Dear President Saves Me Again

So Barack Obama is gonna play the Robin Hood thing again, this time announcing his plan at the State of the Union, to save me from poverty and penury, relieve me of tax obligations and pass the burden along to the rich. How sweet it is! 

And deserved? You be the judge.

When I get around to filing our federal tax return our tax bill will run about three percent of our adjusted gross income. By my standards we live pretty high on the hog. No debt. No mortgage (or mortgage interest deduction). We don't have to work. And we live in a 4,200 square foot home with gorgeous mountain views on an acre lot. By my standards, we live pretty high on the hog.

One of the reasons our federal taxes are absurdly low is something called the child tax credit, which we fully qualify for. Obama says he is going to triple the child tax credit which would negate our tax liability altogether, and assuming it remains refundable, could result in the federal government cutting us a check. The income tax system would pay us -- not vice versa.

I looked into the history of the child tax credit, courtesy of the "nonpartisan" Center of Budget and Policy Priorities. 

The Center has been broadly praised by the left and right -- wings of the Democratic party that is.

What Others Say About the Center

• “[The Center’s] statistical work is absolutely impeccable. If you care about [fiscal issues], check CBPP’s site regularly for updates.” 
  — Nobel Laureate and New York Times columnist Paul Krugman
   
• “[I]n a political environment rife with ideological warfare and poisoned by partisanship, the Center’s knack for getting things done sets it apart from  . . . well, from just about everybody else in Washington.”
  — Steven Pearlstein, Pulitzer Prize-winning Washington Post columnist 
   
• “The invaluable Center on Budget and Policy Priorities … [has] been the go-to resource for consistently reliable analysis on matters of budgets and fiscal policy at every level of government.”
  — Vice President Joseph Biden
    
• “[CBPP’s] staff includes not only some of the most reputable federal budget analysts in Washington, but the analysts that other analysts go to for information, advice and reality checks. They’re highly experienced, credentialed and credible. Even those who disagree with the CBPP’s politics seldom, if ever, argue with its understanding of the budget process.”
  — Stan Collender, leading budget expert and Roll Call columnist
   
• “In a year that was all about budget issues, the Center on Budget and Policy Priorities lived up to its name. Whether you were looking for the latest numbers on state budget cuts, a quick analysis of Rep. Paul Ryan’s proposals, or simply an introduction to where your tax dollars go, CBPP lived up to its reputation as the fastest, fairest, and smartest policy think tank in Washington.” 
  — Ezra Klein, Washington Post, in naming CBPP as Think Tank of the Year (2011)

The Center says the child tax credit is about "helping low income working families." Sweet. They laud the program for allowing working families to "owe little or no income tax in a given year" and claim the credit is "a powerful weapon against poverty." That would implicate us child tax credit recipients as poverty stricken and in need of charity, I guess. We love progressives, even if they don't have a brain.

Also, research suggests that boosting working families’ incomes can expand opportunities for children, such as by improving school performance. Lifting low-income families’ income when a child is young not only tends to improve a child’s immediate well-being, but is associated with better health, more schooling, more hours worked, and higher earnings in adulthood, research has found.

Just give me money and my kids will do better in school. Of course! How brilliant is that? Give me yet more money and my kids will be Einsteins. This tax policy is better than a miracle drug.

Fact is that my three percent tax rate is the norm for the bottom fifty percent.

High income tax payers are already paying seven times my rate (the ratio will be larger for 2014). 

And the top half of taxpayers are paying 97.2 percent of all income taxes.

Everybody should have some skin in the game. I guesstimate that, including other changes, Obama's plan will relieve up to half of the lower fifty percent from paying any income taxes whatsoever.

Obama apologists, thanks but no thanks. I don't want or need your support. It's not good for our society. It's not good for our economy. It's not good for our future. Period.

The Demographic Tsunami

From time to time we have referred to the upcoming demographic tsunami and its debilitating impacts on the government's and country's fiscal welfare. You can see the tsunami coming in the huge gap between the 67 year old and 68 year old age distribution in the following graph. The 67 year olds were the first of the post World War II Baby Boomers (68 years old now). We are just three years into the first cohort of Boomers qualifying for Medicare. Year by year the number of new Medicare recipients will grow until about ten years from now when the annual incremental enrollment will be twice what it was just five years back. 

The stories and the ultimate expense impacts are similar for social security and other programs that grow with increases in the number of aged citizens.

