Patterico's Pontifications


Breaking: California Democrat State Senator Indicted for Public Corruption; UPDATE: Yee Detained

Filed under: General — Patterico @ 10:09 am

San Jose Mercury News:

SAN FRANCISCO — State Senator Leland Yee has been indicted for public corruption as part of a major FBI operation Tuesday morning spanning the Bay Area, according to law-enforcement sources.

Yee, D-San Francisco, highlights a string of multiple arrests that also includes infamous Chinatown gangster Raymond “Shrimp Boy” Chow, connected to a variety of charges including racketeering and drug crimes, sources said.

FBI agents and local police are serving arrest and search warrants throughout the Bay Area, with agents seen in locations in San Francisco and San Mateo, as well as Yee’s Capitol office in Sacramento. One of the searches was at the San Francisco Chinatown office of the Gee King Tong Free Masons and is linked to Chow’s arrest.

I think they mean “Wednesday morning” because my impression is that this is all going on right now.

Thanks to MM.

P.S. Perhaps my favorite tidbit:

Yee is the state’s third Democratic legislator recently tied to corruption allegations. In February, State Sen. Ron Calderon, D-Montebello, surrendered to authorities after being indicted on bribery charges. In January, Assemblyman Roderick Wright, D-Inglewood, was convicted of voter fraud and perjury stemming from a 2010 indictment.

Voter fraud? Why, voter fraud never happens!

Never fails. Republicans always have the sex scandals, while Democrats tend to have the corruption scandals.

UPDATE: Yee has been detained, per the L.A. Times:

State Sen. Leland Yee of San Francisco has been detained after a series of raids by FBI and gang task force officials Wednesday, according to various media reports.

FBI agents searched Yee’s state Senate office Wednesday morning but declined to comment to The Times on the nature of their investigation. News photos showed Yee, a Democrat who is also running to be California’s secretary of state, in the backseat of a patrol car as he arrived at a federal courthouse in downtown San Francisco.

Dan Lieberman, Yee’s press secretary, told The Times his office would not comment on the FBI raids, which were reportedly linked to the arrest Wednesday morning of Raymond “Shrimp Boy” Chow.

Somehow the L.A. Times declined to provide one of those photos. If a reader finds one, let me know and I will post it.

UPDATE x2: Here is the first photo I have found, from NBC Bay Area:

Screen Shot 2014-03-26 at 10.41.08 AM

UPDATE x3: Mayor of Charlotte, North Carolina also arrested on corruption charges today. Prepare for a shock: it’s another Democrat.

Charlotte Mayor, Patrick DeAngelo Cannon, was arrested today by FBI agents for alleged violations of federal public corruption laws, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal criminal complaint filed in U.S. District Court, charges Cannon, 47, of Charlotte, with theft and bribery concerning programs receiving federal funds, honest services wire fraud and extortion under color of official right.

Thanks to crosspatch.

UPDATE x4: Yee recently received an award for making government more transparent:

For his efforts to bring greater government transparency, Senator Leland Yee (D-San Francisco/San Mateo) will be honored with the Public Official Award by the Northern California Chapter of the Society of Professional Journalists (SPJ) on Thursday, March 20, at 6:00 PM, at the City Club in San Francisco.

“I am honored to receive this award from the Society of Professional Journalists,” said Yee. “I’m proud to share the stage with so many who have done so much to keep our government open and accountable.”

Yee received the award in recognition of his opposition to efforts to weaken the California Public Records Act by loosening disclosure requirements for local governments.

Yee has authored numerous bills designed to make government more transparent.

Thanks to K.T.


Those Racist Pro-Slavery Neoconfederates in Venice

Filed under: General — Patterico @ 5:06 pm

People in a smaller unit of government are talking about breaking away from the larger unit, because the larger unit is running itself into the ground economically.


No. Venice, Italy:

Venetians have voted overwhelmingly for their own sovereign state in a ‘referendum’ on independence from Italy.

Inspired by Scotland’s separatist ambitions, 89 per cent of the residents of the lagoon city and its surrounding area, opted to break away from Italy in an unofficial ballot.

The proposed ‘Repubblica Veneta’ would include the five million inhabitants of the Veneto region and could later expand to include parts of Lombardy, Trentino and Friuli-Venezia Giulia.

If Venetians are discussing the possibility of secession, this can mean only one thing: The citizens of Venice, Italy are actually racist, pro-slavery Neoconfederates.

Because, as we all know, anyone who ever discusses the possibility of a smaller political unit breaking away from, or “seceding,” from a larger unit? That person is obviously doing so only because they pine for the days when black men and women were in chains.

If I can be serious for a moment, even if we discount the vote in Crimea, the vote in Venice is not unique. Scotland and Catalonia (in Spain) are also planning similar referenda later this year.

And there are many parallels between Venice and Texas, besides the rather obvious one that each is an economic powerhouse in a country whose economy is sputtering. Let’s start with that obvious point, though, and put some meat on the bone.

