The World and Everything in It - February 21, 2022
On Legal Docket, a Supreme Court case about campaign finance rules; on the Monday Moneybeat, the latest economic news; and on History Book, significant events from the past. Plus: the Monday morning news.
MARY REICHARD, HOST: Good morning!
Senator Ted Cruz challenges a campaign finance rule that the government claims reduces corruption.
NICK EICHER, HOST: That’s ahead on Legal Docket.
Also today the Monday Moneybeat, more evidence of inflation and what the Federal Reserve is likely to do in response. Economist David Bahnsen joins me later.
Plus the WORLD History Book. Today, birthday of a groundbreaking actor who died this year:
REICHARD: It’s Monday, February 21st. This is The World and Everything in It from listener-supported WORLD Radio. I’m Mary Reichard.
EICHER: And I’m Nick Eicher. Good morning!
REICHARD: Here’s Kent Covington now with today’s news.
KENT COVINGTON, NEWS ANCHOR: Russia extends military drills along Ukraine’s northern border » Russia has extended military drills in Belarus, near Ukraine's northern borders that were originally set to end on Sunday.
Russia has an estimated 30,000 troops in Belarus. Moscow could use those forces to sweep down on the Ukrainian capital of Kyiv, which is less than a 3-hour drive from the northern border.
U.S. Defense Secretary Lloyd Austin on Sunday said Russian President Vladimir Putin has assembled a powerful invasion force.
AUSTIN: He’s been very deliberate in terms of assembling the right kind of combat and combat-support capabilities in the border region. And so he has a number of options available to him, and he could attack in short order.
Russia has positioned another 150,000 troops along Ukraine’s borders to the east and south.
President Biden told reporters on Friday that he fully believes Putin intends to give the order to invade.
BIDEN: We have reason to believe the Russian forces are planning to and intend to attack Ukraine in the coming week, in the coming days. We believe that they will target Ukraine’s capital of Kiev, a city of 2.8 million innocent people.
U.S. leaders say they believe Putin has made up his mind, but they remain hopeful that he will change his mind and seek a path of diplomacy.
Meantime, Ukraine and some U.S. lawmakers are urging Western allies to hit Russia with sanctions preemptively. But Pentagon spokesman John Kirby said “crippling” sanctions must remain as a threat.
KIRBY: They’re gonna be unprecedented, and we mean this as a very strong message to Mr. Putin and as a deterrent. If you pull the trigger on that deterrent, well then it doesn’t exist anymore as a deterrent.
Kirby said if you punish somebody for something they haven’t done yet, they might as well just go ahead and do it.
Police clear ‘Freedom Convoy’ protesters in Ottawa » Hundreds of police in riot gear swept through Canada’s capital over the weekend, clearing the streets of protesters in front of Parliament buildings.
Truckers parked their big rigs in downtown Ottawa for weeks to protest vaccine mandates for truck drivers and other COVID-19 restrictions.
Interim Ottawa Police Chief Steve Bell said police are committed to ending the so-called Freedom Convoy protest.
BELL: If you are involved in this protest, we will actively look to identify you and follow up with financial sanctions and criminal charges.
He said, “This investigation will go on for months to come.”
While some protesters vowed to stay on Ottawa's streets, one organizer told reporters they had “decided to peacefully withdraw.” Tom Marazzo added, “We will simply regroup as a grassroots movement.”
Queen Elizabeth II tests positive for COVID-19 » Queen Elizabeth II tested positive for COVID-19 on Sunday. WORLD’s Josh Schumacher has more.
JOSH SCHUMACHER, REPORTER: British leaders expressed concern for the 95-year-old monarch. But Buckingham Palace said the queen is only experiencing mild, cold-like symptoms, and added that she plans to carry on working.
The palace said she would continue with “light” duties at Windsor Castle over the coming week.
The queen is fully vaccinated and had a booster shot.
Both the queen's eldest son Prince Charles and daughter-in-law Camilla, Duchess of Cornwall contracted COVID-19 earlier this month.
People in the U.K. who test positive for COVID-19 are now required to self-isolate for at least five days, although the British government says it plans to lift that requirement for England this week.
Reporting for WORLD, I’m Josh Schumacher.
Winter Olympics come to a close » The Olympic flame was extinguished on Sunday as the Winter Games in Beijing came to a close.
The United States finished fifth in the overall medal count with 25 in total. One of those medals belongs to Jessie Diggins who won silver in the Women’s Cross Country skiing 30-kilometer freestyle. She recalled collapsing from exhaustion after crossing the finish line.
