An Indirect Bailout for Puerto Rico

Puerto Rico Bankruptcy

I wrote last year about why Puerto Rico got into fiscal trouble.

Like Greece and so many other governments, it did the opposite of Mitchell’s Golden Rule. Instead of a multi-year period of spending restraint, it allowed the budget to expand faster than the private sector for almost two decades.

As the old saying goes, that’s water under the bridge. Since we can’t un-ring the bell of excessive spending in the past, what’s the best option for the future?

The House of Representatives has approved a rescue plan that is getting mixed reviews.

Desmond Lachman of the American Enterprise Institute is supportive but not enthusiastic about the proposal.

The proposed Puerto Rican Restructuring Bill is to be welcomed as a first step towards resolving the island’s chronic debt problem… However, …the bill will be little more than a stop-gap measure to get us through the U.S. election cycle without a full blown Puerto Rican economic and financial crisis before November.

The legislation creates a board with some power to force fiscal and economic reforms.

…a seven-member oversight board…is to have exclusive control to ensure that Puerto Rico’s fiscal plans are enacted and enforced as well as to ensure that necessary reforms are undertaken to help the island regain fiscal solvency. The bill also includes a stay on debt-related litigation to create an environment for consensual negotiations with creditors. It is explicit that it will not involve taxpayer money to bail out the island.

So if there’s no taxpayer money involved, why do people say the legislation is a bailout?

Because the proposal allows Puerto Rico to defer payments on existing debt and then to restructure at least some of that debt. And “restructure” is a politically correct way of saying “partial default.”

So Puerto Rico will be bailed out to the extent that it will be able to stiff bondholders to some degree.

…it would afford the island with a temporary stay on debt principal repayments to allow more time for the voluntary restructuring of its debt mountain. That stay would forestall an otherwise disorderly Puerto Rican default as early as July 1, when some $2 billion in debt repayments come due.

Lachman views that as the least worst of the possible options, so this indirect bailout is not an argument against the legislation. At least from his perspective.

He’s more worried about the fact that much more needs to be done to restore growth on the island.

…it should be obvious that if the island’s economy were to continue to contract at its present rate of around 1 percent a year and if 2 percent of its able-bodied population were to continue to migrate to the mainland each year as is presently the case, the island would become progressively less capable of servicing its $72 billion in public debt or honoring its $45 billion in pension liabilities. A lack of restoring economic growth would also mean that the island would probably need a series of debt write-downs over time.

Writing for Forbes, Ryan Ellis has a much more optimistic assessment of the overall deal.

…the bill is a big win for limited government conservatives. It has no taxpayer bailout of Puerto Rico–not a single dime of taxpayer money is sent down there. …Puerto Rico will have to work their own way out of $72 billion in debt and defaults. They will be helped by an “oversight board”…modeled after the D.C. control board from the 1990s and 2000s, and their job is to approve fiscal plans and budgets, conduct audits, etc.

But Ryan acknowledges that “work their own way out of” is just another way of saying that there is likely going to be a partial default.

The oversight board…will first try to get the 18 classes of bondholders to agree to a voluntary debt restructuring with the Puerto Rican government and government sponsored enterprises. If that fails, the control board will recommend a debt restructuring plan to be enforced by a non-bankruptcy federal judge.

That being said, he’s confident that the legislation won’t be a template for profligate states such as Illinois and California.

Congress is exercising its Constitutional authority to provide all “needful and useful” laws to govern possessions, which is a separate power from the federal bankruptcy clause. There’s no risk of “contagion” to other states.

Though he agrees with Lachman that there’s very little hope for a growth spurt.

It lacks the necessary pro-growth reforms needed for Puerto Rico to get out of its decade-long depression, reverse migration back to the island, attract capital, and create jobs.

Which is why Ryan likes the ideas being pushed by Congressman McArthur of New Jersey. He’s especially fond of territorial taxation for American companies that do business on the island.

The solution is to enact the same type of international tax reform we want to do in the rest of the world–the U.S. companies pay tax in Puerto Rico, but don’t have to pay a second tax to the IRS just to bring the money home. That’s what the rest of the world does, and it’s called “territoriality.” It’s a basic principle of conservative tax reform to move from our outdated “worldwide” tax system to a “territorial” one. There is no better place to start than Puerto Rico.

That would be a good step, and it would be a nice bookend to the very good law Puerto Rico already has for high-income taxpayers from the mainland.

Other conservatives have a less sanguine view of the legislation. Here are excerpts from a coalition statement.

People, companies, states, and territories don’t just “go” broke. Willful prior activity is required. …Puerto Rico has a long history of financial mismanagement brought about by progressive politics and crony capitalism.

Amen. Puerto Rico got in trouble because of bad policy. And the bad policy wasn’t just excessive spending. There have also been grossly misguided interventions such as price controls.

So it’s quite understandable that signatories to this statement are not overly excited that Puerto Rico will have a route for partial default.

Progressive politicians, who are already seeking an indirect bailout – in the form of upending the existing legal structure to allow bankruptcy ‐‐ in the U.S. Congress, argue that a bailout or bankruptcy will help the people of Puerto Rico.

They correctly list several procedural reforms and also point out that there are some obvious policy reforms that should be undertaken.

Sensible economic reforms include allowing Puerto Rico (1) to set its own minimum wage law, including not having a minimum wage law; (2) to be exempt from U.S. overtime rules (which have just been greatly expanded by presidential fiat); and (3) to be exempt from the Jones Act, a protectionist measure that regulates U.S. shipping practices.

Sadly, the legislation is very tepid on these non-fiscal reforms.

So what’s the bottom line? Should the law get three cheers, as Ryan Ellis argues? Two cheers as Desmond Lachman prefers? Or only one cheer (or maybe no cheer), which seems to be the position of some conservative activists?

My answer depends on my mood. When I’m going through a fire-breathing-libertarian phase, I’m with the conservatives. Puerto Rico spent itself into a ditch so they should suffer the consequences.

But when I’m in my long-time-observer-of-Washington mode, I try to imagine the best possible (or least-worst possible) outcome, then I think Paul Ryan and the Republicans did a decent job.

In other words, this is like the fiscal cliff deal back in late 2012. Disappointing in many respects, but not as bad as I would have predicted.

The key question now is whether Republicans insist on putting good people on the oversight board.

And that’s not a trivial concern. I remember thinking the 2011 debt limit fight led to a decent outcome because we got sequester-enforced caps on discretionary spending (not as good as a comprehensive spending cap, but still a good step).

And we even got a sequester in early 2013. But then later that year, and last year as well, Republicans joined with Democrats to bust the spending caps.

That doesn’t bode well for any policy that requires long-run fiscal discipline. Though maybe GOPers will be tougher this time since the spending restraint will be imposed on people who don’t vote in congressional elections.

By Dan Mitchell of the Cato Institute.

What’s driving Silicon Valley to become ‘radicalized’

What’s driving Silicon Valley to become ‘radicalized’

SAN FRANCISCO — Like many Silicon Valley start-ups, Larry Gadea’s company, Envoy, collects heaps of sensitive data from his customers.