The CNBC story linked above says:

Italy receives around 71 billion euros ($96 billion) each year in tax from Venice, according to AFP – some 21 billion euros less than it gets back in investment and services.

Historically, Texas has also sent more money to the federal government than it has received. Although that is lately not the case, it appears to be because of a huge influx of poor people (read: illegal immigrants) — a situation that might well change if Texas were to become independent.

The Daily Mail story above says:

The floating city has only been part of Italy for 150 years. The 1000 year–old democratic Serenissima Repubblica di Venezia, was quashed by Napoleon and was subsumed into Italy in 1866.

Similarly, Texas became a state in 1845, and had a period (albeit brief) of independence before that. Like Venice, large parts of the state’s boundaries are natural, created by bodies of water — rivers and the Gulf of Mexico.

Texas has other advantages that go beyond Venice’s. For example, Texas has its own power grid, although it does not quite cover the entire state (missing El Paso and parts of the Panhandle and East Texas).

I don’t see secession, at least currently, as a likely prospect for Texas — or for that matter, for any state. Polls tend to show most Texans opposed to the idea — although a poll in 2009 showed 48% of Texas Republicans in favor of the idea. But I think it’s time to trot out a quote from F.A. Hayek that is nice to remind people about when folks talk about what is politically possible:

We need intellectual leaders hwo are willing to work for an ideal, however small may be the prospects of its early realization. They must be men who are willing to stick to principles and to fight for their full realization, however remote.

Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this had rapidly become impossible as the result of changes in a public opinion which they have done nothing to guide.

Before I argued for the secession of a state in which I no longer live, I would rather use this stirring language to try to fix America. It would be ideal to remove the government interference with the economy that has set us on the path to ruin.

But if that’s not possible, then why not try to save the parts that can be saved? Just talking about it guides public opinion — on the fact that the idea is not the exclusive province of cranks, and on the economic realities that make this sort of talk necessary.

They will call you racist, pro-slavery, and Neoconfederate. Just tell them you’re on the same page as the people of Venice.

More Questioning of Michael Hiltzik’s Recent “The Sky Is Falling on Social Security!” Column

Filed under: General — Patterico @ 11:03 am

Over the weekend I caught Michael Hiltzik falsely claiming that Republicans had taken a “meat cleaver” to the budget of the Social Security Administration. The offered proof was that (no doubt like most goverment agencies) they usually don’t get quite what they ask for. I looked at some budget documents and noted that there was an 11% increase in the SSA budget over four years (2009 to 2013) and that they typically request 8% more every year than they received in the previous year.

It’s almost as if Michael Hiltzik wasn’t being truthful with the readers of the Los Angeles Times.

Daleyrocks dug deeper and found a document that challenges some other key assumptions of Hiltzik’s column. That document, in turn, caused me to research other documents relating to the performance of the SSA, with results that (surprise, surprise!) undermine Hiltzik’s claim that the level of service has plummeted.

Hiltzik’s column, remember, was titled, Another way to harm Social Security: wreck its customer service.

Mark Miller of Reuters brings us up to date on this underhanded campaign, which involves closing field offices by the score, satellite offices by the hundreds and service staff by the thousands. “Visitors to field offices waited more than 30 percent longer in fiscal 2013 than in 2012,” Miller reports. “Busy signals on the SSA’s toll-free customer assistance line (800-772-1213) doubled in fiscal 2013 over the previous year.”

Let’s put that in perspective. In 2013 the agency reported (pdf): “Busy signals on our 800-number were the lowest ever.” The document found by daleyrocks contains this table:

Screen Shot 2014-03-24 at 10.07.50 AM

So, despite the supposed “meat cleaver” slashing of the budget (again, an 11% increase over 4 years), the percentage of calls resulting in a busy signal has declined over time from 12% (FY 2006) to 5% (FY 2012). But then, last year (FY 2013), they supposedly doubled, right back to 10%.

What could explain this sudden change, then, from 2012 to 2013? If you look at my earlier post, you’ll see that the actual budgets for the SSA were $11.5 billion in 2012, SLASHED WITH A MEAT CLEAVER to $11.4 billion in 2013. Did this almost 1% cut in the budget mean that busy signals doubled? I tend to doubt it.

What did happen in 2013 was . . . the government shutdown. And during that period of time, the phones were apparently not being answered at anywhere near the same rate. CBS News reported in October 2013:

While Social Security checks will continue to go out after the government shutdown, some folks making calls to their Social Security office may find their calls unanswered.

Although this didn’t last long, when nobody’s calls get answered for weeks, that can skew totals greatly. Until I see data otherwise, I conclude that the government shutdown, and not a systematic “slashing” of budgets that remain mostly steady or increase.

[UPDATE: This theory is incorrect, because as a reader notes, the government shutdown took place at the beginning of fiscal year 2014, even though it was in calendar year 2013. So the alleged doubling of busy signals must have some other explanation — although it seems very hard to believe it was due to a paltry 1% cut in the SSA budget.]

