Friday, August 26, 2022

RSN: FOCUS: Jon Schwarz | The Origin of Student Debt: Reagan Adviser Warned Free College Would Create a Dangerous "Educated Proletariat"

 


 

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Gov. Ronald Reagan explains his requested shutdown of California's higher education system in Sacramento, California, on May 6, 1970. (photo: Bettmann Archive)
FOCUS: Jon Schwarz | The Origin of Student Debt: Reagan Adviser Warned Free College Would Create a Dangerous "Educated Proletariat"
Jon Schwarz, The Intercept
Schwarz writes: "In 1970 Roger Freeman, who also worked for Nixon, revealed the right's motivation for coming decades of attacks on higher education."


In 1970 Roger Freeman, who also worked for Nixon, revealed the right’s motivation for coming decades of attacks on higher education.

With the vociferous debate over President Joe Biden’s announcement that the federal government will cancel a portion of outstanding student debt, it’s important to understand how Americans came to owe the current cumulative total of more than $1.6 trillion for higher education.

In 1970, Ronald Reagan was running for reelection as governor of California. He had first won in 1966 with confrontational rhetoric toward the University of California public college system and executed confrontational policies when in office. In May 1970, Reagan had shut down all 28 UC and Cal State campuses in the midst of student protests against the Vietnam War and the U.S. bombing of Cambodia. On October 29, less than a week before the election, his education adviser Roger A. Freeman spoke at a press conference to defend him.

Freeman’s remarks were reported the next day in the San Francisco Chronicle under the headline “Professor Sees Peril in Education.” According to the Chronicle article, Freeman said, “We are in danger of producing an educated proletariat. … That’s dynamite! We have to be selective on who we allow [to go to college].”

“If not,” Freeman continued, “we will have a large number of highly trained and unemployed people.” Freeman also said — taking a highly idiosyncratic perspective on the cause of fascism —“that’s what happened in Germany. I saw it happen.”

Freeman was born in 1904 in Vienna, Austria, and emigrated to the United States after the rise of Hitler. An economist who became a longtime fixture in conservative politics, he served on the White House staff during both the Dwight Eisenhower and Richard Nixon administrations. In 1970 he was seconded from the Nixon administration to work on Reagan’s campaign. He was also a senior fellow at Stanford’s conservative Hoover Institution. In one of his books, he asked “can Western Civilization survive” what he believed to be excessive government spending on education, Social Security, etc.

A core theme of Reagan’s first gubernatorial campaign in 1966 was resentment toward California’s public colleges, in particular UC Berkeley, with Reagan repeatedly vowing “to clean up the mess” there. Berkeley, then nearly free to attend for California residents, had become a national center of organizing against the Vietnam War. Deep anxiety about this reached the highest levels of the U.S. government. John McCone, the head of the CIA, requested a meeting with J. Edgar Hoover, head of the FBI, to discuss “communist influence” at Berkeley, a situation that “definitely required some corrective action.”

During the 1966 campaign, Reagan regularly communicated with the FBI about its concerns about Clark Kerr, the president of the entire University of California system. Despite requests from Hoover, Kerr had not cracked down on Berkeley protesters. Within weeks of Reagan taking office, Kerr was fired. A subsequent FBI memo stated that Reagan was “dedicated to the destruction of disruptive elements on California campuses.”

Reagan pushed to cut state funding for California’s public colleges but did not reveal his ideological motivation. Rather, he said, the state simply needed to save money. To cover the funding shortfall, Reagan suggested that California public colleges could charge residents tuition for the first time. This, he complained, “resulted in the almost hysterical charge that this would deny educational opportunities to those of the most moderate means. This is obviously untrue. … We made it plain that tuition must be accompanied by adequate loans to be paid back after graduation.”

The success of Reagan’s attacks on California public colleges inspired conservative politicians across the U.S. Nixon decried “campus revolt.” Spiro Agnew, his vice president, proclaimed that thanks to open admissions policies, “unqualified students are being swept into college on the wave of the new socialism.”

Prominent conservative intellectuals also took up the charge. Privately one worried that free education “may be producing a positively dangerous class situation” by raising the expectations of working-class students. Another referred to college students as “a parasite feeding on the rest of society” who exhibited a “failure to understand and to appreciate the crucial role played [by] the reward-punishment structure of the market.” The answer was “to close off the parasitic option.”

