Josh Gerstein on the Courts, Transparency, & More
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WH preserves secrecy option for tax panel
I think I have a better idea now why the White House was so sensitive about my story Monday questioning the legality and wisdom of secret meetings held by subcommittees of President Obama's economic advisory panel.
It was because officials planned to announce within days that Obama intended to use just such a subcommittee to prepare his tax simplification and enforcement initiative. And it looks like they're laying the groundwork to allow the new tax panel to do its work behind closed doors.
The announcement of the tax reform task force came Wednesday from Office of Management and Budget Director Peter Orszag. He was quite careful as he described how the tax reform panel would be constituted from the 16-member advisory board, headed by former Federal Reserve chief Paul Volcker.
"The task force on tax reform that will be formed by the Volcker board will be examining ways of being even more aggressive on reducing the tax gap," Orszag told reporters in a conference call Wednesday morning. "I would also note that the president believes that the following prospective members of the board would be especially well-suited to carry out the mission of the task reform task force, in particular Laura Tyson; Roger Ferguson, the CEO of TIAA-CREF [a teachers' pension fund]; Bill Donaldson, the former SEC Chairman; and Marty Feldstein, a professor of economics at Harvard University. ... That task force will report back to the board, and the full board will report back to the president with options for tax reform by Friday, December 4th."
"My understanding is the president can signal his desire for those four people to serve on the task force, but it is up to the PERAB itself to appoint those members," Orszag said.
At another briefing for reporters later in the day, Orszag made clear that legalities drove the unusual phrasing he used about the president thinking certain members were "especially well suited" to the tax reform task.
"There is a legal issue involved in naming a subpanel or task force of the PERAB. I'm not an attorney, so I don't want to speak to it. But what I'm told I'm allowed to say is that the president would favor the naming of those people but ultimately the PERAB itself has to appoint a task force or subpanel," Orszag said.
"It's a formality…a legal formality which I'm being very careful about," Orszag said. "I consider it a formal announcement [but] in terms of formally constituting the task force, the announcement would come from the PERAB."
Asked Thursday whether the tax subcommittee planned to do its business in public or private, White House spokesperson Jen Psaki said, "The board will provide periodic updates and seek public input."
That said, the legalities Orszag alluded to all seem to be aimed at allowing the tax panel to meet in private. The reason to have the task force appointed by the advisory board and not Obama is that, if Obama names them and gives them an assignment, they are a freestanding panel subject to the rules of the Federal Advisory Committee Act, including advance public notice of meetings and public meetings in most cases. Having them give their report to the full 16-member advisory board also insulates the group. By not reporting directly to Obama, the tax reform task force will be able to work behind closed doors.
However, there are potential complications. Sending the task force's report to the full board, which will meet publicly and includes CEOs and union leaders not represented on the smaller panel, means the potential for dissent and a split vote on whatever the subcommittee proposes. Of course, there is likely to be some dissent on the smaller panel, too. Feldstein has already written an op-ed denouncing Obama's proposal to limit charitable deductions.
The legal standards here come in large part from a 1983 federal appeals court decision on a challenge to secret task forces of an anti-government-waste board best known as the Grace Commission and set up by President Reagan. The court said that task forces "could well" be subject to the open meeting requirements if their "reports are transmitted directly to federal decision makers before they are made publicly available" or if the main board "is merely 'rubber stamping' the task forces' recommendations with little or no independent consideration."
Of course, these standards are like Swiss cheese for those intent on secrecy. Task force members could bounce tentative recommendations off of the White House through a variety of channels while not technically sending a "report." And the advisory board's votes on the tax plans could be carefully counted in advance while formally tallied at a meeting that doesn't give outward evidence of "rubber stamping."
But Obama has promised to create "an unprecedented level of openness in Government." Given that Democratic lawmakers have called the subcommittee exception a "loophole" in federal law and that a House committee voted early this month for a bill that would close that "loophole," it may look a bit odd if the White House tries to leap straight into a "loophole" their congressional colleagues are trying to close.
GOP transparency push seen as attack on Michelle O.
House Republicans are pressing for a change in federal law that could force Michelle Obama and future first ladies to do more of their policy work in public. But Democrats warn President Obama may take the attempt personally "as an attack on his wife."