Back to Hiltzik:

What was especially fatuous was the agency’s assertion that the annual statements, which showed up in people’s mailboxes with such regularity you could almost set your watch (or at least your calendar) by them, could easily be replaced by an online service anyone could access by computer.

Of course, many people don’t have access to a computer as easily as they do to their mailbox, and fewer feel comfortable going online for private, personal information. Now Miller reports that only 10 million workers, a mere 6% of the total, have signed up to get their statements online. How predictable.

Yeah? And what percentage of the people who got this stuff in the mail actually opened it up? I bet that percentage is very small — and that is the relevant comparison point. In other words: true, Internet access to the statements doesn’t mean everyone will sign up — but mail access to the statements doesn’t mean everyone opens them up (or would much care if they stopped coming). Hiltzik’s 6% argument basically assumes everyone reads the statements, but only 6% can figure out how to get online.

Logic and numbers tell a different story.

First, logic: even if it is true that most people don’t go online to access their statements, there are plenty of reasons people might not care what their benefits are. For some, perhaps that is because they know they can’t collect Social Security. That describes me. I have paid into Social Security for the requisite number of quarters, but I won’t collect a dime because of rules relating to pensions. For others, they will technically be eligible but not care, perhaps because they are young and this is not their top priority, or because they figure the system will collapse and they will never see any money from the system. Others may already remember what their benefits were and not yet be interested in how it has all changed in the last year. Still others think they will get benefits, never knew what they were, and won’t start to worry about the specifics until they near retirement.

Hiltzik assumes 100% of recipients are critically interested in seeing this information on a regular basis. But logic says they aren’t. What’s more, the numbers say that when getting online is important to them, more and more people can figure out how tondo that.

Second, the numbers: want to know something that does matter to people? Filing their claims. And guess what? That is happening online more and more every year. According to the document located by daleyrocks (.pdf), the “Complete Performance Section” for Fiscal Year 2012, as of 2012 the number of claims filed online was steadily increasing year after year:

Screen Shot 2014-03-24 at 9.28.14 AM

The document Overview of our Fiscal Year 2013 Goals and Results has the following table:

Screen Shot 2014-03-24 at 9.47.46 AM

Online claim filing continues to increase every year. And these are people who are theoretically the least able to access computers of anyone: the elderly and the disabled.

The daleyrocks-located document alao claims that the SSA met goals in numerous different areas, undercutting the idea that services have been cut to the bone. Goals met include: eliminate the oldest pending hearing requests; reduce the percentage of Appeals Council cases pending 365 days or over; minimize average processing time for initial disability claims; complete the budgeted number of initial disability claims; meet target for Disability Determination Services cases production per workyear; complete the budgeted number of disability claims at the reconsideration level; achieve the target number of initial disability claims pending; achieve the target percentage of initial disability cases identified as Quick Disability Determinations or Compassionate Allowances; increase the percentage of claims filed online (discussed above; this is considered a priority goal); complete the budgeted number of retirement, survivors, and Medicare claims; achieve the target busy rate for National 800 Number calls (as discussed above); omplete the planned number of video hearings; etc. etc. etc. I got tired of cutting and pasting all the goals they met.

Of course, they fell short in some areas, too. How can you keep increasing your request by 8% a year if you don’t claim you’re underfunded somehow?

But, just as Hiltzik’s claims of drastic budget slashing don’t withstand scrutiny, his claims of a pervasive, year-after-year decline in services doesn’t hold up. A review of these documents shows the services keep getting faster, more automated, and more reliable every year — with the apparent exception of a year with a government shutdown.

So, hey, I know what let’s do: let’s cherry-pick some numbers from the government shutdown year, lie about meat cleaver slashing, and make it sound like the SSA is going to hell in a handbasket.

Par for the course from this guy.

UPDATE: In 1993, busy signals at the 800 number were sometimes between 50 and 90 percent (.pdf). Then the GOP took a meat cleaver!! to the SSA budget and the percentage skyrocketed to between 5% and 10%.


Ted Cruz to DOJ: The American People Deserve Better

Filed under: General — Dana @ 12:48 pm

[guest post by Dana]

Senator Ted Cruz does not take things lying down. Most recently, we have seen him here , here, and here bluntly and forthrightly speaking his mind. Some might even call it rocking the boat. So, it should be no surprise that last week when the DOJ denied his request that a special prosecutor be appointed to investigate an abuse of power by the IRS and their targeting of conservative groups, he came out swinging,

It is the height of hypocrisy for the Obama Administration to claim that the investigator leading the investigation into the IRS’s illegal program has no conflict of interest. The investigator is a partisan Democrat who has donated over six thousand dollars to President Obama and Democrat causes. Just as nobody would trust John Mitchell to investigate Richard Nixon, nobody should trust a partisan Obama donor to investigate the IRS’s political targeting of President Obama’s enemies. Sadly, “in the discretion of the Attorney General,” Eric Holder has chosen to reject the bipartisan tradition of the Department of Justice of putting rule of law above political allegiance.

