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September 30, 2011

Tax Eaters Abusing Taxpayers

Judicial Watch, the conservative non-partisan educational foundation that promotes transparency, accountability and integrity in government, politics and the law, reports at its Corruption Chronicles blog yesterday:

“This week Oregon officials bragged that the USDA has given the state $5 million in “performance bonuses” for ensuring that people eligible for food benefits receive them and for its “swift processing of applications.” The money comes on the heels of a separate $1.5 million award from the feds for making “accurate payments of food stamp benefits to clients.” So welfare recipients are clients?”

In addition, Judicial Watch also says:

“It marks the fifth consecutive year that Oregon has been “recognized” by the federal government for “exceptional administration” of the entitlement program, according to the announcement posted on the state’s Department of Human Services web site. The state official who runs SNAP assures that her staff will “continue working very hard to exceed expectations” so that Oregonians can “put healthy foods on their table quickly.”

[ . . . ]

“As if this weren’t bad enough, the feds are also giving the state a two-year grant to test an “innovative approach” to the food-stamp “client eligibility review process.” This will make it even easier for people to get food stamps because it grants state officials a waiver that allows them to grant the benefit without interviewing the candidate.”

Talk about taxpayers being under siege? Sheesh!

September 29, 2011

Bureaucrats, Shorts Cuts and Global Warming

Stephen Dinan of the Washington Times reported yesterday the Environmental Protection Agency’s Inspector General found that EPA “cut corners in evaluating the science it used to back up its 2009 finding that carbon is a dangerous pollutant and can be regulated under existing federal law.” The newspaper report added:

“Investigators did not question EPA’s scientific conclusions that human-caused global warming is occurring, and said the agency did follow basic rules. But investigators said EPA didn’t treat the finding as seriously as the situation required, and failed to meet administration guidelines for peer review of such a major issue.”

Dinan adds the “EPA rejected the report, saying the science it did use was peer reviewed, and that its findings were based on the work of other major bodies, such as the Intergovernmental Panel on Climate Change.” However, he also wrote:

“Sen. James M. Inhofe, the ranking Republican on the Environment and Public Works Committee, called for hearings into EPA’s decision-making.

“EPA needs to explain to the American people why it blatantly circumvented its own procedures to make what appears to be a predetermined endangerment finding,” said Mr. Inhofe of Oklahoma.

“David Doniger, the climate policy director for the Natural Resources Defense Council, said Mr. Inhofe’s accusations were “laughable,” and that EPA’s conclusions are backed by climate science.”

Climate science? Would that include the 130 scientists persuaded by the World Wildlife Fund “to join its Climate Witness Scientific Advisory Panel,” a claim made by No Frankking Consensus (HT Climate Depot).

HT Greg Pollowitz at National Review Online’s Planet Gore, which includes a link to Sen. Imhofe's committee blog. The IG's report is posted here at the website of the Senate Committee on the Environment and Public Works.

September 28, 2011

Education Spending Up 64%, Test Scores Not So Much

CNS News reported earlier this week that “(t)en years of living under No Child Left Behind has brought billions of dollars in increased appropriations to the U.S. Department of Education and no substantial progress in the education of America's public school students.” More specifically, they report:

“By 2002, after No Child Left Behind was implemented, appropriations had increased by 33.6 percent, going from $42.1 billion in 2001 to $56.2 billion the following year, according to the Education Department. (See edhistory.pdf.)

“The increase in funding from 2000 to 2010 was 63.8 percent, as the department saw an added $24.6 billion to its budget, according to the Education Department Web site.”

However, CNS News also reports:

“There has been no significant change in the Education Department’s National Center for Education Statistics (NCES) findings for reading since 2002.

“Results from the Nation’s Report Card for Fourth Grade reading proficiency in 2002 found 38 percent below basic, 32 percent basic, 23 percent proficient and 6 percent advanced.  In 2009 for reading,  34 percent were below basic, 34 percent at basic, 24 percent at proficient and 7 percent at advanced.

“For Eighth Grade reading, there has been no change in scores since 2002.  In 2002 and 2009, 26 percent were below basic proficiency, 43 percent achieved basic, 28 percent were proficient and 2 percent performed at an advanced level.

“Mathematics scores, however, have steadily improved since 1990, owing no credit to NCLB.”

By comparison, CNS News also cites information enabling comparison with OECD countries in reading, math and science. For example:

“Overall, the United States was rated “average” by the Organization for Economic Cooperation and Development (OECD) in 2010, after conducting the Programme for International Student Assessment (PISA), an international test of reading, math and science administered on 15-year-olds.”

Finally, CNS News reported the the United States spent an average of $10,499 per pupil in 2009, citing data from the U.S. Census Bureau. By comparison, the Arlington Public Schools spent an average $17,322 per pupil in the school year that ended in June 2011, according to the most recent WABE report.

September 27, 2011

Grotesque Complexity and Other Historical Details

In today’s Wall Street Journal, economic historian John Gordon Steele has “a short history of the income tax.” Here’s the lede, but the complete piece is worth reading in its entirety, especially to understand why today’s federal tax code “is grotesquely complex, often arbitrary, and corrupted by mutual back-scratching between members of Congress and influential lobbyists:”

“Whether the "millionaires and billionaires" are actually paying their fair share of taxes is a matter for the electorate to decide. After all, fairness is hardly an objective standard.

“Before the modern era, however, the federal tax system was manifestly unfair by any reasonable standard, grossly biased in favor of the well off. Ironically, attempting to fix that unfairness is what has brought us to the present moment, with a federal tax system that is grotesquely complex, often arbitrary, and corrupted by mutual back-scratching between members of Congress and influential lobbyists.”

If you don’t believe that “grotesquely complex” comment, consider:

"The income tax act of 1913 had been 14 pages long. The Revenue Act of 1942 was 208 pages long, 78% of them devoted to closing or defining loopholes. It has only gotten worse."

A second Journal op-ed this week discusses the “untold story” of stimulus and the Depression. It's written by economics professors Harold Cole and Lee Ohanian, and says in part:

“Proponents justify stimulus spending in part based on the widely held view that government-fueled increases in "aggregate demand" during FDR's New Deal ended the Great Depression and brought recovery. Christina Romer, former chairwoman of Obama's Council of Economic Advisers, has argued in op-eds that government should continue to spend for this reason. And in a 2002 speech as a Federal Reserve governor, current Fed Chairman Ben Bernanke claimed that monetary expansion and the turnaround from the deflation of 1932 to inflation in 1934 was a key reason that output expanded.

“But boosting aggregate demand did not end the Great Depression. After the initial stock market crash of 1929 and subsequent economic plunge, a recovery began in the summer of 1932, well before the New Deal. The Federal Reserve Board's Index of Industrial production rose nearly 50% between the Depression's trough of July 1932 and June 1933. This was a period of significant deflation. Inflation began after June 1933, following the demise of the gold standard. Despite higher aggregate demand, industrial production was roughly flat over the following year.”

The entire Cole/Ohanian essay is also worth reading.

Kudos to the Wall Street Journal for published these two articles.

September 26, 2011

Quote of the Day

"One of the sharpest critics [of the invention of the automobile] was the president of Princeton University, Woodrow Wilson.  In 1906, seven years before he moved into the White House as president of the United States, Wilson declared that cars were "a picture of the arrogance of wealth” and that “nothing spread socialistic feeling in this country more than the use of the automobile."

~ Dan Yergin, forthcoming book on energy, The Quest

HT Steven Hayward at PowerLine.com.

September 25, 2011

Quote of the Day

"So-called "progressives" actively wage war on progress. They're opposed to dams, which spurred the growth of California. They're opposed to air-conditioning, which led to the development of the Southwest. They're opposed to light bulbs, which expanded man's day, and they're opposed to automobiles, which expanded man's reach. They're still nominally in favor of mass transit, so maybe we can go back to wood-fired stream trains? No, sorry, no can do. The progressives are opposed to logging; they want a ban on forestry work in environmentally sensitive areas such as forests. Ultimately, progressives are at war with mass prosperity."

~ Mark Steyn

HT Page 34, "After America: Get Ready for Armageddon," Regnery Press.

