Our Lost Constitution

There was a time when the Constitution meant something.  It was respected for what it was.  So were the limitations that were carefully crafted into the document by the Framers.  Even when there was pretty compelling language in the Constitution to bend it to the "current times" it was ruled out of bounds.  Has something been lost?

Most definitely based on the 5-4 Supreme Court decision on Friday where it was miraculously concluded that the 14th Amendment to the United States Constitution provides "that the right to marry is a fundamental right inherent in the liberty of the person, and under the Due Process and Equal Protection Clauses of the Fourteenth Amendment couples of the same-sex may not be deprived of that right and that liberty."

It is all a little hard to understand in that the 14th Amendment was adopted in 1868.  How is it that this fundamental right in the Constitution was not discovered for 147 years?

Justice Scalia asks the same question in his dissenting opinion and he also provides a most troubling answer.

“The five Justices who compose today’s majority are entirely comfortable concluding that every State violated the Constitution for all of the 135 years between the Fourteenth Amendment’s ratification and Massachusetts’ permitting of same-sex marriages in 2003. 

They have discovered in the Fourteenth Amendment a ‘fundamental right’ overlooked by every person alive at the time of ratification, and almost everyone else in the time since. They see what lesser legal minds—minds like Thomas Cooley, John Marshall Harlan, Oliver Wendell Holmes, Jr., Learned Hand, Louis Brandeis, William Howard Taft, Benjamin Cardozo, Hugo Black, Felix Frankfurter, Robert Jackson, and Henry Friendly—could not.

They are certain that the People ratified the Fourteenth Amendment to bestow on them the power to remove questions from the democratic process when that is called for by their ‘reasoned judgment.’

These Justices know that limiting marriage to one man and one woman is contrary to reason; they know that an institution as old as government itself, and accepted by every nation in history until 15 years ago, cannot possibly be supported by anything other than ignorance or bigotry. And they are willing to say that any citizen who does not agree with that, who adheres to what was, until 15 years ago, the unanimous judgment of all generations and all societies, stands against the Constitution.”

What is most amazing to me is that five unelected Supreme Court Justices could effectively overrule state constitutional provisions and laws against same sex marriage. And almost all of the constitutional provisions were ratified by the voters of each state within the last 15 years. By and large these were not even close votes either.

What is even more remarkable about this is that these Constitutional votes were taken by the people exactly because they were concerned about this exact result---that judges would somehow find a "right" in their Constitution that did not exist there before.

Below is a chart of the states that voted on the question of same sex marriage by a vote of the people with the vote outcome.

Notice that in only two cases did a ban on gay marriage fail to gain a majority of voters. In Arizona in 2006 (which also attempted to ban civil unions) and in Minnesota in 2012.  Arizona voters went on to ban same sex marriages in 2008 while allowing civil unions for same sex couples.

State	Date	Yes vote	No vote	Vote outcome
Alabama	2006	81% (734,746)	19% (170,399)	Yes
Alaska	1998	68% (152,965)	32% (71,631)	Yes
Arizona	2006	48% (574,332)	52% (607,769)	No
Arizona	2008	56% (1,258,355)	44% (980,753)	Yes
Arkansas	2004	75% (753,770)	25% (251,914)	Yes
California	2008	52% (7,001,084)	48% (6,401,482)	Yes
Colorado	2006	56% (865,126)	44% (674,030)	Yes
Florida	2008	62% (4,890,883)	38% (3,008,026)	Yes
Georgia	2004	76% (2,454,912)	24% (768,703)	Yes
Hawaii	1998	71% (285,384)	29% (117,827)	Yes
Idaho	2006	63% (282,301)	37% (163,408)	Yes
Kansas	2005	70% (414,106)	30% (178,018)	Yes
Kentucky	2004	75% (1,222,125)	25% (417,097)	Yes
Louisiana	2004	78% (618,928)	22% (177,103)	Yes
Michigan	2004	59% (2,698,077)	41% (1,904,319)	Yes
Midwest:
Minnesota	2012	47% (1,399,938)	53% (1,550,844)	No
Mississippi	2004	86% (957,104)	14% (155,648)	Yes
Missouri	2004	71% (1,055,771)	29% (439,529)	Yes
Montana	2004	67% (295,070)	33% (148,263)	Yes
Nebraska	2000	70% (450,073)	30% (189,555)	Yes
Nevada	2002	67% (337,183)	33% (164,555)	Yes
North Carolina	2012	61% (1,317,976)	39% (840,802)	Yes
North Dakota	2004	73% (223,572)	27% (81,716)	Yes
Ohio	2004	62% (3,329,335)	38% (2,065,462)	Yes
Oklahoma	2004	76% (1,075,216)	24% (347,303)	Yes
Oregon	2004	57% (1,028,546)	43% (787,556)	Yes
South Carolina	2006	78% (825,766)	22% (232,978)	Yes
South Dakota	2006	52% (172,242)	48% (160,173)	Yes
South:
Tennessee	2006	81% (1,419,434)	19% (327,536)	Yes
Texas	2005	76% (1,718,513)	24% (536,052)	Yes
Utah	2004	66% (593,297)	34% (307,488)	Yes
Virginia	2006	57% (1,328,134)	43% (998,483)	Yes
West:
Wisconsin	2006	59% (1,260,554)	41% (861,554)	Yes

