The economy is contracting (thanks Biden), attacks and counterattacks in eastern Ukraine, regulation madness, and something from the 1875 crime blotter in 2022. It’s the Friday LinkSwarm!
Note: Today’s LinkSwarm will be a bit shorter than usual because: A.) I’m off Twitter for the time being, so I’m not grabbing links there, and B.) I took the day off from work and I’m just feeling lazy.
Sure, the Biden Administration sucks on basic competence when it comes to the American economy, but to balance that, they also suck on regulation.
The Biden Administration capped off its first full year in office with more than $201 billion in regulatory costs and 131 million hours in new annual paperwork, putting it far ahead of the two immediately preceding administrations’ respective first years by a wide margin.
Actions related to vehicle emissions and COVID-19 safety measures provided the vast majority of these administrative burdens.
Additionally, in terms of executive orders issued during the first year of an administration, the 77 put forth by President Biden represent the highest number since the Ford Administration.
Russia’s invasion of Ukraine continues, and Russian forces seem to be making a slow, grinding advance on the strategic city of Severodonetsk in eastern Ukraine. “Moscow has poured thousands of troops into its assault on Severodonetsk and its sister city of Lysychansk. The twin cities, straddling the Siverskyi Donets river, have been in Russian sights for months. They currently comprise the lone Ukrainian redoubt in the Luhansk oblast.” Taking Lysychansk will require Russians to cross the Donets, previous attempts at which have been disasterous for them.
Russia has succeeded in taking Lyman, but Ukraine has launched counterattacks against the Russian forces encircling Severodonetsk.
The Texas Association of School Boards is set to leave Its parent organization, the National School Board Association, according to records obtained by Texas Scorecard.
The National School Boards Association made headlines last year following their letter to President Joe Biden and U.S. Attorney General Merrick Garland requesting federal intervention in local school board meetings and referring to concerned parents as “domestic terrorists.”
It has since been revealed that the NSBA leadership urged the Biden Administration to deploy military forces in an effort to prevent parents from attending school board meetings.
Since then, parents have been calling on the state organization—the Texas Association of School Boards—to leave the organization, as more than 20 states already have.
“Professor Fired Over Tweets Questioning BLM Movement Gets Reinstated, Awarded Back Pay After Arbitrator Finds In His Favor.” “An arbitrator has ruled that a University of Central Florida professor, Charles Negy, has to be reinstated.”
Who’s been funding the attacks on Elon Musk following his Twitter bid? Would you believe Bill Gates? Of course you would. “Would you believe what perfidy Ernst Stavro Blofeld is up to this week?” Why yes, I would. The biggest difference is that Blofeld has better fashion sense and never tried to inflict Microsoft Bob on the world…
I’ll take headlines from 1875 for $400: “Loving County judge arrested for cattle theft….Loving County Judge Skeet Jones is accused of livestock theft and organized criminal activity.”
It’s been three months since Russia invaded Ukraine, and there’s more tank news coming out as the main theater has shifted to eastern Ukraine. Here’s a (mostly) video roundup of the news:
We hear a lot about Russia has 20,000 tanks (or some other crazy high number) in reserve. This guy went through satellite photos of all Russian tank storage yards and came up with an estimate of 6,000, only 3,000 of which appear as if they could be made battle ready. (A lot of the photos show hulks with their turrets off).
Did Russia’s First Tank Army lose 130 tanks in the Battle of Kharkiv alone?
Ukraine appears to have knocked out a Russian T-90M tank, the most modern Russian tank that’s actually been fielded:
(There’s still no sign of Russia’s T-14 Armata in-theater.)
Update: As of this writing, Russia has lost 729 tanks in Ukraine, and a total of 4,134 “vehicles” (including helicopters, UAVs, and even towed artillery pieces) in theater.
Is Russia demothballing T-62s to send to Ukraine?