The GOP effort is being led by the ranking member of the House Oversight and Government Reform Committee, Rep. Darrell Issa (R-Calif.), whose initial salvo was rebuffed recently at a contentious committee markup session. Under Issa's amendment, any government policy group that Mrs. Obama or another first spouse regularly participates in would be subject to a law requiring meetings to be announced in advance and, in most instances, public.
At the March 10 markup, Issa's proposal triggered more than 35 minutes of impassioned debate. I've linked video of the exchange below, but Democrats clearly seemed to be recoiling at what some viewed as an effort to target Mrs. Obama.
Rep. William Clay (D-Mo.) suggested President Obama might see the legislation as a personal provocation that could trigger a fight. "Let me ... caution my friend from California that, as you're probably aware, this president is very guarded about his family," Clay said. "I think that, no matter what you're intending with this amendment, that the president may view this as an attack on his wife. And I'm just saying, you know, let's be careful--if we want to open up that can of worms. Let's not go in that direction."
"We are trying actually to protect the historic role of the first lady," Issa insisted, repeatedly invoking the "transparency" mantra of the Obama administration. "I believe this is open government at its finest."
"What is protection to one person may be just the opposite to another," Rep. Elijah Cummings (D-Md.) observed.
Issa's amendment would have effectively overturned a 1993 federal appeals court decision which held that First Lady Hillary Clinton could be considered the equivalent of a federal employee. The court ruled that Clinton's involvement in a presidential Health Care Task Force was not enough to render the group an outside advisory panel which had to meet in public and disclose its records. After the health reform effort cratered, the Clinton Administration gave up the legal fight and released the records.
"We should have a set of rules that future presidents, vice presidents, first ladies and spouses of vice presidents, understand what their do's and don't's are. Can they have an open meeting? Can they have a closed meeting?" Issa said. "Perhaps we need to get to 1600 Pennsylvania Avenue for an opinion."
Democrats were skeptical about why Republicans were pressing the issue in the first year of a new Democratic presidency. However, Issa said the GOP actually proposed changing the law early last year, when Republican President George W. Bush and his wife Laura were in the White House.
Issa ultimately withdrew his amendment, which he had offered on a bill aimed at closing loopholes in the Federal Advisory Committee Act. Aides told POLITICO that he plans to reintroduce the spousal provision either as an amendment to another bill or as freestanding legislation.
A spokesperson for Mrs. Obama, Katie McCormick-Lelyveld, said this week that her office had no comment on the proposed legislation.
The House hearing earlier this month was covered by CQ and Congress Daily, but they did not make their reports freely available on the web.
The video, as recorded by the committee's GOP staff, is after the jump. Discussion of the first ladies' amendment begins at about 10:57.
Summers to brief guests at $5,000-a-head WSJ conference
National Economic Adviser Larry Summers conducted a private briefing at the White House Tuesday afternoon for about 100 financial industry executives attending a $5,000-a-head conference sponsored by the Wall Street Journal.
Organizers said the Summers session is off the record, though some from the Journal and its parent company, Dow Jones, are expected to be present.
The White House said the event is considered "closed press" and one in a series of briefings by administration officials. This session has been planned for some time. The list of participants suggests that the administration's new plan for a public-private partnership to buy banks' toxic assets was likely to be discussed.
Treasury Secretary Tim Geithner spoke to the two-day Future of Finance Initiative conference on Monday night, but that session, like others held at a Washington hotel, was open to press coverage. Reporters from various news organizations were also allowed in Tuesday as attendees heard from Sen. Evan Bayh (D-Ind.), Rep. Carolyn Maloney (D-N.Y.), and former Federal Reserve Chairman and current Presidential Economic Recovery Advisory Board Chairman Paul Volcker.
Conference attendees were taken on buses from the Park Hyatt hotel in Northwest Washington to the White House for the briefing.
Additional Reporting: Carol E. Lee
Obama: No sympathy for pricey states
I wrote couple of articles recently about the state-v.-state dynamics of President Obama's budget proposals. One, here, was about how blue states which supported Obama in the election, like New York and California, are likely to foot much of the bill for insuring the uninsured in states across the south which didn't support Obama, like Texas. Another, here, was about how Obama's plan to limit state tax deductions will have the most bite in places which have big state tax bills, like the northeast, Maryland, D.C. and California.
