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12 February 2013

State of the Union (2012): Examined

Looking at the debates between Mr. Obama and Mr. Romney, and comparing them to the Constitution was a useful exercise, so I thought I'd try doing it with Mr. Obama's State of the Union address. Ideally, I'd like to do it to the opposition response as well, but I have a three-week old, sooo... we'll see how far I get. Please note that I am not fact-checking, and for the most part I'm also not pointing out the (many) places where I think this president is wrong. I make no bones of it: I think that Mr. Obama is very bad for America. But my propose here is to compare his comments to our Constitution, according to my best understanding of the document, as the Founders intended it to function, and that's all.

The Washington Post has the transcript I am using.

First of all, we have a State of the Union address because of the Constitution. Article II Section 3 requires of the Executive: "He shall from time to time give to the Congress information of the state of the Union, and recommend to their consideration such measures as he shall judge necessary and expedient..." That's the purpose of the exercise. Back in the day, Wikipedia tells me, it used to be submitted as a written report, rather than the three-ring circus it is today, where he can't even complete a sentence without being interrupted for applause. I find that particular practice odious. Not only is it intensely annoying to try to listen to a speech like that, but it reinforces the exaggerated sense of importance attached to the Presidency. He's a guy. A guy with a big job, to be sure, but reading the Constitution reveals that it is Congress, not the Executive, that is really the first among the three branches. The Presidency has been, for generations, accumulating power and customs that smack of the monarchy our Founders tried so hard to avoid.

So. On to what he actually said.

Mr. Obama: " ...last month I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought, and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world."

The Preamble tells us that one of the purposes of the Constitution is providing "for the common defense." I have issues with the idea that we are defending America when our troops are in Iraq. If the shoe was on the other foot, if Iraqi troops were in America, deposing an American president and defending Iraqi "interests," I don't think that many would have a hard time calling it imperialism. It would be called an invasion, and a threat to our sovereignty, and rightly so. I can't think that it's anything different when American troops go around doing the same thing. So, while I approve of bringing home the troops, I don't buy the pretty language that it's inevitably wrapped up in. I don't think for a minute that we were safer here in our own land because our troops served there. Once again, be considering the situation, were it reversed, it becomes much more clear. If the Iraqis were here on American soil, "defending" Iraq, would their people and their land be safer, on the other side of the world, for their efforts? Or would it stir up hatred, and create a big fat target for those who are inclined to extremism? No disrespect to the troops themselves, but I think that our Commander-in-Chief (as well as many of his predecessors in both parties) has done them and our nation a grave disservice, and spent their precious blood on something other than the common defense our law provides for.

Mr. Obama: My grandfather, a veteran of Patton’s Army, got the chance to go to college on the G.I. Bill.

I'd like somebody to show me a Constitutional rationale for this sort of benefit. I see that they have the power to "raise and support armies (Article I Section 8)," and to "provide and maintain a navy (IBID)," but both of those speak of troops in the present tense: troops now serving. I can't find authorization for the extravagant benefits enjoyed by vets. Perhaps I am missing something.

Mr. Obama: ...but most hard- working Americans struggled with costs that were growing, [and] paychecks that weren’t...

This is inflation that he's describing, and inflation is interesting. Perhaps it's a bit of a side-track away from the address, but I think it's interesting enough to go there. First, what is inflation:

a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value from currency (from Dictionary.com)

Basically, when there is more physical money in circulation, that money has less value. Counterfeiting is forbidden because it devalues a currency; when our government does the same thing it's called "quantitative easing." We're currently on QE3 - that is, they've done this "quantitative easing" three times now. Used to be, when we had a gold or silver standard, that the number of dollars in circulation was tied to the value of the precious metal that backed it, but our nation did away with that; there's been no huge stash of gold in Ft. Knox for quite some time. Now our money has value because... the Federal Reserve Bank said so, and our people believe it. But it works a bit differently when the money is backed by some actual commodity, or, better yet, is a precious commodity itself. William Blackstone explained it this way:

Money is an universal medium, or common standard, by comparison with which the value of all merchandise may be ascertained: or it is a sign, which represents the respective values of all commodities. Metals are well calculated for this sign, because they are durable and are capable of many subdivisions: and a precious metal is still better calculated for this purpose, because it is the most portable. ...

