While the national unemployment rate of 10.2 percent is a sobering reminder of the depth of this recession and the protracted timeline a recovery will take, the challenges posed by long-term unemployment are far greater.

“We are breaking every record post-Great Depression on long-term unemployment,” said Heidi Shierholz, an economist with the Economic Policy Institute. Right now, around 35 percent of those without jobs have been unemployed for more than six months, a figure that adds up to 3.6 percent of our country’s labor pool.

Image by: Matt Mahurin

While economists are divided about the best way to combat this growing problem, most agree on how it happened. The current recession exacerbated an ongoing economic shift from manufacturing to a service base. Troubles faced by Detroit’s Big Three automakers fanned the flames, rendering the skills of many workers obsolete. Even as local economies withered on the vine, workers were rendered immobile, locked into their homes by the real estate crash.

Long-term unemployment is dangerous because it can have a snowball effect, says Kevin Lowden, managing economist at the Milken Institute. The longer someone is out of work, the more likely he or she is to default on his or her mortgage, even low-risk borrowers at the time when the loan was originated.

“You also see significant issues in terms of the effect on consumer demand due to the dramatic increase in savings rate,” he said. While this increase in savings is good for the economy long-term, right now that frugality comes at the expense of consumer spending that could lead to employers hiring more workers.

This epidemic of long-term unemployment also puts an added burden on government coffers. “This is direct drain on budgets in two ways,” said Dean Baker, co-director of the Center for Economic and Policy Research. Government doesn’t collect income tax on laid-off employees, and when these workers go onto unemployment or disability rolls, this creates an additional drain on the system.

For instance, the increase in workers applying for disability has shot up. Currently, some 7 million adults are on disability, an influx so overwhelming that the trustees of the Social Security program predict that the disability fund will be emptied by 2017 if nothing changes.

This mass migration to disability status is primarily a function of our employer-based health care system, according to Lawrence Katz, a professor at Harvard University. “If you have a pre-existing condition, even if you get another job there will be problems with your coverage,” he said. “The one place you can go is disability, where you get onto Medicare. And once they go on, they basically never come off.” Health plans currently under debate in Congress would subsidize low-income citizens and families, which would include the unemployed, as well as ban insurers from eliminating pre-existing conditions, which make going off disability feasible. Currently, those jobless for a long period of time have nothing to fall back on after their COBRA benefit expires.

Even if those who have been unemployed long-term make it back into the workforce, their future earning power suffers. There’s some evidence that post-layoff retraining can mitigate this, but only under certain circumstances. A study out of the University of Chicago’s Harris School of Public Policy Studies found that attending one year of community college gave displaced workers a 5 percent wage boost. Unfortunately, the vast majority of workers enrolled in such programs don’t stick around for even a semester, let alone a whole year.

However, for workers that stick it out and specialize in vocational training, science or mathematics, the returns can be even greater. The study’s authors found a 10 to 15 percent jump in wages for this subset of workers, as well as higher returns for those who already had some degree of college education prior to their participation in the program.

To this end, much of the work that is being done to combat long-term unemployment focuses on retraining workers so that their skills are more in alignment with today’s service-based economy. “The economy has changed fundamentally and our workforce system has not,” said Andy Levin, Michigan’s chief workforce officer, who runs that state’s No Worker Left Behind program. “Most people who lose their jobs can’t replace their standard of living without getting significant training because of the rapid and ongoing march of technology and globalization,” Levin said.

No Worker Left Behind began operating in August 2007 and is funded primarily by the Workforce Investment Act, which was created in the 90s and received $1.25 billion in stimulus funding to help dislocated workers. Since then, No Worker Left Behind has trained 102,000 at-risk or jobless Michigan residents for jobs in growing industries like health care, technology and transportation.

Levin has put into place bureaucratic efficiencies, such as standardizing which types of jobs are eligible for training subsidies throughout the state and streamlining the process that lets jobless workers continue to receive unemployment benefits while pursuing additional education. When the program conducted a survey this April, they found that nearly half of the workers who had completed training had landed a job, 86 percent in a field that related to their training.

Other economists say that programs such as No Worker Left Behind, while helpful, don’t do enough to address the root of the problem: the overwhelming lack of jobs. Although the pace at which companies are laying off workers has slowed, companies aren’t rehiring, which means there are still too few jobs to go around. Traditionally, small businesses are the first to hire when the economy picks up steam after a recession; however, small-business financing has dried up due to the credit crunch, preventing entrepreneurs from expanding and adding employees.

“The crisis is just so big at this point with 10.2 percent unemployment that we’re thinking about new direct job creation proposals because the scale of the problem is so large,” said Allegra Baider, senior legislative associate at the Center for Community Change. That group, along with a host of other advocacy and labor organizations, recently released a joint statement calling for new investment in job creation in fields such as infrastructure and education.

“A top priority ahead of job training is we’ve got to fix the labor market and start generating jobs,” said the Economic Policy Institute’s Heidi Shierholz. The Obama administration plans to hold a jobs summit next month examining incentives like tax credits to encourage businesses to hire new workers.

John Challenger of Challenger, Gray & Christmas acknowledged that even if such programs succeed, many Americans will have to make adjustments. “One of the things that’s happening is a steady career at one large company or in a company town is no longer available, and people at all levels can no longer think of their careers as always progressing upwards in income.” Even as they learn new skills, employees also have to be taught how to be flexible so they can adapt to the twists and turns of the 21^st-century economy.

President Barack Obama (WDCpix)

In signing the Defense Authorization Act, which, among other things, amends the laws governing military commissions, President Obama confirmed Wednesday that he plans to keep the controversial military commissions alive. The effect is to deny at least some suspected terrorists — now called “unprivileged enemy belligerents” — the right to a trial in a civilian federal court. And though Obama has promised to use the commissions sparingly, the new law sets up a parallel justice system that could outlive the Obama administration and leave an indelible stamp on its legacy.

Image by: Matt Mahurin

Even those who fiercely oppose trying suspected terrorists in military commissions acknowledge that the months of wrangling over the legislation in Congress led to significant improvements over the Bush-era military commissions approved in the Military Commissions Act of 2006. Still, there are many lingering concerns. The new commissions allow the admission of coerced evidence in certain narrow circumstances. They allow the government to try children as war criminals. And, the new law would allow trials by military commission for offenses that are not traditionally considered war crimes. Those provisions leave even the new-and-improved military commissions vulnerable to constitutional challenge, and their verdicts open to reversal on appeal. And that could undermine the entire purpose of creating military commissions, which is ordinarily to provide swift justice when ordinary courts are not available.

Many legal experts and human rights advocates say the improvements over the 2006 Military Commissions Act are significant.

Under the amendments, an “unprivileged enemy belligerent” — what the Bush administration used to call an “enemy combatant” — is entitled to competent, experienced defense counsel, particularly if the suspect might face the death penalty. The previous commissions did not provide for defense lawyers with significant experience handling capital cases.

The new commissions also require that most statements of the accused must have been “voluntary” to be admitted at trial. That’s in addition to the requirement that the statements were not solicited by torture, or by cruel, inhuman or degrading treatment, as defined by the Detainee Treatment Act. Of course, the Detainee Treatment Act was interpreted by the Bush administration’s lawyer very liberally, so even extreme sleep and food deprivation, stress positions, threatening dogs and confinement with an insect in a small box was deemed lawful under that standard. But adding that the statement must also be “voluntary” — a change pressed by the Obama administration at several Congressional hearings — raises the bar significantly higher.

