Can We Ever Trust The IRS Again?

I hold government bureaucrats to a much higher standard than the average citizen. Government bureaucrats have been given both power and the trust of people. So whether your primary concern is cronyism or government corruption or just plain incompetence, government bureaucrats are guilty until proven innocent. They must embody both virtue and integrity if our government is to function in a reasonable manner. Our founding fathers wrote extensively about virtue so I am puzzled why anyone would let Lois Lerner and the IRS dabble with politics. It was not in the best interest of the IRS or the country.

So let’s review what we know about the IRS targeting particular 503c4 applications for more scrutiny. The advantage of 503c4 corporations is that the donations they receive are tax deductible and anonymous as long as they were focused on social welfare issues like voter registration. This was pretty handy to the NAACP in the early years when they were trying to get more blacks registered to vote. If an organization steps over the political line, the remedy is that the IRS pulls their tax exempt status. If we look at the True The Vote website we can see that their mission is “equipping citizens to take a stand for free and fair elections.” Using the NAACP as the standard then the True The Vote effort looks very similar but for a different group of people. If the IRS is following standard practices they should approve the True The Vote 503c4 status and gently remind them that they will yank their tax exempt status if they cross over the line. That is what they should have done.

Instead the IRS chose a variety of tactics that brings in to question the integrity of the organization.

  1. They targeted certain group based on their use of certain words for extra scrutiny.
  2. They requested more information from the organizations than was required for the IRS to do their job.
  3. They delayed the approval status for a very long time.

Obviously this involves a lot more effort by IRS then the traditional route of granting 503c4 status and threatening to yank the tax exempt status later. The IRS had the means and opportunity to harass prospective 503c4 organizations but what was the motive?

In the Washington Times today we have begun to gain a little insight into the motive.

IRS emails released Wednesday show that just before the tea party targeting scandal was revealed last year, Lois G. Lerner and her colleagues at the tax agency were talking with the Justice Department about making examples out of nonprofit groups that they felt were violating campaign laws by playing political roles.

Okay, why was the IRS considering suing nonprofit groups when they could easily yank the tax exempt status? Who put them in charge of enforcing campaign laws? This sure looks like a motive and makes it look like they deliberately chose to violate the trust of the people so they could play hard ball politics from the security of the IRS office! Now we are confronted with the dilemma of how to rebuild trust in the IRS without firing everyone. If Congress does not set an example with the IRS now then what will stop a Republican president from using the IRS in the same manner? Thanks to Lois we are reminded that trust is easy to lose but very hard to win back.

Is Federal Land Ownership In The Same Political Quagmire As Slavery in the 1800s?

The federal land ownership question has me puzzled. I understand why it may have been good for the federal government to reserve vast amounts of land from the states when they applied for statehood but I do not understand why they are still doing it now. It kind of reminds me of the problem our founding fathers had with the slavery issue. It was necessary for our founding fathers to agree to protect the slave trade for twenty years so that they could get the votes to pass the Constitution. However when the twenty year time limit expired, Congress quickly passed the Act Prohibiting Importation of Slaves in 1807. The shelf life for the slavery issue had expired and it was stinking up the place. It was pretty obvious to the supporters of slavery that most of the country had decided that the practice of slavery should be abolished and that slaves should be freed. It was not obvious how this could be accomplished politically. In the end there is nothing like a very uncivil war to remind us that this political issue was not handled well. Not only did both the North and the South lose a large number of men to finally settle the slavery issue but the economy of South was devastated and the job opportunities for the newly freed slaves was primarily as sharecroppers. It was the classic lose-lose scenario that got worse with age.

Once again our country is caught up in another lose-lose opportunity. The country is in an absentee landlord relationship with the western states. If the saying “All politics is local” is true, for whose benefit is the federal government trying to keep up with these local grievances? Even though I question the legality of Mr. Bundy’s actions, he has shown the Putin approach to dealing with the federal government works. Now we get to see if the Administration can be more successful at talking down this situation then they have been with convincing Putin to not invade Ukraine. If the talks with Bundy stall what is the federal government going to do? I am sure that invading Nevada would be amusing spectacle to most people outside of Nevada. Maybe it is time for the federal government to do something it should have done more than 100 years ago and scale down the federal ownership of western lands. It is time to start selling the land and the first place to start would be to sell the grazing land to Mr. Bundy. It is the right thing to do. The shelf life for this absentee landlord relationship has expired and it has begun to stink.

Mr. Bundy and the Second Amendment

I was getting pretty concerned this weekend over the Bundy versus the Bureau of Land Management(BLM) fiasco this weekend. I saw a couple of scenes that looked they were one small step from re-enacting the Waco siege. The Waco siege or otherwise known as the Waco massacre is is not one of the bright spots in American history. It purportedly was about the sale of automatic weapons but it was so botched that the only thing most people remember is all of the people who died unnecessarily. It is a vivid reminder of the pitfalls when you to try to defend yourself against the government. In the case of the Mr. Bundy versus the BLM, wiser heads prevailed and the BLM backed down. What I found interesting is what Mr. Kornze said,

“Based on information about conditions on the ground, and in consultation with law enforcement, we have made a decision to conclude the cattle gather because of our serious concern about the safety of employees and members of the public.”

This weekend I also caught up with Justice Steven’s opinion in the Washington Post on how to fix the Second Amendment. In that piece he argues everything would have been fine with the Second Amendment if the authors had said,

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms when serving in the Militia shall not be infringed.

