Giving The President’s Process Its Due

Considering his background as a self-described constitutional law professor (he was technically a “senior lecturer,” not a tenured professor), President Obama is surprisingly free from hang-ups about due process when it comes to the country’s founding document.

If he doesn’t think you have a moral title to the rights you assert, he tends to just brush your claims aside. Hence his administration’s firing of former General Motors CEO Rick Wagoner before it actually gained the legal power to do so during the 2009 bailout of GM. And the president famously denouncing Chrysler’s creditors – “I don’t stand with them” – the same year. And his strong-arming $20 billion from BP during the 2010 Gulf oil spill, before either the extent of the company’s liability or the extent of the actual damage was knowable.

Congress is now the unworthy party in the president’s eyes. At least he chooses to portray it as the unworthy party for the all-important purpose of his re-election later this year.

So Obama acted completely in character when he unilaterally asserted Congress was in “recess” and made four controversial recess appointments last week. The fact that neither house of Congress had actually recessed was not enough to deter the president, who treated this impediment as immaterial.

Obama’s breezy approach to formalities is a little difficult to square with his comment at a 2007 campaign fundraiser: “I was a constitutional law professor, which means unlike the current president I actually respect the Constitution.” But it is easy to reconcile with the view that, when it comes to his re-election, the current president is not the sort of guy to stand on ceremony.

Obama used, or misused, his recess appointment power to install former Ohio Atty. Gen. Richard Cordray as the head of the Consumer Financial Protection Bureau and to place three individuals on the National Labor Relations Board.

The CFPB, created last summer by the Dodd–Frank Wall Street Reform and Consumer Protection Act, had yet to receive its first director. Because many of the agency’s powers specifically rest with the director, it was effectively paralyzed as a result. The NLRB, meanwhile, had only two of its five slots filled. The Supreme Court has ruled that the NLRB must have at least three members to act, and so it too was at a standstill. Senate Republicans, however, refused to confirm nominees for either agency.

So Obama did what he says needed to be done. Ordinarily, the president must receive the “advice and consent” of the Senate for all senior appointments. However, because the Senate was not always readily available in the country’s early years, the Constitution allows the president to independently make temporary appointments, good until the end of the next session of Congress, whenever the Senate is in recess. As obstacles to Senate confirmation have become more political than practical, presidents continue to regularly use recess appointments. The founders may not have envisioned an era when no one is ever really inaccessible; nevertheless, recess appointments serve the same purpose now as they did then, the White House assures us. That purpose is keeping vital agencies staffed in the face of obstacles.

But smooth government administration is not really the president’s top priority. It’s not his second-highest priority, either, or his third. In Obama’s calculations, getting re-elected is always priority 1 through X, with X equal to a very large number. This formula is essential to understanding last week’s appointments.

The problem is that the congressional recess during which Obama made his appointments was not a recess at all. During the George W. Bush presidency, the Senate got wise to the fact that, if it could avoid ever taking a recess, it could avoid giving the president the opportunity to make any recess appointments. Since then, the Senate has frequently, during its breaks, continued to hold pro forma sessions every few days. By agreement, no real business is conducted during these sessions – the session that preceded Obama’s appointments took exactly 41 seconds – but such sessions have, until now, been enough to keep presidents from seizing the opportunity to fast-track their nominees.

In this case, the House reinforced the Senate’s claim that it was not really away. The Constitution stipulates that each house must obtain the other’s permission before taking a recess of more than three days. Usually, this permission is granted by a concurrent resolution passed by both houses. By not introducing or passing such a resolution, the House makes it legally impossible for the Senate to totally shut down for more than three days, and therefore makes it difficult for a president to claim the Senate is in recess. Congress first employed this practice last summer and implemented it again this winter.

The White House has argued that, because the Senate is unavailable to offer “advice and consent” while holding only pro forma sessions, recess appointments ought to be permissible. That’s debatable. And “ought to be permissible” is a very different matter from “are permissible.”

Any actions the newly appointed officials take will be clouded by uncertainty until the inevitable court challenge determines whether Obama’s recess appointments are valid. Until such a ruling comes, nobody will know whether forthcoming actions by the CFPB or the NLRB have any legal force. Uncertainty is a powerful deterrent to decision-making, especially the kinds of decisions Obama wants the business community to make: decisions to invest large sums of money in hiring and expansion. So in the long term, the appointments are counterproductive. But the long term is not Obama’s priority; his short-term election prospects always come first.

So the president concluded that the recess appointments were a no-lose proposition for him. If they are upheld, he will get the personnel he wants, at least until the current Congress adjourns at the end of the year. If not, he will have at least underscored his argument that congressional inaction, not his own track record over the past three years, is to blame for anything that might be making voters unhappy.

If Obama had really just wanted to get the Consumer Financial Protection Bureau and the NLRB running, he had a way to do it without opening the door to lawsuits. The Constitution allows the president to adjourn both houses of Congress “to such Time as he shall think proper” if they fail to agree on when to adjourn. As a constitutional law scholar, Obama surely was aware of this. Of course, a president who sends the voters’ elected representatives home is going to have a hard time persuading those same voters to keep him in the White House. So the president who promised to respect the Constitution opted not to use the power that the Constitution explicitly gave him.

Whenever Obama’s policies don’t quite seem to add up, it helps to remember the First Mathematical Law of the Obama Presidency: re-election is always goal number one.

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About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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