VIDEO: McCain’s Subcommittee Staff Director Urged IRS to Target Conservative Groups

Little is as unnerving as trouble with the IRS, especially if you haven’t done anything wrong. That happened repeatedly during the Obama administration, as his IRS enthusiastically targeted conservative groups.

We’re now understanding why the Congress didn’t do much of anything about it.

We just released internal IRS documents revealing that Sen. John McCain’s Former Staff Director and Chief Counsel on the Senate Homeland Security Permanent Subcommittee, Henry Kerner, urged top IRS officials, including then-director of exempt organizations, Lois Lerner, to “audit so many that it becomes financially ruinous.”  President Trump, presumably unaware of these new facts, appointed Kerner as Special Counsel for the United States Office of Special Counsel.

The explosive exchange was contained in notes taken by IRS employees at an April 30, 2013, meeting between Kerner, Lerner, and other high-ranking IRS officials. Just ten days following the meeting, Lois Lerner admitted that the IRS had a policy of improperly and deliberately delaying applications for tax-exempt status from conservative non-profit groups.

Lerner and other IRS officials met with select top staffers from the Senate Governmental Affairs Committee in a “marathon” meeting to discuss concerns raised by both Sen. Carl Levin (D-MI) and Sen. John McCain (R-AZ) that the IRS was not reining in political advocacy groups in response to the Supreme Court’s Citizens United decision. Senator McCain had been the chief sponsor of the McCain-Feingold Act and called the Citizens United decision, which overturned portions of the Act, one of the “worst decisions I have ever seen.”

In the full notes of an April 30 meeting, McCain’s high-ranking staffer Kerner recommends harassing non-profit groups until they are unable to continue operating. Kerner tells Lerner, Steve Miller, Nikole Flax, then chief of staff to IRS commissioner, and other IRS officials, “Maybe the solution is to audit so many that it is financially ruinous.” In response, Lerner responded that “it is her job to oversee it all:”

Henry Kerner asked how to get to the abuse of organizations claiming section 501 (c)(4) but designed to be primarily political. Lois Lerner said the system works, but not in real time. Henry Kerner noted that these organizations don’t disclose donors. Lois Lerner said that if they don’t meet the requirements, we can come in and revoke, but it doesn’t happen in a timely manner. Nan Marks said if the concern is that organizations engaging in this activity don’t disclose donors, then the system doesn’t work. Henry Kerner said that maybe the solution is to audit so many that it is financially ruinous. Nikole noted that we have budget constraints. Elise Bean suggested using the list of organizations that made independent expenditures. Lois Lerner said that it is her job to oversee it all, not just political campaign activity.

We previously reported on the 2013 meeting. Senator McCain then issued a statement decrying “false reports claiming that his office was somehow involved in IRS targeting of conservative groups.” The IRS previously blacked out the notes of the meeting, but we found the notes among subsequent documents released by the agency.

We separately uncovered that Lerner was under significant pressure from both Democrats in Congress and the Obama DOJ and FBI to prosecute and jail the groups the IRS was already improperly targeting. In discussing pressure from Senator Sheldon Whitehouse (Democrat-Rhode Island) to prosecute these “political groups,” Lerner admitted, “it is ALL about 501(c)(4) orgs and political activity.”

The April 30, 2013 meeting came just under two weeks prior to Lerner’s admission during an ABA meeting that the IRS had “inappropriately” targeted conservative groups. In her May 2013 answer to a planted question, in which she admitted to the “absolutely incorrect, insensitive, and inappropriate” targeting of Tea Party and conservative groups, Lerner suggested the IRS targeting occurred due to an “uptick” in 501 (c)(4) applications to the IRS but in actuality, there had been a decrease in such applications in 2010.

On May 14, 2013, a report by Treasury Inspector General for Tax Administration revealed: “Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status” (e.g., lists of past and future donors). The illegal IRS reviews continued “for more than 18 months” and “delayed processing of targeted groups’ applications” in advance of the 2012 presidential election.

All these documents were forced out of the IRS as a result of an October 2013 Judicial Watch Freedom of Information (FOIA) lawsuit filed against the IRS after it failed to respond adequately to four FOIA requests sent in May 2013 (Judicial Watch, Inc. v. Internal Revenue Service (No. 1:13-cv-01559)). Judicial Watch is seeking:

  • All records related to the number of applications received or related to communications between the IRS and members of the U.S. House of Representatives or the U.S. Senate regarding the review process for organizations applying for tax exempt status under 501(c)(4);
  • All records concerning communications between the IRS and the Executive Branch or any other government agency regarding the review process for organizations applying for tax exempt status under 501(c)(4);
  • Copies of any questionnaires and all records related to the preparation of questionnaires sent to organizations applying for 501(c)(4) tax exempt status and;
  • All records related to Lois Lerner’s communication with other IRS employees, as well as government or private entity outside the IRS regarding the review and approval process for 501 (c)(4) applicant organizations.

The Obama IRS scandal is bipartisan – McCain and Democrats who wanted to regulate political speech lost at the Supreme Court, so they sought to use the IRS to harass innocent Americans. The Obama IRS scandal is not over. We continue to uncover smoking gun documents that raise questions about how the Obama administration weaponized the IRS, the FEC, FBI, and DOJ to target the First Amendment Rights of Americans.

JW Sues for Mueller Deputy Andrew Weissmann’s Text Messages

This week we learned that Deputy Attorney General Rod Rosenstein hid from Congress a text message by FBI official Peter Strzok declaring that Trump wouldn’t become President:

“No. No he’s not. We’ll stop it.”

The highly partisan Strzok became a lead player in Robert Mueller’s Russian collusion investigation of Donald Trump. Also, and still, in the lead is Andrew Weissmann, a senior deputy for Special Counsel Robert Mueller and a former chief of the Justice Department criminal Fraud Division.

Now the question is: What was Weissmann saying about Donald Trump and Hillary Clinton? We will find out.

Our legal team just filed a Freedom of Information Act (FOIA) lawsuit asking the court to compel the Department of Justice to produce “all text messages to or from DOJ official Andrew Weissmann” regarding President Donald Trump and Hillary Clinton. (Judicial Watch v. U.S. Department of Justice (No. 1:18-cv-01356)).

We sued after the DOJ failed to respond to our December 15, 2017, FOIA request for:

  • All text messages sent to or from DOJ official Andrew Weissmann regarding Donald Trump and/or Hillary Clinton between August 8, 2016 and the present.
  • All calendar entries, whether in physical or electronic form, for Weissmann from January 1, 2015 to the present.

We’re not at all surprised that the Justice Department didn’t respond, given its deplorable record of transparency.

Weissmann’s objectivity in Mueller’s investigation was called into question in December 2017 when a separate JW FOIA lawsuit uncovered an email Weissmann wrote praising former acting Attorney General Sally Yates for defying Trump on enforcement of the President’s so-called travel ban.

Weissmann wrote to Obama appointee Yates in the email: “I am so proud. And in awe. Thank you so much. All my deepest respects.” President Trump fired Yates over her refusal to defend the policy. Yates was appointed by President Obama and was serving in an acting capacity as Attorney General for President Trump.

Also in December 2017, the Wall Street Journal reported that Weissmann had been in attendance at Hillary Clinton’s 2016 election night party. According to the Washington Post, Weissman contributed more than $4,000 to the Obama Victory Fund in 2008 and $2,300 to the Clinton campaign in 2007.

Weissmann, described by The New York Times as Mueller’s “pit bull,” is the lead prosecutor in the Mueller team’s case against former Trump campaign manager Paul Manafort.

Weissmann is demonstrably an anti-Trump/pro-Clinton activist. And it is suspicious that the Justice Department refuses to turn over any Weissmann text messages, especially given the anti-Trump bias documented in the FBI”s Strzok-Page texts.

Judicial Watch Seeks Obama-Era Records on Refugee Resettlement Sites

While the professional Left has successfully diverted everyone’s attention to a manufactured crisis involving illegal alien children on our Southern border, we are investigating other ways people flow into our country.

In particular, we continue to look at the UN-sponsored refugee program that has brought dangerous people across our borders. During the Obama administration, pro-refugee officials in several places gamed this system to disguise their intent.

We have filed a Freedom of Information Act (FOIA) lawsuit in the United States District Court for the District of Columbia for records on sites that were considered for the resettlement of refugees in the United States during the last two years of the Obama administration. (Judicial Watch vs. U.S. Department of State (No. 1:18-cv-01244))

We sued after the State Department failed to respond to our February 23, 2017, FOIA request for:

  • All records reflecting the locations within the United States that were considered as possible sites for refugee resettlement under the U.S. Refugee Admissions Program (USRAP) in 2015 and 2016.
  • All records reflecting the criteria used to determine suitability of locations as refugee resettlement sites in 2015 and 2016.
  • All records reflecting the names of local organizations promoting any of the locations identified above for consideration as refugee resettlement sites.

In October 2016 we made public 128 pages of documents we obtained from the mayor of Rutland, Vermont, showing a concerted effort by the mayor and a number of private organizations to conceal from the public their plans to resettle 100 Syrian refugees into the small southern Vermont town. The mayor and resettlement organizations shrouded the plan in such secrecy that not even the town’s aldermen were informed of what was taking place behind closed doors. The aldermen eventually wrote to the U.S. Department of State protesting the plan and opened an investigation into the mayor’s actions.

The State Department says it currently works with nine nonprofit organizations to resettle refugees. Those nonprofits have about 315 affiliates in 180 communities throughout the U.S.

According to the International Organization for Migration (IOM), the U.S. admitted 84,994 refugees during fiscal year 2016, just short of the 85,000 target set by the Obama administration. The U.S. admitted 16,370 refugees from the Democratic Republic of Congo, 12,587 from Syria, 12,347 from Myanmar, 9,880 from Iraq and 9,020 from Somalia. Pew Research reports that nearly 39,000 Muslim refugees entered the U.S. in fiscal year 2016, the highest number on record, according to analysis of data from the State Department’s Refugee Processing Center.

In fiscal year 2015, the U.S. reportedly admitted 70,000 refugees. The Obama administration also proposed admitting 110,000 refugees for fiscal year 2017.

President Donald Trump on January 27, 2017 issued Executive Order 13769, which included a suspension of the USRAP for 120 days. There were 29,022 refugees reportedly admitted to the U.S. in 2017 – the lowest number since 2002.

In a July 2017 report on the refugee applicant screening process and associated fraud risks, the U.S. Government Accountability Office (GAO) noted that, “Increases in the number of USRAP applicants approved for resettlement in the United States from countries where terrorists operate have raised questions about the adequacy of applicant screening.”

We are suing to find out which towns across America were, without input and over the objections of residents, targeted for refugee settlements by the Obama administration.

And to make sure the Deep State isn’t up to its usual tricks, we are investigating to make sure now that the current State Department is being more transparent and honest in its placement of refugees.