In practice, this meant to the National Review, a “system of full tuition charges supplemented by loans which students must pay out of their future income.”

In retrospect, this period was the clear turning point in America’s policies toward higher education. For decades, there had been enthusiastic bipartisan agreement that states should fund high-quality public colleges so that their youth could receive higher education for free or nearly so. That has now vanished. In 1968, California residents paid a $300 yearly fee to attend Berkeley, the equivalent of about $2,000 now. Now tuition at Berkeley is $15,000, with total yearly student costs reaching almost $40,000.

Student debt, which had played a minor role in American life through the 1960s, increased during the Reagan administration and then shot up after the 2007-2009 Great Recession as states made huge cuts to funding for their college systems.

That brings us to today. Biden’s actions, while positive, are merely a Band-Aid on a crisis 50 years in the making. In 1822, founding father James Madison wrote to a friend that “the liberal appropriations made by the Legislature of Kentucky for a general system of Education cannot be too much applauded. … Enlightened patriotism … is now providing for the State a Plan of Education embracing every class of Citizens.”

“Knowledge will forever govern ignorance,” Madison explained, “and a people who mean to be their own governors must arm themselves with the power which knowledge gives.” Freeman and Reagan and their compatriots agreed with Madison’s perspective but wanted to prevent Americans from gaining this power. If we want to take another path, the U.S. will have to recover a vision of a well-educated populace not as a terrible threat, but as a positive force that makes the nation better for everyone — and so should largely be paid for by all of us.



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POLITICO NIGHTLY: Biden’s economic mission-in-progress

 


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BY BEN WHITE

Federal Reserve Chair Jerome Powell is pictured with the personal consumer expenditures trend line overlaid.

David Badders/POLITICO illustration

POWELL RAINS ON KLAIN — Ron Klain arrived at work this morning, fired up his official White House chief of staff Twitter account and did something that would have been unthinkable just a month or so ago: He jammed out a bunch of happy tweets about the state of the economy.

Mainly, Klain wanted to highlight the latest pretty good news on inflation, an issue that has crushed President Joe Biden’s approval rating and left Democrats mostly curled into crash positions, fearing an absolute beat down in the midterm elections.

The newly released numbers showed the annual rate of inflation as measured by the Personal Consumption Expenditures Index (wonkery of which we’ve written in this space before) dropping to a 6.3 percent pace in July from 6.8 percent in June. That’s still crazy high by historical standards and a pace not seen since the early 1980s.

But at the moment, it’s the trend that matters. And we now have a fair amount of data suggesting inflation may finally — at long last and at great pain — have peaked. That wasn’t everything on Klain’s mind. He also noted positive developments on consumer sentiment, declining gas prices, personal income and spending.

But Klain began it all with an important caveat: “A LOT of work left to do on the economy…” he wrote, before ticking off his list of positive trends replete with up and down arrow emojis. And it was certainly no accident he began that way.

Because while many economic numbers are indeed showing improvement — prices actually DECLINED in July from June according to today’s report — most are still pretty crummy, and some are getting worse.

Consumer and business sentiment remain low. New home sales are tanking and overall declines in house prices are likely ahead in certain markets as the Federal Reserve pushes up interest rates to fight inflation (more on that in just a moment). Consumers are still seeing price hikes outpace wage gains, making everyone feel poorer and angry.

Gas under $4 per gallon will likely give Biden and Democrats a little lift in the polls. But pump prices are still higher than when the president took office. And the administration remains at the whim of Russia’s war on Ukraine re-jolting oil markets and shooting gas prices right back up. The White House would love nothing more than inking a global price cap on Russian oil along with other big-buyer nations. But such a deal remains highly elusive.

In an email exchange with Nightly , Klain emphasized the caution that prefaced his tweet storm (which also included retweeting a bunch of positive news stories about the inflation report).

“I regularly emphasize that there is more work to do, and that inflation is not where we want it to be,” Klain wrote. “These are NOT ‘mission accomplished’ tweets. But I do think the President deserves credit for the fact that we are making progress on his economic agenda.”

