Government by Confiscation

The NIH’s notice to unilaterally revise indirect cost rates on grants to 15% reads as though it were written by someone who barely understands what indirect costs are and how they are computed, which suggests it was imposed on them from without, as are many agency policies throughout the federal government. While it is unquestionable that the presidency sets policy throughout the executive branch, there is a reason why we rely on knowledgeable professionals in the civil service to advise on such policy. Moreover, the setting of policy cannot contravene federal laws, regulations, Congressional appropriation, case law, and most fundamentally, the obligation of contracts.

The notice in question relies on a specious, unprecedented reading of federal regulations (2 C.F.R. 200.414) that would give any agency the right to unilaterally ignore the federally-negotiated indirect cost rate agreement, which legally binds the federal government, and replace it with a de minimis rate, effectively defrauding institutions of reimbursement of real costs per the terms and conditions of existing contracts. The agency even claims that they would have the right to apply such a reduction retroactively to the beginning of an existing award, and reclaim indirect costs already paid in previous years. Quite apart from its illegality on multiple fronts, the mere pretense of having such a right is to claim to be beneath the most basic principles of honesty and integrity in abiding by one’s word, which a contract is supposed to formalize.

Such thorough dishonesty has long been a hallmark of Donald Trump’s business practices. Stiffing his contractors and subcontractors, even in violation of signed agreements, as a mere negotiating tactic to strong-arm weaker parties into accepting pennies on the dollar, is well-documented in Trump’s business career, via numerous legal disputes. A most thorough exposé of his amoral practices was given by his long-time fixer, Michael Cohen, in the book Disloyal. No one should be shocked by its contents, as it well accords with the public persona of Trump, which people excuse because they agree with him on one or another issue, thinking they are using him when they are the ones being used.

Having decades of experience in this domain, I am well positioned to appreciate how thoroughly ignorant Elon Musk and others in the Trump administration are in this matter, when they characterize indirect costs as some kind of surcharge by which universities rip off the federal government. In fact, indirect cost, which is to say the added cost of administration and facilities that is attributable to supporting research, is painstakingly audited every one to three years by the negotiating agency (DHHS or the Office of Naval Research). In fact, even the negotiated rate, often around 55%-65% of direct costs for universities (with certain excluded categories), and higher for hospitals, does not cover the full real cost of supporting federally-sponsored research. Large institutions cover the difference with internal funds. They can accept lower indirect rates from non-profit foundations (a small fraction of most research portfolios) only by cost-sharing with internal funds, so most institutions require investigators to provide such sources themselves. The actual indirect cost recovery rate ends up averaging 40% of directs or less, so a large institution may already be subsidizing federally-funded research on the order of $100M/yr or more.

A reduction to 15% would require a level of cost sharing that would be unbearable for many small to mid-size institutions, forcing them to refuse NIH funding. If the intent is to punish big universities, it will actually hurt small institutions more, but Trump has never truly cared about small businesses, as his own business practices prove. Elon suggests universities should use their endowments, proving he has no idea how endowments work. You can only spend the revenue, not the assets, or it’s not a true endowment. The revenue in most cases (2%-4% of assets depending on market) is already obligated to pay for the salaries of faculty beyond the NIH salary cap (reduced in 2012 and returned to that level only in 2022). Again, this “solution” would not help small institutions, but there is no evidence Musk cares about the consequences of his supposed “efficiency,” which should mean doing more with less, not less with less. Moreover, since 2008, NIH alone among federal agencies has refused to pay inflationary 3% increases, at first as a crisis measure, and now as a permanent fiction that inflation does not exist.

Indirect costs are so named because they cannot be directly attributed to a particular grant, but they are directly attributable to research operations as a whole. Federally-funded projects require added space, utilities and infrastructure, especially IT. They also require considerable administrative effort to maintain audit compliance for all transactions and reports. Ironically, NIH imposes more administrative burden on recipients than any other federal agency, yet they would illegally demand that this administrative work be uncompensated. It is already inadequately compensated. Since a cap of 26% of direct costs was imposed in 1991 on the administrative portion of indirect cost rates, real administrative burden has increased over the decades due to dozens of new regulatory changes, so the real cost of research administration is closer to 30%-35%. These are not mere secretaries or clerks. They are more like bookkeepers who must also have vast regulatory knowledge to ensure proposals, reports, and finances are all compliant. Grant administration is notoriously understaffed and overworked; draconian cuts will mean layoffs, worsening the problem possibly to the point of dysfunction. Small businesses actually tend to have higher negotiated rates, since they lack the efficiencies of scale that large universities have.

