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  • To Whom Does an Elected Official Owe a Duty of Loyalty?

To Whom Does an Elected Official Owe a Duty of Loyalty?

William L. Kovacs

October 2022

To Whom Does an Elected Official Owe a Duty of Loyalty?

As the 2022 elections for Congress approach, citizens should ask to whom an elected official owes a duty of loyalty. Are these candidates merely politicians seeking office to enhance their brand by leading the opposition against Americans who think differently? Or are these candidates seeking office to serve as fiduciaries to the Constitution? In a dangerously polarized nation, the answer leads to dramatically different forms of governance. The current political strife leads to deceit, distrust, and conflict. Electing fiduciaries should lead to trust that our institutions work for the people.

For 256 years, the U.S. has elected representatives, but their duty of loyalty to whom or what is vague. Of course, all take an oath to the Constitution and represent constituents, but such responsibilities are so abstract they are meaningless.

The writings of John Locke, Edmond Burke, and James Madison reflect a fundamental belief that no power is granted to our representatives as individuals. These representatives are fiduciaries that must act to achieve the public good. As fiduciaries, they cannot act beyond their legal authority and must administer laws impartially. Unfortunately, today this view is rejected by what Madison terms “factions,” groups of citizens united in a common interest adverse to others in the community.

These factions are today’s political parties and interest groups that build their brand, raise massive amounts of money and acquire power by preaching division. The academic literature supports this self-interest by arguing that public officials cannot be fiduciaries since it would be impossible to give loyalty to the many diverging interests confronting elected officials.

While divergent ideas are essential and constitutionally protected, the fiduciary’s duty of loyalty does not apply to individuals, groups, or political parties. Instead, it applies to the Constitution’s separation of powers structure that allows society’s many contestable issues to be debated rationally to foster a consensus around the public good. The process includes a Congress that formulates laws after listening to all sides of a debate; an Executive administers those laws, and courts resolve the controversies between branches.

For this structure to work, each branch of government has an independent duty to act as a check on the other branches. This tension is necessary to achieve the public good. Unfortunately, when elected representatives function as politicians, they distort the constitutional structure by placing their loyalty to political parties and interest groups ahead of the institution they serve. Displaced loyalty diminishes the Constitution.

Since our Constitution is held in trust by our elected representatives, for the American people, it is protected when these officials vigorously defend the powers and duties of the branch they serve. Such defense is the best mechanism to ensure government is limited to the powers given it by the Constitution.

Today’s political climate illustrates this point. We have one political party controlling Congress and the Executive. We have an Executive making new laws, (student loan forgiveness), or refusing to enforce existing law (immigration). While the Executive’s party in Congress may have a majority of members in its caucus, at times, it still may lack the votes needed to authorize the Executive’s actions. In instances when the Executive acts without congressional authority, his party in Congress generally has the power to block the minority party from preventing the Executive’s arbitrary accumulation of power. As an end run around the Constitution, the politicians in Congress, rather than dealing with the difficulties of the legislative process, abandon their oath to uphold the separation of powers by allowing the Executive to make law through regulation, Executive Order, or simply not enforcing laws.

In theory, the Constitution works well. In practice, however, the constitutional mandate of separation of powers is regularly abused. When Congress ignores its duties to defend the separation of powers, it limits the ability of the constitutional structure to fully allow the multitude of interests a voice in the debate needed to achieve a governing consensus. For several decades party-line voting (Democrats vote one way; Republicans oppose) has become the norm. In the 1960s, party-line voting was around 60%, but by the Trump administration, it reached 90%. Without letting the structure of the Constitution work, these representatives breach their fiduciary duty to the Constitution by allowing the Executive to enhance its power by diminishing the power of Congress.

When loyalty to political parties and interest groups eliminates the separation of powers protections in the Constitution, citizens must rely on the interest groups named Democrats or Republicans for protection. Today such actions are arbitrary political power. Tomorrow it could be tyranny.

This article was first published in TheHill.com

William L. Kovacs, author of Reform the Kakistocracy, winner of the 2021 Independent Press Award for Political/Social Change, and former senior vice president at the U.S. Chamber of Commerce.

 

 

 

 

 

 

 

 

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  • In Need of a Federal Ban on Gifts to Friends of Congress

In Need of a Federal Ban on Gifts to Friends of Congress

William L. Kovacs

September 2022

In Need of a Federal Ban on Gifts to Friends of Congress

Since the beginning of the republic, there has been a debate over the scope of Congress’s power to spend our money and then tax us to generate more money to spend. James Madison argued Congress could only spend on the items enumerated in the Constitution. Alexander Hamilton argued the Constitution’s Spending clause is independent of the enumerated powers, thus allowing Congress to tax and spend as it deems necessary. The only limitations – spending must be for the general welfare and Congress cannot use taxation as a pretext to indirectly control states.

Continuing to debate the limits of Congressional spending is a waste of time. The Supreme Court has made it clear that Congress can spend on whatever it wants as long as it promotes the general welfare. Only Congress can make that determination.

Such a broad interpretation of Congress’ ability to tax and spend has resulted in a massive expansion of government and a $30 plus trillion national debt that will likely place our posterity in involuntary servitude to the federal government. Most troubling is that the general welfare has morphed from building the canals, bridges, and highways to make the U.S. an economic superpower into trillions of dollars of gifts to special interests and friends. These gifts to private entities come in the form of grants, tax credits, loan forgiveness, and paycheck protection plans.

A few examples of the cost of congressional gift giving.

$600 billion in student loan forgiveness based on the Higher Education Relief Opportunities Act of 2003, which forgave $10,000 – $20,000 of student loan debt for approximately 15 million students.

$ 721 billion in grants to states as a bribe to manage federal programs enacted outside the constitutional authority of Congress to legislate.

