Pacific Progressive

Tax Expenditure of the Week: Tax-Free Health Insurance - Counting Down the Country's Biggest Tax Breaks, Week by Week

This article was published by the Center for American Progress.

By Seth Hanlon

This is the first in a new CAP series called the “Tax Expenditure of the Week.” The series aims to explain the often-confusing constellation of tax breaks in a way the average taxpayer can understand. Every Wednesday we will focus on one tax expenditure, explaining what it is, what purpose it is intended to serve, and whether it is effective toward that purpose. We will also review any applicable reform proposals.

Subjecting these dozens of tax breaks to greater scrutiny is part of our broader focus on making government work better and achieving better results for the American people, which is the goal of CAP’s “Doing What Works” project.

Tax-free health insurance is the single largest tax break in the United States, estimated to cost the federal government more than $1 trillion over the next five years in foregone revenue.

CAP has argued that tax expenditures are essentially spending programs that are administered by the IRS. They therefore should be evaluated alongside direct spending programs that serve similar purposes.

The tax exemption for employer-sponsored health insurance is a rare example of a tax expenditure that was considered in the context of overall health care reform. The Patient Protection and Affordable Care Act of 2010 makes important changes to the tax treatment of health care as part of more comprehensive changes to expand affordable health coverage and slow the growth of health care costs. Below, we will consider the role and effectiveness of the tax exclusion for employer-sponsored health insurance in promoting health coverage, as well the effects of the recent reforms.

Saving Without Slashing: How to Reduce Waste, Fraud and Abuse While Preserving Vital Services

This article was published by the Center for American Progress.

By John Griffith 

There was one exception to the deficit reduction commission’s call for across-the-board cuts in discretionary spending. The panel did not call for limits on so-called “program integrity efforts.”

And for good reason. These are programs designed to reduce mistaken and improper government payments to people and companies, a $125 billion problem in 2010. At a time of fiscal belt-tightening, they offer a way to reduce spending without cutting vital services more in demand now than ever.

One promising such initiative is the new Partnership Fund for Program Integrity Innovation, charged with cultivating creative approaches to a problem that has long vexed Washington. The $37.5 million, three-year fund establishes pilot programs to test new ideas for reducing improper payments and improving the delivery of services in federal programs.

Here’s how it works. Government workers and members of the public submit suggestions for improving payment accuracy through an online tool. After vetting by the relevant federal agency, the best ideas are passed on to a “collaborative forum” of nonfederal representatives, made up of state and local financial managers, program managers, technology experts, and beneficiary advocates. That forum assesses the costs, benefits, risks, and service implications of each idea and develops the most promising into concept proposals. Finally, the Office of Management and Budget, which administers the fund, works with a group of senior agency officials to decide which proposals to fund as state and local pilots.

What Are Alaska Native Corporations?

by Michael Grabell and Jennifer LaFleur ProPublica

Q. How were Alaska Native Corporations created?

Congress passed the Alaska Native Claims Settlement Act of 1971 in response to a rise in native activism and pressure from oil companies to smooth the path for a trans-Alaska pipeline after oil was discovered in 1968. The act allotted 40 million acres of land for division among 12 regional native corporations and 220 village corporations. The law was intended to settle longstanding land claims by Alaska natives and provide economic opportunities. Alaska natives and descendants born before 1971 were allowed to receive 100 shares in their village corporation and regional corporation.

In 1975, a 13th corporation formed to represent Alaska natives residing outside the state. Over the years, some village corporations merged with each other or with their regional corporation. Today there are 198 village corporations, according to the Alaska Division of Banking and Securities.

In 1986, Congress passed legislation that allowed ANCs to participate in the Small Business Administration's disadvantaged business program, known as the 8(a) program, which sets aside federal contracts for minority-owned or other disadvantaged companies. With strong advocacy from Alaska Sen. Ted Stevens, Congress later extended to ANCs additional special 8(a) benefits, such as the ability to win no-bid contracts for any amount and to own multiple subsidiaries in the program. Other participants do not have those advantages.

Q. Why are Alaska Native Corporations in the news?

Over the years, Congress has taken aim at ANCs. As the amount of federal contracting they do has expanded, studies found that the native shareholders of ANCs have not seen the improvements or opportunities promised by the program. In some cases, non-native workers outside Alaska have benefited more.