One of the issues that comes up in both these discussions is the argument that places with a high cost of living are unfairly impacted by federally-set income thresholds for health insurance assistance (such as three times the federal poverty line for the S-CHIP children's program) and by phase-outs for various tax benefits and credits (often around $130,000 to $200,000 a couple). The idea is that an income of $150,000 is enough to live like a king in Birmingham, Ala., but can be tough to raise a family on in Manhattan or the San Francisco Bay area.
Guess what? Obama doesn't buy it.
At a town hall meeting in Los Angeles last week, a self-described Obama supporter put the premise to the chief executive pretty eloquently, saying:
We have one of the highest costs of living in the U.S. here. A household income that is considered middle or upper class in any other state wouldn't go very far here. However, the tax laws and the recent economic stimulus address household income on a national level and do not take into account the cost of living by state, as far as I know….So what I want to know is what can be done to address California's …unique situation and stimulate the economy here in California, and like you mentioned, just be prosperous into the future -- keeping in mind again, household incomes, and we're not really apples-to-apples with other states, but we're taxed as if we are.
Obama gave a lengthy answer, but only a portion of it directly answered the woman's question:
Obviously, there's differentiation between states both in terms of cost of living, but also in terms of salaries. And generally, those are taken into account through the deductions that are available through the tax code. I would say that the biggest problem…in our tax code is not the difference between how Californians are treated and people in Idaho are treated. The bigger difference actually has to do with how people inside California are treated by the tax code.
The president went on to cite Warren Buffett's refrain about how his housekeeper pays a higher total tax rate on her income than he does. The upshot was Obama sees the big divide in tax policy as that between rich-and-poor. Geographic inequities don't concern him much, or he doesn't believe they exist.
He made a similar point in the 60 Minutes interview aired Sunday when he said he wasn't worried about New Yorkers who doubted they could get good people to manage investments for $250,000 a year. "They need to spend a little time outside of New York. Because-- you know, if you go to North Dakota, or you go to Iowa, or you go to Arkansas, where folks would be thrilled to be making $75,000 a year-- without a bonus, then I think they'd get a sense of why people are frustrated," the president said.
Why It Matters: As the budget fight plays out in coming weeks, don't expect Obama to be very sympathetic to complaints that his proposal to pay for health care by limiting itemized deductions will hurt states like New York and California. His attitude also suggests that when those states start demanding a big chunk of the universal-health-insurance pie, he is likely to hold the line, insisting that more funds go to the states which have big populations of uninsured rather than to paying states for doing what they're already doing.
For a more comical treatment of this issue of geographic variability in the cost of living, see this article on the struggle to survive in New York City on half a million a year.
Rosen v. AIPAC
Earlier this month, a longtime employee fired from the American Israel Public Affairs Committee, Steve Rosen, filed a slander suit against the group. As a public service, I'm posting a copy of the suit here.
Rosen and another former AIPAC staffer, Keith Weissman, are awaiting trial in federal court on charges that they violated the Espionage Act by conspiring to obtain classified information and distribute it to journalists, diplomats and others.
In the suit, Rosen alleges that he was repeatedly slandered by AIPAC when it explained his firing by publicly claiming that he violated the group's standards. Rosen, who worked for AIPAC for nearly 23 years, asserts that the group essentially threw him over the side in order to curry favor with federal prosecutors who had the organization in their crosshairs. He says he didn't violate the law or AIPAC's rules and he insists that the group's leaders knew about all his activities.
I asked AIPAC for comment on Rosen's suit. Patrick Dorton, who serves as the group's spokesperson on the matter and is also named as a defendant in the slander suit, offered the following: "The complaint paints a false picture of what happened. The organization intends to defend itself vigorously. AIPAC made all decisions in this situation with a determination to do the right thing."
Some may wonder why Rosen, who worked as the group's director of research and information and later as its director of foreign policy issues, decided to sue for defamation rather than wrongful dismissal. The suit does not indicate that Rosen had any contract or employment agreement with AIPAC ,so it is likely the group had the right to terminate him for any reason not expressly prohibited by law. (It couldn't fire him because of his race, religion, or in the District of Columbia, for example, his personal appearance.)
