Wednesday, May 27, 2020

Sen. Richard Burr and The Shroud of Inside Information on Capitol Hill

Senator Richard Burr-NC
There is a persistent urban legend that elected officials are somehow privy to “inside information” that makes them all “very rich.”

If that is the case, I have never worked for one, or knew anyone, who did. I certainly never figured out how to use any inside information I was privy to as chief of staff to a US senator and a US congressman to get filthy rich quickly.

There are three problems with this urban legend. First, it is illegal for anyone in government, business or on Wall Street to use inside information not generally available to the public to enrich themselves and any trade over $1,000 is reported to congressional ethics. Second, much of what appears to be obvious inside information to the public later turns out to be incorrect. Finally, the private market seems to be more efficient at uncovering information — and reacting to it — than politicians, staffers and bureaucrats.

If you had to report publicly every stock trade you made over $1,000 (buy or sell), would you take any chances on it being illegal or unethical?

Only one member of Congress has been sent to prison for using inside information to buy or sell stocks, former Congressman Chris Collins of New York in January 2020. If any elected official, including Sen. Burr, is found to have abused any confidential information for stock trades, they deserve the same fate as Mr. Collins.

No one yet knows all the details behind Burr’s stock sales on February 13 of this year. Anyone who knows Richard or has worked with him over the years knows he keeps his own counsel and marches to the beat of his own drummer — many times to the exasperation of his staff and campaign consultants.

If he had asked for my advice when first elected in 1994, which he didn’t, I would have suggested that he place his stock portfolio in a blind trust to eliminate any appearance of impropriety since so much of politics is perception anyway.

Maybe he didn’t have a sufficiently large enough portfolio at age 38 to justify placing it in a blind trust then.

He does have a history of being very skittish about financial markets which makes me wish I had been as cautious as he was before the market crashed in 2008 and 2020.

In October 2008, Senator Burr told his wife to take money out of the ATM over the weekend in anticipation of the financial collapse that was about to unfold. He was not the chairman of the Senate Intelligence Committee at the time nor was he on any relevant commerce or financial services committee that had any oversight of the stock market.

He had a bad feeling about what was going on. The pending collapse was all over cable news on a second-by-breathless-second basis during what should be called “Black October.”

This year, Burr said in a Feb. 7 Fox News op-ed that “Americans are rightfully concerned about the coronavirus” and that the situation “is alarming.” That was a week before he initiated the stock trades that have drawn scrutiny.

Any one of us could have done the same thing based on the daily news we all were watching.  Perhaps Sen. Burr should become a financial manager when he retires and help people avoid having their portfolios sliced in half when something bad is about to happen.

Some partisan media and opponents speculated that Sen. Burr sold his DC house in a sweet deal in 2017. The Senate Ethics Committee reviewed all relevant documents before the sale and determined it was done in line with all Senate rules and ethical guidelines.

One ethics committee lawyer told me after calling their office almost weekly in 1985: “Let me give you some guidelines; if you think something may be unethical, it usually is. Don’t ask us to approve something unethical or illegal, because we won’t”.

Senate Ethics would have declined his house sale if it was not done properly in an arms-length transaction.

I have known Richard Burr for 28 years. He is one of the least pretentious and preening of any U.S. senator who has ever served. He drove himself to meetings around the state in a 1998 Honda Accord without an entourage in a black Escalade following him around. He is not fabulously wealthy like many other senators either through inheritance or marriage, or due to business or real estate success.

In short, Burr is like most of the rest of us. Except he chose to run for public office and serve his state and country to the best of his ability for the past 26 years. I hope his stock trades were based on his past practices, public information and the information he shared publicly.

(first published in North State Journal 5/27/20)
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Wednesday, May 20, 2020

The “Μολών λαβέ” Attitude Behind Civil Disobedience

"Come and Take Them"

King Xerxes of Persia surrounded Spartan King Leonidas and 7,000 of his remaining warriors with 300,000 men at the narrow pass of Thermopylae during the waning years of the Peloponnesian War. 

According to Plutarch, he sent a message demanding the Spartans surrender or face certain death.

“When Xerxes wrote again, ‘Hand over your arms,’ (Leonidas) wrote in reply, ‘Μολών λαβέ.’”

Μολών λαβέ” (molon labe) is Greek for “Come and take them.” It has become a rallying cry for defiance ever since.

The brave sacrifice of the Spartans bought a few extra days for the citizens of Athens to evacuate before the Persians ransacked the city, after destroying the Spartan army. Not only did it save Athens to fight another day, which it did two years later when their navy defeated the Persians at the Battle of Salamis, it saved Western civilization as we know it. 

Μολών λαβέ does not always have to be associated with armed conflict. Such acts of defiance have been expressed in peaceful non-violent civil disobedience such as Gandhi preached during the fight for Indian independence from the British during the 1940s and when Dr. Martin Luther King Jr. led the civil rights movement in America in the 1960s.

