Kisses, Huma Abedin, and Gradual Escalation

I was filing a friend-of-the-court brief recently—hold on, this will get relevant—and was corresponding with the counsel for the parties: Federal Rule of Appellate Procedure 29(a)(2) requires that the brief either be accompanied with a motion for leave or “state[] that all parties have consented to its filing,” so I e-mailed the parties asking, “Would you consent to the filing of the brief, so that we can file it without drafting an accompanying motion for leave?” The side we are supporting responded promptly with “Appellees consent,” but the other side responded with “No objection.”

No objection? Wait, is that consenting to the filing? Or just saying that they won’t file an opposition to our motion for leave, if we file a motion? I wasn’t going to tell the judges that the parties “have consented” when one of them merely wasn’t objecting.

So I responded with, “just to confirm, may I note that as your consenting to the filing of the brief.” Not hearing back, I e-mailed again, “Sorry to trouble you, but I just wanted to confirm that you indeed consent.” Then I got back, “Yes that’s fine,” and I figured that was enough.

By sheer coincidence, I was planning on kissing a woman that day …. No, actually, that wasn’t it (these days, I only kiss my wife, and we aren’t on Rule 29(a)(2) terms); but I do remember, back in the day, 35 years ago now, I was talking to an older female friend of mine about a woman I had indeed asked for permission to kiss, and my friend told me quite firmly that women didn’t like to be asked about that.

And now to Huma Abedin: The Guardian reported, based on its review of Abedin’s not-yet-released memoir,

[Headline:] Longtime Hillary Clinton aide Huma Abedin describes sexual assault by US senator …

Abedin details her alleged assault while describing her work for Clinton when the former first lady and future secretary of state and presidential candidate was a US senator from New York, between 2001 and 2009….

[A]fter describing a Washington dinner attended by “a few senators and their aides” but not Clinton, Abedin writes: “I ended up walking out with one of the senators, and soon we stopped in front of his building and he invited me in for coffee. Once inside, he told me to make myself comfortable on the couch.”

She says the senator took off his blazer, rolled up his sleeves and made coffee while they continued to talk.

“Then, in an instant, it all changed. He plopped down to my right, put his left arm around my shoulder, and kissed me, pushing his tongue into my mouth, pressing me back on the sofa.

“I was so utterly shocked, I pushed him away. All I wanted was for the last 10 seconds to be erased.”

Abedin writes that the senator seemed surprised but apologized and said he had “misread” her “all this time”. As she considered how to leave “without this ending badly”, she writes, the senator asked if she wanted to stay.

“Then I said something only the twentysomething version of me would have come up with—’I am so sorry’—and walked out, trying to appear as nonchalant as possible.” …

Abedin later followed up that she did not consider it sexual assault (and also that the senator was someone she “knew and … was very comfortable with”), and I think that’s right: An unwanted open-mouthed kiss, generally isn’t considered sexual enough to be sexual assault. (California law, for instance, defines misdemeanor “sexual battery” as touching “the sexual organ, anus, groin, or buttocks of any person, and the breast of a female” “against the will of the person touched, … for the specific purpose of sexual arousal, sexual gratification, or sexual abuse.”)

At the same time, this did make me wonder: Is this indeed something that should be seen as at least improper behavior (whether or not illegal), or just as a nonculpable misreading of the signals that led to an awkward situation? My general sense of “the rules,” at least back when I was dating in the mid-1980s to early 2000s, was what one might call “gradual escalation”: Some degree of acquaintance (could be very short, if the meeting was in certain kinds of contexts) and conversation, followed by kissing, followed by more touching, followed by undressing, followed by sex of various sorts; instead of asking for overt permission, one of the parties (usually the man, but could be the woman) would try the next step, and then see if that was rebuffed.

Skipping steps (e.g., kissing a total stranger, touching breasts without kissing or something like that in between, etc.) was bad, trying a rebuffed step (in the absence of some indication of greater interest) was bad, but merely trying the next step and learning that it wasn’t wanted was seen as potentially awkward but not reprehensible. If you want to map this to the legal rules, one might think of (say) kissing someone after what you thought was an interaction that reflect some interest as involving a known risk that the kiss wouldn’t be welcomed, but in context it wasn’t seen as a “substantial and unjustifiable risk” and thus wasn’t what the criminal law would call “reckless.”

I personally liked the idea of more express consent; I don’t think much would be lost in life if that were the norm in romantic contact and not just in appellate briefing. My sense, though, is that just was quite far from the custom.

But that was just my recollection, so I decided to ask several close female friends of mine, whom I’ve known for decades, for their thinking on the subject; with their permission, I quote their responses. They are obviously not a random sample of the population. But I can confidently say that they are intelligent, thoughtful, educated, independent women, who I expect have found themselves the object of romantic interest from a considerable number of people, and whose judgment I much respect. They are also a politically and professionally mixed group (though with lawyers overrepresented, of course), and they have a mix of marital statuses: married, divorced, and never married.