Rosen and Weissman were fired in March 2005, more than six months after word of the FBI investigation into AIPAC was broken by CBS. The men have pled not guilty in the criminal case, which has been pending since 2005. A trial is set for June.
More on Why Obama Should Care About Your 401(k)
I suggested recently that the White House's tangle-with-CNBC gambit may not have been the best idea politically. Now, some evidence of that from a poll taken this month by NPR.
The survey (see page 13) showed 22% of Americans rated the decline of the stock market as the most important economic issue they face, while only 15% said fear of losing their own job. Now, if you add the 15% with the 9% who worried about getting a good job, one could argue that's just as big a cohort as those who are primarily worried about the market.
Still, I think it underscores the notion that the Obama folks would do better to express empathy for those who have taken a bath in the market. Also worth noting that while the Dow is about 10% below where i was when Obama was sworn in, the broader Nasdaq market is back roughly to where par. The biggest losses in recent years clearly came under Bush, not Obama.
It's also interesting that the poll showed the housing bust was way down on the list of concerns. Only 5% said they were mainly worried about the housing market and only 1% said they worried about losing their home.
The survey was circulated this afternoon by House Minority Leader John Boehner (R-OH).
It may not be great news for the GOP, though. Their number one issue, tax cuts, didn't rate too high. Only 12% said high taxes were their biggest economic fear.
Obama Wants to Save Your 401(k)
I was struck by a portion of President Obama's comments today, as he left for California, in which he said his efforts to prevent catastrophic failure in the financial system were driven at least in part by a concern about the retirement accounts of average Americans.
My interest is not protecting banks. My interest is protecting the American people; the people's 401(k)s; ordinary folks who have a credit line with a bank for their small business; people whose pension funds are invested in some of these financial institutions. The prospect of all of that unraveling would have been unacceptable -- an unacceptable risk.
Obama's reference to protecting 401(k) retirement accounts jumped out at me because it seemed like a very different attitude to the one the administration expressed as the stock market was in freefall a few weeks ago. At that time, the White House's public pronouncements dismissed the recent stock drops as mere gyrations. There were even suggestions that those really worried about such things were derivatives traders or Wall Street types hoping to make a quick buck on a government bank bailout.
Throughout the stimulus debate, the White House talked about millions of lost jobs. It said much less about the trillions lost in the stock market. I think I understand why, but I wonder if for some older people, even people who are far from rich, the market drop might be worse even than losing a job. A 35-year-old worker who loses a job is likely to find another doing something, albeit at a lower salary. However, a 67-year-old retiree who thought a year ago that he or she had $300,000 to retire on is arguably in a much more serious fix. With a lot of index funds off about 50% that $300,000 might now be $150,000. That would be jarring enough, but interest rates are also much lower now than a year or 18 months ago, down from perhaps 4.5% to about 2% or less. So, assuming a risk-averse retiree moved his or her money from the market into the bank, the interest has gone from what could have been about $14,000 a year to about $3000 a year. That's a huge drop in money many people planned to use to supplement Social Security and pay the bills. Of course, for those nearing retirement it might mean delaying retirement for several years.
Press Secretary Robert Gibbs did make a sympathetic reference back in January to Americans opening their 401(k) statements, but that was before the big market drops which led to a kind of us-v-them White House approach to Wall Street. I don't have much truck for arguments that because 60% of Americans own stock we should cut all investment-related taxes to zero. That would be a huge boon for the wealthy, who obviously own a lot more stock than truly middle-class Americans. But some regular statements of concern for those who saw their retirement funds get severely whacked might be politically wise. Wall Street's problems are now Main Street's problems in more ways than one.
DOJ Skips Challenge to Aipac Ruling
The Justice Department is passing up a chance to challenge a key court ruling it lost last month in its criminal case against two pro-Israel lobbyists accused of trafficking in classified information.
On Feb. 24, the 4th Circuit Court of Appeals upheld trial court rulings allowing the former employees of the American Israel Public Affairs Committee, Steven Rosen and Keith Weissman, to introduce classified FBI and State Department reports they contend are relevant to their defense. The pair, who have pled not guilty, are accused of conspiring to obtain classified information and relay it to journalists, diplomats and others.
