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InsiderOnline Blog: May 2013

To Do: Figure Out Europe

• Learn what Europe can do to spur growth. The Cato Institute will host a discussion with Simeon Djankov, Former Deputy Prime Minister and Finance Minister of Bulgaria; and Anders Aslund of the Peterson Institute for International Economics. The discussion will begin at 4 p.m. on June 5.

• Connect with the leaders of the European liberty movement at the 10th Annual European Resource Bank. This year’s event will be held in Vienna, Austria, June 7 - 10.

See Honor Flight, a documentary about the project to fly thousands of World War II veterans to Washington, D.C., to see the World War II Memorial. The Heritage Foundation will screen the movie at 5:30 p.m. on June 5.

• Get some perspective on the scandals roiling the nation’s capital by hanging out with Danielle Pletka, Marc Thiessen, and Jonah Goldberg. They’ll be at an AEI Google Hangout starting at 1:15 p.m. on June 4.

Posted on 05/31/13 05:55 PM by Alex Adrianson

Will Congress Ever Cut Corporate Farm Welfare?

Diane Katz reviews who’s really been living off the farm subsidy hog:

According to government data compiled by the Environmental Working Group (EWG), the farm owned by former President Carter and his family collected $272,288 in subsidy payments from 1995 through 2012.

During that same period, Vilsack received $82,874 in USDA benefits for his 592-acre farm in Davis County, Iowa. And USDA Under Secretary Michael T. Scuse owns 20.8 percent of a farm in New Castle County, Delaware, upon which taxpayers have lavished $1,051,107 from 1995 through 2012.

There are no farms in Manhattan, but residents there have collected subsidies totaling nearly $9 million in the past seven years. Recipients also include Mark F. Rockefeller ($356,018) and David Rockefeller ($591,057). Yes, the Rockefeller family (Standard Oil, Chase Manhattan Bank, etc.).

Over on the West Coast, in Beverly Hills 90210, the estate of comedian Jack Benny has collected $18,120 for a farm in Madera County, California, while $142,933 was paid to Mary Ann Mobley (Miss America of 1959) for a farm in Madison County, Mississippi.

These examples are not exceptions but the norm. The USDA’s Economic Research Service reports that two-thirds of the farms with income exceeding $1 million annually received government payments averaging $54,745 in 2011. Meanwhile, just 27 percent of farms with income of less than $100,000 received payments—averaging just $4,420 in 2011. [The Foundry, May 29]

To Congress, however, reform doesn’t so much mean cutting farm programs as shuffling the money into different programs. Sallie James  runs down what’s going on with the farm bill:

The Senate committee’s farm bill (S.954) would cost $955 billion over 10 years (2014–2023), according to the Congressional Budget Office (CBO), which is a savings of $18 billion compared with the baseline (i.e., the cost of simply continuing current programs). The House committee’s farm bill (H.R.1947) would cost less ($940 billion) and save more ($33.3 billion) over the same time period.

Modest as even these cuts would be, recall that these “cuts” are compared with the spending that would occur if the current programs were extended, and are not necessarily cuts from actual current spending. They also rest on projections and assumptions that do not always hold up. In fact, a study by the American Enterprise Institute points out that CBO estimates are based on an assumption that current high commodity prices will continue, and the AEI study estimates that projected costs would “balloon” if commodity prices returned to their longer-run average.

Much of the savings in both bills come from two places: eliminating the direct payments program, currently projected to cost $4–5 billion a year, and reducing spending on nutrition programs (by $4 billion over 10 years in the Senate bill, and about $20 billion in the House bill). Some of the savings are returned to farmers in the form of higher crop insurance subsides, which the CBO estimates will cost almost $9 billion per year for the next 10 years, and new farm risk management programs. […]

The decades-old protectionist sugar program that shovels billions of dollars a year to sugar growers (at consumers’ expense) remains in the bills intact. The proposed changes to the federal dairy program are hardly better: they replace currently largely defunct price-support programs with margin protection and supply management programs that would tax milk producers who produce “too much” when prices are low. [“Farm Bill ‘Reform’ Is in the Eye of the Beholder,” by Sallie James, Cato Institute, May 29]

Posted on 05/31/13 05:31 PM by Alex Adrianson

Fighting Back

On Wednesday, on behalf of 25 Tea Party and other conservative organizations, the American Center for Law and Justice filed suit in federal court against the Internal Revenue Service, charging that its clients were singled out for burdensome and unconstitutional questioning in order to delay their applications for tax-exempt status. The lawsuit names not only the IRS, but also a number of individuals as defendants, including Attorney General Eric Holder; Treasury Secretary Jacob Lew; Steven Miller, former acting Commissioner of the IRS; Lois Lerner, Director of Exempt Organizations Division for the IRS; and Holly Paz, Director, Office of Rulings and Agreements. More from ACLJ:

The suit contends that the Obama Administration “unlawfully delayed and thereby effectively denied approval of Plaintiffs’ applications for tax exempt status by means of a comprehensive, pervasive, invidious and organized scheme that purposefully established unnecessary and burdensome inquiries and scrutiny of Plaintiffs’ applications based solely upon Plaintiffs’ political viewpoints (or Defendants’ assumption of Plaintiffs’ viewpoints, based on their organizational names).”

Further, the complaint asserts that the federal government’s “unlawful conduct included but was not limited to excessive scrutiny of Plaintiffs’ applications by requiring donor names, listing of issues important to Plaintiffs’ organizations, including their positions on such issues, the contents of communications between the organizations and legislative bodies, the applicants’ criteria for membership, volunteer names and the political affiliations of persons associated with the organizations . . .” [American Center for Law and Justice, May 29]

Posted on 05/31/13 04:43 PM by Alex Adrianson

ObamaCare Driving Huge Premium Spikes in California

The cost of health insurance in California isn’t going to decline by as much as 29 percent as Peter Lee, the director of the state’s health insurance exchange, claimed. Rather, reports Avik Roy, some Californians could see their cost for health insurance spike 146 percent.

If you’re a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare’s exchanges is the catastrophic plan, which costs an average of $184 a month. (By “average,” I mean the median monthly premium across California’s 19 insurance rating regions.)

The next cheapest plan, the “bronze” comprehensive plan, costs $205 a month. But in 2013, on eHealthInsurance.com, the median cost of the five cheapest plans was only $92.

In other words, for the typical 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.

Under Obamacare, only people under the age of 30 can participate in the slightly cheaper catastrophic plan. So if you’re 40, your cheapest option is the bronze plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261.

But on eHealthInsurance, the median cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent.

For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double. […]

How did Lee and his colleagues explain the sleight-of-hand they used to make it seem like they were bringing prices down, instead of up? “It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market,” Covered California explained in last week’s press release, “because in 2014, there will be new standard benefit designs under the Affordable Care Act.” That’s a polite way of saying that Obamacare’s mandates and regulations will drive up the cost of premiums in the individual market for health insurance. [Forbes, May 30]

Posted on 05/31/13 04:23 PM by Alex Adrianson

Nice Non-Profit Health Company You Have There …

The agency that wants to know what your Tea Party group is reading, who its donors are, and the names of the students it teaches has been given 47 new tasks under ObamaCare, according to the Galen Institute’s tabulation. These tasks include such things as making sure that the terms of group health plans do not discriminate in favor of highly compensated individuals; imposing new excise taxes on high-cost plans; collecting from state health insurance exchanges the names of individuals who are exempt from minimum coverage requirements; and disclosing taxpayer information to the Department of Health and Human Services in order to determine eligibility for subsidies. The list also includes the authority to provide tax exemption “for nonprofit health insurance companies receiving federal start-up grants or loans to provide insurance to individuals and small groups” and “for entities providing reinsurance for individual policies during first 3 years of state exchanges.” [Galen Institute, May 15]

Posted on 05/31/13 02:52 PM by Alex Adrianson

IRS Scandal Update

Here’s what we learned this week about the Internal Revenue Service and its treatment of conservative groups applying for non-profit status:

• Organized labor, for whom the 501(c)5 section of the tax code establishes rules similar to those that govern 501(c)4 social welfare groups, has spent $4.4 billion on politics and lobbying since 2005 alone. By the way, unlike 501(c)4 organizations, unions do not receive their funding from voluntary donations. [Wall Street Journal, May 30]

• According to former Illinois state representative Al Salvi, the official at the center of the IRS targeting scandal tried to pressure him into quitting politics when she was at the Federal Elections Commission. Salvi says Lois Lerner offered to drop the FEC’s lawsuit against Salvi if he agreed to never run for public office again. The FEC claimed that Salvi had made an improper loan to his campaign for the U.S. Senate in 1996 against Sen. Dick Durbin (D). Salvi refused to make any deal and a court ruled in 2000 that his loan was proper. [Daily Caller, May 30]

• At least five pro-Israel groups that criticized the Obama administration’s opposition to Israeli settlement construction over the “green line” were audited by the IRS in 2009 and 2010. [Washington Free Beacon, May 30]

• Douglas Shulman visited the White House 157 times during his tenure as IRS Commissioner, more than any other major government official. He visited twice as often as Attorney General Eric Holder and more than three times as often as both Treasury Secretary Timothy Geithner and Health and Human Services Secretary Kathleen Sebelius. Shulman’s predecessor, Mark Everson, visited the White House once in four years during the George W. Bush presidency. [Daily Caller, May 29]

• If you teach a class in which conservatives might participate, your name could show up in letters that the IRS sends to non-profit-status seekers. In March 2011, the IRS sent a letter to the Liberty Township Tea Party that instructed the group to “explain its relationship to Justin Binik-Thomas.” Binik-Thomas says he taught one class for the organization “EmpowerU.” The IRS refused to explain why it was investigating Binik-Thomas’s connections to Tea Party organizations by citing taxpayer privacy laws. The same IRS office demanded that the Hawaii Tea Party explain its relationship to Dylan Nonaka, who ran one training program through the Washington, D.C., -based Leadership Institute. [Daily Caller, May 24]

• The Inspector General Act of 1978 requires IGs to report any “particularly serious or flagrant problems, abuses, or deficiencies” immediately to the relevant agency heads and requires those agency heads to transmit those reports to Congress within seven calendar days. The Treasury Inspector General for Tax Administration was aware of problems in the IRS determinations unit in July of 2012, but did not issue its report until May 14, 2013. [Wall Street Journal, May 23]

Posted on 05/31/13 01:57 PM by Alex Adrianson

Do States Have an Alternative to Common Core?