Here are their answers, lightly edited and excerpted, using numbers instead of names for privacy reasons:

[1.] Normatively, “I think asking for explicit permission is the only right approach,” but norms were different in “the aughts.” Still, even applying the gradual escalation norms, “coffee to ‘pushing tongue in my mouth’ is skipping a whole bunch of steps,” such as “a soft closed mouth kiss,” “sit[ting] closer and closer,” “‘casual’ physical contact,” “ask[ing] about your relationship status,” etc.

[2.] “Yes it’s sexual assault. Yes the norms have changed. This behavior was sexual harassment in the 80’s. Women just didn’t come forward because not much was done to help them.

“No it’s not a casual pass. They’re not on a date. This was a situation where they were work colleagues and he in his position took advantage. Women deal with this shit all the time and have to behave gracefully while navigating men’s unwarranted attention. Now that people are more outspoken, the lines are clearer.”

[3.] “Yes, the term ‘sexual assault’ has been broadened in the last decade or two, and rightly so, IMO.

“My sense it that it was a pass that went wrong, but also one done by a man who has power to a women who does not. I’d wager he’d done it before, with no consequences, and might have even been successful several times. That’s not to say that even if he was, the attention was wanted or reciprocated with other women. In that situation, especially back then, women often did not feel they had the agency they have now, fearing the repercussions, especially when one’s job might be at stake.”

[4.] “It does seem like a rather sudden escalation and certainly an inappropriate one. If someone had done it to me, I probably would have hit him.” But it’s not sexual assault.

[5.] “This is not sexual assault to my mind, and calling it such diminishes acts that I do classify as sexual assault. We need to return to the idea that some men are cads (meaning, he knew what he was doing and was hoping she would just go along with the powerful senator) and some are oafs (meaning that he misread her, isn’t good at non-verbal cues generally, and feels terrible about this confusion).”

[6 (summarizing a phone conversation).] Not sexual assault, pretty consistent with gradual escalation norms; being asked before being kissed was very unusual.

[7 (summarizing a phone conversation).] Not sexual assault, may be slimy but not that bad.

[8.] “My sense is the pass was crass but in no way assault. Not then. Not now. His response to her strong recoil was, in my view, proof that he intended to be assertive rather than assault. It was a botched execution. It’s a broadening of the term sexual assault to the extreme. One that waters down the term.

“I do not think men should need to ask permission to kiss a woman, though when that has been the case personally, I found it charming in the one instance I recall since the person clearly knew I was interested. This is, of course, personal preference but in general, I still think it’s nice for a man to take the lead and, well, read the room. Women like that, too! If they are interested. There’s the rub in intimate relationships. I hope to never need to press the kiss/no kiss-o-meter prior to a first kiss with someone. Boy would that take the fun out of it.”

“There’s no way this was considered sexual assault by an 80’s definition. I hope it does not constitute assault today.”

[9.] “Definitely not sexual assault.” “I read the excerpt to each of [my children] separately, verbatim, then asked the question.”

“[Daughter,] 13: Definitely not sexual assault. It was just a communication issue. I then asked her if the guy was supposed to ask first. Answer no.

“[Son,] 15: Same answer. But there might be a problem if the guy had done this to a lot of women—it still wouldn’t be sexual assault, just that the guy had issues.

“I do think things have changed, but more so around consent when intoxicated, and the right to revoke consent. I don’t think there are ‘norms of escalation.’ The sudden kiss is seen in all sorts of TV shows and such nowadays.

“But more significantly, you forgot to include an arguably salient part of the book excerpt—I forget what it was exactly, but something about how when, later, Abedin saw that senator and [Hillary Clinton] was there, and [Clinton] seemed to sense that something had happened, as if the senator had done that to other women—which feeds into [my son’s] comment. I don’t think that makes the senator a predator or anything, just a run-of-the-mill lech, like a guy with sex on the brain—not uncommon, and IMO not that big of a deal.”

Finally, here’s a reaction from Prof. Sherry Colb (Cornell), whom I asked about this (I classify this separately because the other responses are all from women I asked because they were my close friends, while Prof. Colb is a professional acquaintance whom I asked because of her thoughtfulness on such matters):

[10.] “I imagine that the women you spoke with about their preferences (for avoiding express questions) were probably thinking about what they wanted from a guy that they were really interested in.

“With such a guy, they preferred not to have him ask ‘is it okay if I kiss you?’ or something like that. They would prefer for him to know that they are interested and to take a chance and kiss them. That’s obviously fine when they in fact are hoping he will kiss them.

“I wonder, though, how they would feel if you asked them about a guy that they find gross or just completely unattractive who somehow got it into his head that his feelings for them were reciprocated. Would they prefer that he ask ‘can I kiss you?’ or would they prefer that he just do what that senator did with Huma Abedin?

“I would bet a lot of money that when a woman is alone with a man for whom she has no romantic feelings, she would much much prefer that he inquire than that he start kissing her or whatever. In other words, the utility of questions is not for people who really want to hook up. It is for people who don’t.

“I also think what the women may really be telling you is that they want guys to know what they want without having to ask. This wish is understandable, of course. What could be more romantic than being interested in someone and having that someone be so tuned in to you that they can tell what you would most want them to do? The problem comes up where the woman either feels no attraction for the guy (presumably Huma’s situation with the senator) or where the woman feels attracted to him but does not want to go as ‘far’ (hard to avoid middle school jargon) as he does.

