Amy Coney Barrett and the Problem of Conservative Judicial Deference

AmyConeyBarrettCSPAN

Judge Amy Coney Barrett of the U.S. Court of Appeals for the 7th Circuit is reportedly at the top of President Donald Trump’s shortlist of candidates to replace the late Justice Ruth Bader Ginsburg on the U.S. Supreme Court. A former Notre Dame law professor, Barrett is a popular and respected figure in conservative circles. But any conservative or libertarian who hopes to see the federal courts pay greater heed to the original meaning of the 14th Amendment is likely to be troubled by some of Barrett’s writings on judicial deference and economic liberty.

In 1938 the Supreme Court concocted a bifurcated approach to judicial review that treats some constitutional rights as more equal than others. If a law or regulation infringes on a right that the Court has deemed fundamental (such as freedom of speech or the right to vote), the Court said in United States v. Carolene Products Co., the judiciary should presume that law or regulation to be unconstitutional and subject it to “more exacting judicial scrutiny.” By contrast, in cases dealing with “regulatory legislation affecting ordinary commercial transactions,” Carolene Products stated, “the existence of facts supporting the legislative judgment is to be presumed.” In other words, judges are supposed to tip the scales in favor of lawmakers when economic liberty might be at stake.

Now known as the rational-basis test, this rubber stamp approach has led to some truly dreadful judgments. Take Goesaert v. Cleary (1948), in which the Supreme Court upheld a Michigan law forbidding women from working as bartenders unless they were “the wife or daughter of the male owner.” Valentine Goesaert, who owned a bar in Dearborn, fought for her right to tend bar in her own establishment. She lost thanks to rational-basis deference.

“We cannot cross-examine either actually or argumentatively the mind of Michigan legislators nor question their motives,” declared Justice Felix Frankfurter. “Since the line they have drawn is not without a basis in reason,” he wrote, invoking the rational-basis test, “we cannot give ear to the suggestion that the real impulse behind this legislation was an unchivalrous desire of male bartenders to try to monopolize the calling.” Needless to say, the ban on female bartenders served no legitimate public health or safety purpose.

Rational-basis deference was also at the center of the federal district court ruling in Niang v. Carroll (2016). At issue was a Missouri law that made it a crime to offer African-style hair braiding services without a cosmetology license. That slip of government paper did not come cheap. In addition to paying thousands of dollars in fees, would-be African-style hair braiders had to complete over 1,500 hours of state-sanctioned education. What is worse, none of Missouri’s licensed cosmetology schools actually offered any training in African-style hair braiding. Once again, the regulation at issue served no legitimate public health or safety purpose.

But none of that mattered to Judge John M. Bodenhausen of the U.S. District Court for the Eastern District of Missouri, who let the preposterous law stand. “This case,” Bodenhausen declared, “illustrates the great deference that federal courts must show to government regulations under the rational basis standard.”

Amy Coney Barrett has written in defense of the rational-basis standard. “Highly deferential judicial review reflects the judgment that a more searching inquiry would pull judges into terrain they are not good at navigating,” Barrett wrote in a 2017 article for Constitutional Commentary. “The current, deferential regime reflects humility about the capacity of judges to evaluate the soundness of scientific and economic claims.” According to Barrett, “deferential judicial review of run-of-the-mill legislation” is defensible on the grounds that such judicial deference “is consistent with the reality that the harm inflicted by the Supreme Court’s erroneous interference in the democratic process is harder to remedy than the harm inflicted by an ill-advised statute.”

The late Antonin Scalia once defended judicial deference in similar terms, arguing in a 1984 speech that “the position the Supreme Court has arrived at is good—or at least that the suggestion that it change its position is even worse.” According to Scalia, the best approach in economic cases was for the courts to adopt an across-the-board stance of judicial pacifism. “In the long run, and perhaps even in the short run,” Scalia maintained, “the reinforcement of mistaken and unconstitutional perceptions of the role of the courts in our system far outweighs whatever evils may have accrued from undue judicial abstention in the economic field.”

The problem with the Scalia-Barrett view is that it runs counter to the text and history of the 14th Amendment, which was written, ratified, and originally understood to protect (among other rights) the right to economic liberty. In the words of Rep. John Bingham (R), the Ohio congressman who served as the principal author of Section One of the 14th Amendment in 1866, “the provisions of the Constitution guaranteeing rights, privileges, and immunities” includes “the constitutional liberty…to work in an honest calling and contribute by your toil in some sort to the support of yourself, to the support of your fellow men, and to be secure in the enjoyment of the fruits of your toil.”

Put differently, if the federal courts had followed the 14th Amendment—rather than the judicially invented rational-basis test—then a bar owner’s right to tend bar in her own establishment and an African-style hair braider’s right to earn a living would have been rightfully secured against arbitrary and unnecessary government interference.

If Amy Coney Barrett is nominated to replace Justice Ruth Bader Ginsburg, I hope that someone on the Senate Judiciary Committee will ask her whether she thinks that rational-basis deference can be reconciled with the original meaning of the 14th Amendment.

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SPAC Stocks Slammed After SEC Chair Clayton Vows To “Look Closer” At Transactions

SPAC Stocks Slammed After SEC Chair Clayton Vows To “Look Closer” At Transactions

Tyler Durden

Thu, 09/24/2020 – 10:15

SPAC stocks like Forum Merger II, Tortoise Acquisition, and DiamondPeak Holdings all tumbled after SEC Chair Jay Clayton said the agency would be looking closer at the transactions going forward, in an interview on CNBC. 

Given the ongoing implosion of one of the market’s most well known recent SPAC transactions in Nikola (which is down about 15% again this morning and has traded with a 16 handle literally days after touching $50), Clayton likely thought it wise to make a round of PR stops on Thursday morning to assure investors that, even though fraud could be widespread in SPACs, the SEC is on the case. 

The SEC Chair assured investors that the SEC was focusing on certain parts of the SPAC process while Andrew Ross Sorkin noted that over 100 companies have used the IPO-end-around go to public this year so far. 

“To the extent that the SPAC structure is an alternative to an IPO, it’s actually really healthy,” Clayton said, defending the process at first.

“Competition to the IPO process is probably a good thing, but for good competition and good decision making you need good information and one of areas in SPAC space I’m particularly focused on is incentives and compensation to the SPAC sponsors,” Clayton said.

Clayton continued, telling Andrew Ross Sorkin: “For good competition and good decision making you need good information. One of the areas I’m particularly focused on is the incentives and compensation to the SPAC sponsors. How much of the equity do they have now, how much of the equity did they have at the time of transaction?”

“What are their incentives? We want to make sure investors understand those things. And then at the time of the transaction, when they vote, that they’re getting the same rigorous disclosure that you get in connection with bringing an IPO to market,” he said.