Is the federal government using its waiver power to force states to adopt the Common Core curriculum—i.e., to enforce, in defiance of federal law, a defacto national curriculum on the nation’s K-12 schools? Or do states have an Option B? The Obama administration’s evidence for an option B is that out of 37 states that have been granted waivers to the requirements of the No Child Left Behind law, two—Alaska and Virginia—have not adopted Common Core standards. Ted Rebarber takes a closer look at the waiver applications of those two states:

Exhibit A for the Administration’s claim that the waivers aren’t being used to impose a national curriculum, Alaska’s 820 page (!) approved waiver submission, documents to the satisfaction of federal officials that the state has met all of their requirements. Revealingly, an included analysis of alignment between the Alaska standards and Common Core (pp. 346-7) concludes that, though “Alaska has chosen different wording and examples for certain standards,” the final revised Alaska standards “align very closely with the Common Core” (emphasis added). Examples are included of how this impressive degree of alignment was achieved, including state standards that were modified to fit Common Core and Common Core standards adopted in their entirety. Perhaps not coincidentally, the DC-based Council of Chief State School Officers (CCSSO), a key author of the Common Core standards, was selected to perform the alignment analysis and confer its blessing on the state’s standards.

Exhibit B, Virginia’s comparatively brief 202-page approved initial waiver submission, states on p. 14 that one of the state’s accomplishments is “…the adoption of revised content standards that reflect national and international college- and career-ready expectations in mathematics and reading and are fully aligned with the Common Core State Standards” (emphasis added). The approved state submission goes on to cite extensive analyses of alignment between Virginia’s standards and the Common Core as well as resulting modifications and supplementary standards added based on Common Core (pp. 18-19). For Mathematics, a live link is included within the application providing federal reviewers access to a document detailing line-by-line additions to the state’s standards to bring them into alignment with the Common Core. For English, the application describes how Common Core was incorporated directly at the time of the state’s revision of its standards to ensure alignment. [Pioneer Institute, May 29]

So state options appear to run from “fully aligned” all the way to “very closely aligned” to Common Core standards.

Posted on 05/30/13 07:45 PM by Alex Adrianson

The Thing Internet Tax Supporters Know that Just Isn’t So

Though supporters of the Marketplace Fairness Act have been working really hard to convince you otherwise, it really is not true that the current sales tax regime is tilted against bricks-and-mortar retailers. A recent letter from the groups Let Freedom Ring, American Majority, 60 Plus, and Americans for Job Security repeats this charge; Andrew Moylan explains why author Travis gets the Internet tax argument all wrong:

He writes that the decision in Quill v. North Dakota said that “States, without Congressional authority, cannot require online retailers to collect sales taxes at the point of sale, as they often require brick-and-mortar shops to do.” This is false on two levels. First, even after Quill states very clearly do have the authority to require sales tax collection at the point of sale (so long as that point of sale exists within their borders) and doing so would actually be a great idea. Travis just alluded to the fact that brick-and-mortar sales effectively operate on a very simple system called origin-based sourcing, something that we’ve been advocating at R Street for some time: require tax collection based on where the business is located, not based on where the customer lives. That’s how every brick-and-mortar sale is governed today, so let’s extend that to online sales as well.

Second, that’s not at all what Quill said. The Court’s decision said that states could not require sales tax collection and remittance for businesses not physically present within their borders. This reiterated the so-called “physical nexus” standard that underpins virtually all of our tax policies. After the collapse of the Articles of Confederation, we designed a system where state taxing power ended at its borders and Quill basically affirmed that because of the huge complexity that exists in sales tax codes.

Travis continues by stating that current policy “…is a clear case of government picking winners and losers in the economy.” Yeah, no. Current law treats every retailer, regardless of their model, identically. If they’ve got a physical presence in a state, they’ll have to collect and remit its sales tax for sales made to consumers in that state. If they don’t, they don’t. There is no “picking” of winners and losers between business models in a policy that makes no distinction between business models. [R Street, May 29]

Posted on 05/29/13 02:09 PM by Alex Adrianson

No Accountability

The White House says it knew nothing of the goings-on at the Internal Revenue Service over the last few years. That shouldn’t surprise anybody, but it does highlight the fact that the administrative state is largely disconnected from political accountability. Jonathan Turley:

[T]he vast majority of “laws” governing the United States are not passed by Congress but are issued as regulations, crafted largely by thousands of unnamed, unreachable bureaucrats. One study found that in 2007, Congress enacted 138 public laws, while federal agencies finalized 2,926 rules, including 61 major regulations.

This rulemaking comes with little accountability. It’s often impossible to know, absent a major scandal, whom to blame for rules that are abusive or nonsensical. Of course, agencies owe their creation and underlying legal authority to Congress, and Congress holds the purse strings. But Capitol Hill’s relatively small staff is incapable of exerting oversight on more than a small percentage of agency actions. And the threat of cutting funds is a blunt instrument to control a massive administrative state—like running a locomotive with an on/off switch.

The autonomy was magnified when the Supreme Court ruled in 1984 that agencies are entitled to heavy deference in their interpretations of laws. […]

The judiciary, too, has seen its authority diminished by the rise of the fourth branch. Under Article III of the Constitution, citizens facing charges and fines are entitled to due process in our court system. As the number of federal regulations increased, however, Congress decided to relieve the judiciary of most regulatory cases and create administrative courts tied to individual agencies. The result is that a citizen is 10 times more likely to be tried by an agency than by an actual court. In a given year, federal judges conduct roughly 95,000 adjudicatory proceedings, including trials, while federal agencies complete more than 939,000. […]

Of course, federal agencies officially report to the White House under the umbrella of the executive branch. But in practice, the agencies have evolved into largely independent entities over which the president has very limited control. Only 1 percent of federal positions are filled by political appointees, as opposed to career officials, and on average appointees serve only two years. At an individual level, career officials are insulated from political pressure by civil service rules. There are also entire agencies—including the Securities and Exchange Commission, the Federal Trade Commission and the Federal Communications Commission—that are protected from White House interference. [Washington Post, May 24]

We have a system, explains Glenn Reynolds, in which bureaucrats can fall down but never suffer a bruise:

The problem is that they don’t have, in President Obama’s words, “skin in the game.” When it comes to actual wrongdoing, they’re shielded by doctrines of “absolute immunity” (for the president) and “qualified immunity” (for lesser officials). This means that the president can’t be sued for anything he does as president, while lower-ranking officials can’t be sued so long as they can show that they were acting in a “good faith” belief that they were following the law.

Such defenses aren’t available to the rest of us. And they’re not even the product of legislation passed by Congress after considered judgment – they’re judicially created. (Judges gave themselves absolute immunity, too, for good measure.) [USA Today, May 27]

Posted on 05/28/13 12:57 PM by Alex Adrianson

To Do: Help Fix Your Government

• If you have had difficulty obtaining tax-exempt status for a non-profit organization, let the House Ways and Means Committee know by filling out the form at www.waysandmeans.house.gov/irsinvestigation.

Build an app that helps people discover what’s really going on in Congress. The Cato Institute’s “Deep Bills” project is currently adding XML tags to bills proposed in Congress. That will allow coders to build transparency apps that let people explore the data more deeply. The project is adding tags to indicate: what agencies and bureaus are affected; what laws are affected (by popular name, U.S. Code section, Statutes at Large citation, and more); what budget authorities are included; the amount of the proposed spending; the purpose of the spending; and the fiscal year(s) covered.

Expand your audience to JAGTV. If you are a libertarian writer looking for a new outlet, then get in touch with the folks at JAGTV. They are currently developing plans to launch JAGTV as a libertarian lifestyle television network. We hear the network is about a year away from launch, and is looking for content creators right now.

• Save the dates! Of all the events in all the towns in all the world, you’ll want to walk into these: the Cato Institute’s five-year retrospective on the Heller decision, featuring three of the attorneys representing Heller (Alan Gura , Robert Levy, and Clark Neily) plus Emily Miller of the Washington Times, June 4 in Washington, D.C.; the America’s Future Foundation’s Summer Leadership Dinner with Senator Ted Cruz, June 5 in Washington, D.C.; the Victims of Communism’s Sixth Anniversary of the Dedication of the Victims of Communism Memorial, featuring Chinese dissident Yang Jianli, June 12 in Washington, D.C.; the Bradley Prizes honoring Yuval Levin, Roger Ailes, and Mitch Daniels for their outstanding contributions to the cause of free, representative government, June 12, in Washington, D.C.; and the Competitive Enterprise Institute’s Annual Dinner, featuring Sen. Rand Paul (R-Ky.), June 20 in Washington, D.C.