“I think that the population of women who don’t want the particular romantic contact that the guy wants (whether that be any contact at all or a level of contact that exceeds what they are comfortable with) should be the relevant population when we decide what qualifies as sexual imposition or assault. Why? Because if a woman is super-interested in a guy, then she loses a whole lot less when he asks for a kiss (instead of just kissing her, as she wishes he would do) than a woman who is not at all interested in the guy loses if he starts touching or kissing her.

“It is easy to make fun of such things as the Antioch Code when you have two people who really just want to hook up, but the utility of asking is really for people who don’t want this person on them and prefer not to have to fight him off. Adding to my sense that questions might be best is the fact that in studies, men seem to commit a lot of Type 1 errors when assessing a woman’s interest in them. Women will self report that they were just being friendly, and men will interpret what’s happening as sexual interest. To me, words can be really useful under these conditions.”

In any event, I thought all these views were worth presenting, in part precisely because they ranged over a broad spectrum. I’d be interested in hearing our readers’ reactions.

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The Firearms Policy Coalition Offers a Simple Way to Resolve the Texas SB 8 Case

The Supreme Court.

 

The Supreme Court is about to hear Whole Women’s Health v. Jackson, one of two cases filed against Texas’ SB 8 anti-abortion law. The case focuses on the procedural issue of whether abortion providers and others can challenge the law in federal court, given that all enforcement is delegated to private “bounty hunter” litigants, who stand to get awards of $10,000 or more if they prevail. Current Supreme Court precedent usually requires plaintiffs filing a pre-enforcement lawsuit against a state government for violating constitutional rights to target a specific set of officials who can be enjoined by the court. In this case, it initially appears there are no such potential defendants, because no state official is allowed to enforce the law.

For reasons I summarized in an earlier post about the SB 8 litigation, if this subterfuge is allowed to stand, it would create a road map for avoiding judicial review for other state violations of constitutional rights. Simply confine enforcement to private litigants, and you’re good to go!

Fortunately, an amicus brief filed by the Firearms Policy Coalition (which got involved because of the potential threat to Second Amendment rights), offers a simple way to resolve the problem (see also Jonathan Adler’s post about the brief):

Laws that deter or chill the exercise of constitutional rights violate those rights. Such deterrence or chill constitutes a present harm for which litigants can seek present redress without having to absorb the tremendous costs and risks of putting their heads on the proverbial chopping block by violating those laws and hoping for eventual vindication. Even where the risk derives from prospective litigation initiated by private parties invoking state law, such risks are still the product of state action in adopting and implementing the law. Whether the relevant state actors are the “deputized” potential plaintiffs and/or the court officials and jurists that wield the power of government at every stage of the litigation process, the chilling of protected conduct is the consequence of invoking state power to such ends, wholly apart from the outcome in any particular case. Indeed, the Texas law is designed precisely to have that effect, biasing the playing field in a manner that likely violates due process, the right to petition, and various other provisions of the Constitution wholly apart from its restriction on abortion. In such circumstances, there should be no serious barrier to enjoining any and all state actors or agents who facilitate or play a role in such a farce.

For purposes of dealing with laws like SB 8, state courts and private litigants “deputized” to enforce the law can be considered state actors, and therefore subject to injunction. State courts are no less bound by the federal Constitution than other state government employees, and should be no less subject to injunction when they violate constitutional rights – or threaten to do so.

I would go a step further than the FPC brief and suggest that, when faced with something like SB 8, a federal court should simply be able to enjoin the state government as a whole, rather than focus on a specific set of officials (or “deputized” private litigants). As explained in my previous post on SB 8:

Even if we do not know which individuals, if any, plan to enforce an unconstitutional law, or have the authority to do so, a court should be able to issue a general injunction precluding enforcement of that law by anyone who might otherwise be in a position to undertake that task.

If it turns out that no one is willing or able to enforce it, then the injunction will be unnecessary, but also won’t do any harm; it would, in that scenario, forbid something no one was going to do anyway. But such a general injunction could play a valuable role in forestalling violations of constitutional rights in situations where it is difficult to predict in advance who the violators will be.

The FPC brief highlights a reason why this approach is consistent with the text of the Fourteenth Amendment. It follows logically from the text of the Privileges or Immunities Clause:

[T]he Fourteenth Amendment would seem to supersede any previous potential state sovereign immunity as against violations of the  federal Constitution. Looking at the Privileges or Immunities Clause, for example, a State may not  “make or enforce any law which shall abridge the privileges or immunities of citizens of the United
States.” U.S. CONST., amend. XIV.

Notice that the text forbids “making” laws that abridge privileges or immunities of citizens, as well as “enforcing” them. The entity that makes the laws is the state legislature, and this provision opens the door to injunctions that do whatever is necessary to render any such unconstitutional enactments null and void. As the FPC brief points out, many conservatives, including Supreme Court justices  Thomas and Gorsuch have long argued that the Privileges or Immunities Clause is the right vehicle for “incorporating” the Bill of Rights against the states. And other rights protected by the Fourteenth Amendment (including any constitutional right to abortion) also surely qualify as privileges or immunities for enforcement purposes.