Credit: Wikipediahttps://en.wikipedia.org/wiki/U.S._state_constitutional_amendments_banning_same-sex_unions

What is really important to remember here is that there is a U.S. Constitution and that document has a mechanism that allows it to be amended if it is necessary. 

There is absolutely no way that the U.S. Supreme Court should be overturning a constitutional provision that a majority of the various states have adopted.

What is so wrong with following the Constitution? I wrote about all of this in 2011 in "Making Amends With The Constitution". There is a process in place in our Constitution if we want to change the rules. It is not easy but it was not supposed to be easy if we were to carefully protect the rights of the majority and also assure that minority rights are also respected. 

Compare the same sex ruling of the Court to other significant constitutional issues in our history.

For example,

Abolition of Slavery

President Lincoln had effectively abolished slavery through his Emancipation Proclamation in 1863 but he still believed in the necessity of following Constitutional standards and proposing the 13th Amendment which reads "Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."

Lincoln's effort in this regard is the subject of the 2012 movie "Lincoln".  Why did he see the need to go though all of that effort when it could have been done by the Courts or by letting his Emancipation Proclamation do the job? He did it because he wanted the legitimacy of the process. 

Income Tax

Article I, Section 8 of the Constitution provides that Congress has the power to lay and collect taxes. Nevertheless, the income tax law of 1892 was ruled unconstitutional because it was considered outside the power of Congress.  The 16th Amendment was ratified in 1913 to allow the establishment of an income tax.

Women's Right to Vote

There was nothing in the Constitution signed by the framers that precluded women from voting.  All references in the document were to people, not men.  However, the culture and custom was generally for only males to vote.  Nevertheless, it took the 19th Amendment in 1920 before it became the law of the land.  

Interestingly, 15 states (beginning with Wyoming in 1870) granted women the right to vote before adoption of the 19th Amendment.  Since voter eligibility was an issue left to the states (in that it was not specifically enumerated in the Constitution by the Framers) women in these states voted in both state and federal elections before 1920.

Equal Rights Amendment

Similarly, a substantial effort was made in the 1970's to pass an Equal Rights Amendment to the U.S. Constitution to state that "Equality of rights under the law shall not be denied or abridged by the United States or by any State on account of sex."  Why go through the effort if a court could just make a ruling? The amendment ultimately failed as only 35 of the 38 states needed to ratify the amendment signed on. 

Was the U.S.Constitution designed to change with time? Of course. That is what the amendment process is for (Article V).  The Framers in their wisdom also considered this carefully.  They did not want it amended for some passing fancy. 

Nor did they want a small majority to change the key foundations of the governing document to the detriment of a significant minority.  Therefore, 2/3 of both the House and Senate can come together and propose any amendment. They do not even need the President to concur.  Alternatively, 2/3 of the states can come together and call a convention to propose their own amendments and bypass Congress completely.  If the amendment is ratified by 3/4 of the states it is adopted as part of the Constitution.

If the American people want a federal government with expansive power they can have it. They can allow gay marriage. Or ban it in all 50 states. They can require everyone to buy health insurance or anything else.  They can ban assault weapons or ban abortions from coast to coast.  There is a way to do it.

It just does not seem that these types of powers exist with the President or Congress with any reasonable reading of the Constitution.  At least, this has been the interpretation for most of our history. Nor does it seem to be within the power of five justices to suddenly discover fundamental rights that have somehow been hidden in the Constitution for over 200 years and start applying them to over 300 million citizens by fiat.