Posted on 05/24/13 05:29 PM by Alex Adrianson

Scandal Update

Here’s what we learned this week about the Internal Revenue Service and its treatment of conservative groups applying for non-profit status:

• The Treasury Inspector General for Tax Administration wasn’t the first to conduct a review of the activities of the IRS’s Determinations Unit. The IRS conducted an internal investigation, which was completed six months before the 2012 election. [Daily Mail, May 22]

• Lois Lerner, head the IRS’s Determination’s Unit (now on paid leave), was previously head of the Federal Election Commission’s enforcement division. While she was there, the FEC brought charges against the Christian Coalition for allegedly coordinating its issue advocacy with candidates. The Christian Coalition ultimately won the case, but not before suffering through a costly and intrusive investigation. In one deposition, the FEC asked Oliver North—who had run for Senate in Virginia—whether the Christian Coalition’s Pat Robertson had prayed for him. [Weekly Standard, May 20]

• Between 2010 and 2012, “[l]etters from 10 high-profile Democrats to then-IRS commissioner Doug Shulman pressured the IRS to investigate nonprofit politicking, even threatening legislation to change IRS standards if the IRS didn’t act.” [Fox Business, May 23]

• In December 2009, President Obama signed an executive order giving all government employee unions a greater role in decisions about workplace operations. That order covered the IRS. The National Treasury Employees Union—the union for IRS employees—gave hundreds of thousands of dollars to anti-Tea Party candidates in 2010 and 2012. Colleen Kelley, head of the National Treasury Employees Union, met with the President on several occasions, including the day before IRS managers decided to begin a “Sensitive Case Report on the Tea Party cases.” [Obama and the IRS: The Smoking Gun?” American Spectator, May 20; and “U.S. News: Obama-Kelley Meeting,” American Spectator, May 20]

Posted on 05/24/13 03:22 PM by Alex Adrianson

Here’s One Election Outcome Changed by Voter Fraud

The Left keeps saying voter fraud has never changed the outcome of an election; it’s past time to stop saying that. Hans von Spakovsky notes a recent item from the news:

On Monday, John C. Moretina pleaded guilty to a federal felony count of voter fraud in the August 2010 Democratic primary in Missouri’s 40th legislative district. Moretina falsely claimed he was living in the 40th district just so he could vote in the primary. This is a Democratic district where the winner of the primary, John J. Rizzo, was highly likely to become the district representative in the state house and, in fact, was elected. But Rizzo beat his Democratic opponent, Will Royster, by only one vote: 664 to 663.

Moretina did not inform the court whom he voted for, but since he is Rizzo’s uncle, it is not too much of a stretch to guess that he gave his nephew the winning margin of victory. Moreover, there were also allegations that Moretina’s wife fraudulently voted in this primary election as well, although she was not charged.

What is undeniable is that, as the Kansas City Star says, “the wrong candidate was declared [the] winner of the 2010 Democratic primary.” [The Foundry, May 17]

Posted on 05/24/13 02:15 PM by Alex Adrianson

Dodd-Frank v. ObamaCare

The Dodd-Frank financial reform, by limiting bank interchange fees and overdraft fees, appears to have pushed some low-income folks out of the market for banking accounts. And being “unbanked,” explains Megan McArdle, could be a barrier to buying the health insurance that ObamaCare legally requires people to buy:

Debit card interchange fees, and bank overdraft fees, were not only supporting a lot of rewards on your debit cards; they were subsidizing bank accounts for relatively poor people who don’t have a lot of money in their accounts. Banks don’t like these sorts of accounts, because they cost more to service than they deliver in revenue. […]

[W]hen the government cracked down, that meant banks raised fees on everyone. GMU law professor Todd Zywicki reports that in 2009, 76% of accounts were eligible for free checking. In 2012, that figure was just 39%.

If you have $500 or less in your checking account, a $10 a month fee is eating a substantial part of your capital. Which may be why the number of unbanked customers has risen by over 800,000 since the financial crisis. Of course, some of that is undoubtedly also due to the recession. But rising fees on bank accounts was a predictable (and predicted) effect of the interchange fee regulations. It’s reasonable to suspect that this has something to do with the rising cost of a bank account.

Nothing in Obamacare requires insurers to take something like a prepaid debit card, and analysts are worried that insurers won’t have much incentive to make that an option. The unbanked are likely to be poorer than the general population, which means that they’re also likely to be sicker, and their accounts more difficult to service. [The Daily Beast, May 23]

Posted on 05/24/13 02:02 PM by Alex Adrianson

The Hidden Cost of Government

You know how much you pay in taxes, but do you know how much you pay because of government regulation? Not only do you never see a regulatory bill from the government, Congress never even votes on regulatory costs. It’s the unelected bureaucrats—to whom Congress hands off the power—who write the rules that come with economic costs. Thankfully, Clyde Wayne Crews of the Competitive Enterprise Institute keeps track of these hidden costs of government with his annual Ten Thousand Commandments report. Here are some details from his latest, released this week:

• This author’s working paper compilation Tip of the Costberg,” largely based on federal government data, estimates regulatory costs at $1.806 trillion annually.
• U.S. households “pay” $14,768 annually in regulatory hidden tax, “absorbing” 23 percent of the average income of $63,685, and 30 percent of the expenditure budget of $49,705.
• The most recent Small Business Administration (SBA) evaluation of the overall U.S. federal regulatory enterprise estimated annual regulatory compliance costs of $1.752 trillion in 2008. […]
• For the first time in history, the estimated cost of regulation exceeds half the level of the federal budget itself. Regulatory costs of $1.806 trillion amount to 11.6 percent of the U.S. gross domestic product (GDP), estimated at $15.549 trillion in 2012.
• Combining regulatory costs with federal FY 2012 outlays of $3.538 trillion indicates that the federal government’s share of the entire economy now reaches 34.4 percent.
• Regulatory compliance costs exceed 2011 estimated corporate income taxes of $237 billion and individual income taxes of $1.165 trillion. […]
• According to the 2012 “Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions,” which lists federal regulatory actions at various stages of implementation, 63 federal departments, agencies, and commissions have 4,062 regulations at various stages of implementation. […]
• Of the 4,062 regulations in the pipeline, 224 are “economically significant” rules, which the federal government defines as wielding at least $100 million in economic impact. [“Ten Thousand Commandments 2013,” by Clyde Wayne Crews Jr., Competitive Enterprise Institute, May 2013]

Posted on 05/24/13 10:58 AM by Alex Adrianson

Through the Ringer

Catherine Engelbrecht’s experience at the hands of five different government agencies is one of the more Kafkaesque stories we’ve heard in awhile. Engelbrecht is the founder of two different non-profits: True the Vote, a national organization that works to prevent voter fraud; and King Street Patriots in Rosenberg, Texas.

National Review’s Jillian Kay Melchior details the numerous actions that government agencies have taken regarding Engelbrecht, the machine shop she runs with her husband Bryan, and her two non-profit organizations following her applications for tax-exempt status for her two organizations in July 2010.

Those actions include five rounds of questions from the Internal Revenue Service about her two organizations; multiple calls over many months from the Federal Bureau of Investigation asking questions about one person who attended one King Street Patriots event; two unscheduled audits of her shop by the Bureau of Alcohol , Tobacco, and Firearms; an inspection of her shop by the Occupational Safety and Health Administration; and an audit from the Texas Commission on Environmental Quality.

OSHA issued a fine of $25,000 which was eventually reduced to $17,500. The Engelbrecht’s say they could have contested the fines, but didn’t want to make more waves. Meanwhile, after waiting for nearly three years, Engelbrecht’s organizations still have not receive approval from the IRS. [National Review, May 20]

On Tuesday, True the Vote, announced it was suing the IRS and the IRS employees responsible for holding up its application. [Daily Caller, May 23]

Sure, maybe all of the extra attention was completely unrelated to the fact that the Left really, really didn’t like True the Vote’s work against voter fraud. Even so, the story suggests another lesson to add to points offered by Doug Bandow below: The more we ask government to do, the more ways it has of coming after you.

Posted on 05/23/13 06:56 PM by Alex Adrianson

Welcome to the Machine

Even if we never get good answers out of the Internal Revenue Service, the source of the abuse is plain enough. As Doug Bandow explains, a government that does social engineering is a government that must give bureaucrats the sort of wide discretion that will inevitably be abused:

[T]he broader the government’s authority, the greater its need for revenue, the wider its enforcement power, the more expansive the bureaucracy’s discretion, the increasingly important the battle for political control, and the more bitter the partisan fight, the more likely government officials will abuse their positions, violate rules, laws, and Constitution, and sacrifice people’s liberties.

The blame falls squarely on Congress, not the IRS. Legislators have tasked the tax agency with pulling $2.52 trillion out of Americans’ wallets. With Uncle Sam a prodigious and very public wastrel, there aren’t many people stepping forward to voluntarily turn more of their incomes over to the Treasury. Even those who most cheerfully insist that taxes should be raised themselves don’t give extra cash. Thus, raising that much more requires squeezing taxpayers with intrusive and painful enforcement measures. […]

[T]he denizens of Capitol Hill also have created a tax code marked by outrageous complexity, special interest electioneering, and systematic social engineering. Legislators have intentionally created avenues for tax avoidance to win votes, and then complained about widespread tax avoidance to win votes. […]

[T]he more expansive and expensive the state, the more money that has to be raised. The more money that has to be raised, the greater the pressure from taxpayers for exemptions, credits, and deductions. The more complex the tax code, the more discretion IRS agents require. And the more tax-based abuses that will occur. [American Spectator, May 22]

Posted on 05/23/13 05:11 PM by Alex Adrianson

Disclosure v. First Amendment

Last week, we learned that the Internal Revenue Service asked conservative groups seeking non-profit status to disclose, among other things, their donors as well as lists of participants in their programs. If you think those kinds of government queries are in tension with the First Amendment, then you share that opinion with the Supreme Court. In a 1958 case in which the state of Alabama tried to oust the National Association for the Advancement of Colored People from the state for not complying with its incorporation laws, the Supreme Court told the state that it could not compel the NAACP to disclose its membership lists. Here is the court’s reasoning:

Effective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association, as this Court has more than once recognized by remarking upon the close nexus between the freedoms of speech and assembly. It is beyond debate that freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the “liberty” assured by the Due Process Clause of the Fourteenth Amendment, which embraces freedom of speech. Of course, it is immaterial whether the beliefs sought to be advanced by association pertain to political, economic, religious or cultural matters, and state action which may have the effect of curtailing the freedom to associate is subject to the closest scrutiny. […]

It is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as the forms of governmental action in the cases above were thought likely to produce upon the particular constitutional rights there involved. This Court has recognized the vital relationship between freedom to associate and privacy in one’s associations. […] Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs. [Internal citations omitted.] [NAACP v. Alabama (1958)]

The state, said the Court, had no overriding valid interest that outweighed the deterrent effect that disclosure would have on members exercising their First Amendment rights. It’s also hard to see how donor and participant lists would help the IRS decide whether a non-profit’s activities were too political. But, as in the case of Alabama investigating the NAACP, fulfilling a valid government interest probably wasn’t the point of the IRS’s questions.

