split the Postal Service in two. One organization would fulfill the universal service obligation by delivering market-dominant mail. The other part would be privatized and take over competitive products (Priority Mail and package shipping); it would also be given the freedom to expand into new areas of business now prohibited for the Postal Service.

The article prompted several critical responses, including pieces by Dave Johnson in Crooks & Liars and Zaid Jilani in AlterNet. Rein also did a follow-up article in the WaPo — “Why sell off the Postal Service if it’s making money?” — in which she goes more deeply into the conflicting explanations for the Postal Service’s financial problems.

One of the main issues in the debate has been the Retiree Health Benefit Fund (RHBF). The critics of Kamarck’s paper (and Rein’s column about it) argue that were it not for the RHBF prefunding established in 2006 by the Postal Accountability and Enhancement Act (PAEA), the Postal Service would not have been posting huge losses. The core of the financial problem facing the Postal Service is the requirement to fully fund decades of future retiree health costs with ten annual payments of about $5.6 billion, an obligation imposed on no other business or government agency.

Kamarck anticipates this claim about the RHBF, and her paper tries to set it aside. In so doing, however, she makes an error that’s worth looking at in some detail.

The fly in the ointment

Kamarck’s paper addresses the argument about the prefunding as follows:

Many believe that the prefunding requirement for retiree health benefits accounts for all of the Postal Service’s financial problems. Although the prefunding requirement does account for a large share of net losses, retiree health benefits caused $22,417 million in expenses out of a total net loss of $5.5 billion in fiscal year 2014.

Kamarck is trying to make the case that prefunding the RHBF does not explain the Postal Service’s huge losses, which she thinks can only be explained by the declining mail volumes caused by the Internet. To make this point, she says that prefunding accounted for $22,417 million (or $22.4 billion) of the $5.5 billion loss in FY 2014.

This doesn’t make sense. She’s trying to show that the RHBF expense doesn’t account for such a large portion of the net loss, but according to her numbers, the expense was four times greater than the loss.

That’s not just illogical, it’s wrong. The RHBF expense in FY 2014 was not $22.4 billion. It was $5.7 billion, as stated in the USPS 10-K report. And the expense did not account for just a portion of the $5.5 billion net loss. It accounted for all of it. If it weren’t for prefunding, the Postal Service would have posted a profit in 2014.

I notified the Brookings Institute about the error in Kamarck’s paper on September 22, the day after the paper was posted on the Brookings website, but so far I’ve received no response, and the error still appears in the paper on their website. (run75441: This is not unusual for a source not to acknowledge an error and I have done it also with reports and studies. They just do not respond and the error goes forward as the truth even though challenged.)

Anyway, it seems like a pretty minor mistake, hardly worth noting, but it goes to the heart of Kamarck’s argument. She’s trying to refute the claim that prefunding explains the Postal Service’s financial problems, but the number she presents is wrong, and that’s all she has to say about the claim. If prefunding really is the cause for the Postal Service’s financial problems, the solution is obviously to fix the prefunding — not sell off and privatize the competitive products business, the one area that’s actually growing.

The Source of the Error

The error in Kamarck paper is derived from a misreading of a table in a financial analysis by the Postal Regulatory Commission, which is cited in footnote #8. On page 21 of the PRC report, there’s a table showing “Structure of Assets and Liabilities” for the Postal Service. [(You can see the table here.)

The table shows that as of September 30, 2014, there was a liability of “$22,417 million” for “retiree health benefits.” But this figure is not the expense for the retiree health benefit expense in FY 2014, as Kamarck says in her paper. Rather, as the PRC explains in the text following the table, “The Postal Service has not yet paid RHBF statutory prefunding obligations for FY 2011 through FY 2014, which total $22.4 billion and comprise 52.7 percent of current liabilities.”

In other words, the Postal Service did not pay $22.4 billion into the RHBF as required for 2011-2014 (it defaulted on these payments), so the total for these unpaid obligations appears as a liability for retiree health benefits in the table. The $22,417 million cited by Kamarck is the cumulative expense for four years, as of the end of FY 2014, not the expense for FY 2014 itself.