Recently, he decided to do something with that data trove that was long considered unthinkable: He is getting rid of it.

The reason? Gadea fears that one day the FBI might do to him what it did to Apple in their recent legal battle: demand that he give the agency access to his encrypted data. Rather than make what he considers a Faustian bargain, he’s building a system that he hopes will avoid the situation entirely.

“We have to keep as little [information] as possible so that even if the government or some other entity wanted access to it, we’d be able to say that we don’t have it,” said Gadea, founder and chief executive of Envoy. The 30-person company enables businesses to register visitors using iPads instead of handwritten visitor logs. The technology tracks who works at a firm, who visits the firm, and their contact information.

In Silicon Valley, there’s a new emphasis on putting up barriers to government requests for data. The Apple-FBI case and its aftermath have tech firms racing to employ a variety of tools that would place customer information beyond the reach of a government-ordered search.

The trend is a striking reversal of a long-standing article of faith in the data-hungry tech industry, where companies including Google and the latest start-ups have predicated success on the ability to hoover up as much information as possible about consumers.

Now, some large tech firms are increasingly offering services to consumers that rely far less on collecting data. The sea change is even becoming evident among early-stage companies that see holding so much data as more of a liability than an asset, given the risk that cybercriminals or government investigators might come knocking.

Start-ups that once hesitated to invest in security are now repurposing limited resources to build technical systems to shed data, even if it hinders immediate growth.

“Engineers are not inherently anti-government, but they are becoming radicalized, because they believe that the FBI, in particular, and the U.S. government, more broadly, wants to outlaw encryption,” said prominent venture capitalist Marc Andreessen in a recent interview. Andreessen’s firm, Andreessen Horowitz, is an investor in Envoy.

The government abandoned its effort to force Apple to help unlock the iPhone of one of the San Bernardino terrorists and paid professional hackers to crack the phone instead. But experts say that the issue is far from settled, and will probably be the subject of court and legislative battles.

The FBI has found a way into San Bernardino Syed Farook’s iPhone, and is now dropping bids to force Apple to help them crack into the phone. See all the latest developments in the case, and why the case isn’t over yet. (Jhaan Elker/The Washington Post)

Start-ups are particularly wary, Andreessen said, of legislation proposed recently by Sens. Richard Burr (R-N.C.) and Dianne Feinstein (D-Calif.) that would compel tech companies to build technical methods to share customers’ encrypted data, at a court’s request.

“They believe there’s this window of opportunity that if we build strong encryption now, we can make it a fait accompli. But if we let five years pass, it may never happen,” Andreessen said.

In the past two years, more companies have embraced encryption, which scrambles information so that it looks like a stream of unintelligible characters to an outsider who accessed it without permission. What’s changed more recently, industry officials say, is that companies are encrypting data and throwing away the key to prevent their gaining access, a move that started with Apple but is spreading across the Valley.

This latter tactic is the most worrisome to law enforcement. Government officials have said repeatedly they do not want to outlaw encryption; FBI Director James B. Comey has called strong encryption a vital means of protecting the public’s personal information from hackers.

But officials insist that there must be a technical means to access that information when companies are served with warrants. Otherwise, there will be “profound consequences for public safety,” Comey told Congress in March. Terrorists and criminals are already using messaging services to which tech companies have thrown away the key, he said. Investigators say two such services, WhatsApp and Telegram, were used by terrorists in the Paris attacks last November.

“This is a Silicon Valley delusion that the government wants to outlaw encryption,” Stewart A. Baker, a former National Security Agency general counsel, said in an interview. “I grant that there is a radicalized subculture of engineers that is very prone to that delusion, but it is a delusion.”

Surely not every company will resort to building such systems. Many simply can’t. Their business relies on targeted advertising or the mining of customer data, and cutting off access would be a recipe for failure. But many start-ups that wouldn’t have considered it before the Apple FBI fight are now doing so and discussing the accompanying trade-offs, said Bret Taylor, formerly Facebook’s chief technology officer and now chief executive of the start-up Quip.

The trade-offs can be significant: Heavy encryption risks slowing down your service. It limits the ability to analyze customer behavior or introduce new features. (Encrypting email, for example, would make it harder to search through email.) Once you give customers the only key to their data, you can’t give them a backup if they lose it.

Such efforts over the past few years have been described as part of an arms race between large tech companies and potential invaders, spurred largely by the growing threat of cyberattacks. To some extent, they’ve also been prompted by a newfound wariness of government after Edward Snowden’s revelations about government surveillance, as well as a growing awareness among entrepreneurs of the sheer sensitivity of the data on their services.

Apple led the pack, launching end-to-end encryption with its popular messaging app, iMessage, in 2011. In 2014, the company blocked its own access to information stored on iPhones — data that disappears permanently after 10 failed passcode attempts. (End-to-end encryption enables only the partners trading messages to decode them. The companies providing the means to transmit them cannot.)

WhatsApp, the global messaging service owned by Facebook, announced end-to-end encryption this year, as did Viber, a messaging app that is popular in Europe. These years-long technical efforts predated the FBI case. Cloudera and Box, two larger tech start-ups selling data storage and processing systems to large corporations, have built encrypted systems over the past year in which only the customer has the keys needed to unscramble data.

The case between Apple and the FBI and the possibility of “backdoor” legislation — mandating encryption bypasses for law enforcement — is a new inflection point. Earlier this month, Google launched Allo, a chat app that allows users to switch on end-to-end encryption, and Amazon chief executive Jeffrey P. Bezos said he was exploring measures to encrypt data and throw away the keys on devices owned by the Seattle-based company.

Stealth Worker — a start-up funded six months ago by the prominent incubator Y-Combinator — provides contract cybersecurity experts to early-stage start-ups, which often operate on a shoestring budget. Stealth Worker chief executive Ken Baylor said that in the past month he had been approached by a half-dozen companies looking for ways to build tougher encryption and other secure technical architectures. But many don’t want to talk about it, he said.

“They are afraid of a phone call from someone high up saying that they are unpatriotic,” Baylor said.

Bracket Computing, a 70-person Silicon Valley start-up, embarked on an encryption project about a month ago intended to make it easier for customers to hold the keys to their own data.

That way, “I can’t get subpoenaed the way Apple did,” Bracket chief executive Tom Gillis said. “This clears up the whole issue: If you have an issue with my customer, go talk to my customer, don’t talk to me. I’m just a tech guy, and I don’t want to be in the middle of these things.”

Gillis said that initially, customers seeking the ability to hold the keys to their data were large, sophisticated financial services companies, such as Goldman Sachs and Blackstone. Today, a broader array of companies, including media and automotive firms and small banks, are making these requests. Advances in Intel’s chips, he said, have made it possible to build these complex systems 13 times as fast as in 2010.

Building systems that cut off a company’s access to customer data is time- and resource-intensive, and these systems don’t come without risks.

Envoy CEO Gadea, an engineering prodigy who was hired by Google when he was just 18, estimates that his company’s data-wiping project will take a few months and about three engineers working full time.