Posted on 05/23/13 01:18 PM by Alex Adrianson

President’s Budget Increases Taxes by $1 Trillion Over Ten Years

President Obama’s FY 2014 budget includes some tax increases that are easily missed by the casual reader. As Curtis Dubay notes, one of them is identified only in a footnote, and another is identified in a section titled “Early Childhood Investments.” Happily, Dubay has rounded them up in one convenient table:  

[For more details on the President’s FY 2014 budget, see “Net Tax Increase in Obama’s Budget Over $1 Trillion,” by Curtis Dubay, The Heritage Foundation, May 16, 2013.]

Posted on 05/21/13 05:30 PM by Alex Adrianson

To Do: Unravel the EPA Coverup

• Learn about the Environmental Protection Agency’s continuing efforts to keep secret its coordination with outside liberal environmental groups. The Competitive Enterprise Institute’s Christopher Horner will give a briefing in 406 Dirksen Senate Office Building at 3 p.m. on May 20.

• Relive the truth-telling crusades of Andrew Breitbart and the hatred they inspired from the Left. The film Hating Breitbart is now playing in select theaters around the country. If the film isn’t playing near you, you can demand it online.

• Learn how good institutions can solve the problem of the “Resource Curse”—i.e., when a country becomes so rich in natural resources that it faces little incentive to reform corrupt institutions. The Heritage Foundation will host a panel discussion featuring Todd Moss, author of The Governor’s Solution: How Alaska’s Oil Dividend Could Work in Iraq and Other Oil-Rich Countries; Francisco Ferreira, of the World Bank; and Sergio Daga of The Heritage Foundation. The event will begin at 11 a.m. on May 21.

• Explore the prospects for the collapse of the welfare state as we know it. The Cato Institute will host National Review writer and cell phone-etiquette vigilante Kevin Williamson, author of The End Is Near and It’s Going to Be Awesome: How Going Broke Will Leave America Richer, Happier, and More Secure. Williamson will speak at noon on May 23.

• Make sure the newsrooms have some conservatives in them, too. If you are interested in being a journalist, check out the Institute for Humane Studies eight-week journalism internship program. The fall deadline is July 1.

Posted on 05/17/13 07:07 PM by Alex Adrianson

The Department of Education Offends Student Rights

With a letter sent to the University of Montana last week, the Department of Education is undermining the rights of students and faculty at every college and university that accepts federal funding, reports Greg Lukianoff:

The May 9 letter addressed the results of a year-long joint investigation by the departments into the school’s mishandling of several serious sexual-assault cases. The investigation determined that the university’s policies addressing sexual assault failed to comply with Title IV of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972.

But the joint letter, which announced a “resolution agreement” with the university, didn’t stop there. It then proceeded to rewrite the federal government’s rules about sexual harassment and free speech on campus.

If that sounds hyperbolic, consider the letter itself. The first paragraph declares that the Montana findings should serve as a “blueprint for colleges and universities throughout the country.” After outlining the specifics of the case, the letter states that only a stunningly broad definition of sexual harassment—“unwelcome conduct of a sexual nature”—will now satisfy federal statutory requirements. This explicitly includes “verbal conduct,” otherwise known as speech.

The letter rejects the requirement, established by legal precedent and previous Education Department guidance, that sexual harassment must be “objectively offensive.” By eliminating this “reasonable person” standard—which the Education Department has required since at least 2003, and which protects the accused against unreasonable or insincere allegations—the right not to be offended has been enshrined in a federal mandate. […]

The implications for professors and students are enormous. An unsuccessful request for a date, or even assigning a potentially offensive book like “Lolita,” could now be construed as harassment. [Wall Street Journal, May 16]

Posted on 05/17/13 06:06 PM by Alex Adrianson

Medicaid Considerations

Expanding Medicaid on the federal dime may seem like a free lunch for the states, but it’s not that simple for many reasons—in particular that even the federal government cannot forever spend money it doesn’t have. The Mercatus Center has a short new video that reviews the issues:

Posted on 05/17/13 05:48 PM by Alex Adrianson

More IRS Dots

Here are some other things we learned this week about what’s been going on at the Internal Revenue Service:

• While some conservative organizations have been waiting for more than three years for the Internal Revenue Service to approve their applications for tax-exempt status, the Barack H. Obama Foundation obtained approval within one month of filing. The Foundation is run by the President’s half-brother Malik Obama. Lois Lerner signed the group’s approval letter, dated June 26, 2011, which makes the tax-exempt status effective retroactively to December 2008. [Daily Caller, May 14]

• In November 2012, the Cincinnati IRS office that allegedly initiated the inappropriate reviews of tax-exempt status applications sent the still-pending tax-exempt status applications of nine conservative organizations to the investigative reporting outlet ProPublica. [ProPublica, May 13]

• Knowledge of inappropriate reviews was not limited to one IRS office in Cincinnati. The Treasury Inspector General for Tax Administration, which released a report on the matter on Tuesday, briefed then-IRS commissioner Douglas Shulman about the activities in May 2012. Steven T. Miller, who became acting commissioner when Shulman departed in November was also informed later that month. Further, IRS officials in Washington and at offices in California also sent queries to conservative groups asking about their donors. [Washington Post, May 13]

• According to the National Organization for Marriage, someone at the IRS leaked its tax return along with the identity of its donors to the pro-gay marriage Human Rights Campaign. That document was subsequently used in the writing of a Huffington Post article attacking GOP presidential candidate Mitt Romney, one of NOM’s donors. [National Organization for Marriage, May 14; Breitbart, May 14]

• In March 2012, a number of Democratic lawmakers, including senators Chuck Schumer (N.Y.) and Al Franken (Minn.), and Rep. Peter Welch (Vt.) sent letters to the Internal Revenue Service asking the agency to investigate tea party groups. [Atlantic, May 13; Daily Caller, May 17]

Posted on 05/17/13 05:00 PM by Alex Adrianson

Farm Bill = Corporate Welfare

Congress is working on another farm bill, which is another way of saying that soon Congress will vote once again to take money from taxpayers and consumers and hand it out to big business. From Daren Bakst and Diane Katz, here are a few details on how that’s been working:

According to government data, farms with gross sales of $1 million or more received 23 percent of all commodity-related payments in 2009—up from just 8 percent in 1991. In contrast, the share of commodity-related payments received by farms in the $100,000 to $249,999 sales class shrank from 34 percent in 1991 to 15 percent in 2009.

The subsidies collected by large enterprises make it more difficult for small farms to stay in business. The flow of free dollars to big farms increases demand for farmland, which, in turn, raises the price of property. Smaller players and newcomers are priced out and left to compete in niche markets.

It is also notable that Members of Congress and their immediate families are eligible for farm subsidies. Many of the lawmakers assigned to the House and Senate Agriculture Committees are farmers, but taxpayers are prevented from learning who receives crop insurance subsidies and in what amounts. […]

Americans pay two to four times higher prices for sugar than consumers in other countries, on account of government-imposed tariffs on imports and quotas on domestic production. And consumers pay hundreds of millions of dollars more for milk, butter, cheese, and a variety of other dairy products because of government manipulation of supplies and prices. [“A Farm Bill Primer: 10 Things You Should Know about the Farm Bill,” by Daren Bakst and Diane Katz, The Heritage Foundation, May 14]

One of the twists this time around is that direct payments to farmers supposedly will be reduced, while crop insurance will be expanded. But don’t expect that swap to save the taxpayers money, says Veronique de Rugy:

Like most businesses, farms buy insurance policies to protect from potential losses, such as poor yields or declining prices. Unlike most businesses, they can count on the government to pay about two thirds of the premiums, at a cost of $7 billion annually. The proposed “shallow-loss program” would send money to farmers in the event of small drops of revenue that are not typically covered by crop insurance.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) claims that the extension would save taxpayers money, swapping $3 billion in new payments in exchange for eliminating $4 billion in direct payments. But the crop insurance scheme is likely to cost twice as much as estimated, according to a 2012 American Enterprise Institute study by the economists Vincent H. Smith, Barry K. Goodwin, and Bruce A Babcock. History tells us that it won’t be long before the program resembles the direct payments it was supposed to replace. That’s because, if implemented, these subsidies will kick in at relative low level of losses. Given that prices will surely come down from their current record levels, most farmers will wind up receiving a payment every year. [“Farm Subsidies Must Die,” by Veronique de Rugy, Reason, April 2013]

Posted on 05/17/13 03:05 PM by Alex Adrianson

About the IRS Mess: Power Is the Problem

• There’s a history of the IRS being misused for political purposes, notes Michael Scherer at Time:

John F. Kennedy sanctioned an “Ideological Organizations Project” at the IRS that investigated right-wing groups. President Richard Nixon encouraged a secret IRS program called the “Special Services Staff” to investigate his political opponents and harass them with audits. And presidents weren’t the only offenders; the FBI has long used the IRS to harass political opponents. A 1964 FBI plan to “discredit” the United Klans of America called for illegally disclosing tax information about key members. Around the same time, the FBI initiated an IRS audit of Dr. Martin Luther King Jr. and his non-profit organization, the Southern Christian Leadership Conference. One memo even suggested the bureau forge letters from King to donors of the group that warned of the ongoing IRS investigations, in the hopes of cutting off the group’s cash flow. Some of the most egregious abuses of the last 50 years were undertaken at the behest of the FBI, sometimes under the cover of a secret domestic counterintelligence program called COINTELPRO. [Time, May 14]