Politics Most Blatant: Conservatives Can't Escape Blame for Financial Crisis

This article was published by the Center for American Progress.

By David M. Abromowitz, David Min |

The onset of the recent financial crisis in late 2007 created an intellectual crisis for conservatives, who had been touting for decades the benefits of a hands-off approach to financial market regulation. As the crisis quickly spiraled out of control, it quickly became apparent that the massive credit bubble of the mid-2000s, followed by the inevitable bust that culminated with the financial markets freeze in the fall of 2008, occurred predominantly among those parts of the financial system that were least regulated, or where regulations existed but were largely unenforced.

Predictably, many conservatives sought to blame the bogeymen they always blamed. In March of 2008, Sen. Jon Kyl (R-AZ) blamed loans “to the minorities, to the poor, to the young” as causing foreclosures. Not long after, conservative commentator Michele Malkin went so far as to claim that illegal immigration caused the crisis.

This tendency to shift blame to minorities and poor people for the financial crisis soon developed into a well-honed narrative on the right. Swiftly and repeatedly many conservatives blamed affordable housing policies—particularly the affordable housing goals in place for the two government sponsored mortgage finance giants Fannie Mae and Freddie Mac and the 1977 Community Reinvestment Act that applies to regulated lenders such as banks and thrifts—for the massive financial crisis that occurred. This despite the fact that as recently as 2006 prominent conservatives, including FCIC Republican member and American Enterprise Institute Senior Fellow Peter Wallison, were arguing that Fannie and Freddie needed to do more lending to low-income communities and minorities.

2011: Year for the Ingenuity Economy

This article was first published by Science Progress.

By Jonathan Sallet

Our nation’s economic growth and competitiveness in 2011 will top the list of things to worry about among policymakers in Washington. The extension of the Bush-era tax cuts for another two years beginning January 1 means the debate over short-term economic stimulus is, hopefully, behind us. Now the fight over fiscal policy really begins. And the debate will focus on how to put our fiscal house in order, not whether we need to do so, which in turn means the term “investment” will be politically loaded—and hotly debated. After all, investment to some means future growth but to others is just federal pork to be cut or blocked.

So let’s delineate what meaningful investment is all about. To do so, investment should be paired with another “I” word: innovation. President Barack Obama’s State of the Union speech and his administration’s expected reiteration of its innovation policy next month will surely focus on economic growth and competitiveness, as will the president’s Fiscal Year 2012 budget, which begins October 1, 2011. And the key to the success of the president’s policy objectives will be how innovation powers our economy and our global competitiveness.

Rampant Fraud, Self-Dealing Alleged in Alaska Native Corporation

by Michael Grabell ProPublica

SAXMAN, Alaska -- When the oil boom came to Alaska, Congress promised new economic opportunities for native peoples like the Cape Fox Tlingit.

The Tlingit had wrested a subsistence life from the harsh coasts of southeast Alaska for thousands of years, only to see their villages destroyed, their resources exploited and their population wiped out by disease when white settlers came in the 19th century.

In 1971, Congress passed a law intended to right the historic wrongs and compensate natives for construction of a new oil pipeline through their ancient lands. The legislation allowed tribes and villages to form Alaska Native Corporations that would build businesses and pay cash dividends to the native shareholders.

In the 1980s, Congress gave the ANCs special privileges in a federal program that sets aside contracts for small minority businesses. Through the program, ANCs have received more than $10 billion in federal contracts in the last two years alone.

A ProPublica investigation found that very little benefit from these contracts has trickled down to native shareholders. Instead, much of the money has ended up in the hands of outside contractors, consultants and Washington lobbyists who earned generous compensation for themselves and, in some cases, for their families.

Perhaps nowhere have the abuses been more startling than in Saxman, where the Cape Fox Corporation represents 300 Tlingit natives. While other ANCs have been taken advantage of by one consultant or in a single subsidiary, lawsuits, investigations and audits allege fraud and self-dealing in five of the seven companies Cape Fox had in the program.