Forgiving tens of billions of dollars of federal Paycheck Protection Program loans made to organizations controlled by the elite rich such as Paul Pelosi (husband of the Speaker of the House); Khloe Kardashian, Tom Brady and Reese Witherspoon, Forbes Media, Ruth Chris Steakhouse, The Washington Times, and more than a few members of Congress.

$16 billion in farm aid to offset losses suffered by farmers on tariffs imposed on products sold to  China. The top 10% of farmers receive 70% of the subsidies.

The $330 billion prescription drug industry was granted $64 billion in federal research funding.

Flood insurance subsidies are given to insure high-end housing in flood-prone areas. This insurance program is potentially liable for $1.3 trillion in flood claims while only collecting $3.5 billion in annual premiums. The program has $25 billion in losses that taxpayers will have to pay.

Most recently, through the falsely named “Inflation Reduction Act,” Congress authorized $370 in new tax credits for corporations and individuals if they acquire green energy products or build green energy facilities. The tax credits are to boost corporate sales of electric vehicles, the installation of rooftop solar panels, the development of solar power systems, heat pumps, water heaters, space heating, electric stoves, circuit breaker boxes, additional home insulation, and exterior windows, to name a few beneficiaries. This is in addition to federal regulations imposing energy efficiency requirements on at least sixty products and $577 billion in tax credits and grants for green energy projects since 2004.

A week before the passage of the IRA, Congress authorized $280 billion to incentivize the semiconductor industry to build plants in the U.S. and invest in the new research.  The semiconductor industry is a $573 billion industry that is expected to grow to $1.4 trillion by 2029 due to high demand for its products.

While there is almost no limit to Congress making gifts to its supporters, historical precedents prohibited state governments from giving gifts to private entities. In the mid-1800s, many municipalities and states used public funds to purchase stock in the railroads being built across the continent. Many of these governments lost or were swindled out of large amounts of taxpayer money. To prevent this type of financial loss in the future, forty-five states enacted constitutional limitations preventing gifts to private entities. The limits placed on gifts to private parties came to be called “gift clauses.”

The general gift clause prohibited state and local governments from giving or loaning public funds to private corporations or associations or for private undertakings. The sole purpose of these gift clauses was to prohibit the gifting of public money for nonpublic purposes. Initially, these provisions stopped government speculation with taxpayer money and the gifting of public money to private entities.

Over time, however, the courts began to legislate exceptions to the prohibitions for what they construed as a “public purpose,” a purpose similar to the federal Constitution’s general welfare clause.  Courts simply found legal the gift of public funds to a private entity if the gift would somehow result in a public benefit. The courts further expanded the definition of “public benefit” to include almost anything the legislature believes is a public benefit. Such gifts can be seen in almost every type of government project, from parking lots to sports facilities, corporate rent subsidies, to outright gifts to attract business to a state or locality.

At the federal level, gifts are deemed legal to private parties for almost anything Congress wants to finance, incentivize, or throw money at. Taxpayer money just flows, and the courts find it legal since the appropriations prove that the legislature viewed the gift to private parties to be for a public purpose.

With a $30 trillion-plus national debt, citizens need to demand the enactment of a federal gift clause to limit how Congress spends our money. And while few believe that Congress will ever enact a prohibition on gifts to friends and interest groups, citizens need to demand every person running for Congress to take the following pledge:

I pledge that, as a member of Congress, I will not vote to give, grant, or loan public funds or to extend the credit of the public to any private corporation, association, or private undertaking.

By asking every candidate for Congress to take this pledge, citizens will easily distinguish between candidates seeking to protect the public’s money and those seeking personal gain.

William L. Kovacs has served as senior vice-president for the U.S. Chamber of Commerce, chief counsel to a congressional committee, and a partner in law D.C. law firms, and his book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change. His second book, The Left’s Little Red Book on Forming a New Green Republic is a collection of quotes from the Left on how to control society by eliminating capitalism, people, and truth.

 

 

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  • Spending Power is Bargaining Power: No Wall, No Dept Ed

Spending Power is Bargaining Power: No Wall, No Dept Ed

William L. Kovacs

June 2022

Spending Power is Bargaining Power: No Wall, No Dept Ed

While Joe Biden has a long plagiarism record, he at least steals good lines. For the release of his FY 2023 budget, he attributed to his father a phrase borrowed from James Frick (first director of development for the University of Notre Dame), “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” Actual words of wisdom related to congressional spending power and Biden’s refusal to build a border wall or enforce immigration laws.

Biden knows what he values. Its time for Congress to respond with its own set of values. If Republicans take control of at least the House of Representatives, they should inform the president; that if he does not build the border wall and enforce immigration laws, it will not fund the Department of Education (“Dept. Ed”). While these issues are unrelated, combining them into one negotiation is legal, workable, and requires little effort by a Republican House.

The ability of Congress to place limits on an out-of-control federal government and a president that refuses to execute the laws of the land rests on how it uses the “spending power” granted by the Constitution. Congress, including Republican Congresses, have used this power to spend and spend more for a century. Today Congress is confronted by a spendthrift President that has intentionally opened the Southern Border of the U.S. to millions of illegals, including drug smugglers, sex traffickers, and terrorists. This deliberately reckless decision harms citizens, overwhelms small cities, and costs taxpayers billions. Courts have ordered Biden to enforce immigration laws, but his administration continues to implement its values.

Implied in congressional spending power is the power not to spend. With a $30 trillion national debt, Congress can no longer ignore its real power not to spend. Congress only debates the level of spending, never the fact that it does not have to appropriate any money for any program, for any reason. If one House of Congress refuses to spend money, that one Chamber can control the size and shape of government. More importantly, if the Executive acts unreasonably, one House of Congress can control the Executive by refusing to spend on the Executive branch’s priorities.