Both Nixon Administration Attorney General Elliot Richardson and Clinton Administration Attorney General Janet Reno appointed special prosecutors whose integrity was beyond reproach; Eric Holder should do likewise. To date, nine months after a damning Inspector General report, nobody has been indicted, many of the victims have not even been interviewed, and Lois Lerner has twice pleaded the Fifth. And yet the Attorney General refuses to allow a genuine–and impartial–investigation.

The integrity of the Department of Justice deserves better. The American people deserve better.

Also, last week in a penned Wall Street Journal opinion piece, Republican congressman from Ohio, Jim Jordan, seconded the request for a special prosecutor to investigate the IRS. In a nice turn, he used Democratic Senator Elijah Cummings’ own words to fortify his request,

When Congress is thwarted in our attempts to get answers—as is clearly the case given Ms. Lerner’s willingness to speak with the Justice Department but not to the public’s elected representatives—we have an obligation to hold accountable those hiding the facts.

Additionally, it is necessary to appoint a special prosecutor. Mr. Holder called the IRS matter “outrageous and unacceptable” and ordered a Justice Department investigation to be conducted in coordination with the Federal Bureau of Investigation. No one can have confidence in this investigation, started by a politically appointed attorney general and led by a campaign contributor to his boss.

As Elijah Cummings, my Democratic colleague on the Oversight Committee, said on May 22, 2013—the day of the committee’s first IRS hearing—getting the truth and restoring trust must be paramount. “This is more important than one election,” he explained. “The revelations that have come forward so far provides us with a moment pregnant for transformation; not transformation for a moment, but for generations to come and generations yet unborn.”

I hope Mr. Cummings and fellow members of his party will join me in acknowledging the time has come for the appointment of an independent and unbiased special prosecutor.

Most certainly, Jordan is not expecting a different response from the one Cruz received, yet it is heartening to see another elected official not let this go.

More boat rockers, please.


Patterico Reader Schools Rutten

Filed under: General — Patterico @ 9:22 am

Found at the bottom of Rutten’s now-rewritten column that repeated myths about what astronauts can see from the moon with the naked eye:

Editor’s note: This column has been corrected to remove an incorrect reference to American astronauts being able to see the Great Wall of China and the California Aqueduct from the moon; they could not.

The headline now says “corrected” as well.

My post correcting Rutten, in which I was tipped by JVW, is here.

JVW 1, Rutten 0.


A Picture is Worth a Thousand Words

Filed under: General — Dana @ 1:06 pm

[guest post by Dana]

As we are all well aware, March is Women’s History month. Here is President Obama’s proclamation.

In part,

As women fight for their seats at the head of the table, my Administration offers our unwavering support. The first bill I signed as President was the Lilly Ledbetter Fair Pay Act, which made it easier for women to challenge pay discrimination. Under the Affordable Care Act, we banned insurance companies from charging women more because of their gender, and we continue to defend this law against those who would let women’s bosses influence their health care decisions. Last year, recognizing a storied history of patriotic and courageous service in our Armed Forces, the United States military opened ground combat units to women in uniform. We are also encouraging more girls to explore their passions for science, technology, engineering, and mathematics and taking action to create economic opportunities for women across the globe. Last fall, we finalized a rule to extend overtime and minimum wage protections to homecare workers, 90 percent of whom are women. And this January, I launched a White House task force to protect students from sexual assault.

Clearly, there is much to disagree with and debate within the proclamation. Not all of us play gender politics, and not all of us see these changes as a positive for our country. Also, it’s important to note that the progress cited in the proclamation is not necessarily being accurately reflected.

In the interest of brevity and because a picture is indeed worth a thousand words, I will simply say that I choose to be grateful for what others dare not dream about. And I don’t need one month of the year federally designated as a reminder.


(Photo via American Digest)



Hiltzik: Federal Government Takes a MEAT CLEAVER!!! to Social Security Administration Spending, by Increasing Rate of Spending By “Only” 11% Over Four Years

Filed under: General — Patterico @ 10:24 pm

Michael Hiltzik:

It’s no secret that if you really want to destroy a business, just hack away at its customer service. (Sears has been testing this axiom with considerable vigor.) The principle also holds true for government programs, which is why you should be very suspicious about the relentless budget-cutting at the Social Security Administration.

Mark Miller of Reuters brings us up to date on this underhanded campaign, which involves closing field offices by the score, satellite offices by the hundreds and service staff by the thousands. “Visitors to field offices waited more than 30 percent longer in fiscal 2013 than in 2012,” Miller reports. “Busy signals on the SSA’s toll-free customer assistance line (800-772-1213) doubled in fiscal 2013 over the previous year.”