Remember, the Soviets stopped manufacturing the T-62 in 1975, the same year that the Captain & Tennille and “Rhinestone Cowboy” topped the charts and The Rocky Horror Picture Show debuted in theaters…
Ukraine has also taken delivery of the Brimstone anti-tank missile from the UK:
Not a tank, but built on a T-72 chassis, is the Russian T-2 “Terminator,” which sports duel 30mm auto-cannons for close support of tanks in urban warfare.
That does look like it would but a world of hurt on urban defensive positions, but won’t be any more immune to NATO-sourced Ukrainian antitank weapons, and they reportedly only have a handful in-theater.
Also not a tank: Ukrainian forces take out a thermobaric (AKA “vacuum bomb”) missile launcher:
Turns out that the Russian military’s catastrophic performance in Ukraine is not a great advertisement for its weapon systems, and India is canceling some big deals.
All the favorites won in yesterday’s statewide Republican primary runoff races:
Ken Paxton clobbered George P. Bush with more than two-thirds of the vote. Paxton won 67.90% to Bush’s 32.10%. Bush went from getting more votes than Greg Abbott in 2014 to garnering less than one-third of the vote in a runoff, and the only sizeable county he won was Travis. Back in 2014, a whole lot of political pundits talked about Bush as though he were some political golden boy destined for higher office. Those notices proved premature. Now everyone is talking about “the end of the Bush dynasty.” Maybe, but that talk may also be premature; that bush has a lot of branches…
Wayne Christian didn’t quite get 2/3rds of the vote against challenger Sarah Stogner, but didn’t fall short by much, winning 65.04% of the vote to Strogner’s 34.96%. So that $2 million that transexual West Texas ranching heir Ashley (formerly Andrew) Watt poured into the race may have bought Stogner an extra 2% of the vote.
In other races, Pete Flores beat Raul Reyes in Senate District 24 (as expected), and Ellen Troxclair beat Justin Berry with 56.48% of the vote in State House District 19.
Texas Scorecard notes that in open races, a lot of school choice advocates beat the candidates that Governor Greg Abbott endorsed…
Today is the Texas runoff election. Here is some brief coverage of the races and who I’ll be voting for.
Texas Attorney General: Incumbent Ken Paxton vs. current Land Commissioner George P. Bush. Paxton has campaigned on a solid conservative record and an endorsement of President Donald Trump, while Bush has dropped a bunch of direct mail flyers trying to label Paxton as corrupt. My pick here is strong favorite Paxton, who has constantly followed conservative principles in filing lawsuits against both federal overreach and neglect of enumerated constitutional duties. Moreover, the charges against Paxton have dragged out over seven years, long after the underlying federal charges were dismissed, making it seem more like a political witch hunt and possible Sixth Amendment rights violation than anything resembling justice. George P. Bush has hardly been impressive in his stint as Land Commissioner and doesn’t deserve a promotion.
Texas Land Commissioner: Former Texas Senator Dawn Buckingham vs. Dr. Tim Westley. Buckingham is the pick here, and she’s going to win this one running away, having been endorsed by Trump, Ted Cruz and the NRA, and holding a significant financial advantage over her underfunded challenger. Westley seems like a nice guy, but he has the profile of someone who should start out running in a local race.
Texas Senate District 24: Pete Flores vs. Raul Reyes: Flores is the heavy favorite here, having been endorsed by Trump, Cruz, Abbott, Perry and Patrick. Despite all that, I will be voting for Reyes, based on Flores seeming a bit squishy to me, and Reyes receiving the endorsements of Gun Owners of America and several Tea Party groups.
Evidently Twitter has decided that mentioning use of lethal force to defend your life and home (legal in all 50 states, but especially in Texas, a castle doctrine state) is forbidden. Or, more likely, the left-wing “duh, you don’t need to worry, because there’s only a 7% chance home invaders will commit violence!” troll reported it as a “threat” and Twitter just automatically suspends accounts over mere reports.
It sucks when you exceed your credit limit and you can’t buy gas for your car. And “you” in this case means “the City of Houston.”