On the other hand, there is an exception. Statements are admissible even if not “voluntary” if “the statement was made incident to lawful conduct during military operations at the point of capture or during closely related active combat engagement, and the interests of justice would best be served by admission of the statement into evidence.”  It remains to be seen how narrowly a judge will construe that.

The admission of hearsay evidence has been narrowed as well. The new law requires whoever introduces the evidence to give the other side enough advance warning to see the evidence and prepare a response, and the judge, in weighing the evidence, must “take into account all of the circumstances surrounding the taking of the statement, including the degree to which the statement is corroborated, the indicia of reliability within the statement itself, and whether the will of the declarant was overborne…” Then, in addition, the judge has to find that the statement is relevant and probative of a fact of the case, that it’s impractical to get direct testimony from the witness, and that “the general purposes of the rules of evidence and the interests of justice will best be served by admission of the statement into evidence.” That essentially mirrors the hearsay exception for evidence provided in a civilian federal court.

As for the admission of classified evidence, the military commission has to follow the same procedures a civilian federal court would to determine how and if the evidence can be used, and to what extent and in what form the accused and his lawyer are entitled to see it.

But if the procedural safeguards are so similar to those in federal court, then why have the military commissions at all? The question is even more important because Congress, in passing this law, defined the court’s jurisdiction to include crimes that are not traditionally war crimes, such as conspiracy, and suspects who are not traditionally considered war criminals, such as those who provide “material support” for terrorism. Even Assistant Attorney General David Kris, testifying before Congress, testified that it’s not clear that those crimes — which are commonly charged against terror suspects in civilian federal courts — can constitutionally be brought before a military commission. Justice Stevens, in the case of Hamdan v. Rumsfeld, in an opinion joined by three other justices, specifically notes that “conspiracy” has not traditionally been considered a war crime. (The court did not ultimately rule on that basis, so it’s not clear how a majority would rule on it now.) Therefore, defense lawyers could argue that for Congress to make it a war crime after the suspect’s crime was committed would be an unconstitutional “ex post facto” law, says Shayana Kadidal, senior managing attorney of the Guantanamo Global Justice Initiative at the Center for Constitutional Rights.

For the administration to bring a terrorism case before a military commission and be sure to avoid this issue, then, it would have to avoid charging conspiracy and substantial support for terrorism. Those charges are made in almost all terrorism cases.

Which raises the question, why bring cases in military commissions at all?

Justice John Paul Stevens in Hamdan argued that the purpose of military commissions is “military necessity.” Yet in this situation, as many legal experts have pointed out, it’s not at all clear that these commissions are necessary.

As the ACLU’s Jameel Jaffer said in a statement released yesterday after the President signed the new law: “The commissions remain not only illegal but unnecessary – the federal courts have proven themselves capable of handling complex terrorism cases while protecting both the government’s national security interests and the defendants’ rights to a fair trial.”

Many other lawyers and advocates agree. A study conducted by former prosecutors for Human Rights First, for example, found that civilian federal courts had successfully prosecuted more than 214 terrorism cases since September 11, 2001. Prosecutors won 195 convictions, and successfully handled the challenges of unavailable witnesses, classified evidence, undercover informants and other complexities that arise in terrorism cases, the report found. By contrast, the military commissions created by President Bush after the 9/11 attacks and subsequently authorized by Congress tried only three cases. In only one of those did the defendant even put on a defense. In that case, Salim Hamdan, Osama bin Laden’s driver, was sentenced to only five and a half years in prison, with credit for the more than five years he’d already served. He was released to his home country of Yemen in January.

Part of the reason the military commissions have been so ineffective is because they were vulnerable to constitutional challenge. But legal experts say that even the new commissions would be vulnerable. As ACLU attorney Chris Anders put it, “they’ve narrowed the gap, but they still fall far short of the due process guarantees in Article III courts, which will still make them vulnerable to reversals.”

“This is a brand-new system, for the third time,” said Kadidal, referring to the two earlier incarnations of the military commissions during the Bush administration. The first commission system was invalidated by the U.S. Supreme Court, and the second was suspended by the Obama administration.

“This lesser degree of process is not justice,” said Virginia Sloan, president of the bipartisan Constitution Project, in a statement released yesterday. “Furthermore, these modest improvements cannot save the irretrievably tainted military commissions.”

The Obama administration surely knows that these cases are vulnerable to challenge, particularly since Congress included provisions in them that Justice Department lawyers admitted were legally questionable. And it’s not clear that it wants to bring important cases in the military commissions, and risk having convictions of major terrorists reversed on appeal.

What’s more, there’s no “sunset provision” in the legislation, so the military commissions can exist indefinitely. That’s also contrary to what the administration itself asked for. David Kris, testifying before the Senate Armed Services Committee, noted that traditionally, “military commissions have been associated with a particular conflict of relatively short duration.” Buy contrast, the current conflict “could continue for a much longer time.”

The result is that the military commissions could outlast the Obama presidency, raising another potentially sticky point that the Obama administration might prefer to avoid. “By not having a sunset provision,” said Kadidal, “this system will be a permanent part of President Obama’s legacy.”

Center for Constitutional Rights Executive Director Vincent Warren yesterday made the point even more starkly: “These are now President Obama’s military commissions: he owns them and all of the problems that come with them, and their inevitable failure will scar his legacy and embolden our critics in the world. Military commissions are an unnecessary, jury-rigged creation, second-rate in comparison to our legal system. Obama is tinkering with the Constitution for no good reason.”

Attorney General Eric Holder (WDCpix)

After months of leaks and speculation about its content, the Department of Justice yesterday produced a declassified version of the 2004 CIA inspector general report that provides details of the CIA’s investigations of certain detainees in the Bush administration’s “war on terror.” At almost the same time, Attorney General Eric Holder announced that he would conduct a “preliminary review” into those interrogations to determine “whether federal laws were violated in connection with the interrogation of specific detainees at overseas locations.”

Illustration by: Matt Mahurin

But while the Holder probe is expected to be narrow, focusing only on about a dozen cases already investigated and not prosecuted by the Bush Justice Department, the content of the CIA inspector general report suggests that a far broader investigation is warranted. The report makes clear that virtually every step taken was approved by higher-level officials in the government, including lawyers in the Department of Justice. So the newly appointed Assistant U.S. Attorney John Durham, who’s already investigating the destruction of the videotapes of CIA interrogations, may find it impossible — or at least very difficult — to conduct a thorough and ethical investigation that stays within those narrow bounds.

Take, for example, the fact that the report explicitly acknowledges that the Department of Justice approved the use of certain so-called “enhanced interrogation techniques” in ways that were more extreme and more frequent than its written legal memos allowed.

“With respect to two detainees at those [secret CIA] sites,” says the report, referring to terror suspects Abu Zubaydah and Abd Al-Rahim al-Nashiri, “the use and frequency of one [enhanced interrogation techniques], the waterboard, went beyond the projected use of the technique as originally described to [Department of Justice].” But CIA interrogators did not decide to go beyond those guidelines on their own. In fact, the report continues, the “Agency, on 29 July 2003, secured oral [Department of Justice] concurrence that certain deviations are not significant for purposes of [Department of Justice’s] legal opinions.”

Justice Department officials appear to have approved the repeated waterboarding of these men. Other documents confirm that CIA interrogators used the technique on one suspect up to 183 times, and on Zubaydah up to 83 times. A prosecutor taking his job seriously would have to question Justice Department officials about who approved what and why, what instructions they were given and how those instructions were communicated.

But there’s more.