An intelligent examination of indirect cost rates might consider reducing the facilities portion and increasing the administration portion, since universities might be reasonably expected to shoulder more of their facilities costs, and the current model with capped administrative expenses may create perverse incentives to overbuild infrastructure (though this is speculative). NIH very recently recognized that recipients are undercompensated for administrative costs, by increasing the indirect cost base on subcontracts from $25,000 to $50,000. Its sudden new claim that universities are overcharging is a willful lie.

The 15% rate is based on no new analysis whatsoever; it was simply the lowest rate that they think they can legally get away with. This is naked confiscation, or more bluntly, theft. The felonious behavior of Donald Trump was not limited to his Stormy Daniels payments (which were exposed only because he initially stiffed his fixer Michael Cohen on his holiday bonus, necessitating later payments), for hundreds of small contractors have attested to his refusal to make legally obligated payments for no other reason than to apply leverage and force them to accept lower payment. Cohen correctly identified this as the tactics of a gangster.

The United States government enjoys what authority it has only insofar as it is grounded in the rule of law, for it makes no claims to an immanent right to rule, as did absolute monarchs. When a government willfully acts without any regard for the rule of law, not only in this but in many other matters, it loses its authority and right to command obedience. I have only spoken on the matter that happens to be within my expertise, and perhaps this will only be persuasive to those with similar knowledge. But I do not delude myself that he is acting incompetently only in my domain of knowledge; there is little reason to doubt that such infantile recklessness, matched with an uncritical and unmerited confidence in one’s own judgment, pervades all of his rash orders.

Many of these orders may be stopped by the courts, but a thief does not cease to be a thief simply because he is prevented on several occasions. The most serious concern is not how many illegalities will stand, but the fact that the chief enforcer of federal laws sees illegality as a fair means to any end, even going so far to condemn and discredit judges who rule against him. The dictatorship which seemed like a delusion when it was described only by those on the left is now already a practical reality, at least as far as the compliant Congressional majority is concerned. Even if they should change their position later, they may find there is no longer a state apparatus willing to implement their will.

Putin’s Strategic Blunder

When Vladimir Putin invaded the Ukraine in 2022, he effectively ended Russia’s rise as a power broker in Eastern Europe and in the world at large. This stunning unforced error made it impossible to sustain any pretext of being a member in good standing of an emerging multipolar world. Had he merely attempted to secure the Donbass region, he might have attained realistic strategic goals without alienating anyone besides the left-of-center Westerners who already demonized him. Instead, he attempted to conquer all of Ukraine, or equivalently, to depose its government and replace it with a client state. To understand why he risked so much for so little, one need only take his Russian nationalist ideology at face value, and dispense with the myth of a master strategist favored among conspiracy-minded right wingers who yearned for a powerful adversary to the Western liberal order.

For two decades, Putin had cultivated an image of being a rational authoritarian intent on restoring Russia to her place among the great powers, though this time in a way that relied more on soft power, especially economic power in the energy sector. Germany and other nations would never have placed themselves in a state of energy dependence on Russia unless they had to some degree accepted Russia as a rational actor and member of the international community. Russia even postured as a counter-balance to the sometimes misguided military interventionism of the United States in the Middle East and Eastern Europe. Putin exploited misgivings about U.S. imperialism, affecting to be defending himself against an encroaching NATO.

