Broke States & Bailouts: Restoring Fiscal Federalism Through Budget & Labor Reform

On January 11th, 2011, from 12:30 – 1:45 PM, The Mercatus Center will be holding an event entitled Broke States & Bailouts: Restoring Fiscal Federalism Through Budget & Labor Reform.  The event will be held at The Mercatus Center, 3301 North Fairfax Drive, Room 221, Arlington, VA 22201.  The following scholars will be speaking:

  • Eileen Norcross, Senior Research Fellow, the Mercatus Center at George Mason University
  • Steve Malanga, Senior Fellow, The Manhattan Institute

Conservatives who are interested in criminal justice reform should note that both Norcross and Malanga have been critical of the role that public sector unions — including prison guard unions — have played in the rapid growth of state budgets.  According to the event flyer:

As statehouses open for the 2011 session, happy days are not here again. Rather, for most states harsh fiscal reality must be faced. Many question if the fundamental structure of American politics is broken and if this structure will continue to force states and citizens toward a downward spiral of massive, ever-increasing debt.

‘This panel will discuss the institutions in place that allow for state spending and the growth of government to continue, discussing these questions:

  • What institutions are in place that increase state spending and debts?
  • What are the consequences of a bailout by the federal government for states?
  • What are potential solutions states can implement in 2011?

Lunch will be provided at 12:15, shortly before the event begins.[email protected] or at (703) 993-8426 

For more information about this event please contact Kathleen O’Hearn at

RSVP for this event and live stream.

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The Texas Public Policy Foundation’s 2011 Policy Orientation

The Texas Public Policy Foundation’s 2011 Policy Orientation for the Texas Legislature will be held in Austin, TX on January 13-14. The Corrections session will be on Thursday, January 13 from 9:40am to 10:50am.  Marc Levin of Right On Crime will moderate the session, and the panel will consist of:

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Decentralize Power in Sentencing (Just Like We Try to do in Economics)

Central planning doesn’t work.  The amount of knowledge that is required to efficiently allocate limited resources is too vast for a single person – or a single committee – to comprehend.  As conservatives frequently point out, this is a big reason why the Soviet Union, with its numerous planning committees, was destined to collapse. Friedrich Hayek, the Nobel Prize winning economist and conservative hero, wrote that “[w]e need decentralization because only thus can we insure that the knowledge of the particular circumstances of time and place will be promptly used.”

The merits of decentralization are a central conservative insight about economics, but in an interesting post at The Atlantic’s website, Wendy Kaminer demonstrates that the same logic applies in criminal justice.  Her essential argument is that mandatory sentences have the unintended consequence of centralizing the power to sentence offenders in the hands of prosecutors – when it would be much better to distribute this power among police officers, prosecutors, and judges (and juries — which Kaminer does not mention, but which also have an important role).  It is an interesting argument, and it touches upon an essential conservative truth about how centralized power corrupts:

“Advocates for mandatory guidelines and mandatory minimum sentences still argue misleadingly that they limit arbitrariness and discretion in sentencing. They do not. They transfer sentencing discretion from judges to prosecutors: When legislatures dictate particular sentences for particular crimes, prosecutors are effectively empowered to decide how defendants will be sentenced when they choose the crimes with which defendants will be charged. This represents a dangerous concentration of power, and mandatory sentences are useful in coercing inappropriate plea bargains…

Discretion in the administration of justice simply can’t be eliminated; but it should be de-centralized to minimize its abuses: apportioned out to police who make arrests, prosecutors who decide whether and how to charge, and judges who determine sentences. Lessen judicial discretion and you increase the discretion of prosecutors; lessen prosecutorial discretion and you’d increase the discretion of police. Isn’t it obvious that justice, or some semblance of it, requires checks and balances? It’s something of a zero sum game.

Kaminer’s entire post can be read here.