Source: http://www.stevenssweet.com/2014/08/the-most-common-age-in-us-is-far.html

There is a double whammy to this picture in that the Boomers will not only become takers; they will no longer be makers as their peak earnings years pass and their incomes and tax payments decline.

We are turning the corner, but going the wrong way. Here is how the Congressional Budget Office (CBO) shows federal deficits increasing back into the $1 billion to $1.5 billion range as a consequence.

Source: http://crfb.org/document/report-deficit-falls-486-billion-debt-continues-rise

As for projections, per standard practice CBO assumes away the business cycle. That is, it is assumed there will be no recessions between now and 2025, when the statistical probability is there will be two and it is a virtual certainty that there will be at least one recession. Without legislative change, the numbers going forward will almost certainly be worse than projected.

Halfway through his second term Dear President has done absolutely nothing to address the programmatic impacts of the tsunami. He will do nothing in his last two years in office either other than to lay back and trash any Republican that hints at spending reforms that will limit expense growth. 

Gridlock, thy name is Barack.

The tsunami rolls on. 

North Dakota Gold

Remember the intro to each 
Beverly Hillbillies episode, when Jed Clampett's rifle shot missed low and produced a gusher? Well, it seems Jed's aim has moved a smidgen or two north now. There is gold in them there hills, black gold that is, North Dakota tea. The western badlands and plains in North Dakota are checker boarded with drilling rigs and pipes. They extract and transport from the Bakken oil fields and the underlying Three Forks formation, now confirmed by the USGS to include 7.4 billion barrels of oil reserve, an estimate that will only increase in years to come. On top of that, the fields contain 6.7 trillion feet of natural gas. 

While some other states are raising tax rates to counteract stagnant or slowly growing revenue streams, North Dakota's tax revenues have risen by leaps and bounds, enabling tax rate reductions. Here is a 2013 report that highlights the favorable trends.

BISMARCK, N.D. — North Dakota’s last revenue report for 2013 from the Office of Management and Budget shows yet another month of double-digit percentage increases even after years of oil boom-driven revenue growth.

Six months into the 2013-2015 biennium, tax collections are running more than 20 percent above the previous biennium. Going back four bienniums to December of 2007, North Dakota’s tax revenues have increased nearly 135 percent. 

In terms of raw dollars, the largest increase has been in sales tax revenue, which increased $142.68 million to $638.44 million for the biennium to date. By comparison, sales tax revenue at this point in December 2007 were $279.33 million. 

As a percentage, the largest increase has been collections from personal and corporate income taxes, which have increased 43.7 and 65.6 percent, respectively. 

That comes despite a 19.3 percent cut for personal income taxes and a 12 percent cut for corporate income taxes passed by the Legislature last year, the third consecutive session in which both tax rates were trimmed.

Compare, for example, the state of Illinois, which raised its income tax rate by 67 percent and imposed a punitive corporate tax rate that is driving business out of the state. Also, contrast with California which has voted in double digit income tax rates on top of an incredibly high 7.5 percent sales tax. It is no wonder that North Dakota is now experiencing the most rapid population growth of any state in the country.

The state of North Dakota is profiting greatly from the rapid growth in the development oil and gas resources. But North Dakotans are not spendthrift short term thinkers or planners. They are putting a hefty portion of the oil wealth away in sovereign funds, a real investment for future generations.

Here is the scorecard,

The state Legacy Fund, a lock box for a portion of the state’s oil-tax wealth that was created in 2010, is now worth about $2.2 billion. The state Department of Trust Lands, which leases out North Dakota’s oil-bearing property, has about $4.6 billion – an increase of about 350 percent from fiscal year 2009, when the boom was just beginning.

The two-fund total of $6.8 billion may not sounds like all that much to those in the more populous environs on the coasts and through America's heartlands. But consider that North Dakota state population is 723,393. low enough to even allow some Montanans to sneer. Annual North Dakota state government expenditures are on the order of $4.5 billion. The Legacy and Trust Lands fund are growing on the order of half a billion dollars annually.  If the combined fund reserve and surplus ratios were applied to the federal government as a whole, we would have approximately $5 trillion in investments (as opposed to the actual $18 trillion in debt), and our annual surpluses be around half a trillion dollars compared to the last six year average of just less than a trillion dollars ($954 billion).

North Dakota voted this in, by a 27 point margin.

---

 N.D. Legacy Committee issues Measure One statement

BISMARCK, ND – In yesterday’s statewide election voters passed Measure 1, which establishes the North Dakota Legacy Fund. 