Late Thursday night, the City of Houston ran into a problem at the pump.
It is best described in a memo obtained by KPRC2 Investigates, sent from HFD dispatch to fire crews citywide about midnight:
“Effective Immediately, all Voyager fuel cards are inoperable until further notice. All units must refuel at a City of Houston fuel site location (attached, or contact OEC for locations). If units receive an invalid odometer reading, they will need to contact Senior Captain XXXXX at 713-XXX-XXXX. The member must be present at the pump for the reset to take place. All members should make themselves aware of their current fuel capacity and consider the possibility of transport distances to Medical Center, etc., especially in morning traffic for outer laying fire stations. This consideration should also be made that this is a citywide issue and HPD, Solid Waste, and other city vehicles may also congest these fueling sites around our shift change. Please pass this information to the oncoming shift and contact your immediate supervisor and/or OEC for critical fuel situations.”
The President of the Houston Professional Fire Fighters Association reacted strongly, Friday.
“This is something that nobody should learn about at midnight. Either they didn’t know or they didn’t notify everybody. Somebody needs to be held accountable because there is no do-over in the emergency response business,” President of HPFFA Patrick Lancton said.
We contacted the Mayor’s office for comment, Friday.
Director of Communications Mary Benton responded with the following, noting that the problem was rectified quickly Friday morning.
“Last night, shortly after 10 p.m., Fleet Management began to receive notice that fuel transactions attempted by City employees with Voyager fuel cards were being declined. COH representatives contacted Voyager and learned that due to the recent spike in fuel costs, the City of Houston credit limit under the Voyager program had been exceeded. This resulted in the cards being deactivated without notice to the City.
Someone was asleep at the switch here in not getting the credit limit raised. Though Voyager is evidently a standard fleet card, it does make me wonder what control are in place to prevent fraud and people filling up their own cars or those of others. I knew someone in college whose parents had taken out a gas station card in his name, and he used it as an ATM for filling up other people’s cars in exchange for cash.
It seems like the sort of thing that should receive regular auditing.
Peter Zeihan is back with another provocative video (filmed at the Eisenhower Naval School) that suggests that China faces such massive problems that collapse may be imminent. “I see China with not just a demographic failure, but a failure of leadership, a failure of policy, an agricultural failure, and an energy failure, all at the same time. It is
entirely possible that this is the last year of the People’s Republic.”
Some of this (especially the demographic collapse) we’ve covered here before. Takeaways:
“China was already the fastest aging society in human history with the biggest sex imbalance. We already knew that their economic model would not match up with this demography this decade, we always knew that the economic collapse of China was coming.” And that was before we found China had over-counted their prime working age population by 100 million.
“I don’t see how China survives as a single political entity, much less a globally significant one. I don’t see how it survives this decade with these numbers, because this suggests that the Chinese population peaked back in 2003, and that Chinese economic efficiency probably peaked around the same time.”
Chinese labor is no longer cost-competitive with other Asian countries like Thailand or The Philippines, or Mexico. “This is the fastest labor [wage] appreciation in human history, including during the black death, including during all wars. So we’re looking at a 15-fold increase since 1999, [while] their labor effectiveness productivity is probably only increased by a factor of two, maybe three.”
“There is not an industrial process that is done in China that can’t be done in North America at a lower cost, because our labor is so much more productive, our energy is so much cheaper, our supply lines are so much shorter and you can produce stuff where people actually live.”
“The only reason we think of China as a major industrial player is because of the sunk cost of the preexisting industrial plant.”
“You don’t rebuild that somewhere else overnight. But it is happening. The United States is already in the process as its fastest industrialization, even faster than what we did during World War II.” That’s some mighty bold talk, but the U.S. population is roughly 2.5X larger than at the start of World War II.
“We probably need to double the size of our industrial plant in the next 5-10 years. That’ll be awkward, expensive, inflationary, but on the other side of it, we will have a far more insulated and secure supply chain system. The problem is just getting from here to there, and that is not a straight line.”