The most obvious criticism of this approach is that it would open up states to a variety of potentially frivolous lawsuits. Perhaps so. But federal courts have a variety of tools for swiftly disposing of frivolous suits, including using Federal Rule of Civil Procedure 12(b)(6), which allows dismissal of a complaint for  “failure to state a claim upon which relief can be granted.” Judges don’t need to tolerate assaults on judicial SB 8 in order to prevent frivolous litigation.

The FPC brief is also notable for its succinct and powerful summary of why preenforcement challenges to laws violating constitutional rights are so important (see pp. 4-10 of the brief). As it points out (pp. 9-10), SB 8’s structure may make it even more of a menace than other laws intended to “chill” the exercise of a constitutional right.

In my previous post on this case, I emphasized that my critique of SB 8 is not about the issue of whether Roe v. Wade should be overruled or limited, or whether there is a genuine constitutional right to abortion. Rather, my concern is preventing SB 8 from creating a dangerous road map for undermining judicial protection of a wide range of constitutional rights:

My strategy would not preclude the Supreme Court (or other courts) from simply ruling against abortion rights (or other constitutional rights claims) on the merits. If the Court wants to overrule Roe v. Wade because a majority of justices think it’s a terrible decision, they can still do so. The same goes for Citizens United, decisions protecting gun rights, and so on. The purpose of my proposal is not to freeze any particular precedent in place, but to forestall the use of private enforcement mechanisms as a tool for evading judicial review of laws that threaten constitutional rights, and in the process creating dangerous “chilling effects.”

That’s a goal worth pursuing regardless of what you think of Roe v. Wade and abortion rights. Even if you welcome Texas’ circumvention of Roe, you might not be so happy to see the same tools used to threaten constitutional rights you care about more.

 

 

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Foundation for Individual Rights in Education on the University of Florida Matter

Here’s their statement from yesterday; I expect it’s short precisely because it was posted on the weekend, when some people have days off:

FIRE is deeply concerned by a report in The New York Times that the University of Florida has barred three professors from participating as witnesses in a voting rights lawsuit against the state of Florida.

FIRE has said it before, and we’ll say it again: The profound civic importance of fair trials requires the ability of fact and expert witnesses to come forward to testify truthfully without fear that their government employer might retaliate against them. Public university faculty are no exception. We call on UF to reverse course immediately.

UF should be aware that Plymouth State University’s ill-considered decision to punish faculty who had testified in a trial ultimately cost the state of New Hampshire’s taxpayers $350,000. FIRE warned Plymouth State then, and we’re warning UF now: If you pick a fight with the First Amendment, you will lose.

Here’s FIRE’s summary of the Plymouth State incident:

On July 31, 2018, Plymouth State University (PSU) punished two professors for their participation in a criminal proceeding. PSU adjunct professor Nancy Strapko testified as an expert witness for Kristie Torbick, a high school guidance counselor convicted of sexual assault, and professor emeritus Michael Fischler sent a letter to the court during Torbick’s sentencing. After their participation was publicly criticized in the months leading up to Torbick’s sentencing in early July, PSU refused to rehire Strapko and suspended Fischler from teaching until he completes Title IX training. On September 7, FIRE sent a letter to PSU reminding the university that professors’ expression on matters of public concern is protected by the First Amendment, and that citizens should not be disciplined for speaking on behalf of those facing the criminal justice system. On February 15, 2019, PSU settled with Strapko, agreeing to pay her $350,000 to avoid a lawsuit over her firing and agreeing to release a public statement acknowledging the importance of witnesses participating in the criminal justice process.

For my longer analysis, see this post.

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Iran Blames Israel & US For Cyberattack That Crippled Nationwide Fuel Network

Iran Blames Israel & US For Cyberattack That Crippled Nationwide Fuel Network

Starting Tuesday Iran’s gas station network saw many thousands of stations go offline as Iranians across the country were unable to use government-electronic cards for government subsidized gas due to a massive cyberattack on the online system that allows payment processing.

The network was reportedly down for at least 12 hours, with some gas stations being disabled for days – and almost 1,000 still disabled into the weekend, sparking widespread anger as long lines formed and fuel was urgently sold at greatly marked-up cash prices. Amid an ongoing Iranian investigation, a top Iranian general is the earliest to lay direct blame on Israel and America for the crippling cyberattack.

Gas shortages & high prices have impacted multiple Middle East countries, via Reuters.

“From our point of view, this attack has definitely been carried out by the Americans and the Zionists,” said Brig. Gen. Gholam Reza Jalali, who serves chief of the Civil Defense Organization of Iran head.

He was quoted in Iran’s semi-official Tasnim News Agency as saying further that “Serious infrastructural cyber warfare has started.” He urged, “We should take it seriously and rectify our areas of weakness.”

“We are still unable to say forensically, but analytically I believe it was carried out by the Zionist Regime, the Americans and their agents,” Jalali said in the state TV in an interview of the ongoing investigation. The influential general explained that this fresh cyberattack resembles to prior ones where authorities concluded Israeli and US covert involvement:

Tuesday’s attack “technically” resembles two previous incidents whose perpetrators “were unquestionably our enemies, namely the United States and the Zionist regime”, the Revolutionary Guards’ Gholamreza Jalali said.