“This is a bright day for the future financial stability of North Dakota,” said North Dakota Farm Bureau Public Policy Director Sandy Clark. “North Dakota voters made the decision to leave a legacy for future generations. Projections for the 2011-2013 biennium will put $613 million into the savings account and still have almost $700 million for immediate needs.”  

The 2010 Legacy Fund measure requires 30 percent of the total collections of both the oil extraction tax and gross production tax are deposited into the fund. Deposits into and earnings of the Legacy Fund cannot be withdrawn until 2017. After 2017, the earnings from the Legacy Fund are transferred into the general fund, and the Legislature may spend up to 15 percent of the fund’s principle balance every two years with a two-thirds approval by both the House and Senate.  

Dakota Draper, President of the North Dakota Education Association, said, “The NDEA is very pleased that North Dakota voters have supported a plan to make sure that the oil resources we have continue to provide for generations of future North Dakotans long after the oil is depleted. The balance of saving and spending in Measure 1 enables us to take care of present and future needs of all North Dakotans.” 

The 2010 Legacy Fund is a more balanced approach than the similar measure proposed in 2008, which was based on specific dollar amounts rather than on set percentages.

Responsible fiscal management is spelled N_O_R_T_H  D_A_K_O_T_A, not anything that correlates with or emanates from our federal government. 

Have a blessed day and good luck to all.

No Capital Gains Tax

Pretty much all my life I have been a scrimper, saver and investor. 

But now I am retired and have three school age children. You don't get there by accident. We've blogged on how during our working years we spent most of our "spare time" earning additional income. We've blogged from time to time about our investments and investing strategy. During our productive working lives, instead of buying fancy cars, frequenting snazzy joints, or taking luxuriant vacations, there were years when we saved 30 to 40 percent of our income. Those savings went straightaway into retirement and non-retirement brokerage accounts to be traded and invested, as the case may be. 

Now that we are retired things have changed. Our savings no longer come from income. We live day to day and month to month on our pension, supplemented by dividends paid out by stocks in our brokerage accounts. Our savings grow now only to the extent our investments grow. 

Occasionally we have major expenses that require dipping into those investments. We are not yet pulling money out of retirement accounts (we hope to avoid doing so until Uncle Sam requires such starting at age 70 and one-half). This means when selling stock and withdrawing the proceeds, we consider tax implications, if for no other reason than to make quarterly estimated tax payments timely to the IRS and state tax authorities.

During my working days we liquidated a large block of stock once to put on a major home addition, about doubling the size of our house. We also traded stocks and derivatives frequently during the days and months leading up to the 2008 financial meltdown, shorted stocks during the meltdown, and put money back in the stock market in the meltdown aftermath, beginning with its recovery in March 2009. These purchases and sales resulted in myriad taxable transactions, and substantial income tax liabilities, which we duly reported to the IRS and promptly paid.

While I won't let tax considerations prevent me from selling stocks to cash out before a market falls, or to fund the purchase of a rising star in a bull market, it is a bit different when I sell for financial need. When selling to fund household purchases I've historically tried to avoid selling big blocks of stocks with large capital gains, lest we incur a substantial tax liability from the sale of those highly appreciated securities. 

Last month I had to sell some stock, so I scoured our brokerage account records and tried to select for sale stocks that yielded the right amount of tax liability -- not too little but not too much.  

Then I thought, why the heck am I even thinking about this? Unless we win the lottery, when we do our 2014 taxes, once we take out the minimum standard deduction from our income and subtract our personal deductions, we will be down within the 15 percent ordinary income tax bracket, which means that all, or essentially all of our long term capital gains will be taxed at the resounding rate of 0 percent. That's right -- no tax, nada, nothing! Zero! 

The 0 percent capital gains tax rate compares to, and graduates up to a rate of 23.8 percent (including the Medicare surcharge) for taxpayers earning $407,750 per year per year or more (filing as an individual) to $457,600 per year or more (married, filing jointly).

Here is a description of how the no-tax system works,

You may owe 0% on your investment profits 

Despite the tax hikes included in the misnamed American Taxpayer Relief Act, long-term capital gains and qualified dividends earned in your taxable brokerage firm accounts are still taxed at 0% when they fall within the 10% and 15% federal rate brackets.

Many more people than you might think occupy these bottom two brackets. Remember: your bracket is determined by the amount of your taxable income, which equals adjusted gross income reduced by allowable personal and dependency exemptions and by the standard deduction amount (if you don’t itemize) or your total itemized deductions (if you do itemize).