In 1990, while negotiating the admittance of a unified Germany into NATO, the U.S. made repeated assurances to the USSR that NATO would not expand eastward. While much of the liberal media calls this a myth, it is in fact well documented. After the dissolution of the USSR, this commitment was abandoned and Russia was in no position to oppose it. The Czech Republic, Hungary and Poland joined NATO in 1999. A more controversial expansion occurred in 2004, with the inclusion of the former Soviet Baltic States (Estonia, Latvia, Lithuania), along with Romania, Bulgaria, Slovakia and Slovenia. Since then, Albania and parts of former Yugoslavia joined. In 2008,
NATO expressed its intent that Georgia and Ukraine should also become members.

Admittance of the Baltics and former Warsaw pact states to NATO was at the insistent application of these nations, who wished to orient themselves with Europe and have protection against Russian domination. It is already telling that Russia has so few willing allies. Russia, still following a “spheres of influence” concept of international relations, desires satellite states for its own good, but the U.S. and EU offer tangible benefits, not mere subordination, to their allies.

It is eminently reasonable for Putin to be mistrustful of NATO expansion, though the fact remains he is able to offer only a stick and no carrot to both Georgia and Ukraine, invading the former in 2008. No one outside of Russia seriously envisions a land invasion of Russia from eastern NATO countries, which have fewer than 2000 NATO troops each. The expansion rankles Russia not because it provides a real existential threat, but because the mutual-defense pact frustrates any possible designs of using military power against its former satellites and Soviet republics. This is a problem only because Russia is utterly wanting in soft power.

Putin tried to present Russia as integrated in the world’s political and economic power structure, through membership in the G8, friendly relations with some U.S. and European heads of state, collaborations with NASA, joint energy projects, and some diplomatic and counterterrorism efforts in the Middle East. Hosting the Winter Olympics (2014) and FIFA World Cup (2018) reinforced this image of a new, modern Russia that attained power through economic, diplomatic and cultural influence.

The West, however, takes economic battles no less seriously than military conflicts. When Ukrainian president Viktor Yanukovych rejected an EU association agreement in late 2013, it resulted in public protests by the Euro-friendly opposition. U.S. politicians professed solidarity with the protestors, and covertly the State Department was interfering to achieve its desired goal of ousting Yanukovych, as evidenced in a leaked State Department phone call. Vice President Biden is mentioned on this call, as he was involved in Ukraine policy, and shortly after the April 2014 revolution his son Hunter joined the board of Ukraininian energy company Burisma Holdings. Infamously, President Trump’s first impeachment resulted from his 2019 demand that Ukrainian President Zelenskyy investigate the Bidens’ dealings in Ukraine. While the leftist media repeats incessantly the absurd fantasy that Trump is some kind of Russian agent, we are to ignore the dirt on the hands of the left meddling in Ukraine. By invoking the childish word “whataboutism,” they hope to defuse any accusation of hypocrisy. We do not pretend that the sins of the left excuse those of the right; we commit no logical fallacy by pointing out the insincerity and immorality of both parties. On the contrary, it is rationally essential to grasp that the left is every bit as ruthless and amoral as the “authoritarians” they oppose, so we understand this as a power conflict rather than a moral conflict.

Russia’s invasion of Crimea in 2014 was an understandable reaction to the overthrow of a pro-Russian Ukrainian goverment in favor of a more European-oriented one. Crimea is predominantly (67%) Russian in ethnicity and holds naval strategic importance. As much as the hypocritical West professed outrage at this violation of Ukrainian sovereignty, they continued to do business with Russia, though they used this act as an excuse for sanctions against their competitor.

Putin believes that Ukraine is a “made up” nation, as it was historically a part of Russia. Indeed, Kievan Rus was Russia, and the distinctions among the ethnicities we now call Russian, Ukrainian and Belarussian emerged gradually, and none has greater claim than another to be more authentically or originally Russian. The notion of Ukrainian nationalism did not arise until the 19th century, and the name Ukraine was not favored over Little Russia until the 20th century. The Ukraine SSR’s borders did not align with ethnic geography; this was partly by Soviet design to suppress ethnic nationalism, and partly the result of the annexation of Poland by agreement with Germany. Thus the post-Soviet state called “Ukraine” had an ethnically Russian east and ethnically Polish west.
Ukraine is an “invented” nation, as indeed all nations are, but it is no less real on account of its novelty. Ukrainian national identity, existent even before the dissolution of the USSR, strengthened over the next two decades. Putin’s invasion was at least a decade too late if he expected it to be welcomed by a significant fraction of the population. If anything, by this act he has done more than anyone to solidify Ukrainian national identity for good.

