TRAINWRECK

MARCH 29, 2012 UPDATE – A TRAIN WRECK FOR THE ADMINISTATION

The weight of opinion is now in.  The mandate is dead and the entire measure is likely to be flushed.  We won’t know more until the high Court publishes its opinion, most likely in June.  But this is bad news for Obama and good news for Romney.

Paul Clement for the challengers: “What makes this different is that the provisions that have constitutional difficulties or are tied at the hip to those provisions that have the constitutional difficulty are the very heart of this Act… they are interconnected to the exchanges, which are then connected to the tax credits, which are also connected to the employer mandates, which is also connected to some of the revenue offsets, which is also connected to Medicaid; if you follow that through what you end up with at the end of that process is just sort of a hollow shell.”

Justice Roberts: “Congress had a balanced intent. You can’t look at another provision and say this promotes patient protection without asking if it’s affordable.”

Justice Scalia: “My approach would be to say that if you take the heart out of this statute, the statute’s gone.”

Justice Sotomayor: “Unless Congress tells us directly it is not severable, we should let them fix their own.” … “Why in a democracy structured like ours where each branch does different things, why should we involve the court in making a legislative judgment?”

CNN’s Jeffrey Toobin: “This still looks like a train wreck for the Obama administration. It may also be a plane wreck.”

http://jaygaskill.com/DangerousPower.htm

Justice Kennedy Leaning

Update

Justice Kennedy is the swing vote on the lynchpin commerce Clause issue.  Note this exchange:

“Justice Kennedy later expressed some sympathy for the government’s claim that young people who don’t buy insurance are “very close” to affecting interstate commerce, but the key distinction is that proximity is not enough and can’t be enforced by the courts. To regulate individuals at any point in their lives merely because they exist would still undermine the accountability and destroy the dual sovereignty that are the touchstones of his jurisprudence.”

Wall Street Journal

http://online.wsj.com/article/SB10001424052702304636404577295883378953596.html?mod=WSJ_GoogleNews&mod=igoogle_wsj_gadgv1

BE CAREFUL WHAT YOU PRAY FOR

The Obama Care Case analyzed

By Jay B Gaskill

Also posted on The Policy Think Site at – http://jaygaskill.com/DangerousPower.htm.

BE CAREFUL WHAT YOU PRAY FOR – The Obama Care Case analyzed

BE CAREFUL WHAT YOU PRAY FOR

The Obama Care Case analyzed

By Jay B Gaskill

Also posted on The Policy Think Site at – http://jaygaskill.com/DangerousPower.htm.

From time to time history presents moments of correspondence between the religiously motivated (we-pray-the-world-will-be-a-better place), and the well-meaning social engineers, (we-will-make-the-world-a-better-place).

These are combustible moments.

I’m noticing on Facebook and elsewhere a prayer surge in favor of the administration’s position on the Supreme Court’s pending review of the so called “Affordable Health Care Act”[i].  [An aside: Beware misleading labels. Whatever the policy virtues of Obama Care, affordability is not among them.]  This prayer support movement is being cast in a number of forms; the one that recently came to my attention was “prayerful witness on health care”.

The last major push for social reform in the USA that represented the alliance of prayer and public policy took place in 1920, after a great deal of public dispute, when the country banned beer, wine and booze.  In that fateful year, the income tax was generating almost 10 times the tax money received from that older cash cow, liquor taxes.

Income-tax revenues allowed Congress to enact alcohol prohibition.

Here’s the takeaway point.  Imposition of prohibition was a violation of the existing constitutional structure.  Therefore it had to be accomplished via a constitutional amendment (the 18th amendment, thankfully repealed under Teddy Roosevelt by the 21st Amendment).

Here’s a second takeaway point.  If the current administration’s constitutional theory supporting Obama Care’s mandate to all Americans to purchase insurance is upheld, we would not need a constitutional amendment to enact prohibition. Please understand – I’m not suggesting that prohibition will actually come back, just that the administration’s theory will leave us with no further constitutional barrier, check or balance against the “we-will-make-the-world-a-better-place” impulses of the social engineers, except a few specifically enumerated rights like free speech.

The great constitutional scheme on which our republic is based consists of enumerated powers of government balanced against enumerated rights in a specifically biased way:  The enumeration of rights was not intended to be exclusive – there are non-enumerated rights as well (such as privacy); but the short list of enumerated powers was intended to be exclusive – there were to be no powers given the federal government that were not enumerated in the constitution.

This frames the overriding importance of the Obama Care case.  The administration is relying on a single enumerated power to force all Americans to purchase insurance: It is the so called Commerce Clause of Article I Section 8, which reads as follows: The Congress shall have the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”.

In its origin, the commerce power was designed and used to promote free trade among the states, to effectively restrain them from acting like sovereign nations, barring them from imposing duties and tariffs that would impede the flow of commerce within the US.

There is a century of constitutional litigation here, well beyond the scope of this piece to summarize[ii].  But suffice it to say that this single grant of power has supplied the foundation of a huge expansion of federal authority.[iii] At its most extreme, the proponents of the commerce clause power will argue that even passive behavior affects commerce (much as the flutter of a prehistoric butterfly might affect the timing of Lincoln’s birth.) This view converts the grant of a power originally designed to free the flow of commerce among the states into a truly comprehensive authority over every aspect of our behavior.[iv] The expansion of power is staggering because our every action can be viewed as consumer behavior. If the administration wins this point, the enumeration of powers structure of our constitutional system is dead.[v]

Consider what might have happened.  We might have had congressional hearings, a measure-by-measure debate and a careful consideration of individual reform measures.  Instead we were treated to the sorry partisan spectacle of a frantic effort to push through a package so comprehensive and poorly drafted that, even now we are discovering problems that need correction. The measure’s flaws have prompted the administration to grant 1,200 waivers to date.  We started with a heath care system that served 80% of us quite well; and we could have begun a careful process of extending care to the underserved in ways that would not degrade or damage the care enjoyed by the vast majority of Americans.

We could have, for example, lightened the load on our hospital emergency rooms (already mandated to take all comers without regard to patients’ means) by creating sliding-scale clinics financed by a combination of taxes and contributions.  We could have accomplished a number of rational, incremental reforms.

But we did not. The well-meaning social engineers, (the “we-will-make-the-world-a-better-place” crowd) had achieved a fleeting state of control over both legislative chambers and the executive branch. With no time for reflection, no willingness to give due consideration to the constitution, no patience to consider the public fisc or the prudential requirements of wise policy, they gave us a measure that neither the president nor the members who voted on it were actually able to read, let alone study.

And now we are at the stage in which only the highest court in the land can restore the constitutional balance.

Pray that it is not too late.

JBG


[i] Dept. of Health and Human Services vs. Florida et al

[ii] The Amicus Brief filed by the Landmark Legal Foundation is a good start — http://landmarklegal.org/uploads/Brief_Filed.pdf

[iii] And I must note the restraint that previous administrations have shown. For example, under Jimmie Carter, the 55 mile an hour speed limit was not imposed using the raw Commerce clause power; it was imposed as a condition attached to the receipt of federal highway moneys.  As a result, states varied somewhat in enforcement policies.  In one state with which I am particularly familiar, speeding tickets that were issued for exceeding 55 but under “the previously posted limit” were more lenient.  In another example, national educational policy is not directly imposed on the states and their various educational institutions, but is attached as a condition to receiving federal aid. The arguments advanced by the current administration in favor of the insurance mandate represent a truly radical departure.

[iv] Credit for the main thrust of the argument goes to Virginia Attorney General Ken Cuccinelli, Duke University law professor Walter Dellinger, and Georgetown University law professor Randy Barnett.

[v] A coalition of 26 states opposes the administration’s position.

LAKE FOE-BEGONE & THE MAROONED ECONOMISTS

LAKE FOE-BEGONE & THE MAROONED ECONOMISTS

Analysis

By Jay B Gaskill

Also posted on the Policy Think Site – http://jaygaskill.com/LakeFoebegone.htm

The liberal economist/columnist Paul Krugman and the other public policy mavens of like minds cut their teeth during that halcyon era when American production seemed to prop up the whole world economy. These smart men and women may sincerely believe they have accommodated their views to all the wrenching economic changes of the last twenty-five years.  But their minds are still eddying in the past; their theories and approaches are still caught in the drag of old assumptions.

One thing they seem to have missed: Scale changes the rules.

