SENATOR CODEY & ASSEMBLYMAN ROBERTS ECONOMIC CRISIS AGENDA: The Good, The Bad & The Ugly

Governor Corzine, Senate President Codey and Assembly Speaker Roberts have had an epiphany the people of New Jersey are in deep economic distress and the State Budget is in a fiscal crisis that requires emergency action. Indeed, both Codey and Roberts quickly endorsed the Governor's holding of an emergency economic summit.


Thus, it comes as no surprise Assembly Speaker Robert's October 1, 2008 press release unveils, what he describes, as a "broad economic agenda for unprecedented [October 6,2008] Assembly Committee sessions." It further comes as not surprise that, on October 3, 2008, Senate President Codey announced a hearing on similar legislation.

The question is whether either Senate President Codey or Assembly Speaker Robert's Agenda" will be effective in meaningfully addressing the current economic stress while not substantially increasing the structural deficit.


I. The Framework For Creating Counter Cyclical Fiscal Policy.


The primary task of counter cyclical policy, even at the State level, is to stop the downward spiral in economic activity. Government spending and fiscal policy, however, are not synonymous. Effective fiscal policy is based on three general principles.


It must (1) be timely: "In the worst case, poorly timed policies add instability to the economy, potentially exacerbating rather than damping businesses cycle." It must be (2) targeted: "tax cuts and spending increases should be directed sothat each dollar generates the largest possible increase in short-run GDP. Tax cuts and spending increases shouldbe directed so that they provide the greatest benefit to people who are affected most adversely by an economic slowdown." And, it (3) must be temporary: "tax and spending changes must be temporary and not increase the already large long-run budgetdeficit."


II. The Codey - Roberts Economic Agenda: The Good, The Bad, and The Ugly


The hodge-poge of Bills to be reviewed on October 6, 2008 by an assortment of Assembly and Senate Committees are summarized in theRoberts' October 1 and Codey October 3 press releases. What follows draws directing from and is a first impression based on them.


THE GOOD


1. BEST IN CLASS. The Commerce Committee will consider legislation to provide a corporation business tax and grossincome tax credit to employers who allow their employees to telecommute. The bill is sponsored by Assemblyman Michael Patrick Carroll (R-Morris).


The bill is timely as those effected immediately have more money in their pockets. Lowers demand for gas and thereby reduces inflationary cost pressures. Lessens road usage and is environmentally friendly because it reduces useof fossil fuel. Change is consistent with and supportive of ongoing structural changes in the way New Jerseyian's makea living. Facts to watch for (1) number of people it benefits and (2) whether dollar benefit of incentives is greater than cost to budget. In short, is it budget deficit neutral?


2. A-688 scheduled for Budget Committee would provide an annual cost-of-living increase in a program that helps low-income seniors and disabled persons pay gas and utility bills. The increase - proposed by Assembly members Grace Spencer (D-Essex), Anthony Chiappone (D-Hudson), and Elease Evans (D-Passaic) - would be proportional to the increases in the Social Security benefit for the year; the current level of assistance is only $225.


GOOD IDEA BUT BAD BILL. This Bill, like many of the others, is little more than a resubmission from a previous session. Cost index may not accurately reflect price changes. Timing requires enactment prior to onset of winter. Targeting may be narrow as it does not encompass all who are unable to afford heating costs. Maybe there is another bill or law that covers others, but it seems clear kids shouldn't be cold. Permanent nature adds to structural deficit as cost is projected to rise from estimated $2 million in 2009 to plus or minus $11 million in 2013. Danger of permanently increasing fuel prices for all taxpayers. Longer term emphasis may make better use of State resources by concentrating on individual unit conservation.


State may also find it helpful to monitor the spread between the wholesale price of fuel reflected in the futures market and local dealer's retail prices.


3. GOOD IDEA BUT BAD POLICY. The Assembly Health and Senior Services Committee and Assembly Human Services Committee will hold a joint hearing on the impact of the crisis on health care and social services such as food stamps, Medicaid and NJ FamilyCare.

State should assure people have food and medical care as needed. Now, however, is not the time for structural healthcare policy changes that fix uncertain budget costs. Increase spending for food and emergency care over the short term, but forget the rest until after the new President is inaugurated.

4. A-2997 would remove limitations and extend grants under the Business Employment Incentive (BEIP) program while a bill sponsored by Assemblyman Matt Milam (D-Cumberland/Atlantic/Cape May) would make it easierfor small and mid-size businesses to take advantage of the Business Retention and Relocation Assistance Grant Program BRRAG) program.

GOOD, GOOD AND BAD. Programs that expand resident employment has the potential to help stabilize. Keeeping Companies in NJ is also a priority. Attracting out of State business to uncertain and takes too long.

THE BAD

5. Legislation A-2517 Assemblywoman Watson Coleman is sponsoring to create a fund to provide foreclosure preventioncounseling and make loans and grants available to nonprofits that help homeowners as well as require creditors seekingto foreclose on a subprime loan to offer a six-month hold to let borrowers negotiate refinancing.


Preventing foreclosure is in everyone's interest. That said, assuming for the moment 1)the structure of emergency loans realistically forestalls foreclosure, 2) the rental alternative is affordable, 3) the costs are not prohibitive, and 4) unintended consequences have been considered, then A-2517 is positive. There is no doubt the financial help is timely. Depending on the duration of any loans it can be temporary.