September 24, 2011

Green Jobs and Empty Promises

On Monday, September 19, we growled about Solyndra and the green jobs scam, citing an editorial in Investor’s Business Daily that pointed out there are “a minimum of five green firms going bankrupt” resulting in taxpayers “paying ghastly sums for each green job created.”

If that’s not enough to roil your blood, Human Events reports the “top 10 green job fiascoes,” only some of which have we growled about here. Of course, it’s not easy defining just what is a green job. According to a report from Fox News:

“In a series of tense exchanges, Republicans on a House oversight panel sharply questioned whether the Obama administration was looking to inflate the number of "green" jobs by using a broad definition -- which, as it turns out, counts virtually anybody working in mass transit.”

Fox News also wrote that “Republicans said the working term the government is using is far too broad, suggesting officials were trying to pad the figures.”

Nicolas Loris of the Heritage Foundation makes four points at their blog, The Foundry, to keep in mind when discussing green jobs:

  • Government spending does not create jobs.
  • Jobs per unit of energy produced does not measure the economic desirability of an energy source.
  • Environmental regulations don’t create jobs, either.
  • Green jobs have been expensive.

Finally, at Power Line blog, John Hinderaker points readers to a “superb piece by the House Budget Committee.” He writes the Budget Committee report “reviews the history of failure that such efforts have universally encountered both in the U.S. and abroad; explains the reasons why government “investment” in political favored industries is a bad idea; and outlines more efficient energy policies. The piece is an excellent primer on crony capitalism and why it should be avoided.”

With environmentalists running around talking about solar and wind “renewable energy,” the report includes a chart showing the loopy logic in thinking that solar and wind will replace fossil sources any time soon. According to the Budget Committee’s report:

“In 2007, the U.S. Energy Information Administration (EIA) conducted an analysis of subsidies received by both alternative and conventional energy sources. On a dollar-per-unit-of-production basis, the level of subsidies received by the wind and solar industries were almost 100 times greater than those for conventional energy.”

The report also reports that total subsidies for the so-called renewable energy "rose from $5.1 billion in 2007 to $14.7 billion in 2010." Here’s the chart of federal electric subsidies per unit of production.


Sure make you wonder how much of Al Gore’s global warming Kool Aid the Arlington County Board drank to conceive of their Community Energy Plan (CEP), not to mention what the CEP will cost Arlington businesses and taxpayers.

September 23, 2011

Dead Federal Bureaucrats Collecting Pensions

The Associated Press reported today (HT radio talk show host Mark Levin) that “(t)he federal government has doled out more than $600 million in benefit payments to dead people over the past five years,” citing a report from the U.S. Office of Personnel Management's Inspector General (requires Adobe).

Today’s Washington Post also reported the story on the federal page (A16). Ed O’Keefe, who reported on the story for the Post, pointed out the OPM IG had previously reported on such “improper payments” in 2005 and 2008. According to O'Keefe:

“Improper payments to dead retirees increased 70 percent in the past five years, far higher than the 19 percent climb in overall annuity payments, the report said.

“The payments are on the rise because OPM is doing a poor job of tracking potential cheats, McFarland said. In one case, a deceased annuitant’s son continued receiving federal benefits until 2008 — 37 years after his father’s death. OPM learned about the improper payments — which exceeded $515,000 — only after the son died. The agency never recovered the money.”

The Inspector General reported several “positive developments” in protecting the integrity of payments from the Civil Service Retirement and Disability Fund (CSRDF). However, the IG also said:

“ . . . there remains a high probability that egregious loss of monies from the CSRDF will continue and require strategic corrective actions.  Each year new cases are identified which support this concern, such as an annuitant’s son who continued to receive benefits until 2008, 37 years after his father’s death in 1971.  The improper payment in this case exceeded $515,000 and was reported to OPM when the son, who fraudulently received the payments, died.  The improper payment was not recovered.”

How many times do you have to hit a bureaucrat over the head? Why have an IG if bureaucrats aren’t going to respond to his reports? And did Senators Jim Webb and Mark Warner, or Representative Jim Moran, ask any questions about these so-called improper payments? Hardworking taxpayers would like to know.

Arlington County taxpayers concerned about such slothful bureaucracy may want to take a few minutes to voice their concerns to their poohbahs on Capitol Hill. Better yet, write to them at the links below:

  • Senator Jim Webb (D) -- write to him or call (202) 224-4024.
  • Senator Mark Warner (D) -  write to him or call (202) 224-2023.
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376.

September 22, 2011

Quote of the Day

"The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

~ Thomas Jefferson, letter to John Taylor, 1816
HT Daily Quote at Patriot Post

September 21, 2011

Getting Fatter on $16 Muffins

In the November/December 2009 issue of their Policy Report, the Cato Institute reported their director of tax policy studies "exposed what ought to be obvious to anyone: federal employees are quite well paid." Now comes word that federal employees at the Department of Justice are also living large while attending DoJ conferences.

Yesterday, Susan Jones reported at CNS News that a DoJ internal audit found that “DoJ conferences featured $16 muffins, hors d’Oeuvres at $7.32 a pop.” According to Jones:

“The inspector general's office examined 10 Justice Department (DOJ) conferences that took place between October 2007 and September 2009 to determine whether the costs of conference planning, meals, and refreshments were properly accounted for and minimized.
“The 10 sampled conferences -- four in Washington, D.C., three in Palm Springs, Calif., one each in Denver, San Francisco, and Istanbul, Turkey -- cost a total of $4.4 million. Fourteen percent of that total -- $600,000 -- was spent on logistical event-planning services. And DOJ spent $490,000 (11 percent of costs) on food and beverages at those 10 conferences.
“The inspector general's report said its assessment of food and beverage charges "revealed that some DOJ components did not minimize conference costs as required by federal and DOJ guidelines. For example, one conference served $16 muffins while another served Beef Wellington hors d’oeuvres that cost $7.32 per serving. Coffee and tea at the events cost between $0.62 and $1.03 an ounce. At the $1.03 per-ounce price, an 8 ounce cup of coffee would have cost $8.24."
"The inspector-general's report also says some of the conferences featured costly meals, refreshments, and themed breaks "that we believe were indicative of wasteful or extravagant spending -- especially when service charges, taxes, and indirect costs are factored into the actual price paid for food and beverages. For example, with these other charges, the Office on Violence Against Women spent $76 per person on the 'Mission Dolores' lunch for 65 people at the Enhancing Judicial Skills Workshop in San Francisco, California.
“The report notes that all 10 conferences took place at major hotels that applied service fees -- usually 20 percent -- to the cost of expensive menu items.”

Two paragraphs in today’s Washington Post are especially interesting since the Post reporter first seems to suggest that President Bush is to blame for these outrageous expenditures, but then realizes that at least one of the 10 events occurred in the Obama administration. The Post's Jerry Markon writes:

“Most of the conferences studied were held or planned during the Bush administration, and the report included a May 2009 memo from then-Deputy Attorney General David W. Ogden vowing that the Obama administration would crack down on conferences and other “extravagant spending, especially during these challenging financial times.’’

“The event that raised the most eyebrows — the 2009 legal training conference in Washington sponsored by Justice’s Executive Office for Immigration Review — was held three months after the Ogden memo. It featured 250 assorted muffins for $4,200, or $16.80 apiece, and $2,880 for 300 cookies and brownies, along with various pastries and snacks.”

The Los Angeles Times even tries to justify DoJ's extravagance, writing:

"It's a familiar story: government extravagance in trivial matters. This time it's the revelation that the Justice Department paid $16 apiece for muffins served at a conference. What makes stories like this so popular is that they allow ordinary folks to feel morally superior to public employees (or, better yet, politicians). (emphasis added)

"Sen. Charles Grassley (R-Iowa) complained: "The Justice Department appears to be blind to the economic realities our country is facing."  The implication is that buying cheaper muffins -- or muffin tops, as on "Seinfeld" -- would appreciably reduce the deficit or provide more aid for the unemployed. Actually, the practical effect of the overcharging is minuscule. It's the symbolism that matters.

"I know, $16 here, $16 there, and it all adds up to real money. But the price tag covers not only the cost of the muffins but the joyful indignation citizens will experience reading about them."

It seems that even among the political elite, some fat cats live better than others. Sheesh!