• For as long as the tax code puts bureaucrats in charge of determining whether an organization’s activities are too political, there will be the potential for abuse, as the Cato Institute points out in a new video:

• ObamaCare will soon make the Internal Revenue Service even more powerful. As Scott Gottlieb notes: “Under Obamacare, responsibility for verifying eligibility for the healthcare program, and monitoring whether you carry ‘qualifying’ health coverage (and are exempt from the law’s penalties) falls principally to the IRS. The IRS was given expansive, new powers to execute these goals. That includes more authority to share your personal information — not only about your income, but also your healthcare.” [Forbes, May 14] And those new powers will be wielded by Sarah Hall Ingram, who just happens to have been in charge of the IRS office that reviewed tax-exempt status applications during the time Tea Party organizations were targeted for extra scrutiny. [Fox News, May 17]

• Point taken: “We have a large government. […] Part of being president is there’s so much beneath you that you can’t know because the government’s so vast,” say David Axelrod, former advisor to President Obama. [Comments on MSNBC, via National Review, May 15]

Posted on 05/16/13 04:50 PM by Alex Adrianson

Journalist Who Writes on Politics Cheers Limits on Non-Profits That Don’t Share His Politics

According to Jeffrey Toobin, the scandal at the Internal Revenue Service isn’t what the agency was asking groups with “Tea Party” and “Patriot” in their names. The scandal is that the IRS isn’t cracking down even more on political organizations masquerading as social welfare organizations in order to obtain tax-exempt status. [New Yorker, May 14]

But the tax code, says Josh Barro, doesn’t mean what Toobin thinks it means when it uses the term “social welfare”:

“Social welfare” is a term of art that doesn’t mean exactly what it sounds like. To qualify, a group must have the aim of producing benefits that accrue to the community as a whole, not just its members. “Benefit” and “community” are construed broadly; organizations do not have to demonstrate that the policies they promote are good or that they benefit everyone.

You can see this in the IRS regulations governing 501(c)(4) groups. These groups may engage in unlimited lobbying related to their social welfare missions. The IRS offers these specific examples of acceptable activity: “promotion of legislation on animal rights,” “advocacy of anti-abortion legislation,” “legalization of currently illegal activity” and “advocacy of changes in the tax law.”

The groups can also engage in electioneering, even endorsing candidates. Here’s the IRS: “An exempt IRC 501(c)(4) organization may intervene in political campaigns as long as its primary activity is the promotion of social welfare.” [Bloomberg, May 14]

And, notes Ed Krayewski, Toobin and others making similar arguments ignore the fact that “the most popular and well-known 501(c)4 in the country, Organizing for Action (formerly known as Obama for America), which runs the @barackobama twitter feed and owns BarackObama.com” also identifies as a social welfare organization: “In its targeting of Tea Party and patriot groups, the IRS went after political dissenters for trying to enjoy the same tax-exempt status that the president’s fan club and other liberal groups get.” [Reason, May 15]

In any case, it’s no defense of the IRS to say that its ad hoc and standardless enforcement was just a way to fix “shaky, or even nonexistent, rules.”

Posted on 05/16/13 04:12 PM by Alex Adrianson

The Questions Are the Scandal

The scandal at the Internal Revenue Service isn’t just that the review of tax-exempt status applications was tilted against groups with conservative-sounding names. The scandal is that the Internal Revenue Service was asking questions that it had no business asking anyone of any ideological stripe. “Unconstitutionally intrusive,” is what Jay Sekulow calls them. Sekulow’s American Center for Law and Justice has represented 27 conservative organizations whose tax-exempt status applications have been delayed by the IRS. He reports that the IRS asked many of his clients whether, for example they communicate, directly or indirectly, with members of legislative bodies. Sekulow asks: “What is an ‘indirect’ communication? A newspaper article that a legislator might read? A speech a legislator’s spouse might attend?” 

The IRS also asked ACLJ’s clients whether past and present board members, officers, and key employees had any plans to run for office in the future. Not only that, they wanted to know whether anyone in the families of past and present board members, officers, and key employees had any political plans, too. [Fox News, May 14]

But don’t take just Sekulow’s word for it; in a report released yesterday, the Treasury Inspector General identifies seven different types of inappropriate questions that the IRS asked. The IRS wanted names of donors; lists of issues important to the organization and the organization’s positions on those issues; details about the audiences and participants who attend organization events; and information about political plans, political affiliations, and work histories of organization employees. [See page 20 of “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review,” by the Treasury Inspector General for Tax Administration, May 14, posted online by the Washington Post, May 14]

When the Tennessee-based Linchpins of Liberty, one of ACLJ’s clients, applied for tax-exempt status, the IRS sent “a list of 95 questions in 31 parts, including an ultimatum for a list of everyone the group had trained, or planned to train,” reports David Martosko. [The Daily Mail, May 15] The group teaches young leaders about “the inter-relation between individual liberty and morality, free-markets, limited government, strong national defense, and the traditional principles of our moral and constitutional order which have been passed down through Western Civilization.”

The IRS asked one tea party group in Ohio to send the group’s reading list, reports ABC News. The group mailed a copy of the Constitution. [ABC News, May 14]

From other groups, reports Politico, the IRS wanted printouts of Facebook and other social media postings. “They were killing tree’s left and right,” said Waco tea party organizer, Toby Marie Walker. [Politico, May 14]

In an interview with Todd Starnes, Sally Wagenmaker of the Thomas More Society said the IRS asked one of her clients about its prayer activity outside of Planned Parenthood clinics. The IRS then asked the group to pledge that it would not picket or protest outside of abortion clinics or organize others to do so, according to Wagenmaker. She also told Starnes that the IRS suggested that another client, a Christian broadcaster, needed to provide balanced coverage of the abortion issue in order to receive tax-exempt status. [Fox News, May 15]

Posted on 05/15/13 07:24 PM by Alex Adrianson

Not Just the IRS: Politics Tilts Treatment of Outside Groups by EPA, Too

The Environmental Protection Agency waives fees on Freedom of Information Act requests 92 percent of the time when the requester is a liberal group supporting more regulatory powers for the EPA. Meanwhile, the agency denies fee waiver requests 93 percent of the time when the requester is a free market-oriented critic of the EPA. Those are the results from a review conducted by Chris Horner, a fellow at the Competitive Enterprise Institute.

Between January 2012 to this Spring, “green groups, such as the National Resources Defense Council, Sierra Club, Public Employees for Environmental Responsibility and EarthJustice, had their fees waived in 75 out of 82 cases.” Over the same time period, Horner submitted 15 FOIA requests to the EPA, and the EPA denied 14 of them.

All of those denials were eventually overturned on appeal. Says Horner: “That these denials are ritually overturned on appeal, not after I presented any new evidence or made any new point, but simply restated what was a detailed and heavily sourced legal document to begin with, reaffirms the illegitimacy of these hurdles EPA places in the way of those who cause it problems.”

Other right-of-center groups also batted under .500: “EPA documents also showed Judicial Watch and the National Center for Public Policy Research each went 2-for-4, the Franklin Center had both its requests denied, and the Institute for Energy Research was denied in its only foray.”

Meanwhile: “[L]iberal media outlets, such as National Public Radio (7-for-7), ProPublica (3-for-3), the Nation and InsideClimateNews – all had all their requests granted over the same period.” [Competitive Enterprise Institute, May 14]

Posted on 05/14/13 12:00 PM by Alex Adrianson

How Could Anyone Be Cynical this Week?

As noted, there were two big stories of government scandal this week. If we didn’t know it before, we certainly know now that some government officials lied about what they knew in the days following the 9/11/12 attacks in Benghazi. We also know that other officials told untruths about whether the Internal Revenue Service harassed conservative organizations applying for tax exempt status.

But let’s rewind a little further. On Sunday, before those stories broke, President Obama told the graduating class of Ohio State University:

Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems; some of these same voices also doing their best to gum up the works. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices. Because what they suggest is that our brave and creative and unique experiment in self-rule is somehow just a sham with which we can’t be trusted.

See how that works? If you mistrust the government, then you mistrust the people, since the people are in charge of the government. In that moral universe, we’re all responsible for politically motivated harassment of non-profits, and we’re all responsible for lying to ourselves about why an American ambassador was murdered. That formulation is awfully convenient if you’re the one in charge of the government.

Posted on 05/10/13 09:22 PM by Alex Adrianson

IRS Admits It Targeted Conservative Groups

On Friday, an Internal Revenue Service official admitted that the IRS targeted organizations with the words “Tea Party” and “Patriot” in their names for extra scrutiny when reviewing their applications for tax exempt status. The admission, from Lois Lerner, came not before a Congressional hearing but at the tax conference put on by the American Bar Association. Lerner apologized but claimed that the extra scrutiny was the result of bureaucratic errors, was limited to one IRS unit in Cincinnati, and was not the result of political malice. Kevin Williamson isn’t buying that:

[T]hose tea-party organizations were sent letters of inquiry demanding information that would seldom if ever be demanded of any other applicant in the process. The IRS demanded lists of donors, names of spouses and family members, detailed information about political views and associations—all of that “under penalties of perjury.” Many applicants dropped out of the process. The questions were remarkably invasive: For example, the IRS demanded to know not only whether political candidates participated in public forums conducted by the groups, but which issues were discussed, along with copies of any literature distributed at the forum and material published on websites. (The IRS has been less forthcoming with its own materials related to this investigation.) If the organizations collected dues, the IRS demanded to know how much they were. It demanded everything down to the résumés of employees. The inquiry was not limited to members of the organization, its executives, or its directors, but included even their family members: The IRS demanded to know—again, under penalty of perjury—whether any of their family members might be thinking about running for office. Its demand for the names of all donors—and all recipients of grants—is in violation of IRS policy. […]

Other groups were included in this additional review, but while the office handles applications from all sorts of organizations, a full 25 percent of those targeted for additional review were “Tea Party” or “Patriot” groups.