IRS Form 1040, Schedule D, Capital Gains and Losses

• Say you are a married joint filer with two dependent kids. You claim the standard deduction for 2014. You could have up to $102,000 of adjusted gross income (including long-term capital gains and dividends from securities) and still be within the 15% rate bracket. Your taxable income would be $73,800, which is the top of the 15% bracket for joint filers in 2014.

• Say you use head of household filing status. You have two dependent kids and your claim the standard deduction for 2014. You could have up to $70,350 of adjusted gross income (including long-term capital gains and dividends) and still be within the 15% rate bracket. Your taxable income would be $49,400, which is the top of the 15% bracket for heads of households in 2014.

• Say you have no kids and claim the standard deduction for 2014. You could have up to $47,050 of adjusted gross income (including long-term capital gains and dividends and still be within the 15% rate bracket. Your taxable income would be $36,900, which is the top of the 15% bracket for singles in 2014.

• If you itemize deductions, your 2014 adjusted gross income (including long-term capital gains and dividends) could be even higher, and your taxable income would still be within the 15% rate bracket.

To be perfectly clear, if your total taxable income, including long-term capital gains and qualified dividends, is less than the top of the 15% rate bracket, you will owe the Feds nothing for all your capital gains and dividends. If part of your gains and dividends fall within the 15% bracket and part of them fall outside, you will only owe 15% of the part that falls outside — unless your income is so high that the 20% maximum rate kicks in.

Here are the story elements in tabular form.

The next time someone tells you the tax code burdens and discriminates against people on the bottom end, think about it. We are getting a free ride baby! 

Getting the Government You Vote For

It's works for me so long as someone else bears the burden.

Sometimes you run across a quote that you just can't pass up. This one comes from Austin, Texas. Austin is a university town (U of T), the artsy town, and the state capital, which means it is home to the highest echelons of the highly paid, secure and fringe benefit laden state bureaucracy, and populated with wall to wall know-it-all moral relativists who can find a demon to justify blocking any fiscally, economically or commercially viable market and efficiency based outcome and spending unlimited funds to do so. These are smart and creative people who know better what is good for a person than any individual can ever know for him or herself.. Whenever stuff doesn't work, costs too much, collapses of its own weight, or generates enormous "unintended consequences," why that is just some other evil person's fault who they will make sure to target and make pay in the next round of collectivism.

The relativists vote to concentrate power and expand the collective, to deputize crony capitalists (for local government, this typically means commercial real estate interests whose economic power is concentrated these days in a relative handful of national REITs) who go along with the crowd, and to punish those who don't, without judging when and how the collective and its mercenaries will ultimately come back to bite and consume them. Here is how the Austin vote went the last presidential election -- more or less opposite the state as a whole.

With 100 percent of the states precincts reporting, Obama won more than 60 percent of the vote in Travis County, home to Austin, the state's most liberal city. Romney trailed with just over 36 percent of the vote.

These are the really smart people who are prone to vote for a person based on his or her identity and little or nothing else, not because that's the right thing to do, of course, but they just know in their scientific bones that everyone who doesn't vote their way is an evil misogynist, racist, greedy capitalist, privileged white guy or whatever, who unites with others to vote the opposite way base on another spurious set of identities. 

Now, here is the quote.

“I’m at the breaking point,” said Gretchen Gardner, an Austin artist who bought a 1930s bungalow in the Bouldin neighborhood just south of downtown in 1991 and has watched her property tax bill soar to $8,500 this year.

The collective's tax and spend policies are gentrifying
Gretchen Gardner out of her 23 year long residence.

“It’s not because I don’t like paying taxes,” said Gardner, who attended both meetings. “I have voted for every park, every library, all the school improvements, for light rail, for anything that will make this city better. But now I can’t afford to live here anymore. I’ll protest my appraisal notice, but that’s not enough. Someone needs to step in and address the big picture.”

Uh, that would be you lady, the brainless, navel gazing, power aggrandizing, reflexive voter who asked for this. Duh!!!!

Redistributive Justice

The world of equality, re-distributive taxes, government operated markets and social justice is alive and well in Cuba.

HAVANA (AP) — Talk about sticker shock! 

President Barack Obama sharing the love with
Cuban legacy dictator Raul Castro.

Cubans are eagerly flocking to Havana car dealerships as a new law takes effect eliminating a special permit requirement that has greatly restricted vehicle ownership in the country. To their dismay on Friday, the first day the law was in force, they found sharply hiked prices, some of them light years beyond all but the most well-heeled islanders.