Image from FotoSearch, available royalty free.

UPDATE (9/23/11): At the Cato Institute's blog, Cato@Liberty today, Tad DeHaven points out that such examples of "(G)overnment waste actually creates a good opportunity for politicians to feign concern for taxpayers," but adds "a majority of Americans erroneously believe that the federal budget’s imbalances can be fixed by just eliminating waste, fraud, and abuse."

September 20, 2011

The President’s “American Jobs Act” Speech, Part III

We previously growled (Part I and Part II) about the "American Jobs Act" that President Obama proposed in a speech he made September 8, 2011 to a joint session of Congress. In a news release yesterday, the Tax Foundation reported that "a review of the academic literature suggests that the proposed policies will have little, if any, impact. Indeed, because these temporary tax measures would be offset by some $460 billion in permanent tax increases, the whole package could end up doing much more economic harm than good."

The study (Fiscal Fact No. 283; and here in Adobe) points out the act "includes more than $250 billion in tax credits and incentives that are intended to induce more hiring and spur more consumer and business spending.  The remainder of the package is dedicated to new spending on infrastructure and "make-work" projects." The study concludes this way:

"The American Jobs Act is intended to be an ambitious proposal to spur new hiring and generate economic growth. But the economic research suggests that its core tax incentives will have little, if any, impact on either job creation or improved GDP growth. Moreover, whatever meager benefits come from these temporary provisions will be swamped by the long-term impact of the permanent tax increases that are nearly twice the size of the tax cuts.

"Lawmakers should stop trying to jump-start the economy in the short run and begin crafting policies that set the country on a long-term growth path. The economic evidence suggests that cutting our corporate and personal income tax rates while broadening the tax base would greatly improve the nation's prospects for long-term GDP growth while helping to restore Washington's fiscal health. More importantly, these measures will lead to higher wages and better living standards for American citizens. And that should be the number one priority of any tax policy."

Thanks for the explanation, Tax Foundation. To support the Tax Foundation, click here.

September 19, 2011

Solyndra, the Green Jobs Scam, and Getting Sunburned

In an editorial over the weekend, Investor’s Business Daily (IBD) wrote the following about the green jobs scam:

“With a minimum of five green firms going bankrupt, taxpayers find themselves on the hook for at least one possibly illegal loan while paying ghastly sums for each green job created. We've been sunburned.

“As solar panel manufacturer Solyndra was sliding into a long-predicted bankruptcy, Energy Department officials began negotiations with the company and two of its main investors about restructuring its $535 million loan to keep afloat the business that was supposed to be a good investment.

“Under the restructuring agreement, Solyndra's private investors were moved to the front of the line and taxpayers were put on the hook for at least the first $75 million if the company should default. Subordinating taxpayers to private investors in recovering loan money is an "apparent violation of the law," according to Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee.

[ . . . ]

“Why was the Solyndra loan restructured in this way? . . . .”

IBD then points out the loans were made despite the work of government watchdogs. For example, a 2009 report by the Department of Energy’s own Inspector General “warned that DOE lacked the necessary quality control for the $38.6 billion loan-guarantee program. In July 2010, the Government Accountability Office said DOE had bypassed required steps for funding awards to five of 10 loan recipients.” The in March 2011, the IG “faulted the loan program for poor record-keeping.”

If you don’t believe the extent of the scam, do a little bit of arithmetic. Consider this from the IBD editorial:

"The administration claims that as a whole this loan guarantee program, which was supposed to create 65,000 jobs, was a success, creating or "saving" some 44,000 jobs. An analysis by the Washington Post says the actual number of permanent jobs created is 3,545.

[ . . . ]

“Even if you accept the administration's questionable job accounting, divide the $38.6 billion by 65,000 and ask yourself if the administration is spending your money wisely — or honestly.”

Here’s the math. $38.6 billion divided by 65,000 jobs is just a bit less than $594,000. If you do  the division by 3,545 jobs, the cost is even a more ridiculous $10.9 million per permanent job.

The Hill newspaper reports the “fury over Solyndra loan threatens to sunset solar investments.” Gee, ya think?" Consider the cost per permanent job in the paragraph above? Perhaps a few more of the poohbahs on Capitol Hill should be asking the question that Rep. Michael Burgess (R-Texas) asks in the Hill article:

“Should we be in the business of facilitating something that should be in the purview of the private sector? And if we’re picking winners and losers, then we’re going to make mistakes . . .”

One has to wonder, however, what senior government officials were thinking. An indepth report by CBS News last Friday included this:

"Even so, warnings about the company persisted. A report last year by auditor PricewaterhouseCoopers said Solyndra had suffered recurring losses from operations and negative cash flows, raising "substantial doubt about its ability to continue as a going concern."

"But last May, a Solyndra email informed the White House that "things are going well" at the company and that it had "good market momentum, the factory is ramping up and our plan puts at cash positive later this year. Hopefully, we'll have a great story to tell toward the end of the year."

By the way, "going concern" is an accounting term that "refers to a company's ability to continue functioning as a business entity," according to Wikipedia.

Unfortunately, Bloomberg News reports today that the Solyndra “flop” hasn’t slowed the White House from pushing to finalize $9.2 billion in additional loans. According to Bloomberg:

“The Obama administration, defying congressional Republicans after the failure of solar-panel maker Solyndra LLC, is working to award as much as $9.2 billion in government financing to renewable energy companies before a Sept. 30 deadline.

“Loan guarantees for 14 companies will close by month’s end if the projects meet government lending rules, Damien LaVera, a Department of Energy spokesman, said in an interview. “We want to get as many of these done in a way that responsibly protects the taxpayers’ interest,” he said. “If they meet conditions set out in the agreement, then they’ll close.”

“Solyndra filed for bankruptcy protection on Sept. 6, after receiving $535 million in loan guarantees from the administration, and the Federal Bureau of Investigation raided its Fremont, California, headquarters two days later. Republicans have called Solyndra a “poster child” for the failure of clean-energy subsidies awarded by the Department of Energy under President Barack Obama.

“I am very concerned about where the $10 billion DOE has left to spend before the September 30 deadline is going,” Representative Cliff Stearns, a Florida Republican, said at the Sept. 14 hearing of a House oversight panel he heads. “Taxpayers would be better served by not risking even more of their money, instead using it to reduce our mounting national deficit.”

Additional background information is available from this post by Chris Horner at Big Government and by two Washington Post reporters. Horner’s advice to “follow the timeline” is especially compelling if your interested in culprits. However you view it, American taxpayers got a third-degree burn from these green jobs.

UPDATE (9/24/11): Megan McArdle is a senior editor at the Atlantic, and writes about business and economics. She writes that she's "still trying to wrap my mind around just how much money Solyndra managed to spend in just two short years." She concludes by writing:

"As I've said before, I don't think this is going to end up being a story about corruption.  I think it's going to end up being a story about bad decision making: at Solyndra, among its investors, and in the Obama administration.  People took large bets with low expected values, because the alternative was admitting that the money they'd already spent was gone, and not coming back.  They doubled down, just like some chump who lost his stake at the Vegas blackjack tables.

"This does happen in the private market, of course.  The difference is, when Argonaut Ventures takes a flyer on a longshot, they're not doing so with my money.  The administration was supposed to have the economic dream team.  Couldn't they have spared a moment to sit down with the folks at DOE and explain the concept of sunk costs?"

September 18, 2011

Don't Serve Foreign Tax Collectors

According to this press release from the Center for Freedom and Prosperity (CF&P), the IRS was seeking to implement a regulation that would require “banks to report nonresident alien deposit interest information, despite the fact that such interest is not taxed under U.S. law.” The background according to CF&P:

“The regulation (REG-146097-09) puts the interests of foreign tax collectors ahead of both U.S. law and economic interests. A 2004 study by the Mercatus Center at George Mason University looked at a similar regulation that only applied to fifteen countries and found that it would result in the loss of $88 billion in foreign investment. The current version of the proposed regulation would be much more destructive, as it would apply to deposits from citizens of any nation. Despite this evidence, the IRS has never performed a cost-benefit analysis of the regulation as required by Executive Order 12866 for any regulation that would have an annual effect of more than $100 million. The bureaucrats have blithely dismissed their legal obligation by claiming that their proposal is “not a significant regulatory action.””