Kamarck is wrong on the larger point as well. Prefunding is clearly the primary cause of the Postal Service’s net losses, and to a significant extent.

The Impact of Prefunding

Kamarck acknowledges that the “prefunding requirement does account for a large share of net losses,” but she doesn’t say how large that share is.

The following table shows what’s happened since prefunding began. It shows each year’s net loss, as reported in the PRC financial analysis (p. 26), along with the prefunding payment for the year and what the profit or loss would have been without the prefunding.

The prefunding for 2007 includes $5.4 billion for the first annual RHBF payment and another $3 billion transferred into the fund from an escrow account, (An earlier version of this article neglected to include the escrow transfer, but it is included in the $5.1 billion net loss, as explained in the 10-K report for 2007.) The unusually large net loss in 2012 was due to the fact that the Postal Service was permitted by Congress to skip the RHBF payment in 2011, but then owed a double payment in 2012. The figures for FY 2015 are estimates based on the first eleven months of the year, as reported in the USPS financial report for August.

As the table shows, over the past nine years, the Postal Service has posted losses totaling about $56 billion. Almost $49 billion of it — 87 percent — was due to prefunding.

Over the past nine years, there were four years when the Postal Service would have posted a loss if it weren’t for prefunding — the years of the Great Recession and its aftermath. In the two years before the economy tanked, the Postal Service would have shown a profit if it weren’t for prefunding. In 2013 and 2014, with the economy improving and postal revenues stabilizing, the Postal Service would again have shown profits if it weren’t for prefunding.

The same will be true for FY 2015. As of September 1, 2015, eleven months into the fiscal year, the Postal Service had a net loss of $4.1 billion, including a RHBF expense of $5.2 billion. Depending on the size of the workers comp adjustment for September, the Postal Service will end the year with a net loss of something like $4.6 billion. But without the RHBF expense, it would show a profit of about $1 billion, about the same as last year.

Kamarck writes that “many believe that the prefunding requirement for retiree health benefits accounts for all of the Postal Service’s financial problems.” No one believes that prefunding accounts for all of the financial problems, but clearly it accounts for a huge part. This is not a matter of belief. It’s a fact.

The Origins of Prefunding

Congress should have fixed the prefunding problem back in 2009 or 2010, as soon as it became clear that the size of the payments was unmanageable in a recession. Unfortunately, privatization advocates in Congress (like Darrel Issa) wanted to use the crisis as justification for legislation designed to dismantle the Postal Service. Fortunately, there were others in Congress, Democrats and Republicans, who saw the value of having a vital public postal system. That’s why there’s been a political stalemate.

But Congress should never have imposed the prefunding payments to begin with. It’s worth recalling how that happened.

In 2002 the Office of Personnel Management (OPM) determined that the Postal Service was overpaying billions of dollars into one of its pension plans, but reducing the pension payments to the Treasury would have had a negative impact on the unified budget of the federal government — something that the Bush administration would not permit.

So when PAEA was winding its way through Congress, a deal was hatched between the bill’s creators and the Bush administration, specifically the Office of Management and Budget (OMB). Rather than paying for retiree health costs on a pay-as-you-go basis, as it had always done and probably could have continued to do, the Postal Service would begin setting aside funds for future retirees, decades in advance.

The idea for the fund may have come from Postmaster General John Potter, who in 2003 recommended to Congress that a different pension overpayment (involving postal workers who were vets) might be transferred to a new Retiree Health Benefit Fund. It was the next best thing to getting a refund on the overpayment, which Potter knew Congress would never approve. The Postal Service’s proposal to create such a fund is analyzed in more detail in this 2003 GAO report, which explains how the plan would be “scored,” i.e., how it would impact the federal budget.

Three years later, Congress created the RHBF to address a different pension overpayment problem. The overpayments were essentially shifted to the new fund, and they had to be as large as they were in order to offset the reduction in pension payments.

A 2009 committee report in the House of Representatives about PAEA explained it this way:

The payment schedule for the first 10 years was established primarily to make the PAEA budget neutral, responding to the concerns of the Office of Management and Budget at the time the PAEA was passed, rather than corresponding to actuarial requirements or financial conditions at the Postal Service.