As Nancy Altman, co-director of the advocacy group Strengthen Social Security, told Miller, this is part of “a raging fight by conservatives to get rid of the government’s footprint wherever possible.” And since Social Security has long been in their cross hairs, it’s unsurprising that a meat cleaver has been taken to its administrative budget. The budget request has been pared down in 14 of the last 16 years, Miller found.

Because as everybody knows, if a government agency does not get what it asked for, then the budget is being SLASHED!!!!!!!! — even if it’s being increased every year. If we learned nothing during the Era of Austerity, we learned that the dreaded Sequestration — a minor slowing of the rate of increase in government spending — was the slashiest of all budget slashings in all American history.

Thank the Lord that’s all over with.

So anyway, I decided to spend a few minutes looking into the actual numbers. Because, you’ll be shocked to learn, I didn’t quite trust Michael Hiltzik.

Here’s what I found.

Nota bene: I don’t get paid to do this research, so what you get is limited. It’s free ice cream; if you want to improve it, go ahead, but don’t complain while you’re doing it. In this post, we will focus on the “LAE” which is the “Limitation on Administrative Expenses.”

The President’s proposed 2011 budget contains the following passage:

Provides an 8 Percent Funding Increase to Provide Services Faster and Reduce Backlogs. This year, SSA will process almost 5 million retirement, survivor, and Medicare claims; 3.3 million disability claims; and over 326,000 Supplemental Security Income (SSI) aged claims. The Budget proposes $12.5 billion for SSA, an increase of $930 million, or (8 percent), above the 2010 enacted level of $11.6 billion.

From this we get these figures:

2010 enacted: $11.6 billion
2011 requested: $12.5 billion

Further down in the document there is a table of other figures:

Screen Shot 2014-03-22 at 9.43.13 PM

From this table I get these figures:

2009 actual: $10.3 billion
2010 estimated actual: $11.3 billion
2011 estimated actual: $12.2 billion

Now here is the fiscal year 2014 budget overview document. The request is made for $12.3 billion, an 8 percent increase over the previous year’s budget. (They apparently enjoy requesting 8 percent over the previous year. Nice work if you can get it.) So:

2014 request: $12.3 billion

The request contains this table:

Screen Shot 2014-03-22 at 9.31.58 PM

2012 actual: $11.5 billion
2013 estimate: $11.5 billion
2014 estimate: $11.1 billion

(That last figure adds a healthy $1.2 billion above that for “Program Integrity Proposed Mandatory Funding.”)

Here is another document with some figures to fill in some of the gaps. Quote: “The President’s FY2013 budget request for SSA administrative expenses, referred to as the limitation on administrative expenses (LAE) account, is $11.8 billion.” So:

2013 request: $11.8 billion

Quote: “For FY2012, the total SSA LAE appropriation was $11.4 billion, taking into account the 0.189% across-the-board rescission.” So:

2013 actual: $11.4 billion

Now I am putting together these all figures that I set aside above, in chronological order:

2009 actual: $10.3 billion
2010 enacted: $11.6 billion
2010 estimated actual: $11.3 billion
2011 requested: $12.5 billion
2011 estimated actual: $12.2 billion
2012 actual: $11.5 billion
2013 estimate: $11.5 billion
2013 request: $11.8 billion
2013 actual: $11.4 billion
2014 estimate: $11.1 billion
2014 request: $12.3 billion

We go from a 2009 actual expense of $10.3 billion to a 2013 actual expense of $11.4 billion. I calculate that as about an 11% increase. Raise your hand if you got an 11% raise between 2009 and 2013.

MEAT CLEAVER!!!!!!!!!!!!!!!!!!!!!!

Now we have a 2014 request of $12.3 billion — admittedly an 8 percent requested increase from 2013 (8 percent in one year!) — not to mention the little $1.2 billion for “Program Integrity Proposed Mandatory Funding.”

So we have an 11% increase in actual funding over four years, and a request for another 8 percent in the next year. And if we get a penny less than the amount requested? Well, then: the government is just using a MEAT CLEAVER!!!!!!!!!!!!

More claptrap from Michael Hiltzik.

Planet Money on Rent-Seeking, Part 4: The Government-Mandated Minimum Prices for Sugar

Filed under: Economics,General — Patterico @ 9:02 pm

When I did my recent three-part series on rent-seeking based on Planet Money episodes, commenter jakee308 said: “Do one on sugar.”


This is Part 4 of my three-part series on rent-seeking — legal bribery of politicians to pass protectionist laws. The series discusses individual episodes from the wonderful NPR show Planet Money, a sometimes quietly subversive show which does a lot of episodes (on NPR!) that explain how government interferes with the free market.

Part 1 of the series dealt with state-created monopolies for car dealerships. Part 2 addressed the Jones Act, which creates an absurd and costly rule that shipments between U.S. ports must be made with American-made ships. Part 3 introduced readers to the “Raisin Administrative Committee” — a government-sponsored cartel that controls the raisin supply, and ruins any raisin producer who bucks the Stalinist organization and dares to sell all his raisins.