“Obviously, you don’t get dozens of inquiries asking unconstitutional questions, with zero corresponding inquiries into liberal groups, unless there is something going on,” says David French, senior counsel for the American Center for Law and Justice, which is representing 27 groups from 18 states in the IRS matter. “It’s not just the numbers, it’s the questions themselves. They were designed to dissect the operations of the organizations.” Mr. French believes that the IRS’s actions were intended as political intimidation.

He also is skeptical that the problem is limited to the Cincinnati office: “We dealt with offices from California to D.C. on this,” he says. With regard to the congressional testimony denying such targeting, he concludes: “Either they lied or they didn’t do the most basic due diligence.” [National Review, May 10]

Posted on 05/10/13 07:26 PM by Alex Adrianson

White House E-Mails Contradict White House Story about Its Benghazi Story

ABC’s Jonathan Karl has the big story of the week:

When it became clear last fall that the CIA’s now discredited Benghazi talking points were flawed, the White House said repeatedly the documents were put together almost entirely by the intelligence community, but White House documents reviewed by Congress suggest a different story.

ABC News has obtained 12 different versions of the talking points that show they were extensively edited as they evolved from the drafts first written entirely by the CIA to the final version distributed to Congress and to U.S. Ambassador to the U.N. Susan Rice before she appeared on five talk shows the Sunday after that attack.

White House emails reviewed by ABC News suggest the edits were made with extensive input from the State Department. The edits included requests from the State Department that references to the Al Qaeda-affiliated group Ansar al-Sharia be deleted as well references to CIA warnings about terrorist threats in Benghazi in the months preceding the attack. [ABC News, May 10]

Posted on 05/10/13 07:00 PM by Alex Adrianson

Campaign Finance Reforms Don’t Reduce Corruption

In a new paper for the Mercatus Center, Adriana Cordis and Jeff Milyo use a number of statistical tests to measure the effect of campaign finance reforms on public corruption:

[W]e find no strong or consistent evidence that state campaign finance reform reduces public corruption. This finding is true regardless of whether the reform in question is a limit on corporate or individual contributions or some form of public financing. […]

These non-results are substantively important because the courts effectively have placed the burden of proof on the government to show that campaign finance regulations reduce corruption.

Our findings are consistent with other research that demonstrates an absence of any treatment effect of state campaign finance regulations on public trust and confidence in state government […] . While these results may not surprise scholars of American politics, they are at odds with the popular wisdom that many politicians, reform advocates, and media pundits espouse. Further, the apparent impotence of campaign finance regulations in ameliorating the “actuality or appearance of corruption” has dramatic implications for the longstanding legal rationale for all existing campaign finance regulations. Heretofore, many judges and legislators have considered it self-evident that restrictive campaign finance regulations are a prophylactic for public corruption. We find that this presumption is baseless. [Internal citations omitted.] [“Do State Campaign Finance Reforms Reduce Public Corruption?” by Adriana Cordis and Jeff Milyo, April 2013]

Posted on 05/10/13 05:40 PM by Alex Adrianson

The Estonia Model

In contrast to the policies of the United Kingdom, Estonia’s austerity isn’t fake. It’s also working, says Matthew Melchiorre:

In the four quarters following the British government’s announcement of austerity in June 2010, general government spending increased by 4.3%, a rate of growth that has increased since then.

Some “austerity.”

Whitehall also has been squeezing more taxes out of British citizens, with revenues increasing by 7.8% the first year and the rate of growth shooting up into double digits the next two.

And the Bank of England’s balance sheet has grown 334% since September 2008, as it’s tried to prop up bad assets held at London banks.

The result: A still-unaddressed gap between wages and labor productivity that has sapped British competitiveness over the past decade, stagnant export growth (which was actually negative in 2012), and net negative economic growth since 2008. […]

For a better way forward, let’s look at Estonia, which took its medicine as soon as the global financial crisis broke. It cut government spending relatie [sic] to its pre-crisis level drastically—2.8% in 2009 and 9.5% in 2010—and is now one of Europe’s fastest growing economies.

Tax revenues fell, too. Moreover, Estonia’s central bank refused to prop up banks that shipwrecked on the rocks of a real estate bubble.

Today, the country’s number of non-performing loans is half what it was during 2009-2010. Export growth rebounded strongly during 2010-2011 and has since remained above its pre-crisis level.

Estonia’s economic recovery is impressive enough, with unemployment now below the Euro Area average and having made up its total economic losses by 2012. [Investor’s Business Daily, April 24]

Posted on 05/10/13 03:52 PM by Alex Adrianson

“Internet Tax” May Hit Savings Accounts

Your 401(k) might not be tax free after all if the Marketplace Fairness Act (MFA) becomes law. Described by proponents as a way of leveling the playing field between online and physical retailers, the bill would allow states to impose use taxes for transactions beyond their borders. It’s already been passed by the Senate, and the House may take up the bill soon, too. John Berlau explains how this bill will allow states to tax savings vehicles:

The bill authorizes states to “require all sellers not qualifying for the small seller exception [$1 million in sales or less] to collect and remit sales and use taxes with respect to remote sales sourced to that Member State.” Yet “sellers” and “sales” are never specifically defined, and there are no specific exemptions for certain types of products or services.

Financial experts say this means states tax “sales” such as stock trades in a mutual fund or brokerage account, or even contributions to pension plans such as 401(k)s that were designed to be tax-free until retirement.

The American Society of Pension Professionals and Actuaries, a group of more than 11,000 retirement plan and benefits professionals, warns the bill “would allow states to impose a financial transaction tax that would apply to American workers’ 401(k) contributions and other transactions within worker’s accounts.” The group notes that “over 70 million workers could be affected” by such taxes, which “could significantly reduce workers savings over time, threatening their retirement security.” […]

The Securities Industry and Financial Markets Association (SIFMA), representing securities firms and asset managers, issued a statement urging hearings on the MFA’s impact on financial services. As written, “the bill could lead to unexpected costs being passed on to consumers of financial services, including sales taxes on services or state-level stock transaction taxes,” the group said. [OpenMarket.org, May 6]

Posted on 05/10/13 02:51 PM by Alex Adrianson

Herb Romerstein, R.I.P.

Communism expert and Cold War historian Herb Romerstein died this week after a long illness. Paul Kengor remembers:

Herb knew the Cold War and communist movement unlike anyone. He understood it because he lived it and breathed it. Born in Brooklyn in 1931, he himself had been a communist, having joined the Communist Youth League before becoming a card-carrying member of Communist Party USA (CPUSA). He broke ranks over 60 years ago, the final straw being the Korean War, which made clear to him that he was dealing with inveterate liars, whether in Korea, Moscow, or among communists on the home-front. He went on to become one of America’s best anti-communists and most respected authorities, regularly testifying before Congress. He became a chief investigator for the House Committee on Internal Security. In the 1980s, he joined the Reagan administration, where his full-time job at the U.S. Information Agency was to counter Soviet disinformation, a duty for which few were so well-equipped or enthusiastic. He relished the role of taking on professional Soviet propagandists such as Georgi Arbatov and Valentin Falin. Later, he did the highly touted analysis of the Venona transcripts, which he published as The Venona Secrets.

That’s just the tip of the iceberg. I cannot do justice to how this translated into action. I never tire of listening to stories from Herb’s longtime friend Charlie Wiley on how they penetrated the communist-run World Youth Festivals in the 1950s, or challenged a Soviet official successfully spooning the Party line to open-mouthed progressives at the All Souls Church in New York, or tossed a wrench into this or that meeting of communist youth leaders. Guys like this were one of a kind who lived life to its fullest. They were warriors — unafraid, cheerful, colorful Cold Warriors. [American Spectator, May 10]

Posted on 05/10/13 02:03 PM by Alex Adrianson

“Debunked” Might Not Mean What Liberals Think It Means

We keep hearing that researchers from the University of Massachusetts – Amherst have debunked Ken Rogoff and Carmen Reinhart. Rogoff and Reinhart’s work found that high levels of gross public debt lead to slower growth. The supposed debunkers are Thomas Herndon, Michael Ash, and Robert Pollin, who have published a paper that examines one of Rogoff and Reinhart’s papers. Herndon, Ash, and Pollin conclude that it contains “coding errors, selective exclusion of available data, and unconventional weighting of summary statistics.” Liberal commentators have used this “debunking,” to argue that the United States does not need to rein in spending. Those commentators are ignoring one fairly key point, however: After correcting Rogoff and Reinhart’s data, Herndon, Ash, and Pollin recalculated the relationship between gross public debt and economic growth and found that it remains negative and pronounced. Like Rogoff and Reinhart, they’ve found that economic growth suffers when gross public debt exceeds 90 percent of a country’s annual gross domestic product:

Currently, gross public debt exceeds 105 percent of gross domenstic product in the United States. [H/t: Just Facts Daily, May 6]

Posted on 05/08/13 02:20 PM by Alex Adrianson

Progress!

The Fund for American Studies has a new video that reminds us of how much the standard of living in the United States has improved since 1900. Nobody could have imagined that progress 113 years ago. Can we imagine the technologies and the knowledge that will make lives better in the next 113 years? What kind of economic system allows the surprising, the unimaginable, the unplanned to happen? Check out the video:

Posted on 05/08/13 11:16 AM by Alex Adrianson

An Immigration Amnesty Would Cost $6.3 Trillion

Legalizing 11 million immigrants who are currently in the United States illegally, as proposed by the so-called “Gang of Eight” immigration reform being considered by the Senate, would cost taxpayers $6.3 trillion over the lifetimes of those legalized. That’s the finding from a new paper by Robert Rector and Jason Richwine, who estimate in detail how much the newly legalized population would pay in taxes and how much they would draw in benefits from means-tested federal programs. Some details of their analysis:

[I]n 2010, in the U.S. population as a whole, households headed by persons without a high school degree, on average, received $46,582 in government benefits while paying only $11,469 in taxes. This generated an average fiscal deficit (benefits received minus taxes paid) of $35,113.