Then, comically, he thanks CNBC: “I appreciate you guys bringing to light that SPACs are different than IPOs.”

With Clayton offering no specifics about concrete steps the agency is ready to make right now to reel in the SPAC frenzy, it is likely that the feeding frenzy of questionable transactions will continue throughout the rest of 2020 – or at least until another SPAC publicly implodes, leaving the SEC not so much worried about the individual investor – but rather how the embarrassment affects their image as an agency.

Then, maybe they’ll do something about it. 

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US New Home Sales Surge In August To Highest Since 2006

US New Home Sales Surge In August To Highest Since 2006

Tyler Durden

Thu, 09/24/2020 – 10:08

Despite a huge upside surprise in existing home sales (to highest SAAR since 2006), analysts expected a small drop MoM in new home sales in August (which makes some sense after the colossal rebound in the last 3 months to well above the pre-COVID levels and the largest YoY jump since 1992!).

But, in keeping with the recent trend, new home sales beat expectations with a 4.8% MoM rise (-1.2% MoM exp) but we do  note that YoY growth in sales slowed very modestly from 28 year highs…

Source: Bloomberg

…to 1.011mm SAAR (well above the 890k SAAR expected)…This is the first time new home sales SAAR is above 1mm since Sept 2006…

Source: Bloomberg

Mixed picture across regions with the Midwest sales down 21.7% MoM (and West -1.7% MoM), while sales in the South surged 13.4% MoM and the Northeast saw sales rises 5.0% MoM.

Notably, while existing home prices surged to a new record high, median new home price fell 4.3% y/y to $312,800; average selling price at $369,000.

Also worth pointing out is that unlike the surge in high-end existing home sales, 12% of new homes sold in August cost more than $500,000, down from 14% prior month.

via ZeroHedge News https://ift.tt/2HsTdym Tyler Durden

Facebook Launches Long-Promised ‘Oversight Board’ Before US Election

Facebook Launches Long-Promised ‘Oversight Board’ Before US Election

Tyler Durden

Thu, 09/24/2020 – 09:51

Facebook is planning to move ahead with the launch of its “Supreme Court-style” oversight committee – which Sen. Josh Hawley has lambasted as Facebook’s ‘special censorship committee’ – according to a report published Thursday morning in the FT.

Just days after the UK business broadsheet reported that Facebook was planning for dozens of election-night contingency scenarios, including – presumably – shutting down any official or unofficial accounts that suggest President Trump won’t accept the results of the election, an issue that has sent liberals into a tizzy after Trump again joked about refusing to leave the White House.

The oversight board, which was first mentioned by Zuckerberg in November 2018, will start accepting cases from mid-to-late October. Of course, the rules of the committee allow 90 days for review, meaning decisions on issues taken up before and during the vote might not be resolved until early next year. Though the board will process cases submitted by users and from within Facebook, it will have an “expedited” option that the company can deploy to demand a quicker turnaround on a given decision.

Back in May, Facebook announced the members, including major figures from across the political spectrum, including Alan Rusbridger, the former editor of the Guardian newspaper, to John Samples, vice-president of the libertarian think-tank, the Cato Institute.

While the review board will be in place, Facebook cautioned that it won’t be the primary mechanism via which the social media platform ‘self-polices’ for censoring “harmful” speech, like ‘premature’ claims of victory from Trump.

The board’s focus will be entirely “forward looking,” according to a report from Politico published in May.

via ZeroHedge News https://ift.tt/3j3ipJM Tyler Durden

S&P Enters Correction, Down 10% From Highs, Goes Red YTD

S&P Enters Correction, Down 10% From Highs, Goes Red YTD

Tyler Durden

Thu, 09/24/2020 – 09:35

But, but, but… fiscal stimulus… Powell Put… v-shaped recovery… vaccine…

Nasdaq is leading the tumble but the S&P 500 has just hit a 10% drop from its highs – entering correction…

And going red year-to-date…

Time for a call?

 

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No Murder Charges in Breonna Taylor Case; Protests Erupt Across U.S.

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People around the United States took to the streets last night to memorialize Breonna Taylor and to protest a Kentucky grand jury’s decision not to indict three Louisville police officers for shooting her to death.

On Wednesday—six months after Kentucky cops executed a no-knock raid warrant at Taylor’s home in the middle of the night—a grand jury decided that criminal charges should be brought against only one of the officers involved in Taylor’s death. But rather than indict Louisville Metro Police Department (LMPD) Detective Brett Hankison for a charge related to killing Taylor, the jury decided to indict him on three counts of wanton endangerment in the first degree “for endangering her neighbors with wild shots,” as C.J. Ciaramella noted here yesterday.

Hankison was booked Wednesday and then quickly released on bail, and Louisville’s mayor ordered a curfew.

Kentucky Attorney General Daniel Cameron said the officers broke no law in killing Taylor, since her boyfriend, Kenneth Walker, had fired his gun at the strange men who broke down his girlfriend’s door while the couple was sleeping. “According to Kentucky law, the use of force[…] was justified to protect themselves,” Cameron said.

Cameron also insists that the operation wasn’t a no-knock raid. Walker maintains otherwise.

Some people suggest we can’t know who’s telling the truth here about the police announcing themselves, since both Walker’s culpability and that of the police both hinge on this contested fact. And yet Walker’s actions are consistent with this story—he called 911 saying someone had broken into this house and shot his girlfriend.

Meanwhile, the cops’ application for a search warrant specifically says they are “requesting a no-knock entry to the premises.”

Only one of a dozen of Taylor’s apartment building neighbors said they may have heard the cops announce themselves before shots rang out.

And even that neighbor’s tale is somewhat suspect, as criminal justice reporter and Rise of the Warrior Cop author Radley Balko points out.

If the Louisville police did decide—contra their search warrant—to announce themselves, then they obviously didn’t do it in a manner that was sufficient for Walker and Taylor to understand what was happening.

I’ve been covering this stuff for nearly 20 years,” Balko tweeted. “I’ll never get over the ease with which cops go barreling into homes based on little, shoddy, or dirty information. It’s an insanely dangerous act with no margin for error and little to no consequences when someone dies.”

The essential backdrop to Taylor’s death and the system’s response is that things like this keep happening across the country. That doesn’t diminish blame for the particular police and government actors in this case, but it does indict a much broader system of reckless, unnecessary, and unaccountable policing, the absence of government checks and balances on that power, as well as the terrible laws and incentives that prompt this kind of policing in the first place.

“Until states ban the use of forced entry warrants for alleged drug crimes, we will continue to see more Breonna Taylors,” commented Lauren Krisai, senior policy analyst at the Justice Action Network. “There’s no public safety justification for allowing officers to forcibly enter someone’s home to enforce drug laws, even if they announce themselves beforehand.”