There was no urgent need requiring ten years of huge RHBF payments. If Congress thought that it was a good idea to prefund retiree health costs, it could have spread out the liabilities on a 40-year amortization schedule, as Dan Blair, then the Acting Director of the OPM, had recommended in testimony to Congress in 2005. But Congress was using the new fund to solve the pension overpayment problem, and small RHBF payments wouldn’t have solved the problem.

USPS Inspector General David Williams tells the same story about the origin of the RHBF in a letter he wrote to the GAO about one of its reports expressing concern about postal liabilities.

“The Postal Service started prefunding its retiree health benefits as a result of the discovery that, due to external fund management misjudgments, it was on track to seriously overfund its pension obligations by $78 billion,” wrote Williams. “The aggressive payment schedule appears to have been set based on byzantine ‘budget scoring’ considerations rather than actuarial assumptions or an evaluation of the Postal service’s ability to make the payments.”

So that’s how the whole mess got started. Congress was trying to fix the pension problem, and it created a new problem in the process. but it was the Bush administration’s OMB that was ultimately responsible for the payment schedule. The Postal Service — and its workers and ratepayers — ended up with a huge burden, all so that PAEA would be “budget neutral.”

(There’s more about the origins of prefunding in this previous post.)

Fixing the problem

Congress and the Bush administration created the prefunding problem, and one day Congress will have to fix it. The latest bill proposed by Senator Tom Carper, one of those who helped craft PAEA, tries to do exactly that. It would eliminate the existing payment schedule, cancel any outstanding payments, reduce the prefunding goal to 80 percent of projected obligations, and amortize payments over 40 years.

Congress should have passed a bill five years ago saying just that and only that. Perhaps then we would not have had to endure the endless stream of news articles about billion dollar losses, bleeding red ink, defaults on payments, and the obsolescence of the postal system.

Perhaps then the Postal Service might not have found it necessary to increase rates, lower delivery standards, close post offices and plants, sell historic buildings, and make draconian cuts to its workforce. And perhaps we would not be hearing from the Brookings Institute about why it’s a good idea to privatize the Postal Service.


(Photo credit: Brookings’ panel on “The Future of the United States Postal Service”)

How prefunding retiree health benefits impacts the Postal Service’s bottom line – and how Brookings got it wrong Steve Hutkins, Save The Post Office blog

Tags: , , Comments (24) | |

How Probability Is Perceived . . .

I ran across this explanation of Probability as seen by different professions at Sam Wang’s Princeton Consortium and tracked it down to Ben Orin’s Math with Bad Drawings blog. A little about Ben and his blog as told by himself: “This blog is about the things I like. It’s also about the things I can’t do. I hope that the juxtaposition here – carefully edited writing alongside art that my wife (charitably) likens to ‘the average 6th grader’ – captures the contradictory state of the teacher, of the mathematician – and, what the hell, of the human. We are all simultaneously experts and beginners, flaunting our talents while trying to cover our shortcomings the way an animal hides a wound.”

Note the differences in viewpoint of which some are a matter of convenient and profession. I thought you might enjoy the truth and the humor in it as explained by a Ben, a Math Teacher.

Actual Meaning

B Political Journalist

C Investment Banker

D Local News Anchor

E Philosopher

F Weather Forecaster

G Mission Impossible Agent

H Millennium Falcon Captain

Tags: Comments (0) | |

CBO’s 2015 Long-Term Projections for Social Security: Additional Information

CBO’s 2015 Long-Term Projections for Social Security: Additional Information

The Social Security Policy Options, 2015 was not the only report released by CBO yesterday. You have this one filling out the details in the Long-Term Budget Outlook

Haven’t read this one either. So you all get first shot at framing the debate! Go get ’em Tigers!