“We have analysed two incidents, the railway accident and the Shahid Rajaei port accident, and we found that they were similar,” Jalali, who heads a civil defense unit responsible for cyber activity, told state television late Saturday.

As of Saturday, the AFP reports that “Around 3,200 of the country’s 4,300 service stations have since been reconnected to the central distribution system, the National Oil Products Distribution Company said, quoted Saturday by state news agency IRNA.”

Neither Washington nor Tel Aviv have yet to address the new Iranian charges, which in the past have tended to go unanswered. There’s also the possibility of well-funded Iranian opposition and dissident groups, namely the MEK, or “People’s Mujahedin of Iran” – which has itself been known to work with Israel’s Mossad intelligence agency. It also has support from American politicians, with former Vice President Mike Pence on Thursday speaking at an MEK conference in D.C.

Tyler Durden
Sun, 10/31/2021 – 17:15

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Foundation for Individual Rights in Education on the University of Florida Matter

Here’s their statement from yesterday; I expect it’s short precisely because it was posted on the weekend, when some people have days off:

FIRE is deeply concerned by a report in The New York Times that the University of Florida has barred three professors from participating as witnesses in a voting rights lawsuit against the state of Florida.

FIRE has said it before, and we’ll say it again: The profound civic importance of fair trials requires the ability of fact and expert witnesses to come forward to testify truthfully without fear that their government employer might retaliate against them. Public university faculty are no exception. We call on UF to reverse course immediately.

UF should be aware that Plymouth State University’s ill-considered decision to punish faculty who had testified in a trial ultimately cost the state of New Hampshire’s taxpayers $350,000. FIRE warned Plymouth State then, and we’re warning UF now: If you pick a fight with the First Amendment, you will lose.

Here’s FIRE’s summary of the Plymouth State incident:

On July 31, 2018, Plymouth State University (PSU) punished two professors for their participation in a criminal proceeding. PSU adjunct professor Nancy Strapko testified as an expert witness for Kristie Torbick, a high school guidance counselor convicted of sexual assault, and professor emeritus Michael Fischler sent a letter to the court during Torbick’s sentencing. After their participation was publicly criticized in the months leading up to Torbick’s sentencing in early July, PSU refused to rehire Strapko and suspended Fischler from teaching until he completes Title IX training. On September 7, FIRE sent a letter to PSU reminding the university that professors’ expression on matters of public concern is protected by the First Amendment, and that citizens should not be disciplined for speaking on behalf of those facing the criminal justice system. On February 15, 2019, PSU settled with Strapko, agreeing to pay her $350,000 to avoid a lawsuit over her firing and agreeing to release a public statement acknowledging the importance of witnesses participating in the criminal justice process.

For my longer analysis, see this post.

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Warning: Joe Biden’s “Eat The Rich” Pitch May Come Back To Bite You

Warning: Joe Biden’s “Eat The Rich” Pitch May Come Back To Bite You

Authored by Jonathan Turley,

Below is my column in the Hill on the renewed effort to pass a wealth tax by the Biden Administration. The effort to tax “unrealized capital gains” has been growing for months as an alternative to Elizabeth Warren’s wealth tax.

However, it raises similar constitutional questions. What was most notable is that the new tax was simply put into the Senate bill with the support of the Biden Administration without a single hearing or debate. That led to objections from figures like the Chair of the House Ways and Means Committee Rep. Richard Neal who noted that it was not vetted or studied. It is not part of the House bill.

However, many are still pushing the concept despite the significant questions over its constitutionality.

Here is the column:

President Joe Biden has struggled to get the massive new spending bill through Congress with a pitch that would make Joe Isuzu blush: We talk about price tags. It is zero price tag” and “My Build Back Better agenda costs zero dollars.

The trillions in spending is “free” — according to Biden — because others will pay for it. It’s like claiming your college tuition was free because your parents got the bill.

Biden is hardly the first politician to shrug off spending by saying “the rich will pay for it.” Indeed, during the Democratic primary, the candidates lined up behind figures like New York Mayor Bill De Blasio declaring “we will tax the hell out of the wealthy.” Of course, the “eat the rich” mantra has been part of politics for over 200 years. What is different now is that President Biden has embraced a plan to tax the rich that is not just unworkable and unprecedented but likely unconstitutional.

The Biden administration appears ready to give up on a massive tax increase — but intends to keep its “freebee” pledge by taxing the “super rich.” However, it is not the target but the tax that is different. The administration wants to tax “unrealized capital gains,” a term akin to oxymorons like “exact estimate,” “openly deceptive,” or — perhaps more apropos with the Biden tax — “going nowhere.”

Biden is suggesting that he will pay for the new spending by taxing people not on what they have earned but what they could earn from selling assets. Most people have assets that increase in value over time. Consider a family home. Over the course of many years, it can easily double in value, but you do not “realize” that money unless you sell it. Biden is suggesting that the government should start taxing you based on any increased value of the things you own, even though you have not actually made that money. It doesn’t matter that the home or stock or art could ultimately go down in value after you are taxed on the higher value. Indeed, if you tax some unrealized gains, you could in extreme cases force people to sell assets like a home to pay the tax on income that they did not make.