Fair enough. And the dip in the pace of price hikes will take some of the sting off of criticism that the president’s student loan forgiveness effort is unfair and inflationary.

But if things are so groovy … why did Wall Street crash today? The Dow tanked over 1,000 points, or 3 percent. The S&P also plunged 3 percent, and the tech-dominated Nasdaq swooned nearly 4 percent. Why, you ask? Because of Jerome Powell and the aforementioned Fed, that’s why.

Federal Reserve Chair Jerome Powell speaks at a lectern.

Stock market investors — and many Democrats — are deeply terrified that the Fed’s campaign of inflation-fighting rate hikes will tip an already wobbly economy into recession and drive up the unemployment rate. And Wall Street hoped that in his big speech today in Jackson Hole, Wyo., Powell would lean harder into a “dovish” message that the size and pace of rate hikes will soon slow.

Yeah. He did not do that. Instead he pledged to keep hammering away with hikes until inflation sinks back way closer to the central bank’s goal of around 2 percent. Rates might stay high for a while and it could cause economic “pain,” Powell said.

So while Klain and other Democrats could go into the weekend feeling a little bit better about their economic prospects, the mission is quite clearly not accomplished.

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at bwhite@politico.com or on Twitter @morningmoneyben.

Programming note: POLITICO Nightly won’t publish from Monday, Aug. 29, through Monday, Sept. 5. We’ll be back in your inboxes on Tuesday, Sept. 6.

 

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

 
 
LATEST ON MAR-A-LAGO

UNFOLDERED AND INTERMIXED — Federal investigators obtained a search warrant for former President Donald Trump’s Mar-a-Lago estate earlier this month by pointing to a raft of highly classified material they’d already obtained from there, according to a legal affidavit unsealed today.

Records obtained by the FBI from Trump’s Florida home in advance of the Aug. 8 search bore indications they contained human source intelligence, intercepts under the Foreign Intelligence Surveillance Act and signals intelligence, as well as other tags indicating high sensitivity. Several of those tightly controlled documents contained Trump’s “handwritten notes,” the partially redacted affidavit detailing the Justice Department investigation says.

In those boxes, agents found 184 unique documents: 25 were marked “top secret,” 92 were marked “secret,” and 67 were marked “confidential” — the lowest level of national security classification. According to the affidavit, NARA officials found some of those “highly classified records were unfoldered, intermixed with other records, and otherwise unproperly [sic] identified.”

Prosecutors also added in another court filing unsealed today that the ongoing criminal probe into government records stashed at Trump’s Florida home has involved “a significant number of civilian witnesses” whose safety could be jeopardized if their identities were revealed.

Read more on the affidavit from Josh Gerstein and Kyle Cheney, who both pored through the filings today. You can also read the full redacted, unsealed document.

WHAT'D I MISS?

— RNC fires national spokesperson: The Republican National Committee has fired Paris Dennard as its national spokesperson , according to two people familiar with the move. Dennard had been serving as a national spokesperson and director of Black media affairs for the committee. “Paris Dennard no longer works for the RNC. We don’t comment on personnel matters,” RNC chief of staff Mike Reed said in a statement. One person familiar with the firing said it took place earlier this week. Dennard did not respond to a request for comment.

— Senate GOP super PAC cancels ad buys in Arizona, Alaska: The Senate Leadership Fund is canceling roughly $8 million in Arizona and Alaska ad reservations , raising questions about the party’s commitment to Blake Masters, its Senate nominee in the Copper State. In November, Masters will face Sen. Mark Kelly (D-Ariz.), who already enjoys a heavy financial advantage down the stretch. The super PAC’s move will exacerbate that Kelly edge as Republicans seek to net the one seat needed to take back Senate control. On the other hand, the decision to cut two weeks — or about $1.7 million in advertising — to boost Sen. Lisa Murkowski (R-Alaska) is seen as a vote of confidence in her prospects.

Charlie Crist,second from right, stands with United Teachers of Dade President Karla Hernandez-Mats.