Currently, when a visitor enters a building with an Envoy registration system, a message is sent alerting the appropriate employee that they have a guest. Envoy can send such messages — by text, email or other messaging services — because the customer data is stored on its servers, which are hosted remotely by Amazon Web Services, the cloud division of Amazon. The information is encrypted, but Envoy holds the keys to unscramble it. (Amazon CEO Bezos owns The Washington Post).

Under the new protocol, the engineering team will have to reconfigure the system so that the keys to unscramble the data are kept by the customers on the iPads used to sign people in. Envoy will no longer have the ability to access the keys. The technical challenge will be making it possible for the iPads to alert people when they have visitors, instead of having the alerts come from Envoy’s servers. The goal is to make the change unnoticeable to users, Gadea says, but it could take months to get there.

There will undoubtedly be many trade-offs, Gadea said. Not only will Envoy sacrifice the ability to send visitor notifications directly, but customer service also could be become more challenging. Today, if one of Envoy’s 2,000 customers asks for help correcting a mistake in a visitor name or resetting a password, an Envoy customer service rep can lend a hand. Under the new system Envoy’s reps could have their hands tied.

The new system could also make it harder to fix software errors because Envoy will no longer be able to push out automatic updates from its servers. And if a customer loses its passwords or keys, Envoy won’t have the ability to restore the lost data. It will be inaccessible forever.

Gadea said he is not anti-government and would sell Envoy’s services to the FBI if the agency wished to become a customer. “It’s like with your friends,” he said, “you’re always going to find one thing you don’t like about them. But you’re not going to hate a person because of one disagreement.”

And he said he understands the trade-offs.

““For a small startup trying to iterate quickly, it definitely slows things down,” Gadea said. “But in the long run, it’s a competitive advantage and it reduces risk on our company. I can sleep better at night.”

Staff writer Ellen Nakashima contributed to this report

Think Tank Fires Employee Who Questioned Trump Ties

The Center for the National Interest, a Washington-based think tank, has fired one of its fellows after he criticized the organization’s decision to host Republican presumptive presidential nominee Donald Trump for a widely publicized speech, Foreign Policy has learned.

The dust-up marks the latest feud among the country’s top foreign-policy realists over whether to embrace the real estate tycoon — whose more narrow interpretation of U.S. national interests bears some resemblance to their own — or disown him as a charlatan with no serious ties to any intellectual tradition.

The employee, a junior fellow named Alexander Kirss, sharply rebuked the think tank for inviting Trump to explain his foreign-policy platform in an April 27 event at Washington’s Mayflower Hotel.

“Whether intended as an endorsement or not, the Center’s invitation is tantamount to tacit, if not explicit, approval of Trump’s positions,” Kirss wrote in a Monday column for the website War on the Rocks. He added that the businessman’s positions contain numerous “logical flaws and errors.” 

In hosting the mogul, Kirss said the think tank exhibited the same “opportunism displayed by others who have sided with Trump, such as New Jersey Gov. Chris Christie, Alabama Sen. Jeff Sessions, and former presidential candidate Ben Carson.”

He was fired the same day the story published.

Paul Saunders, the executive director of the center, told FP that the decision to terminate Kirss’s position had “nothing to do with Trump.”

“The real issue is that this individual publicly disparaged the organization he was working for,” he said, noting that Kirss had never voiced his misgivings about the event to his superiors. “I don’t think that any employer would tolerate that.”

Kirss, in an email to FP, said the purpose of his piece was not to “publicly disparage the Center or its work, but rather to criticize a broader tendency within the realist movement to anoint political champions without thinking about the consequences of doing so.”

Founded by President Richard Nixon in 1994, the Center for the National Interest was created to serve as a “voice for strategic realism,” an expansive school of thought in international relations that in the context of U.S. foreign policy tends to warn against costly military interventions that do not directly threaten national interests. Prominent Republicans who have been associated with realism include heavyweights such as Brent Scowcroft and former President George H. W. Bush, but realism’s most vocal adherents have largely been relegated to academia.

In the years following the 9/11 attacks, the center’s flagship magazine, theNational Interest, served as a refuge for Republican foreign-policy thinkers who rejected the militaristic impulses of neoconservatives who controlled the party’s commanding heights as the wars in Iraq and Afghanistan turned into embarrassing quagmires.

The rise of Trump, who has denounced the neoconservative agenda andlocked horns with its most prominent adherents, poses difficult questions for the center and realists more broadly. While some of Trump’s positions closely match the realist worldview, especially his complaints that American allies in Europe and Asia are failing to pay their fair share for U.S. protection, many prominent realists are frightened by his impulsive demeanor and find the rationale for his policies to be incoherent.

The center has not endorsed Trump, and some of its members have published criticisms of the businessman in the National Interest, including Vice Chairman Dov Zakheim, a co-signatory of the widely publicized “Never Trump” open letter from March.

The magazine has also published essays strongly supportive of Trump, such as a May column by defense analyst Crispin Rovere.

The center’s relationship with Trump had not garnered much attention at all until it played host to the businessman’s much-touted foreign-policy address in April. Critics of Trump quickly seized on the think tank, accusing its employees and former U.S. ambassador to Afghanistan Zalmay Khalilzad, who introduced Trump, of being lackeys of the reality TV star. The criticisms eventually forced the magazine’s editor, Jacob Heilbrunn, to clarify inPolitico that neither his employer nor Khalilzad was endorsing the candidate — merely providing a venue to air his views.

On Monday, Kirss said those assurances were unsatisfactory. “While the Center’s leaders later claimed that they invited Trump out of a benign desire to expand the scope and tenor of the foreign policy conversation in this year’s election, this line of argument is unconvincing,” he wrote.

“The Center’s defense of the event offered several approving statements of Trump’s views, and the tone of the speech was more that of a booster rally than a serious presentation,” he added in his essay.

Saunders said Kirss’s accusations had little merit and noted that besides hosting a variety of viewpoints on Trump, one of the center’s board members was Maurice Greenberg, a Jeb Bush backer “who contributed millions of dollars to stop Trump.”

“There are many different points of views on Trump, and I think there is a debate certainly at our magazine,” Saunders said. “If Mr. Kirss had approached our editors and wanted to write a piece very similar to the one he wrote that did not disparage the organization … I’m pretty confident that the editors would’ve been happy to publish that.”

In response, Kirss said, “I believe they would have tried to suppress my criticisms had I raised them internally before publication.”

BY JOHN HUDSON 

Photo credit: Al Drago/Getty Images

Clinton’s Email Investigation

hillary-clinton-blackberry-email

Our  investigation of former Secretary of State Hillary Clinton’s email system entered a significant new phase this week.

We announced a schedule  of depositions of her top aides, Cheryl Mills and Huma Abedin, as well as top State Department official Patrick Kennedy, and former State IT employee Bryan Pagliano.

Their testimony is about the creation and operation of Clinton’s non-government email system.  The first witness, Lewis A. Lukens, a deputy assistant secretary, was deposed on May 18.   I can’t say much about the testimony at this point, other than to tell you that it was not helpful to either Mrs. Clinton or the Obama State Department.