Protests over the grand jury’s decision yesterday were sizeable in Louisville as well as Atlanta, Chicago, Los Angeles, New York City, Portland, Seattle, Washington, D.C., and elsewhere.

In a number of cities, police “deployed chemical agents” at crowds and ordered protesters to disperse. Police also arrested and charged protesters and journalists covering the protests.

In Louisville, two police officers were shot and wounded while investigating gunshots in an area where police were corralling protesters and targeting them with pepper balls.

“Interim Louisville Police Chief Robert Schroeder said a suspect was in custody but did not offer details about whether that person was participating in the demonstrations,” reports AP:

He says both officers are expected to recover, and one is undergoing surgery. He says the officers were shot after investigating reports of gunfire at an intersection where there was a large crowd.

Several shots rang out as protesters in downtown Louisville tried to avoid police blockades, moving down an alleyway as officers lobbed pepper balls, according to an Associated Press journalist. People covered their ears, ran away and frantically looked for places to hide. Police with long guns swarmed the area, then officers in riot gear and military-style vehicles blocked off roadways.

Kentucky Gov. Andy Beshear is asking for Louisville police to release investigative evidence in the Taylor case.


FREE MINDS

Hong Kong activist Joshua Wong was arrested. He’s reportedly charged with violating an anti-mask law… in a city where masks are now mandatory.

From The Washington Post:

Hong Kong leader Carrie Lam tried to ban face coverings at public gatherings last year, a move she hoped would quell unrest on the streets but instead added fuel to the pro-democracy movement and charges that she was abusing her power. A court later ruled that the mask ban, which was enacted using colonial-era emergency powers, was partially unconstitutional.

Since the pandemic, Hong Kong has enacted laws mandating that residents wear masks in all public places to curb the spread of the coronavirus.


FREE MARKETS

Checking in on the TikTok deal. From TechCrunch:

The September 20 deadline for a purported TikTok sale has already passed, but the parties involved have yet to settle terms on the deal. ByteDance and TikTok’s bidders Oracle and Walmart presented conflicting messages on the future ownership of the app, confusing investors and users. Meanwhile, Beijing’s discontent with the TikTok sale is increasingly obvious.

China has no reason to approve the “dirty” and “unfair” deal that allows Oracle and Walmart to effectively take over TikTok based on “bullying and extortion,” slammed an editorial published Wednesday in China Daily, an official English-language newspaper of the Chinese Communist Party.


QUICK HITS

• “Caring about children doesn’t mean sharing lurid memes about the monster lurking around the corner. It means being honest about what truly puts children at risk — even if the solution requires doing something we should have done years ago”: at HuffPost, “You’re Wrong About” podcaster Michael Hobbes takes a very good and thorough look at “the futile quest for hard numbers on child sex trafficking.”

• More research casts doubt on the idea that many people with COVID-19 will not develop symptoms.

• Florida reacts to Democrats raising money to pay off court fines and fees that are preventing people from being allowed to vote:

• Ann Arbor, Michigan, lawmakers just voted to decriminalize psychedelic plants.

• Maine will try ranked-choice voting in the presidential general election!

• A new poll from The New York Times and Siena College shows President Donald Trump “on the defensive in three red states he carried in 2016, narrowly trailing Joseph R. Biden Jr. in Iowa and battling to stay ahead of him in Georgia and Texas, as Mr. Trump continues to face a wall of opposition from women that has also endangered his party’s control of the Senate.”

• The Los Angeles Times editorial board rejects California’s Prop 22, “which would classify drivers for app-based services such as Uber and Lyft as independent contractors but guarantee them certain benefits.”

• A good explainer on some of the problems with the Department of Justice’s proposal to amend Section 230, from Julian Sanchez of the Cato Institute. Start here:

• Andrew Yang has joined the Joe Biden presidential campaign, making him the eighth former Democratic presidential candidate to do so.

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During a Routine Child Services Check, Cops Hog-tied a Mom and Carried Her Out ‘Like a Pig Upside Down’

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For Vanessa Peoples—a 25-year-old nursing student living with her mom and kids in Aurora, Colorado—July 13, 2017, started out like any other day. But by late morning, police had hauled Peoples out of her home and hog-tied her: wrists handcuffed behind her back and tied to her legs, which were in shackles.

“You know how you tie a pig upside down and his feet are hanging from the stick?” Peoples tells Reason. “That’s how they carried me.”

Paramedics were called to the scene after Peoples said she couldn’t breathe, and they made the cops loosen the chains so they could take her to the hospital. It was there that Peoples learned the cops had dislocated her shoulder. Then they took her to jail.

Her crime? About a month earlier, Peoples’ 2-year-old son had wandered away at a family picnic in the park. He was swiftly recovered and completely unharmed—but this common, noncriminal occurrence attracted the attention of the authorities, which eventually led to a confrontation in Peoples’ home. What happened was extensively documented by police reports, body cam footage, and interviews with Peoples, her mother Patricia Russell, and Erica Grossman, a civil rights attorney who took Peoples’ case against the police.

In June 2017, Peoples and her kids—ages 2 and 4—were at a family gathering with about 15 relatives at a park. As her cousin was leaving, Peoples’ younger son followed the cousin toward her car. A passerby saw the seemingly unattended child and grabbed him. Peoples came over and demanded the woman let him go.

“I’m telling her, ‘ma’am, that’s my son,'” Peoples says. “She’s refusing to let go of him and talking on the phone. I didn’t know she was talking to the police.” 

The cops arrived a few minutes later, but the woman still refused to relinquish the child, according to Peoples. The cops then demanded proof that Peoples was indeed the boy’s mother, even though her son was calling her mom and reaching for her, Peoples recalled.

Other relatives came over to support Peoples. Finally, the other woman released the child. The cops left Peoples with a ticket for child neglect and departed.

How long before Peoples noticed her son was missing and went to find him? About a minute, according to Peoples.

Even if the boy had wandered off, this is something that happens to many parents at some point in their lives. In England, a doting mom and dad took their child to a pub and later left in their separate cars. Their daughter came out of the loo and found they were gone. Her mom was not investigated for neglect, nor was her dad: David Cameron, who was prime minister at the time

As a family defense attorney, I’ve had my fair share of neglect claims just like these that land parents in the middle of a child services investigation. Cooler heads usually prevail and the investigations are closed pretty quickly. Middle-class parents often get the benefit of the doubt. Peoples—a low-income African-American woman—enjoyed no such luck.

Clearly, the authorities weren’t too alarmed for the safety of Peoples’ kids: It was a month before a caseworker came to conduct a follow-up well-being check. That’s when the trouble really started.