A new Kia Rio hatchback that starts at $13,600 in the United States sells for $42,000 here, while a fresh-off-the-lot Peugeot 508 family car, the most luxurious of which lists for the equivalent of about $53,000 in the U.K., will set you back a cool $262,000.

"Between all my family here in Cuba and over in Miami, we couldn't come up with that kind of money," said Gilbert Losada, a 28-year-old musical director. "We're going to wait and see if they lower the prices, which are really crazy. We're really disappointed."

Cuba's Communist-run government traditionally has placed huge markups on retail goods and services paid for with hard currency, a policy that amounts to a tax on people who can afford such goods. The practice applies to everything from dried pasta, to household appliances, to Internet access.

Through a series of mandates, penalties, excise and income taxes Obamacare is a massive re-distributive tax program that doesn't educate a single nurse, train a single doctor, open a single clinic or build a single hospital. Welcome to the world of socialism Havana style. Best wishes and good luck to all. 

Let the Tax Breaks Go Dude

It's time for a little deficit busting exercise. Let all the expiring tax breaks go, let all 55 of them go.  Here are some highlights from the Tax Foundation.

There are a couple of expiring provisions that many individual taxpayers will care about:

• The tax subsidy for riding mass transit will fall from about $245 a month to $130.  The tax subsidy for parking will remain at $250.

• The deduction for qualified tuition and related expenses will expire.

• The ability to donate money from your IRA tax-free will expire. This has been very popular with retirees.

• The amount that banks write off in mortgage loan forgiveness for people whose houses are under water has been tax exempt, but will once again be counted as income for tax purposes.
  

Many businesses will care about these expiring items:

• The tax credit for research and development (R&D).

• Small businesses will see a reduction in the amount of equipment purchases they can expense (so-called 179 expensing).

• Big businesses will lose the 50% bonus expensing for capital investments.

• Multinational businesses will lose two key provisions: “Active financing,” which is the equivalent of deferral for  banks and businesses that finance the foreign sale of their own products (such as tractors); and, “look-through treatment,” which allows companies to move cash between foreign subsidiaries without triggering a U.S. tax liability.    

Some tax breaks most of us won’t miss:

• Special expensing for film and TV productions.

• 3-year write off for race horses under two years old.

• Faster depreciation for motor racing tracks.

• Lots of tax subsidies for renewable energy programs such as biodiesel, electric motorcycles, and energy-efficient appliances.

An economy where the players produce value by making choices of their own in a tax neutral environment is a much stronger economy that produces yet more revenue from enhanced growth. That's what tax reform is about. Let the favors go, every one of them.

Dudes if it's good for you, that doesn't mean it's good for America -- usually quite the opposite. Washington sitting on its hands and not renewing will add $50 plus billion to the bottom line. Do it. KA-CHING.

Bike Share -- Big Subsidies for Big Wheels for Big Incomes

When progressives say share what they really mean is that someone else pays.

Progressive moral relativists (to be redundant for the moment) can justify the government taking your money to hand it out to just about anyone for just about anything. Take bike-share programs in Arlington, Virginia for example. Median household income in Arlington is $100,735, third highest in the nation. Arlington nabbed federal grant money to pay for the bikes and then installed the bike stations along the Metro corridor, locale of the bars, bistros and barristas serving the young affluents in their luxury condos or nearby million dollar homes. Annual bike-share operating deficits are funded ad infinitum by the county taxpayers, though Arlington County's bureaucrats will no doubt find ways in the future to get chunks paid for by the federal taxpayer. Remember, these are the same people who brought us million dollar bus stops, paid for by you the federal taxpayer. 

New York City just started its bike-share program. And sure enough, it is serving the few, bikes for the affluent. 

DC Bikeshare:  Free Ride for Government Workers

The bike-share program includes a few racially and economically diverse neighborhoods—like the lower East Side and parts of Bedford-Stuyvesant in Brooklyn. But on average its neighborhoods are more affluent and have fewer minority residents than the rest of the city. 

They include the most expensive downtown neighborhoods like SoHo and TriBeCa and have a median household income of about $73,000 compared with $48,300 in the rest of the city, an analysis by The Wall Street Journal found. The population of bike-share neighborhoods is 56% white, while the rest of the city is 30.6% white. The analysis looked at Census tracks within an eighth of a mile of a docking station to determine the size and ethnicity of nearby populations. Income was estimated from broader Census data.