The integration of Ukraine with European culture had been ongoing for many years, which is why the reaction of Europe to the invasion has been so decisive. This was an attack on a European country, where people from all over Europe attend university, live and work. The invasion could hardly be seen as anything but a proximate attack on Europe itself, and a shameless discarding of all the norms required for membership in the European community. By this act, Putin revealed himself to be a brute, not a European. The attempted conquest of Ukraine was the equivalent of defecating on the floor, swiftly casting aside any veneer of civilization.

The thorough miscalculation by Putin before and during this war should lay to rest any myth about him being some master strategist. Apart from his false belief that Ukrainians in any significant numbers share his myth about Russian nationalism, he seemed not to think that Europe would impose any serious repercussions on Russia. Most significantly, the actual prosecution of the invasion has been inept, and exposed the poor logistical capabilities and tactical incompetence of the Russian military. What was once its greatest strength, sheer force of numbers, has also evaporated, as most of the truly combat-ready units have already been committed. It is Russia, not the U.S., which most frequently makes unsubtle reference to its nuclear capabilities, in admission of its conventional military weakness.

Worse, Russia has few reliable allies, as even China has maintained ostensible neutrality, and purchases Russian natural gas only at a steep discount. Western sanctions are incapable of sinking Russia, for its natural resources will always find a market. Financial sanctions failed to ruin the ruble, which actually rebounded above pre-war levels by May 2022. Nonetheless, Russia’s soft power is limited. By 2023, Europe has weaned itself off of Russian energy sufficiently for energy prices to become manageable, though still well above pre-war levels. Economically, Russia needed Europe more than Europe needed Russia. The replacement of integration with confrontation harms Russia, which was much more powerful as a competitor than as an enemy of the West.

The political, economic, and military weaknesses of Russia, to some extent exposed by the invasion and to some extent created by it, may come as a disappointment to those who saw Putin as some Clausewitzian mastermind who could outmaneuver the West, holding in check its more noxious postmodern cultural influences. A Christian nationalist who stood firm against sexual nihilism and other perceived decadences appealed to many on the right, and even today there are some conspiracy-minded conservatives who like to think Putin is playing some incomprehensible long game. On the contrary, it is likely due to his impending mortality that Putin decided to think short-term and resolve the Ukraine issue decisively and swiftly, solidifying his perceived destiny of the restorer of a Russian empire. This best explains why he has thrown caution to the wind, squandered whatever good will he may have built up in the past, and now commits extensive forces to a much more limited goal of securing territory that was already sympathetically Russian.

The biggest indictment of Putin’s supposed genius is the poverty of what even a victory might have achieved. A conquered Ukraine would be an unmanageable and fiercely resistant country, reverting to autonomy the moment that military occupation ceases. The economic benefit would be more than offset by the cost for years to come, and there was no realistic prospect of holding most of the country for more than a few years. Winning allies by naked conquest is no longer practicable, even if it were ethical, as Russia should have learned from recent failures of American intervention. Putin failed to perceive that Ukraine is for the most part no longer Russian and will never return to the Russian sphere by mere force.

As Russia’s true allies are limited to Belarus and some Central Asian republics, there is no realistic prospect of Russia regaining superpower status, if that means the ability to project power globally. Russia’s population crisis has accelerated, with now less than half the population of the United States, and the annexation of Ukraine, with its own demographic crisis, would hardly have helped matters. A cold realist would have recognized that the most profitable trajectory for Russia would be as a regional power integrated in a multipolar international community. Putin’s imperialist pretensions only succeeded in weakening Russia, making the world less multipolar than it would have been otherwise.

Conspiracy Theories Can Kill

There have always been conspiracy theories, with greater or lesser degrees of plausibility, that are believed by at least a substantial minority of the population. These are generally harmless except when someone with perceived authority gives sanction to such a theory, emboldening people to act upon them. This is exactly what happened on January 6.