Exhibit One. In the run-up to our most recent crisis, underwater mortgages were packaged in hugely complex credit instrument bundles that were floated as assets – as it later was revealed, vastly overpriced assets. These packages were so out of scale (in size & complexity) with more straightforward traditional credit instruments, that ordinarily intelligent players were misled by their old assumptions.

The collapse of a misplaced trust bubble followed, and it almost took the world’s economy down with it.

Dr. Krugman is a Neo-Keynesian economist, a term that requires some explanation.[i] In its most benign form, counter-cyclical Keynesian economists advocate money-supply boosting measures to smooth out the business cycle – deficit spending in a recession, and running surpluses to pay down the debt during a boom.

The first counter-cyclical Keynesians were the Egyptian pharaohs.  Idle, off-season agricultural workers were impressed into pyramid building work.  But no one messed with the harvest; the laborers impressed into pyramid work would not otherwise have been employed at much of anything.  Egypt was a net food exporter and the pyramid workers returned to the fields every season.

The last prudent counter-cyclical Keynesian leader (IMHO) was President John F Kennedy.  His economic team used Keynes-style deficit spending and monetary policy to boost the money supply during a recession, but reversed the process during prosperity to repay debt.

Both boost and payback were modest by today’s standards. And scale matters.

In fact, scale-sensitive regimes are a universal principle in nature.  In physics, for example, the effective operating rules change when the scale changes.  At the extremes, quantum tiny (Heisenberg/Feynman/Plank), and cosmological huge (Einstein/Hubble/Peacock), the straightforward mechanics of Isaac Newton no longer work in the same way.  In fact, if the rules did not work differently at these different scales, we would not have computers, lasers or flat screen displays.

In economics, things also behave differently at the very small and the very large scales. Somehow, this basic caution has caught the current generation of economists by surprise.  As a result, modern overconfident economists are feeling their way in the dark, seduced by their new tools: massive computers using under-tested algorithms.

I mentioned that Paul Krugman is a neo-Keynesian economist.  Dr. Krugman and his fellow travelers have kept the kernel of John Maynard Keynes’ assumptions and doctrines, with important tweaks.  After all, Keynes (1883-1946) did all his work before computers, and well before the emergence of the modern world economy.  The Neo-Keynesians have produced mathematical models more or less based on Keynes’ principles. By utilizing very complex algorithms, the potential policy utility of simple Keynesian principles was greatly amplified.  A Keynesian advisor can plausibly tell a policy maker, “If you spend X in stimulus money, then our computers say you can get Y in increased employment.”  When this does not happen as predicted, the same economists tend not to blame the algorithm.  Instead they tell the policy makers that the plan worked, but the gains in employment were masked by other factors.

Just as was the case with the overly complex bundled debt instruments, the magnitude and consequences of potential policy error is also ramped up by blind reliance on algorithms. Their uncritical use by macro-economists is the modern equivalent of shooting in the dark.

Here is most persistent kernel of Keyes’s thinking: Because sharp reductions in the money supply can bring the production-consumption & employment-spending engines of an economy to a standstill, it follows (so Keynes and his apostles thought) that sharp increases in the money supply will work the opposite magic: One adds money in circulation and abracadabra, the injection generates a restart of the stalled production-consumption & employment-spending engines.

We need to note that Keynes’ particular focus was employment. This was a famously myopic frame of reference because employment takes place in the context of an employer that is generating income through the production or transfer of goods and services or via necessary ancillary activities.

In a famous example, Keynes asked us to imagine an English village paralyzed by intractable joblessness. He asked us to imagine in this famous thought experiment, that a benefactor (like the government) buries a cache of money just outside the village and gives the city the treasure map.  Quickly, a full-employment industry develops, digging up and distributing the buried Pounds Sterling.  No matter that the primary economic activity thus stimulated was make-work: In Keynes’ doctrine, general consumption will be stimulated; ergo further production and prosperity will return to the village.

Several under-examined assumptions were buried in this example, not the least of which the hidden assumptions about the scale and local nature of the problem. The village economy was not the whole of England. The newly “wealthy” villagers were able to import goods and services from the rest of the country.  After all, they couldn’t eat, drink or otherwise use pounds sterling except as that currency retained credibility as a medium of exchange. Moreover, the rest of England was actually working (for the most part) producing the goods and services that the villagers purchased, using their buried money from the make-work digging.

Clever counterfeiters have done just as well, thank you, as long as they remain a small minority…and are not jailed.

We saw this myopic conceit repeated in arguments made by former Speaker Nancy Pelosi when she defended the purported employment/consumption multiplier effect of extended unemployment benefits.  Keynes’ example was little more than unemployment benefits coupled with illusory, non-productive make-work.

In economics, supply-demand is a conservative law, something that liberals and Marxists have repeatedly tried to repeal with embarrassingly conservative results[ii].  But its application to real world situations also varies depending on scale.

For example, in a small isolated village where there is a single inventory of widgets and a fixed money supply, supply/demand works exactly as advertised, without fuzzy math.   Introduce a whole lot of extra money and it still works, but now you have added a whimsical demand factor.  A lone wolf player with a boatload of money can sew up the beer supply in our hypothetical village for example, and drive up prices.  This will eventually create an incentive for somebody to import outside beer…and so it goes.

Parked fiat money can achieve excessive levels without immediately affecting prices.  Think of weird Uncle Fred keeping a huge fortune under his mattress where old Fred is a non-drinker.

In the world of 1950’s America, the USA was a very large village.  Moreover we were the unchallenged lead producer of goods and services in a world the manufacturing base of which had either been reduced to rubble by bombs or had not yet emerged at all. American households had accumulated modest savings and big pent up demand because rationing had been in effect during the war.

Flash forward to the early 21st century.

  • If most WWII households were goods-deprived, by contrast most modern American households are goods-saturated.
  • Almost everything that is “made in America” faces a strong competitive counterpart somewhere else in the world.
  • The relevant money supply (that aggregate of exchange media that supports transactions) is no longer just American currency.  It is a whole range of currencies, debt and asset instruments of which the traditional greenback (including its virtual electronic forms) is merely one component.  [Economists depend on a measure of the aggregate money supply, but their data lags far behind the realities of the international economy.]

The profound internationalization of the money supply, driven by currency exchange markets and wildly differing local regimes, is an economic wild card.  There are so many hidden mattresses, so many realized and neglected spending opportunities, so many quirky demands and shortages.

Supply and demand laws still operate but the playing field is vastly more complex and significantly more unstable. IF the system remains sufficiently free and IF the players remain sufficiently rational, THEN shortages can level out whenever supply can be increased – or alternative products and services and fill the demand/supply gap.  For the moment, the system is not particularly free even in the USA – I note that government policies are holding back supply in sensitive areas like energy production.

Therefore, the injection of a huge overload of fiat money (as in deficit spending or the less obvious measures of the US fed) invites what we can call the tornado inflation effect.  A tornado can be a chaotic, unpredictable event.

Living with a large overhang of fiat money is analogous to living with the energy in a potential tornado-generating storm system.  A spot supply-bottleneck in any one critical energy or foodstuff component can suddenly draw a lot of buying energy, generating a price increase cascade that spills over to a range of other consumer prices with serious effects.  This risk tends to be masked before, during and after, by the macro-numbers that the experts are monitoring.  This is why catastrophic inflation is almost always a “surprise”. While the actual risk is amplified greatly by the fiat money load, longer effects of the monetary actions by the fed are not all that predictable.  Put another way, the algorithms can lie.

All of the historical destabilizing hyperinflationary episodes, from pre-Nazi Weimar Germany (1921-23) through the banana republic episodes in South America (1980-94), came as a surprise. Ugly surprises are in the nature of chaotic systems

There are several critically important questions that modern economists cannot yet definitively answer.  Among them looms this big one – Q: Please quantify the aggregate money supply, including all funds and financial instruments that are capable of fueling inflationary demand surges in the USA’s economy.

The fed’s entire structure of control rests on the legalistic axiom that it controls the “legal tender” question for all key transactions that can affect the US economy. This belief was founded in the doctrine that only US dollars can be used to settle US debts.  In the context of the world economy, this is a fatal conceit.  Article I, Section 8 of the Constitution does grant the federal government exclusive power to coin money and “regulate the value thereof.” The Federal Reserve central banking system was created on 12-23-1913 in order to achieve the orderly lending of money and “to regulate the value thereof.”  As a result, the fed and its bankers have felt secure in the assumption that, whatever mischief the other countries of the world commit, at least the USA will control its own economic destiny. But American dollars are only one component in the US domestic economy.