It is indeed ironic that Justice Kennedy in the majority opinion based much of his rationale on the rights and liberty of the same sex couple who wants to marry.

However, what of the rights and liberty of the voters of the various states cited above?

And most importantly, what about the rights and liberty of those who might have a different view of gay marriage based on their religion?

Who prevails in a conflict between someone who has the right and liberty to marry under the 14th Amendment and a Pastor, Rabbi or Iman who also believes that the 1st Amendment is supposed to protect their rights as well? How will the government balance those rights?

Will we see churches threatened, sued and denied tax-exempt status for not performing same sex marriages?

In my view, that is a certainty. They have already come after butchers, bakers and candlestick makers who did not want to participate in gay marriage ceremonies based on their religious beliefs. The clergy is next as are the churches, synagogues and mosques.

Look no further than Kennedy's opinion where he states only that religious believers may continue to "advocate" and "teach" their beliefs. Nothing more. There seems to be no allowance for religious believers to actually "exercise" their religion.

Who would think that when it came to rights and liberty that #14 would trump #1?

And that the politics would trump policy at the Supreme Court of the United States.

This is not the Constitution of our Founders. Are they even looking at the Constitution?  

If they can do this what can't they do?

Roberts' Rules of Order

Robert's Rules of Order is a book "containing rules of order intended to be adopted as a parliamentary authority for use by a deliberative assembly."

It was written in 1876 by U.S. Army Colonel Henry Martyn Robert (1837–1923).

Apparently Chief Justice John Roberts and a majority of the U.S. Supreme Court have decided to develop their own legislative rules of order so that it can save the U.S. Congress from itself and the Affordable Care Act from oblivion.

Roberts has taken up the pen writing for a majority of the Supreme Court twice by concocting and contorting opinions that try to affirm a law that deserves no affirmation. He first turned a penalty into a tax to save the law in the original ACA case and he now has turned the federal government into a state in King v. Burwell.

It is all quite remarkable.

Especially for a body that is supposed to interpret the law rather than legislate from the bench.

The Supreme Court, and Chief Justice Roberts in particular, seems to believe its role to be more concerned with political and social order than its constitutional role to provide checks and balances between the three branches of government and assaults on constitutional order.

I found this portion of the majority opinion written by Justice Roberts to be especially remarkable where he defends the decision to allow credit subsidies on the federal exchange even though the statute clearly states that subsidies can only be provided by "exchanges established by the state".

"Those credits are necessary for the federal exchanges to function like their state exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid," Roberts wrote.

I almost laughed out loud when I read this rationale.

I also would like to ask Justice Roberts this question.

If Congress plainly meant to avoid a calamitous result why did they not plainly make that clear when they wrote the statute and passed it into law?

This seems to me to be an open and shut case if the Court was doing its job and not that of Congress.

Justice Antonin Scalia blasted the majority ruling in his dissent, in one part suggesting the healthcare law should now be called "SCOTUScare."

"Rather than rewriting the law under the pretense of interpreting it, the court should have left it to Congress to decide what to do about the act's limitation of tax credits to state exchange," Scalia wrote, joined by conservative justices Clarence Thomas and Samuel Alito.

Exactly.

Leave Robert's Rules of Order to maintain order in the deliberative process.

Do not use Justice Roberts' Rules of Order to save bad legislation.

Interest About Interest

It has now been almost seven years since the effective federal funds rate established by the Federal Reserve was over 1%. I am not aware of any other period in economic history that interest rates have been so low for so long.

Here is the FRED graph showing the federal funds rate from the beginning of the data set in 1954.

If that period is not long enough for you, here are a few graphs using a longer time perspective that I came across in a paper on The Equilibrium Real Funds Rate by James D. Hamilton, Ethan S. Harris, Jan Hatzius and Kenneth D. West.


Nominal interest rates in the United States since 1855.

Interest rates in the United Kingdom since 1800.

Nominal interest rates in Germany since 1858.

In Japan .

In Italy.

In Switzerland.

To say that the monetary and interest rate policy by the world's central bankers is in uncharted waters is an understatement.

How long can this be sustained?

What happens when the air is let out of the balloon?

What happens upon a Greek default?

Have the central bankers boxed themselves in so there is no graceful exit?

These are just a few questions circulating right now.

At some point there will be a lot more interest about interest. That usually comes when people also start being more concerned about the return of their money than on the return on their money. Or when the pernicious effects of inflation start to be better understood when things start heating up.