The mob that stormed the Capitol consisted of diverse groups, including survivalists, QAnon conspiracy theorists, militias, white supremacists, and anti-Semites. Some of the better prepared groups had murderous or otherwise terroristic intentions, while others were violent only in their unlawful entry and destruction of property. Many more, unaffiliated with any group, were simple thrill-seekers caught up in crowd euphoria, entering the Capitol because everyone else was doing it. (See Elle Reeve’s immersion reporting, CNN, January 7, 2021, 1:00 ET) What they all had in common was anger at a perceived injustice, motivated by a strong belief that the 2020 presidential election had been stolen.

It is not unprecedented for so many to believe a presidential election was stolen. Many still believe this was the case for the 2000 election, though Gore would have still lost under the recount rules its legal team accepted, if these had been implemented. (Chicago Tribune) Some historians hold that the 1960 election was swung to Kennedy by mob votes in Chicago and Texas, though this is unprovable. Nixon, believing this, nonetheless thought it prudent not to contest the election openly, both for his own political future and the good of the country, though he allowed his surrogates to pursue legal challenges that corrected the vote count slightly. There is nothing untoward about aggressive legal challenges to perceived electoral fraud or error. What is unprecedented is for the losing candidate to proclaim publicly that he was defrauded even after all legal challenges have failed.

Trump did not stop even there. He actually advocated blocking constitutional processes by extra-legal means. First, he encouraged state legislatures to refuse to certify the electors’ votes, or even to replace the electors outright. When that failed, he waged a weeks-long pressure campaign on Congress and his own vice president to contest or even reject the electoral votes received, remanding them to the states, that they might choose new electors. (Reportedly, he even considered invoking martial law, and he seems to still be getting advice on this as of yesterday.) Moreover, he urged his followers to rally at the Capitol that day to demand that this be carried out. When the vice president failed to “do the right thing,” many in the crowd naturally believed they had no recourse but storming the Capitol in order to reverse the “stolen” election.

Some of the better organized groups had come to this conclusion weeks earlier, as evidenced by their planning. This is why the role of Trump as an inciter was much more obvious in the preceding weeks than in the content of his January 6 speech. It was in the preceding weeks that he asserted unequivocally that the election was fraudulent, and that he would never concede. On January 4 in Georgia, he gave the most incendiary speech yet, calling the opposition Communists and Marxists who hate this country. By doing this, he was putting them beyond the pale, outside of the polity. This is the rhetoric that lays the groundwork for civil war. Between this and what was discussed on fora such as thedonald.win, it was obvious to me then that a civil war would be attempted. I believed it would fail immediately, based on the usual levels of security at the Capitol for such events.

What was shocking is not that the crowd attempted to storm the Capitol, but that they succeeded. Many past protesters would have loved to do the same if it were possible. Exactly how this security failure occurred remains to be fully investigated. Trump was unfortunate in this momentary success by the crowd, of which he was an avid spectator. By invading the Capitol and threatening the lives of the entire Congress and vice president, the riot rose to the level of insurrection. Trump did not denounce it until it was clear that it would end. Only in the aftermath did he acknowledge there would be a peaceful transition of power. The leader of a failed coup should not complain if the worst penalty he faces is being debarred from office.

If Trump did not exactly “lie” about the election being stolen, since he sincerely believes the falsehood, he is nonetheless guilty of a consistent disregard for truth, clinging to falsified claims that he wishes were true. An example is his repetition of the claim that 139% of people voted in Detroit, which is easily refuted by publicly available data. To believe the election fraudulent, we should have to believe that the notoriously mendacious Trump and his allies are the only truth-tellers, against a conspiracy including:

  • Judges in state and federal courts, including some Trump appointees
  • Election officials of both parties in various states
  • Most major news organizations
  • Numerous poll workers paid near minimum wage
  • Volunteer poll watchers
  • Federal intelligence agencies
  • The U.S. Postal Service

Anyone so conspiracy-minded is impervious to facts, since one can always add the source of any unfavorable facts to the list of conspirators. Such vast conspiracies are credible only to those lacking familiarity with how the election and result canvassing processes work.

