Mostly the bad and ugly in the court decision

THE GOOD, THE BAD, AND THE UGLY IN THE COURT DECISION

by J. Chritian Adams    at Pajamas Media:

There will be lots of analysis and spin today on the Supreme Court’s decision. But here is all you need to know. The Court got the Commerce Clause part right, but so what? They were never going to find the mandate within the power of the Commerce Clause. The Court, on the other hand, disregarded the position of the government and read the law to be a tax, and therefore within the power of the Constitution.

The Good:

The Constitution grants Congress the power to “regulate Commerce.” Art. I, §8, cl. 3 (emphasis added). The power to regulate commerce presupposes the existence of commercial activity to be regulated. This Court’s precedent reflects this understanding: As expansive as this Court’s cases construing the scope of the commerce power have been, they uniformly describe the power as reaching “activity.” E.g., United States v. Lopez, 514 U. S. 549, 560. The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce.

Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority.

The Bad:

In pressing its taxing power argument, the Government asks the Court to view the mandate as imposing a tax on those who do not buy that product. Because “every reasonable construction must be resorted to, in order tosave a statute from unconstitutionality,” Hooper v. California, 155 U. S. 648, 657, the question is whether it is “fairly possible” to interpret the mandate as imposing such a tax, Crowell v. Benson, 285 U. S. 22, 62. Pp. 31–32.

The Ugly:

In answering that constitutional question, this Court follows a functional approach,“[d]isregarding the designation of the exaction, and viewing its substance and application.” United States v. Constantine, 296 U. S. 287, 294. Pp. 33–35.  Such an analysis suggests that the shared responsibility payment may for constitutional purposes be considered a tax. The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation.

Understand that the decision to characterize the law as a tax (even though the Justice Department made the opposite argument) is not entirely outlandish. Courts have an obligation to presume statutes are constitutional. Roberts particularly hails from that jurisprudential pedigree, as opposed to someone like Justice Thomas or Scalia.

There are conservatives like Roberts obsessed with reining in courts, largely from their Roe v Wade shell shock and other 1970s opinions. Conservatives like Scalia and Thomas are more interested in enforcing constitutional limits to protect liberty.

When you hear Republican politicians warn about “legislating from the bench,” they are using rhetoric from two decades ago when courts advanced a leftist agenda in the absence of legislative activity. The term today is as archaic as parachute pants and AMC Gremlins. These days, legislatures are passing leftist legislation that exercises unconstitutional power. In that circumstance, it is up to the courts to defend the Constitution. Today, the Court flinched from that obligation, in part because of decades of conservatives repeating the empty and now obsolete admonition against “legislating from the bench.”

 

 

Mitt Romney Sends an Email

Yes, this is a first for me.   I have yet to send him my meager dollars to oust Marxist and otherwise confused president of these United States, Barack Hussein Obama.

I am in the landscape business and business in the Obamarule era has been in ruins.    We actually hired a new hand this year, the first in four, having lost nearly half of our staff.

Of course the email is an automated one……but in this battle to save American from Obama’s Marxist goverrnment rule, I feel honored…and will oblige with a donation.   

How about you joining me?              Mitt’s email said:

Glenn,   Today, the Supreme Court upheld Obamacare. But regardless of what the Court said about the constitutionality of the law, Obamacare is bad medicine, it is bad policy, and when I’m President, the bad news of Obamacare will be over.It was always a liberal pipedream that a 2,700 page, multi-trillion-dollar Federal Government takeover of our health care system actually could address the very serious problems we face with health care. With Obamacare fully installed, government will reach fully half of the economy — that is the recipe for a struggling economy and declining prosperity.   On Day One, I will work to repeal Obamacare to stop the government’s takeover of our health care and intrusion in our lives. I will push for real reform to our health care system that focuses on helping patients and protecting taxpayers. We cannot afford Barack Obama’s on-the-job learning, Big Government proposals, and irresponsible spending. Our basic liberties are at stake — and I will fight to restore our freedoms, renew the respect for our Constitution, and halt the government takeover of health care. This November it’s all on the line. The stakes couldn’t be higher. Donate $10 or more to put a stop to the policies of Barack Obama and the liberal Democrats. Thanks, Mitt Romney