The Chinese plan has always been to let the Russians go first, just as a proof of concept. So their thinking was a fast war that conquers Taiwan in a matter of days, that imposes a done deal upon the world, and everyone just sucks it up and takes it, because China is too economically powerful to be challenged. And once you hold the territory, there’s no point in going to a broad scale war against the Chinese when it’s already happened. That’s always been their plan.
Oh my.
With the Russians, they have had every aspect of all of their planning for the last 40 years set on fire and burned to ash in less than a month. So number one it will not be a quick war, because Ukraine was one of the world’s less militarily competent countries in the first place…
I think this statement may have been true in 2014, but I don’t think it was true by the time Russia invaded. Ukraine professionalized and modernized their military with considerable help and guidance from western militaries, and developed a competent officer and NCO core (partially thanks to experience with the low-intensity conflict in Donbas).
…and they’re still holding out against the Russians. Taiwan has been preparing for this war since 1955. Taiwan has a moat. Taiwan has a nuclear program that started in 1974, so if we have a two-month accumulation of Chinese forces getting ready to push, the Taiwanese will see it because this is the only national security question that they pay any attention to, and they will make a nuclear device. And so the only way that the Chinese can even make an attempt on Taiwan is to text all of their soldiers at the same time and just say everyone get to the coast take a fishing boat with your buddies and start moving on Taiwan. They know it is going to cost them a million troops just to get there.
I find this scenario unlikely, and even less likely to succeed.
“Now they know from Ukraine that it’s not going to be a pushover. [Taiwan] is mountainous, it’s forested as opposed to Ukraine, which is flat and open.”
Then there are the sanctions:
Russia has many flaws, but they’re a massive producer of food and energy products. If you put the sanctions that we have put against Russia onto China, oh my. China imports 85% of their energy, 85% of that from the Persian Gulf, and they import 85% of inputs that are necessary to grow their food. So you would have an industrial collapse, a civilizational breakdown, and mass famine within six months, and then you would probably lose a half a billion Chinese over the course of the next year to famine.
Again, I think this is overstated, as there would be enough countries willing to break sanctions, and enough radical actions China could take (conquer Mongolia and parts of Siberia for farming, throw off all Pacific fishing limits, etc.) to avoid the worst case famine scenario. Not that they wouldn’t be in a world of hurt…
The one that has scared the Chinese the most are the boycotts. BP and Halliburton didn’t have to leave, they weren’t doing anything that was sanctioned, but the super majors and the oil services firms and countless other firms left on a moral imperative prompted by individual shareholders and consumers. And in China, the idea that the average Joe or Jane can influence policy is so antithetical to their mindset that they had no idea this was even possible, much less it was going to happen. So everything that the Chinese have based their system and their strategic policy on for the last 30 years has been proven in the last two months to be utterly wrong.”
My judgement of Zeihan’s analysis is that he’s more right than wrong, but has a tendency to overstate his case. Still, a worldwide inflationary spiral and energy shortage is the sort of thing that’s likely to destabilize a lot of governments worldwide, and China’s economy is built on more smoke and mirrors than most.
Greetings, and welcome to another Friday LinkSwarm! The Biden Administration has done everything it can to worsen inflation, The Ministry of Truth’s Scary Poppins dissolves into a puddle, a whole lot of school groomer news from all across the country, and the world’s longest D&D game.
The Biden administration’s first response to any problem is to pretend that it isn’t a problem. That’s how inflation went from a minor problem to a major one. Unwilling to take the necessary steps to rein in inflation early — pushing the Fed to raise interest rates and slowing down the torrent of money going out the Treasury’s doors — Biden and congressional Democrats at first insisted that inflation wasn’t a real problem: “Transitory,” they called it.
And then when inflation turned out not to be transitory, they thought they could just pin it on the Russians. Jen Psaki sniffed smugly at the “Putin price hike,” as though Americans were too stupid to understand that inflation at home had started long before the Russian invasion of Ukraine. That gambit fizzled, too.
