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Dale Franks

Dale Franks’ QandO posts

Economic Statistics for 12 Jan 12

Today’s economic statistical releases:

Initial Jobless claims have been declining for several weeks, but last week jumped 24,000 to 399,000. The first week of the year is always bad like that, though. Often, it’s the worst week of the year. I think the seasonal variations really confound the government’s ability to factor in the loss of temporary holiday jobs.

December retail sales were worse than expected. Sales were up 0.1% over last month and, ex-autos, actually declined -0.2%. Ex-autos and Gas, sales were flat. Retail sales for October and November were also revised downwards. On a year-on-year basis, however, sales were up 6.5%, and up 6% ex-autos. So today’s report is a disappointment, but not a disaster.

The Bloomberg Consumer Comfort Index was -44.7 last week, up from -44.8 the prior week. That’s the highest reading since July.

Business inventories and sales both rose 0.3% in November, keeping the stock-to-sales ratio unchanged for a 5th straight month.

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Dale Franks
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Economic Statistics for 11 Jan 12

Today’s economic statistical releases:

The MBA reports Mortgage applications are on the rebound after 3 weeks of sharp declines. Purchase applications rose 8.1% and refinance applications rose 3.3% last week. The composite index rose 4.5%.

We’re waiting, at the moment, for the release of the Fed’s Beige Book report on the economy, due out at 2PM EST.

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Economic Statistics for 10 Jan 11

Today’s economic statistical releases:

The NFIB Small Business Optimism Index  rose for a 4th straight month by 1.8 points to 93.8.

Inventory build corrected sharply in November wholesale trade, increasing only 0.1% as businesses kept their inventories in check.

In weekly retail sales: ICSC-Goldman Store Sales plunged -5.4% in the Jan 7 week, with Year on year sales growth only 2.8%. Redbook also reports a strong sales decline, with the year-on-year rate falling from 4.9% to 3.3% last week.

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Observations: The QandO Podcast for 08 Jan 12

This week, Bruce, Michael, and Dale talk about the president’s recess appointments and the new US military strategy.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

Economic Statistics for 6 Jan 12

Today’s economic statistical releases:

The Monster employment index fell 7 points in December to 140, as global economic uncertainty keeps hiring plans cautious.

But you don’t care about that. You care about the December Employment Situation. The BLS reports that 200,000 net new jobs were created last month, with the unemployment rate falling to 8.5%. Average hourly earnings increased by 0.2% while the average workweek rose 0.1 hours to 34.4 hours. The labor force shrunk by 50,000 but household employment rose 176,000 and the number of unemployed declined 226,000, according to the household survey. The labor force participation rate held steady at 64.0%. The U-6 unemployment rate, the broadest measure of unemployment, fell from 15.6% to 15.2%. Every indication is of a slowly and mildly improving labor market in December.

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Dale Franks
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Proposed Constitutional Amendment

I think the president’s recess appointment power should be revised, as indeed the entire process of nomination and confirmation to appointed posts. The recess appointment power is really a holdover of the days when Congress was absent from Washington DC for 6 to 9 months of the year. At the same time, I don’t think the Framers intended for Congress to defeat appointments via filibuster, either. A president deserves an up-or-down vote on his nominees. So I would propose an amendment that does the following things:

1. Repeal the power of the president to make recess appointments.

2. The Senate must return a confirmation vote on all presidential appointees within 60 working days.

3. If no vote has been held within 45 working days, cloture on the debate will be automatically imposed, and all other Senate business must cease until a confirmation vote is held.

4. If a confirmation vote is not held within 60 working days, the nomination is automatically confirmed, and the Senate majority and minority leaders will be expelled from the Senate, and barred from reelection or reappointment to the Senate during the current term.

This would eliminate the president’s ability to sneak in an unconfirmable nominee during a recess, and would force him to be more selective about his nominees, and would force the Senate to explicitly confirm or reject every nominee, or wave bye-bye to the Senate leadership.