The House Holds the Contemptible Attorney General Holder in Contempt

HOUSE VOTES TO HOLD AG ERIC HOLDER IN CONTEMPT

 by Erika Johnsen    at  HotAir:

For the first time ever, the House of Representatives voted Thursday on whether to hold a sitting attorney general in contempt of Congress. Republicans brought the vote to the House floor in an effort to force Attorney General Eric Holder to finally face the music for his willful failure to fully comply with a Congressional subpoena of documents relating to Operation Fast & Furious, the not-botched gunwalking scandal that resulted in the death of a U.S. border patrol agent and countless Mexicans — and face the music Holder did. The House voted 255-67 to hold Eric Holder in contempt.

During the pre-vote debate, Minority Leader Pelosi accused the Republicans of playing “heinous,” “frivolous” political games, and even encouraged the members of her party to walk out on the vote: “I’m very moved by the members of the Congressional Black Caucus who say they are going to walk out on this,” she said on the House floor. “Walk out on this. Perhaps that’s the best way. …I urge my colleagues to vote ‘no’ or not vote.” Her oh-so-rousing call to protest, however, didn’t inspire quite the solidarity she was probably looking for: Over 100 Democrats didn’t vote, but at least 17 Democrats defected and joined Republicans in the contempt charge.

Developing…

Update: Yep, looks like 110 members decided not to vote — the CBC explained their reasoning for walking out earlier:

“Contempt power should be used sparingly, carefully and only in the most egregious situations,” said a letter from the 42-member Congressional Black Caucus to colleagues. “The Republican leadership has articulated no legislative purpose for pursuing this course of action. For these reasons, we cannot and will not participate in a vote to hold the attorney general in contempt.”

Regardless, after 18 months of investigating and subsequent stonewalling, this is officially moving forward. Technically, when you’re found in criminal contempt, you’re subject to a hefty fine or even arrest, and your case would go to a DC district court via the Justice Department — but the obvious problem here is that Holder is the head of the DOJ. The House is now getting set to vote on whether to hold Holder in civil contempt, so the Oversight Committee can hire their own lawyers to file a civil lawsuit to prosecute the attorney general. Another update to follow…

Update: Heh. If you missed the House floor debate, BuzzFeed has a nice round-up of the gist of it — good times, good times.

Update: Ughh, of course. Here’s part of the White House‘s all-too-foreseeable response to the contempt vote:

The problem of gunwalking was a field-driven tactic that dated back to the George W. Bush Administration, and it was this Administration’s Attorney General who ended it. Attorney General Holder has said repeatedly that fighting criminal activity along the Southwest Border – including the illegal trafficking of guns to Mexico has been is a top priority of the Department. Eric Holder has been an excellent Attorney General and just yesterday the Chairman of the House Oversight Committee acknowledged that he had no evidence – or even the suspicion – that the Attorney General knew of the misguided tactics used in this operation.

Yet, Republicans pushed for political theater rather than legitimate Congressional oversight. Over the past fourteen months, the Justice Department accommodated Congressional investigators, producing 7,600 pages of documents, and testifying at eleven Congressional hearings. In an act of good faith, this week the Administration made an additional offer which would have resulted in the Committee getting unprecedented access to documents dispelling any notion of an intent to mislead. But unfortunately, a politically-motivated agenda prevailed and instead of engaging with the President in efforts to create jobs and grow the economy, today we saw the House of Representatives perform a transparently political stunt.

Update: The aye’s have it — the House just followed up on their criminal contempt vote with an affirmative civil contempt vote, which will allow them to hire their own counsel to challenge President Obama’s invocation of executive privilege. Which, as Rep. Trey Gowdy explained in a video this morning, they’re ready and rarin’ to do:

Obamacare Goes back to the Zoo called Congress

 

It Now Falls to Congress

By Roger Pilon -    at the Cato Institute:

ObamaCare was a mistake from the start, a massive effort by the federal government to take over and control one-sixth of the economy – indeed, the part that concerns the most complex and intimate details of life, our health. It’s the most ambitious example to date of the political hubris progressives have displayed for over a century now, the belief that government can solve all of our problems.

