by | ARTICLES, ECONOMY, GOVERNMENT, OBAMA, TAXES
Recently, the WSJ had an article drawing attention to Obama’s changes made to the student loan system for higher education. The article, while it raised good points, did not go far enough to explain the detriment to our economy that his program is causing.
President Obama is intentionally undermining people’s successes — and our nation’s success — by encouraging large amounts of graduates to go into the government and the non-profit sectors and then subsequently forgiving student loan debt. This practice is both a) incompetent as a matter of economics and b) devious as a matter of policy.
Indisputably, the driver of economic growth in our country’s history has been the free market. By having the forces of supply and demand set prices for different things and wage levels for types and quality of labor, people were able to make logical choices of what businesses to go into, and what jobs to study and train for. The higher paying jobs were those most productive to society and had the logical effect of encouraging economic growth. Individuals could match their skill set with their desire to earn money to find their best employment, and would be maximizing the country’s economic growth as a by-product.
While non-profits have in important place in our society, they do not play an important role in actually driving our economy, which is something we desperately need right now. Discouraging economic growth, and paying a high price to do so, is certainly not smart.
Likewise, the other sector in which Obama is encouraging students to find work is the government. In the past, the public sector may not have paid as much as the private sector. Today, however, the public sector is better paid with more generous benefits, making it a very lucrative career path. How then, can Obama justify student loan forgiveness for government workers who will actually earn more than their private sector peers, who are also the ones who have to fulfill their contractual obligations to pay back their student loans?
One of the provisions of student loan reform is that Obama made certain student loans “non-taxable” if the loan is forgiven, while keeping other loans taxable as income received. This inconsistency creates confusion regarding which loans have what kind of classification.
In general, if someone forgives a debt, like a credit card company, if you racked up $10,000 in debt and settled to pay off $5,000, the IRS considers that you received $5,000 of income from the loan forgiveness; you will receive a 1099 for it, and will be expected to report it as income on your taxes. On the other hand, if you work in a qualifying field in exchange for income and also student loan forgiveness, you have a scenario that is truly the very definition of income — and yet Obama has given a free pass to some loans by making their loan forgiveness also non-taxable.
Obama is essentially picking winners and losers in particular industries through the student loan programs and masking it under student loan forgiveness and “non-taxable” categories. This is underhanded policy.
This mindset is one that suggests to and encourages students to take large amounts of student loans and then go into the sectors where their loan can be forgiven — not into the sectors where they would be most productive, and therefore most likely to earn enough to pay it back. It’s like saying to the students, “Here’s a way to not pay back your loans!”. Frankly, that’s criminal. And it fundamentally subverts the basis principles of logic and economics. Also, I can tell you as an accountant, the numbers for Obama’s student loan policy simply don’t work.
For example, if someone borrows $30,000 a year for 4 years for a degree, that is $120,000 of student loan debt. The debt carries an interest rate of at least 6%. The Obama repayment plans offer an option that allows borrowers to pay 10% (it used to be 15%) of what they earn, and if not fully paid back by the end of ten years, any balance is forgiven.. So for instance, if a new graduate lands a job that pays a generous $50,000/year, he/she would pay back $5,000/year. With interest of at least $7,200 ($120,000 x 6%) which likely does not even cover the interest on the original $120,000 loan.
There is almost no way a borrower can begin to pay back anything on their loan, and by the time they actually can make a dent, the additional interest accrued would have ballooned the total loan amount to at least $150,000. This is financially crippling for a young person.
In essence, what Obama is doing to win over the young people voting bloc is simply telling them another huge lie. He is suggesting they take out loans on which they will never be able to pay back the principal. The numbers do not work. It’s a terrible gamble; no student can pay off the loan in any rational way from any jobs in the fields they are encouraged to enter to in with the incentives offered to by the Obama Administration.
The costs for “Pay As You Earn” have ballooned from $1.7 billion in 2010 to $3.5 billion in 2013 to an estimated $7.6 billion for 2014.
“This might seem like a windfall for the students, but the only clear winners are the universities that are the ultimate recipients of the taxpayer money. While the students may technically get the freebie, the impressionable youngsters, who likely have little or no wealth, are being given an enormous financial incentive to pursue careers in government or at low-paying nonprofits.
The consequences for our economy are no less tragic than for the individual borrowers. They are being driven away from the path down which their natural ambition and talent might have taken them. President Obama keeps talking about reducing income equality. So why does he keep paying young people not to pursue higher incomes?”