Conventional thinking at the fed treats the aggregate USA money supply in different categories, based on its working assumptions about liquidity.  The most liquid category (M1) consists of checking deposits and cash.  M2 expands the aggregate money supply to include short term savings, some money market funds and other reasonable quick access deposits. A third category (M3) has not really been used much, as I understand it[iii], but it attempts to roll in institutional money market funds, Euros, certain time deposit and the like.[iv] Ironically, the reserves of banks that are linked to the fed are not counted (presumably because the fed believes that it can control this component by metering its bank-to-bank lending).  Moreover the fed’s aggregate money supply does not include the whole sector of day-today borrower discretion lines of credit.

For all these reasons, I submit that the fed is incapable of coming up with a realistic, reasonably accurate answer to the real aggregate money supply question.

Consider just the most recent debacle in which bundled credit instruments containing “toxic assets” (translation grossly inflated, hugely overleveraged mortgages) were operating as a de facto part of the money supply. They might as well have dropped into the US economy from outer space.  Now consider the pervasive extent of international monetary entanglement with every aspect is US domestic commerce.

Far too many external influences are at work for Keynesian management of the US economy to amount to more that guess work covered in a thin patina of economic jargon.

  • Can we be reassured that the obligations of American businesses can only be retired by paying dollars when the very US business entities have footprints in six other countries?

  • Can we be reassured that foreign-controlled purchase moneys will not drive up demand for scarce US resources?

  • Can we be reassured that the fed really has a handle on all of the credit deals, deposits, asset-swap arrangements and dollar-equivalent currencies and quasi-currencies capable of impacting the US economy?

Of course not…

If the fed is not capable of coming up with an adequate answer to the aggregate money supply question, then how can we describe the fed’s attempts to manipulate the money supply as anything but experimental?

And if Fed Chair Bernanke’s efforts are experimental, why isn’t this just shooting in the dark?

Fed Chair Ben Bernanke & his colleagues are not sleeping well at the moment.  I give them credit for their attempts at ongoing monitoring – within the constraints of the available data.  One hopes and prays that with close, proactive attention, the fed may be able to tamp down the risks of hyperinflation that recent increases in the money supply can easily trigger.  But strong inflationary pressures are already in play.  For the moment, Bernanke and co. are distracted by the supposed risks of deflation, based on the price-collapse of a single asset class (US real estate).  Wiser heads counsel to let the real estate market bottom out sooner rather than later, rather than add to the general inflationary pressures in a futile campaign to prop up the unproppable.

The overall financial system has an irreducible chaotic component; and there are always costs of inflation containment. Anti-inflationary measures will impose costs in the form of new bureaucratic controls, higher interest rates and other measures (no doubt heavily influenced by politics), all of which are likely to restrain or reverse economic recovery.

If you take away no other lesson from this discussion, please highlight the risks that attend political interference with market forces. The decades-long political interference with the American economy has brought us this dangerous precipice. More of the same will lead us ever deeper into a mess from which there will be no easy escape.

All this suggests a strong cautionary message to fed chair Bernanke: You may be wrong.  Your algorithms may be dangerously misleading.

The entire system is a trust pyramid.  Never lose sight of that bedrock fact.

Over time, the fed’s tinkering impulses (so far in the form of quantitative easing and below zero interest loans) and the partisan impatience to govern by decree will begin to fatally damage the fragile core trust relationships on which the whole business system depends.  The real economic engines that fund everything else are tasked to earn money by producing and selling goods and services for which there is a real demand…and to do so at a profit.  Business activities are founded in trust relationships – in government policies that promote and protect predictability, transactional stability, in the legal preservation of earnings, in a stable and level playing field, and a non-hostile business environment.

When the core trust relationships on which healthy commerce depend fail, then no algorithm, no theory, and no doctrine can avert the crash.

Or so it seems to me out here in Lake Foebegone country, where America has no enemies and every adult liberal is above average.

JBG


[i] My own romance with Keynesian doctrine ended with the crash of 2008.  See my article at http://jaygaskill.com/KeynsianCollapse.pdf.

[ii] The Chinese communists of fifty years ago repeatedly attempted to decree supply increases without allowing for demand incentives.  They failed. The operations of supply-demand markets were a mystery to them.

[iii] I suspect this is because the needed data is too difficult for the fed to collect.

[iv] This is a simplification, of course, but it conveys the idea of economists trying to keep up with rapidly evolving transactional strategies in which traditional “money” is just one element.

Copyright © 2012 by Jay B Gaskill

First published on The Policy Think Site (www.jaygaskill.com)

and the Dot-2-Dot Blog (http://www.jaygaskill.com/dot2dot/)

As always, links and forwards are welcome and encouraged, as are quotes with attribution.

For everything else, please contact the author via e-mail at law@jaygaskill.com.

Obama's New Executive Order

PRELIMINARY OBSERVATIONS

The March 16, 2012 POTUS Executive Order

Analysis

By Jay B Gaskill

As posted on the Policy Think Sitehttp://jaygaskill.com/ObservationsMarch16ExO.htm

On March 16, the White House issued an Executive Order that creates and consolidates sweeping powers to acquire, redirect and control a whole range of private resources and activities in the name of defense preparedness.

{The Full Text of the Order is appended}

On the face of it, this piece of work would have been in active development for about 6 months. It replaces at least two earlier specifically referenced executive orders that I haven’t yet read and it will undoubtedly change a number of others, unnamed.

Executive Order 12919 of June 3, 1994, and sections 401(3) (4) of Executive Order 12656 of November 18, 1988, are revoked.  All other previously issued orders, regulations, rulings, certificates, directives, and other actions relating to any function affected by this order shall remain in effect except as they are inconsistent with this order or are subsequently amended or revoked under proper authority.  Nothing in this order shall affect the validity or force of anything done under previous delegations or other assignment of authority under the Act.

(b)  Nothing in this order shall affect the authorities assigned under Executive Order 11858 of May 7, 1975, as amended, except as provided in section 802 of this order.

The Order derives its core rationale from the Defense Production Act of 1950 as amended, which Harry Truman attempted to use when he seized a private steel plant in 1952, but was rebuffed by the Supreme court in Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952).

One provision in the March 16th Order seems tailor made for the Truman seizure attempt

The head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303(e) of the Act, 50 U.S.C. App. 2093(e), to:

(a)  procure and install additional equipment, facilities, processes, or improvements to plants, factories, and other industrial facilities owned by the Federal Government and to procure and install Government owned equipment in plants, factories, or other industrial facilities owned by private persons;

(b)  provide for the modification or expansion of privately owned facilities, including the modification or improvement of production processes, when taking actions under sections 301, 302, or 303 of the Act, 50 U.S.C. App. 2091, 2092, 2093; and

(c)  sell or otherwise transfer equipment owned by the Federal Government and installed under section 303(e) of the Act, 50 U.S.C. App. 2093(e), to the owners of such plants, factories, or other industrial facilities.

[][][]

Here are some excerpts from the 1950 law (recently amended) –

Critical and Strategic Materials

The powers granted in this section shall not be used to control the general distribution of any material in the civilian market unless the President finds (1) that such material is a scarce and critical material essential to the national defense, and (2) that the requirements of the national defense for such material cannot otherwise be met without creating a significant dislocation of the normal distribution of such material in the civilian market to such a degree as to create appreciable hardship.

Domestic Energy; Materials, Equipment, and Services

(1) Notwithstanding any other provision of this Act [50 U.S.C. App. § 2061-2171], the President may, by rule or order, require the allocation of, or the priority performance under contracts or orders (other than contracts of employment) relating to, materials, equipment, and services in order to maximize domestic energy supplies if he makes the findings required by paragraph (3) of this subsection.

(2) The authority granted by this subsection may not be used to require priority performance of contracts or orders, or to control the distribution of any supplies of materials, services, and facilities in the marketplace, unless the President finds that—

(A) such materials, services, and facilities are scarce, critical, and essential—

(i) to maintain or expand exploration, production, refining, transportation;

(ii) to conserve energy supplies; or

(iii) to construct or maintain energy facilities; and

(B) maintenance or expansion of exploration, production, refining, transportation, or conservation of energy supplies or the construction and maintenance of energy facilities cannot reasonably be accomplished without exercising the authority specified in paragraph (1) of this subsection.

(3) During any period when the authority conferred by this subsection is being exercised, the President shall take such action as may be appropriate to assure that such authority is being exercised in a manner which assures the coordinated administration of such authority with any priorities or allocations established under subsection (a) of this section and in effect during the same period.