The Strange Case of McAuliffe & McCabe — Another Clinton/FBI Scandal

You won’t hear from this from the liberal media, but the IG report is chock full of facts and scandal leads that go way beyond Clinton emails and the “get Trump” fever that overtook the FBI leadership. As our own Micah Morrison points out in his latest Investigative Bulletin piece, raises more questions about other players in the Clintons’ orbit:

Every student of American politics knows that Terry McAuliffe is that swampiest of swamp creatures, the cool cat with the big bucks. Al Gore called him “the greatest fundraiser in the history of the universe.” In 1996 alone, as national finance chairman of the Clinton-Gore re-election team, McAuliffe raised $50 million, but plunged the Democratic Party into a sweeping campaign-finance scandal involving the sale of sleepovers in the Lincoln Bedroom, coffee klatches at the White House, a vast cast of sketchy characters and rivers of money. The Clintons loved the ebullient money man and he loved them back. By 1999, McAuliffe claimed to have raised nearly $275 million for the Arkansas couple—and that’s before he joined forces with the Clinton’s 21st century money machine, the Clinton Foundation and Clinton Global Initiative. In 2000, he was named chairman of the Democratic National Committee. In 2008, he chaired Hillary Clinton’s presidential campaign. In 2013, with enthusiastic support from the Clintons, he ran for governor of Virginia and won.

By 2015, Governor McAuliffe already was “shaping a significant role for himself” in Mrs. Clinton’s second try at the presidency, Politico reported. A “consummate political animal, [McAuliffe] just can’t keep his fingers away from the flame. Despite the daily demands of running the state…he’s emerging as Hillary’s informal liaison to governors and the party’s biggest donors, while also keeping a finger on the pulse of the camp’s central operations in Brooklyn.”

By contrast, even today, in the wake of hundreds of media stories and last week’s Office of Inspector General report on alleged wrongdoing in the 2016 election, few people will recognize the name Andrew McCabe. He’s a swamp inhabitant too, though many would put him on the right side of the swamp, on dry land, chasing the bad guys. Except that’s not quite how it turned out.

Many of the McCabe details in the OIG report will come as no surprise to Judicial Watch followers. We’ve been uncovering facts about the McCabe affair for over a year. Read about our efforts herehere, and here.

A useful timeline in the OIG report sketches the McCabe-McAuliffe saga—a swamp tale of a particular sort. In 2014, McCabe, a rising star at the FBI, is assistant director of the bureau’s Washington, DC, field office. His wife is a pediatrician in Virginia. Terry McAuliffe is governor.

In February 2015, Dr. McCabe receives a phone call from Virginia’s lieutenant governor. Would she consider running for a state senate seat?

Less than two weeks later, in March 2015, McCabe and his wife drive to Richmond for what they thought was a meeting with a Virginia state senator to discuss Dr. McCabe’s possible run for office.
In Richmond, according to the OIG report, they are told there had been “a change of plans” and that “Governor McAuliffe wanted to speak to Dr. McCabe at the Governor’s mansion.”

It’s around this time that a veteran FBI agent’s radar might start blinking.

McCabe and his wife meet with McAuliffe for 30 to 45 minutes, according to the OIG report. Fundraising was discussed. “Governor McAuliffe said that he and the Democratic Party would support Dr. McCabe’s candidacy.” McAuliffe asked McCabe about his occupation and “McCabe told him he worked for the FBI but they did not discuss McCabe’s work or any FBI business.” McCabe later described it to an FBI official as a “surreal meeting.”

After the meeting, the couple rode to a local event with the governor, then returned to the mansion with the governor to retrieve their car.

McCabe informed FBI ethics officials and lawyers about the meeting and consulted with them about his wife’s plans. No one raised strong objections. McCabe recused himself from all public corruption cases in Virginia and Dr. McCabe jumped into the race.

In July 2015, the FBI opened an investigation into Mrs. Clinton’s email practices.

Let’s pause to note here that while the official FBI investigation was opened in July 2015, Mrs. Clinton was known to be in hot water as far back as March 2015, when the State Department inspector general revealed her widespread use of a private, non-government email server.

Swamp cats will notice that March 2015 is also when Andrew and Jill McCabe got their surprise audience with McAuliffe, the longtime Clinton money man.

The McCabe fortunes rose in the autumn of 2015. Mr. McCabe was promoted to associate deputy director of the FBI. Dr. McCabe received $675,000 from two McAuliffe-connected entities for her state senate race. They were by far the biggest donations to her campaign.

In November 2015, Dr. McCabe lost her race.

In January 2016, the FBI opened an investigation into the Clinton Foundation.

On February 1, Mr. McCabe was promoted again, to deputy director of the FBI.

Despite the McAuliffe connection, the OIG report notes, there was no FBI re-evaluation of McCabe’s recusals following his promotions. Although recused from Virginia public corruption investigations, he retained a senior role in Clinton-related matters.

In May 2016, news broke that McAuliffe was under FBI investigation for campaign finance violations. CNN reported that investigators were scrutinizing “McAuliffe’s time as a board member of the Clinton Global Initiative” and Chinese businessman Wang Wenliang, a U.S. permanent resident who made large donations to both the McAuliffe 2013 gubernatorial campaign and to the Clinton Foundation.

On October 23, the Wall Street Journal revealed the McAuliffe-linked donations to Dr. McCabe’s campaign. At FBI headquarters, McCabe resists pressure from senior executives to recuse himself from all Clinton-related matters.

Finally, on November 1—a week before the presidential election — McCabe recused from the Clinton email and Clinton Foundation investigations.

Following James Comey’s dismissal in May 2017, McCabe was briefly acting director of the FBI—the most powerful law enforcement position in the land. Following the appointment of Chris Wray as director, McCabe returned to the deputy director position and, as controversy engulfed him and the FBI, he went on paid leave. Attorney General Jeff Sessions fired him in March, 2018. The Justice Department inspector general has referred a possible criminal case against McCabe to federal prosecutors for lying to internal investigators in an earlier probe of the Wall Street Journal story and leaks.

One of the strangest claims in the OIG report is that the senior leadership of the FBI was not aware of — or perhaps simply did not care about — McAuliffe’s long history with the Clintons. “We were troubled,” the OIG report notes, “by the fact that the FBI ethics officials and attorneys did not fully appreciate the potential significant implications to McCabe and the FBI from campaign contributions to Dr. McCabe’s campaign and did not implement any review of those campaign donations. Thus, while the same factual circumstances that led to McCabe’s recusal on November 1, 2016, were present at the time McCabe became deputy director on February 1, 2016, the FBI ethics officials, McCabe, and Comey only learned of them as a result of the October 23 WSJ article.”

It seems likely now that the McCabe chapter of the larger battle in Washington will end with a whimper, not a bang. The beasts—investigative, media, political—move on. But what are we to make of Terry McAuliffe’s role in the episode?

Swamp aficionados will note the sudden “change of plans” that elevated the trip to Richmond from a meeting with a low-level political operative to an encounter with the governor. McAuliffe is charming and charismatic. Money is (vaguely) discussed, and oh by the way, McAuliffe asks McCabe, what is your occupation?

Now, Terry McAuliffe’s connections are legendary. His devotion to the Clinton ambitions is unswerving. He knows everybody, particularly anybody who has any business with the Clintons (remember, the email controversy is about to metastasize) and certainly he knew that Andrew McCabe worked for the FBI before he asked that question. But now McCabe knows that the governor knows. Next, money—a lot of it—flows to Dr. McCabe’s campaign.

Things might have turned out differently, after all. Jill McCabe might have been in the state senate. Hillary Clinton might have been in the White House. And Andrew McCabe was in line to be the next director of the FBI. Some of the best swamp plays are not about greed but ambition.

Here’s How Trump Wants to Streamline Government

The Trump administration proposes to reform and reorganize government by streamlining food regulation, merging two Cabinet departments, and consolidating housing programs.

Combining the Education and Labor departments is among 32 proposals in a plan released Thursday by the Office of Management and Budget in response to a charge President Donald Trump issued 14 months ago.

“We wanted to change the dialogue in Washington, to say it’s not acceptable to have things that just don’t make sense,” Margaret Weichert, OMB’s deputy director for management, told The Daily Signal.

Weichert did not provide an estimate of savings, but said it would be clear in the administration’s next budget proposal.

Mick Mulvaney, director of the Office of Management and Budget, lauded the report’s recommendations Thursday during a Cabinet meeting convened by the president.

The OMB’s 132-page plan also would merge the food component of the Food and Drug Administration, now part of the Department of Health and Human Services, into a Department of Agriculture entity to be known as the Food Safety Agency.

The report notes that the USDA regulates chicken, but the FDA oversees eggs—if the eggs are in shells. If the eggs are processed and in a carton for pouring, then it’s the USDA’s job.

What’s more, the FDA regulates cheese pizza but the USDA regulates pepperoni pizza.

“Our favorite one is an open-face roast beef sandwich is regulated by the Department of Agriculture,” Weichert said. “If you stick a layer of bread on top of it, and you add new bureaucracy, it switches to FDA. That just doesn’t make sense.”

Since the Labor Department and the Education Department both are responsible for learning and skills for Americans, the Trump administration wants to create a single Department of Education and the Workforce.

The merger, if approved by Congress, would put the United States in line with most other developed nations that are part of the Organization for Economic Cooperation and Development, Weichert said.

“When it comes to education and labor, most OECD countries managed education and labor missions in an integrated fashion. It’s actually part of the kind of competitive advantage dialogue that you can see in Europe and China,” Weichert told The Daily Signal, adding:

Lifetime learning and whatever form of education is needed to both drive the needs of society broadly, but also to drive the economy, is integrated. The House committee itself that has jurisdiction over these two agencies is a single committee.

Rep. Virginia Foxx, R-N.C., chairwoman of the House Committee on Education and the Workforce, called the proposed change a long overdue recognition of the connection between the two missions.

“We welcome the administration’s focus on education and workforce issues together, and as we continue our oversight over the Department of Education and the Department of Labor, we look forward to working with the administration on the proposal and how the new department could function to best serve American students, workers, job creators, and families,” Foxx said in a public statement.

The merger idea already is getting pushback, though, including from unions.

“The proposed merger of the departments of Labor and Education is yet another attempt by the Trump administration to weaken programs that serve and protect working families and to concentrate even more power in the hands of large corporations,” Chris Shelton, president of the Communication Workers of America, said in a formal statement.

In general, the OMB report calls for combining the functions of several departments and agencies and largely eliminating duplication.

Between a quarter and a third of the recommendations may be done through executive action, but the bulk of them would require congressional action, Weichert said.

In April 2017, Trump signed Executive Order 13781, which directed the Office of Management and Budget to propose a plan that would reorganize governmental functions to limit duplication.

The resulting plan contains solid ideas, said Paul Winfree, who was director of budget policy at the White House when Trump asked for the reorganization plan. Winfree since has returned to his position as director of the Roe Institute for Economic Policy Studies at The Heritage Foundation.

“The Heritage research team started thinking through a reorganization proposal more than three years ago,” Winfree said in a statement provided to The Daily Signal. “Early in the administration, I drafted the executive order that established the plan for assembling the proposal, which the president signed.”

“OMB worked closely with the Heritage team,” Winfree said, “and it’s obvious from reading the administration’s proposal that everyone is moving in the same direction.”

The federal government spends about $250 million a year for education programs on financial literacy across more than 20 agencies. The report recommends consolidating programs to save time and taxpayer resources.

The plan also calls for moving programs providing rural housing loan guarantees and rental assistance out of the Agriculture Department and into the Department of Housing and Urban Development, locating all federal housing programs in a single Cabinet department.