The caseworker knocked on the door for a while and received no answer. Peoples had just given the kids their baths, and they were in the basement with her where she was doing some laundry. She hadn’t dressed them yet, and when the kids ran upstairs, the caseworker saw one of them naked and leaning out the first floor window.

Concerned the kids might be alone, the caseworker called her supervisor and was told to contact the police. Soon, three cops arrived at the house.

“The front door was unlocked,” wrote the police in their report. They announced that they were coming in and then entered the single-family home without either permission or a warrant. They also drew their guns.

“As I was going up the stairs, the sergeant has a gun pointed at my head, saying, ‘This is the Aurora Police Department!'” says Peoples.

Unless there is an emergency—imminent danger to the kids—the government must obtain a search warrant to enter a home without the homeowner’s consent. Nothing in Peoples’ file, however, suggested there was enough evidence for a warrant. And once she came upstairs, startled and unarmed, any immediate concern that perhaps there was no one home with the kids evaporated. The cops didn’t need to stick around.

Nevertheless, they asked Peoples why she hadn’t answered the door. According to the bodycam footage, she politely replied that she was hard of hearing in one ear. The cops noted this point as a “concern,” along with the fact that the children were undressed, the front window’s screen was loose, and the door unlocked. They also noted that the family had “little food in the pantry.”

At that point, Peoples called her mother, Russell, urging her to hurry home from her nearby doctor’s appointment.

According to the bodycam footage, the home visit was nearly completed by the time Russell arrived, angry and demanding that the cops and the caseworkers leave. From there on, things became chaotic as police and caseworkers swarmed back into the house from the front doorway and started issuing orders.

Russell tried to go into a room to fix the children’s clothing, attempting to close the door behind her. But the police did not want to leave her alone with the kids, and a struggle began.

“I told her I need to go in the room because she could not be in the room alone with the children,” wrote an officer in the report. “She attempted to close the bedroom door on me again. I then pushed past her.” The officer took hold of Russell and wrote that she “started to calm down.”

Meanwhile, Peoples became upset with what was happening out of her view, shouting, “It’s my house, my kids, that’s my mom!” over and over again. She disregarded the cops’ orders to stay back and attempted to move past an officer and join her mother in the bedroom. The confrontation then turned physical. One officer put his hand on her throat, according to the bodycam footage and the officer’s own report. The officers then pushed the 107-pound woman face-first into a bean bag chair to stop her from moving.

Two or three cops pinned her as she began to flail, screaming for her mother. At that point, the cops decided to hobble her. Hobbles are a set of hand and ankle cuffs that can be attached to each other from behind, hog-tying the person. 

“My hands are handcuffed and tied to my feet,” Peoples recalls. “My stomach and face were toward the ground. When they were in the process of handcuffing and hog-tying me, they dislocated my shoulder. I was telling them, ‘There’s something wrong with my arm. I’m in a lot of pain.'”

The cops carried Peoples outside and placed her in the backseat of a police car as she screamed “I can’t breathe.” At that point, they agreed to call for medical assistance for her, because she was having trouble breathing, suffering from an injured shoulder, and in pain from the restraints. Eventually, the police officers discussed removing the hog-ties, but took her out of the car and placed her on the grass in order to do so. The restraints remained in place until medics arrived.

Inside the house, the inconsolable screams of Peoples’ 4-year-old calling for his mother are audible on some of the bodycam footage. A cop is heard repeating, “Mommy’s okay,” as Russell begged to go out to see for herself, only to be told that her own agitation “is not helping.”

Recall that this all began when caseworkers came to the home just to make sure the kids were fine following the incident in the park nearly a month before.

The medics decided to transport Peoples to a hospital where she was given a sling, ice, and ibuprofen. Her good arm, and a leg, were cuffed to the bed “so I couldn’t go anywhere,” she says. After the examination, she was taken to the police department, booked, and placed in a jail cell. Her mother bailed her out around midnight.

Shortly before the police had hog-tied her, Peoples had managed to call her husband, Tevin Hike, to come help with the kids. He left his electrician’s job and got there as quickly as he could. The police stopped Hike outside the home. He started to question the officers about why Peoples had been arrested, apparently “unaware that he was about to suffer the same fate,” noted one of the police reports. The cops had found an outstanding warrant for Hike—for missing a court date for a speeding ticket.

As two officers approached Hike to handcuff him, he tried to go into the house. Officers warned him “not to fight,” and notified him of the warrant against him. When Hike appeared to the cops to be trying to escape, one of them wrapped his arm around his neck, and pulled him to the ground in front of the house. The police report claimed that he had “resisted with all his might” before being placed in a cop car. On the bodycam video, one of the officers commented that he would be charging Hike with “as much as he can charge.” Another officer joked that “maybe we should just take the whole house to jail.” 

Several officers pressed the caseworker to take the kids into foster care then and there. But she pushed to allow the kids to stay with Russell, noting “foster care isn’t good for kids.” As they were leaving, a cop handed Russell her own ticket for obstructing justice. 

By the time Hike and Peoples had been taken from their home, at least seven police officers, as well as two caseworkers and a team of paramedics, had either come into their home or provided backup outside, lining the street with their cars and an ambulance. The sheer number of police and the detailed reports of how they subdued Peoples and Hike read as if it were a raid of El Chapo’s headquarters. 

Peoples ultimately took a plea deal, which allowed her to avoid jail time. She had to accept regular visits from a social worker, complete a year of probation, pay a $200 fine, and enroll in parenting classes. She completed all the requirements and was released from probation two months early. But she still has reckless endangerment of a child on her record, which may hurt her ability to get a job when she finishes her nursing program. 

Peoples’ case, illustrating the extreme force used in the course of a routine well-being check, is unusual insofar as it is thoroughly and clinically documented by seven different police officers. (Peoples and her attorney never received the social services file, and the primary caseworker could not be reached as she no longer works with the Adams County Social Services Department.) 

That using this type of restraint—a hog-tie—was unremarkable seems apparent from the female supervising officer’s matter-of-fact comments: “I checked [Peoples’] hobble and handcuffs. The hobble was put on correctly with a waist chain and leg restrict. Each chain and the leg restraint was hooked with a handcuff. I did notice the waist chain was tight,” and did “advise we needed to loosen the waist chain.” 

The application of hobbles has been known for at least 20 years to cause significant breathing problems, sometimes resulting in asphyxiation and death. Peoples warned the cops she had asthma, even as they kept her tied up.

What is also unusual about Peoples’ story is that she eventually secured legal representation to sue the Aurora Police Department for the injuries she experienced. The threatened suit settled out of court.