U.S. District Court Judge Emmet G. Sullivan set this historic evidence gathering in motion.  Judge Sullivan granted us “discovery” into Clinton’s email system, noting that “based on information learned during discovery, the deposition of Mrs. Clinton may be necessary.”

The depositions are part of our Freedom of Information Act (FOIA) lawsuit that seeks records about the controversial employment status of Huma Abedin, former Deputy Chief of Staff to Clinton.  The lawsuit, which seeks records regarding the authorization for Abedin to engage in outside employment (the Clinton Foundation and other Clinton, Inc. entities) while employed by the Department of State, was reopened  because of revelations about theclintonemail.com system (Judicial Watch v. U.S. Department of State (No. 1:13-cv-01363)).

We have permission from the court to question these individuals for as long as seven hours:

May 18 – Lewis A. Lukens,  deputy assistant secretary of state and executive director of the State Department’s Executive Secretariat from 2008 to 2011, who emailed with Patrick Kennedy and Cheryl Mills about setting up a computer for Clinton to check herclintonemail.com email account.  (This testimony took a little over two hours.)

May 27 – Cheryl D. Mills, Clinton’s chief of staff throughout her four years as secretary of state.

June 3 – Stephen D. Mull,  executive secretary of the State Department from June 2009 to October 2012, who suggested that Clinton be issued a State Department BlackBerry, which would protect her identity and would also be subject to FOIA requests.

June 6 – Bryan Pagliano, State Department Schedule C employee who has been reported to have serviced and maintained the server that hosted the “clintonemail.com” system during Clinton’s tenure as secretary of state.

June 8  – 30(b)(6) deposition(s) of the State Department regarding the processing of FOIA requests, including Judicial Watch’s FOIA request, for emails of Clinton and Abedin both during Clinton’s tenure as secretary of state and after.

June 28 – Huma Abedin, Clinton’s deputy chief of staff and a senior advisor to Clinton throughout her four years as secretary of state and also had an email account on clintonemail.com.

June 29 – Patrick F. Kennedy, undersecretary for management since 2007 and the secretary of state’s principal advisor on management issues, including technology and information services.

As you will see below, in a separate FOIA lawsuit concerning Hillary Clinton and the Benghazi terrorist attack, U.S. District Court Judge Royce Lamberth also ruled that we could conduct discovery into the email practices of Clinton and her top aides.

This court-order testimony could finally reveal new truths about how Hillary Clinton and the Obama State Department subverted the Freedom of the Information Act.

Judicial Watch Seeks Clinton Testimony In Email Investigation

The question of whether Hillary Clinton can be questioned under oath by Judicial Watch attorneys now is squarely before a federal court judge.

We also announced this week that we have filed a proposed order for discovery with a federal court that seeks the testimony of Hillary Clinton, herself, about her use of non-state.gov email account(s) for official State Department business.

This additional discovery comes in a July 2014 Freedom of Information (FOIA) lawsuit seeking records and communications in the Secretary’s Office related to the since discredited talking points used by then-U.N. Ambassador Susan Rice to describe the nature of the September 11, 2012, Benghazi attack (Judicial Watch v. U.S. Department of State (No.1:14-cv-01242)).

Clinton’s proposed testimony would cover the State Department’s search of documents in response to Judicial Watch’s FOIA request and, according to the filing:

  • searches of the Office of the Secretary for emails relating to the September 12, 2012 Benghazi attack and its aftermath, including searches for the Accountability Review Board, congressional inquiries, other FOIA requests, and the preparation of Secretary Clinton’s testimony before Congress on January 23, 2013;
  • the State Department’s policies, practices, procedures and/or actions (or lack thereof) to secure, inventory, and/or account for all records, including emails, of Secretary Clinton, prior to [her] termination of employment with the State Department; and
  • the use of non-state.gov email account(s) to conduct official State Department business by Secretary Clinton and other officials and staff in the Office of the Secretary;

Judicial Watch also seeks documents about the State Department’s Benghazi document responses and the handling of non-State.gov emails of Clinton and other top State officials, in particular:

  1. All documents that concern or relate to the processing of any and all searches of the Office of the Secretary for emails relating to the September 11, 2012, Benghazi attack and its aftermath, including but not limited to:
  • searches for records for the Accountability Review Board;
  • searches in response to congressional inquiries (including requests from the House Committee on Oversight and Government Reform dated September 20, 2012, October 2, 2012, October 29, 2012, and November 1, 2012);
  • searches in preparation of Secretary Clinton’s testimony before Congress on January 23, 2013; and
  • searches in response to FOIA requests, including but not limited to the FOIA request submitted by Plaintiff in this case.

Such documents would include the tasking, tracking and reporting records for such searches.  Forms DS-1748 and any “search slips,” “search tasker,” “search details,” shall also be considered responsive.

  1. All communications that concern or relate to the processing of all searches referenced in Document Request No. 1 above, including directions or guidance about how and where to conduct the searches, whether and how to search Secretary Clinton’s email, and issues, problems, or questions concerning the searches and/or search results.
  2. All records that concern or relate to the State Department’s policies, practices, procedures and/or actions (or lack thereof) to secure, inventory, and/or account for all records, including emails, of Secretary Clinton, Cheryl Mills, Huma Abedin and Jacob Sullivan prior to their termination of employment with the State Department.

U.S. District Court Judge Royce Lamberth is also concerned about potential government misconduct.  Judge Lamberth ruled on March 29 that “where there is evidence of government wrong-doing and bad faith, as here, limited discovery is appropriate, even though it is exceedingly rare in FOIA cases.”

(In the lawsuit that has discovery already underway, Judge Emmett Sullivan noted in his  May 4, 2016, order that “based on information learned during discovery, the deposition of Mrs. Clinton may be necessary.”)

In response to our request for her testimony, the Clinton campaign attacked your Judicial Watch with an over-the-top, false statement.   We won’t be deterred, nor do I expect that the courts will be either.

Mrs. Clinton’s testimony will help the courts determine whether her email practices thwarted the purpose of the Freedom of Information Act.

In the meantime, you might enjoy watching this C-Span coverage of our Clinton email investigations.

The Enemy at the Gates is Us

The enemy at the gates is us

First blow for liberty, colonials harassing the enemy British soldiers on the road from Concord, 1775.
Hand-colored halftone illustration

“We have met the enemy, and he is us.” So said the most famous quotation in the comic strip Pogo by Walt Kelly.

All across the Western United States militia groups are springing up who see the federal government as their enemy. In 2008 there were some 150 groups. Today, there are over 1,000. They call themselves patriots, demanding that the federal government adhere to the Constitution and stop what they see as systematic abuse of land rights, gun rights, freedom of speech and other liberties.

One such group is the Central Oregon Constitutional Guard which conducts firearms training every week just like American colonists did before the Revolution. Despite being small, about 30 members, they are well-armed and well-trained. It is led by BJ Soper who formed the group two years ago as a “defensive unit” against “all enemies foreign and domestic.” Mainly, he’s talking about the federal government, which he thinks is capable of unprovoked aggression against its own people.

The group’s members are drywallers and flooring contractors, nurses and painters and high school students, who stockpile supplies, practice survival skills and “basic infantry” tactics, learn how to treat combat injuries, study the Constitution and train with their concealed handguns and combat-style rifles.

