In December 2013, one of the biggest successes for opponents of wasteful government spending took place: the Production Tax Credit (PTC) for the government subsidy–dependent wind-power industry expired, which would progressively save U.S. taxpayers up to $12 billion as no new wind-energy development projects could claim it.
It was an event we noted earlier this year, as President Obama attempted to resuscitate it despite the opposition of a majority of lawmakers. But now, with legislation to revive the subsidy stalled in the Senate, the Obama administration is rewriting the IRS rules to do an end run around the opposition to the wasteful subsidy. Former U.S. Senator and current lobbyist Don Nickles explains how the IRS is tweaking its rules so that the wind industry can take more dollars away from taxpayers:
In a boon to wind developers, the IRS said renewable energy projects could qualify for the PTC if they had incurred at least 3 percent of the total project cost before the beginning of 2014, down from the previous threshold of 5 percent. Of course, this news comes on the heels of prodding from wind developers who have been waiting for this direction since this spring, when investors that provide the cash to fund major wind power projects began demanding a guarantee that projects would qualify. Alas, if only we all lived in a world where we could get paid based on accomplishing 5 percent of something.
Perhaps President Obama is smart to throw his pals a lifeline, because the legislative process won’t get him anywhere when it comes to the real prize. Opposition to an extension of the PTC is strong and bipartisan, with 54 Members of Congress recently issuing a letter to House leaders calling for its end. This comes on the heels of other members who were once supportive of the PTC changing their tune in recognition that the subsidy has served its purpose. House Majority Leader Kevin McCarthy is one of them, which is notable coming from California, a state that has generally supported these kinds of incentives. Other members of Congress are also bound to take note that the PTC should end, especially in the wake of developments like the CEO of Power Company of Wyoming admitting that the PTC is not needed and that its demise will not halt the company’s plans to build a large wind farm.
In a recent Forbes op-ed, Christine Harbin Hanson of Americans for Prosperity took issue with the back-door way the credit is actually being expanded:
On a recent Friday afternoon during August recess, the IRS issued new guidance that expanded the PTC even further. Now, in certain situations, the IRS will allow wind farm developers to sell a project that is either completed or in-progress and the use the selling costs they incur to count toward qualifying for the PTC. The IRS also clarified what “significant work of a physical nature” is needed in order to qualify for the tax credit. The IRS provided a loose definition, saying ... that it is the nature of the work that matters (e.g., digging foundations, installing transformers, building roads), not the extent or the cost.
These repeated changes occur with little public notice, seemingly always on Friday afternoons while most in Washington are away from their Blackberries. These are a problem because arbitrary action by a handful of unelected bureaucrats is quietly expanding this taxpayer subsidy, increasing the price tag of this handout more and more every year. Historically, the PTC program has cost an average of $5 billion per year; thanks largely to these expansions, a 1-year extension would cost a whopping $13 billion over the next decade. Given the federal government’s serious fiscal problems, it makes no sense to increase giveaways like this to any private industry, let alone one as economically unviable as wind energy.
Further alarming is the fact that this is happening without actions from elected officials. Members of Congress facing future elections are able to be held accountable to their constituency; out-of-control IRS bureaucrats like Lois Lerner are not. Since Congress has outsourced so much of its authority to federal agencies over the course of the Obama Administration and its predecessors, the IRS can claim that it is acting within the scope of its legal authority when it issues this type of new “guidance” that expands this controversial subsidy program even though it’s expired.
We can’t get federal spending under control if our elected officials aren’t willing to stand up to special interests like those in the wind energy industry. Congress should reject efforts to extend or grow this special carve-out for wind producers, and it should disapprove of the IRS’s ongoing actions to expand it.
Indeed. An expired government subsidy for a failing government-supported industry should stay dead. If only it would finally die.
It’s the sort of zombie government regulation that gives zombies a bad name.