When you don’t have any fresh ideas or real principles — and when your long-term goals are limited by the fact that the president, who was born during the Roosevelt administration, isn’t exactly buying any green bananas — then the easiest thing to do is to throw money at every problem.
Throwing money at things is how you make inflation worse.
Washington had already thrown a lot of money at the economy during the COVID-19 emergency, and, predictably, the emergency spending outlasted the emergency. By the time Biden was elected in 2020, Washington had thrown $2.6 trillion in budgetary resources at COVID and had authorized as much as $4 trillion in subsidized federal lending. That was new money amounting to about a third of GDP sloshing around the economy. Biden’s first priority was pushing out another $1 trillion in a phony infrastructure bill (that has little to do with actual infrastructure) and a $1.9 trillion stimulus bill, even though the Consumer Price Index was already rising steeply, according to the Federal Reserve.
Stimulating an already overstimulated economy is how you make inflation worse.
Our inflation problem is only partly an issue of dovish monetary policy and reckless spending. There are problems in the real-world physical economy, too, those “supply-chain issues” we hear about. The Biden administration has done extraordinarily dumb things to make these worse, too, keeping in place the worst of the Trump administration’s anti-trade policies. That “Made in the USA” talk sounds good on the stump, but the truth is we need a lot that we don’t make at home and aren’t going to — including much of the steel and other vital inputs for the high-value manufacturing we actually do here.
The incredible fact is the Biden administration still had punitive tariffs on Ukrainian steel while it was seeking financial aid for the Ukrainians — it wasn’t until the Chamber of Commerce and conservative critics started making a stink that the administration changed its stance.
More Biden magic: “Dow Suffers Longest Losing Streak In 99 Years.”
“Hunter Biden Took In $11 Million Over 5 Years.” I would treat NBC’s number as a floor rather than a ceiling…
Scary Poppins resigns from the Ministry of Truth because all those vicious right-wing bullies were mean to her about her gross bias and constant lying.
I know you’ll be shocked, shocked to find Taylor Lorenz attempt to ride to her rescue:
Investigating and criticizing a Homeland Security official is now "harassment" and bullying, according to the WashPost and @TaylorLorenz.
Only ordinary citizens can be investigated — not high-level US Security State operatives. Them's the rules:https://t.co/rtHpupbeMw
In sum, a free press exists to unmask and punish private citizens with the wrong politics ("shoe-lace reporting"), not to investigate and scrutinize the beliefs, conduct and claims of powerful government officials ("harassment" and bullying).
Also seems odd that WPost allowed @TaylorLorenz (who, credit where due, broke the story of the DHS "pause") to write an entire article arguing Nina Jankowicz should be off-limits from criticism, without mentioning Jankowicz argued the same about Lorenz:https://t.co/Sh6mzcKRe0
Indeed, Jankowicz has a very long history of defending Lorenz and expressing solidarity for the trauma Lorenz suffers when her work is criticized. That's almost certainly where Lorenz got her version of events and seems like it should be disclosed when Lorenz defends Jankowicz. pic.twitter.com/R49NHCQ3RZ
I live in a manufacturing city with a very strong union voice speaking into the politics of our community. Yet a fascinating and unmistakable phenomenon has been occurring over the course of the last decade or two. Though the percentage of citizens in our area who post their “Proud Union Home” yard signs has likely increased, the percentage of them identifying as, or supporting, the Democratic Party has dropped precipitously during that same time frame.
For the first time in my city’s history, Republicans swept all municipal offices in the last election. So what is happening, and is it a microcosm of some larger trend?
I can’t offer any scientific study or analysis; I can only tell you what I have been told. Though former President Trump attempted overtures towards the “made in America” union mentality, that isn’t the most often cited rationale among Democrat dropouts. Instead, their disillusionment seems to stem from the prevailing belief that the party has been hijacked by single-issue ideologues that are willing to destroy party cohesion and solidarity if it means advancing their singular cause. More and more of these ex-party members now consider the Democrats the “Abortion First” party.