The administration has started where few would object: billionaires.

The proposal would apply to fewer than 1,000 individuals who are worth more than $1 billion or have annual incomes above $100 million for three consecutive years. Taxing the appreciating asserts of a bunch of fat cats is hardly a rallying cry for street protests.

The “Wyden plan” would allow for a one-time tax on unrealized gains, with an annual tax on each billionaire’s gain in net worth. Initially, it is expected to address losses, illiquid assets and enforcement; however, the limitations to the super-rich is politically rather than constitutionally driven.

And, if successful, it is unlikely that this untapped source of money would be confined to the Bezos class. It would allow the government to tax wealth.

The point is that the Biden administration is seeking to tax the value of assets rather than income.

In many ways, this is a more creative way to achieve Sen. Elizabeth Warren’s (D-Mass.) long-standing dream of a wealth tax. As I have addressed earlier, the wealth tax runs counter to constitutional limits on the taxation authority of Congress. Article One permits Congress to “lay and collect taxes, duties, imposts and excises.” However, it requires that these “be uniform throughout the United States.” The next section says, “no capitation or other direct tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.” A wealth tax is a “direct tax.”

There are arguments that a wealth tax would be constitutional, and there are cases on both sides of that issue. Advocates cite estate taxes and other forms of taxation. However, there is then the small problem of the 16th Amendment, which states “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” The 16th amendment was passed after the Supreme Court struck down an income tax as an unapportioned direct tax. The amendment was passed to allow for an expanded federal tax authority, but it was specifically limited to “income.”

While Warren thrilled liberal audiences by promising to go after the “Rembrandts … diamonds and … yachts” of the wealthy, it was practically and constitutionally dubious. Now however, the Biden administration wants to take a less direct and smaller step toward the same such tax. If successful, there would be little to stand in the way of a full wealth tax on all Americans.

Such a tax, however, would have to pass constitutional muster with the Supreme Court, which would have to accept the oxymoronic notion of non-income income. It would also have to sign off on the idea of the government taxing the value of assets that continually fluctuate or change. It is like waiting for a gambler to win a hand at blackjack in Vegas and taking 37 percent of his chips before he can play the next hand.

Underlying this push is the notion that the wealth of individuals is really “our” money being kept from us. That was born out during the last primary debates when Warren made a show of gleefully rubbing her hands together after saying that she would take some of the wealth of her opponent John Delaney, a self-made millionaire worth $65 million. People pay taxes on income when it is earned. They also pay taxes when assets are sold. Now the Biden administration wants to tax assets before they become income — imposing a continual taxation of wealth.

Even law professors pushing this tax admit that it is not clear that it would pass constitutional review. If it didn’t — with Biden’s “free” trillions already spent — the public, already saddled with a deficit in the trillions, could find itself the recipient of a bill for trillions more for what they thought was free tuition, day care and other programs.

Some lies can be harmless, even charming. When Joe Isuzu promised customers that a new car “has more seats than the Astrodome,” you did not have to buy the car. With this new tax, Joe Biden is promising a free car that the public may have to buy whether they like it or not.

Tyler Durden
Sun, 10/31/2021 – 16:50

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Pelosi To Placate Progressives? Top Dem Mulling Dual Votes Next Week As Biden Approval Hits All-Time Low

Pelosi To Placate Progressives? Top Dem Mulling Dual Votes Next Week As Biden Approval Hits All-Time Low

House Speaker Nancy Pelosi is considering a plan to hold votes on both massive spending packages next week – the (now) $1.75 trillion social welfare bill that Sen. Joe Manchin (D-WV) has tentatively signaled support for, and the $1.25 trillion infrastructure package that House progressives vowed to shoot down unless the first package is passed at the same time.

According to the Washington Times‘ Haris Alic, citing “A source close to Democratic leadership,” no official decision has been made – however there’s growing pressure to “move forward” as President Biden represents the increasingly chaotic United States while traveling abroad amid all-time low approval ratings.

You know it’s bad when Chuck Todd can’t put sprinkles on this turd…

More via the Washington Times:

Earlier this week, Mrs. Pelosi underscored the high stakes facing Mr. Biden as he prepares for meetings with leaders from the world’s 20 major economic powers and attends the U.N. Climate Change summit in Glasgow, Scotland.  

“What this legislation will do is to help the president meet his goals, the goals of America,” said the speaker. “When he goes to meetings with the G-20 now and then to meet His Holiness, the pope, and to go to Glasgow, we want him to go as strong as possible.”

It remains to be seen whether progressive Democrats agree.

The 98-member Congressional Progressive Caucus has long said the infrastructure and social welfare bills are linked and will have to pass together. A significant hurdle towards that goal was overcome earlier this week when Mr. Biden agreed to a 1,684-compromise framework on the social welfare bill.

We have the text, that’s what we needed,” said. Rep. Pramila Jayapal, a Washington Democrat who chairs the CPC.

Meanwhile, Bernie Sanders says not so fast – saying on Sunday that he wants to hash out what’s in the $1.75 trillion package of social benefits before it goes up for a vote in the House.

“I think there has got to be a framework agreed upon in the Senate that all of us know is going to be implemented before the members of the House vote,” Sanders told CNN‘s “State of the Union.”