If Republicans gain control of the House of Representatives in 2023, they could impeach Biden, but a conviction is unlikely. They could try to pass a more restrictive immigration law, but they will not have the votes to override his veto. Republicans could continue whining on cable TV, which feeds their egos but little else. A more forceful alternative is to find creative ways to use its spending power.

Under the Origination and Spending Clauses of the Constitution, only Congress has the power to raise revenue and spend money. No power in the United States can make Congress appropriate money that it does not want to spend. While it takes both houses of Congress and the president to enact a new law or spend money, spending no money is different. If one House of Congress refuses to spend money, there is no authorized money to spend.

Neijiang Why the Dept. Ed?

The Dept. Ed should be the center of the negotiations since it is owned and operated by Biden’s most significant political supporters, the teachers’ unions. The teachers’ unions donated $43 million to liberal groups in the 2020 election cycle.

The Dept. Ed is a perpetual pay-off to the teachers’ unions. Congress can use this sacred cow as a bargaining tool. The Dept. Ed is the platform that allows the teachers’ unions to foster the teaching of Critical Race Theory, impose mask mandates, and torture children’s minds by telling them they are born racists. The mere possibility of the teachers’ unions losing this power will likely persuade Democrats to accept the reality that building the border wall and enforcing immigration laws is a cheap price to pay to keep the Dept. Ed.

Using such leverage requires Congress to engage in high-level negotiations. If Biden concedes, the Republicans get the border wall and immigration enforcement. If Biden refuses to negotiate, the Republicans get to eliminate the agency they had wanted to eliminate since1980 when it was created.

Other than spending several trillion dollars to expand the educational bureaucracy, studies and test results establish the Dept. Ed has made little or no impact on education.

The  Dept. Ed administers educational assistance,  collects educational data, and enforces privacy and civil rights laws like destroying Title IX for women’s sports. Of the 15 cabinet-level agencies in the federal government, its $ 96 billion discretionary budget is the third largest of all departments, only behind Defense and Health and Human Services.

The Dept. Ed has not, in any manner, enhanced education in its 42 years of operation:

  1. The Programme for International Student Assessment (“PISA”) found that among the 35 members of the Organization for Economic Cooperation and Development, the U.S. ranked 30th in math and 18th in science.
  2. The same PISA study found that U.S. millennials in the workforce were tied for last on mathematics and problem-solving tests among the millennials in all the industrial countries tested.
  3. A National Assessment of Educational Progress study found that after 40 years of assistance, there has been no improvement in high school math and reading.
  4. A comparison of SAT scores from 1972 to 2021 illustrates that math scores remained flat, 509 in 1972 and 508 in 2016. The SAT was redesigned in 2017; unfortunately, the scores remained flat even on the redesigned test.
  5. On the reading portion of the SAT, test scores dropped from 530 in 1972 to 494 in 2016.
  6. The National Assessment of Education Progress (“NAEP”) analyzed the number of twelfth-grade students’ performances in science for 2009, 2015, and 2019. There was no change in achievement levels. The average science score of 150 for twelfth-grade students in 2019 was not significantly different compared to 2015 or 2009.

 

While it is unlikely Congress would ever voluntarily abolish this failed agency, it does have an opportunity to use it as a bargaining chip to have a border wall constructed finally and immigration laws enforced.

 

 

 

 

 

 

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  • The Real Separation of Powers: Government vs Citizens

The Real Separation of Powers: Government vs Citizens

William L. Kovacs

April 2022

The Real Separation of Powers: Government vs Citizens

Scholars pontificate on the brilliance of the separation of powers in our Constitution as a means of protecting citizens by limiting the power of each branch of our government. They talk as if each branch actively works to control the power of the other branches to protect citizens. Unfortunately, these scholars miss reality. The three branches of our government work together to enhance federal powers at the expense of citizens. As the power of the federal government increases, the rights of the individual shrink.

The framework of our Constitution is so broad and vague as to allow the federal government to be capitalist, communist, or socialist, or as now, a “wokeist” system. Moreover, the federal government can tax us as much as it needs to satisfy its wants. From 1932 to 1981, the marginal tax rate in the U.S. ranged between 63%  and 91%. Today, it’s hard to believe, that the federal government can’t live on $5 trillion a year.

Cementing this divide, the U.S. Supreme Court, shortly after our Constitution was ratified, adopted the English doctrine (not a law) of sovereign immunity, i.e. “The King (now the federal government) Can Do No Wrong.” The court’s decision adopted the doctrine as the law of the land. In simple terms, no one can sue the federal government without its consent. While the federal government has consented to be sued on routine matters (e.g., torts, breaches of contract, copyright violations, open records laws, and violations of civil rights when government officials are acting illegally but under color of law), the doctrine of sovereign immunity still bars citizens from challenging the illegal operations of government.

Presently the United States is a system of political rulers and citizen subjects. Citizens can change this system by electing members of Congress who will serve as trustees of the Constitution and fiduciaries to us. Our founders attempted to implement this vision through the Oath’s clause, by not recognizing political parties in the Constitution, and by vesting all legislative power in Congress. Unfortunately, Congress has abandoned its duties under the Constitution and the Executive and the judiciary have vigorously grabbed additional powers.

Notwithstanding Congress being granted all legislative power, it has delegated much of its legislative power to the Executive. Once such delegation occurs, the president through Executive Orders, proclamations and agency rulemakings, determines the law of the nation. Routinely Congress passes a law but the president ignores it, or the president uses agency rulemakings to substitute its will for the intentions of Congress. Examples include the open southern border, lockdowns in the pandemic, stripping legally held permits from the fossil fuel industry, and imposing climate change regulations without any authorizing law.