Soper defines their mission like this. “It doesn’t say in our Constitution that you can’t stand up and defend yourself,” Soper said. “We’ve let the government step over the line and rule us, and that was never the intent of this country.”

Mark Potok of the Southern Poverty Law Center, which monitors extremism, said there were about 150 such groups in 2008 and about 1,000 now. Potok and other analysts, including law enforcement officials who track the groups, said their supporters number in the hundreds of thousands, counting people who signal their support in more passive ways, such as following the groups on social media. The Facebook page of the Oath Keepers, a group of former members of police forces and the military, for example, has more than 525,000 “likes.”

The organizations are varied in their beliefs. Militia organizations have a variety of ideologies and objectives including anti-tax, anti-immigration, survivalist, white supremacist, sovereign citizen, libertarian, land rights and southern restoration tendencies. They generally share a common belief in the imminent or actual rise of a tyrannical government in the United States that, they believe, must be confronted through armed force.

Much of the movement traces its roots to the deadly 1990s confrontations between civilians and federal agents at Ruby Ridge, Idaho, and in Waco, Tex., that resulted in the deaths of as many as 90. Timothy Mc­Veigh cited both events before he was executed for the 1995 Oklahoma City bombing that killed 168 people, and he said he had deliberately chosen a building housing federal government agencies.

Now a “Second Wave” is spreading across the country, especially in the West, fueled by the Internet and social media. J.J. MacNab, an author and George Washington University researcher who specializes in extremism, said social media has allowed individuals or small groups such as Soper’s to become far more influential than in the 1990s, when the groups would spread their message through meetings at local diners and via faxes.

The movement received a huge boost from the 2014 standoff at Cliven Bundy’s ranch in Nevada, where federal agents and hundreds of armed supporters of Bundy faced off in a dispute over the rancher’s refusal to pay fees to graze his cattle on federal land.

When federal agents backed down rather than risk a bloody clash, Bundy’s supporters claimed victory and were emboldened to stage similar armed face-offs last year at gold mines in Oregon and Montana.

In January, dozens of armed occupiers, led by Bundy’s sons Ammon and Ryan, took over the headquarters buildings of the Malheur National Wildlife Refuge near rural Burns, Ore., an action that later resulted in the death of Robert “LaVoy” Finicum, an occupier who was shot by state troopers.

Soper is a retired rodeo rider who lives with his second wife and their two daughters on a pastoral plot of land with horses, dogs, cats, chickens and a majestic view of the snow-capped Cascades.

“I lived like 90 percent of Americans, oblivious to everything that was going on, from the time I was 18 until the Bundy Ranch happened,” he said. “I just said, ‘I can’t sit back and do nothing. I’ve got to get involved.’ I feel responsible for where we’re at, because I’ve done nothing my entire life.”

His response was to start his Central Oregon Constitutional Guard, which he said was partly to protect against the government, but partly a way to get back to a simpler America.

Soper’s research also led him to some of the Internet’s favorite conspiracy theories, including a purported U.N. plot to impose “One World Government.” And Soper, like most in the patriot movement, became a believer.

He suspects that the United Nations, through a program called Agenda 21, wants to reduce the global population from 7 billion to fewer than 1 billion. He said the federal government may be promoting abortions overseas as part of that plot, and also may be deliberately mandating childhood vaccines designed to cause autism because autistic adults are less likely to have children.

Soper said he could not rule out the possibility that the U.S. government was behind the 9/11 attacks. He suspects that the government and the “medical community” have had a cancer cure for years but won’t release it because cancer treatment is too profitable for pharmaceutical companies.

“I’m not saying that’s the case,” he said, “but I like to look at all avenues.”

Is this the beginning of the next American Revolution or will the election of Donald Trump satisfy these constitutionalists?

Written by Richard T. Billies with thanks from Kevin Sullivan of The Washington Post.

 

Nigel Farage says Obama interfered in GB

President Obama looks set to wade into the contentious debate in the United Kingdom over whether or not the nation should remain a member of the European Union – and some Brits are angry at the president’s intrusion into a delicate UK issue ahead of a major vote. Those calling for Britain to leave the European Union are not happy at that news, with U.K. Independence Party leader Nigel Farage saying Obama should stay home. ‘A monstrous interference,” Farage told Fox News Thursday. “I’d rather he stayed in Washington, frankly, if that’s what he’s going to do.”

Obama arrived in London late Thursday for a three-day trip. On Friday he will meet Prime Minister David Cameron — who is reportedly keen to get Obama’s backing ahead of the June 23 referendum, in which Britons will choose to remain or leave the European Union.

Cameron is in a difficult position, backing the “Remain” campaign, while many within his own Conservative Party are campaigning for the “Leave” or “Brexit” (British-Exit) campaign. Polls have shows the race is tight, with the Remain campaign holding an edge as small as one percent.

The White House has said Obama is willing to offer his opinion and may announce that he favors Cameron’s position – that Britain should remain in the European Union.

“If he’s asked his view as a friend, he will offer it,” U.S. Deputy National Security Adviser Ben Rhodes said. “As the president has said, we support a strong United Kingdom in the European Union.”

Those calling for Britain to leave the European Union are not happy at that news, with U.K. Independence Party leader Nigel Farage saying Obama should stay home.

‘A monstrous interference,” Farage told Fox News Thursday. “I’d rather he stayed in Washington, frankly, if that’s what he’s going to do.”

“You wouldn’t expect the British Prime Minister to intervene in your presidential election, you wouldn’t expect the Prime Minister to endorse one candidate or another. Perhaps he’s another one of those people who doesn’t understand what [the EU] is,” Farage said.

In March, a letter sent from Conservative MP and former cabinet minister Liam Fox, and co-signed by over 100 MPs from four different political parties, asked the U.S. Ambassador to the U.K. to persuade Obama not to intervene, calling any such intervention “extremely controversial and potentially damaging.”

“It has long been the established practice not to interfere in the domestic political affairs of our allies and we hope that this will continue to be the case,” the letter to Ambassador Matthew Barzun read.

“While the current U.S. administration may have a view on the desirability or otherwise of Britain’s continued membership of the E.U., any explicit intervention in the debate is likely to be extremely controversial and potentially damaging,” the letter said.

London Mayor Boris Johnson — who was born in New York and has expressed strong support for the UK-U.S. relationship — accused Obama of hypocrisy.

“I just think it’s paradoxical that the United States, which wouldn’t dream of allowing the slightest infringement of its own sovereignty, should be lecturing other countries about the need to enmesh themselves ever deeper in a federal superstate,” Johnson said Tuesday.

Cameron however, has said that the advice of allies was welcome, saying “listening to what our friends say in the world is not a bad idea.”

“I struggle to find the leader of any friendly country that thinks we should leave,” he said Wednesday.

FoxNews.com’s Adam Shaw, Fox News’ Greg Palkot and The Associated Press contributed to this report.

Obamacare disaster: Obama’s enduring domestic legacy

Obamacare disaster: Obama’s enduring domestic legacy

Historian David Maraniss notes, in Sunday’s Post, that President Obama came to office with the goal of changing “the trajectory of America” and leaving “a legacy as a president of consequence, the liberal counter to [Ronald] Reagan.”