The government had until last week to ask the full 11-judge en banc bench of the appeals court to take up the issues. There was some reason to think an en banc rehearing might be sought or granted, since the court's full bench used a similar situation back in 1985 to deliver a seminal en banc opinion on the use of classified information at trial.
However, this time, the government seems to have decided to stick with the hand they were dealt. A spokesman for the U.S. Attorney's office in Alexandria, Va., declined to comment beyond saying prosecutors would respond in court.
Why It Matters: By not asking for an en banc hearing, the government has removed one of the last obstacles standing in the way of a trial for Rosen and Weissman, who were indicted way back in 2005. They've had something like twenty trial dates scheduled and canceled since. Now they're on for June 2.
The prosecution is significant because Rosen and Weissman arguably did little more in gathering the allegedly classified information from government employees than many reporters do each day when they approach official sources. One official who provided information to the pair, Lawrence Franklin, pleaded guilty and is cooperating with prosecutors.
WH counsel in settlement talks on e-mail suits
President Obama's White House Counsel's Office is in settlement negotiations to resolve two lawsuits over millions of official White House e-mails that may have gone missing during President Bush's tenure.
In 2007, two groups, the National Security Archive and Citizens for Responsibility and Ethics in Washington, sued after reports emerged that some White House e-mails were not properly archived. The organizations demanded that all back-up media and hard drives be preserved until any missing e-mails were accounted for.
Court papers the Justice Department filed with a federal judge in Washington say that a settlement is under discussion.
"Additional time is required to allow the parties ample opportunity to explore whether the issues raised in these consolidated cases may be resolved through settlement rather than continued litigation," the Justice Department wrote in a legal filing Friday. Earlier filings made no mention of the possibility of settlement.
"They reached out to us and sent us a smiley face," Tom Blanton, the director of the National Security Archive, confirmed Monday in remarks to a conference on government secrecy and transparency at American University.
"We are working with lawyers from the White House and DOJ to try to find a way to resolve the issues without further litigation," Anne Weismann, an attorney for CREW, told POLITICO. "I am cautiously optimistic but it is far too early to say for sure whether we will succeed."
Spokesmen for the White House and the Justice Department had no immediate comment on the settlement talks.
Why It Matters: The cases had been highlighted as examples of how Obama was standing by the Bush Administration's penchant for secrecy. There are plenty of examples of that, but the settlement talks show these White House e-mail suits don't really fit that mold.
Josh's Take: Press reports last month that the Obama Administration was adopting the defiant Bush strategy were overheated, in part due to a CREW press release which suggested that was going on, though never quite saying so. In fact, the only legal arguments against the cases after Obama took office were filed on January 21, 2009. That was one day after the inauguration, before many of the his new appointees were in place at Justice, and the very same day Obama issued a directive promising "an unprecedented level of openness in government."
"I basically took that [court] filing as a kind of sucker punch by the Department of Justice on the new Obama people--but they're responsible for it," Blanton said Monday. "Somebody in the transition process agreed to that."
Historical Note: The first indications that about the e-mail problems came in 2006 when a court filing in the prosecution of vice presidential aide Lewis Libby showed that the special prosecutor on the case, Patrick Fitzgerald, said his investigators had determined that not all White House emails were properly archived.
Welcome to Under the Radar
Welcome to my new blog devoted to stories that have not yet broken through in the mainstream press or just aren't getting the attention they deserve. I also plan to use this space to indulge my own interests in the courts, the Justice Department, the First Amendment, classified information, campaign finance, transparency, and open government laws like the Freedom of Information Act.
Since I'm currently covering the White House for POLITICO, you'll probably see a smattering of posts about doings there or by the Obama Administration more broadly.
I do plan to point out when people in the public eye don't appear to be living up to their words and promises. That said, I also hope to inject a tad of humor here from time to time. Or at least what I think passes for humor.
If you have thoughts on stories that are flying under the radar, I hope you'll consider sending them along to me at jgerstein@politico.com. And don't hesitate to be in touch if you think I've gotten something wrong or if you just want to offer another perspective.
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