Compounding this travesty of congressional delegation of legislative powers to the Executive branch, the federal courts, since the founding of the Republic, have operated as super-legislatures. While the Constitution clearly mandates “All legislative Powers … shall be vested in a Congress of the United States,” the U.S. Supreme Court gladly approved of Congress delegating its legislative authority away, requiring only that Congress indicate some “intelligible principle” to the agency implementing the law. “An ‘intelligible principle’ could be anything in the ‘public interest, convenience, or necessity or considered ‘just and reasonable.’ Being put in such subjective terms gives agencies vast discretion when enacting new rules.”

As a super-legislature, with almost unreviewable power, the Supreme Court created rights under National Environmental Policy Act that allow environmental groups to enjoin any action they believe is not the correct environmental decision. This decision gives the environmental activists the ability to control governmental permitting decisions that encompass new oil, gas, and manufacturing decisions. Another example is the Supreme Court creating a federal right to an abortion by “discovering” some non-existent penumbra of previously unknown rights in the constitution. Simply, the Supreme Court has rewritten the Constitution in cases too numerous to mention, especially during the period 1937 – 1944.

Even in routine administrative rulemakings involving a vague statute, the Supreme Court allows the agency fills in the blanks, rather than making Congress do its work.

As the Supreme Court and the Executive expand their power, Congress is placed in a state of helplessness. It does not matter how the law reads; the law is what the court or agency says it means until Congress can gather the votes to overrule the decisions of the other branches. In a divided Congress this is almost an impossible effort.

Once in this state of helplessness, Congress has only one power to control the administrative state; the power of the purse.  Under our Constitution “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”  If one party is in control of the Executive and both houses of Congress, the will of the Executive generally prevails as Congress is a mere rubber stamp. However, if a minority party controls just one house of Congress, it can refuse to appropriate the monies needed to run the administrative state. While Congress could not eliminate the Executive or Judicial branches, it could dramatically scale back their funding as a means of reigning in a massive federal government.

While withholding the funds to operate the administrative state is viewed by many as abhorrent; it is the only constitutional power Congress can exercise that cannot be blocked by the other branches. If Congress fears using its power of the purse against the administrative state or an out-of-control judiciary, then it is a useless branch of government.

As citizens we can speak out, protest, demonstrate, complain at government meetings, and send nasty letters to our elected officials, but in the end, we will be ignored if the government wants to ignore us. The government controls our money. In most instances, government, through the withholding tax, has its money before we get our paychecks. The government controls the police to ensure we do nothing other than what it permits. The federal government has even designated parents speaking out at school board meetings to be domestic terrorists. Moreover, the government has and will most likely use, the military and its weapons to ensure citizens act only in ways acceptable to it. Police even blocked the road on the truckers’ convoy so it could not protest in DC.  The truckers’ convoy had to good sense to avoid the grave danger of protesting when the police and likely the federal government would use force to stop them. Had they been Black Lives Matter, they could have burned down the city and it would have been called a peaceful protest. That is life under a woke American government.

The only power we the people have to control government is our power to vote for our members of Congress. We do not vote for the President, the Supreme Court, or the millions of nameless bureaucrats that make laws every day through rulemakings. Our right to vote for members of Congress is extraordinarily powerful. It is a legal mechanism for a peaceful revolution. With our votes, we can vote out all elected officials over six years and elect a Congress that is a trustee of the Constitution and a fiduciary to the people.

William L. Kovacs has served as senior vice-president for the US Chamber of Commerce, chief counsel to a congressional committee, and a partner in law DC law firms. His book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change. His second book, The Left’s Little Red Book on Forming a New Green Republic, quotes the Left on how it intends to control society by using climate change to eliminate capitalism, people, and truth.

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  • A Republican House Alone Can Reverse the Authoritarian State

A Republican House Alone Can Reverse the Authoritarian State

William L. Kovacs

January 2022

A Republican House Alone Can Reverse the Authoritarian State

Freedom-loving people may believe the U.S. is at the edge of darkness with Biden’s 76 Executive Orders46 Presidential Memoranda, and 176 Presidential Proclamations that take the form of conflicting vaccines mandates, bans on energy supplies, open borders, union organizing rules, the teaching of critical race theory, and frenzied proposals on climate change to name but a few. In the last several weeks, The Washington Post published at least four articles ( 1234), telling us “…the nation is closer to civil war than any of us would like to believe.” The narrative running through the articles is that the January 6, 2021 riot was an “insurrection” by Trump’s unarmed followers to destroy Democracy.

The Progressive press is pushing its “coming civil war narrative” so hard it seems as if it wants to incite civil war so its leftist government can use the military to violently crush the assembly of objectionable, unarmed, ordinary Americans. It would also give justification to the Department of Justice and FBI to implement their threats against parents who speak out at school board meetings. It’s hard to believe that parents protecting their children are deemed to be “domestic terrorists” by any government, yet alone a U.S. government.

While the Democrats may hysterically claim the Republicans are trying to assassinate Democracy, they cannot hide their real angst over the fact that our Constitution allows us ordinary citizens, to elect the entire House of Representatives every other year. The Left may want a civil war, but patriotic Americans can win a revolution with their votes in November.

Democrats act out of fear of what voters might do on November 8, 2022. Yes, a Republican majority in the 2023 House of Representatives can restrain Biden’s authoritarianism. That’s the easy lifting. The House also has the constitutional power to do far more to reign in an authoritarian state, even if Republicans do not regain control of the Senate.

In simple terms, the real power the original Constitution gives citizens is the right to elect the House of Representatives every two years. That constitutional right is the power to change the direction of government before any administration can cement authoritarian rule. Voting for the House is the power of revolutionary change.