Keeping people in the homes, regardless of income levels, is good in both the short and long run for the families, the towns’ property values, and State revenues. The concern is given the deep and protracted nature of across the board demand destruction, it is not enough. The bias here is the owners, be it a family or a landlord, of pre-foreclosure as well as foreclosed properties can be aided via the use of free floating COAH requirements to bridge the difference between any particular ability to pay and the salvage value or replacement value collaterializing the loan.



The remainder of the bill seems to (1) duplicate and perhaps enhance current Federal and State programs and, (2) assuming lenders have not been chasten and as new practices are being quickly implemented, the other bills may correct the sins ofthe past.

6. The banking and housing panels also will take up A-2496 sponsored by Assemblyman James Holzapfel (R-Ocean) that would require debtors to receive two weeks notice prior to a sheriff's sale of foreclosed property. The bill also would require a sheriff's office to give a debtor notice when there has been a surplus in the sale offoreclosed property.


7. A joint meeting of the Assembly's Financial Institutions and Insurance and Housing and Local Government committees will review A-281. Assemblymen Gary Schaer (D-Passaic) and John Burzichelli (D-Gloucester) are sponsoring to impose tough new requirements on foreclosure consultants and others who contract with homeowners facing foreclosures.


8. Assemblywoman Nilsa Cruz-Perez (D-Camden) is sponsoring A-2272. It includes the sale of securities under the Consumer Fraud Act to protect consumers from deceptive sales and advertising in the marketing of securities.That measure will be heard in a joint meeting of the Assembly Law and Public Safety and Regulated Professions committees.


THE UGLY


The following Bills may or may not represent sound changes to the economy's structure. However, in this time of uncertainty, the obvious shift in structural demand, and the catastrophic condition of the State's finances, these Bills need to be considered in the larger, more measured context of unfolding events and unforeseen consequences. The reasons are straightforward.


Each of the Bills make long term permanent changes to the tax structure. Hence, by the very nature of the change the impact on the State's economic well being is not immediate, but rather it is incremental over the long term.


Second, such bills do not target the immediate cause of the problem. New Jersey's economy is slowing. More people will be unemployed and less goods and services will be purchased. The problem, therefore, is one of how to support faltering demand, how to stop the downward spiral. The proposed longer term changes increase supply at a time when production is being scaled back and the longer term outlook for the amount of sustainable production, and its mix, are uncertain,unknowable and thus immeasurable. With the structural changes in the financial industry, New Jersey's reliance on that industry as a source of revenue and the implication for both consumption, and the potential impact on unemployment and underemployment, the focus needs to remain sustaining people and demand.

Finally, permanent tax cuts and credits are generally counterproductive as they tend to wreck havoc on the structural budget deficit. Conversely, short term cuts and credits, whether immediate or rebatable, have a history of being equally as effective. Moreover, temporary cuts or credits have an immediate short term impact but since they are temporary, minimize the lasting impact on the structural deficit.

9. WORST IN CLASS. A-3124. Assemblymen Louis Greenwald (D-Camden) and John McKeon (D-Essex) are sponsoringto enable businesses to write-down net operating losses for up to 20 tax years. The Senate appears to be discussing the same legislation.


For the reasons set forth above such actions are generally seen as ineffective at best and counterproductive at worst.The impact is generally small and the cost is usually prohibitive because it results in a permanent increase to the deficit. Also, the time to impact is long. The argument the bill would put New Jersey in line with neighboring states that allow businesses such a time frame to recoup losses should not be assumed to more effective in attracting businesses given the unspoken differences between overall State tax structures. Moreover the sponsors’ contention the reform is especially needed by small businesses that might not otherwise be able to weather the current economic storm makes no sense. There is no apparent reason to believe increasing the time to write off net operating loses from seven to twenty years willprovide any immediate relief from current turmoil, yet it would seem to increase the structural deficit.


10. Measures to promote job creation through alternative energy initiatives will go before a joint meeting of the AssemblyTelecommunications and Utilities and Environment and Solid Waste committees. A-843 would provide equal opportunity for businesses to receive energy-related incentives and funding and A-2550 would permit wind and solar facilities within industrial zones. The first measure is being sponsored by Assembly members Upendra ChivukulaD-Somerset) and Marcia Karrow (R-Hunterdon/Warren); the second by Assemblywoman Pam Lampitt (D-Camden), Chivukula, and Assemblywoman Connie Wagner (D-Bergen).

11. The Assembly Commerce and Economic Development Committee will hear A-2722 which is sponsored by Joseph Vas (D-Middlesex), Greenwald and Assemblyman Albert Coutinho (D-Essex). Its purpose is to reshape how certain corporate sales made inother states are taxed, and eliminate a provision that increases the amount of a corporation's entire net income thatis taxable by New Jersey.

How Leveraged Mortgage Monetization Created a Global Financial Meltdown & $700 Billion Bailout

Treasury Secretary Paulson has asked and Congress is considering a $700 billion bailout for financial institutions drowning in bad loans.

In the last several weeks it seems like we have entered an economic black hole. Fannie Mae and Freddie Mac are in a "conservatorship". Lehman Brothers has followed Bear Stearns and both are gone. Merrill Lynch has been bought by Bank of America, AIG has been taken over by the Federal Reserve, and Morgan Stanley (stock chart) and Goldman Sachs (stock chart) are fighting for their very existence.

The obvious question is "what happened"? Consequently,the purpose of this post is discuss how we got to the point where the Government is attemptingto prevent the economy from falling into the same black hole via a guarantee for money market accounts and an additional $700 billion bailout of U.S. financial institutions.