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Obama’s recess appointments II (Updated)

President Theodore Roosevelt made more than 160 recess appointments during a Senate break of less than a day in 1903. According to the Congressional Research Service (PDF):

[T]he President made recess appointments during a transition between sessions of less than a day in length, where no concurrent resolution regarding the transition between sessions had been adopted. In fact, it appears that little time elapsed between the sessions on this occasion. When the first session of the 58th Congress ended, at noon on December 7, 1903, and the second session began soon thereafter, President Theodore Roosevelt made over 160 recess appointments—mostly of military officers. President Roosevelt treated the period between these sessions as a “constructive recess.”

This particular case, the "recess" was literally seconds long. The Senate was not pleased, and 14 months later issued a report that condemned the President’s actions in that particular case; however (PDF):

The 1905 Senate Judiciary Committee Report was issued fourteen months after this action and, as is indicated by the quotation included above, emphatically rejected Roosevelt’s action. It is important to note, however, that the Report, while expressing disapprobation of the President’s exercise of the recess appointment power in such a manner, could be interpreted as validating the execution of intrasession recess appointments generally. Furthermore, Roosevelt’s actions could be viewed as a practical manifestation of the potential infirmities of the Knox interpretation: that is to say, if a formalistic interpretation of the Clause rests upon a concern that allowing intrasession appointments will foster systematic avoidance of the Senate’s advice and consent function, the fact that a President is able to make such appointments during an instantaneous “constructive recess” of the Senate would appear to belie such a distinction.

Indeed, part of the relevant language of that report states:

It was evidently intended by the framers of the Constitution that [“recess”] should mean something real, not something imaginary; something actual, not something fictitious. They used the word as the mass of mankind then understood it and now understand it. It means, in our judgment, . . . the period of time when the Senate is not sitting in regular or extraordinary session as a branch of Congress, or in extraordinary session for the discharge of executive functions; when its members owe no duty of attendance; when its Chamber is empty; when, because of its absence, it cannot receive communications from the President or participate as a body in making appointments. – Senate Report No. 58–4389, at 2 (1905).

At the very least, a colorable argument can be made that the mere existence of pro-forma sessions held for the specific purpose of disallowing recess appointments, during a time when the Senate is unable to meet to discharge its advice and consent functions, is itself an unconstitutional usurpation of the president’s Constitutional powers. There is nothing in the Constitution to indicate the president’s recess appointment power is any less important than the Senate’s advice and consent power.

President Roosevelt’s “constructive recess”, which took place between 12:00pm and 12:01pm on 7 December, 1903 surely seems a stretch of the idea of what a recess is. But, in the proximate case of President Obama it just as surely a stretch to argue that the Senate was "in session" while it was unable to meet to conduct any business.  Indeed, the specific adjournments about which we are concerned here explicitly stated that no business would be conducted.

Madam President, I ask unanimous consent that when the Senate completes its business today, it adjourn and convene for pro forma sessions only, with no business conducted on the following dates and times, and that following each pro forma session the Senate adjourn until the following pro forma session: Tuesday, December 20, at 11 a.m.; Friday, December 23, at 9:30 a.m.; Tuesday, December 27, at 12 p.m.; Friday, December 30, at 11 a.m.; and that the second session of the 112th Congress convene on Tuesday, January 3, at 12 p.m. for a pro forma session only, with no business conducted, and that following the pro forma session the Senate adjourn and convene for pro forma sessions only, with no business conducted on the following dates and times, and that following each pro forma session the Senate adjourn until the following pro forma session: Friday, January 6, at 11 a.m.; Tuesday, January 10, at 11 a.m.; Friday, January 13, at 12 p.m.; Tuesday, January 17, at 10:15 a.m.; Friday, January 20, at 2 p.m.; and that the Senate adjourn on Friday, January 20, until 2 p.m. on Monday, January 23; that following the prayer and pledge, the Journal of proceedings be approved to date, the morning hour be deemed expired, and the time for the two leaders be reserved for their use later in the day; further, that following any leader remarks the Senate be in a period of morning business until 4 p.m., with Senators permitted to speak therein for up to 10 minutes each, and that following morning business, the Senate proceed to executive session under the previous order.