Consequently, CF&P is praising three U.S. senators (Senators Marco Rubio (R-FL), John Cornyn (R-TX), and Kay Bailey Hutchison (R-TX) who introduced legislation (S. 1506) to prevent implementation of the IRS regulation. CF&P explains why:

“The Center for Freedom and Prosperity has led the opposition against all forms of the interest reporting regulation since it was first proposed in the waning days of the Clinton administration. Organized by CF&P, members of the Coalition for Tax Competition have testified at three separate IRS hearings on the issue held over the years, including the most recent on May 18, 2011, and written numerous letters to Administration, Congressional and Treasury officials. Opposing the regulation is a top priority of the Center for Freedom and Prosperity.

Taxpayers are encouraged to thank the Center for Freedom & Prosperity for their aggressive pursuit of American taxpayers freedom and prosperity.

September 16, 2011

Unemployment Benefits Fraud - $19 billion Nationwide

The Real Time Economics blog of the Wall Street Journal reported Wednesday evening that based on new U.S. Labor Department data, “(n)early $19 billion in state unemployment benefits were paid in error during the three years that ended in June.” (HT Via Media blog at American Interest.) The newspaper went on to report:

“The amount represents more than 10% of the $180 billion in jobless benefits paid nationwide during the period. (See a sortable chart of each states’ overpayments) The tally covers state programs, which offer benefits for up to 26 weeks, from July 2008 to June 2011. Layers of federal programs that help provide benefits for up to 99 weeks weren’t included. (link added)

“The figures were released Wednesday as the Obama administration promotes its bid to reduce waste at federal agencies. The federal government foots the bill for administering the programs, and states are supposed to pay for the benefits. Many states exhausted their unemployment insurance trust funds during the long recession and slow recovery, prompting them to borrow from the federal government to replenish their funds.”

The Journal also reported the Department of Labor has “launched a plan to crack down on the improper payments, targeting Virginia, Indiana, Colorado, Washington, Louisiana and Arizona in particular for their high error rates.” Virginia’s three-year error rate was 16.9%, which was 62.5% above the national average of 10.4%.

Walter Russell Mead concludes his blog post, saying:

“Some of the violations are technical rather than substantive, but it’s clear that many state governments aren’t doing their jobs.  Uncle Sugar isn’t made of money these days, and $20 billion is a lot of money to fall through the cracks.  States that can’t be bothered to stop fraud and abuse in their unemployment programs should have their funds cut; the threat alone would ensure better accounting.”

It's hard to add anything more to that!

Additional news reporting: 1) In Niagara Falls, the deputy director of the city's clean neighborhood program "pleaded guilt to a single count of petit larceny, according to the Niagara Gazette on 9/15/11; 2) the state of Florida will be getting "$2.3 million to fight unemployment benefit fraud," reports the Sun-Sentinel on 9/15/11; and, 3) the federal government will "pump" $191 million "for modernizing unemployment insurance programs and detecting fraudulent payments," reports Government Technology.

September 15, 2011

Quote of the Day

"When government spends on the scale Washington's got used to, that's not a spending crisis, it's a moral one. The Irish have a useful word for the times -- flaithiulacht -- which translates to ruinous generosity, invariably with someone else's money. There's nothing virtuous about "caring" "compassionate" "progressives" demonstrating how caring and compassionate and progressive they are by spending money yet to be earned by generations yet to be born. That's what "fiscal conservatives" often miss; this isn't a green-eye-shade issue. Increasing dependency, disincentivizing self-reliance, absolving the citizenry from responsibility for their actions: the multitrillion-dollar debt catastrophe is not the problem but merely the symptom. It's not just about balancing the books, but about balancing the most basic impulses of society. These are structural and, ultimately, moral questions."

~ Mark Steyn

HT Page 14, Prologue, "After America: Get Ready for Armageddon"

September 14, 2011

Quote of the Day

"The government has nothing to give to anybody that it doesn't first take from someone else."

~ Henry Hazlitt

HT Page 91, "As Certain As Death: Quotations on Taxation," TaxAnalysts, Inc.

September 13, 2011

For Jobs, Drill, Baby, Drill!

Yesterday, we growled and asked where have all the jobs gone? Today, we’ll suggest the first place to look for those jobs is the oil industry. Citing a report from the American Petroleum Institute, CNS News reports today the “oil industry could generate over 1 million jobs by 2030.” The online news service, CNS News begins their reporting:

“The petroleum industry could generate 1 million jobs by 2018, and more than 1.4 million by 2030, if key U.S. regions are opened to development and regulatory burdens are lifted on current projects, according to a report issued by the American Petroleum Institute (API).

“The report, released last Wednesday, also projects oil production growth by 10.4 million barrels a day and an increase of $803 billion in government revenue by 2030. The report was prepared by the Scotland-based Wood Mackenzie Research and Consulting.

"These projections are based on the U.S. adopting “policies which encourage the development of new and existing resources," states the report.

“That means reduced government regulation, including opening many areas in Alaska, the Rocky Mountains, and the Atlantic and Pacific coasts that are currently “off-limits” to drilling; increasing the rate at which permits are issued for drilling in the Gulf of Mexico; and developing shale oil in New York State without burdensome environmental regulations.

“Specifically, the policy changes include: opening non-park federal onshore and offshore areas to development where now prohibited; returning oil drilling permits in the Gulf of Mexico back to pre-spill levels; approving the Keystone XL and other pipelines; and establishing a regulatory environment that permits full development of the nation's oil and gas resources, including those locked in shale formations.”

CNS News concludes their reporting, saying:

“If the full potential of domestic oil and gas production could be achieved while also increasing imports of Canadian oil, all of America's liquid fuels could come from secure North American sources within 15 years,” Gerard said.

“Currently, more than 9.2 million people work in the oil and natural gas industry, representing 7.7 percent of the U.S. economy, according to API.

“Oil and gas companies deliver more than $86 million a day in revenue to the U.S. government, and, since 2000, have invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives, the oil industry trade group reported.”

While the federal policy makers could easily choose such low-hanging fruit, Virginia’s environmentalists, led by the Sierra Club, will be celebrating on September 24, Virginia’s move “beyond fossil fuel,” according to the blog, Blue Virginia.

September 12, 2011

Where Have All The Jobs Gone?

Before giving his “jobs” speech last Thursday evening (Growls responded with Part I here and Part II here ), we hope President talked with Ohio University economics professors Richard Vedder and Lowell Gallaway. In a column posted last week at National Review Online, the two professors suggest the current malaise in jobs growth stems from government policy.

Vedder and Gallaway wrote: “In 2010, there were fewer Americans working than in 2004, the first six-year drop in employment since the Great Depression.” They explain that in this way:

“Why? On the demand side, employers are frightened to hire because of concerns that labor costs will rise above the value of workers’ output, lowering profits. Hence employers are hoarding cash, reputedly to the tune of between $1 trillion and $2 trillion. On the supply side, more and more workers find leisure preferable to work, so the employment-to-population ratio, which generally rose throughout the post-war era (because of the rising involvement of women), has fallen sharply in recent years. Were that ratio today what it was in, say, 2000, we would have 15 million more workers, and an unemployment rate closer to 5 than to 9 percent."

They go on to explain why it happened, writing:

“Why has this happened? The simplest answer is that government is crowding out private enterprise. Federal spending accounted for around 18 percent of national output during most of the Reagan–Clinton era. The 1980s are known for tax cuts that created incentives for capital investment and job formation. In the 1990s, federal spending fell as a percentage of GDP for eight consecutive years, the longest such decline in U.S. history. In stark contrast, the 21st century thus far has been marked by a relentless expansion of the federal government’s size (it is approaching 25 percent of GDP), first under George W. Bush but far more aggressively under Barack Obama.

“Most of that increased spending has been for transfer payments, which involve taking funds from taxpayers and lenders and giving them to persons in a manner that often discourages work. The purest example of this is the bipartisan move to extend unemployment benefits to 99 weeks. This has reduced the incentive for the unemployed to seek jobs. In the economists’ lingo, it has raised “reservation wages,” or the minimum amount people will accept to return to work. Our own estimate is that this has added enormously (maybe two to three percentage points) to the unemployment rate, as Harvard’s Robert Barro has also argued.”