[][][]

Presidential Executive Orders, by their very nature, operate only within and on the Executive Branch; therefore they cannot override congressional enactments, like statutory law, or the rulings of the courts (when interpreting the laws and the constitution).

For the friends of liberty in this republic, this is small comfort, indeed, because the vast regulatory powers of the federal government are almost totally within the scope of this order, and those very powers have vastly been expanded since the time of Harry Truman’s steel seizure case.

Anything that the executive has been heretofore allowed to do, acting through any agency, commission, bureau, can be controlled by an executive order, because POTUS is the chief executive.  This Presidential Order does not attempt to rely on the Commerce Clause for its authority, instead relying on the heavy boots of “national emergency”, “national defense”, “national defense preparedness”, and so on –

(j)  “National defense” means programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, homeland security, stockpiling, space, and any directly related activity.  Such term includes emergency preparedness activities conducted pursuant to title VI of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5195 et seq., and critical infrastructure protection and restoration.

Because of the emphasis on “preparation” the scope of the claimed authority is breathtaking.

(m)  “Strategic and critical materials” means materials (including energy) that (1) would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency, and (2) are not found or produced in the United States in sufficient quantities to meet such need and are vulnerable to the termination or reduction of the availability of the material.

(n)  “Water resources” means all usable water, from all sources, within the jurisdiction of the United States, that can be managed, controlled, and allocated to meet emergency requirements, except “water resources” does not include usable water that qualifies as “food resources.”

There are at least three developments on the presidential radar (other than his ongoing reelection campaign) to which this package obviously relates.

  1. China has been actively locking up the world’s supply of rare earth elements, the arcane but indispensable magic ingredient of the entire computer/electronics industry.  The US has scattered and undeveloped sources for some, but by no means all rare earths elements.
  2. Pending trouble in the Middle East could cripple oil supply lines for months, driving up fuel oil and gasoline prices and creating critical shortages, even a partial breakdown in the national transportation system.
  3. The reliable flow of the more mundane essential materials on which the US industrial capacity (such as it is) critically depends (think steel, titanium, copper, aluminum), not to mention various critically important offshore manufacturing arrangements (think i-Pads, jet cockpit displays, GPS devices) for which we have no effective domestic counterparts, could be dramatically disrupted by economic and international political developments.
  4. Domestic terrorism theoretically could disrupt agriculture by interdicting rail transport, even via some biological agent that, say, poisons water supplies, but that set of scenarios is a bit too theoretical to be taken as seriously as the first three.

[][][]

Industrial Policy is the full-on, top-down imposition of politically imposed objectives (for the “national good”) on the major producers in the private sector, often concealed under the rubric, “patriotic cooperation”.  The virtual cheek-to-jowl cooperation between Krupp, the German industrial giant, and the Nazi government is the paradigm example.  Industrial Policy crosses a number of lines of concern to those of us who value freedom.  As of March 16, 2012 in the USA, we’ve crept over several such lines and are poised to jump the rest.

Under the umbrella of defense preparedness, the President’s newest Executive Order reeks of creeping Industrial Policy.  Here are some samples that might raise eyebrows:

The domestic industrial and technological base is the foundation for national defense preparedness.  The authorities provided in the Act shall be used to strengthen this base and to ensure it is capable of responding to the national defense needs of the United States.

be prepared, in the event of a potential threat to the security of the United States, to take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements;

…perform industry analyses to assess capabilities of the industrial base to support the national defense, and develop policy recommendations to improve the international competitiveness of specific domestic industries and their abilities to meet national defense program needs.

The Secretary of each agency delegated authority under subsection (a) of this section (resource departments) shall plan for and issue regulations to prioritize and allocate resources and establish standards and procedures by which the authority shall be used to promote the national defense, under both emergency and non-emergency conditions.

To create, maintain, protect, expand, or restore domestic industrial base capabilities essential for the national defense, the head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303 of the Act, 50 U.S.C. App. 2093, to make provision for purchases of, or commitments to purchase, an industrial resource or a critical technology item for Government use or resale, and to make provision for the development of production capabilities, and for the increased use of emerging technologies in security program applications, and to enable rapid transition of emerging technologies.

(b)  Materials acquired under section 303 of the Act, 50 U.S.C. App. 2093, that exceed the needs of the programs under the Act may be transferred to the National Defense Stockpile, if, in the judgment of the Secretary of Defense as the National Defense Stockpile Manager, such transfers are in the public interest.

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Another concern -Does this Order contemplate a shadow, emergency government, consisting of NDER units???

I’ve read and reread the following provisions of the Order and I remain unsettled. Read it carefully, yourself.

Sec. 501.  National Defense Executive Reserve.  (a) In accordance with section 710(e) of the Act, 50 U.S.C. App. 2160(e), there is established in the executive branch a National Defense Executive Reserve (NDER) composed of persons of recognized expertise from various segments of the private sector and from Government (except full time Federal employees) for training for employment in executive positions in the Federal Government in the event of a national defense emergency.

(b)  The Secretary of Homeland Security shall issue necessary guidance for the NDER program, including appropriate guidance for establishment, recruitment, training, monitoring, and activation of NDER units and shall be responsible for the overall coordination of the NDER program.  The authority of the President under section 710(e) of the Act, 50 U.S.C. App. 2160(e), to determine periods of national defense emergency is delegated to the Secretary of Homeland Security.

(c)The head of any agency may implement section 501(a) of this order with respect to NDER operations in such agency.

(d)  The head of each agency with an NDER unit may exercise the authority under section 703 of the Act, 50 U.S.C. App. 2153, to employ civilian personnel when activating all or a part of its NDER unit.  The exercise of this authority shall be subject to the provisions of sections 501(e) and (f) of this order and shall not be redelegated.

(e)  The head of an agency may activate an NDER unit, in whole or in part, upon the written determination of the Secretary of Homeland Security that an emergency affecting the national defense exists and that the activation of the unit is necessary to carry out the emergency program functions of the agency.

(f)  Prior to activating the NDER unit, the head of the agency shall notify, in writing, the Assistant to the President for Homeland Security and Counterterrorism of the impending activation.

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CONCLUDING OBSERVATIONS

It’s all about the teeth.

In routine practice, much of this Executive Order is designed to streamline and expedite procurement processes already in place, bypassing bidding and providing emergency purchase loans.  And it imposes an overall strategic plan that is aimed primarily at preventing spot shortages and supply disruptions.  So far, this is in the nature of an incremental fix.  But we need to consider the players, the not-so-hidden agendas and the potential for abuse.

Because there are no meaningful disclaimers or limitations, constitutional or otherwise.

By design rather than innocent omission, I suspect that the architects of this Order have produced a template that works quite well in connection with the imposition of “martial law lite”. As to that notion I invite you to imagine a condition in which the acquisition by the government of otherwise private resources and the redirection of domestic civilian priorities is rapidly and expeditiously accomplished using a combination of loans, fine and outright takings.

Think of it, if you will, as if we were living in exposed tents on a large plain.  A few feral predators wander about, usually keeping out of sight.  But one day, we wake up to notice that things have changed overnight.  The predators are now lining up rank by rank with great discipline. They surround your encampment.  They have purpose.

We’ve been led into complacency by government inefficiency.

We wake up in an era when a single administrative agency (one of hundreds operating within the executive branch) has the power to write regulations that have the force of the criminal law, the power to prosecute and even to adjudicate.

One such agency has recently declared the very carbon dioxide you are exhaling when you read this to be a dangerous pollutant.

Given the gradual stealth power grab by the federal regulator bureaucracies over the last half century, with scarcely a whimper of protest, are we entitled to be gravely concerned when the Executive seeks to consolidate all that power for the noble purpose of “preparedness”?

You bet we are.

JBG

Copyright © 2012 b Jay B Gaskill, Attorney at Law

As originally published on The Policy Think Site (www.jaygaskill.com) , The Dot-2-Dot Blog and The Out*Lawyer’s Blog.

Forwards, links and quotations with attribution are welcome and encouraged.  For everything else, contact the author via email at law@jaygaskil.com.

APPENDIX

The White House

Office of the Press Secretary

For Immediate Release

March 16, 2012

Executive Order — National Defense Resources Preparedness

EXECUTIVE ORDER

NATIONAL DEFENSE RESOURCES PREPAREDNESS

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061 et seq.), and section 301 of title 3, United States Code, and as Commander in Chief of the Armed Forces of the United States, it is hereby ordered as follows:

PART I  –  PURPOSE, POLICY, AND IMPLEMENTATION

Section 101.  Purpose.  This order delegates authorities and addresses national defense resource policies and programs under the Defense Production Act of 1950, as amended (the “Act”).