Although the inspector general’s report is heavily redacted, 33 out of 105 pages in all, it strongly suggests that all of the guidelines governing the detention and interrogation of detainees were approved by Justice Department lawyers. Yet the report also suggests that the way the guidelines were written and approved was so vague as to encourage their violation.

The report says that “[a]lthough the [Department of Central Intelligence] Guidelines are an improvement over the absence of such [Department of Central Intelligence] Guidelines in the past, they still leave substantial room for misinterpretation and do not cover all Agency detention and interrogation activities.”

Of course, vagueness isn’t a crime. It may be just bad lawyering. But if Justice Department lawyers deliberately wrote or approved the CIA’s guidelines in a way that was vague and left “substantial room for misinterpretation” so as to encourage their violation, then they were not acting in good faith. And if they knew that the guidelines, as written, were likely to lead to illegal conduct, then they could be liable for conspiracy to commit torture.

The lawyers’ intent in interpreting the law and approving legal guidelines is key. And for a prosecutor investigating how certain terror suspects came to be tortured and even killed during their interrogations, looking into how the techniques that led to the abuses were vetted and approved would seem to be an integral part of any “preliminary review” that Holder may be contemplating.

The vagueness of the guidelines isn’t the only evidence of bad faith on the part of the Justice Department’s lawyers. Just take a look at Footnote 26 of the IG report.

The footnote makes clear that the Justice Department lawyers at the Office of Legal Counsel accepted the CIA’s explanation that waterboarding would cause no lasting harm because the technique is used in a more limited way on U.S. soldiers in their Survival, Evasion, Resistance and Escape, or SERE, training, which teaches them to withstand an enemy interrogations.

Footnote 26 points out, however, that medical professionals told the inspector general that “the SERE waterboard experience is so different from the subsequent Agency usage as to make it almost irrelevant,” and “there was no a priori reason to believe that applying the waterboard with the frequency and intensity with which it was used by the psychologist/interrogators was either efficacious or medically safe.”

In fact, critics of the CIA program have been making the point for months now that repeated, persistent near-drowning, days at a time of sleep and food deprivation, painful stress positions and the range of other techniques used on terror suspects is different when used in the context of a real interrogation by hostile forces, than it is in military simulations by fellow troops.

Maybe it’s possible that the lawyers didn’t think of that themselves. Similarly, maybe it’s possible that, as they wrote in their legal memos, they believed that these techniques would not “shock the conscience” — the Supreme Court’s standard for determining when government officials have violated the Fifth Amendment’s requirement of due process. (The lawyers concluded in their memos that none of these techniques rose to that level.)

Maybe these lawyers were just taking the information they were given and doing what they were told. Still, it would seem that a serious prosecutor probing whether CIA interrogators broke the law would have to ask how and why the Justice Department’s lawyers advised the interrogators based on a factual scenario that seems patently implausible.

Holder’s announcement that he’ll open this preliminary review has provoked reactions ranging from praise to outrage. The Center for Constitutional Rights said Monday that “Responsibility for the torture program cannot be laid at the feet of a few low-level operatives.” While some CIA agents may have gone beyond the limits set out by the lawyers “who twisted the law to create legal cover for the program,” the group stated, “it is the lawyers and the officials who oversaw and approved the program who must be investigated.” The organization called on Holder to appoint an independent special prosecutor “with a full mandate to investigate those responsible for torture and war crimes, especially the high ranking officials who designed, justified and orchestrated the torture program.”

Others, such as former FBI and Defense Department interrogators, have praised the decision to investigate, but called for a broader probe by an independent commission as well. “A nonpartisan, independent commission with subpoena power should assess the deeply flawed policy making framework behind the decision to permit torture and cruelty,” wrote former FBI official Jack Cloonan, and Defense Department interrogators Steven Kleinman and Matthew Alexander to the chairmen of the House and Senate Judiciary and Intelligence Committees.

And Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) himself issued a statement on Monday saying that the CIA report “underscores why we need to move forward with a Commission of Inquiry, a nonpartisan review of exactly what happened in these areas, so that we can find out what happened and why. Who justified these policies? What was the role of the Bush White House? How can we make sure it never happens again? Information coming out in dribs and drabs will never paint the full picture.”

Whether as part of the criminal probe by Durham or as part of a broader investigation by an independent prosecutor or commission, a more thorough investigation may be unavoidable — at least, if the CIA inspector general report receives the careful reading it deserves.

US Attorney General Michael Mukasey (WDCPix)

It’s been exactly one year since then-Attorney General Michael Mukasey proposed in a speech at the American Enterprise Institute that Congress pass legislation declaring a new, expanded war with al-Qaeda and the Taliban — thereby granting the president the authority to detain indefinitely members of those groups anywhere in the world where they’re found.

That proposal from a lame-duck Attorney General never got very far with the Democratic-controlled Congress. But a year later, the country is still debating that exact same detention authority. And news reports suggest that President Obama may seek precisely the same sort of authority that Mukasey was talking about.

Illustration by: Matt Mahurin

Although the Detainee Policy Task Force yesterday announced it was taking a six-month extension on its deadline to formulate the policy, reports from National Public Radio, The Washington Post and Politico have all quoted anonymous Obama administration officials saying the president intends to create or continue some sort of indefinite detention system for suspected terrorists associated with al-Qaeda or the Taliban, whether through new legislation or mere “consultation” with Congress.

“There is no intent in the administration to rely on anything other than congressional authority,” one senior administration official reportedly told The Washington Post.

Whether that authority would take the form of an entirely new system of administrative detention outside the authority of the laws of war, as some have proposed, or whether it would rely either on the existing Authorization for the Use of Military Force, or seek a new authorization, is unclear.  The anonymous officials aren’t explaining (or don’t yet know) how the administration intends to go about solidifying its legal authority to indefinitely detain suspects without charge or trial arrested around the world.

The question arises because the Supreme Court, in Hamdi v. Rumsfeld, affirmed that the president does have authority to detain combatants arrested on the battlefield in a conventional war, which the United States was engaged in with Afghanistan at the time. Since then, lower federal courts have ruled that the United States can detain combatants who are members of al-Qaeda or the Taliban. But it’s not clear if that authority would reach countries where there is no active combat — or if the authority described in the Hamdi decision  at some point runs out.

In attempting to answer that question a year ago today, Michael Mukasey, in a speech delivered to the American Enterprise Institute, said that Congress should:

acknowledge again and explicitly that this Nation remains engaged in an armed conflict with al Qaeda, the Taliban, and associated organizations, who have already proclaimed themselves at war with us and who are dedicated to the slaughter of Americans—soldiers and civilians alike. In order for us to prevail in that conflict, Congress should reaffirm that for the duration of the conflict the United States may detain as enemy combatants those who have engaged in hostilities or purposefully supported al Qaeda, the Taliban, and associated organizations.

Today, Obama — or at least members of his administration — appear to want something very similar.

“It’s hard to see how they would end up writing anything much different from what Mukasey proposed a year ago,” said Chris Anders, senior legislative counsel for the American Civil Liberties Union in Washington. “And that was dead on arrival.” Although the issue was raised at congressional hearings, proposed legislation never received enough support even to get to the floor for a vote.

Last summer, Anders described the idea on the ACLU’s blog as “a multi-part plan to violate the Constitution” that would “give a president worldwide power to declare anyone a terrorist and hold the person forever – without ever charging anyone with a crime.”

Although it’s possible that Obama would have more sway with Congress than Bush did, the leaders of the judiciary committees in both the House and Senate have publicly opposed a preventive detention plan that would detain suspected terrorists that the president deems “dangerous” without charge or trial; the chairmen of the House and Senate Armed Services Committees have likewise expressed reluctance.