Today, the Supreme Court had an opportunity to put a brake on that hubris. Four justices, led by Justice Kennedy, would have done so. But Chief Justice Roberts joined the four justices who are Exhibit A of the modern hubris, writing for the Court to uphold almost all of this monstrous intrusion on our liberty and on the very theory of the Constitution. And he did so on the flimsiest of rationales for deciding a constitutional question – precedent. If precedent carried the weight Roberts gave it today, we’d still be riding in segregated trains and sending our children to segregated schools.

So let’s look a bit more closely at this decision – which, to be clear, will take some time to fully digest. The Court rejected the administration’s main argument for the individual mandate, based on Congress’s power to regulate interstate commerce: “The power to regulate commerce presupposes the existence of commercial activity to be regulated.” But that’s a slim victory for those of us who’d argued that “not buying insurance” is not an act of commerce. How often does Congress try to regulate “non-commerce” under its power to regulate interstate commerce? As best anyone could tell, this was the first time Congress had ever tried such an expansion of its power.

And because there’s no “commerce,” the Court rejected the parasitic Necessary and Proper Clause argument, too, which affords Congress the means to carry out its other powers.

But Robert’s bought the administration’s second fallback argument – that the penalty for not buying insurance is a tax, even though the administration abandoned that argument during the course of litigation, and even though calling it a “tax” would seem to implicate the Anti Injunction Act, which would preclude the Court from even deciding this case until someone was forced to pay the tax, which won’t happen for another couple of years. Yet the Court apparently brushed aside that AIA impediment – talk about lawlessness – in its rush to uphold ObamaCare.

And so there’s your foundation for the decision: the individual mandate is constitutional based on Congress’s power to tax: Congress can “tax” those who don’t buy government approved health insurance. Don’t ask what kind of a “tax” that is! It’s not an income tax. Nor is it a duty, impost, or excise tax, the only kinds of taxes recognized under the Tax Clause of the Constitution, where Roberts purports to rest Congress’s power; and it certainly isn’t “uniform throughout the United States,” as is required for those taxes. It’s sui generis, which is a polite way of saying it’s unconstitutional – if we take the Constitution seriously.

But that’s just the problem, isn’t it? As James Madison, the principal author of the Constitution, Thomas Jefferson, and virtually everyone else at the Founding made clear, the power to tax, the first of Congress’s 18 enumerated powers, like the power to borrow, Congress’s second enumerated power, was designed to enable Congress to obtain the funds needed to carry out its other enumerated powers or ends. It was not, as Madison made clear in Federalist 41, and often on the floor of Congress, an independent power to tax for any purpose at all. Search as you will through those 18 enumerated powers and you will find no power to enact ObamaCare or anything like it. And please don’t say that the taxing power serves the commerce power which in turn authorizes the individual mandate, because the Court nixed that second leap today.

But all of that was lost in 1937 when the New Deal Court, cowed by Roosevelt’s infamous Court-packing threat, suddenly “found” that Congress had an independent power to tax and spend for the “general welfare,” a power that had escaped the Court’s attention for 150 years. That’s the “precedent” for today’s decision – which, like the precedent itself, turn’s the Constitution on its head, giving us effectively unlimited government.

It will fall to Congress, then, to undo this monstrosity, if it can. Under the Constitution, as written, health care would be provided like any other service that’s stayed largely free from government control. But starting with World War II wage-and-price controls and the tax advantages that were given to employer-provided health insurance, it’s been one government intrusion after another and a textbook example of how government can completely mess up what free markets plus voluntary charity can efficiently order while respecting the rights and dignity of people in the process. That’s a vision, the Founders’ vision, that Congress can restore, even if this Court has failed to do its part today. 

Roger Pilon is vice president for legal affairs at the Cato Institute and director of Cato’s Center for Constitutional Studies.

Comment:   To better know the state of the Obama Congress, let none of us forget the passage of the Obamacare Law…WHICH NO ONE READ, NOR COULD ANYONE READ ITS TENS OF THOUSANDS OF PAGES THESE IDIOTS OF AMERICAN LIFE, THE OBAMA CONGRESS,  HAVE DELIVERED TO THE AMERICAN CITIZEN TO CREATE GOVERNMENT CONTROL OVER CITIZEN LIFE.