“To be sure, there’s going to be a lot of good public-sector drama around some of these proposals,” Weichert said, adding:

But I hope underneath all of that, we can find a spirit of willingness to actually do the right thing for the American people. Frankly, all of us know we need to do something. That’s why this president was elected. That’s why the American people wanted a businessman to come to Washington, was the fact that so much business as usual in Washington doesn’t make sense.

Past presidents, going back decades, have tried to reorganize and reform government but haven’t reached the desired effect, said Max Stier, president of the Partnership for Public Service, a nonpartisan research group.

“No one can reasonably dispute that our government needs reform, but structural reorganizations are rarely the most effective way to improve service to our citizens,” Stier said in a public statement.

The OMB report notes that President Warren Harding created the Bureau of the Budget in 1921 in one of the earlier reorganization attempts of the 20th century.

President Jimmy Carter carried out a personnel reform agenda that was fully implemented under President Ronald Reagan. And Presidents Bill Clinton, George W. Bush, and Barack Obama all pushed efforts to reduce duplication and increase public-private sector cooperation.

“For the administration’s reorganization plans to succeed, the president and members of his administration must articulate a government-wide vision for reform, the rationale for each proposal, and how the administration will implement changes and measure progress,” Stier said. “The White House also must get congressional buy-in and bipartisan support, make substantial, upfront investments, and plan for sustained attention over many years.”

Still, Weichert contends now is a time for action.

“Our system was designed after World War II, addressing legacy problems that in many cases are not problems today, and, we are 20 years into the 21st century, fundamentally. We have no time to waste,” she said.

COLUMN BY

Portrait of Fred Lucas

Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal and co-host of “The Right Side of History” podcast. Send an email to Fred. Twitter: @FredLucasWH.

Dear Readers:

With the recent conservative victories related to tax cuts, the Supreme Court, and other major issues, it is easy to become complacent.

However, the liberal Left is not backing down. They are rallying supporters to advance their agenda, moving this nation further from the vision of our founding fathers.

If we are to continue to bring this nation back to our founding principles of limited government and fiscal conservatism, we need to come together as a group of likeminded conservatives.

This is the mission of The Heritage Foundation. We want to continue to develop and present conservative solutions to the nation’s toughest problems. And we cannot do this alone.

We are looking for a select few conservatives to become a Heritage Foundation member. With your membership, you’ll qualify for all associated benefits and you’ll help keep our nation great for future generations.

ACTIVATE YOUR MEMBERSHIP TODAY

EDITORS NOTE: The featured image is of White House Budget Director Mick Mulvaney presenting proposals to consolidate the work of executive agencies during a meeting Thursday of President Donald Trump’s Cabinet. (Photo: Jonathan Ernst/Reuters/Newscom)

Once Again, Obamacare’s Constitutionality Comes Into Question

Readers might recall that, in 2012, the Supreme Court of the United States upheld the constitutionality of the Patient Protection and Affordable Care Act, colloquially known as Obamacare, by a 5-4 vote in a case captioned NFIB v. Sebelius.

Last year, Congress revised Obamacare. In the Tax Cuts and Jobs Act of 2017, Congress eliminated the penalty imposed on people who do not purchase health insurance by reducing the penalty to $0 effective January 2019.

What makes that 2017 law interesting for present purposes is this: Chief Justice John Roberts wrote the controlling opinion in NFIB v. Sebelius; he concluded that the Obamacare penalty can be characterized as a “tax”; and he decided that, so viewed, Obamacare was a constitutional exercise of Congress’ power to raise taxes.

Enter Texas. In February of this year, Texas and several other states filed a lawsuit alleging that, by reducing the Obamacare tax to zero, Congress eliminated the only basis on which the Supreme Court had upheld the constitutionality of Obamacare. A sine qua non of a tax is that it generates revenue, Texas argued, and beginning in January 2019 Obamacare will no longer do so.

Accordingly, concluded Texas, starting next year Obamacare can no longer be upheld as a lawful exercise of Congress’ taxing power, so the federal courts should hold the law unconstitutional now.

The possibility that Obamacare could yet be consigned to the ash heap delighted some and troubled others. (For my opinion on the matter, see here.) Recently, the Department of Justice filed its answer to the Texas complaint. In it, the department agreed with the plaintiffs that Obamacare will become unconstitutional once the individual mandate penalty effectively disappears next year.

The Justice Department believes that, as a result, several provisions of Obamacare must go, such as the requirement that insurance companies provide coverage to someone with a pre-existing condition—but the Justice Department thinks that the rest of the statute can stand.

Texas disagrees. It argues that the Obamacare statute is like the base in Jenga: Once you remove the critical elements, the entire superstructure falls apart.

So what happens now? Here is how the case might proceed.

The district court is likely to act without delay. Why? There are no facts in dispute, only (at most) two legal issues: Is Texas right that Obamacare can no longer be upheld as a lawful exercise of Congress’ taxing power? If “No,” game over. If “Yes,” then is Texas also right that the unconstitutional portion(s) of the law cannot be severed from the remainder without leaving Obamacare a jumble of words that does not make sense?

Those issues may be difficult to resolve legally, but there is no need for a trial over the facts. Plus, the district court knows that, in all likelihood, the Supreme Court will ultimately have to resolve this dispute and that, the closer it gets to January 2019, the more attention there will be on the effect of eliminating the “tax” on the insurance markets.

The Supreme Court will need to decide this issue because of the odd way that it upheld the constitutionality of Obamacare in NFIB v. Sebelius. Four justices concluded that Obamacare was a lawful regulation of commerce, and four disagreed. Roberts was the fifth vote to uphold Obamacare. He decided that the health care law could be upheld as a tax, but not as a regulation of commerce.

The result was that five justices found the law constitutional, but they disagreed about why.

Given the odd nature of the court’s lineup in NFIB v. Sebelius and the pending disappearance of the “tax,” it is incumbent on the Supreme Court to take up the issue once again and—hopefully—come up with a majority opinion that puts the matter to rest.

Once the district court issues its decision, it is possible for one or more parties to ask the Supreme Court to review the case even before the U.S. Court of Appeals for the 5th Circuit does.

How? One of the parties could file in the Supreme Court what is known as a “petition for a writ of certiorari before judgment,” a mechanism that allows a party to leapfrog over the appeals court and go directly to the Supreme Court.

The Supreme Court does not have to grant such a petition, and it prefers to have at least one appeals court review an issue before taking it up, because it likes the help that comes with having three circuit judges write about a problem. But it may not make much of a difference because the court of appeals is also likely to act expeditiously.

Regardless of how the case reaches the Supreme Court, it is likely that the Supreme Court will revisit the constitutionality of Obamacare this fall. With luck, the whole matter will finally be resolved before the end of this year. Stay tuned.

COMMENTARY BY

Portrait of Paul J. Larkin Jr.

Paul J. Larkin Jr. directs The Heritage Foundation’s project to counter abuse of the criminal law, particularly at the federal level, as senior legal research fellow in the Center for Legal and Judicial Studies. Read his research.

Dear Readers:

With the recent conservative victories related to tax cuts, the Supreme Court, and other major issues, it is easy to become complacent.

However, the liberal Left is not backing down. They are rallying supporters to advance their agenda, moving this nation further from the vision of our founding fathers.

If we are to continue to bring this nation back to our founding principles of limited government and fiscal conservatism, we need to come together as a group of likeminded conservatives.

This is the mission of The Heritage Foundation. We want to continue to develop and present conservative solutions to the nation’s toughest problems. And we cannot do this alone.

We are looking for a select few conservatives to become a Heritage Foundation member. With your membership, you’ll qualify for all associated benefits and you’ll help keep our nation great for future generations.

ACTIVATE YOUR MEMBERSHIP TODAY

Antitrust Matters Matter

United States antitrust laws regulate the organization and conduct of business corporations on state and national levels to provide fair competition for the benefit of consumers. Why are they necessary?

The Federal Trade Commission (FTC) has the answer.

“Free and open markets are the foundation of a vibrant economy. Aggressive competition among sellers in an open marketplace gives consumers – both individuals and businesses – the benefits of lower prices, higher quality products and services, more choices, and greater innovation. The FTC’s competition mission is to enforce the rules of the competitive marketplace – the antitrust laws. These laws promote vigorous competition and protect consumers from anticompetitive mergers in business practices. The FTC’s Bureau of Competition, working in tandem with the Bureau of Economics, enforces the antitrust laws for the benefit of consumers.”

The Sherman Antitrust Act, passed by Congress in 1890 under President Benjamin Harrison, was the first Federal act that outlawed interstate monopolistic business practices. It is considered a landmark decision because previous laws were limited to intrastate businesses.

In 1890 Utah, Oklahoma, New Mexico, Arizona, Alaska, and Hawaii were not even states. The Transcontinental Railroad that connected the eastern United States with the Pacific coast was in its infancy. That was then, this is now. Today there are 50 states, world travel is commonplace, and antitrust matters matter to every person on Earth.

Why? What do antitrust matters have to do with me? The answer is EVERYTHING.

The protections of antitrust laws focus on the unfairness of business monopolies on consumers. What about the unfairness of political monopolies on citizens? America broke free from the monopolistic centralized power of the British monarchy and won its independence after years of war and death. Why? To create a country based on the principles of individual freedom and liberty.

Every freedom articulated by our Founding Fathers was designed to protect the citizenry by promoting individualism and fairness. The Constitution and Bill of Rights are the greatest antitrust documents ever written providing:

  • Freedom of religion
  • Freedom of speech
  • Freedom of the press
  • Freedom of assembly
  • Freedom to petition
  • Right to keep and bear arms
  • No quartering of soldiers
  • Freedom from unreasonable searches and seizures
  • Right to due process
  • Right to speedy trial
  • Freedom from cruel and unusual punishment

The United States Constitution protects citizens from anticompetitive mergers in government practices. The United States of America is the greatest experiment in individual freedom and liberty the world has ever known specifically because of its antitrust antimonopolistic infrastructure. The Constitution defines the checks and balances of power and the individual rights of its citizens.

The current battle for our national sovereignty is an antitrust struggle against global governance. Globalism must not be confused with fair global trade between independent nations. Globalism is the monopolistic anticompetitive political practice of concentrating world power in the hands of a few globalist elite rulers. It is a return to the feudal infrastructure of a paternalistic pyramid with the few elites at the top and the masses of enslaved people at its base.

In 1890 antitrust legislation was necessary to protect consumers from exploitive business practices that focused on goods and services in the interstate marketplace. In 2018 the competition is over the world of ideas. Political systems of national sovereignty supporting individual freedom are battling political systems supporting collectivist globalism.

Globalists are selling planetary governance. They are facilitating the sale by concentrating their power with mergers and acquisitions that limit the information the public is offered. Monopolistic information through censorship and partisan program content on the Internet, television, radio, films, and particularly in academic curricula indoctrinate the unsuspecting public toward collectivism and planetary governance.

Today’s consumers need protection from exploitive political practices to provide fair competition for the benefit of consumers. The American public needs to become aware of how protective antitrust legislation that prevents monopolistic concentration of power affects them. Global governance is a worldwide concentration of power that eliminates individual freedom in the same way global monopolies on goods and services eliminate fair competition. Free and open markets are the foundation of a vibrant economy just like the free and open marketplace of ideas is the foundation of freedom.