As the quantity of precious metals increases, that is, the more of them there is extracted from the mine, this universal medium or common sign will sink in value, and grow less precious. ... The consequence is, that more money must be given now for the same commodity than was given an hundred years ago. And, if any accident was to diminish the quantity of gold and silver, their value would portionably rise. A horse, that was formerly worth ten pounds, is now perhaps worth twenty; and, by any failure of current specie, the price may be reduced to what it was. Yet is the horse in reality neither dearer nor cheaper at one time than another: for if the metal which constitutes the coin was formerly twice as scarce as at present, the commodity was then as dear at half the price, as now it is at the whole.
-William Blackstone, quoted in The Founders Constitution, vol. 3 pg. 2

This same process happens with paper money, but without the limits that are natural to metal. Paper currencies caused a whole lot of problems in our post-revolutionary history. Shay's Rebellion was, at least in part, related to terrible inflation problems. In studying the process of ratification of the Constitution, I discovered that paper money and its attendant problems was a factor in the ratification debates. Delaware was the first State to ratify, and money was among the reasons for their rapid and unanimous ratification:

"And as everywhere else, there was the matter of paper money. Many Delawareans supported the Constitution because it prohibited both the states and Congress from issuing paper money and because it upheld the sanctity of contracts." -Ratifying the Constitution, page 46.

Whoa. Hold the show. The Constitution forbids both State and Federal governments from issuing paper money? But the dollar - the familiar cash we all use - is paper money! I haven't figured out how that works, but I did figure out what the author was talking about in Ratifying the Constitution when he says that it's forbidden to both State and federal governments. Finding the part where the States are forbidden was the easiest part:

"No State shall... coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts... (Article I Section 10)"

I suspected that "bills of credit" meant paper money, so I went looking in the Federalist Papers. There it was, in Federalist 44.

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. In addition to these persuasive considerations, it may be observed, that the same reasons which show the necessity of denying to the States the power of regulating coin, prove with equal force that they ought not to be at liberty to substitute a paper medium in the place of coin."
-James Madison

Note Madison's very blunt commentary on paper currencies: they are "pestilent" in their effects. Once you realize how little there is by way of natural limitation to the supply of money when its paper rather than metal, it's relatively easy to see why that would lead to problems.

It took me a little longer to figure out how the Constitution forbids paper money to the Federal government. It does it by not delegating the power to them. The Bill of Rights spells it out in the Tenth Amendment:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

So, if the Constitution doesn't say the federal government can do it, they can't do it. At least, not lawfully. The fact is, they do an awful lot of things that they're not authorized to do, and neither the States nor the People have been able to call them on it. Some of that arises out of the fact that the passage of the Seventeenth Amendment took power from the States' legislatures to hold Senators directly accountable for encroachments into State sovereignty. Part of it, I believe,  is ignorance and indifference on the part of the people, including those elected to both State and federal offices.
In any case, the Constitution permits Congress to coin money, but delegates no power to print paper money, therefore, they are forbidden to do so. Additionally, the Constitution requires that all State debts be paid in gold or silver, which I don't believe has happened when I have been aware of things!

So where do our paper dollars come from and how do they work? I don't know the whole story. I do know that the Federal Reserve Bank that issues them (and incidentally also sets our interest rates) is a private institution, not a governmental entity. I also understand that, although they are entrusted with the care of our money supply, they don't tell Congress what they're up to. Hence the "Audit the Fed" movement.

Oh. And now I notice that this is the 2012 State of the Union. Don't I feel silly. I thought all this time I was working on this year's address!

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