Tags: , , Comments (42) | |

The Enduring Relevance of “Manias, Panics, and Crashes”

by Joseph Joyce

The Enduring Relevance of “Manias, Panics, and Crashes”

The seventh edition of Manias, Panics, and Crashes has recently been published by Palgrave Macmillan. Charles Kindleberger of MIT wrote the first edition, which appeared in 1978, and followed it with three more editions. Robert Aliber of the Booth School of Business at the University of Chicago took over the editing and rewriting of the fifth edition, which came out in 2005. (Aliber is also the author of another well-known book on international finance, The New International Money Game.) The continuing popularity of Manias, Panics and Crashes shows that financial crises continue to be a matter of widespread concern.

Kindleberger built upon the work of Hyman Minsky, a faculty member at Washington University in St. Louis. Minsky was a proponent of what he called the “financial instability hypothesis,” which posited that financial markets are inherently unstable. Periods of financial booms are followed by busts, and governmental intervention can delay but not eliminate crises. Minsky’s work received a great deal of attention during the global financial crisis (see here and here; for a summary of Minksy’s work, see Why Minsky Matters by L. Randall Wray of the University of Missouri-Kansas City and the Levy Economics Institute).

Kindleberger provided a more detailed description of the stages of a financial crisis. The period preceding a crisis begins with a “displacement,” a shock to the system. When a displacement improves the profitability of at least one sector of an economy, firms and individuals will seek to take advantage of this opportunity. The resulting demand for financial assets leads to an increase in their prices. Positive feedback in asset markets lead to more investments and financial speculation, and a period of “euphoria,” or mania develops.

Tags: Comments (7) | |

Cobra’s Unemployment slithers as Capacity Utilization drops

Capacity utilization dropped in November. The drop makes me reflect upon when I first began formulating the equations for effective demand in 2012-13. I made predictions to test the equations. Each prediction guided me to understand effective demand. One early prediction was that the natural rate of unemployment was around 7%.

2013 nat unemploy

This graph comes from a post in May, 2013. The linear trend line for the red dots was heading toward a y-intercept of 7.25, where UT goes to 0%. (UT at 0% represents 0% spare capacity or full-employment of labor and capital.)

The problem was using a linear trend line for only a portion of the data points. The trend line should have been a polynomial using both the red and yellow dots. It would have given a y-intercept of around 6%.

The latest version of the graph looks like this…

update nat unemp poly

Currently the y-intercept is trending to 4.9%. The other trend line shows a natural unemployment rate of 5.1% for data before 2009.

But the unemployment rate ended up falling well below the “better” natural rate of 6%. How did I explain that?

The Cobra equation.

I found the Cobra equation back in October, 2013, to show how unemployment and capacity utilization move together along the effective demand limit. The equation gives a path of increasing profits alongside the effective demand limit.

The Cobra equation implied that as unemployment falls at the effective demand limit, capacity utilization will also fall instead of rise… giving more room for unemployment to fall further. Business cycles had followed this equation before… Would this business cycle follow it?

I was not sure at that point how low unemployment would really go. I wrote back in October, 2013…

“I was projecting a lower limit of 7% for unemployment, but that was based on capital utilization rising. Now I have to reconfigure how low unemployment might go.” link

So did capacity utilization and unemployment end up following the Cobra equation? Yes, near the end of 2014, they started following the Cobra’s profit-max limit. Here is the latest graph using monthly data that includes the data for capacity utilization that came out today.

update 3d monthly


Just as the Cobra equation predicted, aggregate capacity utilization dropped so that unemployment could slither further downward along the profit-max limit… and it fell nicely parallel to the limit.

Finding the Cobra equation in 2013 before the economy followed it again in this weird business cycle gives me comfort. The original model of a natural unemployment rate was re-worked to a better model of unemployment along the effective demand limit.

Comments (8) | |

African Americans, the Poor in Court and Sentencing Reform

As one person I read consistently would say upon discovery of something quite obvious; “Quelle Surprise.”

I was told if I saw a prisoner, a parolee, or an Ex with a tattoo of the number “13-1/2” on their arm, it meant 1 judge, 12 jurors, and 1/2 of a chance. 1/2 of a chance to win in court as the cards were stacked against those who could not afford adequate representation or were African American. For sure if you went to trial, the resulting sentencing would be harsher as you made them work rather than accept the offered plea bargain.