One more thing. Vedder and Galloway say that President Obama is correct about one thing, which is that “(j)obs are not being created in modern-day America in any serious quantity.” Their evidence is the following chart:

Finally, in today's Washington Post, Robert Samuelson provides “a refresher course in Job Creation 101.” It enables us to “judge how much, if at all, President Obama’s proposed $447 billion program of spending increases and tax cuts might revive America’s sputtering job machine.”

A study of these two articles should prove useful in evaluating whether President’s proposed “jobs bill” will be effective or if they will prove to be nothing more than “stimulus lite.”

September 11, 2011

Never Forget September 11

On the 10th anniversary of September 11, Peggy Noonan of the Wall Street Journal remembers that day of horror and heroism. Especially touching was the bravery of the firemen of the New York Fire Department. She writes:

“And there were the firemen. They were the heart of it all, the guys who went up the stairs with 50 to 75 pounds of gear and tools on their back. The other people who were there in the towers, they were innocent victims, they went to work that morning and wound up in the middle of a disaster. But the firemen saw the disaster before they went into it, they knew what they were getting into, they made a decision. And a lot of them were scared, you can see it on their faces on the pictures people took in the stairwells. The firemen would be going up one side of the stairs, and the fleeing workers would be going down on the other, right next to them, and they'd call out, "Good luck, son," and, "Thank you, boys."

“They were tough men from Queens and Brooklyn and Staten Island, and they had families, wives and kids, and they went up those stairs. Captain Terry Hatton of Rescue 1 got as high as the 83rd floor. That's the last time he was seen.”

At National Review Online, frequent contributors remember that morning in an NRO Symposium. Here is the Wall Street Journal's coverage of today's events in New York City.

Three years ago, we devoted that day’s growls to remembering September 11. A few of links no longer work. However, the link to Alan Jackson’s “Where Were You When the World Stopped Turning?” You Tube video still works. The link to Daryl Worly’s “Have You Forgotten” is here. The Arlington County’s 9/11 resource page link is also new.

September 10, 2011

The President’s “American Jobs Act” Speech, Part II

Yesterday, we growled about the speech President Obama gave on Thursday evening, September 8, 2011 to a joint session of Congress about his proposed American Jobs Act; we included numerous links including to the speech’s video and text. In addition, we included responses from the Small Business & Entrepreneurial Council and the National Federation of Independent Business since small business seemed to be a primary focus of the speech.

In Part II today, we’ll first focus on responses to the speech by liberal news media and the financial press before moving on to think tanks and primarily conservative sources. Here’s the lede in Friday’s Washington Post’s page A1 piece by Zachary Goldfarb:

“President Obama made an impassioned appeal on Thursday night for $447 billion in tax cuts and government spending to boost the nation’s lagging economic recovery, calling on lawmakers to put politics aside and work together to solve the jobs crisis.

“Before a joint session of Congress, the president announced a package of tax cuts for employers and employees, spending on schools and roads, aid to states to keep teachers in jobs, and assistance for the unemployed.

“In a plainspoken speech, Obama repeatedly insisted that lawmakers approve the plan, which is composed of slightly more tax cuts than new spending . . . .

“The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working,” Obama said. “It will provide a jolt to an economy that has stalled and give companies confidence that if they invest and hire, there will be customers for their products and services. You should pass this jobs plan right away.”

“The $447 billion cost of the program is more than half that of the stimulus package Congress passed in 2009 and reflects the severity of the nation’s economic challenge. Last week, the government reported that job creation came to a halt in August and that the nation’s unemployment rate was stuck at more than 9 percent, a sign that the economy was at risk of dipping back into recession.”

Then today in the economy and business section (page A12), the Post story, also reported by Zachary Goldfarb, said the president’s strategy “wins praise but is criticized for failing to address Americans’ debilitating mortgage mess.” In support of that, the reporter gives us this (talk of ‘fair and balanced’):

“Economists who strongly support Obama’s jobs plan agree that household debt still poses a serious problem. But they say the jobs plan will do quite a bit of good on its own.

“The forecasting firm Macroeconomic Advisers said in a report that Obama’s plan — the American Jobs Act — would boost economic growth by 1.3 percentage points in 2012 and lead to 1.3 million new jobs.” (HT to the highly partisan blog, Blue Virginia, for the link to the MA blog)

Leaving the partisan press, let’s first turn to a Wall Street Journal editorial in Friday’s paper. Midway through it, they wrote:

“We'd like to support a plan to spur the economy, which is certainly struggling. Had Mr. Obama proposed a permanent cut in tax rates, or a major tax reform, or a moratorium on all new regulations for three years, he'd have our support. But you have to really, really believe in hope and change to think that another $300-$400 billion in new deficit spending and temporary tax cuts will do any better than the $4 trillion in debt that the Obama years have already piled up.

“We've had the biggest Keynesian stimulus in decades. The new argument that the 2009 stimulus wasn't big enough isn't what we heard then. Americans were told it would create 3.5 million new jobs and unemployment would stay below 8% and be falling by 2011. It is now 9.1%. But this stimulus we are told will make all the difference.”

Investor’s Business Daily was more harsh in their editorial on Friday; they begin::

“President Obama's jobs program is disappointing, to put it mildly. Given our economic troubles, this heavily politicized rehash of failed policies is a slap in the face to 27 million Americans without full-time jobs.

“In an angry speech clearly intended to rally his demoralized troops, the president on Thursday unveiled a $457 billion jobs plan that was touted as "new," but really just recycles past failed policies.

“Looking at markets' responses around the world, including a 304-point nose dive on the Dow, his cynical message doesn't seem to be selling well. And indeed, it's shocking to behold a leader who, three years into a presidency, seems oblivious to the harsh reality of his policy failures. But that's what we got Thursday.

“The new spending, the targeted tax cuts for some and the much higher taxes on the successful have all been tried before. It was called "stimulus." It entailed massive borrowing and spending. It didn't work.

“And it won't work now . . . .”

Radio station WMAL 630 AM reports the reactions of several local politicians.

Let's turn to several others who see far less positives in the president's speech. We begin with a statement by our friends at the National Taxpayers Union where vice president Pete Sepp says:

"Taxpayers hoping to see a new and more productive course for job creation in the President's speech tonight may see several confusing directions instead. Despite some plans of near-term tax reductions for workers and businesses, there are far fewer clues of specific long-term relief from what remains a burdensome tax system. Despite recognizing the need for tax reform to help businesses compete at home and abroad, the President resorted to rhetoric that directly contradicts this principle: hinting at selective tax increases that would take away widely available deductions just for certain industries, by labeling them 'loopholes that nobody else gets.' Despite appearing to acknowledge that programs such as Medicare are self-destructing from overspending, the President conjured up a non-existent threat of an ideology supposedly seeking to dismantle government.

"Once again Americans must wait until another day to see the full details of how exactly the President will propose to create jobs in America, and whether he will turn away from the failed formula of big-government programs that has left our nation's balance sheet in shambles and left our economy in a lurch. They're also left to wonder whether some of the encouraging policies the President discussed -- such as ratification of vital free-trade agreements -- will receive the follow-through they deserve. The time for words about fundamental tax, regulatory, and budget reform in Washington is over. The time for deeds is now."

Other NTU staffers add comments about the benefits of energy exploration and a so-called infrastructure bank.

The editors of National Review Online (NRO) began their editorial, "Unstimulating," with this:

"If $900 billion in fiscal stimulus did not deliver us from high unemployment, perhaps another $450 billion will do the trick: That was the theory underlying President Obama’s speech. The same as before, but less impressive — which, come to think of it, isn’t a bad summary of this stage of his presidency.

"Obama’s familiar hectoring tone, condescension, and pose of post-partisanship should not be allowed to obscure the fact that every so often he mentioned a good idea. A simultaneous reduction in corporate tax rates and corporate tax breaks was one. Extending the payroll-tax cut enacted last year was another. Enacting trade agreements would count as a third if the main obstacle to their enactment were not Obama himself and his congressional allies."