As John Elwood puts it at the libertarian/conservative legal blog "The Volokh Conspiracy":

Concluding that such pro forma sessions (which by design are not for conducting business) interrupt the recess of the Senate and thus prevent recess appointments would present a risk to separation of powers because it would allow the Senate unilaterally to frustrate the President’s exercise of a power granted him by the Constitution, which the Framers considered to be important to keep the government functioning by filling offices.  Cf. McAlpin v. Dana, No. 82–582, slip op. at 14 (D.D.C. Oct. 5, 1982) (“[T]here is no reason to believe that the President’s recess appointment power is less important than the Senate’s power to subject nominees to the confirmation process.”).

So, it is far from clear that it was the President, rather than the Senate, who was acting in a manner that violated the Constitutional separation of powers.

Alas, the case of the Cordray nomination still has an unfortunate wrinkle for the president. The specific statutory language of Section 1066 of Dodd-Frank states that the functions of the CFPB cannot be turned over from the Secretary of the Treasury “until the Director of the Bureau is confirmed by the Senate in accordance with Section 1011.” Section 1011, in turn, states: “The Director shall be appointed by the President, by and with the advice and consent of the Senate.”

So, while the president arguably has the power to make recess appointments during pro-forma sessions of the Senate, the statutory language of the law provides that the CPFB cannot be created as an independent agency until after its first Director is confirmed by the Senate. In effect, this means that, while the president may make a recess appointment to the CPFB post, the Bureau that post oversees cannot actually be created until the Director is confirmed by the Senate. So, according to the statute, Mr. Cordray is the bureau chief of a non-existent bureau, until he can be confirmed. So, I hope they can find a nice office for him somewhere, with a comfortable napping couch.

This, in turn, brings up the question of whether sections 1066 and 1011 of Dodd-Frank consist of an unconstitutional violation of the separation of powers by impeding the president’s power to make recess appointments.

But, I’m pretty sure I don’t want to get into that issue at this point.

What should be clear, though, is that President Obama’s recess appointments are, in fact, arguably legal and constitutional, while the practice of pro forma sessions designed to prevent recess appointments are arguably illegal and unconstitutional.

Moreover, the Congress has a number of options for overturning the appointment of Mr. Cordray. They can refuse to fund the CFPB until he is confirmed. They can impeach him. As a recess appointee, they can reduce his pay to nothing.

The bottom line is that there are substantial tensions to recess appointments, and a historical lack of clarity as to what the scope and limits of recess appointments are. When both houses agree to adjourn and hold themselves in recess, the president’s power to make such appointments is unquestioned. But it is certainly unclear that it is constitutional for the Senate to adjourn sine die for weeks at a time, except for pro forma sessions at which no business is conducted and no quorum is present, in order to specifically impede the president’s recess appointment powers.

Whatever the actual practice has been in terms of when presidents made recess appointments, or whether presidents in the past have accepted the practice of pro forma sessions, or even whether someone argued a different view about such appointments in the past, is entirely irrelevant.  It might be instructive to know these things in order to make personal judgments about the character of the respective parties, but it has nothing whatsoever to do with the constitutional issues at hand.

The only relevant questions are, is the Senate in session or is it not?  Is the Senate in session when no quorum is present, the members are not available to meet, and no business is conducted for weeks? Is the Senate in session when it is incapable of providing the advice and consent function for weeks? If the answer to those questions is "no", then the Senate is in recess as a practical matter and pro forma "sessions" are nothing more than a sham with but one design: to subvert the Constitution. That is true whether the president is George W. Bush or Barack H. Obama.