Part of the sentencing reform as proposed by Congress, backed by the Koch Bros, and supported by CAP as well as other progressive orgs. is meant to prevent the Koch Bros. associates and white collar business types from going to prison when they break the law. As to be expected, the Koch Bros. could care less about minorities and the people lacking economic means to fight back in court to prevent going to prison. Mind you now, those minorities and people of little means would still benefit from an early release; however, the effort by the Koch Bros., CAP, etc. does nothing to prevent them from going to prison in the first place.

I had previously warned on another site the effort to revise sentencing guidelines is flawed as it failed to address the upfront justice system as I explain here;

Sorry Ed, Keith, and Nancy:

The issue was always in the courts and how defendants are represented and what avenues they had available to them once and if they were convicted and sentenced. The resources are not there, they are over burdened, and they are understaffed. Defendants do not raise much of a fight in the courtroom as they lack the resource to do so. Today, plea bargaining rules the courtroom and 85%+ of all cases before a judge are plea bargained away with many defendants even signing away their rights to appeal for a period of time. It is a matter of expediency as counties and states do not want to fund the courts and defendants can be moved through the system speedily to the prisons. Besides prisons being in unlikely places away from the crowds, they are an economic incentive as they employ people and raise tax revenue in areas not populated by business.

What is happening in states and in Congress is akin to giving a person with pneumonia an aspirin and telling them they are cured. For all that is said, talked and written about for criminal justice reform, it is a just bromide to the true issues. Besides have any of you looked at the tenets of parole?

Tethering in one state costs $13 per day for the parolee just released from prison and to which there is no escape. At the end of a 2 year parole, the parolee owes a state ~$9,490 if they do not pay it as they go along (mind you they may not have a job in this economic environment). If you do not complete paying for it, you are kept on parole until it is paid. If you refuse to pay it, you go back to prison. States use these funds to finance other state costs besides just keeping tabs on the parolee.

In most states, the Parole Officer judgment is the same as a court’s decision. A prison psychiatrist can decide a parolee needs no additional counseling only to be overruled by the Parole Officer. The length of the counseling is set by them also as they all have their medical degrees(?). The parolee pays for this also. If the parolee fails the course, the course can be extended or they can go back to prison. So much for the issue of recidivism.

Today, the Washington Monthly admitted they were taken in by the efforts of the Koch Brothers. The Koch Brothers have no interest in justice for all as the administration found out and the Washington Monthly (and I assume the CAP) also found out.

“One of those bills – which has been supported by Koch Industries, libertarians and business groups – would make wholesale changes to certain federal criminal laws, requiring prosecutors to prove that suspects “knew, or had reason to believe, the conduct was unlawful,” and did not simply unknowingly violate the law.

Many laws already carry such a requirement — known as “mens rea” – but Congress left it out of many others, and libertarian groups say that has made it too easy to unknowingly violate obscure laws. Some environmentalists argue, however, that the real motive of Charles Koch, the philanthropist and the company chairman, in supporting the legislation is to block federal regulators from pursuing potential criminal actions against his family’s network of industrial and energy companies, a charge the company denies.”

Why would the Koch Brothers be interested in such a change? It appears “‘Koch Petroleum Group knowingly and voluntarily pleaded guilty to criminal violations of the Clean Air Act and to making false statements,’ the DOJ spokesman, Wyn Hornbuckle, said. ‘These admissions and the significant criminal liability in this matter speak for themselves.'”

Is ignorance of the law an excuse for having committed a felony? It sure does not work when caught speeding (misdemeanor) . . . “well officer, I did not see the speed limit sign,” nor does it work when a person lacks cognizance when committing a crime as witnessed by the numbers of mentally ill locked away in prisons. One recent case has arisen where a 21 year old with the capacity of a seven year old is being charged after tweeting threats to schools. Reading the comments of people who know him, it does not appear he might have an evil intent or mind. The difference between the two being, those who are capable in making cognizant decisions and those being incapable of doing so (Bev Jack?). Even though it is not fool proof and when there is a question of ignorance of the law, it is time to ask for a jury trial. In which case, one can test the law by asking the question, “what would a reasonable man expect and do?”