The choice that Americans must make is between “free” stuff in a monopolistic collectivist political system of global governance that will enslave them, or freedom in an independent sovereign United States of America. The coordinated effort to delegitimize and overthrow President Donald Trump is the coordinated effort to delegitimize and overthrow our national sovereignty. Antitrust matters matter because monopolistic oppression is never good for the consumer whether they are buying goods, services, or their freedom.

EDITORS NOTE: The featured image is of President Donald Trump arrives for the official welcoming ceremony the G7 Summit in the Charlevoix town of La Malbaie, Quebec, Canada, June 8, 2018. (Christinne Muschi/Reuters) This column originally appeared on the Goudsmit Pundicity.

Rule to Defund Planned Parenthood Moves Forward

WASHINGTON (ChurchMilitant.com) by Anita Carey : The federal government is proposing removing federal tax dollars from Planned Parenthood, and is seeking the public’s opinion on its proposed rule.

In May, when President Trump spoke at the Susan B. Anthony List (SBA List) Gala, he introduced the Protect Life Rule that would stop all federal money from the Title X family planning program from going to organizations that perform abortions. Last week, the federal government opened the mandatory 60-day public commenting period before legislative discussions to adopt the rule.

Father Stephen Imbaratto of Priests for Life calls this “a good and proper first step to totally defunding the abortion industry.”

Eric Scheidler, executive director of Pro-Life Action League, told Church Militant, “Planned Parenthood likes to pretend that low-income women depend on them for health care, but that’s simply untrue.” He explained that they offer mostly contraception and abortion services, while only providing about one percent of all STD testings and less than one percent of all Pap tests.

Title X was passed in 1970 and was aimed at providing government grants to public or nonprofit entities to establish and operate family planning projects, “including natural family planning methods, infertility services and services for adolescents.” The program was never intended to be used to fund abortion.

The Department of Health and Human Services (HHS) explained that the new rule is needed because there is not sufficient guidance to ensure funding is not used to encourage or promote abortion as a method of family planning.

Scheidler said that the $60 million Planned Parenthood would be stripped of “would go to healthcare providers that offer a wider range of services and a higher standard of care.” He added, “This could include pregnancy resource centers and abstinence programs.”

Mallory Quigley, vice president of communications for Susan B. Anthony List, told Church Militant, “The Protect Life Rule directs tax dollars to Title X centers that do not provide or perform aboartions — such as the growning number of community and rural health centers that far outnumber Planned Parenthood facilities — without reducing family planning funding by a dime.”

“These alternatives offer holistic ppreventative and primary care, not just for women, but for their children, as well as men,” Quigley noted. Planned Parenthood often tells women not to bring their children with them to appointments.

In 2016, Title X handed out over $286 million in taxpayer money to 48 states and 43 family planning agencies that provide contraception, testing for sexually transmitted diseases (STDs) and cancer screenings to almost 3,900 clinics. Planned Parenthood receives about $60 million from Title X grants, representing only about 20 percent of all the federal money they receive.

Father Imbaratto told Church Militant, “Planned Parenthood gets more than this and by all accounts spends all government monies either directly or indirectly to elect pro-abortion candidates.”

Quigley said abortion mills can use this funding as a “slush fund” that allows them to pay for rent, electricity, and other overhead costs. “It can also be used for advertising within the community to attract more clients,” she said.

A recent poll found 60 percent of Americans oppose taxpayer funding of abortion. Quigley said it’s important for all pro-life Americans to submit comments to the HHS: “A large outpouring of public support ensures that the abortion lobby understands the majority of Americans side with President Trump and support the pro-life action taken by the administration.”

Scheidler pointed out that stripping Planned Parenthood of its Title X funding would “reduce Planned Parenthood’s access to low-income women, who will have to go elsewhere for family planning.” He said this could reduce the number of women seeking abortions because “Planned Parenthood will not be able to market abortion to these women.”

Susan B. Anthony List agrees, saying, “Research released by the Charlotte Lozier Institute in 2018 shows Planned Parenthood has inflated the U.S. abortion rate, controlling more than 35 percent of the abortion industry and resulting in more than three million ‘extra’ abortions that could have been avoided.”

Quigley noted that Planned Parenthood’s annual report show that “despite the increase in taxpayer funding, the only thing not to decline at Planned Parenthood is the number of abortions they do.”

“To fully defund Planned Parenthood of all federal money would require legislation,” Scheidler explains. He said the November general election could provide enough votes in the Senate to look at “making Planned Parenthood ineligible for Medicaid funds, which would be a dramatic pro-life victory — and very bad for Planned Parenthood.”

“There is no need to justify withholding such funds,” Dr. Monica Miller, national director of Citizens for a Pro-Life Society, said. “One red cent of taxpayer money should never be granted to any group that fails to respect life.”

“No other argument need be given and Planned Parenthood is the flagship when it comes to carrying the blood of the unborn,” Miller said.

Quigley noted that their “working to-do list” in the pro-life movement mirrors Trumps’s campaign promises: “appointing only pro-life Supreme Court nominees,  to defund Planned Parenthood … to protect the Hyde Amendment, and to advance and sign into law the Pan-Capable Unborn Child Protection Act — which would end abortion after five months.”

“This is not about the pro-life movement,” Fr. Imbaratto clarified. “It’s about babies and moms.”

The commenting period runs to July 31. Pro-lifers are asked to weigh in before the period closes.

The Dark Underbelly of Refugee Resettlement in the U.S.

When I first began writing this blog in July 2007, one of the issues that attracted my attention was the puzzling decision by the Virginia Council of Churches, working for major resettlement contractor Church World Service, to place refugees in one of the worst buildings in the worst section of Hagerstown, MD.

cws logo

But, here we are 11 years later and Church World Service has placed Congolese refugees in Greensboro, NC in housing that is managed by a company that has a record of many years of troubling business practices.

I’m sure CWS rejoinder is—well give us more taxpayer money and we will get them nicer apartments. 

And, I say, this was supposed to be a public-private partnership, so how about you, CWS, raising private money from your churches to help these Africans you placed (so that North Carolina meatpackers could have cheap compliant labor)!

It all began with that fire that killed five Congolese children.  We wrote about it here (fire marshal determined food had been left on the stove).

But, that isn’t the end of it as a Congolese refugee, the father of the dead children, asks (in a heated meeting):

“We are refugees from Africa, we want to know if we have rights.”

I know what some of my readers will say to the Africans, but have some compassion, I’m sure most were never fully informed of what to expect in America.

CWS does much of our processing in Africa and they surely painted a rosy welcoming picture for the Congolese.  (In June 2013, the Obama Administration told the UN that we would take 50,000 from the DR Congo over 5 years. They are still coming!)

From Triad City Beat:

Safety concerns persist at complex that houses Congolese refugees

Congolese refugees, resettlement agencies and the owners of the Heritage Apartments give conflicting accounts of maintenance efforts in the wake of a deadly fire that took the lives of five children last month.

Greensboro meeting

Refugee contractors face unhappy tenants.

Representatives of two agencies that resettle and support refugees in Greensboro had given lengthy presentations about their menu of services to the group of Congolese refugees packed into a sweltering community room at Heritage Apartments on a recent Saturday.

One of the residents, the father of five children who were killed in a fire last month at the apartment complex, asked a pointed question.

“We are refugees from Africa,” said the man, who declined to give his name. “We want to know if we have rights.”

Many of the residents, who work low-paying and grueling jobs in chicken plants in Wilkes and Lee counties, complained about going to the hospital for treatment and coming home with insurmountable hospital bills. Others complained that their apartments lack air-conditioning units.

How about BIG CHICKEN coming up with money for the hospital bills (and air conditioners for their workers)!

Earlier in the meeting, Lynn Thompson, outreach director for the New Arrivals Institute, ventured an answer to the question about refugees’ rights, alluding to widespread community concern about the deadly fire and poor conditions at the apartment complex, which is owned and managed by the Agapion family.

Go buy your own air conditioners says resettlement agency!

“It’s really bad for us,” Anzuruni Juma said through a translator. “When we moved in we didn’t know we only had heating to keep warm in the winter, and nothing to keep cool in the summer. Sometimes we can’t even sleep and have to go to a neighbor’s place to cool off.”

Rachel Lee, a program coordinator for African Services Coalition — one of two resettlement agencies, along with Church World Services, responsible for placing refugees at Heritage Apartments — suggested the residents go to Lowes or Walmart to purchase window units for their apartments. The residents said they don’t earn enough money to be able to afford air-conditioning, prompting some talk that the refugee agencies might turn to churches for donations.

Refugee advocates not happy with Church World Serve and African Services Coalition (Ethiopian Community Development Council)

Some of the advocates directed pointed questions, alongside the residents, at the representatives of the two resettlement agencies.

See Heritage Apartments landlord has history of tenant conflict (2008), and so didn’t CWS or this ECDC subcontractor know any of this?  Do the contractors get some special benefits from choosing certain landlords?

More here.

See other posts on Greensboro, here.

So where are the humanitarian churches*** willing to help the refugees of Greensboro (and America!)?

Too busy protesting the President to do their Christian duty?

cws protest at WH 2

Those small circled signs are CWS signs. How about if CWS spends less time protesting at the White House with CAIR and more time taking better care of the refugees they place in your towns and cities!

Do you belong to one of these churches represented by CWS? If so, ask what is your church getting out of it?

***CWS Member Communions:

African Methodist Episcopal Church

Are the Dems Still Ballot-proof?

Donald Trump may not be on the ballot in November, but the future of his conservative agenda is. And three waves into this primary season, that seems to be all the motivation Republican voters need.

For the third time in as many primaries, conservatives seemed determined to change the media’s narrative about the midterm elections — turning out en masse in four southern states that will be critical to keeping the GOP’s hold on the House. At least in Republican-leaning states, the “blue wave” Democrats keep promising has been more like a blue sprinkle. That’s not to say things can’t change — they most certainly can, especially with the string of West Coast and New England races still to be decided. But for now, it is clear that conservative voters are far from disengaged.

David Wasserman, one of the analysts with an eye on these trends, says that after a rough start to the year, Republicans are getting some small doses of good news. So far, the GOP seems to be reaping the benefits of a banner spring for the White House’s international policies. After positive developments on Iran, Israel, and North Korea, the Democrats’ lead over Republicans on the generic congressional ballot is nonexistent. After being up by double digits in January, Reuters says the two parties are neck-and-neck. But, Wasserman warns, there’s still a long way to go. “Republicans still can’t point to hard election data that proves their base has suddenly closed the ‘intensity gap’ in the last few months.”

But they’re working on it! Tuesday’s showing in Texas, Kentucky, Arkansas, and Georgia was the third strong showing for conservatives in states where liberals hoped to make some noise. Our friend Chris Wilson (@WilsonWPA), who first started seeing some positive trends for Republicans in toss-up states like Pennsylvania, says that pattern is continuing. In Texas, the Democrats’ turnout in the runoff resulted in the fewest votes case since 1920!