Small business owners are adopting the Spartan μολών λαβέ spirit by opening up their hair salons, tattoo parlors and retail shops around the country in defiance of government stay-at-home orders. 

They are not doing so because they hate government or the politicians issuing the orders, but because they are about to lose their businesses perhaps forever. They want to be safe and healthy like any other person, but they just can’t stay closed forever, especially when big box stores such as Costco and Walmart have remained open for the past two months.

Twenty-six of North Carolina’s 100 counties have not recorded a COVID19-related death out of the 679 recorded to date. 87% of the people who have succumbed to COVID19 are over the age of 65 with significant comorbid diseases; 58% of total deaths have occurred in nursing homes. People know the population most vulnerable to COVID-19 are those who live in nursing homes, not on the manufacturing floor, in a barber shop, in a church or in a restaurant.

North Carolina has the ninth largest population but is 34th in terms of deaths per 100,000 people (6 per 100k) which is comparable to remote states and territories such as Hawaii, Alaska, Guam and the Virgin Islands. In that regard, government authorities can point to such statistics and claim their policies were a major success.

One restaurant owner has told authorities, “Come on down and get my keys to the restaurant. You can run it and try to generate the profits you need me to make so I can pay the taxes you need to keep the government you are leading operating at full speed since no state employee has been laid off yet.”

They have not come to get his keys. It would be impossible for the municipal police forces and county sheriff departments to arrest every owner who opens up their business before the appointed time.

Little did Rosa Parks know in 1955 how much she would influence the civil rights movement when she refused to give up her seat on a Montgomery Alabama bus to a white passenger. “At the time I was arrested, I had no idea it would turn into this. It was just a day like any other day. The only thing that made it significant was that the masses of the people joined in.”

She had had enough. If we pass this upcoming Memorial Day weekend without a significant lessening of restrictions, the μολών λαβέ attitude of the ancient Greeks will rise up in masses of people, not just a brave few.

(first published in North State Journal 5/20/20)

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Wednesday, May 13, 2020

When The White House Has Too Many People at The FBI and CIA On Speed-Dial

"I, State Your Name, Do Solemnly Swear To
Tell The Whole Truth About What Went On
In the Obama White House!"
There have been many political scandals in American history. Teapot Dome under President Warren G. Harding was the one most people remember from childhood history books, before, of course, Watergate.
Are we witnessing a third great scandal to be known forever as “Obamagate”?
Perhaps the most troubling aspect of Watergate was not the crime itself but the willful abuse of the CIA and FBI by the Nixon White House to coverup the crime. Remember: It was not the crime but the cover-up that brought down the Nixon White House.
We have to find a way to distance the FBI and the CIA from the political whims of the White House and build a protective wall to prevent future presidential abuse of our top law enforcement and intelligence-gathering systems. At the very least, America deserves independent directors to be appointed who have the integrity to resign when asked by the president to engage in any questionable activity not vital to the national security interest.
Former FBI Director Elliott Richardson and Attorney General William Ruckelshaus resigned rather than fire special prosecutor Archibald Cox during Watergate. People who had any shred of dignity and personal integrity used to do such things on the behalf of the nation.
Watergate was a cover-up of a failed third-rate burglary during a political campaign. Perjury and obstruction of justice were the two most prominent charges brought against 69 government officials in the Nixon Administration. Forty-eight went to prison.
A team of former CIA operatives led by E. Howard Hunt and G. Gordon Liddy, specializing in campaign “dirty tricks,” tried to bug the headquarters of the Democratic National Committee in the Watergate Hotel complex in Washington, DC on June 17, 1972. President Nixon was widely expected to trounce George McGovern in the election which makes the burglary attempt even more strange and idiotic.
When the “plumbers,” as they were called, were caught, a two-year drama played out on the national stage which proved that Nixon and his team in the White House did everything possible to cover-up the burglary. Nixon resigned on Aug. 9, 1974, after the “smoking gun” audio tape was released with Nixon discussing a plan with chief of staff H.R. Haldeman to get the CIA to interfere with the initial FBI investigation.
The fact that the Nixon White House was able to wield presidential power to force the directors of the FBI and CIA to help advance his personal political interests was, and still is, unconscionable.
We do not live in a Gestapo state. We do not want any elected official to have carte blanche power to use the highest levels of law enforcement to protect their political interests. Having different political opinions and strategies is not so crucial to our future that any administration should be able to appropriate the investigatory powers of the FBI and CIA to frustrate the other side during a campaign or a presidential transition.
With each new release of government documents, it is becoming crystal clear that the Obama Administration had the same level of control and power over the FBI and CIA as President Nixon did in 1972. They are on the record detailing efforts to attempt to undermine President-elect Trump and his team from the moment he was elected in November and reporting back to the White House with progress reports.
If proven to be true, as Watergate was proven to be true ultimately, the effort to subvert Trump’s incoming administration will make Watergate look like a food fight at a kindergarten picnic. Never before has an outgoing administration engaged in so many cloak and dagger strategies and tactics to frustrate the administration of the incoming president-elect, in essence, as part of “The Resistance.”
The Democrats and the liberal media have presented their side of the story that Trump is crooked like “Tricky Dick” Nixon and failed to remove him from office. It is now time to watch our judicial system and see if it can bring forth unassailable evidence and sworn testimony that the Obama White House, in conjunction with the full power of the CIA and FBI like Nixon before him, tried to subvert the peaceful transition of power to Donald Trump.
Obama Administration officials, James Comey, John Brennan and the rest of the crew could have apologized on Day One of the Trump Administration for deliberately following false leads and falsified information.
But they didn’t. Now America wants to see if there really was a cover-up that would make people forget there ever was a Teapot Dome or Watergate scandal in our history.