“You don’t have to have all of the legislative language, but you have to have a statement which says A, B, C, D and E is going to be in the package and 50 members of the Senate are supporting it,” he added.

According to Sanders, he spent “all of yesterday on the telephone” in an effort to include provisions designed to cut prescription-drug prices,” adding “The fight continues.”

“That bill is still being worked on literally today. It’ll be worked on tomorrow. I believe we’re making some progress in making it even stronger than it is,” he continued. “I think we can put that together within the next short period of time.”

In short, next week is make-or-break for the Democrats.

Tyler Durden
Sun, 10/31/2021 – 16:25

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Portland Travel Group Says City Is Too Scary For Tourists And Not Just On Halloween

Portland Travel Group Says City Is Too Scary For Tourists And Not Just On Halloween

By John Sexton of Hot Air.com

Travel Portland is the name of group that promotes tourism to the city. It describes itself as “a promoter and steward of this evolving city and its progressive values, which have the power to transform the travelers who visit us.” But Wednesday the group presented a report to the Portland City Council with some bad news. The evolving city and its progressive values have become a big turn off to tourists.

Here’s the problem,” said Commissioner Mapps. “Around the world, too many people associate Portland with homelessness and homicide.”

“Today, a significant chunk of humanity is afraid of spending time and money in our city,” he continued.

That skepticism surrounding the city is holding back major economic recovery, according to the President and CEO of Travel Portland.

“Continued attacks and breaking glass on buildings throughout the city, but especially downtown, continued to affect this hard to overcome sentiment, “ said Jeff Miller. “Our central city occupancy in September lags every competitive city we tracked.”

One specific problem the city is facing is the cancelation of major conferences. Travel Portland CEO Jeff Miller said, “Portland’s specific issues related to civil unrest and public safety concerns has exasperated the negative occurrences and declining attendances and group cancellations.” In other words, riots and shootings are bad for business. In fact, Travel Portland now has a page on its website devoted to frequently asked questions about safety and protests in the city. Here’s a sample:

In 2020, the death of George Floyd spurred more than 100 continuous days of protests, with most participants acting peacefully. Some individuals used the opportunity to behave unlawfully, and the city experienced some riots.

While the city occasionally sees small groups engage in disruptive behavior, activity is typically contained away from visitor attractions and areas where most visitors stay and explore. Protests have significantly decreased in recent months, in part due to city efforts to address concerns directly.

Portland saying it experienced “some riots” is the equivalent of Death Valley announcing it has experienced some warm weather. Over a period of three months starting in May 2020, Portland police declared 22 unlawful assemblies and 23 riots.

Despite all of that, local media argued the coverage of the riots was overblown. In January of this year, the Oregonian argued that, contrary to claims Portland was a city under siege, everything was fine. That got picked up by a number of people including CNN’s Brian Stelter.

But it turns out everything hasn’t been fine. A double shooting this week by a meth addict brought the number of homicides this year to 72, beating a record the city set back in the 1980s. And the rioters haven’t given up either. Just this month, Antifa went on a vandalism spree estimated to have done $500,000 in damage in less than one hour. The destruction was planned in advance to honor an Antifa supporter who died two years ago under unclear circumstances.

In August of this year, there was a gun battle between a member of the Proud Boys and Antifa in broad daylight. That same day an Antifa member assaulted a female journalist. Shockingly, tourists don’t find any of this appealing. Who could have predicted that nightly riots to defund the police could have negative consequences? Here’s the full Fox 12 report:

Tyler Durden
Sun, 10/31/2021 – 16:00

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Why Goldman Sees Ethereum Soaring To $8,000 By Year End

Why Goldman Sees Ethereum Soaring To $8,000 By Year End

Are cryptocurrencies an inflation hedge?

Few questions in the financial universe prompt a more forceful, vigorous, polarizing – and often angry – response than what may well be the simplest, if most far-reaching one: are cryptos truly digital gold, and do they offer protection against inflation during times of soaring prices? Needless to say, an affirmative answer would have huge consequences in a time when the US is experiencing the highest inflation since  the 1970s.

Now, Goldman appears to have finally found the answer: in a note from the bank’s Global Markets managing director Bernhard Rzymelka, the bank shows that crypto assets have traded in line with inflation breakevens since 2019. Specifically, he charts the Bloomberg Galaxy Crypto Index (red) on a log axis, versus the USD 2y forward 2y inflation swap (blue). While correlation may no be causation, the chart below is clear enough to indicate that inflation certainly is a driving force behind the relentless crypto meltup to all time highs (which is delightfully ironic as some of crypto’s biggest detractors are also some of the biggest Fed fanboys, who habitually cheer on the Fed’s catastrophic monetary policy; little did they know that the record surge in cryptos would be most direct outcome of said policy).

What does this mean practically?

Well, if market-based views of inflationary pressures persist, we may soon see a meltup across the crypto universe and especially one token.

As the Goldman strategist writes, the local backdrop looks supportive for Ethereum as it has tracked inflation markets particularly closely, likely reflecting the pro-cyclical nature as “network based” asset.” And, as Rzymelka notes, “the latest spike in inflation breakevens suggests upside risk if the leading relationship of recent episodes was to hold (grey circles below).”