All of Trump’s fraud claims are without factual foundation, which is why his lawyers had the good sense not to present most of them in court. There were some state practices that may have been erroneous in law, but misapplication of the law is not generally grounds for disenfranchising voters who followed the published rules. More importantly, no individual or state has standing to sue for such errors unless they can show actual, not speculative, harm.

The one Trump claim that had legal merit was the challenge of the Pennsylvania rule allowing late-arriving ballots, contrary to the legislative will. There were only 10,000 such ballots, not nearly enough to change the electoral outcome, nor did the late ballots break more favorably for Biden than the timely mail-in ballots. The conservative-leaning 3rd Circuit Court of Appeals correctly found the plaintiffs had no standing, and even if they did, they would not be granted relief, due to the lateness of the petition so close to the election. The late ballots were excluded anyway.

Since Trump’s strategy has simply been to conjecture that every conceivable mode of electoral fraud or error actually did occur, space does not permit the refutation of every single claim. That which is freely asserted may be freely denied with equal force. As for those claims which have at least some equivocal factual support, here are some fact checks:

In every election, there are minor instances of error and fraud, but quantity matters. There are no error-free elections, but the errors are generally much too small to affect the outcome with rare exceptions (e.g. Florida in 2000). Sometimes larger errors occur (in the thousands) on election night counts, but those are just first drafts for the purpose of notifying the public, not the official certified count. The initial count is followed by a thorough results canvassing process, during which the more substantive omissions can be identified. This happens in every election, and there was nothing unusual about this one. More importantly, the original records (ballots and machines) are kept available for inspection, so the data isn’t lost.

Enhanced voter ID and better signature verification would only guard against voter impersonation, which is known to be a statistically rare form of fraud. For fraud to occur on the scale Trump claims (hundreds of thousands of votes in a single state), there would need to be the complicity of election officials. Yet even states with Republican election officials have contradicted his claims.

Notably, Trump still repeated crackpot Dominion theories about removal or replacement of machines in his infamous call to the Georgia secretary of the state, along with other factless claims that had been already debunked publicly. In this call, Trump demonstrates himself to be an uninformed, uncritical thinker who only accepts “facts” in accordance with his preconceived conclusion that he could not have lost the election. Yet we are to accept his highly partial testimony over that of the election officials with access to primary data (all of which is monitored by observers of both parties).

More broadly, an examination of the county-by-county results in key areas is consistent with statewide and nationwide trends, adjusted for the known political demographics of each county. There are no stunning outliers in any major city. In fact, Trump did slightly better than expected in some cities, and fared better than expected with higher turnout, but had slightly weaker support than in 2016 in the suburbs, consistent with trends in recent years. That a president with approval ratings consistently below 50% should lose a tight election is hardly an indicator of fraud. Much less should we expect any Democratic conspirators to be kind enough to permit down-ballot Republicans to win their elections even in areas where Trump lost the presidential race.

Anyone still unpersuaded is likely impervious to argument, because they make the cognitive error of starting with a desired conclusion, and then accepting or rejecting data based on conformity with that conclusion. Such errors are common and generally harmless, except when they are actively and avidly reinforced by someone of the President’s stature and public influence. If a John Bircher or Lyndon LaRouche became President, the result would be comparably noxious to public discourse. The problem is more acute when the conspiracy in question is the purported crime of fraudulent government takeover. Thus we have the crazed spectacle of rioters engaging in an actual insurrection while believing themselves to be resisting an imagined one.

Our uncritical, deluded president undoubtedly provided much amusement at times, but foolishness stops being funny when people die, even if that consequence was not directly intended by the fool. There is something to be said for boring, policy wonky, slick-talking politicians. Perhaps the older, more genteel form of mendacity will have to suffice for now, if truth is too optimistic an ideal for democratic discourse. Ironically, the Trumpistas’ “attack on democracy” may itself have been symptomatic of a deep flaw in secular democracy itself, insofar as it makes the will of the people the arbiter of truth.