While the original Constitution had state legislatures electing Senators, and presidential electors, the people, have always directly elected the House of Representatives. Our Constitution has always empowered citizens with the full power to control the federal government by electing representatives wanting to limit government’s power over its citizens.

One may ask how is such power possible when laws must be passed by the House and Senate and signed by the President? There is an unstated and rarely used power that allows a majority of just one House of Congress to control the nation’s budget and the size of government. All a Republican House needs to do is refuse appropriate money to run the authoritarian state. Think of such power as a Congressional veto over crazy spendthrifts. Using such power allows one party, controlling just one House of Congress, to restructure the entire federal government by refusing to squander taxpayer money.

Suppose voters want control over their federal government. In that case, all they need do is elect a House of Representatives that spends substantially less money than it costs to run a bloated, debt-ridden government. That action alone will shrink the federal government.

How would this process work?

Under our Constitution, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” This power can authorize more spending or be used to reduce spending and the national debt.

For Congress to spend more of the taxpayer’s money, it must appropriate the new money by enacting a law that requires the approval of both Houses of Congress and a Presidential signature. To spend less money or to spend no money; however, one House of Congress merely needs to do nothing. No provision in the Constitution gives the power to anyone to force Congress to spend money. Moreover, as an institution, Congress is the only branch of government that controls the nation’s purse, and one House of Congress can shut the purse.

Under Article I, section 7, of the Constitution, all bills for raising revenue must originate in the House of Representatives. By electing a majority of the House who support smaller government, the House has the sole power to block the enactment of new revenue streams to support a bigger government.

It is clear that no matter how big or powerful the federal government has become, a party that controls the House of Representatives can reign it in if it has to courage to do so. Republicans talk about smaller government, but the government has continuously expanded. They talk about reducing the national debt, but Republicans have increased the national debt more than the Democrats for the last several decades.

If Republicans take control of the House in 2023, it will be their “put up or shut up” moment. Only time will tell if the government remains wildly out of control or the Republican House of Representatives “puts up” to Save Democracy?

William L. Kovacs has served as senior vice-president for the U.S. Chamber of Commerce, chief-counsel to a congressional committee, a partner in law D.C. law firms, and his book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change.

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  • The Judgment Fund – The Mother of all Slush Funds

The Judgment Fund – The Mother of all Slush Funds

William L. Kovacs

January 2022

The Judgment Fund – The Mother of all Slush Funds

Remember when the media reported the Biden administration was contemplating paying illegal migrant families $450,000 per person as a settlement for separating the children from their parent(s). Did you ever ask where would the money come from? Did Congress ever enact a specific appropriation for its payment? The answer is simple – it comes from the Judgment Fund which is the mother of all slush funds. Nothing in the world is comparable to it other than dictators stealing the treasury of a nation. In the U.S., Congress has made such secret payments legal and routine.

The Judgment Fund pays judgments against the United States and settlements agreed to by the Department of Justice. It is a fund that does not disclose the receipt of the payments or settlements even when the actions establish major agency policy or when requested by congressional appropriators. It is a fund without accountability or transparency since the federal agencies making the payments will not provide Congress or taxpayers information about who was paid by the fund.

How does the Judgment Fund work? It is a permanent, indefinite, and unlimited congressional appropriation continuously available to pay money judgments entered against the United States and settlements of cases in or likely to be in litigation with the United States. As an indefinite appropriation, it is so secret that Congress no longer even debates what the amounts are for. The amounts are appropriated, no matter what the amount. The Department of the Treasury just pays the claims when the proper paperwork is presented to it.

How did such a fund come about? Prior to 1956 Congress actually appropriated funds to pay for every single judgment against the United States. Under this procedure, Congress was actually aware of what claims were being made against the United States and was able to evaluate the actions of the agencies being sued.

In 1956 Congress passed the Judgment Fund Act to provide for payment of most judgments against the United States without the need for individual appropriations. The congressional justification was to enhance the efficiency of the appropriations process. In 1961 Congress amended the statute to pay for settlements in addition to judgments but with a ceiling on such payments of $100,000. In 1977 Congress eliminated the ceiling and now the fund is available to pay any covered judgment or settlement, regardless of amount.

The Judgment Fund functions as an automatic withdrawal from the nation’s treasury. Moreover, the payments made to satisfy a judgment against the US or to settle the alleged illegal activity of the agency, do not come out of the agency’s budget.  There is no penalty to the agency for misconduct or illegal activity since payments do not have to be reimbursed unless Congress appropriated funds to the agency for such payments. Simply, agencies are not required to pay for their misconduct or unlawful activities.

What payments have been made under the Judgment Fund? While the Department of the Treasury provides a list of payments and the amounts, it does not identify who received the payments. In a 2016 article, Politico described how federal agencies, using the Judgment Fund, hid more than $4.3 billion in payment to settle sexual harassment complaints. In 2020, the Judgment Fund paid out nearly 7,500 payments totaling over $14 billion.

Even after the House and Senate, Committees on Appropriations requested details concerning the names of claimants, the amounts to be paid and a description of the facts, the Treasury continued its refusal to provide the information to Congress. Moreover, the Obama administration settled over sixty lawsuits with environmental groups. It is likely it utilized the Judgment Fund since there was no other money appropriated to Environmental Protection Agency (“EPA”) to settle lawsuits. Unfortunately, it is impossible to know since the EPA, like all federal agencies, refuses to release the names of the recipients

Are there limits to these secret payments? Unless there is a specific statute authorizing payments in a different manner, there are no limits to payments from the Judgment Fund. According to a September 7, 2016, House Judiciary Committee report, Subcommittee on the Constitution and Civil Justice, the Obama administration likely used the Judgment Fund to settle the $1.7 billion payment to the Islamic Republic of Iran for claims made on the sale of military equipment before the 1979 Iranian Revolution. This is the incident in which the US flew planeloads of cash, in foreign currencies, to Iran as part of what could be termed a ransom payment for American prisoners.