I have worked as a child protection system reform lawyer for over 35 years. I founded and led the Chicago-based Family Defense Center from 2005 through 2017, where I represented hundreds of parents accused of inadequately supervising their kids under the law’s vague standards of proof and overbroad policies. Indeed, one of my lawsuits led the state to clear over 26,000 parents who had been listed as child neglecters for allegedly creating an “injurious environment” for their kids—a charge so vague and boundless that the Illinois legislature had expressly removed it from Illinois law decades before the child protection agency started to use it as a catch-all. The assumption that parents are “guilty until proven innocent” abounds in the child protection system, along with demands that parents must prove their constant attentiveness to their children or risk losing their kids to the foster care system. 

Such demands—ones that even Britain’s Prime Minister couldn’t satisfy if pressed—especially impact communities of color. Fully 53 percent of African-American kids will be investigated by child protective services in their lifetime. Countless black parents will be compelled at some point to defend their parenting against an abuse or neglect accusation coming at them from a stranger, professional, or neighbor. It is the stop-and-frisk of black parenthood.

And often, as in Peoples’ case, it is not just child services that get involved, but also the police. Both child protection authorities and law enforcement have the power to judge parenting and apply sanctions. Caseworkers often call cops when mothers are reluctant to open their doors. For Peoples, it was the call to police at the park that led to the caseworker’s visit, which, in turn, led to the call for police backup.

Often the concerns balloon once the family is put under a microscope. Though she was at Peoples’ home only because of the incident in the park, the caseworker soon expressed concern that the child could fall out the window. She pressed this point, insisting Peoples admit she was insufficiently attentive.

Grossman, a civil rights lawyer with the Denver firm of Holland, Holland, Edwards and Grossman, took Peoples’ case because of her firm’s “visceral reaction” to seeing, on the bodycam footage, “a white man sitting on top of a black woman while tying her up like an animal.”

“They were using a level of military force like they’re at a huge crime scene instead of a child [well-being] check,” Grossman tells Reason. “They did this in front of her two children without a hint of concern about the trauma the children would experience, in the name of making sure their mother was attentive enough.” 

The lawsuit that Grossman prepared was settled with the police even before it was filed. Peoples’ dislocated shoulder and the hog-tie made a presumptive case of excessive force. 

But most home visits by child protective services leave parents without recourse even when parents feel the authorities have overstepped their bounds. If not for the lawsuit, Peoples’ case, too, would have never been exposed.

Dorothy Roberts, a University of Pennsylvania Professor of Law and author of the seminal work, “Shattered Bonds: The Color of Child Welfare,” has argued against expanding mandatory reporting laws and home-visiting programs. “Even well-meaning recommendations to deploy social workers to conduct ‘wellness checks’ in homes will likely result in…expanding the state’s monitoring and disruption of families,” especially African-American families, she writes. 

The vast majority of parents subject to well-being checks are struggling to feed, clothe, and house their families. Poverty is often mistaken for neglect. Well-being checks, like the ones Peoples was required to continue to accept after her arrest, provide no concrete help, instead creating another hurdle parents have to meet in order to be left alone. Social service interventions that actually provide support instead of judgment would help keep families together, rather than tearing them apart.

The government’s well-being check on Peoples’ children left them with nightmares and a fear that the cops could come, tie up, and take away their parents.

“The cops forgot we were human,” says Peoples.

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No Murder Charges in Breonna Taylor Case; Protests Erupt Across U.S.

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People around the United States took to the streets last night to memorialize Breonna Taylor and to protest a Kentucky grand jury’s decision not to indict three Louisville police officers for shooting her to death.

On Wednesday—six months after Kentucky cops executed a no-knock raid warrant at Taylor’s home in the middle of the night—a grand jury decided that criminal charges should be brought against only one of the officers involved in Taylor’s death. But rather than indict Louisville Metro Police Department (LMPD) Detective Brett Hankison for a charge related to killing Taylor, the jury decided to indict him on three counts of wanton endangerment in the first degree “for endangering her neighbors with wild shots,” as C.J. Ciaramella noted here yesterday.

Hankison was booked Wednesday and then quickly released on bail, and Louisville’s mayor ordered a curfew.

Kentucky Attorney General Daniel Cameron said the officers broke no law in killing Taylor, since her boyfriend, Kenneth Walker, had fired his gun at the strange men who broke down his girlfriend’s door while the couple was sleeping. “According to Kentucky law, the use of force[…] was justified to protect themselves,” Cameron said.

Cameron also insists that the operation wasn’t a no-knock raid. Walker maintains otherwise.

Some people suggest we can’t know who’s telling the truth here about the police announcing themselves, since both Walker’s culpability and that of the police both hinge on this contested fact. And yet Walker’s actions are consistent with this story—he called 911 saying someone had broken into this house and shot his girlfriend.

Meanwhile, the cops’ application for a search warrant specifically says they are “requesting a no-knock entry to the premises.”

Only one of a dozen of Taylor’s apartment building neighbors said they may have heard the cops announce themselves before shots rang out.

And even that neighbor’s tale is somewhat suspect, as criminal justice reporter and Rise of the Warrior Cop author Radley Balko points out.

If the Louisville police did decide—contra their search warrant—to announce themselves, then they obviously didn’t do it in a manner that was sufficient for Walker and Taylor to understand what was happening.

I’ve been covering this stuff for nearly 20 years,” Balko tweeted. “I’ll never get over the ease with which cops go barreling into homes based on little, shoddy, or dirty information. It’s an insanely dangerous act with no margin for error and little to no consequences when someone dies.”

The essential backdrop to Taylor’s death and the system’s response is that things like this keep happening across the country. That doesn’t diminish blame for the particular police and government actors in this case, but it does indict a much broader system of reckless, unnecessary, and unaccountable policing, the absence of government checks and balances on that power, as well as the terrible laws and incentives that prompt this kind of policing in the first place.

“Until states ban the use of forced entry warrants for alleged drug crimes, we will continue to see more Breonna Taylors,” commented Lauren Krisai, senior policy analyst at the Justice Action Network. “There’s no public safety justification for allowing officers to forcibly enter someone’s home to enforce drug laws, even if they announce themselves beforehand.”

Protests over the grand jury’s decision yesterday were sizeable in Louisville as well as Atlanta, Chicago, Los Angeles, New York City, Portland, Seattle, Washington, D.C., and elsewhere.

In a number of cities, police “deployed chemical agents” at crowds and ordered protesters to disperse. Police also arrested and charged protesters and journalists covering the protests.

In Louisville, two police officers were shot and wounded while investigating gunshots in an area where police were corralling protesters and targeting them with pepper balls.

“Interim Louisville Police Chief Robert Schroeder said a suspect was in custody but did not offer details about whether that person was participating in the demonstrations,” reports AP:

He says both officers are expected to recover, and one is undergoing surgery. He says the officers were shot after investigating reports of gunfire at an intersection where there was a large crowd.