Rep. Charlie Crist stands with United Teachers of Dade President Karla Hernández-Mats outside of the United Teachers of Dade offices, Tuesday, May 31, 2022, in Miami Springs, Fla. | Lynne Sladky/AP Photo

— Crist to pick Miami teachers union head as his running mate: Democrat Charlie Crist will pick Karla Hernández-Mats, the head of Miami-Dade County’s largest teachers union, as his running mate as he seeks to unseat Gov. Ron DeSantis. Crist is expected to formally announce his pick during a Saturday rally in Miami that he’s holding to officially kick off his general election campaign, which will be an uphill battle. Crist’s pick ensures education will remain at the forefront of the race, especially since schools have been the main focus of DeSantis’ policy and political agenda.

— Apple faces growing likelihood of DOJ antitrust suit: Justice Department lawyers are in the early stages of drafting a potential antitrust complaint against Apple , according to a person with direct knowledge of the matter — a sign that a long-running investigation may be nearing a decision point and a suit could be coming soon. The department’s antitrust division hopes to file suit by the end of the year, the individual said. Still, the department has made no decisions whether or when to sue Apple, the world’s most valuable public company, cautioned that person and one other familiar with the probe — and it’s still possible no case will be filed.

— Defendants targeted in DeSantis’ voter fraud crackdown were told they could vote: Several people who were arrested last week as part of DeSantis’ voter fraud crackdown were notified by official government entities they were eligible to vote , according to court documents and interviews. The defendants told authorities they had no intention of committing voter fraud, according to affidavits, and in some cases were baffled by their arrests because counties had sent them voter registration cards and approved them to vote.

 

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AROUND THE WORLD

People receive iodine-containing tablets at a distribution point.

People receive iodine-containing tablets at a distribution point today in Zaporizhzhia, Ukraine. | Andriy Andriyenko/AP Photo

TOO CLOSE FOR COMFORT — Fears of a radiation leak led authorities to begin distributing iodine tablets today to residents near a nuclear power plant in the Ukrainian city of Zaporizhzhia “amid mounting fears that the fighting around the complex could trigger a catastrophe,” The Associated Press’ Paul Byrne reports: “The move came a day after the plant was temporarily knocked offline because of what officials said was fire damage to a transmission line. The incident heightened dread of a nuclear disaster in a country still haunted by the 1986 explosion at Chernobyl.

“Continued shelling was reported in the area overnight, and satellite images from Planet Labs showed fires burning around the complex — Europe’s biggest nuclear plant — over the last several days.

“Iodine tablets, which help block the absorption of radioactive iodine by the thyroid gland in a nuclear accident, were issued in the Ukrainian-controlled city of Zaporizhzhia, about 45 kilometers (27 miles) from the plant.”

NIGHTLY NUMBER

44 percent

Biden’s job approval rating, according to an Aug. 1 to Aug. 23 Gallup poll. His rating is up six points from a record low in July, hitting his highest mark in a year.

PARTING WORDS

THE ICEMAN COMETH Biden plans to establish a new ambassador-at-large position focused on the Arctic region , an area of growing geostrategic concern to the United States — as well as Russia and China. It was not immediately clear who the nominee for the role will be, but a State Department official familiar with the issue predicted a name would be submitted soon, writes Nahal Toosi.

The Arctic is of growing interest to the United States and its top rivals in part because of climate change. Though the warming of the region could have cataclysmic effects on global sea levels, the reduction in ice has opened new shipping lanes and made possible opportunities for energy extraction. With its long Arctic coastline, Russia is putting its mark on the region, including by expanding its military presence. China has eyes on the territory, too, calling itself a “near-Arctic state” and seeking ways to expand its access for economic and other reasons.

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RSN: FOCUS: SCOTUS Will Probably Kill Student Debt Relief. But Biden Has a Backup Plan.

 


 

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26 August 22

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President Joe Biden announces student loan relief with Education Secretary Miguel Cardona on Wednesday. (photo: Olivier Douliery/Getty)
FOCUS: SCOTUS Will Probably Kill Student Debt Relief. But Biden Has a Backup Plan.
Mark Joseph Stern, Slate
Stern writes: "There are several paths to student debt relief, and even this partisan judiciary cannot block them all."