The high deficits of poorly educated households are important in the amnesty debate because the typical unlawful immigrant has only a 10th-grade education. Half of unlawful immigrant households are headed by an individual with less than a high school degree, and another 25 percent of household heads have only a high school degree. […]

If amnesty is enacted, the average adult unlawful immigrant would receive $592,000 more in government benefits over the course of his remaining lifetime than he would pay in taxes.

Over a lifetime, the former unlawful immigrants together would receive $9.4 trillion in government benefits and services and pay $3.1 trillion in taxes. They would generate a lifetime fiscal deficit (total benefits minus total taxes) of $6.3 trillion. (All figures are in constant 2010 dollars.) This should be considered a minimum estimate. It probably understates real future costs because it undercounts the number of unlawful immigrants and dependents who will actually receive amnesty and underestimates significantly the future growth in welfare and medical benefits. […]

Following amnesty, the fiscal costs of former unlawful immigrant households will be roughly the same as those of lawful immigrant and non-immigrant households with the same level of education. Because U.S. government policy is highly redistributive, those costs are very large. [“The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer,” by Robert Rector and Jason Richwine, The Heritage Foundation, May 6.]

The real cost of an amnesty could be larger than what Rector and Richwine have calculated. For example, they do not include in their estimate the cost that taxpayers will bear if the newly legalized immigrants choose—as they would have the right to do—to bring their spouses and children into the United States from abroad. Rector and Richwine also do not include the costs that would be generated from any fraudulently obtained legalizations or the cost of incentivizing future illegal immigration (which an amnesty now would do). The estimates also assume that means-tested programs will continue as they are currently set up; if instead those programs became more generous over time—as they have throughout the past 50 years—then taxpayers would have to spend even more money as a result of an amnesty.

Some critics of the study, including Doug Holtz-Eakin of the American Action Forum, have argued that this analysis is flawed because it looks only at the net fiscal cost to taxpayers, and doesn’t consider the overall effect of immigration on the economy. As Heritage’s Derrick Morgan points out, that argument isn’t really a critique of the Heritage methodology; it’s a criticism of the question Heritage has chosen to answer:

The complaint isn’t about what Rector has done, but rather what they want Heritage to do. […] Rector and Holtz-Eakin are studying two different questions. Rector’s study is a fiscal distributional analysis that focuses on amnesty for unlawful immigrants, a proposal that greatly concerns conservatives and The Heritage Foundation. Holtz-Eakin, by contrast, looks at “a benchmark immigration reform,” undefined, and then does a rough dynamic analysis that proceeds to ignore the fiscal effect highlighted by Rector. […]

Nearly all immigration will, by definition, increase the gross domestic product. The real test of any immigration or immigration reform is whether it makes current lawful residents better off by raising their after-tax incomes. This is why Heritage has consistently supported immigration of highly skilled immigrants who, according to Rector’s research, pay more in taxes than they receive in taxpayer-funded benefits. [The Foundry, April 23]

The notion that a study might be flawed for looking only at the fiscal consequences of an amnesty reflects the false choice at the heart of the Gang of Eight bill: That we can either fix everything that’s wrong with our immigration system all at once and include an amnesty, too, or we can have no immigration reform at all. As Rector and Jim DeMint point out, there’s no reason to do reform that way:

Instead of forcing through a complicated, lengthy bill, Congress ought to advance piece-by-piece immigration solutions that enjoy broad support and build trust with the American people. We should move to streamline our legal immigration system, encourage patriotic assimilation to unite new immigrants with America’s vibrant civil society, fulfill promises to secure our borders and strengthen workplace enforcement.

We are proudly a nation of immigrants. People the world over are attracted to the United States because we are a nation of laws. Granting amnesty to those who broke the law and putting them on a path to citizenship would be unfair, would encourage more bad behavior and would impose significant costs on American families. [Washington Post, May 6]

Posted on 05/07/13 07:49 PM by Alex Adrianson

To Do: Appreciate GIs through Film

• Honor the sacrifices of our men and women in the military by taking in a screening at the GI Film Festival. The festival runs May 6-12 in Washington, D.C., and Northern Virginia. In addition to screening new films—both long and short—the festival offers several parties, contests, an awards shows, and even a boot camp on financing and distribution for aspiring film makers.

• Find out how the budget impasse will affect national security. The Heritage Foundation will host a panel featuring Robert Zarate of the Foreign Policy Initiative, Todd Harrison of the Center for Strategic and Budgetary Assessments, and former Sen. Jim Talent. The discussion will begin at 11 a.m. on May 9.

• Learn whether Islamism is a religious or an ideological movement. The MacDonald-Laurier Institute will host a lecture by Daniel Pipes on May 13 at 7 p.m. in Ottawa.

• Win $250 by writing a blog post on a Freeman article. The Foundation for Economic Education wants to know when its Freeman articles provoke a reaction. If you read a Freeman article and think the author left something out or could have looked at the issue in another way, write a blog post on it, and then send the post to the folks at FEE. Once a month, the foundation’s Thorpe-Freeman Blog Contest will award $250 to the best blog commenting on a Freeman article.

• Learn how to create and market high-impact videos with the Atlas Economic Freedom Foundation’s Lights, Camera, Liberty! program. Ideal candidates are organizations (both U.S. and international) that are committed to using video as part of their communications strategies. Participants get grants for equipment, expert training, and exclusive eligibility to compete in the annual Lights, Camera, Liberty! Film Festival during Atlas’s Liberty Forum, November 13-14 in New York City.  Applications are due August 11.

• Save the dates! We don’t know how to say this, but these events are kind of a big deal: the American Enterprise Institute’s Annual Dinner featuring Rep. Paul Ryan, May 8 in Washington, D.C.; the Oklahoma Council of Public Affairs’ 2013 Citizenship Award dinner featuring Heritage Foundation President Jim DeMint and Heritage Foundation Founder Ed Feulner, May 9 in Oklahoma City; the Oslo Freedom Forum, May 13-15 in Oslo; the World Congress of Families, May 15-18 in Sydney; the Becket Fund’s Canterbury Medal Dinner honoring Elder Dallin H. Oaks, May 16 in New York; the America’s Future Foundation’s Annual Gala, March 23, in Washington, D.C.;  the America’s Future Foundation’s Summer Leadership Dinner with Senator Ted Cruz, June 5 in Washington, D.C.; and the Competitive Enterprise Institute’s Annual Dinner, June 20 in Washington, D.C.

Posted on 05/07/13 05:23 PM by Alex Adrianson

Another Lawsuit Against ObamaCare

Last Thursday, a group of small businesses owners and individuals in six states filed a new lawsuit against ObamaCare. Similar to the lawsuit filed in January 2011 by the Oklahoma attorney general, this one, filed in the United States District Court for the District of Columbia, alleges that the Internal Revenue Service is contravening the plain language of ObamaCare by making federal tax credits for health insurance available in states that chose not to create their own exchanges. ObamaCare, says the lawsuit, provides for the subsidies only through state-run exchanges, not the exchanges that the federal government will create in the states that decline to create their own exchange. Both the individual mandate to purchase a qualifying plan and the employer mandate to provide health insurance to employees are tied to the availability of the federal subsidies in a state; thus, the IRS’s decision triggers those mandates, which the plaintiffs would rather avoid.

Michael Cannon and Jonathan Adler have been writing about the IRS’s ruling on subsidies for some time; their latest offering is “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” published in Health Matrix: Journal of Law-Medcine, Spring 2013.

Posted on 05/06/13 05:11 PM by Alex Adrianson

Putting People on Medicaid Doesn’t Improve Their Health

Researchers from Harvard and MIT have found that being on Medicaid makes no noticeable difference in objective measures of health such as blood pressure, blood sugar, and cholesterol levels. The findings, which come from studying low-income Oregonians, have just been published in the New England Journal of Medicine. Expanding Medicaid, you may recall, is a big part of what ObamaCare does.

Two years ago, Oregon expanded Medicaid eligibility, but didn’t have enough money to cover everyone who enrolled. So the state conducted a lottery to decide who got coverage and who didn’t. That decision essentially produced a natural experiment in Medicaid coverage. The Harvard/MIT team conducted a randomized controlled trial to see whether Medicaid improved health. The researchers’ bombshell conclusion: “The study did not generate any evidence that Medicaid coverage translated to measurable improvements in physical health outcomes over a two-year window.”

Some details from Megan McArdle:

No statistically significant treatment effect on any objective measure: not blood pressure. Not glycated hemoglobin. Not cholesterol. There was, on the other hand, a substantial decrease in reported depression. […]

There’s been a bit of revisionist history going on recently about what, exactly, its supporters were expecting from Obamacare—apparently we always knew it wasn’t going to “bend the cost curve”, or lower health insurance premiums, or necessarily even reduce the deficit, and now it appears that we also weren’t expecting it to produce large, measurable improvements in blood pressure, diabetes, or blood sugar control either. In fact, maybe what we were always expecting was a $1 trillion program to treat mild depression. […]

Either people with insurance are doing an okay job of getting treatement for all the major chronic diseases—which is startling, because as you may recall one of the main reasons that we needed Obamacare was all the poor uninsured people who can’t control their blood pressure or diabetes. Or that the treatment Medicaid patients get for their chronic diseases doesn’t do them much good.

McArdle also points out that the findings from year two of the Oregon randomized controlled trial—the only such study that has compared having Medicaid with not having any kind of coverage—were supposed to be published last summer, but for some reason weren’t. “That’s a real pity, because many voters going to the polls last November, and governors considering whether to do the Obamacare Medicaid expansion this spring, would probably have liked to have had this data sooner.” [Daily Beast, May 1]

Posted on 05/06/13 02:29 PM by Alex Adrianson

The Freedom Movement Huddles in Orlando

Sen. Jim DeMint offered what we’d like to think is a fittingly optimistic appraisal of The Heritage Foundation’s annual Resource Bank meeting. “All the pieces are here to win this battle,” DeMint told an audience of some 500 think tank leaders, activists, scholars, and journalists. This group—all part of the movement to return the United States to its Founding principles of individual liberty and constitutionally limited government—was about to tuck-in to dinner, one day’s worth of panel discussions and networking behind them, one day’s worth ahead. Were all the pieces to win the battle for liberty really there, in Orlando, Florida, last Thursday and Friday?