The Capital Bikeshare system in place in Arlington Virginia is wildly skewed to favor the daily user (many are commuters to high paying government or government contract jobs), who can purchase an annual pass for $75 dollars, which entitles the holder to an unlimited number of 30 minute trips. Not surprisingly, given that it costs pennies per day, the most common use of Capital Bikeshare is to travel to and from work.  But the unwary visitor or tourist gets hosed by the progressives. Riding around the National Capital region for 8 hours on a single day pass costs $101. Through direct government subsidies and distorted pricing plans, the progressives subsidize the local affluents to the point that the well off pay almost nothing. Isn't that grand?  

Portland bicycle crazed Congressman Earl Blumenauer

promoted bike share for Portland at the Portland Art 

Museum earlier this year, mingling with high society donors,  

corporate bigwigs and local bike industry luminaries, 

his core constituents.

So Why Did You Move?

For one thing, avoiding a $7,000 property tax bill.

Presidential Deception

Here is how it goes.

Sgt. Hans Georg Schulz
Hogans Heroes

May 10, 2013 -- Before launching the Sergeant Schulz routine, White House spokesman Jay Carney calls the IRS “an independent enforcement agency."

May 13, 2013 -- Distancing himself from the scandal, the President of the United States, know nothing Barack Obama, says the IRS "as an independent agency requires absolute integrity."

But what actually happened?  It turns out that White House Deputy Chief of Staff Mark Childress coordinated with "independent" IRS and Treasury on how and what to say about the nonprofit political targeting scandal before it was publicly reported.   The claims of independence are demonstrably a joke -- in fact, bald faced lies.   The IRS is not independent from the White House, nor from the Treasury Department, led by Obama appointee and confidant "tax cheat" Tim Geithner throughout the scandal.  

There will be much more to come.

Holy Crap!

It turns out the low level IRS "rogue employee" in Cincinnati (no pattern here, don't stop to look) viewed prayer as a disqualifier for nonprofit status.

While applying with the Internal Revenue Service for tax-exempt status in 2009, an Iowa-based anti-abortion group was asked to provide information about its members' prayer meetings, documents sent by an IRS official to the organization reveal.

Private Party Prayer Not Permitted
on the Government's Watch

On June 22, 2009, the Coalition for Life of Iowa received a letter from the IRS office in Cincinnati, Ohio, that oversees tax exemptions requesting details about how often members pray and whether their prayers are "considered educational."

"Please explain how all of your activities, including the prayer meetings held outside of Planned Parenthood, are considered educational as defined under 501(c)(3)," reads the letter, made public by the Thomas More Society, a public interest law firm that collected evidence about the IRS practices. "Organizations exempt under 501(c)(3) may present opinions with scientific or medical facts. Please explain in detail the activities at these prayer meetings. 

Also, please provide the percentage of time your organizations spends on prayer groups as compared with the other activities of the organization."

My God, the people who support the lefty political machine are mean spirited and intolerant. The lady who was in charge of the Cincinnati mess is now running the IRS's Obamacare compliance operation. I can foresee it now -- next to come is the questioning, regulation and banning of prayer in hospitals. Hospitals are places for medicine and medicine only, deathbed conversions not allowed.

Tangled

The tone is set at the top.  Here is the gig.

Was the White House involved in the IRS's targeting of conservatives? No investigation needed to answer that one. Of course it was.

The "Elections have
consequences" President
in action.

President Obama and Co. are in full deniability mode, noting that the IRS is an "independent" agency and that they knew nothing about its abuse. The media and Congress are sleuthing for some hint that Mr. Obama picked up the phone and sicced the tax dogs on his enemies.

But that's not how things work in post-Watergate Washington. Mr. Obama didn't need to pick up the phone. All he needed to do was exactly what he did do, in full view, for three years: Publicly suggest that conservative political groups were engaged in nefarious deeds; publicly call out by name political opponents whom he'd like to see harassed; and publicly have his party pressure the IRS to take action.

Mr. Obama now professes shock and outrage that bureaucrats at the IRS did exactly what the president of the United States said was the right and honorable thing to do. "He put a target on our backs, and he's now going to blame the people who are shooting at us?" asks Idaho businessman and longtime Republican donor Frank VanderSloot.

And Obama implicated the IRS as a principal instrument of his lawless politics of destruction by putting tax cheat Tim Geithner in charge. Way to go President of the left!

Breaking News! New IRS Chief to Even Out Audits

Striving to move beyond the political fallout of the IRS’s scandalous treatment of conservative and libertarian organizations that sought nonprofit status, President Barack Obama  appointed senior White House budget officer Daniel Werfel as acting commissioner of the Internal Revenue Service Thursday. 