Alvaro Vargas Llosa, a native of Peru, notes in his book Global Crossings that workers from many nations tend to migrate in search of employment opportunities and prosperity. In the new book A Race for the Future, Cuban native Mike Gonzalez shows how, from the 1940s into the 1960s, the Bracero program allowed Mexican nationals to work legally in the United States. Then American labor unions pressed Congress to kill the program. The jobs remained, forcing workers to cross the border illegally to fill them. Instead of making it easier for workers to migrate legally, U.S. government agencies operate at odds with their work ethic. Take, for example, the U.S. Department of Agriculture, which operates food stamp programs.
As Gonzalez shows, the USDA has crafted radio soap operas in Spanish to get immigrants to drop their natural resistance to being a public burden and accept food stamps. And the USDA even collaborates with foreign governments in that regard. The long-term goal, as Gonzalez sees it, is to co-opt the growing number of immigrants from Mexico, El Salvador, Guatemala, Honduras and other Latin American countries into the Great Society welfare programs created by the administration of Lyndon Johnson. That does not help the immigrants themselves and fails to serve the U.S. economy. It does, however, increase the power of federal bureaucracies. In effect, they are importing new clients to justify their positions and expand their power.
Weakening the work ethic of immigrants is hardly the only harm perpetrated by the USDA, which has paid more than $34 million to grow soybeans in Afghanistan since 2009. According to a report by a special inspector general, this was a multi-million-dollar waste of time, money and resources. The USDA has also turned its the Center for Nutrition Policy and Promotion into a promotional agency for “save the planet” zealotry. The CNPP is now headed by “green food” activist Angie Tagtow, who believes that government policy “dictates everything.” In Big Government, bad policies work together for the detriment of all, even those who seek to work in the United States.
The National Highway Traffic Safety Administration purports to hold the safety of American motorists in high esteem, but according to a recent investigation reported by the Boston Globe, the federal agency is slow to identify safety problems and tentative to take action. This is not a new development. As we noted in April, NHTSA bosses knew about the faulty ignition switches in General Motors vehicles that could cause engines to turn off, disabling air bags with deadly results. The faulty switches led to at least 13 deaths and more than 2.6 million recalled vehicles. The NHTSA had an investigation all teed up but “deep-sixed it,” which an independent investigator found troubling. The most likely explanation is that the federal safety bosses wanted to go easy on General Motors, also known as Government Motors, which the federal government had bailed out to the tune of some $50 billion.
Now it turns out that the NHTSA spends about as much money to rate new automobiles as it does investigating manufacturing defects. Taxpayers will note the abundance of independent review media, such as Consumer Reports. There is no need for the NHTSA to review cars, but it is typical of a federal agency to perform poorly on its actual job and waste money on other tasks better handled by independent, non-governmental groups.
We should also recall that a related agency, the National Transportation Safety Board, is mounting a snoop surge by pushing for installation of “black box” data recorders in cars and trucks. These function only after the fact of any accident, so their safety value may well be doubted. But the black boxes do help the government keep tabs on drivers. This comes at a time when government irresponsibility and unaccountability have plunged to an all-time low. Job one for federal bureaucrats is protecting their jobs, salaries, and budgets. Taxpayers aren’t even number two. By any standard, the system is unsafe at any speed.
If you’ve been following the IRS Scandal involving IRS employees denying tax-exempt status to a number of non-profit groups opposed to President Obama’s political agenda, you’re familiar with the name Lois Lerner — especially if you’re familiar with the IRS claim that it had “lost” all of the senior manager’s, and many of her associates‘, e-mails related to the scandal.
But what you may not have known is that some of the e-mails unrelated to that scandal have exposed another: an IRS employee who is being paid a six-figure salary for doing nothing — not even the task to which they are assigned. The Washington Examiner‘s Paul Bedard reports:
The House Ways and Means Committee said that emails from former IRS executive Lois Lerner, being probed for her involvement in the agency’s targeting of conservatives, show she vented at being blocked from firing one worker who did “nothing,” yet still received up to $138,136 a year....