I. How the Market Mortgage Works & The Role of Investment Banks

Like Banks, Mortgage Bankers and brokers create, i.e. originate, mortgages by working with borrowers to obtain the funds to buy their homes. The loans made maybe kept on the books of the lender or sold to Investment bankers. Investment bankers' turn these mortgages back intomoney, that is they monetize the asset, by forming pools of mortgages that are the collateral for Mortgage Backed Securities (MBS) and Collaterialized Mortgage Obligations (CMO). These securities are sold to domestic and international money market fund, mutual fund, pension fund investors,banks and speculators as investment assets and trading vehicles.

Investment Banks, like Bear Stearns or Lehman Brothers, have a trading desk and sales force that buys and sells mortgage backed securities and collateralized mortgage obligationsfrom and to money market fund, mutual fund, and pension investors. A typical seller can call a firm and the broker will tell him what the trader will pay. If the bonds are sold to the brokerage firm they are placed in the firm's inventory and on its balance sheet until they are sold to another buyer.Brokerage firms finance their borrowings, i.e. the purchase of mortgage backed debt, through the repurchase agreement.

The "repo" allows the brokerage firm to finance its inventory by borrowing money from money market funds, mutual funds,pensions and banks for a period as short as one day and use the MBS as collateral for the loan. Lenders, however,may require a "haircut." Haircut means they will lend our example firm something less than $40.00 and rely on the $1.00 in equity as a cushion against a decline in the mortgage bond's price and thus assure full repayment payment of the loan.

The nature of the problem, long term lending via the ownership of mortgage backed bonds versus the risk of using short termfinancing to carry those bonds in inventory, is also exemplified by the use of financial commercial paper. Brokerage firms used large amounts of asset backed commercial paper to finance their holdings.

II. What Investment Bankers Did to Neutralize Leverage Risk

Investment banks support their purchases through leverage. A good example of the impact of leverage on a balance sheet comes from CNBC's Dylan Ratigan. Paraphrasing Ratigan: (1) Assume you have one dollar ($1.00). (2) assume you borrow $39.00's and with your $1.00buy a forty dollar ($40.00) mortgage backed bond. (3) Your one dollar ($1.00) is "leveraged 40 times. (5) At thispoint you have a $40 asset (the mortgage bond), a $39.00's liability, and $1.00 in equity. If the market value of the $40.00 mortgage goes down in price by 2.5% you lose $1.00 ($40.00 x .025) and the resale value of the mortgagefalls to $39.00. If you lose more than a dollar you can't repay the loan and you are bankrupt. Indeed, with leverage so high, 40 times in this example, any decrease in the value of the mortgage leaves the investment bank insolvent.
The primary exposure of the leveraged brokerage firm that holds these bonds as inventory and the investor who addsthe asset class to the investment portfolio is credit default risk. Credit default risk measures the risk that anumber of individual borrowers, in this case homeowners, will not have the financial wherewithal to repay the loan and therefore the bond.



This risk is addressed in two basic ways.First, mortgage backed bonds may be overcollaterialized to protect the bond holder from default. If the actuarial assumption is that 15% of the collateral backing the bond will default, then the bond isovercollaterialized by at least 15%. An older variant of this theme is "substitute collateral." Under this option a default on 15% of the collateralrequires the defaulting collateral be removed from the collateral pool and be replaced by mortgages in good standing.


A second way default risk is mitigated is through the credit default swap (CDS). The CDO acts as an insurance like hedge against default and can be bought and sold independently from and without the necessity of there being an underlying asset to be insured. CDO's are, however, used to reduce the default risk on actual subprime mortgage bonds.

Understanding how it is thought default risk is mitigated provides the foundation for understanding why a rating agency, such a Moody's and Standard & Poor's, assign mortgage backed bonds investment grade ratings. Both Moody's and S&P perform independent stress tests to determine the ability of a bond, be it mortgage backed, corporate, or municipal,to withstand the downward pressures associated with adverse economic and industry events. The greater that ability to with stand adverse circumstances the higher rating.

III. Why the Financial System Broke Down and Created a Global Financial Crisis

With the above in mind return to the issue of leverage and the hypothetical investment bank. The sharp increase inmortgage default rates and the resultant sharp deterioration in the value of dealer inventories at least appeared to fatally affect the firm’s ability to repay their loans. That is to say if lenders do not feel that $1.00 is sufficient to cushion their loan they may refuse to continue to finance it, demand payment and refuse to make additional loans. If the value is less than $40.00 minus any haircut or repo lenders withdraw financing because the risk is too high. Since the investment bank in unable to pay its creditors or refinance its loans, the investment bank collapses.

A similar situation exists with asset backed commercial paper. Buyers of the paper not only refused to make new purchases as older maturities matured, but they actively sold or tried to sell current positions. As the price of the holdings of commerical paper fell the money market funds broke contractually permitted values ($1, or "the buck") and caused mass withdrawals.

Credit default swaps also reflect leverage. As an example a participant may trade a $10 million swap using $1 million dollars to collateralize the trade. Thus, if a trade which moves against the participant requires it to post more collateral to cover the increase in risk. Since a credit default swap is triggered by a creditevent such as default or non-payment, the deterioration in the assets held by participants, including investment bankers, Fannie Mae & Freddie Mac, and AIG, was of such a magnitude that investors questioned the ability of such companies to meetboth potential and actual requirements to post additional collateral.