There is inherent risk in extending credit to someone else.  The record of interest rates shows that the compensation for that risk is not 0.12% or anything close to what we have today based on any historical standards.

Has the world changed that much? Have the laws of economics been displaced?

I don't think so.

When it turns, who will get burned?

Chickens Coming Home To Roost

This is the headline of an article in Pensions and Investments magazine this week.

Chicago Public Schools faces $634 million pension fund contribution by June 30

Wow! That's a lot of money.

As the deadline looms, the Chicago Public School Teachers’ Pension & Retirement Fund expects the Chicago Public Schools Board of Education to contribute the full $634 million due before the close of its fiscal year on June 30, said Frances Radencic, director of communications of the $10.2 billion pension fund. 

The pension fund “currently liquidates $60 million to $80 million per month to make pension payments to members,” said a statement on its website. “The fund cannot afford another pension ‘holiday’ or budget relief.”

I would say not. When you are a pension fund manager and you are required to have the liquidity to pay out $1.3 billion in benefits payments each year, a $634 million cash contribution is rather important in order to avoid having to liquidate your investment portfolio.

And those benefits paid to retired Chicago school workers are increasing at a rapid rate.

Credit: Chicago Teacher's Pension Fund-2014 Annual Report

This article caused me to look for a little context on the inner workings of the budget of the Chicago Public Schools.

It is a rather large enterprise.

Its 2015 FY budget is $5.7 billion. Those revenues are enough to put the Chicago Public Schools on the Fortune 500 if it was a corporation.

This is the breakdown of the budget. $3.9 billion is paid for salaries and benefits for 39,206 employees. That works out to almost exactly $100,000 per employee.

The CPS serves approximately 397,000 students which puts its per student costs at $14,500 per year.

Credit: Chicago Public Schools 2015 FY Budget

About half of the total staff are teachers.

Credit: Chicago Public Schools 2015 FY Budget

Why is the CPS in such a position on its pension contribution?

It has not been making the contributions it should have in recent years due to legislation passed by the Illinois legislature. The total shortfall in contributions from an actuarial perspective is over $1.2 billion for just the last few years. This chart shows the past contributions and the projected contributions that will be required over the next several years.

Credit: Chicago Public Schools 2015 FY Budget

This chart shows the consistent underfunding of the pension fund between the actuarially required employer contributions and what was actually contributed since 2006.

Credit: Chicago Teacher's Pension Fund-2014 Annual Report

This has led to a funded status on the pension fund of just 51.5% as of the most recent report.

Credit: Chicago Teacher's Pension Fund-2014 Annual Report

Of course, this calculation is assuming a discount rate on the future liabilities of 7.75% which many would argue is much too high considering the low interest rate environment we are in. Using this rate, the CPS pension fund has $20 billion in liabilities and just over $10 billion in total assets. A more realistic view would probably place the future liabilities in the range of $30-$40 billion at today's rates.

Underlying all of this is a significant demographic shift as the number of active employees has fallen in the CPS while the number of retired employees has increased putting even more pressure on the pension fund, the CPS budget and the taxpayers of city of Chicago and the state of Illinois.

Credit: Chicago Teacher's Pension Fund-2014 Annual Report 

It is not a pretty picture.

However, it is a picture that will be painted again and again in other public sector pension plans, Social Security and Medicare if our elected leaders continue to ignore demographic and actuarial realities.

A famous Chicago pastor once said that "America's chickens are coming home to roost."

They certainly have in his home city.

On The Shoulders Of Giants

I am just back from a vacation on the Outer Banks of North Carolina where my beach reading included the new David McCullough biography, "The Wright Brothers".

I could not think of a more relevant read considering the history that Wilbur and Orville Wright made on that wind-swept swath of sand dunes.

What those men accomplished is still awe inspiring. Even to my three-year old grandson who asked his mother as he flew from Texas to North Carolina, "How does this plane hold its weight in the air?"

People for thousand of years wondered if man could ever fly. Many thought it was impossible. In fact, Wilbur Wright told his brother in 1901 (two years before their success at Kill Devil Hills and two years after they had begun working on the challenges of flight) that men would not fly for 50 years.

It shows what passion, perspiration and perseverance mean to success. And Wilbur and Orville Wright used all three to change the world.

A few interesting observations from the book.

Orville's first grade teacher noticed him tinkering with bits of wood one day in class. When she asked him what he was doing he said he was making a machine which he and his brother would fly one day.
Did I say passion?