This really is not the question in that there are those who have better standing in court than the average or less than average citizen due to the availability of resource. Those who have better resource and as a result better standing in court no longer want to make their case and be given a pass. November 24 in a NYT article “Rare White House Accord With Koch Brothers on Sentencing Frays”. Why would this be? It appears H.R. 4002 sponsored by “Wisconsin Republican Jim Sensenbrenner has made it complicated for House Democrats who have been warned (by Republicans) the passage of H.R. 4002 would be essential for obtaining support from Republicans for a larger package of criminal justice bills.” What does this bill do?

In effect it gives businesses a get out of jail free card; “would make wholesale changes to certain federal criminal laws, requiring prosecutors to prove that suspects ‘knew, or had reason to believe, the conduct was unlawful,’ and did not simply unknowingly violate the law.”

Many laws already contain such language which causes the court to prove the defendant knowingly violated the law (except in the case of insanity where the burden of proof is with the defendant). As DOJ spokesman Melanie Newman stated: “Countless defendants who caused harm would escape criminal liability by arguing that they did not know their conduct was illegal.” Those who suffer from mental illness have to prove they lacked an evil mindset and those who do not declare mental illness, do not have such a burden. The potential impact is many more of those could cause potential harm to the environment and walk free. The mentally ill (favored scapegoat of the NRA and weapons promoters these days) are held to a higher standard.

“The proposed standard, Justice Department officials said, might have prevented guilty pleas in a variety of cases, such as the charges filed in 2013 against Jensen Farms of Colorado for failing to adequately clean cantaloupe, resulting in an outbreak of food-borne illness that was cited as a factor in at least 33 deaths. It also might have prevented the plea in the 2012 charges against the owner of a pharmacy who sold mislabeled, super-potent painkillers blamed in three deaths.” The same holds true for “a compounding drug company prepared drugs for injection which resulted in a total of 25 deaths and injury in Michigan and other states.

Even so, some liberal representatives still support the legislation which may result from the passage of H.R 4002 even though it does little to provide the necessary representation in court for minorities and others to get a fair trial without plea bargaining. In a statement on Tuesday (November), Michigan Representative John Conyers said “he supported the bill which the Judiciary Committee approved by voice vote last week because outside parties had raised ‘a number of concerns about inadequate, and sometimes completely absent, intent requirements for federal criminal offenses.’” Seriously, Representative John Conyers? Where is the concern for your constituents who face the courts on a daily basis with nothing to defend themselves other than plea-bargains and the grace of the court (if such exists). The present legislation is little more than a back door correction of what happens and should not have happened in the first place during court proceeding.

Critics have said those who oppose the change due to the Sensenbrenner addition are exaggerating the impact of it as it is only a small portion of the entire bill focusing on eliminating mandatory sentencing. The elimination of mandatory sentencing will not stop a judge from applying a harsh sentence forcing a defendant to apply to a COA to overturn the judge and costing $thousands more. It is true a reduction in sentencing will help the overall issue of too many in prison; but, this solution is only a part of the problem. Most of the issue is on the front end of the justice system in the US. The lack of adequate representation, the under-staffing of public defender offices, the cutting of funds for public defenders, the over use of plea bargaining to short circuit the justice system, the burdens on courts, etc. The poor and minorities deserve the same representation and access to justice as what the associates of the Koch Bros. industries receive in court. This is a far bigger problem and sends many more people to prison than does drug sentencing which could be mitigated if better representation existed. It is here Congress, Conyers, CAP and all the progressive orgs should spend their money and energy. Otherwise much of the effort will not yield the payoff in preventing people from going to prison as expected.

12 Jurors, 1 judge, and 1/2 of a chance.

My $.02 . . .


A Study In Contrasts Nancy LeTourneau; Washington Monthly
Criminal Justice Reform: It Depends Upon Where You Look; Ed Kilgore; Washington Monthly
Quick Takes – my answer to Washington Monthly; Nancy LeTourneau; Washington Monthly
Rare White House Accord With Koch Brothers on Sentencing Frays; Matt Apuzzo and Eric Lipton; NYT

Tags: Comments (13) | |