Today, we have Part 4: the U.S. federal government setting minimum prices for sugar.

The Planet Money episode opens with a CEO of a candy company talking about how he could expand his operations here in the U.S., rather than send massive parts of his operations to Mexico. What does he need? he asks rhetorically. Lower tax rates? Workers’ comp reform? A right to work law? Nope. He says he could pay no taxes, and get all those other things, and would still manufacture candy canes in Mexico. What does he ask for?

“Let us buy sugar on the free market.”

People say: What? You can’t do that?

No, you can’t.

The program explains that there are two prices paid for sugar: what people pay in the U.S., and what the rest of the world pays. The U.S. price is, on average, 15 cents more per pound than it is in the rest of the world.

Just 15 cents? What’s the big deal? Well, the candy CEO mentioned above uses 100,000 pounds of sugar a day. So he pays $15,000 extra per day. That’s between $3 million and $4 million extra per year — a “sugar penalty” the businessman must pay as a cost of doing business in the U.S.

Why? If you guessed “federal law,” you have been paying attention. The operative provision is contained in The Food Conservation and Energy Act of 2008 (aka the U.S. Farm Bill), under which the U.S. Government guarantees a minimum price for sugar: 22.9 cents per pound.

The sugar beet farmers says foreign competitors are getting subsidies. Economists respond that the solution to unfair trade practices is a complaint to the World Trade Organization — or having the U.S. slap a tariff bigger than the subsidy received by the foreign grower. Not setting a minimum price.

The most revealing story: the sugar CEO says that, according to the Ken Starr report, Clinton took a 22-minute phone call from someone while getting serviced by Monica Lewinsky. (Supposedly he was trying to break it off — but the cigar incident had not happened yet, so . . . ) Who was Clinton talking to for 22 minutes at such a moment? A sugar magnate. Now that’s access. It turns out that the sugar industry spends a ton on lobbying — double what the food and beverage industry spent as a whole in one recent year.

The hosts talk to a Congressman who is a big supporter of the minimum price. He says people call him a communist — a central planner — and he’s fine with that. After all, it’s 25% of the economy in his district. The lobbying doesn’t affect me, he says. The sugar folks support me because I support them. Sugar creates jobs in the U.S., he says.

The candy guy replies: yeah. And it also costs the U.S. jobs in my industry — jobs that are going to Mexico.

Every government intervention into the economy has consequences — often unforeseen ones that are the opposite of what government intends. Yet the machinery of interference creaks on, inevitably — as lobbying money greases the wheels. And businessmen and consumers suffer.

Yay government!

Thanks to jakee308 for the suggestion.

The Wire Also Screws Up the Matt Drudge “Liberty Tax” Story

Filed under: General — Patterico @ 6:11 pm

Arit John at The Wire joins the TPM/HuffPo/Tumulty triumvirate in screwing up the story about Matt Drudge’s pre-payment of the ObamaCare “liberty tax”:

Internet master Matt Drudge of the Drudge Report announced to the internet on Friday that he had paid the Obamacare individual mandate penalty, which he called a “liberty tax.” That’s unlikely.

The analysis is similar to the previously blogged TPM and HuffPo posts (and Karen Tumulty tweets), but I want to focus on an update with a blatant misstatement:

Update, Saturday: The Wire reached out to the H&R Block Tax Institute, which said you’re free to over pay your tax obligation on your quarterly estimated tax form, but the IRS has “no way to designate it as penalty prepayment.” The line item for “other taxes owed” doesn’t mention the health law penalty, and the IRS still needs to offer guidance over several aspects of the penalty, the company said in an email.

“The line item for ‘other taxes owed’ doesn’t mention the health law penalty”?? The hell it doesn’t. I covered this in my previous post, and will republish the screenshot here:

Screen Shot 2014-03-22 at 1.02.31 PM

Screen Shot 2014-03-22 at 1.02.44 PM

The weird part is, the next paragraph of the update quotes exactly that language, but the significance of it seems lost on the Wire blogger:

“When the return is filed (in 2015) the overpayment of the estimated taxes likely would get netted against all taxes due and cover the penalty,” according to H&R Block. The actual estimated tax form states the mandate should be paid with the 2014 return next year, though “you may want to consider this when figuring your ‘Other taxes’” owed.

Um, it says “you may want to consider this when figuring your ‘Other taxes’ owed” right now, as part of your estimated taxes that you have to pre-pay.

Although, as I noted in my previous post, there is an obscure Treasury regulation (.pdf) that says the government won’t come after you for not pre-paying the ObamaCare “penalty” (actually ruled a “tax” by the Supreme Court), anyone filling out the Estimated Tax Worksheet would be led to believe they need to pre-pay the ObamaCare payment. For the Wire to say otherwise, and claim that the form does not mention the health care payment, is just sloppy and wrong.