Update: Commenter Pogue Mahone notes another Congressional Research Service opinion (PDF) that specifically states the initial appointment of the CFPB director can, in fact, be made via recess appointment:

Footnote 3:
"P.L. 111-203 § 1011. Although the CFP Act requires the CFPB Director to be confirmed by the Senate, the President could appoint a Director temporarily without Senate confirmation through his constitutionally provided power to make recess appointments. See U.S. Const., art. II, § 2, cl. 3 (“The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”). A recess-appointed Director likely would be considered to have all of the authorities that would be held by a Senate-confirmed Director.

I have, however, seen other legal analyses that say otherwise. Note the word "likely" in the last sentence, above.

Again, my argument is not that the president can’t appoint the director via recess appointment, but that it can be argued the agency’s powers can’t be transferred to the CFPB until the statutory requirement is satisfied. He can be appointed the director of all he surveys, and still have no legal power, no salary, and no agency until the letter of Dodd-Frank is satisfied. The treasury Department could whip him up some spiffy business card, though. Unless congress defunds that, too. That’s a possibility some legal scholars are arguing, anyway.

I think, however,  CRS opinion is correct. The "advice and consent" phrase is pretty pro forma, and reflects the usual nomination/confirmation process, rather than setting up a specific ban on the recess appointment. Certainly, I’d presume the Constitutional recess appointment power would trump the statutory language. It’s amusing to ponder, but it seems pretty clear that a recess appointment to a non-existent position is effectively no appointment at all. Not that there wouldn’t be plenty of lawyers happy to argue otherwise.

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Economic Statistics for 5 Jan 12

Today’s economic statistical releases:

Auto Sales were mixed last month, coming in at a 13.6 million annual rate, the same as November. Light vehicle sales rose 2.8%, however, the best since the "Cash for Clunkers" program expired in August 2009.

Chain stores are reporting sales throughout the day today. So far, about 1/2 of the reporting stores show improved year-on-year sales from last month. Additionally, some chains are raising their investor guidance following the sales results, confirming improved profitability and sales.

The Challenger Job-Cut Report shows that layoff announcements totaled 41,785 in December. That’s right on trend for the last 3 months.

The ADP Employment Report indicates a big increase in private payroll growth, to 325,000 new jobs for December. While I suspect the overall December Employment Situation, which the BLS will release tomorrow, will be at least mildly positive, 325,000 new jobs seems like a stretch for the month. December’s always a tricky month anyway, due to seasonal employment, and the adjustment factors that try to account for it. A BLS increase of 160,000+ new jobs wouldn’t surprise me tomorrow, though, nor would a tick down in the Unemployment rate.

Initial jobless claims fell 15,000 last week to 372,000 from the prior week’s revised 387,000 (an upward revision of 6,000).

The Bloomberg Consumer Comfort Index rose to -44.8 in the period ended January 1 from -47.5 the prior week.

The ISM’s Non-Manufacturing Index rose slightly to 52.6, below expectations for 53.4, and only 0.6 higher than last month.

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Economic Statistics for 4 Jan 12

Today’s economic statistical releases:

Factory orders rose 1.8% in November, mainly on aircraft orders. Ex-transportation, orders rose 0.3%.

A short week and seasonal adjustments aside, the MBA reports that mortgage activity declined, as mortgage applications fell by -3.7%. Purchase applications fell  a steep -9.7%, while re-finance apps dropped by -1.9%.

In weekly retail sales, ICSC-Goldman Store Sales rose a strong 1.2% over the last week, and 5.3% over last year. Likewise, Redbook reports a year-over-year same-store sales increase of 4.9%.

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Economic Statistics for 3 Jan 12

Today’s economic statistical releases:

The ISM Manufacturing Index rose to 53.9 from last month’s 52.7, as manufacturing growth accelerated. This confirms the reports released last week from the various Fed regions, most of which showed manufacturing growth.

Construction spending has been volatile, but the latest month shows a monthly increase of 1.8%, and a year-over-year increase of 0.5%.

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