In a 2011 email recently uncovered by the committee, Lerner wrote to colleagues that she “learned than [an] employee who is assigned to a special project has spent most of the last year doing nothing and reporting to her manager on timesheets that she has been working on the project full time.” The worker was paid $106,263–$138,136.
Lerner said that “We can’t do anything” about the worker, though some argued for termination, explained Boustany’s letter. Instead, the unnamed worker was given a lower performance rating.
Must be nice to “work” for a major government agency where there is no accountability for misconduct.
We know that must be the case because of the things that the Department of Labor spends money on for the purpose of “improving” the morale of its employees. Kyle Smith asks some questions about some of DoL’s more curious expenditures:
An Aug. 25 letter from House Oversight Committee Chairman Darrell Issa (R-Calif.) to Labor Department Secretary Thomas E. Perez contains some pertinent questions about “a pattern of wasteful spending and mismanagement.” We’d all like some answers.
Why, for instance, is the DOL entering itself in public relations contests, often winning them, and then flying top brass to posh locales to pick up the awards at lavish ceremonies? At one such party, the PRSA Silver Anvil Awards in Manhattan, tickets were sold for $375 a pop. Taxpayers, according to Chairman Issa, apparently picked up the tab for a DOL flack to attend. Is the DOL working for the American laborer, or spending our money to polish its own image?
And how, Issa would like to know, did DOL manage to spend $2,637 a week producing posters to be placed in the elevators in the agency’s headquarters building? DOL has blown some $600,000 on these posters, which are evidently aimed at celebrating the agency’s work to its own employees. Of whom there are nearly 18,000. Maybe, the next time Washington is wailing about the impossibility of reducing spending on anything, someone should mention the DOL’s poster squad.
Issa might also ask, while he’s at it, why the agency is prompting employees to waste their time participating in a poetry contest, or logging on to a website to vote for “favorite saint” status for the New Deal Labor Secretary Frances Perkins, for whom the department’s headquarters building is named. (Perkins did indeed win a whimsical online poll, Lent Madness, which department spokesman Carl Fillichio trumpeted as “our small salvation” during the sequestration “crisis”. Fillichio, by the way, is also the official who traveled to New York, apparently on our dime, to accept that Silver Anvil award that acknowledged his skill at relating to the public.)
In the private sector, these kinds of expenditures are the kind of things that ethically troubled executives do to try to improve the morale of their employees as they attempt to distract attention from more troubling matters.
Consider the case of Boeing’s former CEO Phil Condit, who was compelled to abruptly resign in disgrace in 2003 ahead of news breaking of a major defense contracting scandal at the company. Condit’s tenure at the top of the aerospace giant frequently involved poetry recitals by company executives at lavish private parties/training sessions at his estate for the express purpose of improving their morale as the company sought to significantly boost its production without boosting either the pay or the numbers of its labor force:
Of course, none of this can happen without good relations with the workforce. And Condit has introduced a surprisingly touchy-feely approach to this issue. To break down barriers among senior managers, he has enlisted the help of David J. Whyte, a Seattle-based poet and philosopher who has also worked with AT&T, Honeywell, and Eastman Kodak. During a series of weeklong meetings in 1994 and 1995, senior managers capped their sessions with a trip to Condit’s house for dinner, then gathered outside around a giant fire pit to tell stories about Boeing. Whyte says he and Condit asked them to write down negative stories and toss them into the flames to banish the “dark” side of Boeing’s past. “Phil believes that the stories you tell are the legacy you will leave behind,” says Whyte. Condit also asked managers to keep inspiring stories.
That’s really not that much different from what’s going on at the U.S. Department of Labor with its endless supply of new posters “celebrating” the government agency’s “work” and its participation in PR contests. Oh, and its own poetry contests for employees.
These are your tax dollars at work. If only they were going toward getting the Department of Labor to do some productive work....
In 1950, Congress created the National Science Foundation “to promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense.” In fiscal year 2014 the NSF deploys a budget of $7.2 billion, and remains the “major source of federal backing” for “mathematics, computer science and the social sciences.” One of their recent projects gives new meaning to the NSF motto: “where discoveries begin.”