One measure of equity is the investment bank's stock price. If an investor perceives the value of the mortgage backed securities held by the investment bank is deteriorating the investor can sell the stock. When enough investors sell the stock its price falls until it more accurately reflectsthe value or liquidation risk the company. Given the leverage used by Bear and Lehman many investors and speculatorsbelieved their price was going to zero. The price of these stocks dropped quickly and sharply as a result of squeezingthrough the keyhole. Investors and speculators reached similar conclusions at similar times and were willing to and didsell them at almost any price. Conversely buyers in general and stock exchange specialists in particular, pulled theirbids in order to avoid the onslaught of selling.

And, it is this specter that lead to the recent financial meltdown. If one pictures the NYC financial industry as the hub on a wheel, the financial industries of Asia and Europe are the spokes since investors in these areas both traded in and were counterparties in the deteriorating products.

For the purpose of illustration only, hypothetically assume Tokyo companies could only meet their financial commitments to London if NYC companies could meet their commitments to Tokyo. If NYC fails then Tokyo falls, if Tokyo falls then London fails. Given the resultant panic that increasing probability evoked, everyone sold at roughlythe same time and global financial prices collapsed.

WILSON v. CORZINE & KATZ: A Scenario for a Partial Stay of the Judge Innes Ordered Emails Release

The purpose of this post is to posit the inexpert, non-authoritative and quite possibly nonsensical scenario that NJ Superior Court Judge Innes might only grant a partial stay,, or postponement, of the release of the Corzine and Katz emails pending their appeal.

On May 29, 2008 Superior Court Judge Innes decided the emails exchanged by Governor Corzine and Ms. Katz during recent labor negotiations are public documents and must therefore be released to the public. Upon the opinion's May 30, 2008 release, Attorney General Ann Milgram immediately responded by stating the decision by Judge Innes will, if necessary, be appealed all the way to the Supreme Court. A result of her commitment to pursue the appellate process is the likely hood the case will drag into the 2009 gubnatorial election year.

CORZINE MAY ASK THE COURT TO STAY RELEASE OF ALL DOCUMENTS PENDING APPEAL BUT MIGHT ONLY GET A PARTIAL STAY.

Pursuant to the Judge Innes' order it appears that approximately 796 pages of documents are ordered to be released to the public. According to the Asbury Park Press "Corzine's office gave up to 796 pages to the judge to be reviewed ... Corzine spokeswoman Deborah Howlett said 'Friday's court decision requiring Corzine to release e-mails between himself, his staff and Carla Katz involved 72 e-mails.' ... Howlett said they include 11 from the governor to Katz, 50 from Katz to the governor and 11 from Katz to Tom Shea, who was Corzine's chief of staff at the time. Howlett said these e-mails account for exactly 100 pages. ... Howlett said most of those [other] pages were legislation and newspaper articles, for example, that explain and support the
e-mails."

It seems that Governor Corzine and Ms. Katz are entitled to have the trial court order that releases these documents, and thus the opinion the order is based on, reviewed by an appellate panel. N.J.R.CP. 2:2-3.

Because Governor Corzine and Ms. Katz have a right to an appellate review it also seems they have the right to ask the court to stay the order releasing the Corzine & Katz emails until after the appellate court has made and announced its decision. N.J.R.CP. 2:9-5B. Logic suggests, however, the court may only partially grant the request.

The reasons to grant a stay are (1) release of emails alleged by Corzine and Katz to be deliberative prior to appellate review would effectively make any appellate decision meaningless, and (2) release risks irreparable harm to the Governor and Ms. Katz as an appellate ruling favorable to them could not have the intended result of preventing public disclosure.

Conversely, it seems utterly fantastic that the Governor will claim that documents such as newspaper articles are confidential. Thankfully, Governor Corzine's characterization of the emails or attachments as deliberative, however, will not decide the matter. One must believe the court will differentiate between deliberative writings and plain and / or investigative facts. This is especially true for documents available at the local library or available from the Office of Legislative Services.

Thus, it seems reasonable that simple facts such as legislation and newspaper articles, standing alone, are not inherently deliberative, and without more, do not deserve protection pending appeal. Furthermore, it also seems reasonable that, given the court has a power to redact deliberative material; such facts should not be allowed to be concealed by their placement in a deliberative document. If so, such documents or such portions of documents could well be immediately released despite a pending appeal.

NEW JERSEY: CODEY' S STRONG ARMING ORGAN BILL neither compassionate nor understanding

This post compares and contrasts verbatim what New Jersey Senate President Codey’s press release says about the organ "donor" bill and what the bills (S-754 & S-755), by their own exact words, read together, pull off.

The format takes each Codey assertion and (1) quotes the assertion , (2) quotes the passage(s) of the bill referred to, and (3) then offers a Reality Check. The Seanator's press release also has a frequently asked questions and answer list in the form of "myth" and "reality." This post also adds a "reality check."

Senator Codey’s “Out of Sight, Out of Mind” Strategy

An important caveat. Senator Codey completely ignores any mention of the Fourteenth Amendment right of privacy and independence of decision making that is inherent in controlling one’s own body. CRUZAN v. DIRECTOR, MDH, 497 U.S. 261, 269 (1990). Furthermore, the Senator never really addresses the First Amendment right to freedom of thought. PLANNED PARENTHOOD OF SOUTHEASTERN PA. v. CASEY, 505 U.S. 833, 851 (1992) . Thus, it is no surprise he also never mentions that making a decision about organ harvesting is a prerequisite to obtaining or renewing your driver’s license. That said, the press release begins:

Senate President Sets the Record Straight on Organ Donor Bill

CODEY: “TRENTON: With the Assembly Health and Senior Services Committee approving the NJ Hero Act today, Senate President Richard J. Codey (D-Essex) set the record straight on a number of myths and misunderstandings being reported about the bill he recently introduced to help save lives and increase organ donation.”