I’ll contact the Wire and explain the error, as I did with TPM and Huffo and Tumulty. All three of them have so far ignored me. Any bets on how the Wire guy will handle it?

Lefties Totally Goof Up Story on Matt Drudge’s Payment of the ObamaCare “Liberty Tax”

Filed under: General — Patterico @ 2:19 pm

TPM and HuffPo are suggesting that Matt Drudge is either stupid or a liar, for saying that he paid the ObamaCare “liberty tax” yesterday for not having health insurance in 2014. Washington Post reporter Karen Tumulty has been hyping the claims on Twitter this morning.

In this post, I am going to gently suggest that it may be more complicated than TPM or HuffPo or Tumulty suggest. The lefties’ understanding of the topic is laughable. But they may have accidentally stumbled onto the right answer, although their reasoning clearly shows they have absolutely no idea why.

TPM calls Drudge a (probable) liar:

Matt Drudge Is (Probably) Lying About Paying A Huge Obamacare ‘Liberty Tax’

It seems conservative monolith Matt Drudge is taking some pride in paying the penalty for not purchasing insurance under Obamacare. He’s even got a name for it.

There’s just one problem: Americans don’t pay a penalty for not having health insurance until they file their 2014 taxes — in 2015. So either Drudge is lying or he paid a huge penalty a year earlier than he needed to.

As I will explain, there is a third option: he’s paying estimated taxes. But I’m jumping the gun. Let’s give TPM some more rope:

As this helpful IRS explainer details, Americans who go without insurance in 2014 should “make an individual shared responsibility payment with your 2014 tax return filed in 2015.”

“You will make the payment when you file your 2014 federal income tax return in 2015,” it says. That’s in part because the penalty is based on one’s annual income.

Similarly, the cited HuffPo article says Drudge’s tweet is “a little head-scratching” because the payment “isn’t even due until more than a year from now, when people file their 2014 federal income-tax returns.”

Briefly, here’s how the individual mandate works: If you lack health insurance for more than three months in a year, you have to pay the IRS a penalty. (There are a whole slew of exemptions from this rule, however.) The penalty will be assessed on your tax return and taken out of whatever refund you’re owed. Again, that won’t happen until 2015 for people who aren’t covered this year.

Again, it’s as if these people never heard of sole proprietors who pay estimated taxes. Here’s what the IRS says about who must pay estimated taxes ahead of time:

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

. . . .

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

Kinda sounds like it might apply to Drudge, huh?

Sole proprietors pay these estimated taxes quarterly, during the tax year. So if you will owe a tax based on your 2014 return, you have to pay estimated taxes during 2014, not in 2015 like other individuals.

Now. I will freely admit that I am not a tax expert like the geniuses at HuffPo or TPM. But I looked at the Form 1040-ES — Estimated Tax for Individuals (.pdf), which is the form sole proprietors like Drudge use to estimate their taxes. This form has the following under a section called “What’s New”:

Health care coverage. When you file your 2014 tax return in 2015, you will need to either (1) indicate on your return that you and your family had health care coverage throughout 2014, (2) claim an exemption from the health care coverage requirement for some or all of 2014, or (3) make a payment if you do not have coverage or an exemption(s) for all 12 months of 2014. For examples on how this payment works, go to and click under the “Individuals & Families” section. You may want to consider this when figuring your “Other taxes” on Line 12 of the 2014 Estimated Tax Worksheet. For general information on these requirements, go to

A screenshot:

Screen Shot 2014-03-22 at 1.02.31 PM

Screen Shot 2014-03-22 at 1.02.44 PM

Line 12 is part of what you add up to determine your estimated taxes.

This certainly seems to suggest that the ObamaCare payment factors into the calculation of estimated taxes. Now, it says only that you “may” want to consider this payment when calculating your estimated taxes. But if you’re Matt Drudge, who regularly takes on an administration known for using the IRS to target Obama’s critics, you’re going to make good and damned sure that you’re not setting yourself up for an audit.

So why did I say up front that the lefties may have accidentally stumbled onto the right answer? It turns out that the Treasury Department has issued regulations dealing with the interface between the ObamaCare “shared responsibility payment” requirement and the requirement that one estimate one’s taxes. And — while I am not a tax expert and this is not legal advice!!! — it looks to me that the regulations say that underpayment of the ObamaCare payment will not subject a sole proprietor to penalties.

Here is the set of final regulations (.pdf). Here is what I believe to be the relevant passage:

One commentator expressed concern that taxpayers would have difficulty accurately calculating the shared responsibility payment. Emphasizing the complexity of the calculation, the commentator requested that the IRS not impose accuracy-related penalties under section 6662 for underpayments caused by erroneous section 5000A computations.

Section 6662 does not apply to a section 5000A shared responsibility payment. The accuracy-related penalty of section 6662(a) applies only to underpayments of tax, defined in section 6664. The section 5000A shared responsibility payment is not taken into consideration in determining whether there is an underpayment of tax under section 6664. Therefore, the shared responsibility payment is not taken into account under section 6662.