The Wright Brothers made every part, sewed every seam and assembled their aircraft after if was shipped from Dayton to Kitty Hawk. They also built their own building (combined workshop and living quarters) and hanger from scratch on the Outer Banks and had to haul every piece of equipment over four miles across those sandy dunes. They made three separate trips over three years to Kitty Hawk and Kill Devil Hills to understand gliding mechanics and flight control before ever attaching an engine and propellors to their aircraft. Every time they did a test flight they had to haul the aircraft back to its original starting spot. Did I say perspiration?

Wight Brothers Camp at Kill Devil Hills (1903)
Credit: OldPicture.com

Most knew nothing of the efforts of the Wright Brothers. They toiled in obscurity. Who would pay any attention anyway to a couple of guys who owned a bicycle shop who said they were going to fly? Most of those who did hear of their efforts thought they were crazy. In fact, the hometown newspapers in Dayton, Ohio did not even bother to send one reporter to cover the subsequent flight tests they were doing over the next several years in Dayton.  Did I say perseverance?

The story of the Wright Brothers is also another lesson in the limitations and ineptness that often attends government bureaucracy.

At the same time the Wright Brothers were working on the problems involved with flight the federal government was assisting a higher profile effort to the same end. $50,000 in public money was expended on the project in addition to another $20,000 in private funds. All to no avail. The total cost of the Wright Brothers to succeed? About $1,000 out of their own pockets in addition to the sweat of their brow.

To make matters worse, the Wright Brothers were continually rejected by the federal government when they approached it with the airplane technology. After repeated rejections by the United States government their first sale was to France. In fact, the Wright Brothers initially were much more famous in Europe than they were in the United States due to the air demonstrations Wilbur did in Europe.

Sir Isaac Newton was known to have said,

"If I have seen further, it is by standing on the shoulders of giants."

This statement clearly applies to anyone who came after the Wright Brothers unlocked the mysteries of powered flight in 1903. It is truly breathtaking to consider the exponential advances in flight that followed their breakthrough in fairly short order.

By 1909, an airplane had crossed the English Channel.

By 1920, the airplane had been used in World War II.

By 1927, Charles Lindbergh had flown solo across the Atlantic.

By 1935, the DC-3 has been designed and built to carry regularly scheduled money paying passengers

By 1943, the B-29 bomber had been developed that could carry 2,000 pounds of bombs with a range of 5,000 miles at 400 mph.

By 1947, Chuck Yeager had broken the sound barrier in a supersonic jet.

It is incredible to think that Orville Wright lived to see all of this in his lifetime. He passed away in 1948 at age 77 .

Of course, by 1969 a man had walked on the moon. It just so happened that Neil Armstrong grew up in Wapakoneta, Ohio which was just up the road from Dayton.

Unfortunately, Wilbur Wright died in 1912 at the age of 45 due to typhoid fever which is typically caused by contaminated food or water. Less than 400 cases per year are now reported in the U.S. but it was a major public health issue in that era. Orville had almost died of the same disease in 1896 which is now fairly easily treated with antibiotics.

Thank God that Orville survived to work with his brother in bringing us the miracle of flight. And thank God that there are men like Wilbur and Orville Wright who dare to dream and are not afraid to perspire and persevere to propel us to new heights.

May my grandson and future generations have the same spirit and perseverance.

Wright Brothers Memorial
Kill Devil Hills, NC
May, 2015

Debate Dilemma

The Republican Presidential primary field seems to get bigger every day.

And we can expect more entrants before it is over.

Last week I provided my initial views on the race and provided my perspectives on the candidates.

I believe the large field is a positive as it provides the opportunity to find the best candidate from a broad and diverse talent pool.

However, there are two practical problems with a big field that are also somewhat interrelated.

Human brains tend to perform poorly when faced with too many options. In fact, faced with too many choices we often make no decision at all. Or revert to a default mode. Confusion often means that we are most likely to just stay with the status quo. Therefore, good choices may never get a fair evaluation in the confusion caused by too much choice.

Barack Obama most likely would never have been elected if he had been one of six challengers to Hillary Clinton in 2008. He owes a good bit of his success to the fact that it was really just Hillary and him after New Hampshire. The rest of the field melted away early (Biden, Edwards, etc). A crowded field would have been to Hillary's advantage.