Revised Uniform Anatomical Gift Act: “Anatomical gift” means a donation of all or part of a human body to take effect after the donor’s death for the purpose of transplantation, therapy, research, or education. S-754, p.2, lines 23-25.

Reality Check: What you are actually “donating” and certain conditions governing your “donation” are governed by the Uniform Anatomical Gift Act. Senator Codey makes no mention of them, the bill's simultaneous pending revision, or how they impact your decision.Therefore, it only seems fair to at least inform all effected the bill seeks more than agreement to organ transplant donation you are agreeing to the use of your body, body parts, and tissue for transplant, research and education.

CODEY: “The goal of this bill, plain and simple, is to increase the number of registered organ donors by starting a conversation early and often so that everyone understands the importance of organ donation, said Sen. Codey.”

New Jersey Hero Act:“

(d) to instill an understanding of the consequences when an individual does not make a decision to become an organ donor and does not register or otherwise record a designated decision-maker;” Hero Act, S-755, p.3, lines 43-45.

“instills knowledge 2[and values]2 that will enable young adults to make an informed decision about registering to become an organ donor or designating a decision-maker to make the decision on behalf of the young adult. The information shall also instill an understanding of the outcome if no decision about becoming an organ donor or designating a decision-maker is registered or otherwise recorded.” Hero Act, S-755, p. 4 , lines 32-38.

“instills knowledge 2[and values]2 that will enable young adults to make an informed decision about registering to become an organ donor or designating a decision-maker to make the decision on behalf of the young adult. The information shall also instill an understanding of the outcome if no decision about becoming an organ donor or designating a decision-maker is registered or otherwise recorded. Hero Act, S-755,P.5, lines 1-7.

Reality Check: Get it? ... Get it? ... Get it? ... Get it? …Get it? ... Get It? … Get it?

While this post makes has no claim to any legal authority it seems simple to understand the phrases “instill” and “and values” seem unconstitutional either on the face of it or as applied.
"If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. If there are any circumstances which permit an exception, they do not now occur to us." West Virginia State Board of Ed. v. Barnette, 319 U.S. 624, 642 (1943). The State . . ., no less than the Congress of the United States, must respect that basic truth." Wallace v. Jaffree, 472 U.S. 38, 52-55 (1985).

The “values” phrase was removed from the bill by unanimous vote on the same day, March 3, 2008) that Senator Codey put out his press release. Its just not enough.

CODEY: "There has been a tremendous amount of inaccuracies reported in newspapers and echoed on the radio and I want to set the record straight. This bill is about compassion and understanding, not strong arming.”

New Jersey Hero Act: "

The health and welfare of New Jersey’s residents requires a more dynamic, comprehensive framework regarding organ donation, one with mandated educational and decisional components.” Hero Act, S-755, lines 28-31.

Motor Vehicle Commission (“MVC”)will not issue or renew a New Jersey driver’s license or personal identification card unless a prospective or renewing licensee or card holder makes an acknowledgement regarding the donor decision. Hero Act, S-755, lines 1-5.

Reality Check: The bill is pure coercion. arm-twisting means the use of direct personal pressure in order to achieve a desired end as when the State asks you such an unrelated question at the MVC. Coercion means the practice of compelling a person to behave in an involuntary way. Codey is coercing you because you must make a public decision or you cannot obtain or renew your license.

The bill may be about compassion and understanding for people who need a transplant to prevent a physical impairment or death but it also benefits research and the companies who make money off of your "donation" as well as the schools who gain a cost-free source of bodies (or parts) to practice on.

The bill, however, is needlessly antagonistic and insensitive to everyone else. It seems appropriate that legislation both serve the people while respecting the rights of the people. Senator Codey's bill is insensitive because it fails to respect the peoples' liberty interest in privacy and independence in decision making and avoiding disclosure of personal matters. Furthermore, the bill's intent to inculcate people with the State's attitudes is antagonistic to all people, especially those people, who for religious, moral, or other reasons, have choosen or choose to think differently.

CODEY: “In doing so, Senator Codey released the following facts on the NJ Hero Act, bill S755/A2083:The NJ Hero Act is so named to highlight the heroic act of donating one’s organs and tissues to save and enhance the lives of others. In doing so, it contains two major initiatives:

1. Anyone applying for a driver’s license or identification card to first answer a few simple questions regarding organ donation, including: Would you like to be an organ donor? If not, would you like to designate someone to make that decision for you?”

New Jersey Hero Act: “The health and welfare of New Jersey’s residents requires a more dynamic, comprehensive framework regarding organ donation, one with mandated educational and decisional components.” Hero Act, S-755, p.2, lines 28-31.

Reality Check: Does Codey’s sentence even make sense? What he clearly means is: “Anyone applying for a driver’s license or identification card [is required] to first answer a few simple questions ..."

CODEY: “2. Education for public high school, higher education, and medical school and nursing school students and professionals in order to dispel myths associated with organ donation, provide accurate information, and emphasize the fundamental responsibility of individuals to take appropriate action, when able, to help save another persons life.”

New Jersey Hero Act: emphasize the fundamental responsibility of individuals to take appropriate action, when able to do so, to help save another person’s life. Hero Act, S-755, p.2, lines 41-43.