Let me, without expressing a legal opinion as a lawyer, translate that into English. The “section 5000A shared responsibility payment” is what Drudge is calling a “liberty tax” — the payment you will have to make as an individual if you do not purchase health insurance deemed acceptable by the ObamaCare law. “Section 6662″ is the section that imposes penalties upon people who underpay their estimated taxes.

As long as this rather obscure regulation — which is not referenced on the 1040-ES worksheet! — remains in effect, it looks like they won’t ding you for underpaying your ObamaCare payment in your estimated taxes.

Ah, so the lefties were right all along! Er . . . not exactly. Let’s examine how they reacted when Drudge tried to explain that he was paying estimated taxes. First, TPM:

If Drudge was referring to the employer mandate, it only applies to companies with more than 50 employees. They must cover a certain percentage of their employees or pay a penalty.

But companies with less than 100 employees are exempt from any penalty until 2016. Drudge has never revealed the full extent of his staff, but the Huffington Post characterized it as “small” in a 2012 article about two new hires.

Drudge has not responded to TPM’s follow-up attempts for comment.

Um, no, he was not referring to the employer penalty. He was talking about estimating his taxes as a sole proprietor — a distinction that completely escaped TPM. Here is HuffPo:

There does, however, appear to be one possible explanation that would make Drudge’s statement truthful, albeit still curious.

If Drudge pays estimated income taxes every quarter — a common practice for someone who is self-employed or is the sole proprietor of a business — he could have guesstimated what his penalty will be and added that amount to the check he apparently cut to the IRS on Friday.

“That’s perplexing,” said Brian Haile, the senior vice president for health-care policy at Jackson Hewitt Tax Service, a tax-preparation company. The IRS has no mechanism in place yet to even accept individual mandate penalties and hasn’t even published the tables taxpayers will use to work out how much they owe. Plus, any money sent in can’t be earmarked especially for that, he explained. The IRS didn’t respond to a request for additional information about collecting mandate penalties. Drudge didn’t respond to an email asking him to elaborate on his tweet.

“For whatever reason, Matt Drudge has decided to give the government an interest-free loan,” Haile said.

Odd move for a small-government, anti-tax guy to make.

UPDATE: Drudge followed up on his earlier tweet and seems to confirm that he paid estimated taxes for the first quarter of this year on Friday. The mandate penalty nevertheless is separate from income taxes and isn’t due until 2015.

What is this nonsense about the IRS not having a “mechanism” to collect estimated taxes? If anyone thinks that Drudge’s pre-payment of the “shared responsibility payment” he estimates he will owe is going to get returned, because the IRS has “no mechanism” to accept the money, then put on a dunce cap and leave the room now. Drudge is going to owe this money, but as long as Obama and his Treasury Department folks leave the regulation quoted above in effect, he won’t be penalized.

Here’s how Tumulty handled people who tried to explain all this to her:

BZZZZZT! We’re not talking about the mandate on small businesses, Ms. Tumulty. We’re talking about the individual mandate, and the fact that sole proprietors have to pay estimated taxes. When I tried to explain this to her, I checked her Twitter feed for subsequent tweets and found this:

Thanks for being engaged, arrogant Big Media person.

Note that not a single one of the lefties correctly identified the real reason why Drudge might not have to pay now. One of them (TPM) totally mixed up the employer mandate and the responsibility of the sole proprietor to pay estimated taxes, and the other (HuffPo) absurdly stated that he could not pre-pay the ObamaCare payment because there is “no mechanism” for the IRS to accept it. It falls to a schlub blogger in the South Bay of Los Angeles to point out the reason that these people may accidentally be right.

If I were Drudge, I think I would pay it anyway. They could always repeal the regulation later, without my learning about it, and use the rule to audit and penalize me. A year’s worth of interest on $3000 (a guess as to Drudge’s estimated ObamaCare payment) is nothing compared to the peace of mind Drudge will have, knowing that he’s paying what he eventually will have to pay anyway, and that if they are going to audit him they will have to find a different excuse.

If you made it all the way to the end of this post, congratulations. The messiness of the different laws and regulations mean that it takes time to explain all this accurately. But I take pride in distinguishing myself from those in Big Media, who simply jump to conclusions based on absurd premises, and move on to discussing daffodils. If they ever read this post, their reaction will be: “See? I was right all along!”

This is the caliber of analysis you’re getting from your lefty media. Be proud. Be very proud.

UPDATE: Matt Boyle at Breitbart has half the story: he explains about the 1040-ES worksheet showing the lefties’ analysis is wrong, but does not have the regulation that shows the lefties’ conclusion is still right. There are almost 15,000 comments on his post. I bet this post does not get that many.

UPDATE x2: The TPM post’s author beclowns himself on Twitter:

Dude, stop it. You’re embarrassing yourself.

« Previous PageNext Page »

Powered by WordPress.

Page loaded in: 0.2328 secs.