Our American future as a democratic republic is gloomy.   It is the human male who craves liberty and the blessings and its defense  that goes with it.   It is the human male who invents, who investigates,  who problem solves, who builds and who creates knowledge.   It is the human female who bears the future generation and so by birth seeks security, security and more security.

Security used to be provided by the human male in both civilized and uncivilized society that is, until the feminist hysteria which has created the endless numbers of single insecure females who rely on Marxists to provide them  their entitlements for their vote in return……and as we all know the feminist demands entitlements.  She think she is man’s equal in all matters, and some feminists, we are told at university are superior to the human male, although the world is awaiting the statistics.   These  are Obamafolks.   They learn their Koran in Women Studies Madrassas  to spread the good news throughout collegeville, the main stream press, Obamaland and paid for by tax payer dollars.

The very fact this incompetent, this racist, this Marxist opportunist, the dishonest Barack Hussein Obama is favored for reelection is proof the depths to which the American voter has chosen to fall…..He and she don’t even know how to write their own names anymore.   They don’t teach such things in Obamaschool.   Obamalove is in instead.

That nearly everything important in the realms of human life, except for the delivery of human off spring has been created, invented, advanced, organized, and effected has been created and accomplished by the human male seems to escape the brain cells of the feminist…..the Obamafolk….both male and female.

 

Justice Roberts Turns Traitor to both America and Honesty

I have long believed that the most dishonest profession in America….and likely the world is the profession of lawyering.   I cannot confidently claim the world competes with the criminality of the American legal profession for much of  the world is so overwhelmingly corrupt in its management of nearly everything,  if would be hard to distinguish the worst.

Their greatest curse upon the exercise of effective democracy is the exclusive  union card given to attorneys to become judges in America.   I believe most attorneys are bastards in their behavior ‘at home and abroad’.   They learn to be so in law school and in their practice.  The profession teeters between amorality and outright immorality in their bull shit claims to discover justice.

Any American citizen ‘of age’ can make as outrageous and stupid decisions  as the law degreed union-card attorneys make as judges.

The majority Supreme Court decision this morning is a perfect example.

Justice Roberts pretends that Obamacare was a tax bill which the creepy  Democrat liaison of Obama-Reid-and Pelosi prowled around after midnight to pass the bill without anyone being able to read it.  

Obamacare could not be adjudged commerce forcing citizens to purchase,  but it could be deemed a tax, the majority Lefties invented.

THINK OF THAT AGAIN……MOST OF THESE FRAUDS ARE GRADUATES OF LAW SCHOOL.    THEY HAVE NO RESPECT, NO FEEL, NO UNDERSTANDING OF THE AMERICAN EXPERIENCE……THESE ARE CROOKS RUNNING THE COUNTRY…and they are not alone in their Marxism and contempt for the country they are supposed to lead……where the achievement and protection of liberty  used to be respected.

I learned of the Roberts treason shortly after the beginning of this morning’s Dennis Prager show.

Dennis referred early in his report to “SECTION 5,000A of Obamalaw’s file.   He asked if their might be a 5,000B to this likely unreadable Supreme Court ukase as was the orgininal Obamacare bill itself.

THE VERY VOLUME OF THE LEGISLATIVE EXERCISE IS A CRIME IN ITSELF.   The contempt the Supreme Court has, whether among the so called majority or minority for the democracy we live in is demonstrated by both their own political review  of the Obamacare monstrosity as well as the voluminous  monstrosity itself.

In a respected democracy led by the respectful…..both missing from today’s America…..no legislation should be written in language foreign to the voting citizen.      No judicial decisions should be made only by those who have graduated from law school…….and no Supreme Court Judge should rewrite a piece of legislation over which he must judge to abet Court approval as has Mr. Roberts.      

In a viable  people-oriented democracy judges should be elected whether candidates have or do not have law degrees.     Every court jurisdiction should have a cast of  the law degreed available for legal interpretations as needed……but NO CASTE OF THE LAW DEGREED SHOULD BE ELEVATED   TO ANY JUDGESHIP ABOVE ANY ELECTED CITIZEN!