“D’s hopes of turning #TX even slightly violet continue to fade,” Chris tweeted. “Despite a closely contested #TXgov runoff… Dems can’t reach record low of 449k votes from 100 years ago!” And that’s not all, “In each of the open #TX [congressional districts] where *both parties* had a runoff, [Democrats] massively underperformed.” Republicans, on the other hand, continued to stream into their polling stations. In Georgia, the party cast 54,000 more votes than Democrats, which seemed like small potatoes compared to Arkansas, where they cast 96,000 more. Obviously, these are states where conservatives should be outperforming liberals. But in a year where Republicans can’t afford to take anything for granted, the outcome was a reassuring one.

Meanwhile, over at Democratic headquarters, party bosses deepened their bench of far-Left radicals on the November ballot with wins for LGBT activists, abortion extremists, and candidates who promise a return to the Obama years. In the Democrats’ words: We will impeachWe will abortWe will raise taxes. And that’s exactly the kind of agenda that failed them in 2016. Even now, a full year and change into Trump’s administration, heartland Democrats have pleaded with the national party to return to the middle. “You’re Killing Us” was the message to Washington. A message, so far, unreceived.

Over at Deep Root Analytics, experts are making a pretty solid case for a values-driven campaign. After the May 5 and 18 primaries, we mentioned just how potent social issues are proving to be in this election cycle. Well, it turns out, they’re even more compelling than most pollsters realizedIn Pennsylvania and Idaho, where we pointed out that turnout was higher than expected, social issues appeared in “more GOP ads than any other issue — nearly doubling the total number of ads as tax reform, the next highest appearing issue.” In fact, Deep Root explains, there were “nearly two-times as many ads containing a social issue message than a tax message in these primaries.”

What does that mean? A lot if you’re a conservative campaign manager. “While the data we currently have access to does not allow us to comprehensively connect social issues advertising to higher-than-expected turnout, it does indicate something clearly: GOP advertisers relied on social issue messaging as their closing argument…” Obviously, David Seawright wrote, “advertisers believed that messaging on social issues was critical to their goal of both motivating and persuading GOP primary voters during the final stages of each campaign.”

It’s certainly worked in the primaries we’ve seen so far. Of course, the important part is not to get comfortable. I don’t mention these positive developments so that people can get complacent. On the contrary, we want people to know just how important and influential their voice can be. Making America great again starts by making America good again. And that’s not government’s mission, but ours.


Tony Perkins’ Washington Update is written with the aid of FRC Action senior writers.


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What We Can Learn About Welfare Reform from Europe

Daniel J. Mitchell Some European countries have made big changes to their welfare systems that are getting more people back to work.

by Daniel J. Mitchell

America has a major dependency problem. In recent decades, there’s been a significant increase in the number of working-age adults relying on handouts.

This is bad news for poor people and bad news for taxpayers. But it’s also bad news for the nation since it reflects an erosion of societal capital.

For all intents and purposes, people are being paid not to be productive.

Guided by the spirit of Calvin Coolidge, we need to reform the welfare state.

Professor Dorfman of the University of Georgia, in a column for Forbes, pinpoints the core problem.

The first failure of government welfare programs is to favor help with current consumption while placing almost no emphasis on job training or anything else that might allow today’s poor people to become self-sufficient in the future. …It is the classic story of giving a man a fish or teaching him how to fish. Government welfare programs hand out lots of fish, but never seem to teach people how to fish for themselves. The problem is not a lack of job training programs, but rather the fact that the job training programs fail to help people. In a study for ProPublica, Amy Goldstein documents that people who lost their jobs and participated in a federal job training program were less likely to be employed afterward than those who lost their jobs and did not receive any job training. That is, the job training made people worse off instead of better. …Right now, the government cannot teach anyone how to find a fish, let alone catch one.

And Peter Cove opines on the issue for the Wall Street Journal.

…the labor-force participation rate for men 25 to 54 is lower now than it was at the end of the Great Depression. The welfare state is largely to blame. More than a fifth of American men of prime working age are on Medicaid. According to the Census Bureau, nearly three-fifths of nonworking men receive federal disability benefits. The good news is that the 1996 welfare reform taught us how to reduce government dependency and get idle Americans back to work. …Within 10 years of the 1996 reform, the number of Americans in the Temporary Assistance for Needy Families program fell 60%.

Interestingly, European nations seem to be more interested in fixing the problem, perhaps because they’ve reached the point where reform is a fiscal necessity.

Let’s look at what happened when the Dutch tightened benefit rules.

fascinating new study from economists in California and the Netherlands sheds light on how welfare dependency is passed from one generation to the next—and how to save children from lives of idleness.

A snowball effect across generations could arise if welfare dependency is transmitted from parents to their children, with potentially serious consequences for the future economic situation of children. …there is little evidence on whether this relationship is causal. Testing for the existence of a behavioural response, where children become benefit recipients because their parents were, is difficult… Our work overcomes these identification challenges by exploiting a 1993 reform in the Dutch Disability Insurance (DI) programme… The 1993 reform tightened DI eligibility for existing and future claimants, but exempted older cohorts currently on DI (age 45+) from the new rules. This reform generates quasi-experimental variation in DI use… Intuitively, the idea is to compare the children of parents who are just over 45 years of age to children whose parents are just under 45. .

Here’s the methodology of their research.

The first step is to understand the impact of the 1993 reform on parents. Figure 1 shows that parents who were just under the age 45 cut-off, and therefore subject to the harsher DI rules, are 5.5 percentage points more likely to exit DI by the year 1999 compared to parents just over the age 45 cut-off. These treated parents saw a 1,300 euro drop in payments on average. …the reform changed other outcomes as well. There is a strong rebound in labour earnings.

This chart from their research captures the discontinuity.

Here are the main results.

The second step is to see how children’s DI use changed based on whether the reform affected their parents. We measure a child’s cumulative use of DI as of 2014, by which time they are 37 years old on average. Figure 2 reveals a noticeable jump in child DI participation at the parental age cut-off of 45. There is an economically significant 1.1 percentage point drop for children if their parent was exposed to the reform, which translates into an 11% effect relative to the mean child participation rate of 10%. …welfare cultures, defined as a causal intergenerational link, exist.

This second chart illustrates the positive impact.

But here’s the most important part of the research.

Reducing access to redistribution to parents is a good way of boosting income and education for children.

…we examine whether a child’s taxable earnings and participation in other social support programmes change. Cumulative earnings up to 2014 rise by approximately €7,200 euros, or a little less than 2%, for children of parents subject to the less generous DI rules. In contrast, we find no detectable change in cumulative unemployment insurance receipt, general assistance (i.e. traditional cash welfare), or other miscellaneous safety net programs. Looking at a child’s educational attainment, there is intriguing evidence for anticipatory investments. When a parent is subject to the reform which tightened DI benefits, their child invests in 0.12 extra years of education relative to an overall mean of 11.5 years. …these findings provide suggestive evidence that children of treated parents plan for a future with less reliance on DI in part by investing in their labour market skills.

And it’s also worth noting that taxpayers benefit when welfare eligibility is restricted.

These strong intergenerational links between parents and children have sizable fiscal consequences for the government’s long term budget. Cumulative DI payments to children of the targeted parents are 16% lower. This is a substantial additional saving for the government’s budget, especially since there is no evidence that children substitute these reductions in DI income for additional income from other social assistance programmes. Furthermore, there is a fiscal gain resulting from the increased taxes these children pay due to their increased labour market earnings. Overall, we calculate that through the year 2013, children account for 21% of the net fiscal savings of the 1993 Dutch reform in present discounted value terms. This share is projected to increase to 40% over time.

Ryan Streeter of American Enterprise Institute explains that other European nations also are reforming.

Welfare reformers might draw some lessons from unlikely places, such as Scandinavia. While progressives like to uphold Nordic democratic socialism as a model for America, the Scandinavian welfare systems are arguably more pro-work than ours… For instance, to deal with declining labor force participation, Denmark eliminated permanent disability benefits for people under 40 and refashioned its system to make employment central. Sweden reformed its welfare system to focus on rapid transitions from unemployment to work. Their program lowers jobless assistance the longer one is on welfare. The Nordic model is more focused on eliminating reasons not to work such as caregiving or lack of proper training than providing income replacement. Similarly, the British government combined six welfare programs with varying requirements into a single “universal credit.” The benefit is based on a sliding scale and decreases as a recipient’s earnings increase, replacing several differing formulas for phasing out of welfare programs with one. An evaluation of the new program, which encourages work, found that 86 percent of claimants were trying to increase their work hours and 77 percent were trying to earn more, compared to 38 percent and 55 percent, respectively, under the previous system. …Scandinavia and Britain learned a while ago that successful welfare reform is not just about how much money a country spends on people who earn too little. It’s really about how to help them find and keep a good job. It’s time for America to catch up.

Amen.

For what it’s worth, I think we’ll be most likely to get good results if we get Washington out of the redistribution business.

In effect, block grant all means-tested programs to the states and then phase out the federal funding. That would give states the ability to experiment and they could learn from each other about the best way of helping the truly needy while minimizing incentives for idleness.

P.S. This Wizard-of-Id parody is a very good explanation of why handouts discourage productive work.

Reprinted from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

The Unreported Story Of America’s Booming Small Businesses

The untold story — the story the media refuses to tell — is that American small businesses are just banging it under the tax reform package the GOP Congress passed, every Democrat voted against, and Trump signed into law.

American economic strength as measured by unemployment, employment growth, GDP growth and other common measures is perhaps as hot as it has ever been. Even without knowing the exact numbers, Americans recognize this reality and that explains part of the reason President Trump’s approval ratings continue to rise and the generic Congressional ballot continues to narrow.

At the same time, and acting in tandem, small business confidence has hit an all-time high. This matters because businesses make investment, expansion and hiring decisions based on their confidence in the economy going forward, all of which suggests that the economic growth we are seeing has real, lasting legs — barring an unforeseen catastrophic event.

Small businesses are the heart and soul of the American economy. They always have been, and they always will be if the American economy is to retain is global leadership and strength. Apple, Google, Exxon-Mobil, Microsoft, General Motors, may be great companies. But huge companies are not what built and sustain the American economy. Small businesses that blanket every community are that.

And the Trump GOP tax cuts, along with ongoing deregulation, are playing a major role infusing them.

John Horne is a small businessman on the Gulf Coast of Florida and his story is exemplar of hundreds of thousands of small businesses. He owns four restaurants in Manatee County, just south of Tampa, and employs 333 people — 300 of whom are hourly employees with an annual payroll of $2.5 million; 33 are managers who earned $1.5 million in salary and bonuses in the past year.

He recently wrote in SRQ magazine how the tax cuts are affecting his business.

“I met with my CPA after tax season this year when he brought me my returns. What he explained to me was one of the parts of the new Tax Cut and Jobs Act where I get a 20 percent Business Income Deduction this year. He showed me what my taxes were in ’17 and if the new code were in effect what they would have been. I’ve already planned 2018, plugging my adjusted gross income for this year with the 20-percent deduction. We’ve been very consistent in our stores over the last 10 years as far as bottom lines go.”

Like most small businesses — and unlike the caricature created by Democrats and the media — Horne saw a great opportunity arising from the 20-percent reduction that the Trump GOP tax cuts gave him. He is taking that money and reinvesting most of it in his company and people, just like most American small businesses will:

“There are so many options, one I’ve already taken. Back in April after I met with my accountant, I bonused $60,000 to some of my staff. I purchased two new two-sided LED signs at $20,000 each for two of my locations to attract new customers. I heard my accountant say we’d probably realize $100,000 in savings/benefits from the new plan.”