On Wednesday, President Joe Biden unveiled his long-awaited plan for student loan forgiveness. For borrowers making under $125,000 a year, the program will cancel $10,000 in student loan debt (and $20,000 for Pell Grant recipients). It will provide relief to 43 million Americans—if five justices on the Supreme Court let it take effect. Will they? The short answer is: probably not. But there’s good news for beneficiaries: The administration may have already identified another way to enact relief if the judiciary stands in the way of Plan A.

To understand where this is going in the courts as well as the likely workaround, recall a basic fact that many critics of Biden’s program do not appear to understand: The federal government forgives student loans all the time. Multiple statutes give the Department of Education sweeping authority to cancel loans for a broad range of reasons. Before Wednesday, the administration had already approved $32 billion in student loan relief for more than 1.6 million borrowers.* These actions did not provoke substantial controversy or litigation. Nobody raised a legal challenge when Biden canceled $5.8 billion in student loans for more than 323,000 disabled borrowers. Nobody raised a legal challenge when Biden announced rolling loan forgiveness for borrowers who entered public service—a plan that has already granted $10 billion in debt relief to more than 175,000 borrowers.

The Department of Education has tackled so much student debt already because Congress gave it a number of tools to do so. One of those tools is the Heroes Act, passed in the wake of 9/11. This law gives the secretary of education authority to “waive or modify” any provision of the law applicable to student aid programs “in connection with a war or other military operation or national emergency.” (Emphasis mine.) The secretary may exercise this power to “ensure” that borrowers “are not placed in a worse position financially” in relation to their loans because they were “affected” by the emergency. A “national emergency” is defined as any national emergency declared by the president. The ongoing COVID-19 pandemic surely qualifies, since Donald Trump declared it a national emergency and Biden has extended that declaration.

Congress intended the Heroes Act to apply swiftly and widely. It waived a number of procedural requirements that would slow down the education secretary’s efforts to grant relief. And it clarified that the secretary “is not required” to act “on a case-by-case basis,” allowing him to provide relief to an entire class of borrowers at once. The Trump and Biden administrations both used this law to freeze student loan payments during the pandemic.

Biden’s secretary of education, Miguel Cardona, already relied upon the Heroes Act to forgive $10 billion for public service borrowers. Now the administration is using the law as its basis for a much bigger, less targeted student debt relief program. This idea is not new: At the end of her tenure, Trump’s education secretary Betsy Devos tried to stop Biden from embracing it. She solicited a memo arguing that the Heroes Act does not permit “mass cancellation” of student debt. (In a twist, the memo was issued four days after DeVos resigned in protest of Jan. 6, and it violated basic procedural requirements.)

Under Biden, the Department of Education concluded that DeVos’ eleventh-hour memo was wrong, and that the agency can provide mass student loan cancellation because of the ongoing pandemic. The Justice Department’s Office of Legal Counsel agreed. It pointed out that under the Heroes Act, the secretary gets to decide when relief “may be necessary,” deferring to his view of who, exactly, needs financial help because of the emergency. And because this help need not be provided “on a case-by-case basis,” OLC found that the secretary can “proceed by categorical rules.”

Going by the plain language of the law alone, Biden’s plan is likely legal. Sure, it’s probably not how Congress envisioned the Heroes Act functioning. But the program fits into the text that Congress actually passed. These days, however, the Supreme Court no longer uses textualism to assess administrative actions. Instead, it asks whether a federal program involves a “major question”—which just means anything five justices deem a big deal. When handling a “major question,” the court demands an explicit grant of authority from Congress, even if existing law appears to permit the program already. As Justice Elena Kagan put it, the “major questions doctrine” serves as a “get-out-of-text-free” card that can “magically appear” whenever it serves the conservative majority’s “broader goals.” (Specifically, the dismantlement of the administrative state.)

There are at least three “major questions” that the Supreme Court could identify here. First, the majority might say that the ability to “waive or modify” aspects of the law does not allow the secretary to cancel payments. Second, the majority could say that COVID is not the kind of “national emergency” envisioned by the law. Third, the majority could say that an “affected” group must be smaller and more targeted than every low or middle-income American who lived through the pandemic.

