Month: May 2016

Most of us look at Puerto Rico’s financial situation—out-of-control debt it can no longer pay off—and see it as a dire warning. It’s possible that GOP presumptive presidential nominee Donald Trump doesn’t see it that way.

That is to say, Trump’s latest proposed economic solution for federal debt is to do what Puerto Rico is likely going to have to do try to remain solvent—ask creditors to take a haircut on outstanding debts. Such is the way of the world for struggling businesses and dysfunctional economies like Greece. The idea that America itself might pursue such a strategy is a novel suggestion, to say the least. Trump’s musing that America might skate to the brink of default for the sake of a deal seems to have prompted a parade of spit takes from economic analysts. Josh Marshall went on a tear at Talking Points Memo:

It’s a sovereign nation with sovereign debt. It is not too much to say that centuries of American prosperity have been undergirded by the “full faith and credit of the United States.” In other words, the US always pays its debts in full and on time. Indeed, it’s black letter text in the US constitution that the country’s debt can never even be questioned. Defaulting on the national debt would clearly be unconstitutional.

That’s the constitution part, which is a weighty matter. But the entire architecture of the global economy and the United States place in it rests on the certainty and basic risklessness of US government debt obligations. It’s as simple as that. (This has actually allowed the US to in effect have people pay the Treasury to hold on to their money since 2008.) Introducing the idea that the US might pay back only a portion of the returns on Treasury bonds would basically disrupt the entire global economy, have massive and traumatic knock-on effects on the US economy and its ability to service its own debt. It would be catastrophic, an entirely self-inflicted wound.

Trump seems to have immediately backpedaled on the idea a bit and switched to suggesting that the U.S. could seek to repurchase its own debt on better terms, again something that’s not uncommon in the corporate world. But there’s a slight problem with trying to translate it to the United States: The government operates at a deficit and his solution would result in having to borrow even more money in order to pursue such a plan.

Trump’s perception of how debt works (“I am the king of debt. I do love debt. I love debt. I love playing with it,” he said) could help explain why thinks he can promote fiscally incoherent polices that call for both tax cuts and military spending increases (while maintaining Social Security). Trump believes that everything is up for negotiation—everything has the potential for a deal. This is not a bad trait for either a businessman or a politician, but it can reach a point where it becomes a default response when unable to actually explain how he’s going to get from Point A to Point B in policies. For Trump, making a “deal” is his variation of candidates like Bernie Sanders who want to paper over fiscal gaps in policy plans with promises to make rich people and corporations pay for it.

I’ll let The Economist get the final punchline on the problem with trying to force any sort of debt renegotiations:

A forced deal, of course, would count as a default. Treasury bonds are at the heart of the financial system. Banks use them as collateral for loans; insurance companies hold them as reserves; pension funds own then to fund retirement benefits; mutual funds own them as well. Any default within the system would have cataclysmic consequences for the economy that would far outweigh any gains in refinancing costs. To cap it all, the Federal Reserve owns almost $2.5 trillion of Treasury bonds and the Social Security Fund some $2.8 trillion. So the government would, in part, be defaulting to itself.

• Harvard University will punish students for enrolling in single-sex finals clubs (the campus’s version of fraternities), due to perceived sexual assault problems in the clubs.
• The University of Albany has expelled two students who falsely claimed they were the victims of racially motivated violence.
• Scripps College gives students bad advice about how to be a social justice “ally.” It turns out an administrator came up with the guidance.
• This could be Gary Johnson’s libertarian moment.
• Salon‘s Amanda Marcotte laments that Captain American has been re-made into a “douchey libertarian.”
• Aren’t these links great? You’re welcome, commenters.

Like everything else in politics, the rise of Donald Trump will look perfectly predictable in retrospect. Right now we’re still in a rough patch, with many pundits still smarting from the shame of getting so many forecasts wrong, but once that passes we’ll all be able to discuss this with the certainty that comes when you’re talking about things that have already happened. If you could turn back the clock to last June, knowing what we know now, it wouldn’t be hard to spin a story making the case that this crazy man on an escalator is actually on track to win the nomination. Why, it’s all perfectly obvious!

Look, you could say. We all know there’s a deep well of discontent in the Republican grassroots right now. That anti-establishment sentiment comes in many flavors and it can move people in different directions, but at a backlashy time like today it’s easy to see it taking the shape of the nationalism that Trump is espousing. No, he’s not a conventional candidate, but history surely shows that pop-culture figures are often able to leverage their fame into political success. And yes, the party leadership won’t like it, but have you looked at Congress lately? The party leadership can’t control squat anymore. They haven’t even settled on a candidate of their own yet. Just watch. You’ll see.