Sec102.  Policy.  The United States must have an industrial and technological base capable of meeting national defense requirements and capable of contributing to the technological superiority of its national defense equipment in peacetime and in times of national emergency.  The domestic industrial and technological base is the foundation for national defense preparedness.  The authorities provided in the Act shall be used to strengthen this base and to ensure it is capable of responding to the national defense needs of the United States.

Sec103.  General Functions.  Executive departments and agencies (agencies) responsible for plans and programs relating to national defense (as defined in section 801(j) of this order), or for resources and services needed to support such plans and programs, shall:

(a)  identify requirements for the full spectrum of emergencies, including essential military and civilian demand;

(b)  assess on an ongoing basis the capability of the domestic industrial and technological base to satisfy requirements in peacetime and times of national emergency, specifically evaluating the availability of the most critical resource and production sources, including subcontractors and suppliers, materials, skilled labor, and professional and technical personnel;

(c)  be prepared, in the event of a potential threat to the security of the United States, to take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements;

(d)  improve the efficiency and responsiveness of the domestic industrial base to support national defense requirements; and

(e)  foster cooperation between the defense and commercial sectors for research and development and for acquisition of materials, services, components, and equipment to enhance industrial base efficiency and responsiveness.

Sec104.  Implementation.  (a)  The National Security Council and Homeland Security Council, in conjunction with the National Economic Council, shall serve as the integrated policymaking forum for consideration and formulation of national defense resource preparedness policy and shall make recommendations to the President on the use of authorities under the Act.

(b)  The Secretary of Homeland Security shall:

(1)  advise the President on issues of national defense resource preparedness and on the use of the authorities and functions delegated by this order;

(2)  provide for the central coordination of the plans and programs incident to authorities and functions delegated under this order, and provide guidance to agencies assigned functions under this order, developed in consultation with such agencies; and

(3)  report to the President periodically concerning all program activities conducted pursuant to this order.

(c)  The Defense Production Act Committee, described in section 701 of this order, shall:

(1)  in a manner consistent with section 2(b) of the Act, 50 U.S.C. App. 2062(b), advise the President through the Assistant to the President and National Security Advisor, the Assistant to the President for Homeland Security and Counterterrorism, and the Assistant to the President for Economic Policy on the effective use of the authorities under the Act; and

(2)  prepare and coordinate an annual report to the Congress pursuant to section 722(d) of the Act, 50 U.S.C. App. 2171(d).

(d)  The Secretary of Commerce, in cooperation with the Secretary of Defense, the Secretary of Homeland Security, and other agencies, shall:

(1)  analyze potential effects of national emergencies on actual production capability, taking into account the entire production system, including shortages of resources, and develop recommended preparedness measures to strengthen capabilities for production increases in national emergencies; and

(2)  perform industry analyses to assess capabilities of the industrial base to support the national defense, and develop policy recommendations to improve the international competitiveness of specific domestic industries and their abilities to meet national defense program needs.

PART II  –  PRIORITIES AND ALLOCATIONS

Sec201.  Priorities and Allocations Authorities.  (a)  The authority of the President conferred by section 101 of the Act, 50 U.S.C. App. 2071, to require acceptance and priority performance of contracts or orders (other than contracts of employment) to promote the national defense over performance of any other contracts or orders, and to allocate materials, services, and facilities as deemed necessary or appropriate to promote the national defense, is delegated to the following agency heads:

(1)  the Secretary of Agriculture with respect to food resources, food resource facilities, livestock resources, veterinary resources, plant health resources, and the domestic distribution of farm equipment and commercial fertilizer;

(2)  the Secretary of Energy with respect to all forms of energy;

(3)  the Secretary of Health and Human Services with respect to health resources;

(4)  the Secretary of Transportation with respect to all forms of civil transportation;

(5)  the Secretary of Defense with respect to water resources; and

(6)  the Secretary of Commerce with respect to all other materials, services, and facilities, including construction materials.

(b)  The Secretary of each agency delegated authority under subsection (a) of this section (resource departments) shall plan for and issue regulations to prioritize and allocate resources and establish standards and procedures by which the authority shall be used to promote the national defense, under both emergency and non-emergency conditions.  Each Secretary shall authorize the heads of other agencies, as appropriate, to place priority ratings on contracts and orders for materials, services, and facilities needed in support of programs approved under section 202 of this order.

(c)  Each resource department shall act, as necessary and appropriate, upon requests for special priorities assistance, as defined by section 801(l) of this order, in a time frame consistent with the urgency of the need at hand.  In situations where there are competing program requirements for limited resources, the resource department shall consult with the Secretary who made the required determination under section 202 of this order.  Such Secretary shall coordinate with and identify for the resource department which program requirements to prioritize on the basis of operational urgency.  In situations involving more than one Secretary making such a required determination under section 202 of this order, the Secretaries shall coordinate with and identify for the resource department which program requirements should receive priority on the basis of operational urgency.

(d)  If agreement cannot be reached between two such Secretaries, then the issue shall be referred to the President through the Assistant to the President and National Security Advisor and the Assistant to the President for Homeland Security and Counterterrorism.

(e)  The Secretary of each resource department, when necessary, shall make the finding required under section 101(b) of the Act, 50 U.S.C. App. 2071(b).  This finding shall be submitted for the President’s approval through the Assistant to the President and National Security Advisor and the Assistant to the President for Homeland Security and Counterterrorism.  Upon such approval, the Secretary of the resource department that made the finding may use the authority of section 101(a) of the Act, 50 U.S.C. App. 2071(a), to control the general distribution of any material (including applicable services) in the civilian market.

Sec202.  Determinations.  Except as provided in section 201(e) of this order, the authority delegated by section 201 of this order may be used only to support programs that have been determined in writing as necessary or appropriate to promote the national defense:

(a)  by the Secretary of Defense with respect to military production and construction, military assistance to foreign nations, military use of civil transportation, stockpiles managed by the Department of Defense, space, and directly related activities;

(b)  by the Secretary of Energy with respect to energy production and construction, distribution and use, and directly related activities; and

(c)  by the Secretary of Homeland Security with respect to all other national defense programs, including civil defense and continuity of Government.

Sec203.  Maximizing Domestic Energy Supplies.  The authorities of the President under section 101(c)(1) (2) of the Act, 50 U.S.C. App. 2071(c)(1) (2), are delegated to the Secretary of Commerce, with the exception that the authority to make findings that materials (including equipment), services, and facilities are critical and essential, as described in section 101(c)(2)(A) of the Act, 50 U.S.C. App. 2071(c)(2)(A), is delegated to the Secretary of Energy.

Sec204.  Chemical and Biological Warfare.  The authority of the President conferred by section 104(b) of the Act, 50 U.S.C. App. 2074(b), is delegated to the Secretary of Defense.  This authority may not be further delegated by the Secretary.

PART III  –  EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY

Sec301.  Loan Guarantees.  (a)  To reduce current or projected shortfalls of resources, critical technology items, or materials essential for the national defense, the head of each agency engaged in procurement for the national defense, as defined in section 801(h) of this order, is authorized pursuant to section 301 of the Act, 50 U.S.C. App. 2091, to guarantee loans by private institutions.

(b)  Each guaranteeing agency is designated and authorized to:  (1) act as fiscal agent in the making of its own guarantee contracts and in otherwise carrying out the purposes of section 301 of the Act; and (2) contract with any Federal Reserve Bank to assist the agency in serving as fiscal agent.

(c)  Terms and conditions of guarantees under this authority shall be determined in consultation with the Secretary of the Treasury and the Director of the Office of Management and Budget (OMB).  The guaranteeing agency is authorized, following such consultation, to prescribe:  (1) either specifically or by maximum limits or otherwise, rates of interest, guarantee and commitment fees, and other charges which may be made in connection with such guarantee contracts; and (2) regulations governing the forms and procedures (which shall be uniform to the extent practicable) to be utilized in connection therewith.

Sec302.  Loans.  To reduce current or projected shortfalls of resources, critical technology items, or materials essential for the national defense, the head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 302 of the Act, 50 U.S.C. App. 2092, to make loans thereunder.  Terms and conditions of loans under this authority shall be determined in consultation with the Secretary of the Treasury and the Director of OMB.

Sec303.  Additional Authorities.  (a)  To create, maintain, protect, expand, or restore domestic industrial base capabilities essential for the national defense, the head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303 of the Act, 50 U.S.C. App. 2093, to make provision for purchases of, or commitments to purchase, an industrial resource or a critical technology item for Government use or resale, and to make provision for the development of production capabilities, and for the increased use of emerging technologies in security program applications, and to enable rapid transition of emerging technologies.