This, according to Goldman, lines up well with the Ethereum chart. In the past few days, the price of the crypto broke out to new all time highs, rising just shy of $4,500 with a narrowing wedge, which to Goldman is “either a sign of exhaustion and peaking… or a starting point of an accelerating rally upon a break higher.” To Goldman, the answer to this rhetorical question is easy, and the bank hints that ethereum could surge as high as $8000 in the next two months if the historical correlation with inflation fwds persists.

And while some could argue that ETH is due for a pullback, Goldman counters that while the recent surge may appear stretched, “the RSI has yet to hit the overbought levels seen at past market highs.”

One final word of caution. As the Goldman traders notes, US inflation swaps imply core PCE inflation at or above 2.50% for the next 5 years. That’s a lot of overheating, and current market levels hence price a rather aggressive interpretation of the Fed’s AIT framework of “moderately above 2% for some time” already.

On one hand, the upside to inflation markets – and possibly crypto assets – hence looks limited unless the market starts doubting the FOMC’s inflation credibility (much) more fundamentally. In other words, as we have been saying since 2014, cryptos have emerged as the asset class that will benefit the most if we have another major inflationary/stagflationary scare.

As Goldman concludes, “this lines up rather well with the Ethereum chart, suggesting a late stage rally with longer term market top ahead.”

Tyler Durden
Sun, 10/31/2021 – 15:35

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“The Fire Is Hot”: Why Morgan Stanley Is Bracing For A Collapse In The US Consumer Early Next Year

“The Fire Is Hot”: Why Morgan Stanley Is Bracing For A Collapse In The US Consumer Early Next Year

By Michael Wilson, chief equity strategist at Morgan Stanley

Trick or Treat, or Both?

Over the past few weeks, I have been highlighting the increasing probability of a colder winter but a later start than previously expected. In other words, our ‘fire and ice‘ narrative remains intact, but timing of ice has been pushed out (see “”Our Fire And Ice Narrative Remains Intact”: Why Wall Street’s Most Bearish Analyst Simply Refuses To Capitulate“).

Having said that, with inflation running hot in both consumer and corporate channels, the Fed is expected to formally announce its tapering schedule at this week’s meeting, with perhaps a more hawkish tone to convince markets that it isn’t falling too far behind the curve. So, the fire segment (higher rates driven by a less accommodative Fed spurring multiple compression) is clearly under way and has been a focus for investors since the Fed started prepping the markets at Jackson Hole.

With rising inflation now getting so much attention from both investors and the Fed, we shift our focus to the ice segment – i.e., the ongoing macro growth slowdown – and when we can expect it to bottom and reverse course. As regular readers know, we have been expecting a material slowdown in both economic and earnings growth amid a mid-cycle transition. The good news is that so does consensus, with 3Q economic growth forecasts having come down sharply before last week’s disappointing outcome. While its estimates of 4Q GDP have also declined, the consensus expects growth to reaccelerate sharply from here. Most have blamed the Delta variant, China’s crackdown on real estate or supply shortages for the economic disappointment in 3Q, with the assumption that all three will get better as we move into year-end and 2022.

Needless to say, we’re not as sure about that assumption, mainly because we think the more important driver of the slowdown has been a mid-cycle transition from an extreme post-recession peak, an adjustment that is not yet finished. In our view, it would be intellectually inconsistent to think that the mid-cycle transition slowdown won’t be worse than normal, given the greater-than-normal amplitude of this entire economic cycle so far. We can’t help but recall our position over a year ago, when we argued for much faster earnings growth than the consensus. We argued then that the record fiscal stimulus would effectively serve as a government subsidy for corporations to over-earn. Today, we find ourselves on the direct opposite side of consensus again, but for the same reasons. Since we believe consensus failed to see that logic last year, it seems plausible it could now be missing the corollary.

In short, we think the earnings growth slowdown will be worse and last longer than expected as the payback in demand arrives early next year with a sharp year-over-year decline in personal disposable income. While many have argued that the large increase in personal savings will keep consumption well above trend, it looks to us as if personal savings have already been depleted to pre-COVID-19 levels.

Granted, the run-up in stock, real estate and crypto asset prices does provide an additional buffer to savings, but much of that wealth is concentrated in the upper quartile of the population. At the lower end of the income spectrum, consumer confidence has fallen sharply the past few months and it’s not just due to the Delta variant. Instead, surveys suggest that many lower-income consumers are worried about their finances again with inflation increasing at double-digit rates in necessities like food, energy, shelter and healthcare – i.e, the fire is hot.

Bottom line, the fundamental picture for stocks is deteriorating as the Fed starts to tighten monetary policy and earnings growth slows further into next year, turning outright negative for some companies.

However, asset prices are continuing to rise as retail investors keep plowing excess cash into these same investments. Meanwhile, with strong seasonal trends and pressure to perform high at this time of year, many institutional investors we speak with are staying fully invested for these technical reasons. If our analysis is correct, we think that this bullish trend can continue into Thanksgiving, but not much longer.

Enjoy the treat for now, but beware the trick, and manage your risk accordingly.

Tyler Durden
Sun, 10/31/2021 – 15:10

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