Hang On To Your Wallets

Here’s some news that should cause all taxpaying Americans to feel a cold, hard lump in the pit of their stomachs:  Congress has decided to focus on “tax reform.”

ap17306662049220Congress’ decision to pivot to tax reform has produced all kinds of news stories, most of which have headlines that can only stoke the angst.  What does the proposed tax reform bill means for the value of your home?  What kind of hidden tax brackets might be found deep in the dense language of the proposed bill?  How will small business owners be affected?  What company’s stock price took a dive because the bill proposes repealing a crucial tax break?  All of these stories, and more, can be found simply by running a google search on “republican tax bill.”

The stories are indirectly reflective of the key problem with the federal tax code, because the many different areas of potential concern they address shows just how wide and deep is the reach and impact of our federal tax structure.  Virtually every company, industry, form of property, job, trade, college, technology, and concept is affected by some form of federal tax or federal tax break.  At the founding of the republic, Alexander Hamilton may have devised a simple approach to raising revenue to fund the federal government, but those days are long gone.  Now, the tax code is a complicated morass far beyond the ken of the average citizen, with special rates and breaks and benefits and exclusions and surcharges that only experts and lobbyists understand.

So, given that reality, why should the average citizen be concerned that Congress has decided it’s time to mess around with the tax code?  Because our political class, Republicans and Democrats alike, have shown they are primarily interested in raising lots of money so they can be reelected . . . which means the risk that some special provision written specifically to help a large donor will be inserted in the dead of night simply can’t be ignored.  And with the Dealmaker-In-Chief in the White House, who’s going to really dive into the details of whatever gets passed, trying to make sure that the average citizen doesn’t get gored while the special interests get their perks and sweetheart deals?

Maybe it all will work out, and the tax code will be made more fair and equitable and easy to understand, and we’ll be able to file our tax returns on postcards like the photo op pictures are indicating.  Maybe — but I’ll believe it when I see it.  Until then, I’m hanging on to my wallet.

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Politicized Diets

Recently I ran across an interesting article dealing with governmental diet instructions.  It noted that much of the nutrition advice that Americans have received from their government over recent decades has turned out to be dead wrong — and in fact may have contributed to the obesity epidemic that you see whenever you go out in public.

The article focuses on the national dietary guidelines released in 1980 by the U.S. Department of Agriculture and the forerunner to the current Department of Health and Human Services.  The guidelines targeted fat, saturated fat, and cholesterol as villainous substances to be avoided and drummed into American heads that low-cholesterol, low-fat foods were better for your heart and your health generally.  As a result, the article posits, food manufacturers started churning out “low-fat” and low-calorie offerings that Americans bought, thinking they were eating healthy.

dfe6c7a7569e69d9568a402ff1a01e74But the government’s conclusions about our eating habits and their effect on health turned out to be erroneous. Research has determined that fat and cholesterol are not, in fact, harmful, and the “low-fat,” high in carbohydrates foods that Americans have been munching on may instead have helped to produce vast problems with obesity and diabetes — problems that did not exist in 1980, when the government report that triggered it all was released.  One British cardiologist contends:  “The change in dietary advice to promote low-fat foods is perhaps the biggest mistake in modern medical history.”  And other results have indicated that diets that go in the opposite direction from the government’s instruction, with dieters looking to eat meats and eggs and limit carbs instead, are effective in reducing weight.

How did the government turn out to be so wrong?  Some researchers believe that it was because, back in the ’60s, sugar industry lobbyists funded dubious research that linked fat and cholesterol to heart disease and downplayed the adverse health effects of sugar and carbohydrates.  With the nudging from the lobbyists, the government bought the sketchy results, issued its report, and started the country on the road to flabbiness.  In short, politics helped to put us on the wrong dietary road.

If you’ve lived long enough, you begin to reach a critical mass of alarming governmental declarations that have turned out to be wrong.  It’s one of the reasons why the credibility of our governmental institutions among the American public has dropped to an all-time low.  The conclusion that modern America’s obesity epidemic is a self-inflicted problem caused in part by really bad governmental advice isn’t going to help.

Congress Gets Special Treatment, Again

For years, Congress enacted laws that did not apply to Congress.  The Affordable Care Act was supposed to be different, however.  It provided that members of Congress and their staffs would not receive gold-plated coverage through the Federal Employees Health Benefits Program and instead must purchase insurance through the on-line exchanges.  Notably, the law made no provision for taxpayer subsidies of the cost of such insurance.  In short, Congress and its staffers would have to pony up for insurance just like the rest of us schmoes.