So could Obama really get new authorization for preventive detention? Or will he try to rely on the old one, and issue an executive order or presidential memorandum clarifying (or extending) its scope? One reason he might want to seek new authorization is that, as David Kris, assistant attorney general for the Justice Department’s National Security Division,  recently testified before the Senate Armed Services Committee, the authority the Supreme Court acknowledged in Hamdi could eventually “run out.” After all, the laws of war only authorize detention for the duration of active hostilities.

Anders said that in his conversations with lawmakers on the Hill, he hasn’t heard of any proposed legislation being circulated. “No one I’ve come across so far has seen or heard anything from the administration about an indefinite detention proposal,” he said.

In an e-mail, Ken Gude, associate director of the International Rights and Responsibility Program at the Center for American Progress, cautioned that new legislation could lead to far broader authority for indefinite detention than even Obama envisions.

“For me, the answer to this question decides the whole ball game — if they go to Congress, what will inevitably emerge is a broad preventive detention system regardless of what the Obama administration wants. If they rely on AUMF authority, then it can be much more narrow.”

Sen. Jeff Sessions (R-Ala.) meets with Sonia Sotomayor on June 2. (Zuma Press)

Amid the posturing by senators on both sides of the aisle, the outlines of a long-running debate over the role of judges in the American legal system emerged on the first day of the confirmation hearing of Judge Sonia Sotomayor.

Whether judges are neutral, “objective” arbiters of the law or biased individuals who impose their own views and life experience on legal interpretation is a debate that dates back to the early 20th century and included such famous justices as Oliver Wendell Holmes and Louis Brandeis, who argued that law is indeterminate and judges are flawed human beings influenced by external factors.

Illustration by: Matt Mahurin

Since then, scholars and judges have taken that idea in various directions. Monday the debate was on display in full force again in the Senate, with the quality of “empathy” that President Obama said he prized being on the one hand defined by Democratic supporters as “humanity” and by Republican critics as “bias.”

As Ranking Republican Jeff Sessions (R-Ala.) put it in his opening statement: “Empathy for one party is always prejudice against another.”

Sen. Tom Coburn (R-Okla.) similarly criticized the notion that “empathy” is a desirable quality for a Supreme Court justice, noting that it suggests that the law can be interpreted in various ways.

“I’m deeply concerned by your assertion that the law is uncertain,” said Coburn, addressing Sotomayor. “We want justice to be predictable. I’m worried that our Constitution may be seen to be malleable and evolving, whereas I, as someone who comes from the heartland, believe, as do the people I represent in Oklahoma, that there is a foundational document and statutes and treaties that should be the rule rather than our opinions.”

Sotomayor, for her part, has never said that her opinions should trump the law or the Constitution. On Monday, she described her judicial philosophy as simply “fidelity to the law.” But she has also acknowledged repeatedly that her background and upbringing may influence her view of a situation. As she described it Monday: “My personal and professional experiences help me listen and understand, with the law always commanding the result in every case.”

In other contexts, however, usually addressing Latino law students, Sotomayor has said, in a statement repeated over and over by Republicans at Monday’s hearing, that “I would hope that a wise Latina woman with the richness of her experiences would, more often than not, reach a better conclusion than a white male who hasn’t lived that life.”

CNN reports that “that sentence, or a similar one, has appeared in speeches Sotomayor delivered in 1994, 1999, 2002, 2004 and 2001,” and it’s become the basis of Republican objections to her confirmation to the court.

Democratic supporters yesterday defended her “empathy” and denied that it’s the equivalent of bias. “We want a nominee with a sense of compassion,” said Sen. Herb Kohl (D-Wisc). “Compassion does not mean bias or lack of impartiality. It is meant to remind us that the law is more than an intellectual game, and more than a mental exercise.”

Quoting Justice Clarence Thomas from his confirmation hearing, Kohl said it is important that a justice ” ‘can walk in the shoes of the people who are affected by what the Court does.’ I believe this comment embodies what President Obama intended when he said he wanted a nominee with ‘an understanding of how the world works and how ordinary people live.’ ”

Although defending Sotomayor’s “understanding” and “compassion,” Democrats are also aware that some of her past remarks represent her greatest vulnerability, and they’ve tried to keep the focus on Sotomayor’s 17 years’ worth of written judicial opinions. Independent studies from the Congressional Research Service, SCOTUSblog and the Transactional Records Access Clearinghouse have concluded that her decisions reflect neither activism nor liberal bias. But Republican senators at yesterday’s hearing repeatedly argued that her statements outside the courtroom are more telling than her judicial opinions because, as a Supreme Court justice, she would not be bound by precedent nearly as much as she was on the court of appeals.

Sen. Orrin Hatch (R-Utah), for example, warned that on the Supreme Court “Judge Sotomayor will help overturn the very precedents that today bind her” on the court of appeals. “The judicial position she will take on the Supreme Court will be very different than the position she has on the Second Circuit.” Therefore, he argued, her extrajudicial statements – in speeches, in law review articles, in career counseling seminars — ought to be seriously considered.  Although “we are urged to ignore her statements and focus only on her judicial decisions,” Hatch said, “We show respect to her by taking her entire record seriously.”

Democrats shot back by criticizing the record of Republican nominees, who they claimed had become, contrary to their initial promises, the most activist justices on the Court. Chief Justice John Roberts, in particular, came in for criticism for, during his confirmation hearing, likening a judge to an “umpire” at a baseball game calling “balls and strikes”; Roberts then ended up playing a far more activist role as a justice.

“The “umpire” analogy is belied by Chief Justice Roberts,” said Sen. Sheldon Whitehouse (D-R.I.). Quoting a recent article in The New Yorker by Jeffrey Toobin, Whitehouse said: “[i]n every major case since he became the nation’s seventeenth Chief Justice, Roberts has sided with the prosecution over the defendant, the state over the condemned, the executive branch over the legislative, and the corporate defendant over the individual plaintiff. Some umpire.”

In fact, Whitehouse argued, under Roberts’ leadership in recent years: “the right wing Justices of the Court have a striking record of ignoring precedent, overturning congressional statutes, limiting constitutional protections, and discovering new constitutional rights,” he said, such as “the first limitation on Roe v. Wade that outright disregards the woman’s health and safety” and a decision striking down a gun restriction in Washington, D.C. “discovering a constitutional right to own guns that the Court had not previously noticed in 220 years.”

Whitehouse continued: “The Roberts Court has not lived up to the promises of modesty or humility made when President Bush nominated Justices Roberts and Alito.”

But Whitehouse, like all of the senators yesterday, was not really there to debate judicial philosophy or constitutional history. The senators were talking largely to their own constituents, and not to the other side. Sotomayor is widely expected to be confirmed, but Republicans appear to be voicing objections they expect their conservative constituents to have — about Sotomayor, and about larger social issues.

Republicans remained rigid in their views that Sotomayor’s acknowledgment that different people will have different perspectives on the law was a troubling sign. Sotomayor’s statement that “There is no objective stance but only a series of perspectives, no neutrality, no escape from choice in judging,” said Coburn, is “deeply troubling.”  He added: “The fact that it’s subjective implies that it’s not objective. And if we disregard objective consideration of facts, then all rulings are subjective and we lose the glue that binds us together as a nation.”

Of course, Coburn’s ideal of perfect predictability in the law that allows an escape from judgment and perspective would obviate the need for a Supreme Court — and for the Senate’s confirmation hearing.