Again, that may be just the frustrated sentiments of disgruntled Dems in rural Indiana who feel as though the once big tent that embraced them has become far more rigid and dogmatic in who they welcome under the awning. Gone seem to be the days of the party’s Rust Belt/Union Grit identity, replaced today with a coalition that obsesses over white guilt, pronoun pandering, and legal feticide.
“Tucson high school counselor accused of sexual misconduct with a 15-year-old student…police officials in the Southern Arizona city said Zobella Brazil Vinik turned herself in to detectives on May 11.”
Bellingham School District board director is advertising a “queer youth open mic” for ages 0-18 taking place in her sex shop which she owns. @BhamSDpic.twitter.com/jIIdAV0YOu
Speaking of sexual predators after your children, this is pretty horrifying: “Texas Teen Goes to Bathroom at NBA Game, Is Found 10 Days Later Sold for Sex in Oklahoma Hotel.”
In another action-packed school board meeting in McKinney, the board president was served with a lawsuit for suppressing the free speech rights of citizens who disagree with her policies.
Civil rights attorney Paul Davis served Amy Dankel, president of McKinney Independent School District’s board of trustees, during the public comments portion of Tuesday night’s meeting.
“Your outrageous display of tyranny in how you trampled on the rights of the public at the last meeting was shocking,” he said. “I’ve never seen anything like it.”
In recent months, McKinney ISD’s school board meetings have featured a heavy police presence.
On several occasions, police officers have ejected citizens, at Dankel’s direction, for failing to observe her rules of decorum during public comments.
Davis said Tuesday that Dankel’s rules “placed an unconstitutional restraint on First Amendment rights by disallowing signs, clapping, and comments.”
He also says Dankel enforced her rules unequally.
She directed police to physically remove people who were wearing green—supporters of conservative trustee Chad Green, who Dankel is trying to oust from the board.
“Those same rules were not applied to people wearing blue,” Davis said, referring to Dankel supporters. “For that, we have filed a civil rights lawsuit against you.”
Kevin Whitt is one of the plaintiffs in the lawsuit.
During last month’s school board meeting, the pro-family activist spoke against the district’s failure to proactively identify and remove sexually explicit books found in students’ libraries—a contentious topic in McKinney and other districts across the state since last year.
Later in that meeting, Whitt was dragged out by City of McKinney police officers for uttering a single word—“disgusting”—after a local mom finished comments that included excerpts from one of the explicit books.
Speaking of Texas school boards getting sued parents, Round Rock ISD is being sued over violating parent’s rights.
The contentious saga in Round Rock ISD continues after two parents filed a federal lawsuit last week against five school board trustees, the district superintendent, and several district police officers.
Last year, the Williamson County Sheriff’s Office arrested Jeremy Story and Dustin Clark on charges of “hindering proceedings by disorderly conduct” following a September school board meeting. Both men were released the next day.
The lawsuit claims the defendants violated Story’s and Clark’s rights under the First Amendment and the 14th Amendment. Additionally, the suit accuses the defendants of violating 42 U.S. Code 1983, or misusing their power to deny their constitutional rights.
The two men attended last September’s school board meeting to protest Superintendent Dr. Hafedh Azaiez’s continued employment and a proposed tax increase.
Texas Scorecard chronicled multiple scandals involving Round Rock ISD in a special report and a podcast series, Exposed, which included investigations into the school district and Azaiez. Five of the district’s seven trustees, dubbed the “Bad Faith Five,” were also brought under scrutiny for allegedly covering up domestic violence allegations against Azaiez.
At the August 16 board meeting, Round Rock ISD officers removed Story after he referenced the investigation into Azaiez. Amy Weir, president of the school board, instructed district officers to escort Story from the building, claiming his concerns about Azaiez did not follow the meeting’s agenda.