DIGGINS: So I felt like I couldn’t give up and I had to keep pushing as hard as I could. But yeah, it was very, very hard.
U.S. athletes captured eight gold medals.
Norway topped the medal count with 37—16 of those gold.
Officials on Sunday passed the Olympic flag to Italy, which will host the 2026 Winter Games.
I’m Kent Covington. Straight ahead: a legal challenge to campaign finance rules.
Plus, the birth of the U.S. Postal Service.
This is The World and Everything in It.
NICK EICHER, HOST: It’s Monday, February 21st and this is The World and Everything in It. Good morning to you! I’m Nick Eicher.
MARY REICHARD, HOST: And I’m Mary Reichard. It’s time for Legal Docket.
First, a little history.
One of the most infamous decisions ever handed down by the Supreme Court came in 1896, a case called Plessy v Ferguson.
Plessy was Homer Plessy, a black man who protested racial segregation by refusing to leave a passenger-train car set aside only for white people.
Plessy got a lawyer and sued, alleging violation of the Thirteenth Amendment’s prohibition of slavery, as well as the Fourteenth Amendment’s provision of equal protection under the law.
But the court ruled 7-1 against Plessy, who had to pay a fine and live out his life as a convict had to live with an unjust conviction on his record.
EICHER: Well, last month, ninety-seven years after Homer Plessy died, the governor of his state of Louisiana pardoned him!
EDWARDS: Now therefore, I, John Bel Edwards, governor of the state of Louisiana, recognizing the heroism and patriotism of his unselfish sacrifice to advocate for and to demand equality and human dignity for all of Louisiana citizens, do hereby grant a full posthumous pardon for the above listed offenses to Homer A. Plessy...
The Plessy decision enshrined in law the legal theory of “separate but equal.” It stayed there for 62 years until 1954 when the court overturned the doctrine in the case Brown v Board of Education.
Homer Plessy, now vindicated.
REICHARD: Well, we turn now to analysis of an oral argument from January that also invoked Homer Plessy. The case is Federal Election Commission v Ted Cruz for Senate.
The dispute arose four years ago during the general election in Texas. That’s when Senator Cruz ran for reelection against Democrat Beto O’Rourke.
Just before election day, Cruz loaned personal funds to his campaign: $260,000 to be exact. $260,000.
EICHER: Note the emphasis on “sixty” because $260,000 happens to be $10,000 too much. The campaign-finance law called McCain-Feingold sets a limit of 250K for full reimbursement.
Thing is, that was no accident.
Here’s Cruz on the podcast Verdict the day oral argument occurred:
CRUZ: So I loaned my campaign $260,000 right before the election and then 20 days after the election, a little bit later than that, I repaid myself $250,000, which is what you’re allowed to do. So there’s $10,000 that under the law it’s illegal for me to pay myself back. And I did that in order to file this lawsuit.
REICHARD: He sued, alleging that the law imposes an unconstitutional burden on his First Amendment right to free speech.
He won in lower court. But the FEC appealed to the Supreme Court.
Deputy Solicitor General Malcolm Stewart argued on behalf of the Federal Election Commission. His first argument is that Cruz doesn’t even have a legal right to bring a lawsuit. In legal parlance, he lacks standing because he intentionally violated the law in order to challenge it.
Justice Clarence Thomas saw the problem with that. Listen for the reference to Homer Plessy at the end.
THOMAS: If the government determined that certain media outlets had an outsized influence on an election, could it similarly limit the amount that they spend on editorials to equalize the influence?
STEWART: No, it could not do that, and it could not do that with candidates. That is, this is not a limit on the amount of money that a candidate can spend or even the amount of money that the candidate can loan. It's purely a limit on the funds that can be used to repay the candidate loan after it's been made.
THOMAS: I don't quite see the difference, but, okay. My final question is, going back to your standing, you said a number of times that these self-inflicted injuries can't be a basis for standing. But how would you -- using that at that level of generality, what would you say about Plessy sitting in the wrong car?
STEWART: I would -- we would not say that that is self-inflicted in the relevant sense.
THOMAS: Well, why not? I mean … all he has to do is go to another car.
STEWART: Plessy is attempting to assert a legitimate constitutional right and is attempting to do something in the real world that presumably he would do if the law were not on the books.