On the foreign-policy front, he is the anti-Reagan for certain. Reagan defeated Soviet communism and left us a safer world; Obama presided over the rise and metastasis of the Islamic State and left us a far more dangerous one.

Domestically, Ronald Reagan told the American people: “The nine most terrifying words in the English language are ‘I’m from the government, and I’m here to help.’ ” Obama wanted to convince Americans that they were not terrifying. And the way he was going to do it was through the only great liberal legislative achievement of his presidency: Obamacare.

He failed. Even before he leaves office, Obamacare has begun unraveling.

The law was passed over the objections of a majority of Americans, it is still opposed by a majority of Americans — and their opposition has been vindicated. Last week, UnitedHealth Group announced that, after estimated losses of more than $1 billion for 2015 and 2016 under Obamacare, the company was pulling out of most of its ill-fated exchanges.

In fact, commercial insurers across the country are hemorrhaging money on Obamacare at alarming rates. Health Care Service Corp. (which owns Blue Cross and Blue Shield affiliates in Illinois, Montana, New Mexico, Oklahoma and Texas) has lost “well north of $2 billion” in its first two years — twice as much as UnitedHealth. Highmark, the nation’s fourth-largest Blue Cross plan, lost nearly $600 million in 2015. Blue Cross and Blue Shield of North Carolina has projected it will lose more than $400 million in the first two years, and the company has said it may leave the exchanges entirely next year.

The president promised these insurers taxpayer bailouts if they lost money, but Congress in its wisdom passed legislation barring the use of taxpayer dollars to prop up the insurers. Without the bailouts, commercial insurers are being forced to eat their losses — while more than half of the Obamacare nonprofit insurance cooperatives created under the law failed.

So what happens now? Because commercial insurers are not going to keep bleeding cash to prop up Obamacare, they have three choices: 1) scale back coverage, 2) raise prices or 3) get out of the exchanges entirely. More and more are going to choose option 3.

Does this mean that Obamacare is finally entering its “death spiral”? Not exactly. As my American Enterprise Institute colleague Scott Gottlieb explains, while commercial insurers are starting to leave Obamacare, they are being replaced by Medicaid health maintenance organizations (HMOs) offering skimpy plans that mirror what they offer in Medicaid — our nation’s emergency health insurance program for the poorest of the poor.

This is a catastrophe for people stuck in Obamacare. According to a 2014 McKinsey survey, about three-quarters of those in the exchanges were previously insured on commercial plans, either through their employers or the individual market. They were doing fine without taxpayer-subsidized insurance but were pushed into Obamacare. They now face rising premiums and smaller provider networks — and as commercial insurers flee, they will increasingly be stuck in horrible, Medicaid-style plans.

This is not what the president promised when he sold Obamacare to the American people.

The president promised Obamacare would provide “more choice, more competition, lower costs.” Instead, Americans have less choice, less competition and higher costs. According to the Kaiser Family Foundation, if UnitedHealth “were to leave the exchange market overall, 1.8 million Marketplace enrollees would be left with two insurers, and another 1.1 million would be left with one insurer.” As more commercial insurers do the same, there will be even less competition — and higher premiums.

The president promised “if you like your doctor, you can keep your doctor.” But commercial insurers who stay in Obamacare are responding to massive losses by narrowing provider networks, with fewer doctors and hospitals to choose from. And those that quit are being replaced by Medicaid HMOs with even less doctor choice.

The president promised Obamacare would “lower premiums by up to $2,500 for a typical family per year.” But insurers are raising premiums instead to cover the massive losses, and even Marilyn Tavenner — the former Obama administration official who ran Obamacare — has predicted premiums will rise even further next year.

As they do, young, healthy individuals will be priced out of the exchanges — and the only people who will be able to afford Obamacare will be high-risk patients who qualify for federal subsidies. Without enough healthy people in the exchanges to pay for the sick ones, taxpayers will be stuck with more and more of the costs over time — a situation that is unsustainable in the long run.

With Obamacare, Obama wanted to restore America’s faith in big government. Instead, the opposite has happened. Today, 69 percent of Americans say big government is “the biggest threat to the country in the future” (ahead of big business or big labor). That figure, which is slightly down from 72 percent in 2013, is higher under Obama than it has been since Gallup began asking the question about 50 years ago. Obamacare has done more to discredit big government than 1,000 Reagan speeches ever did.

That, in the end, will be Obama’s enduring domestic legacy.

Read more from Marc Thiessen’s archive, follow him on Twitter or subscribe to his updates on Facebook.

Marc Thiessen writes a weekly column for The Post on foreign and domestic policy and contributes to the PostPartisan blog. He is a fellow at the American Enterprise Institute, and the former chief speechwriter for President George W. Bush.

Follow @marcthiessen

Debt and Excessive Spending

As a general rule, I’m not overly concerned about debt, even when looking at government red ink.

I don’t like deficit and debt, to be sure, but government borrowing should be seen as the symptom. The real problem is excessive government spending.

This is one of the reasons I’m not a fan of a balanced budget amendment, Based on the experiences of American states and European countries, I fear politicians in Washington would use any deficit-limiting requirement as an excuse to raise taxes.

I much prefer spending caps, such as those found in Hong Kong, Switzerland, and Colorado. If you cure the disease of excessive government, you automatically ameliorate the symptom of too much borrowing.

That being said, the fiscal chaos plaguing European welfare states is proof that there is a point when a spending problem can also become a debt problem. Simply stated, the people and institutions that buy government bonds at some point will decide that they no longer trust a government’s ability to repay because the public sector is too big and the economy is too weak.

And even though the European fiscal crisis no longer is dominating the headlines, I fear this is just the calm before the storm.

For instance, the data in a report from Citi about the looming Social Security-style crisis are downright scary.

…the total value of unfunded or underfunded government pension liabilities for twenty OECD countries is a staggering $78 trillion, or almost double the $44 trillion published national debt number.

And the accompanying chart is rather appropriate since it portrays this giant pile of future spending promises as an iceberg.

Excessive Spending

And when you look at projections for ever-rising spending (and therefore big increases in red ink) in America, it’s easy to see why I’m such a strong advocate of genuine entitlement reform.

But it’s also important to realize that government policies also can encourage excessive debt in the private sector.

Before digging into the issue, let’s first make clear that debt is not necessarily bad. Households often borrow to buy big-ticket items like homes, cars, and education. And businesses borrow all the time to finance expansion and job creation.

But if there’s too much borrowing, particularly when encouraged by misguided government policies, then households and businesses are very vulnerable if there’s some sort of economic disruption and they no longer have enough income to finance debt payments. This is when debt becomes excessive.

Yet this is what the crowd in Washington is encouraging.

Writing for the Wall Street Journal, George Melloan warns that misguided “stimulus” and “QE” policies have created a debt bubble.