It is time for Congress to take seriously one of its main legislative responsibilities; its control over the nation’s purse as required by Article I, section 9, clause 7 of our Constitution. It can no longer leave the Executive branch with blank checks to be used when needing money to make secret payments, most times for wrongdoing. It is time for our government to be honest with us about what it spends and the recipients of its spending. After all, it is our money!

William L. Kovacs has served as senior vice-president for the U.S. Chamber of Commerce, chief-counsel to a congressional committee, a partner in law D.C. law firms, and his book Reform the Kakistocracy is the winner of the 2021 Independent Press Award for Political/Social Change.

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  • The Heavy Environmental Costs of the Green New Deal

The Heavy Environmental Costs of the Green New Deal

William L. Kovacs

October 2021

The Heavy Environmental Costs of the Green New Deal

The Resource Conservation and Recovery Act, “RCRA,” the primary federal law regulating solid and hazardous waste, was signed into law on October 21, 1976. Its 45 years of life has profoundly changed the American landscape; however, it will be needed again as proponents of the Green New Deal (“GND”) blindly advocate trillions of dollars for clean energy without addressing the waste impacts of the projects.

Before RCRA’s enactment, waste was an afterthought to American industry. Waste was dumped in pits, ponds, lagoons, roadsides and burned in the open air. Rivers were on fire. Local governments managed waste with little knowledge of the issue. Only California had a comprehensive waste management plan. EPA could only identify 50 persons in 25 states that were full-time waste managers.

RCRA changed waste management overnight. It created a cradle-to-grave regulatory structure for the generation, transportation, treatment, and disposal of hazardous waste, established guidelines for managing municipal waste, banned open dumping, transformed the recycling industry, and imposed significant criminal and civil penalties on violators. Today, RCRA manages 293 million tons of municipal solid waste disposed at 1296 facilities and around 35 million tons of hazardous waste generated at 23,700 facilities, with few incidents of improper management.

RCRA’s passage would be unlikely today. It passed at a time when members of Congress spent time discussing issues in committee, not on cable news sowing conflict. Both political parties agreed the nation needed a waste management law and proceeded to make it happen. Members instructed the majority and minority staff to work together on the legislation. The bill’s House sponsors Fred Rooney (D-PA), the subcommittee chair, and Joe Skubitz (R-KS) ranking member, and Senator Jennings Randolph (D-WV) – were legislators without big egos.

RCRA passed in an election year which made floor time extremely scarce. The Senate passed its version in June 1976 by a vote of 88-3. The House Committee, having a more comprehensive approach, did not report the bill out of Committee until September 9 and could not get floor consideration until September 27, 1976, four days before the end of the session. With time short, the members directed staff to meet over the weekend before adjournment to produce a comprehensive, workable final product that could pass both Chambers. To maneuver in the time available, the House took up the Senate-passed bill. It kept the Senate Bill number, struck the Senate text, inserted the negotiated text; passed it by 367-8; and sent it back to the Senate, which passed it by voice vote on Thursday, September 30, the last day of the session. RCRA was sent to the president for signature.

EPA calls “RCRA is one of the great environmental success stories of the past 40 years.” The only question is whether GND proponents, like American industry before 1976, will again ignore the waste?

Solar Panels, 78 million tons of panels will reach the end of their life by 2050. Solar is only 2.3% of our electric generation; however, extrapolating to 50% of electric generation by 2050 would mean almost 2 billion tons of solar panel waste. There is currently little recycling of solar panels due to the low value of the materials and the high cost to recycle. Moreover, landfilling may not be possible since solar panels contain silver, copper, cadmium, and lead, i.e., hazardous wastes, making disposal enormously more expensive than disposing of solid waste. Average landfill costs are $54 per ton; hazardous waste is priced by the pound.

Wind Turbines, an estimated 720,000 blades, 100 to 300 feet long, will require disposal over the next 20 years. They are too large for landfills, and transportation costs are high. The cost to decommission each wind tower is around $532,000. Harvard estimates the cost at four times that amount. Wind capacity is anticipated to double by 2030 and quadruple by 2050.

Another finding in the Harvard study “…is that transitioning to wind or solar would require five to 20 times more land than previously thought, and, if such large-scale wind farms were built, would warm average surface temperatures over the continental U.S. by 0.24 degrees Celsius.”

Cost estimates for the GND range from  $2.7 trillion to $93 trillion. Serious experts, however, believe costs are not calculable without specific policy proposals. Since the objective of RCRA is to prevent this type of problem, Congress should undertake a thorough analysis of the waste issues from green energy before spending trillions to create an avoidable waste problem.

William L. Kovacs was the chief counsel for the House Subcommittee on Transportation and Commerce during the development and enactment of RCRA in 1976.

This article was originally published in The Hill on October 21, 2021.

 

 

 

 

 

 

 

 

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  • DHS Unfunded Mandates Require UMRA Review, Point of Order

DHS Unfunded Mandates Require UMRA Review, Point of Order

William L. Kovacs

July 2021

DHS Unfunded Mandates Require UMRA Review, Point of Order

For the last several weeks’ members of Congress have publicly complained the Department of Homeland Security (“DHS”) has been “dumping,” without notice or consultation, illegal aliens in small towns throughout the U.S., e.g., Gila Bend, AZ, Brownsville, TX, Chattanooga, TN. The legislators claim the towns do not have the resources to care for the illegals. Some towns do not even have hospitals. Members of Congress have asked DHS to set out its legal authority for its actions, but there is no response. Most unfortunate, there does not appear to be any federal funding for the impacted communities.