For better or worse, the majority of senators haven’t gone that far, and Sotomayor’s confirmation hearing continues Tuesday.

An empty quad at the University of Illinois (Flickr: BParedo)

With a growing number of college grads finding themselves crushed under the weight of their student loan debt, the Obama administration is considering action that could derail the entire student loan industry.  Groups who monitor campaign contributions, though, worry that the strength of the industry could block any shot at real change.

The student loan industry is big business. A total of $89.5 billion in loans was originated in the 2007-2008 school year, $22.5 billion of which was in the form of private loans. For students, the stakes are even higher. The default rate on student loans climbed from 5.2 percent to 6.9 percent in only a year, and analysts say the number is likely to rise as the recession continues.

Image by: Matt Mahurin

The amount individual students borrow is rising, too. The average graduate of a four-year college accrues $22,500 in student loan debt, according to the National Postsecondary Student Aid Study . Education advocates say that recent grads and current students are going to bear an increasingly heavy burden when it comes to repaying those debts both because of the growing amounts borrowed and due to the increasing reliance on private loans. For the 2007-2008 school year, 14 percent of students took out a private loan, compared to only 5 percent in the 2003-2004 school year.

The tough job market is another major hurdle. The national unemployment rate was at 8.5 percent in March, and there’s evidence that new grads are hit harder than other groups by the country’s shrinking job pool. Research by the National Association of Colleges and Employers revealed that companies are planning to hire 22 percent fewer new college graduates this year than in 2008. Even students who do land jobs after college might not be out of the woods; another NACE study found that the average starting salary for college grads had declined from 2008.

College students seeking financing can apply for federally-backed or private loans. Federal ones have some advantages in that the costs of borrowing are less and the loan programs have a few consumer protections in place: The interest rates are tied to the three-month Treasury bill rate plus a couple of percentage points, and graduates have a six-month grace period after graduation before repayment must start, although in this economy that might not be enough of a buffer. Deferring the loan is possible, although some agreements may tack on the extra interest that accrues during the deferral period. Former students with anemic job prospects can also extend the term of their loan, paying more interest but lowering their payment to a manageable amount each month. [HERE In the private sector, though, offering any of these options is no more than a courtesy on the part of the lender; there’s no legal obligation for them to cut debtors a break. Since the amount of federal loan money a student can borrow is capped, many have turned to private loans to bridge the gap, especially as the cost of college tuition has risen steadily in recent years. “These lenders have borrowers over a barrel,” said Edie Irons, communications director for the Institute for College Access and Success. “They can be uncompromising.” Even in the case of death or a work-ending disability, she added, private lenders still seek to collect.

Private loans also cost more, sometimes much more. Interest rates are generally variable and several percentage points higher than those for federal loans. Add in a missed payment and default rates of up nearly 20 percent — as much as some credit-card interest rates — kick in. In addition, private loan rules about late payments are nearly always stricter; while it takes months of non-payment to be declared in default of a federal loan, private loans can move into default after only a single missed payment, damaging the borrower’s credit. Since employers in some fields have recently embraced credit checks as part of pre-employment background screening, missed student loan payments could potentially damage a new grad’s chances at a job that would allow them to make those payments.

Student loans differ from other debt obligations like mortgages or credit card debt in a few ways, but one of the most significant is their “stickiness” when it comes to discharging them in a bankruptcy. Student loans are one of the very few types of debt, along with child support and some taxes, that are virtually impossible to have dismissed in bankruptcy. In the case of private student loans, although these lenders aren’t governed by the caps on loan amounts and interest rates imposed on their federally-backed counterparts, they still receive the benefit of the bankruptcy exemption.

While help is on the way via recently passed legislation many in the field worry that it’s not enough. Provisions included in the College Cost Reduction and Access Act of 2007 give students clemency on some loan debt if they go into public service or work in low-income fields, but it only applies to government-backed loans. The Higher Education Opportunity Act of 2008, for instance, required for the first time that private lenders spell out in plain English how much students will be paying in interest and what kind of penalties are levied for missing payments; however, it doesn’t go into effect until next year

“That’s not going to keep [lenders] from making bad loans,” said Deanne Loonin, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. “It’s just going to require them to tell people when they make bad loans.” Loonin says the legislation is a good start but limited in its scope because it only affects future would-be borrowers, not the many students and new grads currently saddled with cumbersome loans. “Going backwards, you still have all these people who are stuck. We also would like to see some relief for those people.”

One major change Loonin and others would like to see is a modification of the bankruptcy rules surrounding student loans. An amendment that would have made student loans dischargeable via bankruptcy was sponsored Rep. Danny Davis (D-Ill.) last year, but was voted down.

The student loan industry is very generous when it comes to supporting politicians it hopes will look out for its interests. While plenty of banks that offer private loans are regulars on the donation circuit, the powerhouses of federal lending are also paying out large sums to favored lawmakers. The PACs for Sallie Mae and NelNet, two of the sector’s biggest servicers of federally backed loans, turned up at number two and eight, respectively, in a list that of top finance-industry donors that also included banking giants like Bank of America and Citigroup. Sallie Mae gave $800,000 in 2008, while NelNet gave $250,000, according to the Center for Responsive Politics.

One notable recipient of this largesse is Rep. Paul Kanjorski (D-Pa.), who received a combined total of $15,000 from Sallie Mae and NelNet in 2008. Kanjorskiy is a vocal advocate of Sallie Mae. Public policy think tank New America Foundation pointed out in an online article Kanjorski’s personal interest in keeping this lending powerhouse healthy; earlier this month, it shifted several hundred jobs into his eastern Pennsylvania district.

In the tug-of-war over who gets control of these billions of dollars in student debt, industry supporters invoke the specter of massive job losses as an objection to the government’s plan to phase out the middleman in federal loan programs in favor of a direct lending system. Both Sallie Mae as well as the National Association of Student Financial Aid Administrators, an industry trade group, have come up with alternative plans that preserve the role of the servicers. They argue their plans can save just as much money and will preserve jobs, as well.

But it’s not just donations and vote-garnering jobs; lenders also spend a lot of money on lobbying. “Sallie Mae spent $3.4 million in lobbying in 2008,” said Sheila Krumholz, executive director of the Center for Responsive Politics. While this was down from 2007 levels, it’s still a significant investment. “By comparison, Bank of America spent just $4 million,” said Krumholz. “In lobbying is where they’re on par with the heavy hitters. It explains where they’re putting their focus.”

With a new president who has already taken aim at education financing via a plan to phase out private loan programs and handle financing directly through schools, lenders are on the defensive. The administration’s plan for overhauling student lending is facing a fight both from Republicans as well as from within its own party — a measure of how far the industry’s fundraising efforts extended. “The fact that they were lobbying so heavily is indicative of the concern they had last cycle,” said Krumholz. “It appears it was perhaps justified given what they’re facing now. They may have seen the writing on the wall.”

Martha C. White is a freelance journalist in New York.

In a keynote speech at the opening of the West Point Military Academy’s Center for the Rule of Law last night, Attorney General Eric Holder made a point of breaking with the Bush administration by affirming the United States’ commitment to international law and acknowledging that the United States has not always lived up to those legal commitments. But even as he extolled the the military officials who’ve stood up for the rule of law, he carefully avoided mentioning the controversial legal policies initiated by the Bush administration that his own Justice Department continues to support. And he failed to explain how the Obama administration can credibly claim to uphold the rule of law when it refuses to investigate the most egregious legal violations by its predecessors.