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The Launch of Right On Crime


On Wednesday, December 15th, the Right on Crime campaign successfully launched at the headquarters of Americans for Tax Reform in Washington, DC.  A conservative roundtable was convened by the following participants:

Approximately 45 members of the media attended the press roundtable in addition to thought leaders in the audience and 38 individuals who called in on the conference line.  (Click here to watch the press roundtable.)

Early media attention for RightOnCrime has been significant.  On the day of the launch, Pat Nolan was interviewed on the Christian Broadcasting Network (CBN News), Grover Norquist appeared on America’s Nightly Scoreboard on Fox Business News, and Ed Meese appeared on the Hugh Hewitt Show.  In the following week, Marc Levin appeared on the Lars Larson Show, Battle Line with Alan Nathan, Talk 650 AM (Houston), Patriot 92.5 FM (San Antonio), KRLD-AM (Dallas), KSKY-AM (Dallas), WBAL-AM (Baltimore), and KYNO-AM (Fresno).

Among the extensive favorable media coverage, Right On Crime has appeared in:

Pictures from the Right On Crime launch can be viewed at our Facebook page.

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How an Accounting Decision Launched a Six Year Federal Criminal Case

Prabhat Goyal is the former CFO of Network Associates, Inc., the company that manufactures McAfee antivirus software. In 2004, he was charged with 15 counts of securities fraud, false statements, and false filings.  The charges stemmed from a strategic decision Goyal had made about accounting.  Goyal had opted to use “sell-in” accounting,  which allowed for revenue to be recognized when the company’s products were shipped to the distributor, rather than “sell-through” accounting, which would have deferred the recognition of revenue until the distributor had sold the products. Goyal was convicted in 2007, and Judge Susan Illston sentenced him to one year in prison.

For the conviction to stand, however, the government needed to demonstrate to the Ninth Circuit Court of Appeals that the revenue difference between sell-in and sell-through accounting would have been “material.” The government made virtually no effort to demonstrate this. The appellate court overturned all 15 convictions last week, finding that “no reasonable juror could have found Goyal guilty beyond a reasonable doubt of any of the charges.” The Court even went so far as to criticize the government for its “total failure of proof.”

Many bloggers have noticed Justice Alex Kozinski’s passionate concurrence in the case.  In the concurrence (which appears below with citations omitted), Kozinski excoriates the government’s case and the manner in which it frays the distinction between criminal law and civil law:

“This case has consumed an inordinate amount of taxpayer resources, and has no doubt devastated the defendant’s personal and professional life. The defendant’s former employer also paid a price, footing a multimillion dollar bill for the defense. And, in the end, the government couldn’t prove that the defendant engaged in any criminal conduct. This is just one of a string of recent cases in which courts have found that federal prosecutors overreached by trying to stretch criminal law beyond its proper bounds.

‘This is not the way criminal law is supposed to work. Civil law often covers conduct that falls in a gray area of arguable legality. But criminal law should clearly separate conduct that is criminal from conduct that is legal. This is not only because of the dire consequences of a conviction—including disenfranchisement, incarceration and even deportation—but also because criminal law represents the community’s sense of the type of behavior that merits the moral condemnation of society When prosecutors have to stretch the law or the evidence to secure a conviction, as they did here, it can hardly be said that such moral judgment is warranted.

‘Mr. Goyal had the benefit of exceptionally fine advocacy on appeal, so he is spared the punishment for a crime he didn’t commit. But not everyone is so lucky. The government shouldn’t have brought charges unless it had clear evidence of wrongdoing, and the trial judge should have dismissed the case when the prosecution rested and it was clear the evidence could not support a conviction. Although we now vindicate Mr. Goyal, much damage has been done. One can only hope that he and his family will recover from the ordeal. And, perhaps, that the government will be more cautious in the future.”