The real impact of this higher education reform is that the government is now encouraging people to borrow substantially for their education, while simultaneously providing an avenue for students to avoid paying back the funds — leaving the taxpayer on the hook, a deficit in freefall, and an economy in stagnation.
by | ARTICLES, ECONOMY, OBAMA, POLITICS, TAXES
It’s the spending, stupid.
CNS News reported today that “Federal tax revenues continue to run at a record pace in fiscal 2014, as the federal government’s total receipts for the fiscal year closed April at $1,735,030,000,000, according to the Monthly Treasury Statement.
Despite this record revenue, the federal government still ran a deficit of $306.411 billion in the first seven months of the fiscal year, which began on Oct. 1, 2013 and will end on Sept. 30, 2014”.
The White House Office of Management and Budget has put out the following estimates for 2014: revenues will be $3.001721 trillion in taxes with spending estimated to be $3.650526 trillion — thereby running a deficit of $648.805 billion.
The problem isn’t lack of taxes. “The single largest source for the federal government’s record tax receipts in the first seven months of FY 2014 was the individual income tax, which brought the Treasury $823.079 billion”
The problem is egregious spending.
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA
Most Americans would score Obama poorly on foreign policy issues. It’s a conundrum, really, because most of the things he has done, people seem to have supported him – from pulling troops out of Afghanistan, to not going to war in Syria. And yet, people think he has done very badly with his decisions.
While at first glance it may seem inconsistent, it is not actually inconsistent at all. People don’t necessarily want their opinions of foreign policy matters carried out; instead, what they want is for the Executive Branch to lead and do the right thing for the country. So much information relating to foreign policy is not public and cannot be made privy to public. For that reason, our country has depended on the Executive Branch to use the information to do the right thing for American, first and foremost above what may be popular sentiment or easy.
FDR faced this with WWII. Almost universally no one wanted to go to war but when the United States was attacked and FDR told the American people, “we need to do this”, Americans said okay and fully supported the war effort. Similar situations with Reagan and Panama, Clinton and Kosovo. These were not particularly popular positions, but when the Presidents made their case, Americans by-and-large gave their support.
What the Presidents didn’t do, was ask first. We had leaders who would lead, even it they did something that was not exactly the most popular or easiest — because there has been a mutual understanding that a President will act first and foremost for the best of his country based on his more full knowledge.
Here’s where Obama is different. We now have a president who is trying to do what he thinks will get him the most political points with the people. This is not presidential. This is not how presidents act. This has given us terrible results.
Obama, like all other presidents, has all the information at his fingertips. Instead of doing what he should do on foreign policy questions — which is to lead — he is trying to listen to the people and gauge their temperature, if they are warm to the idea, instead of telling Americans what is right.
What Americans may by-and-large think what is the right thing to do is sometimes wrong because we do not have the full picture. We understand decisions need to be made on sound policy, not politics. But for Obama, his leadership style has been that of politics first, policy second. Because he’d rather do what he perceives is politically beneficial instead of lead with conviction, both his domestic and foreign audiences find Obama to be weak and ineffective in foreign policy matters.
by | ARTICLES, BLOG, ECONOMY, HYPOCRISY, OBAMA
Can you believe it — a bigger lie than “you can keep your doctor”?
President Obama’s comments regarding the gender pay gap and discrimination are as vicious a lie as his statements that you can keep your doctor. The idea that women earn $.77 for every $1.00 that men earn, for equal work, has never been true, never in the slightest.
That $.77 comparison is not for equal work. It strictly represents the reality that women, more often than men, work at jobs that are lower paying. The reason for such jobs might include school and family situations, flexibility of schedule, and their desires to be able to be use work secondarily for their needs for their families or a source of discretionary income.
There is actually no evidence of any discrimination for women doing the same work an being paid less. If the world of labor could indeed pay women less (23% less) for equal work, why isn’t virtually every company hiring only women as a means to curb costs and increase profit?
A more full and excellently written description was put forth in the WSJ on April 7th. It is a must read.
The most incredible thing about Obama’s statements is that Obama appears to have his own “pay gap disparity” at the White House (women earn $.88 cents per $1.00 for men). Interestingly, the White House takes great pains to discuss the discrimination variables that cause this disparity.
“An analysis of staff salaries done last fall by the conservative American Enterprise Institute found the president’s female aides were paid 88 cents for every dollar paid to men, about $65,000 to $73,729 annually. On Monday, Carney argued the comparison is based on aggregate wages that include the lowest salaries at the White House “which may or may not be — depending on the institution — filled by more women than men.”