Horne is in the restaurant business, which too many people deride is minimum wage. But that’s not really true. Of his 300 hourly staff members, no one is paid minimum wage; 113 earn $10 and $12.50 per hour; 39 earn between $12.50 and $15; 40 between $15 and $20; and 64 over $20. And about 47 percent of the hourly staff earn more than $15 dollars per hour.

Expect those wages to move up. The suddenly strong economy undergirded by the tax cuts and deregulation is now driving wage growth at small businesses. “The low unemployment rate is contributing to steady increases in wage growth,” according to Martin Mucci, president and CEO of Paychex. That means Horne and everyone else will have to pay more to keep and get employees.

Further, the CBO now reports that the tax cuts may pay for themselves, eliminating the “scary” $1.5 trillion deficit issue. That’s because of the economic growth roaring through the economy based on thousands of reinvestment decisions such as Horne’s.

Last June, the CBO said GDP growth for 2018 would be just 2 percent. Now it estimates growth will be a robust 3.3% — a significant boost. It also cranked up its forecast for 2019 from a paltry 1.5 percent to 2.4 percent. The CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.

All of those trillions in GDP will be taxed and that will go a long way toward erasing the deficit — unless Congress continues to spend like drunken sailors, which unfortunately is a safe bet.

Horne’s small business is a down-to-earth illustration of this, also. In the last 12 months, FICA payments at his four stores were $552,544. Matched with the employees’ payments, that means his small business contributed more than $1.1 million in taxes just to support Social Security.

All of this is the undeniable reality of lifting high tax and regulatory burdens off small businesses. When the weight of government on the backs of small businesses is lessened, those businesses take off.

Unfortunately, that is a story most Americans are not being told.

EDITORS NOTE: This column originally appeared in The Revolutionary Act.

Why Democrats Aren’t Running Against “Evil” Tax Cuts

Back in December and January, Democrats and their fellow-travelers in the media were ebullient over the idea of running against the “tax cuts for the wealthiest 1 percent” tax reform package Congress had passed on a straight party-line vote, and President Trump subsequently signed into law.

It’s worth a quick and entertaining look back at the now commonplace hysterical response from the American Left (Democrat/Media/Culture/Education establishment), this time at basic tax cuts.

House Democratic leader, Nancy Pelosi, a constant well-spring of poppycock, called the legislation “the end of the world” and “the worst bill in the history of the United States Congress.” (Ahem…Fugitive Slave Act?) She predicted the tax cut would create “a permanent plutocracy in our country that does violence to the vision of our Founders.” California Gov. Jerry Brown called tax cuts “evil in the extreme.”

The Washington Post felt compelled to run a column predicting the Great Depression II, including unemployment at 25 percent. Former Treasury Secretary Larry Summers said the bill’s health provisions would kill 10,000 people annually. And economic historian Bruce Bartlett said that tax cuts are “akin to rape.”

Veteran Atlantic political reporter Ron Brownstein argued that “President Trump and congressional Republicans have just taken the same leap of faith that Democrats did when they passed the Affordable Care Act.” The Huffington Post anxiously ran a story headlined “ObamaCare Plagued Democrats In 2010. The GOP Just Voted For A Bill Even Less Popular.”

And what’s a media nonsense roundup without Paul Krugman, who wrote a column, “Republicans’ Tax Lies Show the Rot Spreads Wide and Runs Deep.”

Well, something was running wide and deep.

But now that the big blue wave midterms are approaching, Democrats actually are not running against the end of the world, against 25 percent unemployment, against rot, against evil. You’d think those would be winning issues with the American people. Perhaps the end-of-the-world bombast was just empty drivel like so much that has been upchucked into the media since November 2016.

Remember how Republicans ran loud and hard (and for some, lied) about repealing Obamacare as soon as they had the chance. It was proving unpopular and hitting Americans negatively. We are seeing an almost complete absence of that now in both Democratic primaries, and where the general elections are set, in regards to the tax reform package that was the end of the world.

It’s not just by observation we are seeing this step away from tax cut repeal. Democratic leadership is admitting it. Washington Post political reporter David Weigel asked Democratic leaders about it at their recent strategy retreat, and tweeted their response:

“Asked Dems at retreat presser if they’ll run in 2018 on repealing the Tax Cuts and Jobs Act. Answer: Not really. (They’ll “restore balance.”) Weigel tweeted the full text of his questions and their answers. By balance, they presumably and without elucidation, mean balancing the budget, which they did such a bangup job of doing when they were in control.

Why the big flip for Democrats? It’s more than the dawning realization that the slogan, “Vote for me and I’ll raise your taxes!” is probably not going to resonate with voters.

 First, there are the actual facts involved with the tax reform package. The politically liberal Tax Policy Center ran the numbers and figured the tax cuts would benefit 80 percent of American families, while raising taxes for just 5 percent. Those tax hikes would fall disproportionately on the wealthiest 1 percent. The average family would save $1,610.

More facts. The Congressional Budget Office has sharply increased its forecast for GDP growth in 2018 from 2 percent to robust 3.3 percent as a direct result of the tax cuts. The CBO predicts GDP growth next year at 2.4%, up from the expected 1.5% before the tax cuts. Further, the CBO says that this level of growth in the economy could eliminate most of the so-called tax-cut deficit that Democrats are suddenly so concerned about. Unfortunately but to no one’s shock, the media largely ignored that report.

 Second, the tax cut package still remains popular. The “Republican” or “GOP” tax cuts, not so much. Recent polls showing a decline in support for the GOP tax cuts have elated Democrats and the media. But they’re quite misleading. The tax cuts themselves, broken down by almost every element within the bill, are overwhelmingly popular.

Investors Business Daily broke those down here. Americans’ support is absurdly high for most elements of the tax cuts. But most polls label the tax cuts as Republican or GOP, and when that happens, the support drops significantly.

A couple of things are at work here. One is the ongoing demonization of Republicans in the media. This has been a long-running train. The other is the conflation of budget deficit with the tax cuts. This of course has two elements, one of which is continued runaway spending, which congressional Republicans caved on like they always do. (Remember, they are caving to Democrats who actively pursue the runaway spending.) Saying that the taxes alone caused the projected $1.5 trillion deficit — over 10 years, because that is the only way to make it look bad — ignores half of the equation but clearly can influence news consumers.

 Third, an April Gallup Poll found that Americans think the tax code is more fair today than it was before the GOP tax cuts took effect. Last year, 51 percent of Americans said middle income families pay too much income taxes. That is now down to 42%. And amazingly, given the media coverage, 26 percent say upper-income families pay their fair share, up slightly from 24 percent last year. And the big corporate fat cat giveaway? Well, 24 percent now say that corporations pay their fair share, up sharply from 19% a year ago when corporate tax rates were much higher.

It’s hard to run on a lie when the truth keeps showing up in bi-weekly dollars in the wallet, when you can see how strong the economy around you is. High GDP growth is tangible, just like anemic GDP growth was under Obama.

Americans realize that the tax reform package was a net positive for their pocketbooks, for the economy, for jobs and for the deficit — the absolute opposite of how they rightly viewed Obamacare. That Democrats aren’t clawing to run against it means they still have a modicum of political sense left.

EDITORS NOTE: This column originally appeared on The Revolutionary Act. Please subscribe to our Revolutionary YouTube.

Who Are America’s Friends?

Have you ever been out to a large family dinner at a restaurant? Typically someone picks up the check for the entire party, such as a rich uncle. During the meal, he is kidded and listened to, but he is always expected to pick up the bill, with tip. It gets interesting when, one day, the family sits down at the table and the waiter asks who will be taking care of the bill at the end of the meal. The family is aghast when the uncle speaks up and says, “Separate checks.” Suddenly, the uncle isn’t quite so funny anymore, nor do people listen to him during the meal; in fact, he is ostracized and accused of being cheap. This pretty much describes America’s relationship with other countries.

On May 8th, President Trump announced the United States was withdrawing from the Iran nuclear deal. This sent shock waves through our European allies as they had hoped we would stay in it, believing the Iranians would keep their end of the bargain and not develop nuclear weapons down the road. Mr. Trump didn’t read it the same way and saw it as producing long-term problems. It must be remembered this agreement was never ratified as a treaty by the Senate as the Obama administration didn’t want to see the Congress upset one of his landmark achievements.

Following America’s withdrawal, protests were formed in Iran, American flags were burned, and “Death to America,” was chanted by protesters and members of the Iranian parliament. Then again, this was also done when the agreement was first signed, so nothing has really changed; the Iranians never did like us, and probably never will.

This is another example of Mr. Trump’s “Big Stick” foreign policy where we no longer cajole countries into trying to see things our way. Whereas other presidents hoped to entice countries into working together, Mr. Trump is more results oriented, likely because of his business background. Time and again he has been using his “America First” mantra as an intricate part of his foreign policy.

We have used the “carrot and stick” approach for many years, but what did we get in return, loyalty? Hardly. For example, in December 2017, the United Nations held a resolution disapproving of America’s recent decision to move the U.S. Embassy in Israel to Jerusalem, something many past presidents had promised to do, yet failed to deliver. The vote passed 128-9 with 35 countries abstaining. Among those countries voting against the United States included our “friends,” the United Kingdom, France, Germany, Japan, Belgium, Italy, Spain, Ireland, and the Netherlands.

Others also voted against the United States, including many receiving generous foreign aid from America, including:

(From FY2017) –

Afghanistan – $977M
Bangladesh – $179M
Brazil – $25M
Congo – $395M
Cuba – $7.3M
Egypt – $143M
Ethiopia – $939M
Ghana – $167M
Iraq – $529M
Jordan – $813M
Lebanon – $116M
Libya – $64M
Nepal – $181M
Nigeria – $684M
Pakistan – $485M
Somalia – $416M
South Africa – $360M
Sudan – $151M
Viet Nam – $81M
West Bank/Gaza (Palestine Auth) – $285M
Yemen – $573M
Zimbabwe – $154M

SOURCE: USAID

In all, $21B was spent on foreign aid last year, which is used for such things as disasters, poverty relief, technical cooperation on global issues, including the environment, U.S. bilateral interests, and socioeconomic development. However, this does not include military aid which would probably double the figures shown. Yet, all of these countries voted against the United States, thereby creating an embarrassing moment for us.

If you study the individual donations listed here, which is only a partial list, one can only wonder if there is a better way of spending this money, particularly in our own country instead of giving it to our “friends.” Don’t we still have a national debt?

In refuting the resolution, UN Ambassador Nikki Haley said,

“The United States will remember this day in which it was singled out for attack in the General Assembly for the very act of exercising our right as a sovereign nation. We will remember it when we are called upon to once again make the world’s largest contribution to the United Nations. And we will remember it when so many countries come calling on us, as they so often do, to pay even more and to use our influence for their benefit.”

The Palestinian Authority has declared it will not with work the Trump administration in peace talks because of the Jerusalem decision, and will negotiate with other parties instead. Fine. I’m sure they will not need the $285 million they are currently receiving from our country.

Countries ask their rich “Uncle Sam” for money for a variety of reasons, such as to cooperate with American military policy, payola, and because they desperately need it. Whatever the reason, they have to learn to play ball with the administration. A vote against the United States, such as what happened at the United Nations, should be felt in the pocket book.