(b)  Materials acquired under section 303 of the Act, 50 U.S.C. App. 2093, that exceed the needs of the programs under the Act may be transferred to the National Defense Stockpile, if, in the judgment of the Secretary of Defense as the National Defense Stockpile Manager, such transfers are in the public interest.

Sec304.  Subsidy Payments.  To ensure the supply of raw or nonprocessed materials from high cost sources, or to ensure maximum production or supply in any area at stable prices of any materials in light of a temporary increase in transportation cost, the head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303(c) of the Act, 50 U.S.C. App. 2093(c), to make subsidy payments, after consultation with the Secretary of the Treasury and the Director of OMB.

Sec305.  Determinations and Findings.  (a)  Pursuant to budget authority provided by an appropriations act in advance for credit assistance under section 301 or 302 of the Act, 50 U.S.C. App. 2091, 2092, and consistent with the Federal Credit Reform Act of 1990, as amended (FCRA), 2 U.S.C. 661 et seq., the head of each agency engaged in procurement for the national defense is delegated the authority to make the determinations set forth in sections 301(a)(2) and 302(b)(2) of the Act, in consultation with the Secretary making the required determination under section 202 of this order; provided, that such determinations shall be made after due consideration of the provisions of OMB Circular A 129 and the credit subsidy score for the relevant loan or loan guarantee as approved by OMB pursuant to FCRA.

(b)  Other than any determination by the President under section 303(a)(7)(b) of the Act, the head of each agency engaged in procurement for the national defense is delegated the authority to make the required determinations, judgments, certifications, findings, and notifications defined under section 303 of the Act, 50 U.S.C. App. 2093, in consultation with the Secretary making the required determination under section 202 of this order.

Sec306.  Strategic and Critical Materials.  The Secretary of Defense, and the Secretary of the Interior in consultation with the Secretary of Defense as the National Defense Stockpile Manager, are each delegated the authority of the President under section 303(a)(1)(B) of the Act, 50 U.S.C. App. 2093(a)(1)(B), to encourage the exploration, development, and mining of strategic and critical materials and other materials.

Sec307.  Substitutes.  The head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303(g) of the Act, 50 U.S.C. App. 2093(g), to make provision for the development of substitutes for strategic and critical materials, critical components, critical technology items, and other resources to aid the national defense.

Sec308.  Government-Owned Equipment.  The head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 303(e) of the Act, 50 U.S.C. App. 2093(e), to:

(a)  procure and install additional equipment, facilities, processes, or improvements to plants, factories, and other industrial facilities owned by the Federal Government and to procure and install Government owned equipment in plants, factories, or other industrial facilities owned by private persons;

(b)  provide for the modification or expansion of privately owned facilities, including the modification or improvement of production processes, when taking actions under sections 301, 302, or 303 of the Act, 50 U.S.C. App. 2091, 2092, 2093; and

(c)  sell or otherwise transfer equipment owned by the Federal Government and installed under section 303(e) of the Act, 50 U.S.C. App. 2093(e), to the owners of such plants, factories, or other industrial facilities.

Sec309.  Defense Production Act Fund.  The Secretary of Defense is designated the Defense Production Act Fund Manager, in accordance with section 304(f) of the Act, 50 U.S.C. App. 2094(f), and shall carry out the duties specified in section 304 of the Act, in consultation with the agency heads having approved, and appropriated funds for, projects under title III of the Act.

Sec310.  Critical Items.  The head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 107(b)(1) of the Act, 50 U.S.C. App. 2077(b)(1), to take appropriate action to ensure that critical components, critical technology items, essential materials, and industrial resources are available from reliable sources when needed to meet defense requirements during peacetime, graduated mobilization, and national emergency.  Appropriate action may include restricting contract solicitations to reliable sources, restricting contract solicitations to domestic sources (pursuant to statutory authority), stockpiling critical components, and developing substitutes for critical components or critical technology items.

Sec311.  Strengthening Domestic Capability.  The head of each agency engaged in procurement for the national defense is delegated the authority of the President under section 107(a) of the Act, 50 U.S.C. App. 2077(a), to utilize the authority of title III of the Act or any other provision of law to provide appropriate incentives to develop, maintain, modernize, restore, and expand the productive capacities of domestic sources for critical components, critical technology items, materials, and industrial resources essential for the execution of the national security strategy of the United States.

Sec312.  Modernization of Equipment.  The head of each agency engaged in procurement for the national defense, in accordance with section 108(b) of the Act, 50 U.S.C. App. 2078(b), may utilize the authority of title III of the Act to guarantee the purchase or lease of advance manufacturing equipment, and any related services with respect to any such equipment for purposes of the Act.  In considering title III projects, the head of each agency engaged in procurement for the national defense shall provide a strong preference for proposals submitted by a small business supplier or subcontractor in accordance with section 108(b)(2) of the Act, 50 U.S.C. App. 2078(b)(2).

PART IV  –  VOLUNTARY AGREEMENTS AND ADVISORY COMMITTEES

Sec401.  Delegations.  The authority of the President under sections 708(c) and (d) of the Act, 50 U.S.C. App. 2158(c), (d), is delegated to the heads of agencies otherwise delegated authority under this order.  The status of the use of such delegations shall be furnished to the Secretary of Homeland Security.

Sec402.  Advisory Committees.  The authority of the President under section 708(d) of the Act, 50 U.S.C. App. 2158(d), and delegated in section 401 of this order (relating to establishment of advisory committees) shall be exercised only after consultation with, and in accordance with, guidelines and procedures established by the Administrator of General Services.

Sec403.  Regulations.  The Secretary of Homeland Security, after approval of the Attorney General, and after consultation by the Attorney General with the Chairman of the Federal Trade Commission, shall promulgate rules pursuant to section 708(e) of the Act, 50 U.S.C. App. 2158(e), incorporating standards and procedures by which voluntary agreements and plans of action may be developed and carried out.  Such rules may be adopted by other agencies to fulfill the rulemaking requirement of section 708(e) of the Act, 50 U.S.C. App. 2158(e).

PART V  –  EMPLOYMENT OF PERSONNEL

Sec501.  National Defense Executive Reserve.  (a) In accordance with section 710(e) of the Act, 50 U.S.C. App. 2160(e), there is established in the executive branch a National Defense Executive Reserve (NDER) composed of persons of recognized expertise from various segments of the private sector and from Government (except full time Federal employees) for training for employment in executive positions in the Federal Government in the event of a national defense emergency.

(b)  The Secretary of Homeland Security shall issue necessary guidance for the NDER program, including appropriate guidance for establishment, recruitment, training, monitoring, and activation of NDER units and shall be responsible for the overall coordination of the NDER program.  The authority of the President under section 710(e) of the Act, 50 U.S.C. App. 2160(e), to determine periods of national defense emergency is delegated to the Secretary of Homeland Security.

(c)  The head of any agency may implement section 501(a) of this order with respect to NDER operations in such agency.

(d)  The head of each agency with an NDER unit may exercise the authority under section 703 of the Act, 50 U.S.C. App. 2153, to employ civilian personnel when activating all or a part of its NDER unit.  The exercise of this authority shall be subject to the provisions of sections 501(e) and (f) of this order and shall not be redelegated.

(e)  The head of an agency may activate an NDER unit, in whole or in part, upon the written determination of the Secretary of Homeland Security that an emergency affecting the national defense exists and that the activation of the unit is necessary to carry out the emergency program functions of the agency.

(f)  Prior to activating the NDER unit, the head of the agency shall notify, in writing, the Assistant to the President for Homeland Security and Counterterrorism of the impending activation.

Sec502.  Consultants.  The head of each agency otherwise delegated functions under this order is delegated the authority of the President under sections 710(b) and (c) of the Act, 50 U.S.C. App. 2160(b), (c), to employ persons of outstanding experience and ability without compensation and to employ experts, consultants, or organizations.  The authority delegated by this section may not be redelegated.