In a companion move that appears calculated to reestablish the Internal Revenue Service’s bona fides as an even-handed, neutral arbiter of the law, it is expected that Werfel will launch audits of multiple organizations previously granted nonprofit status.  The new targets of the IRS review will include Netroots Nation, a 501 (c)(3) nonprofit, the Center for American Progress a 501 (c)(4) organization, and NARAL Pro-Choice America, also registered under Section 501 (c)(4) of the Internal Revenue Code.  White House officials insist that these organizations have come up for audit under the IRS’s standard management review cycle.  The IRS will investigate political lobbying activity.  It is not lawful for organizations to claim they serve an educational or social welfare purpose, when they are actually organized for the purpose of lobbying members of Congress and influencing officials in the Executive Branch.      

Netroots represents a broad coalition of left leaning and progressive organizations.  The Netroots website describes its influencing role as follows. 

Think of the Netroots as a big political family. We may not agree on everything but common threads connect us—for example, we stand for an America where every person deserves a good job with fair wages and equal opportunity. Our tent may be broad but we all can agree that America has gone off the rails and it’s time to get back on track with policy that is fair and just for everyone. 

The Washington, DC based Center for American Progress is chaired by John Podesta whose political resume and connections to the President include the following.

Prior to founding the Center in 2003, Podesta served as White House chief of staff to President William J. Clinton. He served in the president’s cabinet and as a principal on the National Security Council. While in the White House, he also served as both an assistant to the president and deputy chief of staff, as well as staff secretary.

Podesta served as co-chair of President Barack Obama’s transition, where he coordinated the priorities of the incoming administration’s agenda, oversaw the development of its policies, and spearheaded its appointments of major cabinet secretaries and political appointees. 

The Center describes its American political operation as follows.

How we work

Through dialogue with leaders, thinkers, and citizens, we explore the vital issues facing America and the world. We develop a point of view and take a stand. We then build on that and develop bold new ideas.

We shape the national debate. We share our point of view with everyone who can put our ideas into practice and effect positive change. That means online, on campus, in the media, on the shop floor, in faith communities, and in the boardroom. Our progressive partners—including the CAP Action Fund—take our ideas to Congress and statehouses. 

The third nonprofit, NARAL Pro-Choice America, pushes its abortion rights agenda by targeting both Congress and the Executive for action.

The President

President Obama can do a lot to affect pro-choice policies.

· President Obama picks the people who oversee services important to women's health. He also nominates women and men to serve as judges on federal courts.

· President Obama can use executive orders to change some policies. Just after entering office, he canceled the anti-choice global gag rule.

· President Obama proposes the federal budget. Choice is part of many programs.

· President Obama has the power to sign into law or veto choice-related laws Congress passes. 

Learn more about the powers of the president (PDF)

Congress

Congress—the House and Senate—creates laws and spends money on many health programs. The Senate also approves people the president picks to serve as judges or in key government positions. Right now, pro-choice lawmakers are outnumbered in both the House and Senate.

Find out how members of Congress voted on choice-related issues in 2012.

If the audits find the organizations have worked outside the scope of nonprofit charters, the entities will be required to file tax returns for the last three years, and will be assessed interest and penalties on their tax liability.  Per standard IRS practice, assets will be seized, as necessary, to pay monies due the U.S. Treasury.  Individuals who made tax deductible contributions to any of these organizations or affiliates may also be assessed for tax deficiencies.  If evidence is adduced of willful violation of the Internal Revenue Code during the audits, officials of the organizations may be referred to the Justice Department for criminal prosecution.

Stupid Move IRS

I remember in high school we were tested on the U.S. Constitution.  We had to pass.  No pass equaled no diploma.  So here comes a little old lady from Ohio who founded American Patriots against Government Excess (PAGE) in 2010.  Her group "consisted of volunteers who routinely passed out copies of the constitution at parades, and had informational meetings on anything from the health care law to disaster preparedness."  The IRS challenges her organization's status, political not educational they say.   Said organization passes out copies of the constitution, the very document I and millions of other had to study and comprehend in order to graduate high school.  Said organization responds to IRS audit request for reading materials by sending in copy of said Constitution.  Duh!

Criteria IRS Used to Select Groups for Audit -- Audit Process Impeded and/or Prevented Groups from Operating

Straight from the "independent" IG Report are the following which Obama and his Spokesman Jay Carney have disputed to this point.