He said men and women in equivalent roles at the White House earn the same amount and that 10 of 16 department heads are women, earning the top White House salary of $172,200″.
Here we have the Obama administration admitting that more women are in jobs that include the lowest salaries at the White House.
So, it is not gender discrimination at the White House, which is what Obama has tried to claim in his “$.77 cents” missive and new Executive Order. He wants to apply that label when discussing the “gender pay gap” to all other businesses (as a means to appeal to his female base), but then when the spotlight is shined on the White House pay scale, Obama retreats from that rhetoric.
As he should. Because the gender pay gap is truly a myth. And Obama’s own White House data and discussion prove it.
by | ARTICLES, BUSINESS, ECONOMY, GOVERNMENT, HYPOCRISY, OBAMA, POLITICS
Bernie Sanders recently chose to test the waters of a possible Presidential campaign by weighing in on the deliberations regarding the Post Office. Thankfully, we have this Op-Ed so early on, because it reveals Sanders’ complete and utter inability to comprehend basic economics and accounting.
Bernie argues two main points: 1) the Post Office is not broke and 2) those who believe it is are “anti-government”, “wealthy special interest”, profit-seeking, or all of the above. These points rest entirely on his premise that pre-funding health benefits to postal workers is a very bad thing.
Sanders actually believes that planning for future promised benefits is not a fiscally sound practice. If he feels this way about the Post Office, surely he feels the same about Social Security and Medicare (two programs who have trillions in future liabilities). Does Sanders know that his type of accounting would land any business executive in jail?
Sanders says that if we didn’t have to pre-fund future benefits, than the Post Office would make a profit. Simple, right?
What he fails to mention that if we didn’t pre-fund benefits, the Post Office would merely be sloughing off paying its promises to some future nebulous day and time for some other taxpayers else to take care of –only when its liabilities were astronomical and the finances were on the edge of a precipice.
That result is precisely what we are facing programs like Social Security, Medicare, and many defined benefits plans across the country: politicians made future monetary promises without planning for them, and now the economic pressure has ballooned into severe fiscal instability. Sanders belongs to the ‘spend first, fix (maybe) later” group of bureaucrats who refuse to follow basic accounting practices like any business would be required to practice.
With the Post Office, we actually have an quasi-government entity following good, non-gimmick accounting so taxpayers can see first-hand the true financial picture (current and future) of the post-office. Pre-funding benefits to account for future and current liabilities is a proper and healthy way to do business. And if the Post Office cannot turn a profit while protecting its current and future liabilities, than it must make changes to its business operations
By repealing the legislation to pay for future liabilities, Bernie Sanders is ostensibly demanding someone in the future — your kids and grandkids — to clean up the mess of his government and his generation’s deliberately poor financial planning.
Which bring us two his second point. Bernie Sanders does what the Left does best, which is resort to name calling, straw-man arguments to build up his weak ideas. Sanders actually thinks that those who wish to pass on a health economic future while practice basic and principled accounting practices are anti-government, bought-and-paid-for, or profit-mongers. No, Mr. Sanders, we only wish for the government and its entities to practice the same kind of accounting standards that any other business or family is required to do.
Watch out, America — Bernie Sanders is just more of the same. Another bureaucratic imbecile who refuses to face economic and financial realities when it comes to the Post Office — or any big government program which deals with current and future liabilities. Sanders would rather pass the buck to the next generation in order to save a few union jobs.
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, QUICKLY NOTED
From Katie Pavlich at Townhall.com
“According to new IRS emails obtained through a Freedom of Information Act request from Judicial Watch, former head of tax exempt groups at the IRS Lois Lerner was in contact with the Department of Justice in May 2013 about whether tax exempt groups could be criminally prosecuted for “lying” about political activity.
JW IRS doc
Read the full story here
by | ARTICLES, ECONOMY, OBAMA, OBAMACARE, TAXES
Americans for Tax Reform (ATR) has done an analysis of taxes that Obama has proposed since taking office, by looking the Obama administration budgets for FY2010 – FY2015.
“The 442 total proposed tax increases does not include the 20 tax increases Obama signed into law as part of Obamacare.