Sounds plausible now, because we know that’s what happened. But you’ll notice I didn’t write anything like that when it really was June. I don’t remember anyone writing that in June, though by summer’s end there were reporters who recognized which way things were heading.

Full disclosure: I wasn’t one of them. I’m pretty sure I avoided any foolishly public predictions about what was going to happen—the occasional Twitter wisecrack aside—but if you talk to any of the friends and relations who’ve asked me over the last year who I thought would win the party’s nod, they’ll tell you the only thing I said that panned out was the six-word warning I always inserted at the beginning: “I’m no good at political predictions.” I made two mistakes early on that made me doubt Trump could clinch the nomination, and while I dropped the first one fairly quickly, I held onto the other for far too long.

The first mistake was pretty simple: Because I’ve always thought of Trump as a goofy blowhard, I carelessly assumed that almost everyone else did too. Then he zoomed up in the polls, and I saw that my impression of the man wasn’t as widely shared as I thought. OK, out with that idea; I guess this guy can channel that grassroots discontent after all.

Mistake #2: I thought the party gatekeepers would be able to deny the nomination to someone they so disliked. Yes, the establishment had been having trouble keeping the base in line lately, but the presidential nomination process was its home turf, and I figured those fogies would be able to defend it. (Just look at how badly they routed the Tea Party insurgents four years ago.) Instead, as we all know, the old guard wasn’t able to coalesce around a candidate until very late in the game—and not even then, really. And even if they had managed to pick someone as their champion early on (call him Jebscott Christio), it’s not obvious to me now that this mystery candidate could’ve beaten Trump this year. For me, the biggest lesson of this primary season is just how weak the traditional centers of Republican power have become.

Well, now we know better: We really do live in a world where the alpha-male antihero of a post-Sopranos cable drama can be the GOP’s presumptive nominee. If you predicted that future, I congratulate you. But not too heartily—you have to live in this timeline too.

The parents of Andrew Sadek — the 20-year-old North Dakota college student who in 2014 was found floating in a river with a bullet in his head and wearing a backpack full of rocks after secretly working as a confidential informant (C.I.) — have announced their intention to file a wrongful death lawsuit against the Richland County Sheriff Office and the officer who recruited Andrew, Deputy Sheriff Jason Weber.

The family’s attorney, Lance Block, told Reason that the family has asked the Minnesota Bureau of Criminal Apprehension (BCA) to step aside from the case, which the family feels has been ignored by law enforcement since Andrew turned up dead. The Sadeks have written to U.S. Attorney General Loretta Lynch and the FBI, requesting their involvement in solving what they believe to be Andrew’s murder, but which they say local authorities have speculated was a suicide. 

Sadek, whose tragic story was first covered by Reason TV in 2015 and later cited on the floor of the House by Rep. Steve Cohen (D-Tenn.), was arrested in 2013 after selling $80 worth of marijuana to a confidential informant, then threatened with 40 years in prison unless he agreed to become a confidential informant.

Video footage of Sadek’s interrogation shows Weber encouraging the college student to make more “contacts” in the drug trade. Sadek, who had no lawyer representing him, was also ordered to keep his status as a C.I. a secret, including from his parents. 

It wasn’t until Andrew’s body was found on the Minnesota side of the Red River that his parents learned he had been working as a C.I. Since then, the Sadeks say they have been given no indication that any of the law enforcement agencies who had a hand in busting their son and using him as bait for drug dealers were investigating his death as a potential murder. 

The wrongful death suit will allege both fraud and negligence, Block explained to Reason. He added that the suit will argue that Sadek was lured into becoming a C.I. with lies, and that once he was put in this obviously dangerous and compromised situation, there was no oversight from the officers he reported to. 

Block — who also represented the family of Rachel Hoffman, a Florida college student turned C.I. who was murdered by the drug dealers police had ordered her to buy a gun from — told Reason “of all the cases I’ve ever looked at, [Sadek’s] is the worst case management of a C.I. I’ve ever seen.” 

In 2015, the North Dakota Attorney General’s office released a report indicating it had no concerns with how law enforcement handled Sadek’s case and suggested only minor reforms (if they can even be called that), such as assigning a supervisor to each case and holding a “Pre-Ops briefing.”

Block says the Sadek family is “committed to seeing law enforcement held accountable” for its role in the events which led to Andrew’s death, and that “they hope this case will inspire the North Dakota legislature to take action and institute reforms or the abolishment” of first-time offenders being used as C.I.s. 

Watch Reason TV’s original report on Andrew Sadek below.