Criteria for Potential Political Cases (June 2011)

• “Tea Party,” “Patriots” or “9/12 Project” is referenced in the case file
• Issues include government spending, government debt or taxes
• Education of the public by advocacy/lobbying to “make America a better place to live”
• Statement in the case file criticize how the country is being run

Source: EO function briefing dated June 2011

Audit processes result in delays typically of a year of more, disrupting the applicants and causing applications to wither on the vine.

The IRS process was about deferment, delay and denial during the election season -- a heinous abuse of power.  Here are the types of things the IG says happened or may have happened as a result of the unlawful review process,

As a result, the IRS delayed the issuance of letters to organizations approving their tax-exemptstatus. For I.R.C. § 501(c)(3) organizations, this means that potential donors and grantors could be reluctant to provide donations or grants In addition, some organizations withdrew their applications and others may not have begun conducting planned charitable or social welfare work. The delays may have also prevented some organizations from receiving certain benefits of the tax-exempt status. For example, if organizations are approved for tax-exempt status, they may receive exemption from certain State taxes and reduced postal rates. For organizations that may eventually be denied tax-exempt status but have been operating while their applications are pending, the organizations will be required to retroactively file income tax returns and may beliable to pay income taxes for, in some cases, more than two years

IRS Flashback -- Tax Cheat Tim Geithner

Is it any wonder that the IRS illegally targeted political groups and illegally leaked confidential information on groups disfavored by Barack Obama during tax cheat Timothy Geithner's watch as Secretary of the Treasury? When disrespect for the law starts at the top it runs rampant throughout government organizations.

As for the independent agency spinmeistering, let me say this.  I worked for an "independent agency" of the Federal Government for 33 years, and interacted literally thousands of times with other "independent" agencies.  I can attest that agency independence is a legal fiction, with an exclusive emphasis on fiction.  Agencies are led by political people who are nominated, appointed and confirmed by elected politicians.  Agency leaders know who they are beholden to and act accordingly.  I wish I had a buck for every time I heard someone say say "We need to check with the Hill", "The White House says", "The President wants", "What does the Secretary want?", "We need approval from OMB", "How will Congress react", "That won't fly with the House" or some such thing.  The influences and control are myriad and complete.  Don't be fooled by Barack Obama or Jay Carney's invocation of the fiction, not in the least.

Politidumb of the Week

The competition for this week's Politidumb award was pitched.   Leaders of the national progressive Democratic movement jostled and elbowed one other to make political hay from the Boston Marathon massacre.  They callously and  brazenly tied pet political agendas to the terrorist attack on innocents, before there was a hint of who the suspects might actually be, barely waiting for victims to gulp their last breath or to have their dangling limbs amputated and sewn off. 

Fastest out of the gate, was former White House advisor, Obama pal and confidant, Chicago based political consultant and NBC "Senior Political Analyst" David Axelrod, who jumped straight away to an unsupportable conclusion -- a tax protest.   He said that is what the President was thinking.  Axelrod's statement is most instructive for what it reveals about the progressive and presumptive presidential mindset -- taxpayers are the enemy.  Most of us are taxpayers David -- it's nice to learn of President Obama's regard.

Sadly a president thinking that the folks responsible for the mischief and mayhem are responsible taxpayers fits the uncorked mindset of the current Oval Office occupant incredibly well. 

Then comes Steny Hoyer, the House Democratic Whip who seems to care not a whit anymore about objective reality.   In reference to the sequester Hoyer said the Boston bombings are “proof that those automatic spending changes negatively impacted the intelligence community.”   What Hoyer didn't say is that he is unhinged because the sequester is hitting hardest high-income residents of the DC suburbs, including his Maryland constituents.  Fine job Steny, working to parlay the continuation of your constituents' gravy train off loss of  life and dismemberment of innocents.

Then Barney Frank opened his pie hole, claiming that the sequester hamstrung the government's ability to anticipate and respond to the Boston bombing. Frank called it a “teaching moment.” 

“And yes, I do want maybe for this to have some people be less enthusiastic about reducing our ability to respond to a crisis like this. You’re asking me am I trying to make an argument to affect how people make decisions about public policy? Absolutely, I think this is an important teaching moment about what we need if we’re going to live the way we want to live.”

When Hoyer and Frank went for the political kill, skimming Steny and bizarre Barney did not know that a fully funded FBI had interviewed and investigated the ring leading Tsarnaev and moved on.  Operating prior to the sequester and without constraint the FBI concluded Tamerlan Tsarnaev did not pose an actionable threat.  So much for the despicable money grab.

Still, the winner is the man who has made a career out of channeling the President of the United States. Congratulations David Axelrod for your Pogo moment. We have met the enemy and it is us.