Reality Check: What does the above sentence mean? Does anyone have a "fundamental" duty, as opposed to a personal moral choice, to turn their body over to a pharmacutical company because their research might save lives. What about a pharmacutical company that deals with non-life threatening research. The bill makes no distinction between uses or users.

And, the reason it makes no distinction is any weight in State's interest to your body parts decreasing as the reason moves from save lives to research and then education.

More importantly, the bill represents further erosion of human rights and the next State encroachment on the path to mandatory body and body part harvesting.

Historical Step 1. The State began this process by using its authority to ask questions in seemingly harmless and voluntary manner.

Current Step 2. It is now making its intrusion mandatory as the Motor Vehicle Commission ("MVC") will not issue or renew a New Jersey driver’s license or personal identification card unless a prospective or renewing licensee or card holder makes an acknowledgement regarding the donor decision. Hero Act, S-755, p. lines 1-5.

Projected End Step 3. The New Jersey judiciary rules that pursuant to the long standing and broad Statutory law stating “the fundamental responsibility of individuals to take appropriate action, when able, to help save another persons life,” your body (or more likely you children’s or grand children’s bodies) will, with or without consent, be automatically harvested because a dead person has no legal interests in their dead body.

MYTH [1]: I am being forced to make a decision that I might not be ready to make yet.

REALITY: Taking into account countless factors, including religion, the Hero Act does NOT, in any way, force you to make a decision about organ donation. If you are not ready to be a donor or designate a decision maker in your place, you do not have to. The goal is to generate a conversation and hopefully an awareness of organ donation. You will always maintain the right to NOT be a donor.

REALITY CHECK: YOU ARE BEING FORCED TO MAKE A PUBLIC, LEGALLY BINDING CHOICE THAT YOU MIGHT NOT BE READY TO MAKE.

If you say "yes" you are entered into the State data base and the entry represents a legally binding decision. The decision will appear on your driver’s license. It appears that, if you change your mind you must be sure your name is removed from the data base. If not, in the event of your death, your body could be immediately be harvested.

New Jersey Hero Act: d. Donor information entered into the registry shall supersede any prior conflicting information provided to the registry or on the individual’s driver’s license or identification card, and pursuant to section 2 of P.L.1969, c.161 (C.26:6-58) and section 1 of P.L.1987, c.244 (C.26:6-58.1) or any subsequent statute adopted pursuant thereto, registration by a donor shall constitute sufficient authorization to donate organ and tissues for transplantation and therapy and authorization of another person shall not be necessary to effectuate the gift. Hero Act, S-755, p.7, lines 18-26.

Any other answer is or must be considered a legal binding "no". As example, should you die in a car crash the State cannot immediately take your body and proceed to harvest it because, assuming any earlier consent has been deleted from the data base, there is no data base consent.

MYTH [2]: I am being forced to acknowledge the importance of organ donation, even if I don’t agree with it.

REALITY: The Hero Act in no way forces you to take a stance that runs counter to your beliefs. If you do not wish to be a donor or designate a decision maker, you simply have to acknowledge that you have read through this process by checking off a box that states, I have reviewed the importance of organ donation. This is merely a formality to ensure that you have completed the process before applying for a driver’s license or ID card, with the end goal being to make people consciously aware of the need for organ donation.

REALITY CHECK: YOU ARE BEING COERCED TO ACKNOWLEDGE THE IMPORTANCE OF THE SO-CALLED DONATION FOR TRANSPLANT, RESEARCH AND EDUCATION EVEN IF YOU DON'T AGREE WITH IT BECAUSE THAT IS THE REASON THE QUESTIONS ARE REPEATEDLY ASKED, DECISIONS REPEATEDLY MANDATED, AND A LICENSE REPEADTLY DENIED IF NOT ANSWERED.

The question Codey is also addressing is a trick question. He is asking does the State require you to say or act in a manner that could be conceived as forced agreement with the State’s positions on body harvesting. The applicable bill section reads: “The portal shall require a resident who has not registered as an organ donor, and who seeks a driver’s license or identification card or seeks renewal thereof, to either: (1) register as an organ donor through the Donate Life NJ Registry; or (2) 2 [acknowledge an understanding of] review information about2 the life-saving potential of organ and tissue donation, and 2[an understanding of]2 the consequences when an individual does not make a decision to become an organ donor and does not register or otherwise record a 15 designated decision-maker.” Hero Act, S-755, pg.8., lines 7-15.

On Monday, March 3, 2008, the same day Senator Codey put out his press release, the Senate version, S-755, was also amended to "provide that residents who do not register as organ donors through the Donate Life NJ Registry 'review information about,' rather than 'acknowledge an understanding of,' the life-saving potential of organ and tissue donation (section 8)" because “acknowledge” and / or “understanding” as forced agreement with the State.

MYTH [3]: If I designate a decision maker, it will be noted on my license and maintained in a Motor Vehicle Commission (MVC) database.

REALITY: No, the MVC registry is an affirmative registry and only collects the names of those who wish to be an organ donor. If you wish to designate a decision maker, you will be able to obtain a form through an MVC office or their Web site that will serve much like a living will. This will be a private document kept only by you. When the time calls for it, you and/or your family will be responsible for presenting it.

REALITY CHECK: IF YOU SAY YES IT WILL APPEAR ON YOUR LICENSE FOR ALL TO SEE. ANY OTHER ANSWER IS A NO AND PEOPLE WILL SEE THE NO BY ITS ABSENCE.