Illustration by: Matt Mahurin

“There are some today who argue that as the most powerful military force on earth, international laws will only hinder our efforts and endanger our strength,” said Holder in one of the stronger moments of his speech. “But I reject the very premise of that argument. . . . our strength as a country is amplified – not diminished – when we expand the sphere of the rule of law across the globe.”

In part, Holder’s statement was an implicit endorsement of Harold Hongju Koh, President Obama’s nominee for State Department legal advisor. Koh has been harshly criticized by conservative Republicans for writing that international law should guide all nations, including the United States.

But many of Holder’s other statements seemed more to highlight the controversies of his own Justice Department than to take any specific principled stand.

Holder acknowledged, for example, that the United States has “not always been immune to the impulse to sacrifice the timeless principles of the rule of law to the transient fears of the moment,” without specifically mentioning the Bush administration’s violations of the Geneva Conventions or the Convention Against Torture, or how he intends to respond to them.

Holder is now under great pressure to restore the law-abiding reputation that the United States lost during the Bush years. Whether he can do that will rest in part on how he responds to the Bush administration’s torture and abuse of detainees – all clear violations of domestic and international law. So far, he has skirted the issue, although he’s consistently claimed that “no one is above the law.”

One test will come Thursday, when the Department of Justice faces a court deadline to produce three controversial memos prepared by the Office of Legal Counsel under the Bush administration that reportedly provided legal justification for its harshest interrogation policies. If those legal justifications are flimsy, as is widely expected, they could serve as additional evidence of unethical and illegal conduct by the department. Previous OLC memos justifying extraordinary executive power, torture of prisoners and the suspension of the Bill of Rights during wartime have been harshly criticized, even by former Bush officials.

The Obama administration will also have to reveal soon how it intends to deal with the cases of some 240 men captured in the Bush “war on terror” and still imprisoned at Guantanamo Bay. (President Obama suspended proceedings before the military commissions created by the Bush administration until May 22.)

Holder did not say last night how he would address that problem — whether through the existing military commissions, the federal court system, the military justice system or some new “hybrid” court — but he pledged that his solution will be “grounded in the Constitution.” And he acknowledged that it’s been military lawyers who have most strongly advocated that the U.S. government adhere to legal standards.

“In our current struggle against international terrorism, when others surrendered faithful obedience to the law to the circumstances of the time, it was the brave men and women in the JAG Corps who stood up against the tides, many times risking their careers to do so,” said Holder, referring to Judge Advocates General who stood up to their superiors, like Pentagon General Counsel William Haynes, who favored bypassing the Geneva Conventions and other legal protections for wartime detainees. “We all can learn from their example.”

But has Holder himself learned that lesson?

Last night, the Attorney General referred to the internment of 120,000 Americans of Japanese descent during World War II as “one of the darkest moments in American constitutional history,” noting that the Japanese were imprisoned on suspicion of being dangerous, “without a single hearing or finding of fact.”

Holder never once mentioned that the United States is currently detaining about 600 men — some for more than six years — at the U.S.-run Bagram air base in Afghanistan. A federal court ruled recently that those men aren’t getting any meaningful hearings or findings of fact, either. Still, Holder’s Justice Department last Friday filed a document seeking to appeal the decision, which granted just three of the non-Afghan prisoners habeas corpus rights.

In an apparent attempt to justify other decisions of his department, which has broadly invoked the “state secrets privilege” to dismiss cases challenging government conduct, Holder admitted that many of the decisions he makes as attorney general “will never be known to the public or to the press, because even as we usher in a new period of openness and transparency, many national security decisions must by necessity be made in a manner that protects our ability to gather intelligence, investigate threats and execute wars.”

That need not mean that the executive will ignore the rule of law, he insisted.

“[A] need to act behind closed doors does not grant a license to pursue policies, and to take actions, that cannot withstand the disinfecting power of sunlight,” Holder said, alluding to U.S. Supreme Court Justice Louis Brandeis’s famous phrase, “sunlight is the best disinfectant.”

“In fact, it is in those moments – the moments when no one is watching – when we must be most vigilant in relying on the rule of law to govern our conduct,” said Holder.

“With every decision I make,” he continued, “I ask myself two questions. Will it stand up to scrutiny by the courts, and will it stand up to scrutiny by the American people.”

Yet in fighting to prevent scrutiny by the courts – both of secret government policies or of the government’s justification for the continued indefinite detention of hundreds of prisoners – the Attorney General has sought to eliminate the role of both the courts and the public as a check on executive power. Instead, he seemed to suggest last night, the American people should trust him.

The Obama administration’s supporters may want very much to be able to do that. But many of the Attorney General’s recent positions in ongoing cases suggest that that would not be wise. And fortunately, if the constitutional system that Holder praised so profusely last night means anything, it will not allow that.

Eric Holder would do well to keep in mind his own words: “Discarding the very values that have made us the greatest nation on earth will not make us stronger – it will make us weaker and tear at the very fibers of who we are. There simply is no tension between an effective fight against those who have sworn to do us harm, and a respect for the most honored civil liberties that have made us who we are.”

readydebit.com

Americans are more conscious of debt than ever. Feeling burned by bank overdraft fees of $30 or more, or by credit-card interest rates that can top 25 percent, a growing number of consumers are turning to prepaid, reloadable “cash cards.” These cards have confidence-boosting names like “READYdebit” and “UPside.” They feature the logo of Visa, Mastercard or Discover and are issued by companies like Green Dot Corporation and NetSpend. These cards are sold at retail locations as well as check-cashing storefronts and money-wiring outlets.

For a large segment of users, primarily low- and moderate-income consumers, these cards function as ersatz bank accounts. These consumers are referred to as the “unbanked” in card-industry parlance. With a cash card, those with poor credit or too little money to meet banks’ minimum account balance requirements can participate in the retail transactions most people take for granted: ordering goods online, paying for items with a quick swipe, getting cash on demand from ATMs.

It’s a fast-growing niche; in 2007, $2.1 billion was placed on reloadable prepaid cards, according to Mercator Advisory Group, a market research company that specializes in the payment industry. By 2011, Mercator predicts that number will jump to $14 billion. Green Dot Corporation, one of the big players in the field, says they’ve seen a whopping 50 percent year over year growth rate in terms of dollars loaded onto their cards.

For those who lack the discipline or the know-how to manage their money, these cards can be a lifesaver in that they don’t let a user spend more than he or she has. It’s impossible to overdraw and accrue fines, or tap into a line of credit that could spiral into a nightmare of debt. But while these cards may be beneficial for consumers who want to avoid the temptation of spending beyond their means, they are no panacea. Reloadable prepaid cards have several key differences of which users might not be aware.

First, they’re expensive to use. “The basic situation with prepaid debit cards is that they tend to come with a multiplicity of fees, which make them relatively expensive to use,” said Jean Ann Fox, director of financial services for the Consumer Federation of America. With the exception of Wal-Mart’s $3 Moneycard, most cost $9 or $10 to acquire, and most charge maintenance fees of up to $10 per month after that. Since issuers like to advertise the fact that they don’t charge overdraft fees, it could be easy for a consumer to overlook the fact that everything from withdrawing cash at an ATM to calling customer service costs a couple of bucks. Adding more money to a card can also cost $5 or so if the transaction takes place at a retailer or Western Union location; the place doing the reloading takes a cut, too. Some issuers waive the reload fee if a user has their employer direct-deposit their earnings onto the card.

Want to cancel a prepaid card? Even that could cost $15 in fees. If a user has less than that left on a card, the cardholder can either spend what’s left without going over the amount, which would cause the card to be declined, reload it — for a fee— or just abandon the balance. As a rule, most card companies don’t charge for online account activity, but that might not be a viable option for lower-income unbanked consumers.