Here is a sampling of several think tankers from a Symposium on the jobs speech at NRO:

  • John Berlau of the Competative Enterprise Institute:

"In discussing regulation, the president gave his standard line of the past few months: We should get rid of regulations that put an unnecessary burden on businesses while still not exposing kids to mercury. This has been followed with little action other than a government-wide review. But one deregulation initiative in this speech, while still vague, did at least have a degree of specificity that has been lacking from his past rhetoric. Toward the middle of the speech, President Obama said, “We’re also planning to cut away the red tape that prevents too many rapidly growing start-up companies from raising capital and going public.

”Obama didn’t identify the source of this “red tape,” but those following the issue know that the primary impediment to going public for smaller firms is the Sarbanes-Oxley Act of 2002. This is a law containing a series of accounting mandates, which was rushed through Congress in the wake of the Enron and WorldCom scandals. Mostly through a vague mandate for “internal controls,” Sarbox has made companies responsible for documenting the tiniest minutiae of little importance to shareholders.

"Politically, if Obama wanted to scale back or repeal a big regulation, this would be an excellent candidate . . . .

  • James Capretta of the Center for Ethics and Public Policy added:

"That kind of speech may make the president and his partisan supporters feel better for a week or two, but it won’t produce bipartisan legislation that might actually help the country. What the president should be aiming for is real results for voters . . . Instead he chose more partisan posturing. The result is that he will almost certainly go into 2012 with the worst economic record for a first-term president in modern history. Good luck with that."

  • Chris Edwards of the Cato Institute was much more succinct. He began by saying, "I don't like a single part of President Obama's "American Jobs Act," and ended saying, "My advice is to scrap all this big-government micromanagement and pursue a large and clean corporate-tax-rate cut. Obama did talk vaguely about corporate-tax reform tonight, but I’ll believe that when I see the details." In between he included such "bullets" as "Since the 1960s, federal jobs-training programs simply haven’t worked" and "'Government and business working side-by-side' sounds like crony capitalism to me." (emphasis in the original)

I'll wrap-up this growls with several short items:

  • James Pethokoukis, a columnist for Reuters writes: "What Americans heard last night was a $447 billion political plan, not an economic one. It’s purpose was to a) fire up the demoralized Democratic base and b) show independents that Obama is trying to do something – anything – to reduce unemployment, not just slash needed “investment” like those heartless, pro-austerity Republicans." Stay with him since he will mention research done at George Mason University as well as Milton Friedman's thoughts on Keynesian economics. Further down, he includes his Reuters BreakingViews column on the "jobs" speech.
  • At Walter Russell Mead's blog, Via Media, he writes, "President Obama’s much ballyhooed jobs speech had no discernible effects on world markets or investor sentiment. Any potential impact was crushed by the bad news out of Greece and more generally in Europe, and rather than rejoicing at the President’s plans to turn the US economy around, European, US and Latin markets mostly fell two to four percent."
  • Thomas Lifson said at American Thinker that Styrofoam columns would have been an appropriate prop for the president's speech, opining, "It would have been a fitting response to the abuse of Congress by using an address to a Joint Session to give a campaign speech kicking off a president's re-election campaign."
  • With a HT to Betsy's Page, New York Post columnist John Podhoretz describes the difference in ideological ways of lowering unemployment this way: "So there’s the big difference between Obama and his ideological rivals -- he believes in government’s guiding hand, and his rivals believe in reducing the burden of government as a means of clearing the decks for economic growth." (emphases added)
  • At Canada Free Press, Aaron Reichel thinks the easiest part of analyzing the president's proposed jobs act "is ascertaining key deficiencies." He explains, "Once again, as was the case with the “stimulus” bills and the “health care” bills, virtually everybody has only heard an outline of the bill as selectively edited by Obama’s speechwriters; virtually nobody has seen the bill in its entirety nor had a chance to analyze it, yet Obama clearly wants it passed “now,” even “right now,” which already means yesterday."
  • Finally, Jeff Miron, economics professor at Harvard and senior fellow at the Cato Institute, whose area of expertise is the economics of liebertarianism, gives us "The Speech Obama Should Have Given" at Townhall.com.

I didn't expect this to get as long as it got, but at least now I know not to expect much from the president's proposed American Jobs Act if, unfortunately, it becomes law.

September 09, 2011

Responding to President’s “American Jobs Act” Speech

Last evening, President Obama spoke to a joint session of Congress about his proposed American Jobs Act (you can watch all 32 minutes of the speech here; and here is the text of the speech, including the one-page fact sheet here).

A search of the speech found at least nine references to small business or small companies. Consequently, it seems appropriate to feature the reaction of two small business associations to the President’s speech.

A portion of the response of the Small Business & Entrepreneurship (SBE) Council includes the following:

"We are pleased small business was featured prominently in the President's speech, and we look forward to reviewing the details of the American Jobs Act.  Specifically, as it relates to the payroll tax cut for employers and various hiring credits aimed to boost hiring, we hope these provisions are not unduly complex or have conditions attached that may prevent small firms from fully utilizing these incentives.

[ . . . ]

“Unfortunately, the President did not broach the subject of fixing his health care law. The burdens and higher costs associated with ObamaCare are keeping small firms from hiring.  The new law is driving health coverage costs higher for small businesses, and the unknowns relative to various provisions currently in the rulemaking or implementation stage continue to drive uncertainty. In addition, the President did not directly address the issue of new regulations in the pipeline and whether his Administration will take a more thoughtful approach to a system that is currently out of control. In fact, he seemed to defend the existing approach, which is a source of anxiety and concern for small business owners.

“I hope the President is open to ideas that will add value to his proposal.  He needs to embrace a more collaborative approach with Congress - Republicans and Democrats alike - and consider their ideas to improve his plan. The President may get the 'jolt' desired if he includes legislative ideas that stem the tide of regulation, make permanent key tax provisions and fix the parts of the health care law that impose higher costs, taxes and new burdens on small businesses. Entrepreneurs and millions of Americans are hurting right now. This is a time for leadership, and we hope President Obama steps up to the challenge."

The response of the National Federation of Independent Business was more succinct, consisting of just two paragraphs:

“Small-business owners needed to hear something bold from President Obama tonight, but instead just heard more of the same. His plan does not address the fundamental problems facing small business today. In addition, recent history tells us that a huge federal stimulus program is the wrong approach, and again sends the message that the president thinks he can spend his way out of this recession.

“The truth is that small businesses need the government out of their way. Tax breaks are always a welcome help to small businesses, especially in these tough economic times. But those outlined tonight by the president are temporary, and avoid the question of meaningful business tax reform. Lack of sales is still a major concern and there is a great deal of uncertainty among small businesses thanks to the threat of higher taxes and the thousands of pending federal regulations. The president’s speech did little to ease those concerns.”

We’ll growl an additional response to President’ Obama’s “American Jobs Act” speech in a future Growls. Until then, further reading is available at the references provided at the Tax Prof Blog, where he provides a list of more than a dozen readings concerning the tax portions of President Obabma’s jobs speech.

September 08, 2011

Quote for the Day

“The darkest places in hell are reserved for those who maintain their neutrality in times of moral crisis.”

~ Dante Alighieri

HT OnPower.org

September 07, 2011

Another Example of Government Success? Not!

Business Insider reported on July 15, 2011 of “two Navy ships that cost $300 million (and) are headed to the scrapyard without seeing a day of service.” Here are added details according to Robert Johnson, who reported the story:

“Embroiled by legal battles for more than 25 years, two U.S. Navy ships are finally headed to the scrap heap without ever having sailed and despite the fact that they're almost completely finished.

“According to Hampton Roads, the USNS Bejamin Isherwood and the USNS Henry Eckford were commissioned in 1985 at the Pennsylvania Shipbuilding Co. to carry fuel to the Navy's fleet around the globe.

“When the company defaulted on its Navy contract in 1989 the 660-foot ships were sent to Florida for completion, but cost disputes terminated that contract in 1993.

“Since then, the vessels have sat 95 and 84 percent complete at the mouth of the James River as part of the mothballed ghost fleet.

“In 1997, the Navy cut its ties and British company Able UK considered re-commissioning them for international sale to a NATO country.

“Because they're single-hulled ships, not the double-hulls required of today's tankers, Able UK passed and instead took $10 million to scrap them along with two other ghost ships."