“The federal government is spending nearly $1 million to create an online database that will track ‘misinformation’ and hate speech on Twitter,” notes Elizabeth Harrington of Fox News. To that end, the NSF is bankrolling a web service that will monitor “false and misleading ideas,” with a focus on political activity. Researchers at Indiana University used the NSF money to create the “Truthy” database, a service that, according to the grant, “could mitigate the diffusion of false and misleading ideas, detect hate speech and subversive propaganda, and assist in the preservation of open debate.”
That certainly qualifies as “science.” As we noted, with the current federal administration, “hate speech” can mean anything at odds with the views of the President of the United States and his vice-president. In current conditions, hate speech can mean advocacy of individual freedoms, limited government, accountability, and lower taxes. What we have here is another case of the government deploying federal agencies against the people, as with NSA intrusions and the IRS targeting scandal. Even if the “Truthy” squad sought or found an actual terrorist plot it remains unlikely whether they would do anything about it. Federal snoops knew full well that U.S. Army Major Nidal Hassan was planning an attack but did nothing to stop the Army psychiatrist from gunning down 13 and wounding more than 30 at Ford Hood in 2009. Then the government called this “workplace violence,” not even “gun violence.”
“Truthy” boss Filippo Menczer is a professor of informatics and computer science at Indiana University. As Katherine Rodriguez of CNS News points out, Menczer also “proclaims his support for numerous progressive advocacy groups, including President Barack Obama’s Organizing for Action, Moveon.org, Greenpeace, the Sierra Club, Amnesty International, and True Majority.” So cronyism is also going on “where the discoveries begin.”
As this column observes, government costs are high because of new federal entitlements such as Obamacare, the federal stimulus program, excessive military spending, the war on drugs, bloated bureaucracy, and new federal agencies such as the Consumer Finance Protection bureau, to name just a few of the big-ticket items. Government costs also run high because of lower-level profligacy that sometimes goes unnoticed.
As Darrell Smith and Phillip Reese note in the Sacramento Bee, in 2013 former Yolo Superior Court boss James B. Perry was paid $275,221, higher than any of California’s other 20,500 Superior Court employees. Most of his pay that year came from a lump-sum payment of $201,319, including $159,523 to buy out his health benefits and $41,796 for 520 hours of vacation time and paid time off.
Lump-sum payouts for benefits are uncommon. According to the Sacramento Bee report, in 2013 only 1,100 of California’s judicial employees received such payments and the average payout was $10,000. Perry’s massive cashout also included some $36,000 in defined benefits, deferred compensation, and “other pay.” His annual salary was $169,524, and he said a number of judicial officials are paid more. As for the lump-sum payout, he claimed it was a good deal for Yolo County, which is no longer obligated to pay for his health care. Actually, the payout is a fantastic deal for him, and a terrible deal for taxpayers.
Perry’s payout confirms that government defined-benefit pensions spike costs for taxpayers, now struggling in a weak economy and dealing with dysfunctional Obamacare. In the independent sector, few workers get cash for vacation days they don’t use, but they must fund this perk for ruling-class officials such as James B. Perry and thousands of others. That’s why government costs more than it should.
The Mercatus Center has been busy developing a new online database that quantifies just how the number of regulations governing every activity of the American people has grown since 1997. RegData 2.0 doesn’t just give a high-level summary, it allows readers to drill down into the U.S. federal government’s regulatory morass to quantify where most of the regulations are being generated.
Taking it for a test drive, we started with a simple count of the number of restrictions on activities that are have come to be recorded in the Code of Federal Regulations from 1997 through 2012.
Working from that database, the Mercatus Center’s Patrick McLaughlin identified the 10 biggest issuers of new regulations over the ten years from 2002 through 2012.