…while Mr. Bernanke and Ms. Yellen were trying to prevent deflation, the federal government was engineering its cause, excessive debt. And the Fed abetted the process by purchasing trillions of dollars of government paper, aka quantitative easing. Near-zero interest rates also have encouraged consumers and business to releverage. Cars are now financed with low or no-interest five-year loans. With the 2008 housing debacle forgotten, easier mortgage terms have made a comeback. Corporations also couldn’t let cheap money go to waste, so they have piled up debts to buy back their own stock. Such “investment” produces no economic growth, but it has to be paid back nonetheless. Amid the Great Recession, many worried that the entire economy of the U.S., or even the world, would be “deleveraged.” Instead, we have a new world-wide debt bubble.

The numbers he shares are sobering.

Global debt of all types grew by $57 trillion from 2007 to 2014 to a total of $199 trillion, the McKinsey Global Institute reported in February last year. That’s 286% of global GDP compared with 269% in 2007. The current ratio is above 300%.

Professor Noah Smith writes in Bloomberg about research showing that debt-fueled bubbles are especially worrisome.

…since debt bubbles damage the financial system, they endanger the economy more than equity bubbles, which transmit their losses directly to households. Excessive SpendingFinancial institutions lend people money, and if people can’t pay it back — because the value of their house has gone down — it could cause bank failures. …Economists Oscar Jorda, Moritz Schularick, and Alan Taylor recently did a historical study of asset price crashes, and they found that, in fact, debt seems to matter a lot. …To make a long story short, they look at what happened to the economy of each country after each large drop in asset prices. …bubbles make recessions longer, and credit worsens the effect. …the message is clear: Bubbles and debt are a dangerous combination.

To elaborate, equity and bubbles aren’t a good combination, but there’s far less damage when an equity bubble pops because the only person who is directly hurt is the person who owns the asset (such as shares of a stock). But when a debt bubble pops, the person who owes the money is hurt, along with the person (or institution) to whom the money is owed.

Desmond Lachman of the American Enterprise Institute adds his two cents to the issue.

…the world is presently drowning in debt. Indeed, as a result of the world’s major central banks for many years having encouraged markets to take on more risk by expanding their own balance sheets in an unprecedented manner, the level of overall public and private sector indebtedness in the global economy is very much higher today than it was in 2008 at the start of the Great Economic Recession. Particularly troublesome is the very high level of corporate debt in the emerging market economies and the still very high public sector debt levels in the European economic periphery. …the Federal Reserve’s past policies of aggressive quantitative easing have set up the stage for considerable global financial market turbulence. They have done so by artificially boosting asset prices and by encouraging borrowing at artificially low interest rates that do not reflect the likelihood of the borrower eventually defaulting on the loan.

In other words, artificially low interest rates are distorting economic decisions by making something (debt) seem cheaper than it really is. Sort of financial market version of the government-caused third-party payer problem in health care andhigher education.

Excessive SpendingAnd Holman Jenkins of the Wall Street Journal makes the very important point that debt is encouraged by bailouts and subsidies.

Big banks aren’t automatically bad or badly managed because they are big, but it’s hard to believe big banks would exist without an explicit and implicit government safety net underneath them. …None of this has changed since Dodd-Frank, none of it is likely to change. …we know where the crisis will come from and how it will be transmitted to the financial system. The Richmond Fed’s “bailout barometer” shows that, since the 2008 crisis, 61% of all liabilities in the U.S. financial system are now implicitly or explicitly guaranteed by government, up from 45% in 1999. …Six years after a crisis caused by excessive borrowing, McKinsey estimates that even visible global debt has increased by $57 trillion, while in the U.S., Europe, Japan and China growth to pay back these liabilities has been slowing or absent.

The bottom line is that government spending programs directly cause debt, but we should be just as worried about the private debt that is being encouraged and subsidized by other misguided government policies.

And surely we shouldn’t forget to include the pernicious role of the tax code, whichfurther tilts the playing field in favor or debt.

P.S. Let’s briefly divert to another issue. I wrote last Christmas that President Obama may have given the American people a present.

But the Washington Examiner reports that gift has turned into a lump of coal.

The Department of Justice announced this week that it is resuming its Equitable Sharing program…that allows state and local police to get around tough state laws that limit how much property can be taken from citizens without being charged with wrongdoing, let alone convicted of a crime. …money-hungry police departments can exploit these lax federal rules about confiscating people’s property. The feds like this because they get a cut of the loot. …there is no presumption of innocence. …civil forfeitures by the feds amounted to $4.5 billion in 2014, which is more than the $3.9 billion that all of America’s burglars stole that year. It’s hard to imagine more compelling evidence of gross wrong.

Wow, so the government steals more money than burglars. I guess I’m not surprised.

But if you really want to get upset, check out real-world examples of asset forfeiture by clicking here, here, here, here, and here.

Thankfully, some states are seeking to curtail this evil practice.

April 23, 2016 by Dan Mitchell of The Cato Institute.

Betrayal: the heart of US politics

U.S. Republican presidential candidate Donald Trump REUTERS/Carlo Allegri-Betrayal is at the heart of U.S. politics

A powerful sense of betrayal is driving the 2016 campaign. The Donald Trump campaign has always been angry. We are now beginning to see the same anger in the Bernie Sanders campaign. No candidate left in the race is echoing Barack Obama’s 2008 message of hope and optimism. Senator Marco Rubio (R-Fla.) and former Florida Governor Jeb Bush tried it — and look where it got them.

On the Republican side, the sense of betrayal started long before the Trump campaign. It emerged with the Tea Party movement in 2010, which claimed that Republicans in Washington were failing to do what Republicans elected them to do — namely, stop Obama, particularly his Obamacare policies. The Tea Party accused GOP party leaders like former House Majority Leader Eric Cantor and former House Speaker John Boehner of selling out the conservative cause.

U.S. Republican presidential candidate Donald Trump, April 18, 2016. REUTERS/Carlo Allegri-Betrayal is at the heart of U.S. politics

Donald Trump speaks at a campaign event in Buffalo, New York, April 18, 2016. REUTERS/Carlo Allegri

The Trump campaign does not come out of the conservative movement, which favors Senator Ted Cruz of Texas. Trump’s support among Republicans is broader than ideological conservatives. He appeals to a lot of white working-class voters, who feel intensely alienated from the GOP. Republican leaders got elected with their support, and they then ignored them on issues like trade, immigration, entitlement spending and isolationism. Trump amplifies their complaints.

Conservatives have long nurtured a keen sense of betrayal. In the 1950s, Senator Joseph McCarthy led a campaign against New Deal policies by charging communist betrayal in the highest ranks of government. In the 1990s, as Pat Buchanan ran for the Republican presidential nomination against President George H.W. Bush and Senator Bob Dole of Kansas, he claimed that establishment figures were betraying President Ronald Reagan’s legacy.

On the Democratic side, Sanders has expanded his campaign message from an attack on Wall Street to an attack on the Democratic Party. “We’re taking on not only Wall Street and the economic establishment,” he said in January. “We’re taking on the political establishment.” He accused former Secretary of State Hillary Clinton of being part of the establishment because of her support from Planned Parenthood. He even slammed the Human Rights Campaign, the nation’s leading gay-rights organization, for supporting Clinton because she is the establishment candidate.