Scott Harper of the Virginian-Pilot started his July 15, 2011 story with some additional, but relevant background information:

“The Isherwood and Eckford were part of an 18-ship class known as the Henry J. Kaiser fleet of replenishment oilers, titans that carry oil for Navy vessels around the globe.

“They were the only two that went unfinished, and were part of a 1985 budget request from the Navy for three oilers for a combined $567 million, according to records.

“The two were built at the Pennsylvania Shipbuilding Co. in Philadelphia, which defaulted on its Navy contract in 1989. The ships were then sent to Florida to be finished. But disputes over costs and materials in Tampa led to the termination of that contract in 1993, according to records.

“The Navy thought about turning the Isherwood and Eckford into ammunition ships, but that proved too expensive. In 1997, three years after the ships had been mothballed in the James River ghost fleet, the Navy cut its ownership ties.

“Since then, the two star-crossed ships have sat idle in the middle of the James - until this week."

But I’m sure the government bureaucrats involved in this fiasco are collecting their pensions today. Afterall, you have to keep your priorities straight. On a positive note, congratulations to the Virginian-Pilot for being one of the very few mainline, daily newspapers for reporting on the demise of the two ships, and telling the story of how $300 million disappeared down the proverbial 'rathole.'

Here is one of the two ships, the USNS Benjamin Siherwood #191 (thanks to Wikipedia Commons):

September 06, 2011

Another Porker of the Month & More on Food Stamps

Citizens Against Government Waste (CAGW) defines a Porker of the Month as "a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers."

That said, Citizens Against Government Waste (CAGW) named Agriculture Secretary Tom Vilsack its August 2011 Porker of the Month for asserting that the Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, qualifies as economic stimulus (and) drives economic growth.  In an interview on MSNBC’s “Morning Joe” on August 16, 2011, Sec. Vilsack called SNAP “an economic stimulus,” explaining that “every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity.” Sec. Vilsack did not specify where he got such a precise estimate for the multiplier effects of SNAP, but it is likely that he was referring to Kenneth Hanson’s “The Food Assistance National Input-Output Multiplier (FANIOM) Model and Stimulus Effects of SNAP,” a study published in 2010 by the Department of Agriculture."

The CAGW announcement went on to say:

"Sec. Vilsack’s claims ignited outrage from many members of the political news media and blogosphere, several of whom compared the remarks to Senate Minority Leader Nancy Pelosi’s (D-Calif.) July 2010 claim that unemployment insurance “creates jobs faster than almost any other initiative,” and to White House Press Secretary Jay Carney’s August 10, 2011 statement that extending unemployment benefits will create “up to a million” jobs.

“We are entering a brave new world for economics,” said CAGW President Tom Schatz.  “If one takes the ludicrous analyses of prominent Democrats seriously, it is a shame that millions more Americans do not qualify for SNAP benefits.  Indeed, the best course of action going forward would be to extend SNAP to all Americans, even affluent ones with huge salaries.  That seems to be the administration’s pro-growth strategy.

“These statements reek of desperation,” added Schatz.  “The Obama administration is presiding over an abysmal economy, staggering under persistent 9 percent plus unemployment.  They have done nothing to help and plenty to make it worse.  If food stamps qualify as stimulus, then literally any government expenditure can be justified as such.  Sec. Vilsack’s comments are indicative of the mentality that nobody spends money more wisely than government, and that if only pesky taxpayers would get out of the way and let the government spend as it sees fit, America’s economy would be back on track.  At CAGW, we maintain that private citizens spend their own money most effectively, and that the best stimulus program is a leaner government,” Schatz concluded.

Speaking of food stamps, we learned today from USA Today that "restaurants, which typically have not participated in the program, are lobbying for a piece of the action." The USA Today report added that "Louisville-based Yum! Brands, whose restaurants include Taco Bell, KFC, Long John Silver's and Pizza Hut, is trying to get restaurants more involved, federal lobbying records show," and then wrote:

"Federal rules generally prohibit food stamp benefits, which are distributed under the USDA's Supplemental Nutrition Assistance Program (SNAP), from being exchanged for prepared foods. Yet a provision dating to the 1970s allows states to allow restaurants to serve disabled, elderly and homeless people, USDA spokeswoman Jean Daniel said.

"Between 2005 and 2010, the number of businesses certified in the SNAP program went from about 156,000 to nearly 209,000, according to USDA data.

"There is big money at stake. USDA records show food stamp benefits swelled from $28.5 billion to $64.7billion in that period.

"Four states accept restaurants, with Florida the most recent to begin a program.

"It makes perfect sense to expand a program that's working well in California, Arizona and Michigan, enabling the homeless, elderly and disabled to purchase prepared meals with SNAP benefits in a restaurant environment," Yum! spokesman Jonathan Blum said."

Is Washington totally out of control? Sure seems like it, and it goes far beyond entitlement reform. Greece, we're catching up, and fast. To quote a portion of an anonymous e-mail making the rounds of the Internet:

"The folks who are paying for the free stuff want the free stuff to stop, and the folks who are getting the free stuff want even more free stuff on top of the free stuff they are already getting!"

UPDATE (9/7/11): Thanks to a Google search, we learn of People of Food Stamps, a relatively new blog that expects to expose waste, fraud and abuse in food assistance programs. The picture below is from their website. We wish them success.

September 05, 2011

Best Paid Teachers in the Commonwealth

The Arlington Sun Gazette reported in an online story on Thursday saying that data show “D.C. area teachers (are) best-paid in Commonwealth.” The newspaper went on to report:

“The nearly 57,000 teachers across the D.C. area saw an average salary of $69,390 for at the secondary level, $71,320 at the middle-school level and $68,650 at the elementary level, according to new figures from the federal Bureau of Labor Statistics.

“Those average salaries, which represent data from May 2010, were 24 percent higher than the national average at the secondary level ($55,990), 30 percent higher than at the middle-school level ($54,880) and 26 percent higher than at the elementary level ($54,330).

“No other metropolitan area in Virginia showed average teacher salaries appreciably higher than the national average. After the Washington area, average salaries for teachers were highest in the Charlottesville and Hampton Roads area.

“Wages for teachers were significantly below the national average in five of Virginia’s 11 metropolitan areas: Lynchburg, Kingsport-Bristol, Blacksburg-Christianburg-Radford, Roanoke and Danville.”

Since the Virginia Department of Education has published the results of its teacher salary for the 2010-2011 school year, let's take a look at the salaries for teachers in Northern Virginia. The report is published under authority of Item 132, paragraph B. 12., Chapter 874, 2010 Acts of Assembly (May 17, 2010). According to the report, here is the statewide teacher salary data:

  • FY 2010 Actual Average Teacher Salary -- $51,894
  • FY 2011 Budgeted Average Teacher Salary -- $51,903
  • Budgeted Percentage Change, FY 2010 to FY 2011 -- 0.02%

By the way, Virginia ranked No. 29 ($48,365) according to the 2009-2010 ranking and estimates, according to National Education Association data, which VDoE relied upon.

The budgeted average teacher salary for FY 2011 for Northern Virginia’s school districts including the following:

  • Arlington County -- $69,820 (an increase of 0.12%)
  • Fairfax County -- $65,264 (an increase of 2.21%)
  • Loudoun County -- $$60,474 ((an increase of 1.23%)
  • Prince William County -- $59,601 (a decrease of 3.97%)
  • Alexandria -- $70,073 (an increase of 4.21%)
  • Falls Church -- $$61,277 (a decrease of 2.77%)

At least the Arlington Public Schools don’t have the highest paid teachers; at least not according to the VDoE report.

September 04, 2011

Is the Postal Service a “Going Concern”?

“Going concern” is an accounting term that “refers to a company's ability to continue functioning as a business entity (concern being an early-20th century term for "business" or "enterprise"), according to Wikipedia.