Several shots rang out as protesters in downtown Louisville tried to avoid police blockades, moving down an alleyway as officers lobbed pepper balls, according to an Associated Press journalist. People covered their ears, ran away and frantically looked for places to hide. Police with long guns swarmed the area, then officers in riot gear and military-style vehicles blocked off roadways.

Kentucky Gov. Andy Beshear is asking for Louisville police to release investigative evidence in the Taylor case.


FREE MINDS

Hong Kong activist Joshua Wong was arrested. He’s reportedly charged with violating an anti-mask law… in a city where masks are now mandatory.

From The Washington Post:

Hong Kong leader Carrie Lam tried to ban face coverings at public gatherings last year, a move she hoped would quell unrest on the streets but instead added fuel to the pro-democracy movement and charges that she was abusing her power. A court later ruled that the mask ban, which was enacted using colonial-era emergency powers, was partially unconstitutional.

Since the pandemic, Hong Kong has enacted laws mandating that residents wear masks in all public places to curb the spread of the coronavirus.


FREE MARKETS

Checking in on the TikTok deal. From TechCrunch:

The September 20 deadline for a purported TikTok sale has already passed, but the parties involved have yet to settle terms on the deal. ByteDance and TikTok’s bidders Oracle and Walmart presented conflicting messages on the future ownership of the app, confusing investors and users. Meanwhile, Beijing’s discontent with the TikTok sale is increasingly obvious.

China has no reason to approve the “dirty” and “unfair” deal that allows Oracle and Walmart to effectively take over TikTok based on “bullying and extortion,” slammed an editorial published Wednesday in China Daily, an official English-language newspaper of the Chinese Communist Party.


QUICK HITS

• “Caring about children doesn’t mean sharing lurid memes about the monster lurking around the corner. It means being honest about what truly puts children at risk — even if the solution requires doing something we should have done years ago”: at HuffPost, You’re Wrong About podcaster Michael Hobbes takes a very good and thorough look at “the futile quest for hard numbers on child sex trafficking.”

• More research casts doubt on the idea that many people with COVID-19 will not develop symptoms.

• Florida reacts to Democrats raising money to pay off court fines and fees that are preventing people from being allowed to vote:

• Ann Arbor, Michigan, lawmakers just voted to decriminalize psychedelic plants.

• Maine will try ranked-choice voting in the presidential general election!

• A new poll from The New York Times and Siena College shows President Donald Trump “on the defensive in three red states he carried in 2016, narrowly trailing Joseph R. Biden Jr. in Iowa and battling to stay ahead of him in Georgia and Texas, as Mr. Trump continues to face a wall of opposition from women that has also endangered his party’s control of the Senate.”

• The Los Angeles Times editorial board rejects California’s Prop 22, “which would classify drivers for app-based services such as Uber and Lyft as independent contractors but guarantee them certain benefits.”

• A good explainer on some of the problems with the Department of Justice’s proposal to amend Section 230, from Julian Sanchez of the Cato Institute. Start here:

• Andrew Yang has joined the Joe Biden presidential campaign, making him the eighth former Democratic presidential candidate to do so.

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During a Routine Child Services Check, Cops Hog-tied a Mom and Carried Her Out ‘Like a Pig Upside Down’

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For Vanessa Peoples—a 25-year-old nursing student living with her mom and kids in Aurora, Colorado—July 13, 2017, started out like any other day. But by late morning, police had hauled Peoples out of her home and hog-tied her: wrists handcuffed behind her back and tied to her legs, which were in shackles.

“You know how you tie a pig upside down and his feet are hanging from the stick?” Peoples tells Reason. “That’s how they carried me.”

Paramedics were called to the scene after Peoples said she couldn’t breathe, and they made the cops loosen the chains so they could take her to the hospital. It was there that Peoples learned the cops had dislocated her shoulder. Then they took her to jail.

Her crime? About a month earlier, Peoples’ 2-year-old son had wandered away at a family picnic in the park. He was swiftly recovered and completely unharmed—but this common, noncriminal occurrence attracted the attention of the authorities, which eventually led to a confrontation in Peoples’ home. What happened was extensively documented by police reports, body cam footage, and interviews with Peoples, her mother Patricia Russell, and Erica Grossman, a civil rights attorney who took Peoples’ case against the police.

In June 2017, Peoples and her kids—ages 2 and 4—were at a family gathering with about 15 relatives at a park. As her cousin was leaving, Peoples’ younger son followed the cousin toward her car. A passerby saw the seemingly unattended child and grabbed him. Peoples came over and demanded the woman let him go.

“I’m telling her, ‘ma’am, that’s my son,'” Peoples says. “She’s refusing to let go of him and talking on the phone. I didn’t know she was talking to the police.” 

The cops arrived a few minutes later, but the woman still refused to relinquish the child, according to Peoples. The cops then demanded proof that Peoples was indeed the boy’s mother, even though her son was calling her mom and reaching for her, Peoples recalled.

Other relatives came over to support Peoples. Finally, the other woman released the child. The cops left Peoples with a ticket for child neglect and departed.

How long before Peoples noticed her son was missing and went to find him? About a minute, according to Peoples.

Even if the boy had wandered off, this is something that happens to many parents at some point in their lives. In England, a doting mom and dad took their child to a pub and later left in their separate cars. Their daughter came out of the loo and found they were gone. Her mom was not investigated for neglect, nor was her dad: David Cameron, who was prime minister at the time

As a family defense attorney, I’ve had my fair share of neglect claims just like these that land parents in the middle of a child services investigation. Cooler heads usually prevail and the investigations are closed pretty quickly. Middle-class parents often get the benefit of the doubt. Peoples—a low-income African-American woman—enjoyed no such luck.

Clearly, the authorities weren’t too alarmed for the safety of Peoples’ kids: It was a month before a caseworker came to conduct a follow-up well-being check. That’s when the trouble really started.

The caseworker knocked on the door for a while and received no answer. Peoples had just given the kids their baths, and they were in the basement with her where she was doing some laundry. She hadn’t dressed them yet, and when the kids ran upstairs, the caseworker saw one of them naked and leaning out the first floor window.

Concerned the kids might be alone, the caseworker called her supervisor and was told to contact the police. Soon, three cops arrived at the house.

“The front door was unlocked,” wrote the police in their report. They announced that they were coming in and then entered the single-family home without either permission or a warrant. They also drew their guns.

“As I was going up the stairs, the sergeant has a gun pointed at my head, saying, ‘This is the Aurora Police Department!'” says Peoples.

Unless there is an emergency—imminent danger to the kids—the government must obtain a search warrant to enter a home without the homeowner’s consent. Nothing in Peoples’ file, however, suggested there was enough evidence for a warrant. And once she came upstairs, startled and unarmed, any immediate concern that perhaps there was no one home with the kids evaporated. The cops didn’t need to stick around.