Lawyer for Ted Cruz, Charles Cooper, reminded the justices of court precedent:
COOPER: At least since Mr. Plessy sat down in the train car reserved for whites, this Court has repeatedly held that a plaintiff who deliberately subjects himself to the injury of unconstitutional government action for the admitted purpose of challenging it has created his standing, not defeated it.
I didn’t hear any justice seriously express doubt that Cruz has legal standing to sue. If nothing else, he’s out $10,000, self-inflicted or not.
On the second question, though? I did hear ideological division from the justices. That’s the question of whether these particular campaign rules violate the Constitution.
I’ll note here that the Supreme Court has struck down parts of McCain-Feingold bit by bit over the years. Unintended consequences of the law sparked much of its undoing. Instead of reining in election spending, it backfired and led to even more spending.
But lawyer Stewart for the government reminded the justices of why Congress passed the law in the first place: to prevent corruption, or even the appearance of corruption.
Yet Justice Amy Coney Barrett didn’t see corruption in merely paying back a loan:
BARRETT: But Senator Cruz says that this doesn't enrich him personally because he's no better off than he was before. It's paying a loan, not lining his pockets.
STEWART: He's certainly no better off than he was before the loan was made…
Stewart agreed with that, but still. Time limits and capped dollar amounts on repayment could encourage reluctant candidates who fear they won’t be repaid to go ahead and make the loan.
Cooper for Cruz pointed to a higher principle: freedom of speech.
COOPER: If I go to a restaurant tonight and pay for my meal with a credit card, a month from now I will have to repay the credit card company for that meal. That's what these post-election contributions that actually retire debts pay for. Whether they're retiring the debt of the candidate or any of the other creditors, it's paying for speech that was uttered before and -- and was financed through credit, the candidates and others uttered before the election.
The liberal justices could still see a potential for corruption, to line the pockets of a politician.
Listen to Justice Elena Kagan:
KAGAN: If a third party says you're doing such a good job, I want to repay your loan for you, I mean, one day I had a $10,000 loan; the next day I don't. I'm $10,000 richer. Somebody just made me a $10,000 gift.
COOPER: Your Honor, if -- if a contributor comes in and gives the can – the candidate a $10,000 gift, then, yes, that -- that violates not just the gift statutes but -- but, if -- if there's a quid pro quo involved, the bribery statutes. This is a -- we're -- we're talking about campaign --
KAGAN: But that's the entire point of this law. I mean, the entire point of this law is that we start getting worried when people start repaying the candidate's indebtedness because that's just another way of putting money in his pocket.
COOPER: Your Honor, it – what about the rest of the campaign's debts? This campaign ended up with $2.7 million worth of debt. Only 10 percent -- less than 10 percent of it was the candidate's debt. Is every contribution made after the election a gift to all of those creditors? Of course it's not. And nobody would view it that way. It's not a gift, Your Honor, when a debtor pays the creditor what the creditor is owed. And that's -- and that's what we have here.
The government stood by its assertion the law is valid. It’s up to the court to sort out whether it is.
I do think the questionable connection between potential corruption or bribery to this part of McCain-Feingold’s campaign finance rules here is tenuous.
So I predict a win for Senator Cruz on standing for sure. On the constitutionality question, a little less sure, but probable.
And that’s this week’s Legal Docket.
MARY REICHARD, HOST: Coming next on The World and Everything in It: The Monday Moneybeat.
NICK EICHER: It's time now for our regular conversation on business markets and the economy with financial analyst and advisor David Bahnsen. He's here now. Morning, David.
DAVID BAHNSEN, GUEST: Good morning, Nick, good to be with you.
EICHER: Well, several government economic reports over the past week you want to pick which stands out the most to you, we had another inflation indicator, the Producer Price Index, generally that a snapshot of the supply side of the economy that PPI jumped up 1% in a month, this is January 22 versus December 21. And then comparing year on year, this past January, producer prices were nearly 10% up over January the year prior. Also, the retail sales number, it was up in January month on month rise nearly 4%. Home sales up month on month close to 7%. Of course, these new reports look back into January. But does any of this jump out to you?