The DHS’s illegal alien dumping appears to conflict with most requirements of the Immigration and Nationality Act and issued regulations, e.g., failure to perform background checks, admitting inadmissible aliens having health concerns, criminal convictions, and public charges. The standard remedy, however, Administrative Procedure Act (“APA”) or Constitutional challenges by these local communities, requires money and years of procedural wrangling, which they cannot afford. Meanwhile, these communities must assume the costs of DHS actions.

A  possible way to quickly resolve the controversy may be to dust off the Unfunded Mandates Reform Act of 1995 (“UMRA”), a law intended to end the imposition of federal mandates on local communities without full consideration of the unfunded costs imposed on them.

Unfortunately, UMRA, a densely written, procedurally complex statute of great promise but suffering decades of avoidance and disappointing performance, is seldom used. For illegal immigration, however, there may be creative ways for impacted communities and their members of Congress to force an UMRA review.

A “Federal intergovernmental mandate” is a defined term under UMRA. It includes any federal regulation that imposes an enforceable duty on state, local or tribal governments that reduces or eliminates reimbursements to those governments for the net cost associated with illegal, deportable, and excludable aliens, including court-mandated expenses related to health care, education, or criminal justice.

DHS will likely argue its dumping of illegal aliens is not a regulation since it was not proposed as a regulation. DHS’s actions, (failure to apply existing regulations), however, de facto, repeal, without notice or comment, a comprehensive set of issued regulations covering every aspect of how aliens can legally immigrate into the U.S. and the categories of aliens eligible and ineligible for entry.

Even assuming the DHS has emergency authority to change its regulations immediately, compliance with UMRA still mandates that the DHS follow specific procedures when imposing unfunded mandates on local communities. UMRA requires consultation with the local governments and an assessment of the anticipated costs/benefits of the unfunded mandate.

Since DHS ignored the use of the APA in changing its regulations and refuses to disclose the legal authority for its actions, it is unlikely DHS prepared a cost/benefit assessment. While lawsuits are expensive, under UMRA however, the legal dispute is much simpler. There are only two questions before the court. Did DHS impose unfunded mandates on local communities? Did DHS undertake an UMRA cost/benefit assessment? There are no complex administrative law issues.

If DHS imposed unfunded mandates and failed to perform the cost/benefit assessment, the court can compel it to perform the assessment.

If a court orders consultation with local communities and preparation of the cost/benefit assessment, Congress will have the needed cost/benefit information to use the Legislative Accountability and Reform provisions of UMRA creatively. These provisions allow members of Congress to raise a Point of Order to legislation funding DHS operations that move illegal aliens into communities, thereby making congressional consideration of such legislation not in order.

Specifically, the Point of Order does not apply to appropriations except when the appropriation increases the direct costs of the federal mandate contained in any appropriations legislation. If an appropriations bill funds DHS activity that supports the moving of illegal aliens from the border to small communities, e.g., transportation, room and board, cell phones, clothing, the Point of Order would be valid since those DHS activities directly impose unfunded mandates on local communities by its “illegal dumping.”

UMRA gives significant power to courts and legislators to ensure agencies fully understand the impacts of their mandates on local communities before imposing them. Once the costs are identified in an UMRA assessment, members of Congress, by raising a Point of Order, may block DHS appropriations unless there is budget authority equal to the costs of the mandate. Since agencies are always in need of appropriations, every member of Congress has leverage over DHS through the appropriations process.

 

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  • A Modest Proposal to Stop Congress from Giving Our Money to Private Entities

A Modest Proposal to Stop Congress from Giving Our Money to Private Entities

William L. Kovacs

May 2020

A Modest Proposal to Stop Congress from Giving Our Money to Private Entities

Just a few days before Christmas 2019, Congress, in its 2020 fiscal year appropriations, resurrected from the grave, billions of dollars in expired tax extenders and spread the benefits to distilleries, race-horse and Nascar owners, short-line railroad, biodiesel blenders and other favored industries. Being Christmas, it even applied the tax credits retroactively.

Should Congress consistently give billions of our hard-earned dollars to private entities?

While common sense says NO, it is unfortunate that Congress fails the common-sense test.

The issue of Congress giving away our money to private entities has been debated since the founding of the Republic. Opponents of this giving argue taxpayer money can only be spent on matters enumerated in the Constitution. Government asserts it can spend it on anything that is for the general welfare.

Continuing this debate may seem irrelevant since the courts have made it clear legislatures determine what is general welfare. Such a broad interpretation of governments’ ability to tax and spend has resulted in a massive increase in the national debt and a huge expansion of government. The federal government provides grants, loans, tax credits, tax deferments and guarantees risk to incentivize certain activities. State and local governments provide property tax relief, tax abatements, low interest bonds and outright grants, usually to attract business to an area.

Examples abound at the federal level:

  • Up to a $7,500 tax break for purchasers of the first 200,000 electric vehicles produced by an auto manufacturer;
  • Oil and gas industries receive $20 billion in annual subsidies;
  • Tax deferment on capital gains from Opportunity Zone investment which was to go to poor areas but is a boon to rich areas, e.g. high-end apartments with yoga lawns and pools surrounded by cabanas and daybeds;
  • The prescription drug industry benefited from $64 billion in federal research funding;
  • Flood insurance subsidies promote building high-end housing in flood prone areas. This insurance program is potentially liable for $1.24 trillion in claims while only collecting $3.5 billion in annual premiums. The program is already over $25 billion in losses that taxpayers will have to pay; and
  • Pension bailouts to coal miners while laying the groundwork for a massive bailout of the underfunded private, multi-employer pension system.

Presently the U.S. carries over $23 trillion in national debt and could be on the hook for over $200 trillion in unfunded liabilities. Yet Congress continues to give away billions to private entities.