This first line of attack would be very weak: Both Congress and the Department of Education have operated for years on the assumption that the secretary can permanently cancel some loans; SCOTUS could not abolish this power without wreaking havoc on the entire system. The second would be feeble, too: Whatever the court thinks about COVID, the Heroes Act is very clear that a presidential declaration of a national emergency triggers the law. What’s more debatable is the third potential line of attack. Can the secretary really just decide that COVID put 43 million non-wealthy Americans “in a worse position financially” in relation to their loans? It’s easy to imagine the Supreme Court ruling that the secretary must identify a more specific class of borrowers whose ability to pay off loans was demonstrably harmed by the pandemic.

If the court chooses this route, though, there’s a straightforward fix: Biden can simply announce that any borrower affected by the pandemic can apply for relief; if they can prove hardship, their debts get canceled. The Heroes Act, of course, says such “case-by-case” adjudication is unnecessary. And this method would increase administrative burdens while shrinking the pool of beneficiaries, since some eligible borrowers will fail to apply. But it would still help millions of people who will be in dire need to support when student loan payments resume in 2023. (There’s a direct analogy to Virginia Gov. Terry McAuliffe restoring felon voting rights one person at a time after the Virginia Supreme Court wouldn’t let him do it all at once.)

One last thing: It’s an open question whether anyone can sue against Biden’s program in the first place. In a persuasive and prescient analysis published this year in the Virginia Law Review, Jack V. Hoover argued that no one has standing to file suit against sweeping loan cancellation. To prove standing, a party would have to demonstrate concrete harm to them, and show how blocking cancellation would remedy that harm. Republicans complain that Biden’s program hurts taxpayers, but under Supreme Court precedent, taxpayers don’t have standing to sue. Former borrowers aren’t directly injured, nor can they show that forcing everybody else to pay off their loans would somehow benefit them. Congress is not allowed to sue just because it disagrees with a president’s interpretation of a statute. State governments aren’t injured, since forgiving federal loans imposes no burden on their finances or sovereignty.

Loan servicers, who are federal contractors, have the best case for standing because they profit from processing repayment and will therefore lose money under Biden’s plan. As Hoover noted, courts have generally refused to let contractors sue against federal regulations that hurt their bottom line. Contractors’ duty, after all, is to administer federal programs, and it’s debatable whether a new rule falls within their “zone of interest” solely because it hurts their profits. Moreover, the government spent more than $655 billion on federal contracts in fiscal year 2020 alone. If they could all sue “to protect their fiefdoms from regulatory change,” in Hoover’s words, they would guarantee “ossification” of the entire government.

In truth, though, certain key circuit courts and the Supreme Court seem to follow one standing rule: When a majority wants to decide a case on the merits, they find some justification to grant standing; when it doesn’t, they don’t. The Biden administration should proceed on the assumption that the conservative jurists, and ultimately the justices themselves, will be eager to shred the new program, and will therefore find that somebody, somewhere has standing. It should also consider its response when a Trump judge inevitably issues a nationwide injunction against debt cancellation and the Supreme Court’s conservatives uphold it. There are several paths to student debt relief, and even this partisan judiciary cannot block them all.



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Jerome Powell continues to battle the wrong inflation culprit

 

JEROME POWELL IS A tRUMP APPOINTEE - AN ATTORNEY, NOT AN ECONOMIST WHO COVERED UP THE GREATEST SCANDAL IN FEDERAL RESERVE HISTORY AND SHOULD NOT HAVE BEEN REAPPOINTED. 





Trump has epic meltdown over affidavit release

 


OD Action:

It's Our Democracy!

Tell Merrick Garland it’s time to indict Donald Trump!


BREAKING NEWS

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Trump issues furious tantrum on TruthSocial in response to affidavit release

The disgraced ex-president made his guilt obvious in a petulant and mewling tantrum, accusing the judge of "animosity and hatred of your favorite President" and even figured out a way to drag President Obama into it.… [Read it here]



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Court unseals redacted version of affidavit used to justify search of Donald Trump’s Mar-a-Lago property

The heavily blacked-out document nevertheless showed that, in the 15 boxes that Trump initially sent to the National Archives, 184 documents had classification markings, including 25 marked as top secret.… [more]


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STUNNING new midterm polls signal good news for Democrats

No Lie with Brian Tyler Cohen: Whoa.



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Judges are failing to disclose luxury trips, too

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