Here’s a breakdown of potential taxes by by budget year:
“-79 tax increases for FY 2010
-52 tax increases for FY 2011
-47 tax increases for FY 2012
-34 tax increases for FY 2013
-137 tax increases for FY 2014
-93 tax increases for FY 2015
“History tells us what Obama was able to do. This list reminds us of what Obama wanted to do,”
by | ARTICLES, ELECTIONS, FREEDOM, GOVERNMENT, OBAMA, TAXES
Last week, the Commissioner of Internal Revenue Service, John Koskinen, spoke to the National Press Club on a variety of matters. One of the items he discussed was the proposed regulation changes to 501c4s.
As I mentioned earlier, the citizen commentary on this matter was unprecedented. As such, the IRS concluded they could not review it all in a timely matter for this year. However, he did not say that the matter was closed — only delayed:
“Another recommendation by the IG was that the Treasury Department and the IRS should provide clearer guidance on how to assess the permissibility of 501(c)(4) social welfare organizations’ activities. So last November, Treasury and the IRS issued proposed regulations that are designed to clarify the extent to which a 501(c)(4) organization can engage in political activity without endangering its tax-exempt status.
While I was not involved in the issuance of this draft proposal, because it happened before I was confirmed as Commissioner, I believe it is extremely important to make this area of regulation as clear as possible. Not only does that help the IRS properly enforce the law, but clearer regulations will also give a better roadmap to applicants, and will help those that already have 501(c)(4) status properly administer their organizations without unnecessary fears of losing their tax-exempt status.
During the comment period, which ended in February, we received more than 150,000 comments. That’s a record for an IRS rulemaking comment period. In fact, if you take all the comments on all Treasury and IRS draft proposals over the last seven years and double that number, you come close to the number of comments we are now beginning to review and analyze. It’s going to take us a while to sort through all those comments, hold a public hearing, possibly repropose a draft regulation and get more public comments. This means that it is unlikely we will be able to complete this process before the end of the year.”
Therefore, the IRS will continue to ponder the matter and revisit it — likely during another important election cycle. It is imperative to keep an eye on this, as the changes are onerous and unnecessary for the operation of 501c4s to educate and advocate.
by | ARTICLES, ELECTIONS, OBAMA, POLITICS, TAXES
The IRS recently proposed major changes to the way not-for-profit 501c4 organizations operate, which would effectively and severely limit their ability to engage in advocacy. These are your social welfare organizations, for which advocacy for “the common good and general welfare” is their primary purpose. They differ from 501c3, which are your charitable organizations; 501c5s, your labor unions; and 501c6s, your trade organizations. The one thing all of these organizations do have in common is that they are all tax-exempt organizations.
501c4s are not tax-deductible precisely because they are not political organizations. They serve to educate by being issue-based. This is protected under free speech; so long as the 501c4 sticks to an issue and not advocate for a particular candidate, it is not considered political speech and therefore it cannot be curbed. They can talk about policies and positions, not people.
These social welfare groups can therefore participate in the political arena as long as they maintain education as their primary purpose. Some examples of 501c4s would be the National Rifle Association (NRA), American Association of Retired Persons (AARP), Americans for Tax Reform (ATR), and the Sierra Club. 501(c)4s have been around for nearly 100 years, and the regulations that currently govern them have been in place since 1959.
So why has the Obama administration and the IRS taken a sudden interest in clarifying the rules for social welfare organizations that have been in place for more than 50 years? And why only the social welfare organizations, not the unions or trade organizations?
It is well known that on issue-based advocacy, the Republicans have made much better use of 501c4s than the Democrats. So of course, the Democrats want to find a way to disrupt this. You can find a flood of recent articles documenting how this conservative group and that conservative group spent money on political ads, more than the liberal groups–as if that is somehow unfair. It’s perfectly fair and perfectly legal — except when the Democrats are on the losing/receiving end.
This situation is reminiscent of the attempt to implement the “Fairness Doctrine” for talk radio, pushing to give conservative and liberal talk radio shows “equal air time” — because the conservatives dominate that market as well.
The 2014 Democrats are vulnerable, and they know it. What better way to stifle the ability for conservatives to message (foremost on the fledgling Obamacare law) than by attacking the methodology? The Obama Administration is retaliating by using the IRS to propose changes to the way social welfare organizations function and introducing very specific and onerous rules. These rules that have not been necessary at all for the entirety of the time (nearly a century) 501c4s have been in existence — until suddenly now.