If you say "yes" you are entered into the State data base and the entry represents a legally binding decision. The decision will appear on your driver’s license. Any other answer is or must be considered a legal binding "no", as example, should you die in a car crash the State cannot immediately take your body and proceed to harvest it because there is no data base consent.

Moreover, also thanks to Senator Codey, that information is shared with the Federal government, which probably includes Homeland Security via the Real ID Act or its progeny. Hence your appearance in the data base, or lack of it, can be crossed referenced by any other data base in building a psychological profile about you.

MYTH[4]: This bill is going to force people to make a critical, life altering decision in a rush while they are at a busy MVC office.

REALITY: You can complete the process at any time prior to obtaining your license either by doing so online or by picking up a form at your MVC office ahead of time. This will enable you to make a thoughtful decision in the privacy of your own home and with the advice of family, friends or clergy.

REALITY CHECK: It seems fair to hypothesize some will remember to address the issue prior to physically applying for or renewing their license. It also seems fair to hypothesize some will forget about it until they contact the MVC. But yes, you will, over, and over, and over again be forced to make a public decision before obtaining or renewing your driver's license.

MYTH[5]: This bill places a burden on teachers and administrators by forcing them to cram it into the curriculum.

REALITY: Both the NJEA and the NJ Department of Education have been involved in helping to craft this bill. The Department of Education has been charged with developing a balanced and unbiased presentation of the issue.

REALITY CHECK: More partisan politics , more junk science, more jobs, more pensions, more money, more taxes.

MYTH[6]: I just read in the paper that were doing great on organ donation, why do we even need this bill?

REALITY: Although a record number of New Jersey residents signed up to be organ donors last year, we still have a long way to go to bridge the gap between those who desperately need a transplant and those who are willing to donate. The fact still remains that roughly 4,200 New Jersey residents are presently waiting for a life saving organ donation. Furthermore, each year roughly 6,000 people in this country die while waiting for an

REALITY CHECK: SENATOR CODEY HAS NOT MADE HIS CASE FOR MANDATORY, REPETITIVE DECISION MAKING.

There is no doubt that with organ donations reaching record levels in New Jersey the public conversation is closing the gap between those in need of a transplant and available body parts. And, there are other, noncoercive ways to approach the same goals. Organ and Tissue Donation Information Included With Income Tax Refund Payments, pgs. 4-5.

Conversely, Senator Codey has not shown the subtle use of intimidation via the repeated asking and repeatedly forcing driver license applicants to make a decision about their body is necessary or the best practical way to achieve his goal. Nor has he shown that the dramatic increase in voluntary donations is failing to close the gap or will not be set back by those who resent his heavy handed tactics. There is absolutely no objective reason to believe his plan will close the gap or that it will not increase it simply by the time delay associated with the bills implementation.

ORGAN DONOR OR BODY SNATCHER: Codey’s Inquisition v. Personal Freedom

If New Jersey Senator President Dick Codey has his way the (1) State created substantive right to drive (2) will be contingent on those who apply for, or who seek to renew, their driver’s license obeying the State’s policy to “encourage positive donation” by making a totally unrelated but repeatedly mandatory and public decision (3) as to whether or not the applicant will make a carte blanche “donation” of his or her body, organs, and / or tissue for transplant, research and / or education. New Jersey Hero Act,S-755. (Adobe Reader).

What follows does not attempt to debate the pros and cons of permitting one’s body, organs, or tissue to be harvested for transplant, research or study. It is certainly not meant to be a legal opinion. But when both Blue Jersey and NJ 101.5’s Jim Gearhart oppose the bill’s overreaching mandates one takes notice. It makes one ask: Does the State have the right to ask and demand an answer to such intimate questions, and if so, is the proposed method permissible.

Be forewarned, however, the view here is the legislation, as written, is a patronizing hodge-podge of self-aggrandizing bad law and an incoherent self-serving attempt to slip as much of that bad law as possible by the people. Additionally, reading it together with the proposed Revised Uniform Anatomical Gift Act, S-754 or in the light of 18 U.S.C. 2721 (a)(2). does nothing to change that view. Indeed, where is the OLS legal opinion? Is there one?

LEGISLATION PROPOSAL S-755 CONTENT

Make no mistake – refuse to answer Codey’s questions and the application process is over. According to Senator Codey’s February 14, 2008 testimony, (Windows Media), applicants for driver licenses are required to make a legally binding and recorded declaration concerning their body parts prior to continuing the application process. To “encourage positive donation”, applicants will be met by a State agent, i.e. a motor vehicle employee, who will ask up to three questions. The first is whether the applicant wants to have their remains harvested for transplant, research, or education. It’s an all-or-nothing proposition.

If the answer is yes, the applicant is given a number required for continuing on in the license application process.

If the applicant is not willing or able to make the on-the-spot decision, he or she is asked to name a third party who will be legally responsible for a future decision in the event of the applicant’s death. Upon naming a guardian the applicant is given a number required for continuing on in the license application process.

If the applicant refuses to designate a guardian and proceeds to an outright no to “donation”, the response is recorded and the applicant is given a number required for continuing on in the license application process.

Five years from the date of enactment applicants must answer the same questions via online access or at their DMV office prior to applying for or renewal of a driver’s license. New Jersey Hero Act S-755, p.7, section 8. At the end of the process there will be a donor designation on the driver’s license. New Jersey Hero Act, S-755, p.7, section 8.