Cape Fox's experience shows how outsiders can easily co-opt the privileges afforded to ANCs, siphoning off large sums from taxpayer-funded contracts for themselves. The natives had almost no involvement or oversight of the companies. And when they went to regulators seeking help, they were turned away, told that the law didn't allow the agencies to intervene.

A new analysis by ProPublica quantifies the extent to which ANCs have come to benefit from the minority contracting set-asides, which are part of the Small Business Administration 8(a) Business Development Program -- a civil-rights era effort to help businesses gain experience.

While contracting dollars to 8(a) firms grew nearly fivefold from 2000 to 2009, money to ANC companies in the program increased more than twentyfold -- from $280 million to $5.7 billion -- thanks to a rule that allows them to obtain no-bid contracts of unlimited size.

Where they once accounted for just 5 percent of the contracting dollars, they now make up 22 percent, even though there are only 100,000 Alaska natives in the United States.

Revenues for ANCs Skyrocket, but Not Payouts to Natives

by Jennifer LaFleur and Michael Grabell ProPublica

Revenues of Alaska Native Corporations that are major federal contractors have grown much faster than profits and dividends they have paid to native shareholders, according to an analysis of financial data compiled by ProPublica.

Seventeen of the highest-grossing ANCs saw revenues rise 82 percent from 2005 through 2009, while profits increased just 14 percent, the analysis shows. During this period, most native shareholders received less than $500 a year in dividends from the corporations.

The findings provide evidence for one of the major criticisms of ANCs: that non-native consultants and subcontractors hired by the corporations reap large sums from the contracts for themselves, leaving little for the native shareholders the program was intended to help.

Under a series of special rules, ANCs can get no-bid contracts of unlimited size. The companies often subcontract with big, non-native companies who perform much of the work.

ProPublica's analysis is based on annual reports and other documents from the ANCs, many of which are filed only on paper in a tiny office in Anchorage. While the corporations have been around for decades, their finances have been difficult to track.

ANCs are exempt from U.S. Securities and Exchange Commission reporting rules, and only those with at least 500 shareholders are required to file annual reports with the state of Alaska.

ProPublica has created an online archive of ANC annual reports for every regional corporation and some of the largest village corporations, dating back, in some cases, to 2000.

Justice Department Prepares for Ominous Expansion of 'Anti-Terrorism' Law Targeting Activists

by: Michael Deutsch, t r u t h o u t | News Analysis

In late September, the FBI carried out a series of raids of homes and antiwar offices of public activists in Minneapolis and Chicago. Following the raids, the Obama Justice Department subpoenaed 14 activists to a grand jury in Chicago and also subpoenaed the files of several antiwar and community organizations. In carrying out these repressive actions, the Justice Department was taking its lead from the Supreme Court's 6-3 opinion last June in Holder v. the Humanitarian Law Project, which decided that nonviolent First Amendment speech and advocacy "coordinated with" or "under the direction of" a foreign group listed by the Secretary of State as "terrorist" was a crime.

The search warrants and grand jury subpoenas make it clear that the federal prosecutors are intent on accusing public nonviolent political organizers, many of whom are affiliated with Freedom Road Socialist Organization (FRSO), of providing "material support" through their public advocacy for the Popular Front for the Liberation of Palestine (PFLP) and the Revolutionary Armed Forces of Colombia (FARC). The Secretary of State has determined that both the PLFP and the FARC "threaten US national security, foreign policy or economic interests," a finding not reviewable by the courts, and listed both groups as foreign terrorist organizations (FTO).

In 1996, Congress made it a crime - then punishable by 10 years, which was later increased to 15 years - to anyone in the US who provides "material support or resources to a foreign terrorist organization or attempts or conspires to do so." The present statute defines "material support or resources" as:

... any property, tangible or intangible, or service, including currency or monetary instruments or financial services, lodging, training, expert advice or assistance, safe houses, false documentation or identification, communications equipment, facilities, weapons, lethal substances, explosives, personnel and transportation except medicine or religious materials.

'Go Home': Incoming Leader of the 112th Congress Issues Odd Marching Order

This article was published by the Center for American Progress.