BAHNSEN: Yeah, I think the Producer Price Index was probably the most meaningful number this week, although the manufacturing data was interesting as well. So there was quite a bit of economic data, but the Producer Price Index was most relevant to the ongoing inflation narrative. It's really important that for people to understand, inflation has to be viewed from a forward perspective; backward looking price movements are not relevant to people's, whether it's investors or consumers behavior, in the same way that forward expectations are. And of course, sometimes people may think the future will look like the immediate past. They could be wrong, they could be right. But when we talk about what's relevant inflation, the big point I'm making right now is that it's not just that what is forward about inflation matters more to us, which is true. But it's also what matters to the Fed. You can't make 2023 monetary policy around 2021 activity. And the fact of the matter is, that everybody being honest about the subject knows that 2021 activity had some hair on it. That's my very professional way of saying there were nuances around various idiosyncratic events that are still very much playing out. Perhaps some people think they won't be done playing out. That wouldn't be my view. But it's not an unfair illegitimate view. What I think is going to happen, Nick, and sorry, for the long answer, I think inflation rate of growth is going to come way down, and is going to be way up from what it was pre COVID. And because everyone has been so focused on the six and 7% big headline number from 2021, that when it drops to three to four, the narrative will end up being how much it's come down, instead of how much it actually went up versus pre COVID. And that focus, that emphasis, will make a big difference in the political will, the sort of societal response that will drive, I think, both fiscal and monetary policy.
EICHER: That that's interesting. Do you think, David that the Federal Reserve is going to change its approach that it's been telegraphing right away with respect to interest rates?
BAHNSEN: No. The Fed is not meeting again till March and everyone knows they'll be raising rates there, I think there were some who were starting to speculate they may raise a half a point instead of a quarter point. But the Fed kind of threw water on that idea as well. They will raise a quarter point in March and then they'll raise a quarter point a couple more times, minimum. I'm on the lower end of expectations, there are some that think it'll be more, but the basic expectations for the Fed at the end of the day, the central bank knows that our over-levered financial system, and our overspent governmental system cannot afford yields much higher, a cost of capital much higher. So my belief for WORLD listeners to hear is, I can't time it perfectly, but I expect some form of Fed tightening, while they wait for the headline inflation rate to drop lower - even though it's still going to be elevated, to use that narrative to excuse them stopping any further monetary action. That's where I think we're headed. I think it's the key story in the next 12 to 24 months.
EICHER: Hey, David, we have just another minute or two I wonder what you think about that home sales number. It's down year on year of course, but January saw a big spike on a month to month basis more than six and a half percent. Kind of how that speaks to the health of the market.
BAHNSEN: Oh no, the prices are speaking to a very unhealthy market. The prices are absurd and irrational, and overstretched and very problematic. The volume is what were the reports that came out this week. You know, home prices don't exist as a national index. I mean, I understand that technically they do. But each market is very unique in terms of its own supply demand realities. And, and so real estate, almost always should be thought of as a local dynamic. But the fact of the matter is that we are having a very difficult time getting new homes built. And now we're having a difficult time getting homes finished that are started. There's a record level of uncompleted because they're still waiting for final appliances or garage doors or other things that are stuck in a supply chain bottleneck. But I think that when we talk about the health of the market, if you're a person looking to sell at a premium price, then, yeah, I guess that's a very healthy thing. But if what we're talking about is normal functional markets, I think it's been very distorted for some time. Now, the good news is that the 30 year mortgage rate has risen above 4%. It was below 3% at the low, and once you get higher rates and higher inventory, you will get lower prices. And that will take, I think, to later in the year to play out but it will bring back a little bit of rational affordability to the residential real estate market.
EICHER: Alright. David Bahnsen, financial analyst and advisor. He's head of the financial planning firm, the Bahnsen group he writes at dividend cafe.com. David, see you next time.
BAHNSEN: Great to be with you.
NICK EICHER, HOST: Today is Monday, February 21st. Good morning! This is The World and Everything in It from listener-supported WORLD Radio. I’m Nick Eicher.
MARY REICHARD, HOST: And I’m Mary Reichard.
The store is open! Open for business, selling all kinds of awesome WORLD merchandise. Check it out wng.org/store. Look at this place: I’m headed straight to the little kiddo aisle as I’m new grandma, with a baby due here in a few months—such a cute selection of onesies. I really like the WORLD Watch one, wrap up the little one in a bright colored onesie that exclaims in Big Bash style, “Gooooood morning!”
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REICHARD: Next up on The World and Everything In It: The WORLD History Book. Today, the birth of a barrier-busting actor; the debut of an institution in the art world; and the postal service in its infancy. Here’s senior correspondent Katie Gaultney.
SONG: “William Tell Overture, Finale” Rossini
KATIE GAULTNEY, SENIOR CORRESPONDENT: “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.”