Nevertheless, they asked Peoples why she hadn’t answered the door. According to the bodycam footage, she politely replied that she was hard of hearing in one ear. The cops noted this point as a “concern,” along with the fact that the children were undressed, the front window’s screen was loose, and the door unlocked. They also noted that the family had “little food in the pantry.”

At that point, Peoples called her mother, Russell, urging her to hurry home from her nearby doctor’s appointment.

According to the bodycam footage, the home visit was nearly completed by the time Russell arrived, angry and demanding that the cops and the caseworkers leave. From there on, things became chaotic as police and caseworkers swarmed back into the house from the front doorway and started issuing orders.

Russell tried to go into a room to fix the children’s clothing, attempting to close the door behind her. But the police did not want to leave her alone with the kids, and a struggle began.

“I told her I need to go in the room because she could not be in the room alone with the children,” wrote an officer in the report. “She attempted to close the bedroom door on me again. I then pushed past her.” The officer took hold of Russell and wrote that she “started to calm down.”

Meanwhile, Peoples became upset with what was happening out of her view, shouting, “It’s my house, my kids, that’s my mom!” over and over again. She disregarded the cops’ orders to stay back and attempted to move past an officer and join her mother in the bedroom. The confrontation then turned physical. One officer put his hand on her throat, according to the bodycam footage and the officer’s own report. The officers then pushed the 107-pound woman face-first into a bean bag chair to stop her from moving.

Two or three cops pinned her as she began to flail, screaming for her mother. At that point, the cops decided to hobble her. Hobbles are a set of hand and ankle cuffs that can be attached to each other from behind, hog-tying the person. 

“My hands are handcuffed and tied to my feet,” Peoples recalls. “My stomach and face were toward the ground. When they were in the process of handcuffing and hog-tying me, they dislocated my shoulder. I was telling them, ‘There’s something wrong with my arm. I’m in a lot of pain.'”

The cops carried Peoples outside and placed her in the backseat of a police car as she screamed “I can’t breathe.” At that point, they agreed to call for medical assistance for her, because she was having trouble breathing, suffering from an injured shoulder, and in pain from the restraints. Eventually, the police officers discussed removing the hog-ties, but took her out of the car and placed her on the grass in order to do so. The restraints remained in place until medics arrived.

Inside the house, the inconsolable screams of Peoples’ 4-year-old calling for his mother are audible on some of the bodycam footage. A cop is heard repeating, “Mommy’s okay,” as Russell begged to go out to see for herself, only to be told that her own agitation “is not helping.”

Recall that this all began when caseworkers came to the home just to make sure the kids were fine following the incident in the park nearly a month before.

The medics decided to transport Peoples to a hospital where she was given a sling, ice, and ibuprofen. Her good arm, and a leg, were cuffed to the bed “so I couldn’t go anywhere,” she says. After the examination, she was taken to the police department, booked, and placed in a jail cell. Her mother bailed her out around midnight.

Shortly before the police had hog-tied her, Peoples had managed to call her husband, Tevin Hike, to come help with the kids. He left his electrician’s job and got there as quickly as he could. The police stopped Hike outside the home. He started to question the officers about why Peoples had been arrested, apparently “unaware that he was about to suffer the same fate,” noted one of the police reports. The cops had found an outstanding warrant for Hike—for missing a court date for a speeding ticket.

As two officers approached Hike to handcuff him, he tried to go into the house. Officers warned him “not to fight,” and notified him of the warrant against him. When Hike appeared to the cops to be trying to escape, one of them wrapped his arm around his neck, and pulled him to the ground in front of the house. The police report claimed that he had “resisted with all his might” before being placed in a cop car. On the bodycam video, one of the officers commented that he would be charging Hike with “as much as he can charge.” Another officer joked that “maybe we should just take the whole house to jail.” 

Several officers pressed the caseworker to take the kids into foster care then and there. But she pushed to allow the kids to stay with Russell, noting “foster care isn’t good for kids.” As they were leaving, a cop handed Russell her own ticket for obstructing justice. 

By the time Hike and Peoples had been taken from their home, at least seven police officers, as well as two caseworkers and a team of paramedics, had either come into their home or provided backup outside, lining the street with their cars and an ambulance. The sheer number of police and the detailed reports of how they subdued Peoples and Hike read as if it were a raid of El Chapo’s headquarters. 

Peoples ultimately took a plea deal, which allowed her to avoid jail time. She had to accept regular visits from a social worker, complete a year of probation, pay a $200 fine, and enroll in parenting classes. She completed all the requirements and was released from probation two months early. But she still has reckless endangerment of a child on her record, which may hurt her ability to get a job when she finishes her nursing program. 

Peoples’ case, illustrating the extreme force used in the course of a routine well-being check, is unusual insofar as it is thoroughly and clinically documented by seven different police officers. (Peoples and her attorney never received the social services file, and the primary caseworker could not be reached as she no longer works with the Adams County Social Services Department.) 

That using this type of restraint—a hog-tie—was unremarkable seems apparent from the female supervising officer’s matter-of-fact comments: “I checked [Peoples’] hobble and handcuffs. The hobble was put on correctly with a waist chain and leg restrict. Each chain and the leg restraint was hooked with a handcuff. I did notice the waist chain was tight,” and did “advise we needed to loosen the waist chain.” 

The application of hobbles has been known for at least 20 years to cause significant breathing problems, sometimes resulting in asphyxiation and death. Peoples warned the cops she had asthma, even as they kept her tied up.

What is also unusual about Peoples’ story is that she eventually secured legal representation to sue the Aurora Police Department for the injuries she experienced. The threatened suit settled out of court.

I have worked as a child protection system reform lawyer for over 35 years. I founded and led the Chicago-based Family Defense Center from 2005 through 2017, where I represented hundreds of parents accused of inadequately supervising their kids under the law’s vague standards of proof and overbroad policies. Indeed, one of my lawsuits led the state to clear over 26,000 parents who had been listed as child neglecters for allegedly creating an “injurious environment” for their kids—a charge so vague and boundless that the Illinois legislature had expressly removed it from Illinois law decades before the child protection agency started to use it as a catch-all. The assumption that parents are “guilty until proven innocent” abounds in the child protection system, along with demands that parents must prove their constant attentiveness to their children or risk losing their kids to the foster care system. 

Such demands—ones that even Britain’s Prime Minister couldn’t satisfy if pressed—especially impact communities of color. Fully 53 percent of African-American kids will be investigated by child protective services in their lifetime. Countless black parents will be compelled at some point to defend their parenting against an abuse or neglect accusation coming at them from a stranger, professional, or neighbor. It is the stop-and-frisk of black parenthood.