We would like to believe the European countries are our friends, particularly the United Kingdom. The truth is, it is a myth. Even Australia, Canada, Mexico, and the Philippines, long considered friendly to the United States, opted to abstain as opposed to rejecting the UN resolution outright. We should know by now, the other countries only want deals favoring their countries, and not our own. This is what Mr. Trump has been warning us about since he began to run for president. There is nothing wrong in helping others in time of need, but it should come with the stipulation they will support us in return. Otherwise, it is a Win-Lose proposition and as our president can tell you, the only good business relationship is when both parties prosper.

Keep the Faith!

P.S., Be sure to see my video, “The PRIDE Renewal Tour,” on YouTube.

RELATED ARTICLE: Hamas Turmoil in Gaza is a Reflection of a Deeper Development in the Arab World

EDITORS NOTE: All trademarks both marked and unmarked belong to their respective companies. The featured image is of Iranians holding anti-Israel and anti-U.S. placards during a protest in Tehran. (AFP/Getty Images)

Muslims defraud U.S. taxpayers of over $100 million, use it to fund terrorist group al-Shabaab

Non-Muslims paying for the upkeep of Muslims is a Qur’anic dictate:

“Fight those who believe not in Allah nor the Last Day, nor hold that forbidden which hath been forbidden by Allah and His Messenger, nor acknowledge the religion of Truth, (even if they are) of the People of the Book, until they pay the Jizya with willing submission, and feel themselves subdued” (Qur’an 9:29).

The caliph Umar said the jizya payments from the dhimmis were the source of the Muslims’ livelihood:

“Narrated Juwairiya bin Qudama at-Tamimi: We said to `Umar bin Al-Khattab, ‘O Chief of the believers! Advise us.’ He said, ‘I advise you to fulfill Allah’s Convention (made with the Dhimmis) as it is the convention of your Prophet and the source of the livelihood of your dependents (i.e. the taxes from the Dhimmis.)’” (Bukhari 4.53.388)

UK jihad preacher Anjem Choudary said in February 2013:

“We are on Jihad Seekers Allowance, We take the Jizya (protection money paid to Muslims by non-Muslims) which is ours anyway. The normal situation is to take money from the Kafir (non-Muslim), isn’t it? So this is normal situation. They give us the money. You work, give us the money. Allah Akbar, we take the money. Hopefully there is no one from the DSS (Department of Social Security) listening. Ah, but you see people will say you are not working. But the normal situation is for you to take money from the Kuffar (non-Muslim) So we take Jihad Seeker’s Allowance.”

“Millions of dollars in suitcases fly out of MSP, but why?,” by Jeff Baillon, KMSP, May 13, 2018 (thanks to Ken):

MINNEAPOLIS (KMSP) – For five months, Fox 9 has been investigating what appears to be rampant fraud in a massive state program.

This fraud is suspected of costing Minnesota taxpayers as much as $100 million a year.

The Fox 9 Investigators reporting is based on public records and nearly a dozen government sources who have direct knowledge of what is happening.

These sources have a deep fear, and there is evidence to support their concerns, that some of that public money is ending up in the hands of terrorists.

SUITCASES FILLED WITH MONEY

This story begins at Minneapolis-St. Paul International Airport, where mysterious suitcases filled with cash have become a common carry-on.

On the morning of March 15, Fox 9 chased a tip about a man who was leaving the country. Sources said he took a carry-on bag through security that was packed with $1 million in cash. Travelers can do that, as long as they fill out the proper government forms.

Fox 9 learned that these cloak-and-dagger scenarios now happen almost weekly at MSP. The money is usually headed to the Middle East, Dubai and points beyond. Sources said last year alone, more than $100 million in cash left MSP in carry-on luggage.

The national, go-to expert on what is behind these mysterious money transfers is Glen Kerns.

“What we were interested in is where it was going,” Kerns said.

He is a former Seattle police detective who spent 15 years on the FBI’s joint terrorism task force, until his retirement.

“It’s an outright crime, it’s unbelievable,” he said.

Kerns tracked millions of dollars in cash that was leaving on flights from Seattle.

It was coming from Hawalas, businesses used to courier money to countries that have no official banking system.

Some immigrant communities rely on Hawalas to send funds to help impoverished relatives back home.

Kerns discovered some of the money was being funneled to a Hawala in the region of Somalia that is controlled by the al Shabaab terrorist group.

“I talked to a couple of sources who had lived in that region and I said, ‘If money is going to this Hawala do you think it is going to al Shabaab?’” said Kerns. “And he said, ‘Oh definitely, that area is controlled by al Shabaab, and they control the Hawala there.’”

He said when the money arrives, whether it was intended for legitimate purposes or not, al Shabaab or other groups demand a cut.

As Kerns dug deeper, he found that some of the individuals who were sending out tens of thousands of dollars’ worth of remittance payments happened to be on government assistance in this country.

How could they possibly come up with such big bucks to transfer back home?

“We had sources that told us, ‘It’s welfare fraud, it’s all about the daycare,’” said Kerns.

FOX 9 REPORTED ON THE FRAUD FIVE YEARS AGO

To better understand the connection between daycare fraud and the surge in carry-on cash, you have to look at the history of this crime.

Five years ago the Fox 9 Investigators were first to report that daycare fraud was on the rise in Minnesota, exposing how some businesses were gaming the system to steal millions in government subsidies meant to help low-income families with their childcare expenses.

“It’s a great way to make some money,” Hennepin County Attorney Mike Freeman said.

In order for the scheme to work, the daycare centers need to sign up low income families that qualify for child care assistance funding.

Surveillance videos from a case prosecuted by Hennepin County show parents checking their kids into a center, only to leave with them a few minutes later. Sometimes, no children would show up.

Either way, the center would bill the state for a full day of childcare….

RELATED ARTICLE: Corruption and bribery alleged in UN refugee office in Sudan

EDITORS NOTE: This column originally appeared on Jihad Watch.

More Pay for Unionized Teachers Is the Wrong Solution to the Wrong Problem

Daniel J. Mitchell The real issue at hand is why more and more money never produces better outcomes.

by Daniel J. Mitchell

Education spending and teacher pay have become big issues in certain states.

Unfortunately, not for the right reason. In an ideal world, taxpayers would be demanding systemic reform because government schools are getting record amounts of money (higher than any other nation on a per-student basis) while producing sub-par results.

Instead, we live in a surreal parallel universe where teacher unions are pushing a narrative that taxpayers should cough up more money because teachers supposedly are underpaid.

 

Let’s look at the data.

An article in City Journal debunks the claim that teachers are underpaid.

…protests across the country have reinforced the perception that public school teachers are dramatically underpaid. They’re not: the average teacher already enjoys market-level wages plus retirement benefits vastly exceeding those of private-sector workers. Across-the-board salary increases, such as those enacted in Arizona, West Virginia, and Kentucky, are the wrong solution to a non-problem. …At the lowest skill levels—a GS-6 on the federal scale—teachers earn salaries about 26 percent higher than similar white-collar workers. …The average public school teaching position rated an 8.8 on the federal GS scale. After adjustment to reflect the time that teachers work outside the formal school day, the BLS data show that public school teachers on average receive salaries about 8 percent above similar private-sector jobs. …Data from the Survey of Income and Program Participation show that teachers who change to non-teaching jobs take an average salary cut of about 3 percent. Studies using administrative records in Florida, Missouri, Georgia, and Montana showed similar results. …public-employee retirement and health benefits are bleeding dry state and local budgets. Neither the public nor teachers fully appreciates the costs of these programs. We forget the value of benefits when considering how teacher pay compares with private-sector work.”

And keep in mind those lavish pensions are woefully underfunded, so taxpayers are paying too much now and they’ll have to pay even more in the future.

But I think the key factoid from the above article is that teachers take a pay cut, on average, when they leave the profession. Along with the “JOLTS” data, that’s real-world evidence that teachers are getting paid more than counterparts in the economy’s productive sector.

Allysia Finley of the Wall Street Journal also punctures the false claims of the union bosses.

Teachers unions… They’re using misleading statistics… They conflate school funding and state education spending. In Oklahoma, unions proclaimed that per pupil school spending fell by 28.2% over the past decade. That refers to the inflation-adjusted state’s general funding formula. But total per pupil outlays increased by 16% in nominal terms between 2006 and 2016… They use elevated spending baselines. Teachers unions nearly always compare school spending and teacher salaries today with peak levels before the great recession, which were inflated like housing prices. Between 2000 and 2009, average per pupil spending across the country increased 52%…per pupil spending ticked up by 7.5% between 2012 and 2015. School spending growth…increased faster than the consumer price index. …They don’t account for other forms of compensation. Since 2000, per pupil spending on employee benefits has doubled. …pensions and health benefits are the fastest-growing expenses for many school districts, and most of the money goes to retired teachers. …the unions are lying with statistics.”

In a column for the Denver Post, a parent showed that his state’s teachers are getting above-average compensation.

Teachers are…mostly paid via a union “salary schedule,” meaning they get pay raises based on only two factors: the number of college degrees and certificates they earn, and how many years they’ve been on the job. That makes a pretty lousy incentive structure… We keep hearing Colorado is 49th in the country for educational spending. That lie is repeated so often it becomes legend. Funding for Colorado schools are split between the local school district and the state. So, if you compare only the state funding part to states that have no local match, yep, ours looks low. But when you look at total funding, which can be counted in different ways, the picture doesn’t look so dire. …According to the Colorado Department of Education, the average salary for teachers here is $52,728. But that’s only one piece of the compensation. The school year is about 180 days, or 36 weeks. So, the pay is $1,465 for every week a teacher is teaching. Vacation time? Well, 52 weeks in a year, minus 36 weeks in the classroom, that’s 16 weeks off, roughly 4 months! Compare that to someone who only gets 2 weeks off but still gets paid $1,465 a week when working, that’s the equivalent of $73,233. And let’s count the present-cost value of their retirement benefits. …Not bad for a system where you can retire at 58.”

Let’s close with some excerpts from Jason Riley’s column in the Wall Street Journal.

The nation’s K-12 schools are…turning into hotbeds of political activism. …teachers are demanding higher pay, better benefits and more education funding overall. …The American Federation of Teachers and the National Education Association have thousands of state and local affiliates. They are among the richest and best-organized pressure groups in the country. And they are on a roll. That’s good news for their members but not necessarily for children, parents and taxpayers. …Teachers unions support work rules that prevent the most capable teachers from being sent to low-performing schools, that shield teachers from meaningful evaluations, and that require instructors to be laid off based on seniority instead of performance. …those rules do nothing to address the needs of students. …politicians love to highlight education outlays. It helps them win votes and ward off union agitators. But the connection between school spending and educational outcomes is tenuous. …total spending per pupil at the state level rose, on average, by an inflation-adjusted 18%. During this period, it fell in Arizona… Yet on 2015 federal standardized exams, Arizona made more progress than any other state. New York, by contrast, boasts the highest spending per pupil and teacher pay in the country, but you wouldn’t know it from the test results.”

For what it’s worth, the final few sentences in the above excerpt should be the main issue being discussed in state capitals. Lawmakers should be asking why more and more money never produces better outcomes.

But that’s really not the problem. It’s the symptom of the problem.