PART VI  –  LABOR REQUIREMENTS

Sec601.  Secretary of Labor.  (a)  The Secretary of Labor, in coordination with the Secretary of Defense and the heads of other agencies, as deemed appropriate by the Secretary of Labor, shall:

(1)  collect and maintain data necessary to make a continuing appraisal of the Nation’s workforce needs for purposes of national defense;

(2)  upon request by the Director of Selective Service, and in coordination with the Secretary of Defense, assist the Director of Selective Service in development of policies regulating the induction and deferment of persons for duty in the armed services;

(3)  upon request from the head of an agency with authority under this order, consult with that agency with respect to:  (i) the effect of contemplated actions on labor demand and utilization; (ii) the relation of labor demand to materials and facilities requirements; and (iii) such other matters as will assist in making the exercise of priority and allocations functions consistent with effective utilization and distribution of labor;

(4)  upon request from the head of an agency with authority under this order:  (i) formulate plans, programs, and policies for meeting the labor requirements of actions to be taken for national defense purposes; and (ii) estimate training needs to help address national defense requirements and promote necessary and appropriate training programs; and

(5)  develop and implement an effective labor management relations policy to support the activities and programs under this order, with the cooperation of other agencies as deemed appropriate by the Secretary of Labor, including the National Labor Relations Board, the Federal Labor Relations Authority, the National Mediation Board, and the Federal Mediation and Conciliation Service.

(b)  All agencies shall cooperate with the Secretary of Labor, upon request, for the purposes of this section, to the extent permitted by law.

PART VII  –  DEFENSE PRODUCTION ACT COMMITTEE

Sec701.  The Defense Production Act Committee.  (a)  The Defense Production Act Committee (Committee) shall be composed of the following members, in accordance with section 722(b) of the Act, 50 U.S.C. App. 2171(b):

(1)   The Secretary of State;

(2)   The Secretary of the Treasury;

(3)   The Secretary of Defense;

(4)   The Attorney General;

(5)   The Secretary of the Interior;

(6)   The Secretary of Agriculture;

(7)   The Secretary of Commerce;

(8)   The Secretary of Labor;

(9)   The Secretary of Health and Human Services;

(10)  The Secretary of Transportation;

(11)  The Secretary of Energy;

(12)  The Secretary of Homeland Security;

(13)  The Director of National Intelligence;

(14)  The Director of the Central Intelligence Agency;

(15)  The Chair of the Council of Economic Advisers;

(16)  The Administrator of the National Aeronautics and Space Administration; and

(17)  The Administrator of General Services.

(b)  The Director of OMB and the Director of the Office of Science and Technology Policy shall be invited to participate in all Committee meetings and activities in an advisory role.  The Chairperson, as designated by the President pursuant to section 722 of the Act, 50 U.S.C. App. 2171, may invite the heads of other agencies or offices to participate in Committee meetings and activities in an advisory role, as appropriate.

Sec702.  Offsets.  The Secretary of Commerce shall prepare and submit to the Congress the annual report required by section 723 of the Act, 50 U.S.C. App. 2172, in consultation with the Secretaries of State, the Treasury, Defense, and Labor, the United States Trade Representative, the Director of National Intelligence, and the heads of other agencies as appropriate.  The heads of agencies shall provide the Secretary of Commerce with such information as may be necessary for the effective performance of this function.

PART VIII  –  GENERAL PROVISIONS

Sec801.  Definitions.  In addition to the definitions in section 702 of the Act, 50 U.S.C. App. 2152, the following definitions apply throughout this order:

(a)  “Civil transportation” includes movement of persons and property by all modes of transportation in interstate, intrastate, or foreign commerce within the United States, its territories and possessions, and the District of Columbia, and related public storage and warehousing, ports, services, equipment and facilities, such as transportation carrier shop and repair facilities.  “Civil transportation” also shall include direction, control, and coordination of civil transportation capacity regardless of ownership.  “Civil transportation” shall not include transportation owned or controlled by the Department of Defense, use of petroleum and gas pipelines, and coal slurry pipelines used only to supply energy production facilities directly.

(b)  “Energy” means all forms of energy including petroleum, gas (both natural and manufactured), electricity, solid fuels (including all forms of coal, coke, coal chemicals, coal liquification, and coal gasification), solar, wind, other types of renewable energy, atomic energy, and the production, conservation, use, control, and distribution (including pipelines) of all of these forms of energy.

(c)  “Farm equipment” means equipment, machinery, and repair parts manufactured for use on farms in connection with the production or preparation for market use of food resources.

(d)  “Fertilizer” means any product or combination of products that contain one or more of the elements nitrogen, phosphorus, and potassium for use as a plant nutrient.

(e)  “Food resources” means all commodities and products, (simple, mixed, or compound), or complements to such commodities or products, that are capable of being ingested by either human beings or animals, irrespective of other uses to which such commodities or products may be put, at all stages of processing from the raw commodity to the products thereof in vendible form for human or animal consumption.  “Food resources” also means potable water packaged in commercially marketable containers, all starches, sugars, vegetable and animal or marine fats and oils, seed, cotton, hemp, and flax fiber, but does not mean any such material after it loses its identity as an agricultural commodity or agricultural product.

(f)  “Food resource facilities” means plants, machinery, vehicles (including on farm), and other facilities required for the production, processing, distribution, and storage (including cold storage) of food resources, and for the domestic distribution of farm equipment and fertilizer (excluding transportation thereof).

(g)  “Functions” include powers, duties, authority, responsibilities, and discretion.

(h)  “Head of each agency engaged in procurement for the national defense” means the heads of the Departments of State, Justice, the Interior, and Homeland Security, the Office of the Director of National Intelligence, the Central Intelligence Agency, the National Aeronautics and Space Administration, the General Services Administration, and all other agencies with authority delegated under section 201 of this order.

(i)  “Health resources” means drugs, biological products, medical devices, materials, facilities, health supplies, services and equipment required to diagnose, mitigate or prevent the impairment of, improve, treat, cure, or restore the physical or mental health conditions of the population.

(j)  “National defense” means programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, homeland security, stockpiling, space, and any directly related activity.  Such term includes emergency preparedness activities conducted pursuant to title VI of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5195 et seq., and critical infrastructure protection and restoration.

(k)  “Offsets” means compensation practices required as a condition of purchase in either government to government or commercial sales of defense articles and/or defense services as defined by the Arms Export Control Act, 22 U.S.C. 2751 et seq., and the International Traffic in Arms Regulations, 22 C.F.R. 120.1 130.17.

(l)  “Special priorities assistance” means action by resource departments to assist with expediting deliveries, placing rated orders, locating suppliers, resolving production or delivery conflicts between various rated orders, addressing problems that arise in the fulfillment of a rated order or other action authorized by a delegated agency, and determining the validity of rated orders.

(m)  “Strategic and critical materials” means materials (including energy) that (1) would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency, and (2) are not found or produced in the United States in sufficient quantities to meet such need and are vulnerable to the termination or reduction of the availability of the material.

(n)  “Water resources” means all usable water, from all sources, within the jurisdiction of the United States, that can be managed, controlled, and allocated to meet emergency requirements, except “water resources” does not include usable water that qualifies as “food resources.”

Sec802.  General.  (a)  Except as otherwise provided in section 802(c) of this order, the authorities vested in the President by title VII of the Act, 50 U.S.C. App. 2151 et seq., are delegated to the head of each agency in carrying out the delegated authorities under the Act and this order, by the Secretary of Labor in carrying out part VI of this order, and by the Secretary of the Treasury in exercising the functions assigned in Executive Order 11858, as amended.

(b)  The authorities that may be exercised and performed pursuant to section 802(a) of this order shall include:

(1)  the power to redelegate authorities, and to authorize the successive redelegation of authorities to agencies, officers, and employees of the Government; and

(2)  the power of subpoena under section 705 of the Act, 50 U.S.C. App. 2155, with respect to (i) authorities delegated in parts II, III, and section 702 of this order, and (ii) the functions assigned to the Secretary of the Treasury in Executive Order 11858, as amended, provided that the subpoena power referenced in subsections (i) and (ii) shall be utilized only after the scope and purpose of the investigation, inspection, or inquiry to which the subpoena relates have been defined either by the appropriate officer identified in section 802(a) of this order or by such other person or persons as the officer shall designate.

(c)  Excluded from the authorities delegated by section 802(a) of this order are authorities delegated by parts IV and V of this order, authorities in section 721 and 722 of the Act, 50 U.S.C. App. 2170 2171, and the authority with respect to fixing compensation under section 703 of the Act, 50 U.S.C. App. 2153.

Sec803.  Authority.  (a)  Executive Order 12919 of June 3, 1994, and sections 401(3) (4) of Executive Order 12656 of November 18, 1988, are revoked.  All other previously issued orders, regulations, rulings, certificates, directives, and other actions relating to any function affected by this order shall remain in effect except as they are inconsistent with this order or are subsequently amended or revoked under proper authority.  Nothing in this order shall affect the validity or force of anything done under previous delegations or other assignment of authority under the Act.