At the same time, John McCain won the GOP Presidential nomination in 2008 by being the default pick. Romney, Huckabee, Giulani, Ron Paul and Fred Thompson made the selection much more difficult (and risky). McCain was the safest pick in that he had been around the longest and he was the most familiar to voters. When questions arose and each candidate faltered in some way, McCain was the beneficiary.

The other practical problem involves the Primary Debates.

Most voters learn the most about the candidates from the televised debates. It is the one chance most have to judge the character and competence of the candidate but also in how they connect with the voters.

I follow politics closer than 99.9% of Americans but my exposure to most of the candidates running is limited to brief sound bites and slick tv ads. For example, I have seen Scott Walker, Jeb Bush and Ben Carson do a few tv interviews but nothing of substance. I have only seen Carly Fiorina in a couple of YouTube clips. I have had more exposure to Rubio, Christie and Cruz but it still is lacking in my assessment of each as a Presidential candidate.

I have the best feel for Huckabee (2008) and Santorum (2012) because I saw them in a lot of debates in the past two election cycles. Of course, you would have to live on the moon to not have seen Donald Trump a lot but I have no idea how he would stand up in the give and take of political debate.

That is why I think the debates are critically important in the selection process.

However, how do you have a debate with 15 candidates? Or even 12? It is impossible to do and have it be worthwhile for the voters.

You also have the additional problem of the confusion of choice with such a large field.

Understanding the problem, the Republican National Committee is rumored (with the tv networks) to be trying to limit the number of debaters in some way to between 9-12. They have already announced that they are limiting the number of debates to 9-12 compared to the 20 that were held in the 2012 primary season.

Limiting the number of debates seems to make sense. However, limiting the number of candidates to just 9-12 if there are 15 viable and credible candidates is not a smart decision in my opinion.

I agree that having that many candidates on stage at one time is not workable but there has to be a better way.

I think the better way is to break the field down into separate debates and also make it a competitive enterprise.

After all, isn't competition a bed rock principle of the Republican party? And shouldn't the Republican party also be striving to be as inclusive as possible rather than creating some exclusionary rules on who participates and who does not?

Instead of one debate the week of August 6 (the night of the first scheduled debate) have two (or three) with no more than six candidates.

You can then pair the top candidates (by current polls) in one debate and the second (or third tier) in another debate.

You poll after the debate and the 3 or 4 remaining leaders in the polls stay in the top tier and the top two winners of the second (or third tier) polls move up and the lower end of the top tier moves down.

In effect, it would be like calling up someone from the minors to "The Show" to challenge for the starting lineup. Or going from AA ball to AAA ball in the case of moving from the 3rd tier to 2nd tier.

You continue doing this with each scheduled debate until you had a manageable debate field and could manage only one.

My understanding is that the sponsoring networks for the debates hold a lot of power on the rules of participation but the Republican National Party needs to be actively working to push for the format that will best showcase its candidates (and its brand).

New York magazine devotes an entire article to the problem and suggests other creative solutions.

How about the 2016 GOP Primary Bracket?  Each candidate is seeded and debates one-on-one with another candidate with the winner proceeding much like March Madness.

The Republicans have a unique opportunity to educate, inform and entertain the electorate in the coming election cycle. What better way to do it than with a little competition and gamification in the debate process.

It might look like a debate dilemma.

However, it looks to me like it could be an opportunity to have the debates really be a difference with distinction for voters by,

making the process more inclusionary and less exclusionary,
simplifying the process for voters,
adding some competitive excitement to the race,

in order to identify the best Republican candidate.

What's wrong with that?

The Race Is On

The increasing number of GOP candidates formally announcing their Presidential campaigns has resulted in a lot of people asking my views of the race.

First, I don't have a personal favorite at this time. There are a lot of candidates I could support. There is not one that I would reject in favor of Hillary Clinton or any other Democrat I can see running.

In fact, I believe that is going to be the first priority in most Republican voters minds when they vote in the primary. Can they beat Hillary (or another Democrat)?

I am hedging a little on Hillary because I am not altogether sure that she will be the Democrat candidate. She most likely will be the nominee but who knows what else lurks in her closet? In addition, there are still a number of influential Democrats who want someone else but are silent right now. Most of the people who rejected her for Barack Obama eight years ago are still around.

It is still almost eight months until the first primary votes are taken and well over a year until the conventions. A lot can happen in that amount of time.

Running for political office is very similar to positioning a product in the marketplace. The same principles that apply to marketing and branding apply to a Presidential candidate.

Who are your target customers? How do you position yourself against your competitors? What are the principal features of your product? What are your advantages? What are the benefits to your "customers'? What are your key differentiators in the marketplace"?