Does anyone believe that the three females on the Supreme Court are representative of the American female voting population in nearly any category of experience beyond being female?   Is there any evidence available that these three actually do engage in thinking out their decisions beyond being a rubber stamp for Marxism and its shadowy politics?

Who among the women even vaguely represents American womanhood?   Ginsburg?  Sotomayor?  Kagan?   Are all American women screwball feminists certain there is no difference between the human male and female beyond socialization?

Americans don’t expect feminists to be rational.    They don’t expect racists, even the Obama dosage, to be rational.   Most Americans, I suspect, didn’t believe that Justice Roberts would join the Marxist crowd to pretend that Obamacare mandate forcing the citizenry to buy Obamaproduct health care, was a tax issue.

Conservatives are forced to attend the same Marxist universities which program our educators, lawyers, psychologists, environmentalists, horticulturists,  rabbis,  journalists, AARP members and nearly everyone in the art world to become drones of the State punctuated with atheism, the Marxist ‘god’.

A peoples deserve the government which governs  them.    Americans deserve  the rise of Obama’s Marxism if he is re-elected.     He is already the first  killer of the American dream voted to the White House in the Nation’s history.

Besides his contempt for honesty  and forthrightness, he has already buried us with $5,000,000,000,000 in new debts in his brief 3.5 years of Obamarule.

P.S.   I do not approve of a handful of descriptive words I have used in this opinion, despite the accuracy of their  use.   Please forgive me.

Comrade Jay Carney Presents Premier Obama’s Thoughts on Party’s Healthcare Program

Jay Carney:

People don’t like ObamaCare because

of all the money that was spent attacking it

 by Allahpundit     at HotAir:

 

Via the Examiner, which has a handy rebuttal ready: Just scroll through the polling at RealClearPolitics, all the way back to O’s first few months in office. The first poll showing net opposition to health-care reform appeared in mid-July 2009 and the first one showing double-digit net opposition followed a few weeks later. By early September, after Democrats got an earful at their health-care town halls in August, even the AP was showing a 15-point spread in opposition. Carney’s seizing on money as an explanation because that’s the White House’s unified field theory for all of its troubles right now. They’re being outspent by the right in the campaign (well, no, not really, but they might be eventually) and that Citizens-United-loving wingnut Supreme Court is about to shatter their dreams of universal health care and you just know that the damned Koch brothers are behind it all pulling the strings, so let’s go ahead and blame money for why the public hates ObamaCare too. Even though one of the most compelling reasons on the left for electing Obama four years ago was that he was allegedly such an oratorical samurai that he’d be able to sell the progressive vision while in office like virtually no one else. How many speeches on ObamaCare did he end up giving, in fact? Dozens, surely. How’d that work out with the polls?

Let me offer a radical counter-theory on why ObamaCare’s popularity never took off: As much as people dislike some aspects of their health care, they get panicky at the prospect of a major overhaul. Too much can go wrong if things don’t work out — longer waits, fewer doctors, more expensive care. Toss in a strange new power grab in the form of the mandate, exotic procedures being used in Congress to pass the thing, the prospect of Medicare being raided to pay for the reform, and the unpalatable reality of big government rolling out the ultimate big government program and you’ve got a mighty heavy lift turning this into a political winner. And no, it’s no answer to say, “But voters like seeing people with preexisting conditions covered.” That’s true, but there are lots of things voters like in the abstract that they end up liking a lot less once they realize the trade-offs involved. Voters really like the idea of a balanced budget, but when you explain to them that that’ll require entitlement cuts and higher taxes on the middle class, suddenly they’re a lot less eager, huh? In this case, the “goodies” included in the law simply never looked good enough to make all the causes for anxiety that I described above seem worthwhile.

View Comrade Carney’s Obama performance here:  http://hotair.com/archives/2012/06/27/jay-carney-people-dont-like-obamacare-because-of-all-the-money-that-was-spent-attacking-it/

I’ll leave you with this:

A Fox News poll released Wednesday finds nearly half of voters oppose the law passed by Congress and signed into law by President Obama in 2010. Thirty-nine percent favor the law. Thirty-nine percent — the exact same number — also favored it at the time it was passed two years ago (April 2010).