At the same meeting, trustees Mary Bone and Danielle Weston walked out after accusing the district of intentionally limiting seating under the guise of following COVID-19 safety guidelines. Clark then demanded the board let more citizens in to witness the meeting, and Weir subsequently instructed district officers to escort him out.
Three days later, Williamson County officers arrested Story and Clark. Although Story’s charges pertained to the August 16 meeting, Clark’s charges dated back to a September meeting of the school board. Their lawsuit, filed May 11, accuses all defendants of suppressing Story’s and Clark’s constitutional rights and claims they were arrested illegally.
If successful, the lawsuit would void Azaiez’s contract and prevent Round Rock ISD from restricting attendance at school board meetings due to COVID-19.
Groomer teachers are even popping up in Ohio:
Elementary-high school students at @OlentangySD were allegedly given an invasive electronic survey on their pronouns, sexual orientation, and mental health. Parents were not notified and were not asked to consent. pic.twitter.com/opEPFNm6dC
Speaking of Michigan lawsuits over gross abuse of state power, a couple is suing Highland Park after the police seized their building and legal marijuana business, charged them with no crime, and then offered to give it back if they bought the police department two cars.
Speaking of crooked Democratic politicians, you would think that all that graft Bill De Blasio’s wife raked off would allow him to retire in style, but evidently that festering bucket of crooked failure just can’t stay out of the spotlight, and is now running for congress.
People magazine may cease its print version. Bonus: “Sources told The Post that under Wakeford, People had been selling more than 200,000 copies at the newsstand a week. Since then, newsstand sales have been uneven, with a May 2 Prince Harry cover dipping to about 160,000 copies sold, and a March 14 Lizzo cover cratering to between 125,000- 150,000 copies sold, which is said to be one of the worst selling issues in People’s half-century history.” Funny how no one gives a rat’s ass about woke royals and the morbidly obese…
Larry Correia gives a deserved royal fisking to an article by a leftwing feminist who wonders why her boyfriend reads that primitive “science fiction” stuff rather than modern literary fiction that checks all the required Victimhood Identity boxes.
American Civics 101 teaches us that there are three branches of the American government: Executive, Legislative and Judicial. However, that clean, elegant division started to go awry in the early 20th century (some would place the problems even earlier) with the creation of the Federal Reserve and the vast expansion of the administrative state under the New Deal.
One blow to that traditional tripartite division of federal powers was the creation of administrative courts for independent agencies. Yesterday, the Fifth Circuit Court of Appeals (which includes Texas) ruled such courts were unconstitutional.
The Securities and Exchange Commission’s in-house judges violate the U.S. Constitution by denying fraud defendants their right to a jury trial and acting without necessary guidance from Congress, the 5th U.S. Circuit Court of Appeals ruled on Wednesday.
The court ruled 2-1 in favor of hedge fund manager George Jarkesy Jr and investment advisor Patriot28 LLC, overturning an SEC administrative law judge’s determination that they committed securities fraud.
A spokesperson for the SEC and counsel for the petitioners did not immediately respond to a request for comment on Wednesday.
The Dodd-Frank Act, which Congress passed after the 2008 financial crisis, expanded the SEC’s ability to seek penalties in its administrative proceedings.
In the ruling Wednesday, the majority said that because seeking penalties is akin to debt collection, which is a private right, the defendants were entitled to a jury trial.
The SEC had argued that it was acting to protect investors and enforce public rights found in the securities laws.
The majority also found that SEC judges, known as administrative law judges, lack authority under the Constitution because Congress did not provide guidance on when the SEC should bring cases in-house instead of in a court.
U.S. Circuit Court Jennifer Walker Elrod, joined by Circuit Court Judge Andrew Oldham, penned the majority opinion.
This is a long overdue trimming of the unelected administrative state and a restoration of the division of responsibilities between the three branches that forms part of the Constitution’s vital system of checks and balances. However, given the potentially far-reaching effects of the decision, expect first an en banc hearing of the Fifth Circuit, and then an appeal to the Supreme Court.