It is also important to craft a simple message or overriding theme when you are running for President. Presidential politics is especially difficult for voters to figure out. There are a lot of issues and few voters (especially the key swing voters) agree with any one candidate on every issue. This complexity and the cognitive limitations human beings have in dealing with it forces people to construct simplified models of how the world (or the political scene) works in order to cope with it.

This is the notion of "bounded rationality" which the noted social scientist Herbert Simon documented in the 1960's and 1970's that is key to understanding how people make decisions. And they are not always based on rational thought.

I am going to use a little bit of "bounded rationality" myself in analyzing the Republican field and try to simplify it for you (and me) as well as consider it in marketing and branding terms.

First, the reality of Presidential primary politics is that the field narrows naturally over time as there is only so much money, organizational talent and voter support to go around.

The 2016 Republican primary calendar looks like this between February 2-March 15.

Tuesday, February 2
Iowa caucus (GOP)

Tuesday, February 9
New Hampshire

Saturday, February 20
South Carolina

Tuesday, February 23
Nevada caucus

Tuesday, March 1 (Super Tuesday)
Colorado caucuses
Massachusetts
Oklahoma
Tennessee
Texas
Vermont
Virginia
North Carolina

Saturday, March 5
Louisiana

Tuesday, March 8
Alabama
Hawaii Republican caucuses
Mississippi
Ohio
Michigan

Sunday, March 13 
Puerto Rico

Tuesday, March 15
Florida
Illinois
Missouri

I believe that no more than three candidates will still be standing going into Super Tuesday. All the others will have been eliminated in the aftermath of the first three states.

That is why it is important to carve out a "brand" that is unique and gives a candidate the best opportunity to appeal for support

My guess is that there will be three distinct types of brand categories at play in the primaries. Each candidate will be positioned within one of these groups as they try to attract the financial and voter support to gain the nomination.

To advance, each candidate in a brand group will need to beat the others in that group first. My guess right now is that the three survivors will come out of these distinct groups.

You could see two candidates both emerge from the Establishment group, for example, but if that occurs it would be my guess that one of the candidates repositions themselves to either the Evangelical or Non-Traditional brand.

This is how I see the three brand categories right now.

Establishment
Jeb Bush, Marco Rubio, Scott Walker, Chris Christie, (John Kasich or Rick Snyder if they get in)

Evangelical
Mike Huckabee, Rick Santorum, Ben Carson, Bobby Jindal, Rick Perry

Non-Traditional
Rand Paul, Ted Cruz, Carly Fiorina, Donald Trump, Lindsey Graham


If I had to handicap the race right now, I would place Bush, Huckabee and Paul as the favorites in each category.

The big question mark right now is that there are so many candidates that are not battle-tested in Presidential politics. Only Huckabee and Santorum (and to a lesser extent, Perry) have the experience under their belt. A lot of candidates can look good on paper but how will they do under the glare of the debate stage and the scrutiny of the national press? This is particularly true of those who have not spent their careers in politics---Carson, Trump and Fiorina. That is why handicapping the race at this point is a fool's errand.

At this point I believe the best candidate on paper is Marco Rubio.  He has a number of advantages. He is young. He is articulate. He is Hispanic. He is from a very important swing state. He has a good looking family.

His major negative is his ill-considered attempt to broker an immigration reform bill that was in direct conflict with the views of the vast majority of GOP primary voters. However, in a testament to his political skills, he has done a good job of pivoting from that miscue and putting some distance between his views then and now. We will see how that plays once the race really gets going.

For now the race is mostly about money. And there seems to be a lot of money flowing in. Jeb Bush will bring in the most. I read one report that suggests he might have $100 million banked by the end of this month. However, will Jeb Bush be able to collect votes as easily as he is raising cash? In my view it will not be easy running with the Bush name. He starts the race with more money and also with more baggage that he only has by way of birth. It may not be fair but it's politics. It's never fair.

Rubio, Perry, Paul, Cruz and Trump may have the resources to get to Super Tuesday and beyond even if they can't gain traction in February. Substantial money in the bank when February begins could blow my three-pronged race theory out the window.

The other interesting thing that I see in looking at the state primary lineup is how nicely the early GOP primary states match up with the swing states Republicans have to win in the general election.

This article in Hot Air points to seven states that the GOP must win to prevail in 2016. Which states are we talking about?