DSC04196Then Congress had second thoughts.  Without subsidies, Representatives, Senators, and staffers would face “sharply increased costs.”  That, in turn, might cause a “brain drain,” as dedicated public servants left for more lucrative private employment.  Those considerations, at least, were offered as justification for a new proposed rule promulgated by the Office of Personnel Management after intervention by Congress and President Obama.  Under the proposed rule, taxpayer contributions will be allowed to continue for exchange-purchased plans for lawmakers and their staffs.  The taxpayer contributions will cover about 75 percent — 75 percent! — of their health care costs.

It’s a mystery how the OPM can conclude that taxpayers must pay for a subsidy when the Affordable Care Act says nothing about it.  More basically, though, the justification for the subsidy is laughable.  What is the evidence that there are any brains, among members of Congress or their staffs, that we should worry about being “drained”?  How much thoughtfully crafted legislation has come out of Congress lately?  The last I checked, members weren’t even bothering to read the voluminous bills that get written and voted on at the eleventh hour.  And there is no sign of brilliance in the legislative maneuvering, on both sides of the aisle, that has produced nothing but pointless bickering and idiotic solutions like “supercommittees” and “sequestration.”

In reality, members of Congress aren’t worried about brains — they are worried about protecting their own little fiefdoms, where they are treated like royalty by staffers who are prized not for intellect, but for loyalty and a laser-like focus on the crucial, ultimate goal of getting their member reelected at all costs.  If the loss of a 75 percent subsidy that most private employees could only dream of will cause those staffers to look elsewhere for employment, Congress has only itself to blame.  The alternative jobs undoubtedly will be lobbying and consulting and NGO jobs, where the former staffers will trade on their government experience and ability to obtain “access” to their former bosses and others on Capitol Hill.  If Washington, D.C. were not an insiders’ heaven, lucrative outside employment opportunities for the staffers who are pure political hacks would be non-existent.

Members of Congress are elected to represent us; they don’t thereby become an elite class.  They shouldn’t be treated any differently than the rest of the country, and neither should their staff members.  Shame on us if we let this latest outrage pass without recognizing, and acting on, the fact that Congress has once again immunized itself from the pain and aggravation that we will experience as a result of laws that Congress and the President have enacted.

Newt And Freddie

It’s amazing that Newt Gingrich has been able to depict himself as a “Reagan conservative” and surge to the top of the Republican field.  After all, soon after he left public office he began to do “consulting” work for Freddie Mac, the mortgage giant at the center of the housing crisis that crippled our economy.  Freddie Mac paid Gingrich’s consulting firm at least $1.6 million from 1999 to 2008.  It’s not the kind of resume that you would expect to find in a Tea Party favorite, given the Tea Party’s disdain for the cash-soaked, insiders culture of Washington, D.C.

Gingrich’s firm has now released one, but only one, of its contracts with Freddie Mac.  The contract covers only one year, which is curious.  Has the Gingrich Group really misplaced the other lucrative contracts?  If so, what does that tell you about Gingrich’s managerial abilities?  And if he really has misplaced the other contracts, why not just get copies of them from Freddie Mac and produce them all, so we can see what the entirety of the arrangement was?

The article linked above reprints the one contract that Gingrich’s firm produced.  It’s not scintillating reading — few contracts are — but it reveals that Gingrich’s firm reported to the Freddie Mac Public Policy Director, whom the Post article identifies as a registered lobbyist.  The firm was paid a retainer of $25,000 a month, which means its compensation wasn’t tied to how much work it actually did.  The description of what Gingrich’s firm was supposed to do is found in Exhibit 2, which states only that the firm was to provide “consulting and related services, as requested by Freddie Mac’s Director, Public Policy.”

However, Section 2(b) of the contract says that Gingrich’s group was to submit “an invoice that includes a detailed description of the Services performed” in order to get paid.  I hope a reporter somewhere is using public records requests and other methods to try to get those invoices, which might shed light on whether Gingrich really acted as a historian, as he states, or as a lobbyist and influence-peddler, as his opponents contend.  Interviewing the people that Gingrich reported to, and who requested the “consulting and related services,” would be a good idea, too.

I suppose it is possible that Freddie Mac paid more than $1.6 million for Gingrich to serve as a kind of historian.  After all, Freddie Mac was not exactly a paragon of fiscal responsibility, so it may well have spent $25,000 a month for unspecified historian duties even though its business involved mortgages, not histories.  Or, perhaps, Freddie Mac paid the former Speaker of the House to do other things.  It would be nice to know where the truth lies.

Lobbyist Heaven — And Lobbyist Hell (II)

When the idea of the Joint Select Committee on Deficit Reduction was raised, I expressed the hope that Congress would take steps to ensure that the people who served on the “Super Committee” did not trade on their membership for fundraising purposes.