And often, as in Peoples’ case, it is not just child services that get involved, but also the police. Both child protection authorities and law enforcement have the power to judge parenting and apply sanctions. Caseworkers often call cops when mothers are reluctant to open their doors. For Peoples, it was the call to police at the park that led to the caseworker’s visit, which, in turn, led to the call for police backup.

Often the concerns balloon once the family is put under a microscope. Though she was at Peoples’ home only because of the incident in the park, the caseworker soon expressed concern that the child could fall out the window. She pressed this point, insisting Peoples admit she was insufficiently attentive.

Grossman, a civil rights lawyer with the Denver firm of Holland, Holland, Edwards and Grossman, took Peoples’ case because of her firm’s “visceral reaction” to seeing, on the bodycam footage, “a white man sitting on top of a black woman while tying her up like an animal.”

“They were using a level of military force like they’re at a huge crime scene instead of a child [well-being] check,” Grossman tells Reason. “They did this in front of her two children without a hint of concern about the trauma the children would experience, in the name of making sure their mother was attentive enough.” 

The lawsuit that Grossman prepared was settled with the police even before it was filed. Peoples’ dislocated shoulder and the hog-tie made a presumptive case of excessive force. 

But most home visits by child protective services leave parents without recourse even when parents feel the authorities have overstepped their bounds. If not for the lawsuit, Peoples’ case, too, would have never been exposed.

Dorothy Roberts, a University of Pennsylvania Professor of Law and author of the seminal work, “Shattered Bonds: The Color of Child Welfare,” has argued against expanding mandatory reporting laws and home-visiting programs. “Even well-meaning recommendations to deploy social workers to conduct ‘wellness checks’ in homes will likely result in…expanding the state’s monitoring and disruption of families,” especially African-American families, she writes. 

The vast majority of parents subject to well-being checks are struggling to feed, clothe, and house their families. Poverty is often mistaken for neglect. Well-being checks, like the ones Peoples was required to continue to accept after her arrest, provide no concrete help, instead creating another hurdle parents have to meet in order to be left alone. Social service interventions that actually provide support instead of judgment would help keep families together, rather than tearing them apart.

The government’s well-being check on Peoples’ children left them with nightmares and a fear that the cops could come, tie up, and take away their parents.

“The cops forgot we were human,” says Peoples.

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Goldman Gives Up On New Stimulus In 2020, Cuts Q4 GDP Growth Forecast From 6% to 3%

Goldman Gives Up On New Stimulus In 2020, Cuts Q4 GDP Growth Forecast From 6% to 3%

Tyler Durden

Thu, 09/24/2020 – 09:15

“A U.S. fiscal deal was baked into markets and now what you are seeing is that the probability of a deal going through has simply reversed,” said Legal and General Investment Management PM Justin Onuekwusi, and he couldn’t be more correct when it comes to big bank analysts who during the August meltup were rushing to upgrade their GDP forecasts (if only to validate the market meltup which we now know was not due to fundamentals but a gamma squeeze orchestrated by SoftBank and facilitated by Robinhood traders).

Even as we were warning all the way back in late July that the fiscal cliff – and the lack of new stimulus clarity – threatens to derail the tepid economic rebound, sellside analysts were tripping over each other to upgrade their Q3 and Q4 GDP forecasts. Well, now that Congressional attention is more focused on the Supreme Court, it seems that a new fiscal deal is 2021 business which now seems unlikely to take place before the election, and really before a new president is appointed – a process which according to president Trump will involve the Supreme Court and may drag well into next year.

Indeed, as Justin adds, “we have heard this week how important a fiscal deal is to the Federal Reserve but from a political standpoint, focus has moved more towards the election and Supreme Court deliberations rather than the economy,” and sure enough, overnight the first GDP downgrade came from Goldman Sachs, which aggressively reversed on its previous “base case” of a $1.5 – $2 trillion stimulus being passed “shortly”, and as a result the bank just slashed its Q4 GDP growth forecast in half from 6% to 3%. Here’s why:

We think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution.  This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021.

We estimate that the withdrawal of fiscal support will reduce disposable incomen in Q4 to roughly the pre-pandemic level. This will weigh on consumer spending, but probably by less than initially feared. Seven weeks after unemployment benefits lapsed, timely spending measures have trended higher, reflecting an offset from ongoing adaptation and reopening in the service sector.  This process can likely continue to at least some extent in coming months, and we therefore expect softer but still modestly positive consumption growth in Q4.

Some more details on the expected hit from this lack of stimulus:

The withdrawal of fiscal support will reduce disposable income in Q4.  We estimate that after peaking in Q2, disposable income fell in Q3 and will fall further in Q4 to roughly the pre-pandemic level, as shown in Exhibit 2.  While rapid job growth has partially restored private income in Q3 and should provide a further boost in Q4, the sharp decline in fiscal support is likely to outweigh the gain in private income.

And as noted above, and as we said almost two months ago, Goldman now expects that the hit to disposable income “will weigh on consumer spending in Q4, though probably somewhat less than we initially feared” as shown in the next chart.

As a result, Goldman’s chief economist Jan Hatzius is lowering his consumer spending expectations for the remaining months of this year, “but not dramatically” penciling in a deceleration in consumption growth to 0-½% in September and October and -½% in November and December, “by which point the boost from the last round of extra unemployment benefits is likely to have faded.”

This downgrade to Goldman’s consumption forecast results in a downgrade to the bank’s GDP growth forecast to 3% on a quarterly annualized basis, from 6%previously:

“We are lowering our Q4 GDP growth forecast from 6% to 3% on a quarterly annualized basis.  This leaves more room for catch-up later, and we have therefore raised our 2021Q2-Q4 growth forecasts as a partial offset.  Our new forecasts imply full-year growth of -3.5% in 2020 and +5.8% in 2021 (or -2.5% in2020 and +5.5% in 2021 on a Q4/Q4 basis).”

While Hatzius concedes that this will delay the recovery somewhat he notes that this “leaves more room for catch-up next year, especially once a vaccine becomes available”

We have therefore bumped our 2021 Q2 forecast by 1pp to 7% and our 2021Q3 and Q4 forecasts by ½pp each to 4.5% and 3.5%.  We are offsetting the hit to Q4 with higher growth in Q2-Q4 because we are more confident that widespread distribution of a vaccine to the full population will be achieved by Q2 than by Q1 of next year in light of the recent press reports that the FDA is likely to announce tougher standards for vaccine authorization

Incidentally, Goldman’s core assumption that a vaccine is widely available in early 2021 and was the reason why the bank hiked its GDP forecast a few weeks ago, is where it will also be proven wrong, as a credible vaccine – one which sees a take up by a majority of the population – is unlikely to happen in 2021.

via ZeroHedge News https://ift.tt/3050ECq Tyler Durden