 

 

Corruption Collusion: Obama plus Wall Street plus Government Sector Unions

Time to Occupy State Pensions?

Walter Russell Mead

at the American Interest:

The biggest scam going in American financial life may be the collusive effort by Wall Street, the political class, and public sector unions to use union retirement money to prop up Wall Street speculation.

Step One: state politicians promise big pension and health care benefits to their unionized work forces, but don’t set aside enough money to fund those benefits when the bill comes due. This makes union leaders and unions look good, because they can point to the shiny new benefits they have negotiated with the politicians. Meanwhile, it makes the politicians happy because the unions support them with contributions and volunteers at election time, but because the unions don’t insist on full funding for the benefits, the politicians don’t have to raise costs or otherwise disturb the big majority of voters who don’t work for the government.

Step Two: Make aggressive assumptions about the rate of return on pension investment funds. This has two consequences: it covers the gap between promise and reality (for a while), thereby postponing the day when the politicians have to face the voters and the union leaders have to tell their members that those beautiful benefits were bogus from the start. But the other purpose, equally important, is that it forces America’s public sector pension funds into the deep end of the financial markets, leading pension funds to be major investors in hedge funds, derivatives and various other not-for-the-widows-and-orphans investments. If these work out, great — the funds hit their investment targets and the benefits, or at least some of them, get paid. If they go awry — as many did in the last few years — then the pension problem turns into a crisis.

But whether or not the investments work for retirees, they work very, very well for Wall Street. Fees from giant public sector pension funds played a significant role in creating Wall Street’s buccaneer culture and speculative frenzy that the left claims to hate.

Looking for examples? Head to Pennsylvania:

The Pennsylvania State Employees’ Retirement System, for example, has more than 46 percent of its $26.3 billion in assets invested in riskier alternatives, including private equity funds and real estate. Over the last five years, the system paid roughly $1.35 billion in management fees – over 5 percent of the total value of the fund over a five-year period – while realizing an annualized return of just 3.6 percent, well below the 8 percent it needs to meet its financing requirements and also lagging behind the 4.9 percent median return for all public pension systems.

There’s bad news for Pennsylvania’s teachers, too:

The $51.4 billion Pennsylvania public schools pension system…which has 46 percent of its assets in alternatives, pays more than $500 million a year in fees. It has earned 3.9 percent annually since 2007.

California is also struggling:

Fees for the $242 billion in California’s giant state pension system, known as Calpers, nearly doubled, to more than $1 billion a year, after it increased its holdings in private assets and hedge funds to 26 percent of its total in 2010, from 16 percent in 2006…

Calpers…has earned 3.4 percent annually over the last five years.

Compare that with Georgia, which is at the other end of the investment risk spectrum:

In Georgia, the $14.4 billion municipal retirement system, which is prohibited by state law from investing in alternative investments, has earned 5.3 percent annually over the same time frame and paid about $54 million total in fees.

Pension reform is about more than cutting benefits to realistic levels, and ensuring that politicians and union leaders have to stop the collusive scams. It is also about enabling pension funds to invest in safer investments and stop paying huge fees to hedge fund managers and investment banks — and because public pension funds are such large pools of capital, this would be an effective way to help bring Wall Street back down to earth.

Pension funds should not be aggressively invested. Retirement funds should be conservatively managed — and that means enough has to be paid into those funds so that with moderate investment results, retirees can be sure that their promised benefits will in fact be paid.

The key to this change is stronger regulation of government pension funds, to force them to observe the same requirements that apply to private sector pension funds as well. Amazingly, the same union leaders and lefty experts who call for tough regulations elsewhere in the economy want to keep government workers chained to the roulette wheel in the Wall Street casino: they are bitterly opposed to seriously prudential regulation of government pension funds.

The current battleground in the union effort to subsidize go-go trading on Wall Street involves proposals by the Government Accounting Standards Board to introduce new rules for accounting on public pensions. The New York Times reports that the new rules, which will take effect in 2015, will require pension plans to factor the possibility that they will run out of money into their calculations:

The controversy centers on the way governments measure their future payments to retirees in today’s dollars, a common financial calculation known as discounting. The accounting board has devised a method that will require severely depleted pension funds to factor in the likelihood that they will run out of money at some point, and have to borrow to pay retirees their benefits.