The unbanked also might not have the financial wherewithal or feel empowered enough to ask some hard questions about the security of their money after they make a deposit on the card, a prospect that worries consumer advocates and watchdog groups. “It’s an important question given the dollar volume flowing into these cards,” said Sarah Jane Hughes, a commercial law professor at Indiana University. “Whether or not there really is something standing behind those cards is very important.”

Americans with money in ordinary bank accounts are protected by the Federal Deposit Insurance Corporation. If the bank goes bankrupt, the government makes good on depositors’ money up to $250,000. Prepaid card users don’t necessarily have that assurance. It’s common for cash card issuers to pool all their customers’ funds into one account, which could easily go over the $250,000 maximum. What’s more, this kind of set-up would make the card issuer rather than their consumers the FDIC beneficiary if the bank failed.

At the request of advocacy group Consumers Union, the FDIC recently clarified that a provision called pass-through insurance would come into play with regard to prepaid cards. Essentially, this means that the cardholder rather than the card company would get paid. However, the FDIC also spelled out a series of steps card issuers have to take for pass-through insurance to be initiated — and there’s no law that says the card companies have to take those steps. According to Gail Hillebrand, senior attorney at Consumers Union, it’s up to issuers to do the right thing when it comes to protecting their users’ cash.

“The great victory is that these funds can be FDIC insured to the individual,” said Michelle Jun, staff attorney at Consumers Union. “The problem now is it’s unclear if all these cards are set up in this fashion, and it’s not entirely clear which ones are FDIC insured.” In other words, it’s buyer beware.

Lastly, although these cards carry the logo of brands like Visa, Mastercard or Discover, they are not credit cards. While this distinction may help users from getting — or staying — in debt, it also means that no matter how judiciously they use their card or manage their money, these efforts won’t go towards raising their credit score. In a marketplace where lenders are demanding high credit ratings, not building a positive credit history can be a real handicap. Relying exclusively on prepaid cards means the unbanked will have a tougher time breaking out of that categorization. As much as Americans want temptation-busting tools that protect them from the lure of expensive play-now-pay-later loans, opting out of the system via prepaid spending devices carries some hefty costs of its own.

Martha C. White is a freelance journalist in New York. She frequently writes on economics.

It seemed like a good idea at the time. Last October, the Bush administration unveiled a plan aimed at helping homeowners facing foreclosure called Hope For Homeowners. Earlier this month, there was consternation and disbelief across the political and economic spectrum when it was revealed that the program — initially projected to help up to 400,000 of the most distressed borrowers — had closed exactly 25 loans since its inception.

The logic behind Hope For Homeowners sounded simple enough. It was inspired by a Depression-era entity, the Home Owners’ Loan Corporation, that helped more than a million Americans stay in their homes. Homeowners stuck with ballooning mortgage payments and declining home values could apply for a new, fixed-rate mortgage backed by the Federal Housing Administration. The Department of Housing and Urban Development allocated $29.5 million in start-up costs to cover training and development for the program. To date, a little more than half that amount has actually been spent. What happened?

Illustration by: Matt Mahurin

“Basically, the incentives are wrong for every category of participant,” said Julia Gordon, senior policy counsel at the non-profit Center for Responsible Lending. For starters, it wasn’t cheap to participate. Homeowners had to pay hefty fees and insurance premiums. In addition, a provision designed to discourage house-flipping required homeowners to share, on a sliding scale, between 50 and 100 percent of appreciated equity built up in the home for the first five years. After five years, homeowners would have to turn over 50 percent of that equity, no matter how far into the future they kept the house.

For their part, lenders were required to lower the principle, referred to as “taking a haircut” in industry jargon. Many of these at- or near-default mortgages also had junior liens on them, often in the form of home equity loans. Hope For Homeowners would wipe out those lienholders entirely. Since the plan was wholly voluntary, lenders were under no obligation to take a loss on the loan. As a result, the vast majority took a wait-and-see approach.

The biggest stumbling block, though, was that of securitization. The majority of subprime mortgages were packaged into securities, and the agencies that manage those securities were loathe to enact loan modifications that could lead to lawsuits against them. Technically, a servicing company is free to do what it needs to do to protect investor dollars. However, if the servicer thought taking the HFH “haircut” was the better option while the investor wanted to foreclose and hope for the best, a messy legal battle could ensue, and no one wanted to be the test case.

“What seems to be happening is the servicers are saying ‘I know foreclosure is bad for everybody but my agreement permits it,’ so it’s the default option,” said Alan Mallach, nonresident senior fellow at the Brookings Institution.

Housing policy experts say the program probably wasn’t helped by the decision to put it under the umbrella of the Federal Housing Authority. “The FHA definitely does not move quickly,” said Sharon Price, director of policy for the housing advocacy group National Housing Conference. Marrying HFH to existing FHA programs turned out to be much more complicated than planned, to the extent that the agency ended up having to build the initiative’s infrastructure nearly from scratch.

“What happened was once we got to the details, this program was so different it really forced the FHA folks — who were pretty thinly staffed — to create a whole new infrastructure,” said the Center for Responsible Lending’s Gordon. “It wasn’t as efficient as one might have theoretically surmised.” This alone would have slowed down implementation, but the directive couldn’t have come at a worse time for the FHA.

When the subprime sector took off earlier this decade, the FHA had found itself increasingly on the margins. Formerly the go-to lender for borrowers with tarnished credit histories, the agency found itself competing against behemoths like Countrywide and IndyMac. Its limited menu of fixed-rate loans seemed less attractive to homebuyers than the exotic, interest-only, adjustable or deferred payment plans the private sector offered, and the FHA’s market share slid.

That trend reversed abruptly when the subprime mortgage market imploded. Last year, the FHA suddenly had to juggle a whopping 161.2 percent increase in applications over 2007. “If Hope For Homeowners actually took off, they’d be swamped,” said Alan Mallach.

Last week, House Financial Services Committee chair Rep. Barney Frank (D-Mass.) pledged to figure out what went wrong, and a series of tweaks to the program has been green-lighted by the financial committee and awaits full House approval. This piece of on-deck legislation dials back the required premiums and equity-sharing measures, and decreases the loss-taking required of lenders. Another provision gives legal immunity to loan servicers who modify loans.

Some say it’s not enough. American Enterprise Institute resident fellow Alex Pollock suggests taking HFH out of the FHA and creating a separate entity. “What they did in the 30s and what I would have preferred would have been a stand-alone entity.” Pollock said. “You’d have had a much more energetic program with a higher probability of success if it was set up as a thing in and of itself.”

Alan Mallach takes it a step further, suggesting that this new division could be responsible for all of the mortgage-related programs, infusions and investments the government has become involved — some would say entangled — in over the past several months. “What we need is a single mechanism for whenever the government finds itself controlling a mortgage,” he said.

Both agree that such a plan is politically unpalatable, though, because it requires at the outset an implicit acknowledgement that the current mortgage problems are going to be with us for a long time to come. Even for a government that has gobbled up substantial amounts of soured assets, that admission might be too much to swallow.

Martha C. White is a freelance journalist in New York. She regularly writes about finance and the economy.

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As the Senate Intelligence Committee grills prospective CIA director Leon Panetta, President Obama’s commitment to open government finds itself facing a culture of secrecy that has grown broader and deeper since September 11.

Obama’s executive order strengthening the Freedom of Information Act, issued on his second day in office, signaled his intent to open up the federal government to greater public accountability. The harder part will come in delivering results, especially at the CIA.