(first published in North State Journal 5/13/20)

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Wednesday, May 6, 2020

Milton Friedman Must Be Rolling In His Grave

"Man. I woulda thought the US would have imploded
under massive inflation by now!

I have a confession to make. 

For the past 40 years, for some odd reason, I have been concerned about the high level of federal spending. I was raised by great mentors on a diet of sound fiscal management, control spending first, PAYGO, discretionary caps, Gramm-Rudman-Hollings, give the president line-item veto powers, “don’t waste one precious dollar from the average taxpayer!” 

I was heavily indoctrinated in the belief that huge annual budget deficits led to (you name it): high interest rates, sky-high inflation rates, currency devaluation, crowding out of private-sector borrowing, financial destruction and, for all I knew, the heartbreak of psoriasis and eczema. 

None of the predicted economic catastrophes ever happened. Inflation was 13.5% in 1980; prime interest rates hit 21% in June 1982.  

Inflation is near zero today. So are real interest rates. We have violated every common-sense, rational, conservative balanced-budget principle and deficit-spent our way from $3.4 trillion in publicly-held debt in 2001 to $19 trillion today. 

The national debt of $980 billion in 1980 represented over 30% of GDP. At $19 trillion of debt and still counting, it represents 86% of GDP today. 

We were terrified of such rampant deficit-spending and fiscal irresponsibility when we graduated from college back then. The economy was stuck in “stagflation” — stagnant economic growth plus high inflation — the worst of both worlds.  Stagflation was not entirely the fault of President Jimmy Carter, but his policies and those of the heavily Democratic-controlled Congress and Senate, plus the Federal Reserve between 1977 and 1981, we were told, surely exacerbated the severity of both. 

To avoid more “stagflation,” unemployment and negligible prosperity going forward, Republicans acted like the conservatives they were back then and tried to hold the line on federal spending to balance the budget and stop adding exorbitant amounts of debt that we were convinced would lead to hyperinflation and sky-high interest rates. 

It wasn’t until the second term of President Bill Clinton that America experienced four straight balanced budgets from 1998-2001 when a Republican Congress forced his hand to sign a welfare reform bill first and then the 1997 Balanced Budget Act. 

Those were halcyon days for responsible common-sense folks. Dynasty sort of years comparable to four Final Fours and four national title banners. CBO predicted budget surpluses for as far as the eye could see in 2000; Social Security would be solvent for 100 years, and life would be perfect in America. 

And then, 9/11 hit. And then the Bush tax cuts. And then the Greatest Recession since the 1930. And then Obamacare.  

And now this Coronavirus-induced economic plunge off the cliff and government budget-busting without precedent outside of world war. Thirty million Americans were not just laid-off but thrown out of the work door literally overnight. 

As in every crisis in the past, supply-side theorists from the right extol tax cuts, and Keynesians from the left extol the virtues of massive spending to solve all our problems. Monetarists say “expand the Federal Reserve balance sheet” with abandon to provide liquidity to the banking system, which is all done outside of the “official” national debt totals that keep going through the roof. 

Budget deficits first exceeded $1 trillion in 2008 under Bush 43. President Obama presided over four straight trillion-dollar deficits in his first term. The federal deficit this year alone will be close to $3.7 trillion, and we are barely in the fourth inning.  

Why haven’t interest rates exploded to 21% at any time since 1982? Why hasn’t inflation exploded to 13.5% like in 1980? If nothing bad is going to happen, let’s cut everyone’s taxes to near zero, spend $100 trillion and give everyone free healthcare and education — filet mignon and caviar in every kitchen and a Rolls-Royce in every garage. 

Maybe Paul Krugman is right. Maybe we really can deficit-spend the heck out of anything in America. 

Poor Milton Friedman. If he was cremated instead of being laid to rest, then his dust molecules must be bouncing around like Mexican jumping beans, because none of his warnings have come true. 

Yet, that is. 

(first published in North State Journal 5/6/20)
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