Our primary challenge in education is that we rely on government monopolies that are captured by special interests. We need school choice so that competitive forces can be unleashed to generate better results. There’s strong evidence that choice produces good outcomes in the limited instances where it is allowed in the United States.

And in that kind of system, we may actually wind up with better teachers that are paid just as much. Or maybe even more.

P.S. There’s also strong evidence for school choice from nations such as SwedenChile, and the Netherlands.

P.P.S. Needless to say, eliminating the Department of Education is part of the solution.

Reprinted from International Liberty.

A Government Loan Program for Auto Manufacturers on Road to Repeal

Among programs on the chopping block in the White House’s new plan to cut more than $15 billion in wasteful government spending is the Department of Energy’s loan program for certain automakers. Congress should drop the guillotine and rescind the $4.3 billion remaining in this Advanced Technology Vehicles Manufacturing loan program.

The Congressional Budget and Impoundment Control Act of 1974 authorizes the president to rescind funding previously enacted into law.

Established by Congress under the Energy Independence and Security Act of 2007, the Advanced Technology Vehicles Manufacturing program illustrates why the federal government should not finance energy investments.

In handing out only five loans, the program has wasted taxpayer dollars by subsidizing economic losers, promoted corporate welfare by subsidizing well-off companies, and distorted market decisions by steering private capital toward politically proffered projects.

One loan recipient and failure of the program is Fisker Automotive, an electric car company that received $529 million in April 2010 to develop and produce two lines of hybrid plug-in vehicles at a plant in Delaware.

Fisker’s inability to meet performance targets prompted the Energy Department to cap the money lent at $192 million. Fisker filed for bankruptcy in November 2013. The federal government recovered $28 million, and then recovered another $25 million by selling the loan at auction, leaving a loss of $139 million.

Red flags should have made it apparent that Fisker was not credit-worthy for a government loan. Fisker spent $600,000 per car, which was sold to auto dealers for an average of $70,000, and had a CCC+ credit rating.

After the Fisker failure, the head of the loan program office, Peter Davidson, explained why the government sank money into the project, writing: “Early on, Fisker Automotive looked very promising—raising more than $1.2 billion from leading private sector investors who believed in the company and its business plan, and also attracting strong support from both Republicans and Democrats.”

If a company can attract $1.2 billion from the private sector, it should not need help from the federal government. The question is, would Fisker have generated that much investment absent the government’s loan?

The Energy Department loan artificially made this dubious investment appear more attractive and lowered the risk of private investment. For instance, private investors sank $1.1 billion into Fisker, but much of the private financing came after the department approved and closed the loan.

Another company, Vehicle Production Group LLC, received a $50 million direct loan through the program in March 2011 to develop and produce vehicles that were powered by natural gas and wheelchair-accessible. The company failed to make loan payments, the Energy Department discontinued the project, and the company ceased operations in May 2013.

The government recovered $3 million by selling the loan and recovered $5 million from an escrow payment, leaving a loss of $42 million.

In addition to picking losers, the federal government doled out billions in what is blatant corporate welfare and effectively an auto bailout by another name.

The DOE also issued the loans to both Ford Motor Co. and Nissan North America to retool factories to produce more fuel-efficient and electric vehicles.

In September 2009, the department loaned $5.9 billion to Ford to upgrade facilities in Illinois, Kentucky, New York, Michigan, Missouri, and Ohio. In January 2010, it loaned Nissan a $1.45 billion loan to build a battery manufacturing plant and retool existing factories to expand development of its electric vehicle, the Nissan LEAF.

Ford and Nissan are well-established companies. Drivers value energy efficiency and saving on fuel costs. If Ford and Nissan thought these investments and retooling of manufacturing plants were a way to meet market demand, they should have been completely privately financed outside the government.

The real economic question mark of the loan portfolio, however, is Elon Musk’s Tesla Inc., the California-based company that specializes in electric vehicles, energy storage, and solar panel manufacturing.

The Energy Department and proponents of government-backed loans and loan guarantees advertise Tesla as a success of the loan program. The department loaned Tesla $465 million in January 2010 to reopen a former plant in California to produce electric vehicles and to develop a manufacturing plant to produce battery packs.

Tesla fully paid back the loan in May 2013. But whether Tesla continues to be profitable remains to be seen. Both federal and state governments are doing a lot to help—using taxpayers’ money to subsidize consumption of electric vehicles, which disproportionately benefits the rich.

A recent Bloomberg article headlined “Tesla Doesn’t Burn Fuel, It Burns Cash” warns that the company could run out of money this year. The article notes that Tesla spends $7,430 every minute and features a nifty little calculator that shows you how much money Tesla has spent since you started reading the story.

Regardless, if companies like Tesla promise to be the wave of the future, they should secure investment and loans through the private sector. A system that privatizes the profits and socializes the losses does much more damage than put hard-earned taxpayers’ money at risk.

Government interventions distort free enterprise and allow Washington to direct the flow of private-sector investments. This is not a recipe for more innovation and economic growth. It’s a recipe for ever-expanding cronyism.

COMMENTARY BY

Portrait of Nicolas Loris

Nicolas Loris, an economist, focuses on energy, environmental and regulatory issues as the Herbert and Joyce Morgan fellow at The Heritage Foundation. Read his research. Twitter: .

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The Left’s Chilling Refusal to Stop Flirting With Marxist Ideas

Dear Readers:

With the recent conservative victories related to tax cuts, the Supreme Court, and other major issues, it is easy to become complacent.

However, the liberal Left is not backing down. They are rallying supporters to advance their agenda, moving this nation further from the vision of our founding fathers.

If we are to continue to bring this nation back to our founding principles of limited government and fiscal conservatism, we need to come together as a group of likeminded conservatives.

This is the mission of The Heritage Foundation. We want to continue to develop and present conservative solutions to the nation’s toughest problems. And we cannot do this alone.

We are looking for a select few conservatives to become a Heritage Foundation member. With your membership, you’ll qualify for all associated benefits and you’ll help keep our nation great for future generations.

ACTIVATE YOUR MEMBERSHIP TODAY

No, Teachers Are Not Underpaid

Salaries lag in some states, but nationally, wages and benefits outpace the private sector.

by Andrew BiggsJason Richwine


Recent protests across the country have reinforced the perception that public school teachers are dramatically underpaid. They’re not: the average teacher already enjoys market-level wages plus retirement benefits vastly exceeding those of private-sector workers. Across-the-board salary increases, such as those enacted in Arizona, West Virginia, and Kentucky, are the wrong solution to a non-problem.

Comparing Salaries

Most commentary on teacher pay begins and ends with the observation that public school teachers earn lower salaries than the average college graduate. This is true, but in what other context do we assume that every occupation requiring a college degree should get paid the same? Engineers make about 25 percent more than accountants, but “underpaid” accountants are not demonstrating in the streets.

Teachers rally outside the state Capitol on the second day of a teacher walkout to demand higher pay and more funding for education in Oklahoma City, Oklahoma, April 3, 2018. Reuters

Wages are not determined by years of schooling but by the supply and demand for skills. These skills vary by field of study. About half of teachers major in education, among the least-rigorous fields at both the undergraduate and graduate levels. Incoming education majors have lower SAT or GRE scores than candidates in other fields, but—thanks to grade inflation—they enjoy the highest GPAs. Data from the Collegiate Learning Assessment indicate that students majoring in social science, humanities, and STEM fields not only start college with greater skills than education majors but also learn more along the way.

The Bureau of Labor Statistics (BLS) analyzes the skill requirements of different jobs, assigning each a pay grade based on the federal government’s General Schedule (GS). At the lowest skill levels—a GS-6 on the federal scale—teachers earn salaries about 26 percent higher than similar white-collar workers. At GS-11, the highest skill level, teaching pays 17 percent less than other white-collar jobs. This explains how shortages can exist for specialized positions teaching STEM, languages, or students with disabilities, while elementary education postings may receive dozens of applications per job opening.

Contrary to myth, teachers are generally not foregoing higher salaries by staying in the classroom.

The average public school teaching position rated an 8.8 on the federal GS scale. After adjustment to reflect the time that teachers work outside the formal school day, the BLS data show that public school teachers on average receive salaries about 8 percent above similar private-sector jobs.

Contrary to myth, teachers are generally not foregoing higher salaries by staying in the classroom. Data from the Survey of Income and Program Participation show that teachers who change to non-teaching jobs take an average salary cut of about 3 percent. Studies using administrative records in Florida, Missouri, Georgia, and Montana showed similar results; the Georgia study found “strong evidence that very few of those who leave teaching take jobs that pay more than their salary as teachers.”

It’s Not Just Wages

It’s true that teacher salaries in several states are lagging. Teachers in Arizona, West Virginia, and Oklahoma have good reason to be dissatisfied: their salaries rank near the bottom nationally, even after controlling for cost of living. Even in these seemingly underpaying states, though, pensions can more than make up the difference.

Oklahoma teachers accrue new pension benefits each year, with a present value equal to 30 percent of their annual salaries. Subtract Oklahoma teachers’ own contribution of 7 percent, and employer-paid retirement benefits are worth 23 percent of annual salaries. By contrast, the typical private-sector employer contribution to a 401k plan amounts only to about 3 percent of employee pay.

Many teachers also qualify for retiree health coverage, now practically extinct in the private sector. In some states, retiree health care is modest: Oklahoma teachers get an insurance supplement of about $100 per month. But for teachers in Illinois, future retiree health benefits are worth an additional 8 percent of annual pay, while in North Carolina, retiree health benefits are worth an additional 12.5 percent.

As the New York Times recently reported, public-employee retirement and health benefits are bleeding dry state and local budgets. Neither the public nor teachers fully appreciate the costs of these programs. We forget the value of benefits when considering how teacher pay compares with private-sector work. And research suggests that teachers value deferred compensation less than upfront salary.

Possible Reforms

This opens the possibility of a constructive reform. States could offer newly hired teachers higher pay, coupled with switching those teachers to a generous, well-designed 401(k)-type retirement plan. In Oklahoma, for instance, the state could give new teachers an 11 percent raise—costless to the taxpayer—by providing a 401(k) plan with an employer contribution, which would still be four times greater than private-sector levels.

Research has found that better pay has only a modest impact on teacher quality.

For areas with legitimate teaching shortages—such as in STEM fields or special education—districts could offer targeted salary increases. A strategic approach to filling teacher shortages is particularly important to poorer states such as West Virginia and Oklahoma, where resources are limited.

Across-the-board pay increases, by contrast, are expensive and inefficient. Arizona governor Doug Ducey’s promised 20 percent teacher salary increase will cost $400 million annually before a single new teacher is hired. Such efforts create no incentive for prospective teachers to specialize in areas where shortages exist. And if the salary boost winds up reducing teacher retirements, fewer spots will open up for better-qualified new teachers. Research has found that better pay has only a modest impact on teacher quality.

Teachers enjoy widespread public favor, and their desire for higher pay is understandable. But no nationwide crisis of teacher compensation exists. Most teachers receive market-level salaries and generous retirement benefits. Local hiring problems can and should be addressed without granting windfall benefits to teachers whose compensation is already better than adequate.

Reprinted from the American Enterprise Institute.

Andrew Biggs

Jason Richwine

Jason Richwine

Jason Richwine is a public policy analyst in Washington, D.C.

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