Illustration by: Matt Mahurin

Obama’s appointment of Panetta, the tactful former White House chief of staff known for his diplomatic and managerial skills, signalled a clear desire to go outside the ranks of the agency to establish new management. Like the FOIA order, Panetta’s nomination arises from Obama’s conviction that democratic self-government requires accountability for government officials engaged in legitimate, secret government activities.

The last two incoming Democratic presidents also had the same impulse—and both were thwarted. In 1977 Jimmy Carter wanted Ted Sorensen, former speechwriter for President John F. Kennedy, to head the agency. A vocal rebellion in the ranks of the clandestine service killed the idea. In 1993, Bill Clinton wanted to put dovish career national security bureaucrat Anthony Lake in charge in Langley. Same rebellion. Same result.

The sheer fact that Panetta’s nomination has gotten further than either Sorenson or Lake is testament to changing times and Obama’s political skill. As Spencer Ackerman of The Washington Independent has reported, the clandestine service has been placated by the retention of career officer Mickey Kappes. As the son of a career CIA officer, Kappes was literally born and bred in the Agency. If Panetta has paid his taxes, Obama may get the independent leadership he seeks.

But history shows that Obama’s commitment to open government, while rhetorically appealing and politically popular, also carries a real political price and nowhere more so than Langley, where secrets are the coin of the realm and not willingly surrendered.

As Ackerman has noted, one of the toughest issues facing Panetta is the question of releasing the tightly held CIA inspector general reports on torture and rendition. Disclosure of the reports would likely heat up the already simmering debate about whether Bush administration officials should be investigated for their role in the implementing the torture regime.

Rush Limbaugh has said he worries that Obama’s FOIA order might make it easier to investigate Bush and his colleagues, a prospect he called “un-American.” The under-informed talk show host was mistaken about the potency of FOIA. The law exempts the operational files of intelligence agencies from disclosure under most circumstances. Investigators of the Bush era will have to use other tools to get the full story. But Limbaugh was right to recognize Obama’s open government instincts as a threat to those government officials who use secrecy to hide illegality.

Slate’s Fred Kaplan hailed Obama’s FOIA order saying, “his campaign talk about ‘a new era of open government wasn’t just rhetoric; it’s for real.” Obama’s order countervened a much more restrictive order, issued by John Ashcroft in October 2001. FOIA, Obama said “should be administered with a clear presumption: In the face of doubt, openness prevails.”

But the reality remains that secretive government agencies retain the upper hand over the public and the Congress, even when it comes to records that more than 30 years old.

Case in point: CIA lawyers are actively seeking to block FOIA appeals for disclosure of antique records related to the assassination of President John F. Kennedy, even as the agency’s own statements raised new questions about the its actions in the tragedy’s aftermath. Full disclosure. I am the plaintiff in the lawsuit which seeks records of a deceased CIA officer named George Joannides.

The new questions arise from a sworn declaration, filed in November, by Delores Nelson, chief of CIA information programs, in which she acknowledged that the agency, unbeknownst to Congress, had assigned an undercover officer to work with investigators looking into the Kennedy’s murder. Joannides had worked on two “covert projects” in his 28-year CIA career, Nelson stated. One was running covert operations in Miami in 1963. The other was serving as the agency’s liaison to the House Select Committee on Assassinations in 1978.

“Joannides served undercover in both of these assignments,” Nelson asserted.

The CIA did not respond to questions about Joannides’ undercover mission with the HSCA for this piece. The nature and purpose of that mission, if there was one, remain unknown.

The Agency did not inform Congress of Joannides’ undercover status, said G. Robert Blakey, a Notre Dame law professor and former federal prosecutor who ran the HSCA investigation. In an email, Blakey said CIA officials only told him that Joannides would “help facilitate the committee’s work.”

“I was not told that he had an undercover role with the committee,” Blakey wrote. “I would not have dealt with him in any capacity that was not fully open.”

In 1963, Joannides served in Miami as the chief of the agency’s psychological warfare operations against Fidel Castro’s communist government in Cuba. Declassified CIA records show that Joannides secretly funded an anti-Castro student front group that generated propaganda about Lee Harvey Oswald’s pro-Castro activities both before and after JFK was killed, allegedly by Oswald.

Blakey says the CIA did not tell him about Joannides’ psychological warfare assignment in Miami in 1963 either.

“Had I know that he would not have been a facilitator,” Blakey wrote, “he would have been under oath as a material witness.”

The CIA’s determination to keep the whole matter buried is clear. Nelson’s declaration revealed for the first time that the CIA retains 295 documents concerning Joannides’ secret operational activities in 1963 and 1978 that it will not release in any form. Their release would threaten the national security and foreign policy interests of the U.S. government, Nelson asserted.

In the case of the Joannides files, the legal requirement for disclosure is clear. Quite apart from FOIA, the JFK Records Act of 1992 mandates that all assassination-related records be reviewed and released “immediately.” The intent of Congress and the White House is not in dispute. The JFK Act was approved unanimously by Congress, signed into law by President George H.W. Bush and implemented by President Clinton.

John Tunheim, the federal judge who chaired an independent panel created by the act which declassified 5 million pages of JFK records in the 1990s, says the Joannides files qualify as JFK records and should be reviewed and released.

“If we had known who Joannides was we would have released all of those records,” Tunheim said in an interview.

“I don’t understand why they are fighting so hard on this,” Tunheim went on. “The only thing I can think of is they don’t want to create a bad precedent on FOIA. They’re trying to preserve the right to do whatever the hell they please under FOIA.”

Anna Nelson, professor and resident historian at American University who served with Tunheim on the Assassination Records Review Board from 1994 to 1998, said the CIA “is being foolishly recalcitrant. How long do we wait for the CIA around to tell us who was involved?”

Yet the Joannides files remain secret and impervious to outside review. The staff of the National Archives asked to review the disputed records and was rebuffed. The agency said it wouldn’t share the documents as long as my lawsuit was pending.

Joannides died in 1990. He was never interviewed by any JFK investigators.

If stonewalling is the agency’s posture over documents that are 30- to 45-year-old documents for which there is a long-standing legal and political mandate for release, what are the prospects that a rookie president’s wishes are going to have a substantive effect on far less moldy documents that involve current and former government officials and fierce political dispute?

Minimal says, Mark Zaid, a Washington attorney with a national security practice who often litigates FOIA issues.

“I don’t think I will see anything different in litigation than I have in the past at least not soon,” Zaid said. “In these types of cases, the government and the agencies have so little to lose that they drag it out as long as they want. “

“Nice words from Obama and [Attorney General Eric] Holder is one thing,” Zaid added. “But the GS-12 [meaning a mid-level federal civil servant] who is doing the declassification has to feel the GS-15 who is their boss will support them when they try to open records.”

“It will take years, not months,” for the impact of Obama’s order to be felt, Zaid said.

Obama’s executive order should be applied to pending FOIA cases, said Meredith Fuchs, general counsel for the nonprofit National Security Archives which houses collections of U.S. government documents and frequently litigates for the release of secret records.

“It is incumbent on the Justice Department and the CIA to employ the presumption in favor of disclosure in the Joannides case and other pending litigation,” Meredith Fuchs, general counsel for the nonprofit National Security Archives said in an email. “Where cases have been fully briefed and/or argued, it may take some work for that new policy to have an impact, however.”

That’s an understatment. My attorney, Jim Lesar, filed the lawsuit seeking Joannides records in December 2003. Five years later, the case is still pending before Judge Richard Leon in Washington federal court.