In April 2010, the U.S. General Accounting Office testified (requires Adobe) before the House of Representatives’ Committee on Oversight and Government Reform:

“USPS is facing a major financial crisis. Mail volume, the primary source of USPS revenues, declined by 36 billion pieces (about 17 percent) over the last three fiscal years (2007 through 2009). Mail volume declines were largely due to the economic downturn and changing use of the mail linked to the continuing shift to electronic communications and payments. USPS’s financial outlook is poor as it projects future declines in mail volumes, stagnating revenues, large financial losses, increasing debt, and significant financial obligations, including for retiree health benefits. USPS projects a record loss of over $7 billion in fiscal year 2010. Furthermore, USPS expects to borrow $3 billion, bringing its total outstanding debt to $13.2 billion, close to its $15 billion statutory borrowing limit with the U.S. Treasury.  Looking forward, USPS projects that by fiscal year 2020, total mail volume will further decline by 15 percent, to the lowest level since 1986. Absent additional actions to cut costs and increase revenues, USPS expects financial losses will escalate over the next decade.”

Now comes the New York Times, which tomorrow will report the “Postal Service struggles to stay solvent, and relevant.” In addition, the paper says “the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.” The article, written by Steven Greenhouse,” adds:

“At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

“Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.

“The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the agency’s predicament on Tuesday. So far, feuding Democrats and Republicans in Congress, still smarting from the brawl over the federal debt ceiling, have failed to agree on any solutions. It doesn’t help that many of the options for saving the postal service are politically unpalatable.”

Although the Postal Service may not be a going concern in the long run, there are ways to modernize postal operations in  the short term, it seems. Reuters reported on Thursay:

“The Postal Service plans to unveil on Sept. 15 a plan it says would save up to $3 billion per year by "dramatically decreasing the network of processing facilities and adjusting service standards."

“A report by the Postal Service's inspector general in August determined that relaxing First Class Mail standards from guaranteeing delivery in 1-3 days to 2-4 days could reduce premium pay for overnight workers and trim processing costs.”

It seems Congressional leadership is only capable of acting when the clock is ready to strike midnight.

UPDATE (9/6/11): At the end of a post about the Postal Service's fiscal crisis at American Interest, Walter Russell Mead observes:

"Given its immense health care expenditures, the absurd amount of waste it generates, and the declining public interest in using the expensive snail mail system, the USPS’s fiscal problems come as no surprise.

"Advice for postal system users: make sure your email account works.  For postal workers: brush up on your skills.  The financial crisis of the USPS isn’t going away anytime soon, and a lot of jobs are going to disappear."

September 03, 2011

How is Arlington County Like California and Massachusetts?

If asked whether they conduct any oversight of county operations or how effectively taxpayers funds are used, Arlington County Board members might well argue that they primarily provide oversight during the budget process (e.g., cruise around the DM&F budget webpages for information about the FY 2012, and earlier, budget information). After sitting through dozens of budget work sessions and reviewing stacks of reports generated as a result of the work sessions, Board members would be hard-pressed to convince most Arlington County taxpayers the process is effective, let alone economical or efficient.

Two recent reports from the mainstream media show the effect on taxpayer dollars when the oversight process is lax. Last Wednesday, the Boston Globe reported the laws and policies for state oversight of special education are “badly outdated, clouding the state’s authority over them.” According to the Globe:

“More than two decades of failed oversight have allowed the state’s special education collaboratives to misspend millions of taxpayer dollars, according to the state auditor’s office, which has found a pattern of excessive salaries, conflicts of interest, and possible pension law violations at six of the 30 publicly funded agencies.

“These common findings are indicative of a system that’s lacking in standards and oversight and is easily manipulated by folks who are not putting the interests of taxpayers and special needs kids first,’’ Auditor Suzanne M. Bump said yesterday.”

On the "left" coast on August 24, 2011, the LA Times reported that “lax land oversight (has) cost California millions.” In this case, the Times added, “An audit finds officials have failed to keep leases current for the use of public property.” According to the LA Times’ reporting:

“For 17 years, giant Dow Chemical Co. leased state property near the Bay Area community of Pittsburg without paying any rent. A boating marina in nearby Crockett has paid nothing for the government parcel it has used since 1989 — while subleasing the land to another firm. A Southern California Gas Co. pipeline runs through 48 acres of the Mojave Desert, but the utility did not pay a dime for five years.

“Those businesses and dozens of others have benefited from officials' mismanagement of more than 4 million acres of public land, according to a state audit released Tuesday. The cost to taxpayers could easily be in the tens of millions of dollars, the auditors say, at a time when the state has been forcing teacher layoffs and cutting aid to the poor.

“The State Lands Commission, made up of California's lieutenant governor, controller, finance director and a staff of dozens, has failed to perform the basic duties of any landlord — renewing expired leases, keeping rents at market level and evicting delinquent tenants — the study found.”

Take a few moments to read both news reports. Then if you run into an Arlington citizen campaigning for one of the two County Board seats in the November election, or have a chance to ask them a question during one of their campaign stops, ask them how effective they think the Board's oversight processes really are. You may be surprised by their answers.

September 02, 2011

Illegal Aliens Get Billions From IRS

At the Washington Post’s blog, Federal Eye, today, Lisa Rein writes (HT Mark Levin):

The Internal Revenue Service allowed undocumented workers to collect $4.2 billion in refundable tax credits last year, a new audit says, almost quadruple the sum five years ago. (emphasis added)

“Although undocumented workers are not eligible for federal benefits, the report released Thursday by the Treasury Inspector General for Tax Administration concludes that federal law is ambiguous on whether these workers qualify for a tax break based on earned income called the additional child tax credit.

“Taxpayers can claim this credit to reduce what they owe in taxes, often getting refunds from the government. The vagueness of federal law may have contributed to the $4.2 billion in credits, the report said.

“The IRS said it lacks the authority to disallow the claims.”

In it’s report (.html and .pdf), the Treasury Inspector General for Tax Administration (TIGTA) described the impact of its findings on taxpayers this way:

“Many individuals who are not authorized to work in the United States, and thus not eligible to obtain a Social Security Number (SSN) for employment, earn income in the United States.  The Internal Revenue Service (IRS) provides such individuals with an Individual Taxpayer Identification Number (ITIN) to facilitate their filing of tax returns.  Although the law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, an increasing number of these individuals are filing tax returns claiming the Additional Child Tax Credit (ACTC), a refundable tax credit intended for working families.  The payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives.”

In her reporting at the Federal Eye blog, Ms. Rein wrote that Sen. Orrin Hatch (R-Utah) “announced plans to examine the refunds” based upon his position as ranking member of the Senate Finance Committee, and added:

“The audit recommended that the IRS seek clarification on the law and check the immigration status of filers with taxpayer indentificaion(sic) numbers.

“IRS officials, in response to a draft of the report, agreed to consult with the Treasury Department on the law. But they said they have no legal authority to demand that filers prove their legal status when the tax agency processes returns.”

Is there any wonder why the TEA Party movement gains new adherents every day?

UPDATE (9/3/11): Here's Fox News' take on this story. They begin with the rhetorical question: "Talk about a tax loophole."

UPDATE (9/3/11): The American Thinker today notes that Senator Orrin Hatch (R-Utah) "nailed it," opining:

". . .  The irony is depressing. The IRS will use all of its powers to go after some poor guy who owes a few thousand bucks but won't lift a finger to stop illegals from cheating the government.

"Something is wrong with that picture."

UPDATE (9/4/11): In a weekend editorial, Investor's Business Daily makes the astute observation:

"The IRS claims it's not its job to check the immigration status of those requesting U.S. money (easily done if a filer has a valid Social Security number instead of a "taxpayer ID").

"The tax agency apparently thinks laws only apply to people it audits — not politically sensitive illegal aliens.

"So now we have the sorry spectacle of $4.2 billion in money from law-abiding taxpayers flowing to law-breaking foreigners who belong in other countries."

UPDATE (9/6/11): Today's newsletter from the Federation of Americans for Immigration Reform (FAIR) notes that TIGTA made similar recommendations in 2009; presumably if those recommendations had been implemented, the IRS would not have paid $4.2 billion to people who should not be in the country illegally.

September 01, 2011

Two Quotes for the Day

"[We should avoid] ungenerously throwing upon posterity the burden which we ourselves ought to bear."

~ George Washington

"The principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale."

~ Thomas Jefferson

HT Page 118, "As Certain As Death: Quotations About Taxes" (2010 Edition), TaxAnalysts, Inc.