By Scott Lilly 

The incoming leadership and committee chairmen of U.S. House of Representatives have been boasting about their ambitious, time-consuming plans to conduct intensive oversight and ferret out waste fraud and abuse throughout the federal government. Yet the new House Majority Leader, Rep. Eric Cantor (R-VA), recently unveiled his calendar for the first session of the next Congress—one that has the House in session for fewer days than during any first session in the past decade. Something has to give, but from recent statements by the newly elected leadership, it is not at all clear what that will be.

The man expected to be speaker during the 112th Congress, John Boehner (R-OH), told a press conference hours after his party was swept into the majority on election day, "When it comes to the financial services bill...it is going to require a significant amount of oversight so not only will the Congress understand but the American people understand just what this bill will do to our financial services industry." That was only one of countless statements, press releases, and bulletins over the past six weeks detailing the arduous work load anticipated by the soon-to-be leaders of the House of Representatives in the new 112th Congress.

More recently, the incoming Government Reform Committee Chair Darryl Issa (R-CA) carried the oversight theme to the entire federal budget. He told a meeting of federal inspectors general in Philadelphia, "Government will need to go on a diet…The vast majority of $1.4 trillion (in deficit reduction) will have to come out of government spending…Our committee is going to focus on places where money can be saved, where we can literally close agencies or subagencies or programs. And we are going to work mostly on that."

Small Nations Spend Big on Lobbying in Washington, D.C.

by Jennifer LaFleur ProPublica

Tiny countries have used big-time Washington lobbyists to plead their cases in the United States, a new database of federal records shows.

An analysis of 2009 foreign lobbying records by the Sunlight Foundation shows that overseas governments, political parties and other government-controlled entities spent $60 million influencing officials in Washington.

The new lobbying data show that among the countries that spent the most on lobbying was the Cayman Islands, home to about 55,000 people, which spent $7.9 million on issues relating to tourism and economics. Fifteen separate organizations from the United Arab Emirates spent $5.4 million on a variety of issues from nuclear energy to tourism.

That data is searchable online through the Foreign Lobbyist Influence Tracker.

The database, a joint project of ProPublica and The Sunlight Foundation, was built from reports filed with the U.S. Department of Justice under the Foreign Agent Registration Act (FARA).

The new data show that thousands of contacts made on behalf of foreign countries include everything from e-mails and phone calls to in-person meetings -- with government officials, think tanks and even journalists. The data show that the groups contacted U.S. lawmakers or their staffs 17,000 times.

President's Bioethics Commission Strikes the Right Balance

This article was first published by Science Progress.

By Jonathan D. Moreno 

The President’s Commission for the Study of Bioethical Issues released its first report, the result of a six-month study of synthetic biology. The study was ordered by the president in response to an announcement last May by the J. Craig Venter Institute that it had inserted a laboratory-made genome into a bacterial cell, creating an organism not found in nature. Observers disagree about whether the technical achievement should be considered the creation of life or not, but the announcement drew public attention to the implications of the rapidly growing synbio field.

According to the report, synthetic biology holds great promise to unlock new possibilities in human health and environmental protection. Scientists and entrepreneurs are already working to devise ways to use cells with synthetic genomes to produce renewable fuels, hydrogen, or even generate electricity directly through artificial photosynthesis. In health care it is hoped that synbio may one day lead to improved production of drugs and vaccines, and to novel treatments.

But, as with any valuable new technology, the pursuit of these benefits comes along with certain risks that must be weighed accordingly. Concerns about intentional misuse of synthetic biology aside, there is also the possibility that synthetically developed microbes could escape domestication and cause damage to ecosystems or human health. The report released today recommends a series of regulatory measures to anticipate those risks.

What Bernie Said, Part 2

by: William Rivers Pitt, t r u t h o u t | Op-Ed

As Congressional Republicans and the White House wrangle over the relative merits of exploding the deficit by giving hundreds of billions of dollars in tax breaks to millionaires and billionaires who don't need the money, the real world they appear to know nothing about plods drearily on. AUSA Today story from Wednesday reported:

U.S. Postal Service workers who handle letters addressed to Santa at the North Pole say more letters ask for basics - coats, socks and shoes - rather than Barbie dolls, video games and computers. At New York City's main post office, Head Elf Pete Fontana and 22 staff elves will sort 2 million letters in Operation Santa, which connects needy children with "Secret Santas" who answer their wishes.