Democratic U.S. presidential candidate Bernie Sanders REUTERS/Lucas Jackson-Betrayal is at the heart of U.S. politics

Senator Bernie Sanders takes part in a round table discussion in the Bronx, New York, April 18, 2016. REUTERS/Lucas Jackson

Sanders is running a vigorous campaign against the legacy of Clintonism in the Democratic Party. Last year, he said, “I disagree with [former President Bill Clinton] strongly on NAFTA [the North American Free Trade Agreement] and permanent trade relations with China. … I very strongly disagreed with President Clinton on the deregulation of Wall Street.  I opposed that strenuously.”

Many Sanders supporters regard Clintonism as a betrayal of Democratic values. They cite Wall Street, trade deals, the Defense of Marriage Act, “Don’t Ask, Don’t Tell,” welfare reform, Clinton’s balanced-budget deal with then House Speaker Newt Gingrich and the 1994 crime bill, one factor in the mass incarceration of African-Americans.

Bill Clinton has acknowledged that the 1994 crime bill “went too far.” Hillary Clinton said during the last debate, “I am sorry for the consequences that were unintended and had a very unfortunate impact on people’s lives.”

Bill Clinton was the first Democrat to get elected after the party lost three consecutive presidential campaigns — Jimmy Carter in 1980, Walter Mondale in 1984, Michael Dukakis in 1988. With a string of losses like that, a party is likely to conclude, “We can’t go on like this.”  Clinton led the Democrats back to power by reaching an accommodation with the still dominant Reagan consensus. He was a “New Democrat” and an advocate of “the third way.”

The Reagan consensus was brought down by the failures of the George W. Bush administration. Today, after the destruction wrought by free-market capitalism in the 2008 economic collapse, a self-described “democratic socialist” doesn’t sound so extreme. It’s a different era, and many Democrats want to renounce the compromises of the Clinton era as a betrayal of the party’s true values.

Sanders may cause real damage to Hillary Clinton’s campaign. One in three Sanders supporters said last month that they would refuse to vote for Clinton if she’s the Democratic nominee. Even if he doesn’t win the nomination, Sanders seems intent on provoking showdowns at the Democratic convention over issues (trade, Wall Street) and over rules (the power of super-delegates).

bill-goldwater-betrayal is at the heart of US politics

Senator Barry M. Goldwater September 25, 1962. Library of Congress/Marion S. Trikosko

The theme of betrayal was prominent in the 1960s. It transformed both political parties. Senator Barry Goldwater’s 1964 presidential campaign claimed that the Republican Party had been betrayed by the “Eastern Establishment.” The establishment Republican president, Dwight D. Eisenhower, was never a hero to conservatives. He, like Bill Clinton afterward, was seen as too accommodating to the prevailing consensus. In the 1950s, that was the New Deal consensus.

The cry of betrayal was also heard on the Democratic left in the 1960s. The left had no problem with the Democratic establishment’s commitment to New Deal social-welfare liberalism or civil rights. But they were enraged by the Vietnam War and broke with the party establishment’s commitment to anti-communist containment that dated back to President Harry S. Truman and the onset of the Cold War.

Betrayal is an enduring issue in American politics. That’s because the Constitution mandates check and balances and a separation of powers. Every elected president has to compromise in order to get things done — even with members of his own party. That’s how American government works. “Read the Constitution,” Bill Clinton once said to a Tea Party protester. “It might as well be called `Let’s Make a Deal.’”

Purists don’t like deals. They call people who make them sell-outs. Deal making may be the way the United States has to be governed, but it will always carry the risk of betrayal.

Bill Schneider is a visiting professor in the Communication Studies Department at the University of California — Los Angeles.

Hillary Clinton’s possible VP running mate

Yes, I know. The Democratic primary race between Hillary Clinton and Bernie Sanders is still going on. But, the delegate math is very, very close to determinative — in her favor.

Hillary Clinton's possible VP running mate

While the race will go on — maybe even until June 7 when California closes out the process — it’s worth taking a first cut at the men and women that Clinton will consider to be her vice presidential nominee.  This is a conversation that has been going on behind the scenes — in Washington and elsewhere — for the better part of the last two years (and truthfully, longer).

But now, with Clinton’s nomination all but assured, the “who will she pick” conversation will break more into the public light. So, without further ado, the initial Fix rankings of Clinton’s likely picks. (And make sure to read how the Republican candidates are already thinking about veep picks too.)

5. Amy Klobuchar: We know from Clinton’s campaign chairman, John Podesta, that Clinton will have a woman in her final vice presidential mix. The only question is who. Klobuchar fills that slot for now as an up-and-coming star in the party who represents a state — Minnesota — where Democrats would be favored to hold a seat in the Senate. But this could be Sen. Jeanne Shaheen (D-N.H.) or former Homeland Security secretary and Arizona governor Janet Napolitano — or a woman we are not even thinking about right now.

4. Tom Perez: The Labor secretary checks two boxes for Clinton (and, yes, some of vice presidential picking is box-checking): He’s well regarded in liberal circles, and he’s Hispanic. Also, he’s not named “Elizabeth Warren” or “Bernie Sanders” — neither of whom Clinton wants to pick.  The problem for Perez?This Politico report gets at it: “Aside from the wonkiest of Washington circles and the most progressive corners of the left, no one’s heard of Tom Perez. He isn’t young or handsome. He has zero foreign policy experience. The highest office he’s been elected to is a suburban county council.” Yup. That.

Hillary Clinton's possible VP running mate
Thomas “Tom” Perez speaks during the announcement of his nomination for labor secretary in the East Room of the White House on March 18, 2013. (Andrew Harrer/Bloomberg)

3. Tim Kaine: The Virginia senator was among the first — if not the first — major elected official to endorse Clinton’s presidential campaign. (He said he was for her in May 2014.)  That’s Kaine’s MO; he endorsed then-Sen. Barack Obama in February 2007. Kaine’s profile — Christian missionary, fluent Spanish speaker, governor and now senator of a swing state — is outstanding. The one issue for Kaine: He’s a white male with “senator” before his name right now.

2. Sherrod Brown: Stylistically, Brown, who has been a member of Congress, Ohio secretary of state and now a U.S. senator, is Clinton’s opposite. Gruff to her polished. Populist to her, um, not populist. Blue collar to her white collar. And he’s from Ohio — one of the swingiest states in the country. Brown could also be — and would likely relish — the traditional vice presidential role as an attack dog against the Republican ticket. One downside for Brown: Picking him and winning puts a very competitive Senate seat in play at a time when Democrats are trying to win back control of the chamber.

1. Julian Castro: Castro, on paper, is the person Clinton would like to pick. Why? He is a telegenic 41-year-old Latino from Texas. He complements her in virtually every way, demographically speaking. My working belief has long been that Castro was picked to be secretary of housing and urban development in the Obama administration at least in part so he would have the experience and profile to be part of a national ticket. Castro will absolutely be vetted; whether he passes that vet remains to be seen.

Chris Cillizza writes “The Fix,” a politics blog for the Washington Post. He also covers the White House.  Follow @thefix