What the new policy does is make definitions of political activity, specifically creating a huge number of things to now be considered “political”. The regs “would explicitly define which kind of activities are political and fall outside of the social welfare category, forcing such groups to be more careful about how they spend their funds. Under the proposed regulation, “candidate-related political activities” would include running ads that mention candidates close to Election Day, preparing voter guides or holding voter registration drives”.
By defining such activities as “political” instead of advocacy, they would be opened to being limited or even banned — activities which serve to provide education for the common good, as they always have.
Critics of the way 501c4s operate, which allow their donors to remain protected, suggest that the 501c4s are somehow gaming the system — using phrases like “secret donors” and “secret activity” to inflame the public against 501c4s. But this is patently untrue.
Political donors are required to be disclosed under campaign finance, but since 501c4s are specifically not political organizations, the donor names do not need to be made public. Their anonymity is protected under the Right of Free Association. Those who are on the receiving end of 501c4 activities to educate the populace during the election cycle, however, are now pushing for this to change in order to reveal citizens identities.
Therefore turning a simple and known definition of a 501c4 into a new and incomprehensible one, has the effect of stifling speech. Even the mere presence of such a proposal has had detrimental repercussions.
The regulation triggered more public commentary– tens of thousands of responses — during the open comment timeframe that recently ended, than any other regulation in history. Because of the outcry, there is a strong likelihood that it the proposed changes will be rescinded. How it even was allowed to come to fruition is mind-boggling.
It is possible that the persons who drafted the legislation didn’t even care about its clarity or effects. Every day that the proposal is even out there is another day that these 501c4s either a) can’t get started or b) can’t engage in advocacy. Why? The possibility of these regulations becoming permanent rules has 501c4s worried about potential infractions. After the recent revelations about the IRS targeting last year, it is not unlikely to think that the IRS purposely crafted muddled regulations.
From the vantage point of the 2014 midterm elections, the effect of curbing or scaring the activity of 501c4s during this election cycle undoubtedly benefits the Democrats.
What organization would risk the potential for increased scrutiny and possible violation from the IRS, knowing that the IRS has been operating in an unjust and partisan matter? They wouldn’t of course. So the 501c4s are currently holding back.
The IRS continues to act in an incompetent manner. That they are targeting 501c4s, and not c5s and c6s, show that there is an inherent bias internally within the IRS. No one can look at the situation and not think that this wasn’t done to have an affect on the current political cycle. This is not how the IRS is supposed to function in our country.
by | ARTICLES, ELECTIONS, FREEDOM, OBAMA, POLITICS
Mat Staver from the Liberty Council put together a good overview of the proposed changes to Social Welfare Organizations (501c4s). Below is a partial list that attempts to define political activity, changing the language that has stood for more than 50 years.
“IRS Regulation-134417-13, “Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities,” is a proposed new regulation that is an outrageously brazen attempt by the IRS to silence the speech of 501(c)(4) organizations before the upcoming election. If implemented, the regulation would prohibit a 501(c)(4) from speaking to matters of public concern during the 2014 election cycle.
In part, the proposed regulation:
–Prohibits using words like “oppose,” “vote,” “support,” “defeat,” and “reject;”
–Prohibits mentioning, on its website or on any communication (email, letter, etc.) that would reach 500 people or more, the name of a candidate for office 30 days prior to a primary election and 60 days prior to a general election;
–Prohibits mentioning the name of a political party 30 days prior to a primary election and 60 days prior to a general election, if that party has a candidate running for office;
–Prohibits voter registration drives or conducting a nonpartisan “get-out-the-vote” drive;
–Prohibits creating or distributing voter guides outlining how incumbents voted on particular bills;
–Prohibits hosting candidates for office at any event, including debates and charitable fundraisers, 30 days prior to a primary election or 60 days prior to a general election, if the candidate is part of the event’s program;
–Prohibits distributing any materials prepared on behalf of a candidate for office;
–Restricts employees of such organizations from volunteering;
–Restricts the ability of officers and leaders of such organizations to make public statements regarding the nomination of judges;
–Creates a 90-day blackout period, in an election year, that restricts the speech of §501(c)(4) organizations;
–Declares political activity as contrary to the promotion of social welfare; and
–Protects labor unions and trade associations by not including them under the proposed regulations.
The proposed IRS regulation even restricts the ability of leaders within these organizations to speak publicly regarding legislative matters of public concern and to volunteer”
Tens of thousands of comments have been recorded during the IRS open comment session, which has now closed. While the 501c4s wait to hear the outcome, many have chosen not to be active right now, which is having an impact on the current 2014 election cycle..