 While there is almost no limit to governments’ power to give away taxpayers’ money, there are historical precedents for limiting such gifts. In the mid-1800s, many municipalities and states used public funds to purchase stock in railroads being built across the continent. Many government entities were swindled out of large amounts of money. To prevent future losses, forty-six states enacted constitutional limitations preventing gifts to private entities. These restrictions were called “gift clauses” or “anti-donation” clauses or simply “government gift-prohibitions.”

The government gift-prohibition policies barred state and local governments from giving or loaning public funds to private corporations or associations for private undertakings. Initially, these provisions stopped government speculation with taxpayer money. Over time, however, the courts defined public welfare to be anything that has a “public purpose.” Fitting within this definition is almost every type of government project conceived by a legislature, e.g. parking lots, sports facilities, corporate rent subsidies, politically favored forms of energy. Taxpayer money just flows, and the courts find it legal, based on legislated appropriations.

More troubling is that government gives taxpayer money to the largest and most profitable corporations in the world. “The Good Jobs First” report tracts the one hundred largest companies receiving government gifts (federal, state, local). First on the list is Boeing at $14.9 billion; number two is General Motors at $6.9 billion and number three is Intel at $6 billion. Most companies on the list are in energy, transportation or technology.

These large corporations persuaded our government that a tax cut would spur investment in new business and equipment. These corporations however, spent three times as much on additional dividends and stock buybacks than they invested in their businesses.

We the people need to clearly re-enact the wise-policies of the mid-1800s and demand all candidates running for office take a government gift-prohibitions pledge:

I pledge that, if elected, I will serve as a fiduciary of public money and will not vote to give, grant, or loan public funds or extend the credit of the public to any private corporation, association, or private undertaking.

By asking every candidate for public office to take this pledge, citizens can identify candidates willing to protect taxpayers. If the pledge is broken, the public will quickly know who is not trustworthy. The entire effort becomes self-policing by citizens.

A modest proposal, but it is a start!

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  • Impeachment and the Significance of Member Oaths

Impeachment and the Significance of Member Oaths

William L. Kovacs

January 2020

Impeachment and the Significance of Member Oaths

As impeachment of the President moves to the Senate, both parties assert that members of the opposing party are violating their oath to support the Constitution.

Speaker Pelosi captures the Democrats’ thinking – “Every Senator now faces a choice: to be loyal to the President or the Constitution.” On the Republican side, the Senate majority leader counters “The House made a partisan political decision to impeach. I would anticipate … a largely partisan outcome in the Senate.”

Absent from the debate is discussion of what duties are imposed by swearing an oath?

There are various “Oath Clauses” – three in the Constitution, several statutory and one in Senate Rules of Impeachment.

Taking an oath is the first constitutional act of members of Congress. While the Article VI requirement of a Constitutional Oath is vague (“to support the Constitution”), the administered statutory oath includes the phrase “…I will well and faithfully discharge the duties of the office on which I am about to enter…” The oath obligates each member of Congress to recognize the limits of their authority and respect the separation of powers.

When a member takes the oath, a trustee relationship is created requiring loyalty to the Constitution and the institution in which one serves. As political parties gained greater power with massive organizational and fundraising ability, members of Congress tended to shift loyalty to the political party and away from the institution in which they serve. Notwithstanding an oath pledging to support the constitutional separation of powers, Republicans vote with Republicans, Democrats vote with Democrats, as evidenced by impeachment proceedings and legislative votes being party-line ninety percent of the time.

By prioritizing loyalty to party over the Constitution and the branch of government in which they serve, the Constitution is manipulated; the principle of separation of powers is eroded. Once eroded, the actions of government rest more on political power and less on constitutionally established institutions.

This brings us to the impeachment of the President. The impeachment language in the Constitution is simple – “The House shall have the sole power of Impeachment” and the Senate “shall have the sole power to try all Impeachments.”

The oath to be administered in impeachment proceedings is contained in Rule XXV, “Rules of Procedure and Practice in the Senate when Sitting on Impeachment Trials.” It requires Senators do “impartial justice according to the Constitution and laws.” These words immediately conflict with our political world in which 14 Democratic and 16 Republican Senators have already made biased statements on their votes without hearing evidence. There are no sanctions if a Senator acts with bias; and bias being a political question, court reviewability is unlikely.

Why do our representatives put us through a political process with predetermined outcomes?  Can anything be done to restore the constitutional significance of Impeachment proceedings?

Without impugning intent to the House or the Senate, it is clear Republicans in the Senate do believe the House investigation is flawed and will quickly acquit. The Democrats believe the Senate has an obligation to conduct an impartial trial which includes calling additional witnesses.

If the members of the House had acted as trustees of the Constitution, not as political loyalists, their institutional goal would have ensured a fair investigation, both sides having equal rights. Both parties would have worked as a constitutionally established institution obligated to find the facts, not seek political advantage. The removal of a President demands both parties have the same goal, protection of the Constitution. Trustees of the Constitution would do whatever it takes to protect it. Political parties will do whatever it takes to gain power.

Since the House has spoken, it is up to the Senate to devise a remedy to bring the nation together. Immediate dismissal, or the appearance of a sham trial will end the impeachment nightmare but further divide Congress and the public.

The nation deserves to know all the facts, damning and exonerating, of the President’s conduct. It is the obligation of the trustees of the Constitution to work together as an institution to find the facts. One approach might be for the Senate to unanimously remand the Articles of Impeachment to the House to develop solid facts. Upon the Articles return, every member of the House should abandon party loyalty and become real fact-finders, working to discharge a solemn constitutional duty. Only when the members of the House act as trustees to the Constitution, can they expect Senators to act impartially. Until then, it’s only political theatre and we all have tickets.

This article was first published in The Hill on January 6, 2020.