Having identifed the Environmental Protection Agency (EPA) as the biggest generator of new regulations and restrictions, we returned to the database and sorted through each of the industries that have seen the biggest increase in attention from the EPA. We found two sectors that have seen a remarkable increase in scrutiny over the last several years.
The first won’t be any surprise: the mining, quarrying and oil and gas extraction industries have seen the largest increase in regulations.
The second sector is very surprising. The EPA significantly boosted its regulation of the Finance and Insurance industry.
Now, we can understand why government agencies like the Federal Deposit Insurance Corporation or even the Departments of Commerce or the Treasury might seek to increase regulations over the Finance and Insurance industries, particularly following the 2008 financial crisis. But why on earth would the EPA even think it has a valid role in regulating these industries?
A check of the top industrial polluters in the United States turns up only Warren Buffet’s Berkshire Hathaway as a major contributor to pollution in the U.S. among an otherwise exclusive list of energy-related producers, and then, only because of the conglomerate’s MidAmerican Energy utility division.
As best as we can tell, the Obama administration’s EPA issued a large number of regulations in 2009 related to the creation of a cap-and-trade scheme for controlling greenhouse-gas emissions in advance of the U.S. Congress’s anticipated passage of laws that would enable the EPA to compel the industries it directly regulates to participate. But the legislative effort to establish the scheme failed to pass into law in 2010, despite the Obama administration having a supermajority in the U.S. Congress at the time, leaving behind a bunch of what are now seemingly useless regulations on the books.
But rather than remove the regulations, which have not been approved by the U.S. Congress, the EPA has instead chosen to keep them on the books, where they might lie dormant until some arbitrary time in the future, when they might suddenly erupt like a volcano and blanket the entire nation with a fresh layer of regulatory ash.
This summer, twenty graduate students at the University of Virginia who participated in a cross-disciplinary course on the national debt created a 10-minute YouTube video to help their fellow Millennials better understand where it comes from and also the consequences of the national debt. NBC reports:
Students of the Institute for Business in Society, a branch of UVA’s Darden School, put it all into laymen’s terms for anyone to understand. The animated video was funded by a grant from the Jefferson Trust, an initiative of the UVA Alumni Association.
“When you look at an issue like the national debt, it has far-reaching implications, across education, across healthcare, across a number of social and business sectors,” said Dean Krehmeyer, executive director.
Here’s the video:
For years private health care managed by greedy insurance companies had left thousands without coverage. Then Covered California, a wholly owned subsidiary of Obamacare, rushed to the rescue. Now everybody has with easy access, lower costs and superior care. That glowing government narrative leaves out a few harsh realities. As Emily Bazar of the CHCF Center for Health Reporting notes: “A worrisome trend is emerging among some Californians who thought they were safe and secure under Covered California: Their plans are being canceled without consent and sometimes without notice.”
Bazar sites the case of couple who signed up for an Anthem plan under Covered California and paid premiums but then the plan was canceled without input or permission. The couple was shoved onto Medi-Cal, a problem because “finding doctors who accept Medi-Cal is even more challenging than finding doctors who participate in Covered California’s limited networks.” Many of these people now in Medi-Cal “already have paid thousands of dollars in deductibles and co-pays, and some have even met their out-of-pocket limit under their Covered California plans.” They stand little chance of getting their money back. Others have been “dropped outright,” including a woman who only learned about the cancellation from her local pharmacy. It turns out that Covered California “told the insurer to cancel the policy,” without telling the policyholder.
David Spady, California director of Americans for Prosperity, notes that under Covered California, premiums have gone up for two years in a row, with increases between 22 and 88 percent. This from legislation that was supposed to lower premiums and bring everybody into the fold. Californians are “looking at higher premiums, worse coverage and back payments to the IRS.” It gets worse. As we noted, Covered California wasted $1.3 million on an absurd promotional video with Richard Simmons and paid $20,000 a month to former state finance director Ana Matosantos.
For all but the willfully blind Covered California constitutes government malpractice and abuse. Though dysfunctional and dangerous for the workers, Covered California works well as a cash cow for the ruling class.