Healthier plans will be allowed to discount future payments as they do now.

These are very mild reforms, and will spare most pension funds from changing the way they do business. Worse, the new rules still don’t require public pensions to apply the same accounting standards used in the private sector:

“This is still a flawed accounting system,” said Joshua D. Rauh, an associate professor of finance at Northwestern University. He says states should measure their pension promises much as an insurance company sets the price of an annuity — using the market rates for so-called risk-free bonds that are considered very safe. Using that standard, many states appear to have promised far more than they can reliably pay.

Private sector pension funds “are required by law to use low, risk-adjusted discount rates to calculate the market value of their liabilities, [but] public employee pensions are not.” This means that the private pension funds must take into account the chance that their projected rate of return on investment isn’t met. The higher the assumed rate of return, the greater the risk that must be taken into account.

This is exactly what public pension plans, backed by the unions, do not want to do. Ignoring the chance that assumed rates won’t be achieved disguises a harsh reality for state and municipal pension funds. As a new report from Boston College’s Center for Retirement notes: “there is a total of $2.6 trillion of assets on [the 126 public sector pension plans tracked by the study] but current liabilities under today’s assumption that they can grow by eight percent annually are $3.6 trillion. If the investment assumption is moved down to four percent (still high when compared to current returns), then the liabilities of those plans jumps to a staggering $6.4 trillion.”

Pension funds and union officials like the current lax rules. When Montana needed a new actuary it ignored all applicants who suggested using the same methods private pensions do to assess their future risks. “If the Primary Actuary or the Actuarial Firm supports [market valuation] for public pension plans, their proposal may be disqualified from further consideration,” read the job description. Scott Miller, legal counsel of the Montana Public Employees Board, was more blunt: ”The point is we aren’t interested in bringing in an actuary to pressure the board to adopt market value of liabilities theory.”

The new GASB rules allow many pension funds to continue to use these lax risk accounting methods that would be illegal in a private company. And amazingly, once you sprinkle a little pixie dust and some optimistic, undiscounted assumptions onto them, a number of shaky pension systems look strong. For example, New York City: “The current accounting rules make New York City’s plans look almost perfectly funded. Using the risk-free [market-based] method, Robert C. North Jr., the chief actuary for New York City, has said, there would be shortfalls running into the billions of dollars.”

Even the new rules, weak and watered down as they are, reveal a devastating picture of political irresponsibility and opportunism from one end of the country to the other. When a pension fund can reasonably project having 80 percent of the money needed to meet its obligations, it is considered to be in reasonably good shape. Under the new rules, startling numbers of large state pension funds don’t come anywhere close. (Click here for a Wall Street Journal table that shows what the pension situation looks like around the country.) In Illinois, the pension system for teachers is about as well funded as a Bernie Madoff fund: 18.8 percent of what it needs.

And remember that the new rules are still much looser than anything that would be legal for private companies. These underfunded pension systems become the slaves of Wall Street: to have any hope of meeting their obligations without hefty tax increases, politicians have to channel retiree money into some of the riskiest bets on the Street.

The net result of all this is to shift huge risks onto both taxpayers and state employees while paying Wall Street bigger fees and creating a huge pool of funds for the craziest ideas the bankers can dream up. The unions and the politicians get to keep the lax regulations on pensions that allow them to keep lying to workers and taxpayers, and as a direct result Wall Street investment banks earn or at least receive hefty fees. Retired civil servants in this way have become a captive market for the riskiest, most exotic and expensive products. Meanwhile both the unions and the politicians do their best to conceal the weakness in public pension funds from retirees and the public as they expose millions of unknowing Americans to risks that retirement funds should never run.

This is not a pretty sight, and the whole mess is a strong argument for those who believe that “regulatory capture” means that a powerful government ends up serving the rich and well-connected rather than helping working and middle class Americans. Transforming what ought to be a safe and reliable pension system into a Wall Street boondoggle is exactly the kind of thing a serious labor movement would fight. That the public unions are in effect fighting to retain the “freedom” to put worker pension money in high risk, high fee assets is an indication of just how intellectually and politically bankrupt much of the American public sector labor movement has become.