SENATOR DICK CODEY’S ORGAN BILL, S-755, SEEMS TO VIOLATE THE FUNDAMENTAL RIGHT TO PRIVACY

Despite the seeming lack of specific guidance, tradition can only lead one to the conclusion the individual has a fundamental right to determine the disposition of one’s remains, and therefore, that right is entitled to be exercised in a manner that is free from government interference.The U.S. Constitution recognizes the individuals have a fundamental liberty interest in independence in decision making and avoiding disclosure of personal matters. First among those privacy interests is a person's body. Schmerber v. California, 384 U.S. 757, 770 (Criminal case)(1966). Indeed, "Every human being of adult years and sound mind has a right to determine what shall be done with his own body." Cruzan v. Director, MDH, 497 U.S. 261, 269 (1990).Even where the privacy interest does not rise to the level of fundamental right, analysis of “ ‘privacy’ interest[s] has in fact involved at least two different kinds of interests. One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions.” Whalen v. Roe, 429 U.S. 589, 599-600 (1977).

A statute impinging upon a fundamental right is presumed to be unconstitutional. Harris v. McRae, 448 U.S. 297, 312 (1980).

1. To overcome that presumption, the state must prove its intrusion is not just legitimate, it must prove it to be compelling. "Compelling" generally refers to something necessary, as opposed to something merely preferred. Here, therefore, the government interest in attempting to “persuade” the public to become organ donors is, if anything, merely legitimate because it is the government's preferred option. It cannot be a compelling or necessary interest because it does not, and one could easily argue cannot, mandate organ or tissue donation for transplant, research or study. Conversely, there is no fundamental legal duty to donate.

2. That should be the end it. But, for the sake of argument, let’s assume the court wants to know whether the statute meets the lesser standard of “undue burden” on the right to decision making free from government interference. Now ask yourself the question: Could the State require a woman to decide if she will be a parent in the following four years. If she becomes pregnant during that time, dies while pregnant, regardless of whether the child is or is not viable – what happens to the fetus . Also, will the State inform the women she can give up the right to decide when and whether to have a child by making four year prior notice to a third party who is given the decision making power? Think that answers it….

3. Finally, comes the matter of privacy and “donor” identification on a driver license.Either the appearance or lack of appearance of donor status on a driver license informs everyone who looks at the license of the individual's decision. Yet such identification is neither effective nor necessary. It’s certainly not effective because the only proof as to “donor” status that matters is the “Donate Life NJ Registry”. New Jersey Hero Act, S-755, P.7, section 7(2) (d) . Accordingly, what is on the license must be checked with the registry before any action is taken.

Furthermore, it does not even attempt to minimize the intrusion on privacy as every license is seen by bartenders, librarians, grocers, etc. Thus, unlike the registry, there is absolutely no protection from the eyes of the unnecessary, the uninvolved, the unintended and the curious.

SENATOR LESNIAK SELLS PUBLIC OUT TO CORZINE FISCAL RESTRUCTURING & TOLL MONETIZATION PLAN

Senator Lesniak's betrayal of the public interest to the Corzine fiscal restructuring & toll asset monetization plan speaks for itself.

The 800% road tax was announced by Governor Corzine in his January 10, 2008 State of the State address. On January 16, 2008 Senator Raymond Lesniak told Star-Ledger Reporter Joe Donohue in an article titled Lesniak wants governor to drop toll plan for Route 440 ;

"If they want 440 in there, they will have to find someone else to sponsor it. I won't," said Lesniak, one of the earliest proponents of using the state toll roads to ease the state's financial problems."

With Senators Adler and Van Drew joining the 17 Republican Senator's in opposing the road tax,
any vote in the Senate would tally 20-20, and thus fail.

The Star-Ledger then reports that at Governor Corzine's Middlesex "Town Hall"meeting the Governor announced "Tolls on Rt. 440 'not happening,'"

On September 10, 2008 reformed sinner Lesniak turned Corzine attack dog when he posted a guest article in the Star-ledger smearing New Jersey radio station 101.5 fm [for] self-promotion and pandering because they have actively opposed the Governor's toll road tax.

Senator Raymond Lesniak's February 11, 2008 Star-Ledger post "Lets Talk About Corzine's Toll road plan" is even funnier as Senator' Lesniak's Rah-Rah speech waxes poetic about political courage during tough times and the need for all to support the Governor and reach a solution.

Is that a lesson in slick practices or what?

NJN's MUST-SEE ONLINE COVERAGE OF CORZINE'S FISCAL RESTRUCTURING, ASSET MONETIZATION PLAN

The New Jersey Network has made three very good programs about Governor Corzine's fiscal restructuring and asset monetization plan availible oneline.

On January 6, 2008 NJN's Michael Aron interviewed Save Our Assets spokesman Peter Humphreys. Mr. Humphreys is an attorney and Wall Street expert in asset monetization and securitization who has testified before the Senate Transportation Committee concerning monetization. You can hear the podcast of that interview at njn.net by clicking "Humphreys Interview."

Also, Michael Aron and Kent Manahan followed up on January 13, 2008 with a conversation with Governor Jon Corzine about fiscal restructuring and his asset monetization plan. For the next week that interview can be watched at NJN by clicking "Corzine Interview." After that try NJN's podcast page.

And, finally, NJN's Jim Hooker moderated a January 13, 2008 panel discussion with (1) Nick Acocella of Politifax, (2) Craig McCoy of the Philadelphia Inquirer, John Reitmeyer of the Bergen Record and Dunstan McNichol of the Star Ledger. To hear the discussion "Reporters Roundtable."