Maybe. There were certainly a lot of pieces there, in particular, ideas. Here’s some of what we saw and learned:

A Medicaid Victory. The buzz at dinner was optimistic. Speaker of the Florida House of Representatives Will Weatherford was supposed to be the first keynote speaker of the evening. He had to cancel, but for a good reason: The Florida House was voting that night on whether to expand Medicaid eligibility in order to accept new federal subsidies created by ObamaCare. Medicaid, by the way, has problems. Some studies have found patients on Medicaid have worse outcomes than similar patients who have no insurance at all. And then, of course, there is the question of whether the states should be expanding a program that already eats a quarter of the typical state budget at a time when states are strapped for cash. The promise of federal funding to pay for the expansion has proven too enticing for some states to turn down, but there’s no guarantee that federal funding will continue indefinitely.

As you might expect, this crowd was acutely aware of these issues. Robert McClure, President of the James Madison Institute, filled in for Weatherford; when he relayed the news that the Florida House had just voted down Medicaid expansion, the entire room broke into sustained applause. Since the meeting, the Speaker has continued to hold the line, and the legislature has adjourned the session without taking any federal money for Medicaid expansion.

Care that Makes Sense for the Those Who Really Need It. Florida does have an alternative idea for how to fix Medicaid. At a panel the very next morning, Christie Herrera, of the Florida-based Foundation for Government Accountability, detailed the success that Florida’s Medicaid pilot program has had since it was enacted in 2006. The pilot program, which operates in three Florida counties, shifts Medicaid from a fee-for-service setup to one that puts coverage choices in the hands of patients. The program has saved Florida money while improving patient satisfaction. Herrera told the story of several patients who are considered “medically complicated.” That means they have multiple conditions requiring specialist care that must be coordinated. Those covered under Florida’s new Medicaid have access to case managers; that kind of care coordination isn’t available under a system that simply pays doctors fees calculated by formula for their services. Florida is currently waiting to see if the federal government will OK its waiver application and allow the state to expand its Medicaid reforms to the entire state.

We Now Have Regulation by Tweet! At the panel on the rule of law, Hester Peirce of the Mercatus Center reminded us of just how unaccountable the director of the new Consumer Financial Protection Bureau is. The director alone sets the budget, writes the rules, and decides when to bring enforcement actions. The current director, Richard Cordray, has now established the precedent of enforcement by Tweet. Yes, he has used Twitter to announce enforcement actions. The director cannot be removed from office, except by the President under narrow circumstances.

Cordray, you’ll remember, became director through a “recess appointment” that President Obama purported to make when Congress was not actually in recess. Panelist Todd Gaziano of The Heritage Foundation identified that action as one of the top five unilateral White House actions that were contrary to the rule of law.

The Higher Education Revolution Is Coming. At the panel on higher education, Michelle Rhee-Weise reminded us that disruptive technologies always enter the marketplace first as “just good enough” to compete. Yes, there may be some things that online learning can’t do as well as the traditional classroom model. But if online learning is already good enough to be an alternative for some students, then it is only going to get better over time. There should be no doubt, therefore, that online learning will transform higher education.

Neal McCluskey of the Cato Institute cautioned, however, that the current accreditation system and federal aid setup will continue to be real barriers to innovation in higher education. Accreditation, he explained, looks at inputs, not outputs. Meanwhile, the ubiquity of federal aid gives colleges an incentive to capture that flow of funding by including a lot of frills in the campus experiences they offer and running as many warm bodies to graduation as they can. Short of ending federal aid, McCluskey suggests aid be tied to student performance, so as to give students an incentive to be smarter shoppers of higher education.

Broccoli Hypotheticals Are Always a Good Option. The idea that unions might have too much power can be tough to explain to some people; they figure that since unions represent workers and workers are a sympathetic lot, then whatever unions demand must be just and right. At the panel on labor reform, Joe Lehman of the Mackinac Center suggested the strategy of taking collective bargaining out of the context of labor. Ask: What if we had collective broccoli bargaining? What if everybody had to get their broccoli through collective bargaining with one supplier. And suppose we all had to buy (though probably not eat) as much broccoli as that collective bargaining agreement specified. What could go wrong with that system? Well, that’s the system we have for labor.

Many Teachers Disagree with the National Education Association. At the same labor panel, Gary Beckner talked about the work of the Association of American Educators, a non-union professional organization for teachers. Unlike the NEA, which tells its members what they think, the AAE regularly polls its members. Most of public school teachers who are AAE members support school choice programs.

The Hydrocarbon Is Our Friend. Mark Mills of the Manhattan Institute gave us the good news in the energy sector: The United States is now a net exporter of oil and will soon be a net exporter of hydrocarbons. According to Energy Information Administration, 80 percent of all new energy for the next 20 years will come from hydrocarbons—about the same proportion as now. Fracking and horizontal drilling are part of the story here, but only part, said Mills. Those technologies have been around for four decades. What’s really changed is that new technologies tell us where the energy-rich deposits are so that we know where to drill. Mills calls it “smart drilling.” Who could be against that?

But shouldn’t we be in favor of clean energy? Panelist Chris Horner of the Competitive Enterprise Institute provided a few choice points about clean energy: Whenever you hear clean energy hyped as the next growth sector, just remember that solar has been proclaimed ready to replace oil since the ’90s—1891 to be exact. No environmental rationale can ever make crony capitalism work. Taxing high-productivity sectors in order to subsidize low-productivity sectors and businesses leads to—wait for it—lower productivity. Europe has embraced clean energy. Europe has also lost manufacturing capacity in the last five years. And don’t buy the jobs argument for clean energy either, warned Horner. Just about everything creates jobs. Computer viruses create jobs. Natural disasters create jobs. Are we in favor of computer viruses and natural disasters?

An Intellectual Smorgasbord. The conference also featured discussions on delivering the freedom message, defending religious liberty, alternatives to the welfare state, what’s wrong with the Common Core curriculum and how states can resist federal encroachment in education policy, the changing media landscape, how to use social media to advance your message, and fundraising. This author couldn’t get to all the sessions, obviously, but heard great things about all the sessions, especially the session titled: “Confronting Common Core: Strategic Discussion.” We heard Michelle Malkin was there, tweeting about the session! The Massachusetts-based Pioneer Institute co-hosted the discussion.  For more about Common Core, see the institute’s Common Core Toolbox, or the work of The Heritage Foundation’s Lindsey Burke.

Embrace the Tools, but Don’t Forget What We’re Here to Do. National Review’s Jim Geraghty participated in the media session and wrote a short report on it. Here’s some of his food for thought on the role of social media:

[W]hile we need to be embracing social media and providing our news stories and arguments and ideas in ways that are more bite-sized, I have this nagging fear that we might lose, or perhaps slightly devalue, some of what we’re here to do. There is no such thing as investigative tweeting. A Facebook graphic is two sentences at most, a picture, and perhaps a hashtag. Theoretically, you can use Tweets and Facebook graphics as bait, designed to bring people to the long-form, meatier pieces, but I wonder how many people retweet a headline without actually clicking through to the story.

Good Work. A few folks won awards for their outstanding contributions to the cause of liberty. First, The Heritage Foundation awarded the 2013 Salvatori Prize for American Citizenship to the Claremont Institute. The $25,000 Salvatori Prize is named after late entrepreneur and philanthropist Henry Salvatori. The Claremont Institute was founded in 1979. It’s mission is to “restore the principles of the American Founding to their rightful, preeminent authority in our national life” by “recovering a limited and accountable government that respects private property, promotes stable family life, and maintains a strong national defense.” Among the Institute’s notable projects are the Claremont Review of Books and the Publius and Lincoln Fellowships for rising young conservative leaders.

Also, The Heritage Foundation and the Franklin Center for Government and Public Integrity awarded the 2013 Breitbart Award to Michelle Malkin for the tenacious truth telling she does through her websites MichelleMalkin.com and Twitchy.com. The Breitbart Award is named after social media pioneer Andrew Breitbart who died unexpectedly of heart failure last year at the age of 43.

Talk about “Dudes in Suits.” Rep. Trey Radel (R-Fla.) was the keynote speaker at the closing lunch, and he introduced us to his favorite phrase “dudes in suits.” He has found the phrase helpful in explaining free market, limited-government positions to his constituents: Who do you want making decisions about your health care? About how to spend your money? About where you are going to get your education? A bunch of dudes in suits in Washington, D.C., or you? Essentially, he’s saying what Milton Friedman said in his classic Free to Choose, but in a slightly hipper manner. Oh, he’s also shown you can talk that way while running as a Tea Party candidate to upset the Republican establishment and win a seat in Congress.

Stay Loose and Conserve. Rep. Radel challenged conservatives to loosen up in order to connect with their audiences better. (Radel is fluent in Spanish and dances the salsa.) He should have checked out the Saturday strategy session that focused on the ideas of the American Conservation Ethic. Yes, there was plenty of serious discussion, primarily focused on the need for a better understanding of how free markets, private property, and the ingenuity of free individuals will solve environmental problems. All good and important stuff, but then the falcons and the albino crocodile showed up. Falconer Robert Miller and Sean Haflick, star of the TV show The Python Hunter, each generously gave some of their time so that we could get some face time with a few of nature’s more enigmatic creatures. Haflick left the snakes behind, which was just as well, since many of us were heading back to Washington, D.C.

(All the pictures in this post are ©2013 Shealah Craighead Photography.)

Posted on 05/03/13 02:45 PM by Alex Adrianson

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