(b)  Nothing in this order shall affect the authorities assigned under Executive Order 11858 of May 7, 1975, as amended, except as provided in section 802 of this order.

(c)  Nothing in this order shall affect the authorities assigned under Executive Order 12472 of April 3, 1984, as amended.

Sec804.  General Provisions.  (a)  Nothing in this order shall be construed to impair or otherwise affect functions of the Director of OMB relating to budgetary, administrative, or legislative proposals.

(b)  This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c)  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

BARACK OBAMA

THE WHITE HOUSE,
March 16, 2012.

Why We Are Narrative Prey

Why We Are Narrative Prey

Analysis by

Jay B Gaskill

This article is also posted on The Policy Think Site at this LINK – http://jaygaskill.com/NarrativePrey.htm

“Controlling the Narrative

“At some level, the only thing that actually matters in modern politics is controlling the narrative in which events are explained. Frame this narrative to your benefit, and the battle is at least half won. Lose the framing war, and you face long odds.”

http://politicalprof.tumblr.com/post/11732709849/control-the-narrative

“Who’s really violent?

“Tips for controlling the narrative.

“Committees, caucuses, working groups and people planning specific occupy-related actions, workshops, meetings and events are invited to post to occupyoakland.org”

http://occupythe99percent.com/2012/02/whos-really-violent-tips-for-controlling-the-narrative/

During my former life of crime, I don’t recall any of the DA’s, PD’s, Judges, Cops, Probation Officers or Sheriff’s Deputies referring to somebody’s “narrative.” In my department, we called a client’s version of events his/her “story”, as in “Did you get a guilty story?”  A police report was a “report”.  A witness statement was a “statement”.  A sworn statement given under oath before a judicial officer was “testimony”.  Testimony could and often did conflict.

Facts were to be discovered, but sometimes remained unsettled or unresolved.  Factual versions were always potentially in dispute.  Decades have passed.  Nothing has changed.

“Just the facts, please,” when delivered by a law enforcement officer at the outset of a witness interrogation was meant to curb excursions into speculation, conclusions and deductions offered up as observed facts. In effect it was designed to facilitate the fact-collection process by reducing the normal conversational clutter that gets in the way of a clear account of what someone has seen, heard and observed at a particular place and time.

When lawyers and judges want to illustrate or discuss a particular a point of law, they adopt a fact pattern, meaning a set of events and circumstances taken as true for purposes of the discussion, the object being clarity… always clarity…then decision.

This was a capsule survey of the rational, time honored pattern of formal discourse that continues to work very well.

ENTER NARRATIVE-THINK

Where did this notion of “narrative” come in?  The short answer is that the term narrative arrived in the political discourse as an import from academia. There it is considered a useful construct because it tends to blur distinctions like, truth vs. falsity, honesty vs. dishonesty, fact vs. value and reality vs. fantasy. In a politically correct environment, one can safely write about the creation “narratives” of the Navaho peoples, the moral “narratives” of Moses and even the feminist “narratives” of the Celts, while preserving an Olympic, “judgment-free” sense of academic detachment.  This leaves the real judgments to faculty cocktail parties among trusted friends.

As political advertising devolved into ever shorter forms, political operatives began to notice that whether a particular candidacy or cause gathered traction seemed to depend on the degree that it was sailing with or against the prevailing news-framing narrative of the time. The domestic policy successes of progressive candidates and causes over the last half century or so has been greatly advanced because the dominant news-framing narrative was something like, “the inevitable march of human progress towards greater social and economic equality continues to be hindered by greed and special interests”. This is good example of a durable meta-narrative.  Of course, there are smaller bore versions.

Wartime produces its own meta-narratives.  WWII was based on the narrative that the Nazi-Fascist-Axis powers would destroy western civilization, unless we Allies banded together and stopped them once and for all.  It had the virtue of being true.  A second meta-narrative, that the communism of our Russian ally was just a temporarily exaggerated of the progressive system called socialism, was not true.

Political progressives have enjoyed a whole series of pet narratives as the overall political and economic conditions have changed.  The narratives of the hard working Joe-the-Plummer types have mutated as well.

Should US or IDF forces, or a combination thereof hit Iran’s atomic bomb making capabilities? It turns on the narrative.

Narratives have been used to conceal hidden agendas and obscure false assumptions under the “everybody knows that…” umbrella.  This is a trap.

Narratives are neither true, nor false; they are neither wise, nor unwise.  Narratives catch hold or they do not. Narratives are effective or they are not. Tweets, twitters and other instant messaging modalities are tools to be used to “shape the dominant narrative.”

Contrast, “What was his story” or “What were the findings?” with “What was his narrative?”  A narrative is a rhetorical device designed to work around “the truth problem” in an academic and popular culture in which a growing plurality of the players no longer believe that ascertainable truth exists, or that enduring values, moral precepts and standards are possible except maybe as social compromises.

I’ve just outlined here a social dysfunction of the first order. And the widespread use of the term narrative operates as both its consequence and its continuing enabler.

Politics has devolved into competing attempts to “control the dominant narrative”. This takes place in an information saturated communication environment for which all the rules have changed. A careful and accurate assessment of our real problems, our real perils and our real opportunities has been trumped by three other things: the pursuit of your attention, your assent and your uncritical acceptance of the trend line contained in the narrative being pushed.

We are narrative prey…because that is how they see us.  Think how little our common intelligence is actually respected.

The farther we fall from the kind of careful, commonsense rational discourse and thinking (of the type I illustrated in my law and justice examples above), and the more we stray from clear-headed moral principles in our dealings and actions (a topic that apparently is no longer routinely taught in the academy), the more we will be moved from the prey category to the farm animal one.

At least some prey can escape.

ESCAPE OF THE BUBBLE PEOPLE

We love our narratives, they give meaning to our desperate lives…but….
How about the facts for a change?

Andrew Benjamin

Idiocy: I refer here to the garden variety idiot-condition, not the clinical version. Idiocy consists in turning off one’s critical faculties in favor of some common narrative.  Adopting any locally prevailing narrative is easy; and inevitably you find yourself drawn to “like-minded” people, meaning people who have uncritically adopted the same narrative.

Jay Gaskill

THE NARRATIVE BUBBLE, PHASE ONE:

You began when you drew a virtual circle and went inside it.  You put all of the intelligent, well-meaning people inside that circle with you. You notice that they all agree with you. This will protect you from the idiots outside.  You fail to notice that you have changed your definition of “idiot”.  Now it means someone who fails to see the obvious truth of your adopted narrative.

A small, critical, fact-hungry part of you feels uncomfortable with this arrangement, but your discomfort is manageable…for now.

THE NARRATIVE BUBBLE, PHASE TWO:

You wake up one day to discover that some of the smart people have left your circle.  When the new people who share the original narrative arrive, you find them to be not nearly as smart as those who have left the circle.  You begin to discover that you are surrounded by idiots…and that until a short while ago, you were one of them.  Maybe, just maybe, you think, this was a broken narrative.

THE NARRATIVE BUBBLE, PHASE THREE:

You leave the circle –noting that you are now beginning to think of it as a bubble.  After knocking about in the real world, you discover that many of your key inside-the-circle assumptions do not correspond with the facts outside.  You are still encountering idiots, but you can see them more clearly than ever before.

THE NARRATIVE, PHASE FOUR:

You begin to encounter intelligent people who are willing to accept facts, but they won’t get inside a circle with you. They are not bubble people.  It turns out that once you are outside that original circle, you can’t find another one to enter without giving up part of your critical intelligence.

PHASE FIVE – BREAKING THE NARRATIVE SPELL

At this stage, you begin to enjoy life outside the bubble. You say – “Screw the narratives – let’s see if we can’t figure out what’s really going on”.

Congratulations: You are longer an unthinking liberal, a reflex conservative or prey for the bubble people.

Welcome to the discomfort zone.  You are in good company.  This is where the good leaders are made.

JBG

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March 14, 2012

This article was simultaneously posted on –

The Policy Think Site

The Dot 2 Dot Blog

The Out*lawyer’s Blog

Copyright © 2012 by Jay B Gaskill, Attorney at Law

As always, links, forwards and excerpts (with attribution) are welcome and encouraged.  For comments and all other permissions, please contact the author directly via email law@jaygaskill.com. The author is the California attorney who served as seventh Chief Public Defender for Alameda County, CA, headquartered in Oakland.