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Indiana Rethinks its Sentencing Policies for Drug and Property Offenses

Some bizarre statistics about Indiana emerged from a joint study that was released last week by the Council of State Governments (CSG) and the Pew Center on the States.  For example, the average sentence in the Hoosier state for many non-violent crimes is 96 months, but the average sentence for sexual assault is only 65 months.  The study, which calculated that Indiana’s prison population has grown by more than 40% in the past 10 years (three times faster than any neighboring state) has received widespread coverage.  CSG and Pew have recommended several ways in which Indiana could reduce its overcrowded prison population and tamp down on costs that are projected to reach $1 billion by 2017.

One of the most significant recommendations in the study is to reform Indiana’s unusual sentencing laws for non-violent offenses.  The essential problem with the laws is that they do not adequately distinguish between differences in severity.  Thus, according to the Indiana Journal Gazette, “Someone who steals a $20 DVD can be charged with the same level of felony as a person who steals thousands of dollars’ worth of items.”  CSG and Pew recommend a system of graduated sentencing and returning some sentencing discretion to judges who are hamstrung by mandatory minimum sentencing laws.

“Every significant aspect of law enforcement and criminal justice has been brought together in this project,” said Indiana Gov. Mitch Daniels. “We have hoped for a package of changes that will bring more certain and firm punishments to the worst offenders in Indiana, more sensible, smarter incarceration for those who pose much less of a danger to Hoosiers and, as a byproduct of that, grace to taxpayers in the form of lower costs in the years ahead. I am thrilled to say that this group has brought about such a product and I am happy to pass it on to the General Assembly with my strongest endorsement.”

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Reading Material For Governor-Elect Kasich

Last month, Ohio elected John Kasich, one of the premier conservative stars of his generation, as its new governor.  Kasich has a strong interest in corrections reform, so hopefully, his administration will read the excellent new report from the Buckeye Institute that proposes thoughtful ideas for cutting Ohio’s corrections budget, while still keeping the public safe.  The paper is called Smart On Crime: With Prison Costs on the Rise, Ohio Needs Better Policies for Public Safety, and it can be found here.

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Will Governor Jindal Seek to Privatize Two Prisons?

Last week, Governor Bobby Jindal said that he would consider selling the Allen Correctional Center and the Winn Correctional Center in order to help close the $1.6 billion budget shortfall that is facing Louisiana.  He reiterated the idea in a speech at a Lake Charles bookstore today.  The two prisons, if they are sold, may bring the state about $64 million.  Jindal proposed the prison sales as part of a larger plan to reduce the shortfall by exploring the sale of numerous state assets.

Republican State Treasurer John Kennedy, a budget hawk who speaks frequently about reducing the size of government, is skeptical of the possible sales: “A junkie can go sell his television and sell the radio and pay for a fix…[b]ut sooner or later…he’s got to face his addiction. I would prefer to have us face our addiction.”

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A $7.5 Million Shortfall is Expected for South Carolina’s Prisons

South Carolina Department of Corrections Director Jon Ozmint has credibility in his state.  Over the past seven years, the corrections budget in South Carolina has increased by 2%, while the state budget as a whole has increased by 35%.  Within these budget constraints, Ozmint has had some notable successes.  He has reduced escapes and assaults in South Carolina’s prisons, and the Department of Corrections has set GED completion records.

Now, Bloomberg reports that the state’s prison system will be running a $7.5 million shortfall in its current budget.  In the article, Ozmint says that “[t]he only way to cut $7 million from our budget would be to lay off a lot of people really quickly and close a prison.”  The article further notes that “Ozmint has twice proposed plans to release nonviolent offenders early and close a prison but said there was little political support in the Legislature.”  If Governor-Elect Nikki Haley retains Ozmint as SCDC Director, it seems he will have to make his case to the Legislature yet again.

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Andy Pallito Discusses Recent Successes in Vermont

There is good news out of Vermont today — the incarceration rate is declining.  According to Vermont Public Radio: “At the end of November, 2,112 people were incarcerated in Vermont prisons. Another 581 Vermonters were held in out-of-state prisons.  All told, that’s about 250 fewer prisoners than last year at this time.”

The  statistics above come from the below interview with the Vermont Corrections Commissioner, Andy Pallito.


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