That phrase originated with The Persian Wars by Herodotus. But, it’s come to make up an unofficial motto of the U.S. Postal Service. And, 230 years ago, on February 20th, 1792, George Washington established the United States Post Office Department when he signed the Postal Service Act.
The postal service counts its birth year as 1775, but it had been around in various forms for many decades before that. What Washington’s act did was shore up some important civil rights—like freedom of the press. Under the new law, newspapers were mailed at a discount, so more people could have access. And it secured privacy, levying punishments for opening other people’s mail.
David Rupert works in corporate for USPS. He noted that from its start, the post office has been an equalizer, delivering mail with no consideration for income level, age, race, ethnicity, or religion. It’s about creating connections.
RUPERT: We have this great tradition of bringing and binding together a nation, which still is our mission statement, to bind the nation together with reliable communication.
To that end, the act also created additional postal routes, with the idea the new routes would lead to new settlements in a brand new country.
SONG: “Please, Mr. Postman,” The Marvelettes
Today, the U.S. Postal Service is not without its woes. But despite its recent struggles, a 2020 Pew Research poll found that 91 percent of Americans hold a positive view of USPS—higher than any other federal agency.
And moving from letters to art.
SONG: “Menuetto,” Schubert
One hundred and fifty years ago, on February 20th, 1872, the Metropolitan Museum of Art opened in New York City.
The museum’s founding actually came two years earlier, but it had no building or works of art; only a charter and a board of trustees. In 1871, those trustees acquired a collection of nearly 200 old-master paintings. That led to a one-year lease on a Fifth Avenue exhibition space that used to be a dance academy.
Rave reviews came when those Fifth Avenue doors flung open a century-and-a-half ago, and art lovers beheld the paintings. Museum president John Taylor Johnston wrote at the time:
JOHNSTON: We had a fine turnout of ladies and gentlemen and all were highly pleased. The pictures looked splendid, and compliments were so plenty and strong that I was afraid the mouths of the Trustees would become chronically and permanently fixed in a broad grin.
Artists and journalists mingled with New York high society.
JOHNSTON: We may now consider the Museum fairly launched and under favorable auspices. We have something to point to as the Museum, something tangible and something good.
When that one-year lease expired, the Met moved to a bigger space for a few years, and finally, in 1880, it settled in its permanent location in Central Park. That location boasts more than 2 million works of art spanning 5,000 years.
And from art to drama.
SONG: Theme from Guess Who’s Coming to Dinner
Had he not died last month, actor Sidney Poitier would have turned 95 years old this week. He was born February 20th, 1927.
Poitier was born in Miami to Bahamian parents, and he was raised on a tomato farm on Cat Island in the Bahamas. After serving in the Army during World War II, Poitier moved to New York to study acting.
A Tony Award and Academy Award nominations followed. He was the first African American to win an Oscar for best actor.
BANCROFT: The winner is Sidney Poitier in Lilies of the Field…
As actress Anne Bancroft announced, that achievement came for his work in the 1963 movie Lilies of the Field, about a traveling handyman who helps a group of German nuns build a chapel in Arizona. This clip shows Poitier’s character giving the nuns English lessons.
1967 was a banner year for the actor. He starred in some of his most memorable films: In the Heat of the Night; To Sir, with Love; and Guess Who’s Coming to Dinner.
CLIP: Mom, this is John./ Doc-doc-Dr. Prentiss, I’m so pleased to meet you./ I’m pleased to meet you, Mrs. Drayden…
He became a director and eventually a diplomat, too. The Bahamas tapped him as its ambassador to Japan in 1997, a role he filled for a decade.
Poitier received numerous awards for his skill and his status as a civil rights symbol. Kennedy Center Honors, the Cecil B. DeMille Award, lifetime achievement awards from several organizations, an honorary Academy Award, and, in 2009, the U.S. Presidential Medal of Freedom.
OBAMA: It’s been said that Sidney Poitier doesn’t make movies; he makes milestones. Milestones of artistic excellence. Milestones of America’s progress…
Poitier died on January 6th of heart failure brought on by Alzheimer's disease and prostate cancer. His wife and five of his six daughters survive him.
That’s this week’s WORLD History Book. I’m Katie Gaultney.
NICK EICHER, HOST: Tomorrow: citizenship for international adoptees. We’ll tell you why some adults brought to the country legally as children now face possible deportation.
And, the Durham report. We’ll dig into the details of what happened and what it may mean.
That and more tomorrow.
I’m Nick Eicher.
MARY REICHARD, HOST: And I’m Mary Reichard.
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