Iowa, New Hampshire, Nevada, Colorado, Virginia, Florida, Ohio.

Each of those states is in the early part of the primary season meaning that winning in those states should hold some greater relevance in selecting the best Republican nominee.

This map shows the electoral math based on the recent leanings of the 50 states.

Note that Florida is absolutely critical in any path to the White House for the GOP.

So keep your eyes on both Bush and Rubio.

It is hard to see where at least one of The Sunshine Boys will not be on the ticket as the Presidential or VP nominee when you consider that math.

Infernal, Not Internal

It is called the Internal Revenue Service.

However, there is nothing internal about it.

Internal is defined as something that is inside of something else. That means it has limits and boundaries. I have seen no evidence of any limits anywhere at the Internal Revenue Service of late. On the other hand, there seems to be plenty of malfeasance, misconduct, misbehavior, mismanagement or mistakes. All of which seems to have no limits or boundaries

Infernal is defined this way according to Google's dictionary.


1. "of, relating to, or characteristic of hell or the underworld."


2. "irritating and tiresome (used for emphasis)."

It seems a little more fitting doesn't it?

Let's look at the recent record.

Lois Lerner. We still don't know the full story of what was going on in the Exempt Organizations Unit of the IRS which Lerner headed. However, all the evidence points to the fact that organizations were being targeted by the IRS based on their political views.

Lerner took the Fifth and we were later told by the Commissioner of the IRS John Koskinen that Lerner's emails had been lost forever after a computer crash and could not be retrieved from its archival storage. Of course, we found this was not true and it has subsequently "found" 35,000 Lerner emails of which 6,400 were just turned over to House of Representatives this week.

Of course, we all know what would happen to a taxpayer if they told the IRS they lost their supporting documentation.

Wayne Allyn Root. Mr. Root was in the same graduating class at Barack Obama at Columbia University in 1983. However, he has claimed that, despite having the same major as Obama, he does not know one person in his class at Columbia who knew Obama. Needless to say, he has been a vocal critic of the President over the years.

Root also found himself to be a frequent target of the IRS Audit Division after he starting voicing his concerns about Barack Obama, a fact that he did not think was coincidental, and which he wrote about in 2013.

This week he updated the story with new evidence in his IRS audit file which he recently obtained in a Freedom of Information Act (FOIA) request. I was a tax attorney for many years and was often involved with IRS audits, appeals and tax cases. The documents certainly raise questions in my mind about what the IRS was doing in this case.

You can view the documents yourself here and make up your own mind. Mismanagement? Misconduct? Mistake?

Taxpayer Service. It was also recently reported that 8 million phone calls from taxpayers went unanswered during tax season as the IRS cut millions from taxpayer services. Such much for Service in the name as well. Only 40% of those who called the IRS got through and many of them were put on hold for as long as 30 minutes.

Commissioner Koskinen stated that the reason that they had to cut taxpayer services was because "the agency is required by law to implement the health law, leaving him with few other places to cut." However, there seem to have been plenty of things in Obamacare that were in the law that ended up not being required. Funny how that works.

Obama Stimulus Tax Credits. It was reported this week that a recent Treasury Inspector General audit found that the IRS doled out more than $5.6 billion in refunds on tax returns for tuition tax credits. The questionable claims involved almost 4 million students where there was no documentation from the college that tuition has been paid or was from a school that did not qualify under the law.

The Inspector General stated "the IRS still does not have effective processes to identify erroneous claims for education credits.”

Almost $6 billion in bogus refunds in just one year. And we keep hearing that our taxes have to be raised because there is not enough money?

IRS Tax Cheats. Another report by the Treasury Inspector General that was released today found that the IRS refused to fire the majority of its workers who were found to have cheated on their tax returns. In fact, in some cased these IRS employees were actually promoted within a year of the offense.

During the decade from 2004 to 2013, the IRS identified nearly 130,000 potential cases of tax violations by its own employees, and concluded about 10 percent of those were actual violations. 

Of those 13,000 cases, 1,580 were deemed to be intentional cheaters, and they were sent to managers for discipline. But in 60 percent of the cases, the managers refused to fire the employees.

Among the abuses were employees who repeatedly failed to file their returns on time, those who intentionally inflated their expenses and those who claimed the stimulus homebuyer’s tax credit without actually buying a home.

Take another look at the IRS logo.

Note the scale of justice.

Does that look the way the IRS is doing its job?

We deserve better.

Infernal, Not Internal.