Fontana, a customer relations coordinator for the Postal Service, has been head elf for 15 years. "The need is greater this year than I've ever seen it," he says. "One little girl didn't want anything for herself. She wanted a winter coat for her mother."

Cesar, 7, wrote for himself and his baby sister. "This year my mom don't have much money to spend on Christmas gifts so I'm writing to you," Cesar told Santa. "It would make us very happy if you and your elves would bring us toys and clothes." One mom sent a turn-off notice from the electric company, Fontana says.

Melanney, 9, asked Santa for a coat and boots. "I have been a very good girl this year," she wrote.

Puts things in perspective, don't you think?

Texas Up by 4, Florida Up by 2, New York and Ohio Down by 2 - House Reapportionment

The Census bureau released the reapportionment of House seats.  Texas was the big winner with 4 more seats.  The northeast was the biggest loser, dropping 5 seats total.  California remains the largest state delegation with 53 seats. 

The press kit for the first 2010 Census results is available.

Bush Sr., James Baker Instrumental in Getting Nigeria to Drop Bribery Charges Against Cheney

 

by: Jason Leopold, t r u t h o u t | Report

Dick Cheney recently faced bribery charges related to $180 million in bribes that executives working for Halliburton's former subsidiary, Kellogg, Brown & Root paid to Nigerian government officials between 1994 and 2004. (Image: Lance Page / t r u t h o u t; Adapted:Kristin Fitzsimmons / Wikimedia)

Former President George H.W. Bush and ex-Secretary of State James Baker were part of a negotiating team that convinced Nigerian government officials to drop bribery charges against Dick Cheney and Halliburton, the oil services firm he led prior to becoming vice president.

Bush and Baker, whose law firm was hired by Halliburton in 2004 to handle the bribery allegations, participated in conference call discussions with senior Nigerian government officials, including the country's attorney general, Mohammed Adoke, last weekend on behalf of Cheney in an attempt to work out a settlement, according to a report published by an African news agency.

The negotiations took place in London and included Halliburton represenatives.

On December 17 Femi Babafemi, a spokesman for Nigeria's Economic and Financial Crimes Commission (EFCC), the agency that filed the 16-count indictment last week, said the case against Cheney, Halliburton and several other current and former executives has been "formally dropped."

Earlier this week, Babafemi said Halliburton agreed during negotiation talks to a "plea bargain" and to "pay $250 million in fines in lieu of prosecution." He said the Nigerian government accepted the terms of the settlement.

The Most Neglected Branch: Obama's Judicial Nominees Need to Be Confirmed Now

This article was published by the Center for American Progress.

By Ian Millhiser 

It’s tough to imagine a more flawed decision than Monday’s opinion by Judge Henry Hudson striking down a provision of the landmark Affordable Care Act. Indeed, in his unconstrained zeal to strike down health reform, Hudson mixed up two entirely different provisions of the Constitution—an error that even conservative commentators have criticized. Yet Hudson’s very presence on the bench is the product of a one-sided 30-year campaign to move the courts to the right.

Even the most heavy-handed novelist could not invent a character whose biography more clearly foreshadowed the kind of judge Hudson would be. A former antipornography crusader and conservative congressional candidate, Hudson has come under significant fire for his large investment in the right-wing campaign firm that includes Virginia Attorney General Ken Cuccinelli among its recent clients. Cuccinelli, of course, is the lawyer who filed the lawsuit challenging the act in Hudson’s court.

Hudson is hardly an isolated extremist. In fact, he was very much par for the course among President George W. Bush’s first slate of judicial nominees—a slate which included such luminaries as:

• Priscilla Owen, who took thousands of dollars worth of campaign contributions from Enron and then wrote a key opinion reducing Enron’s taxes by $15 million when she sat on the Texas Supreme Court
• Jeffrey Sutton, who spent much of his legal career inventing new ways to immunize states from civil rights laws
• Edith Clement, who now sits on the board of a notorious industry-funded organization that provides free junkets for federal judges
• Janice Rogers Brown, who once compared liberalism to “slavery” and Social Security to a “socialist revolution”