Alas, my hopes were promptly dashed.  According to Roll Call, about two hours after Representative Xavier Becerra, a California Democrat, was named to the “Super Committee,” emailed invitations to a fundraiser touted his appointment and asked attendees to make a “suggested contribution” of $1,500 to “Becerra for Congress.”  The email pointedly states: “This will be Mr. Becerra’s first event since being named to the commission and may be one of the first for any of the twelve members of the group,” and adds, “This event could give all attendees a glimpse into what will most assuredly be the primary topic of discussion between now and the end of the year.”

Becerra says he did not know about the solicitation.  “I did not know, did not ask, would not ask and I will not ask any of my supporters to use my appointment to the select committee for purposes outside its principle [sic] focus,” the Roll Call article quotes him as saying. “That’s my position today and that’s what my position will be for my tenure on the committee.”

Let’s take Representative Becerra at his word.  Isn’t the real problem, though, that in our current system flunkies and cronies and lobbyists can do the wink-wink/nudge-nudge messaging for the candidate, who stays above the unseemly touting?  Incidentally, the Roll Call article reports that the fundraiser is going forward, despite the controversy about the email and invitation linking Becerra’s service with a suggested contribution to his campaign.  I wonder how many $1,500 checks will be made out to “Becerra for Congress”?

Lobbyist Heaven — And Lobbyist Hell

Here’s an interesting side-effect of the debt ceiling compromise:  the 12 members of Congress appointed to the Joint Select Committee on Deficit Reduction charged with coming up with a plan to wring $1.5 trillion in savings out of the federal budget will be extraordinarily inviting targets for intense, all-out lobbying.

This should not surprise anyone.  Even by Washington standards, $1.5 trillion is a lot of money.  AARP, farming interests, NPR, corporations, hospitals, colleges, state and local governments, and all of the various special interests who could lose part of their federal funding or their special tax breaks will be willing to do whatever it takes to protect their turf and make sure the cuts come out of somebody else’s hide.  Lobbyists who have good relationships with any of the Joint Select Committee members will be in high demand.  Lobbyists who don’t will be sucking wind.  And for the special interests, it’s not a bad deal — instead of having to lobby 535 Senators and Representatives for years at a time, they only need to influence the decisions of 12 people who must submit their recommendation within a few months.

So, every lobbyist on K Street will be keenly interested in who gets appointed to the Committee.  Let’s hope that Congress takes steps to ensure that whoever is selected to serve on this stunningly powerful, temporary entity doesn’t have the opportunity to capitalize on their status by having constant fundraisers between now and the date the Joint Select Committee’s recommendation is due.  The “Divine Dozen” are being entrusted with enormous responsibility.  They should all pledge not to seek any campaign contributions, fund-raising support, or any other form of benefit during their term of service on the Joint Select Committee.  The Committee’s recommendation will be controversial enough without people wondering if a few well-placed contributions influenced its decision-making.

Exploring The Limits Of Constitutional Power

Today a federal district court judge in Virginia ruled that the “individual mandate” provision of the “health care reform” legislation — that is, that portion of the statute that would require people to purchase health insurance or pay a penalty — is unconstitutional.

Judge Henry Hudson concluded that the individual mandate “exceeds the constitutional boundaries of congressional power.”  He found that the commerce clause, which gives Congress the authority to regulate interstate commerce, does not permit Congress to regulate a person’s decision not to purchase a product.  Although there are other court rulings that have upheld the “health care reform” legislation, Judge Hudson’s decision is significant because it reflects an interesting approach to skirting the broad powers afforded Congress through the commerce clause.  In effect, Judge Hudson is saying that if individuals choose not to purchase a good or service they are not engaged in commerce, and therefore they necessarily are beyond Congress’ regulatory power under the commerce clause.

Of course, this issue will be addressed by federal appellate courts and, ultimately, will be decided the Supreme Court.  Until then, it is an issue that Americans of all political stripes may well want to consider.  Supporters of the “health care reform” legislation want that law to be upheld — but do they really want a court ruling that says that Congress can force Americans to buy products or take other actions in furtherance of commerce?  In other instances, federal law requirements are simply attached to a decision and therefore become part of the individual decision-making process.  If I want to work, for example, I have to pay Social Security and have income tax withheld from my wages.  If I don’t want to pay Social Security, I can choose not to work.  With the “individual mandate,” however, there is no choice.  Simply by virtue of being an American, you become obligated to buy health insurance.

When we speak of constitutional doctrine, we have to take the long term view and look past the relative merits of the statute at issue.  If the Supreme Court rules that Congress has the constitutional power to force us to buy health insurance, what’s next?  Smoke alarms?  Government bonds?  Subscriptions to the Congressional Record?  And if we think the corruption and influence of lobbyists is out of control now, what will it be like if corporations and interest groups learn that, through some deft lobbying work, they can achieve passage of legislation that will require us to spend our money for their goods and services?