Unfortunately he ignores the fact that our Bill of Rights was based on the English Bill of Rights and common law history. Here is what Wikipedia says.

The right to keep and bear arms (often referred to as the right to bear arms or to have arms) is the people’s right to have their own arms for their defense as described in the philosophical and political writings of Aristotle, Cicero, John Locke, Machiavelli, the English Whigs and others.[1] In countries with an English common law tradition, a long standing common law right to keep and bear arms has long been recognized, as pre-existing in common law, prior even to the existence of written national constitutions.[2] In the United States, the right to keep and bear arms is also an enumerated right specifically protected by the U.S. Constitution and many state constitutions[3] such that people have a personal right to own arms for individual use, and a right to bear these same arms both for personal protection and for use in a militia.[4]

The concept of the “right of the people to keep and bear arms” is derived from the English Bill of Rights 1689 which states:

That the Subjects which are Protestants may have Arms for their Defence suitable to their Conditions and as allowed by Law.

Now we get to the $64 questions. Were the authors of the second amendment deliberately vague in phrasing this right so as to allow citizens to act as the political counter-balance to thuggish political actions by the executive branch and to allow the judicial branch some discretion in how the law was enforced? I suspect that Justice Steven’s solution would only recognize a militia that was duly authorized by the legislature.  This would make a mockery of the people who felt the Bundy’s grazing rights had been trampled on solely to support a misguided environmental concern voiced by a major donor to Senator Harry Reid. The idea that people in the government would engage in thuggish political actions solely to benefit their friends existed long before the Bill of Rights and I suspect King George III would have agreed with Justice Stevens on the importance of restricting the right to bear arms. The right of the people to keep and bear arms appears to have been a veiled threat intended to convince our politicians whether they be Kings, Prime Ministers, or Presidents that they should fear the wrath of their citizens whenever they stop listening and respecting the grievances of the citizens.

The second of the $64 questions is why is Justice Stevens arguing this point at the same time the Administration has garnered their place in history as the best gun salesman ever. This bustling market for guns looks like a bigger problem than one that can be solved by adding five more words to Second Amendment. The more the Administration talks the worse the problem gets. When Vice President Joe Biden gave us his opinion on self defense, my wife went out and bought a shotgun. Now we own two guns and I sarcastically refer to the shotgun as Joe. If Justice Stevens and the Administration really wanted citizens to own less guns then they should seriously consider doing the opposite of what they are doing.

The third $64 question comes from The Second Amendment As Ordinary Constitutional Law piece by Glenn Reynolds of Instapundit fame. He asserts that the “individual right to arms, not just “state armies”—a right that was, in fact, not at all dependent on the individual’s membership in any organized body or militia” is ordinary constitutional law. If that statement is true then why is Justice Stevens trying to make the link of the right to bear arms to participation in the militia? Isn’t that already settled?

Year-Round Sales Of Health Plans

One of the advantages of having a grandfathered health insurance plan is that you can look around and kick the tires of the new health insurance market place. A common fallacy I have heard from folks looking at going without health insurance is that they could go get a health insurance plan anytime they needed one. That is incorrect for most states. Most states allow health insurance to be sold without restriction only during the “open enrollment” period which recently went from October 1st to March 31st. The only state that mandates year-around sales of health plans is Nevada. The argument against year-around sales is the impact of adverse selection. The interesting question is how does this reduce adverse selection and health care costs?

Let us look at an example. Suppose in August your wife gets a call from the hospital and they say there is a dot on the mammogram and they recommend a biopsy. The earliest they can schedule the operation is in September. Is the insurance company better off if their prospective new customer delays their operation to October? In the immortal words of Hillary Clinton, what does it matter? How are they avoiding adverse selection by delaying treatment to October?  For  better or for worse the Affordable Care Act has made adverse selection a moot point for insurance companies. For those who are curious my wife’s diagnosis was just another false positive. Hmm… Maybe I need to write my state representative and see if he wants to piss off his party some more.

Student Loans Is The ONLY Consumer Credit That Is Growing!

I was looking at the latest G.19 report from the Federal Reserve and noticed that the only major holder of consumer credit who increased their loans was the Federal Government. For people unfamiliar with this report, this is where the government reports its student loan holdings. It is probably too early to declare the consumer driven economy as dead and buried but you get the gist. It is hard to be optimistic about a growing economy in 2014 when the only folks borrowing money in February were students. Read it and weep!

The Vanishing Goal Posts Of The Affordable Care Act

I was surprised when Neil Cavuto announced on Thursday night on Fox Business(FBN) that the 7.1 million enrollee figure the White House was celebrating was celebrating was off. How much off were the numbers? Here is what FBN said.

Try about a million enrollees.

Not a million fewer enrollees. A million net new, paying enrollees.

Yes, we crunched the data, separated out as best we could those who already had insurance, so weren’t exactly “new” to getting insurance. Then, with the help of an expert, separated from the remaining group those actually paying for the coverage.

And lo and behold we arrived at that slightly more than 1 million paying ObamaCare customers.

Now, the White House fumed that we were leaving out the millions signing up for Medicaid and kids staying on their parents’ policies longer, thanks to ObamaCare. Fair enough, we told them, which is also why we excluded the millions more Americans who lost their health care coverage altogether.

As a numbers guy I was surprised. Obviously they were not getting the numbers from the Administration so I started looking for details how they came up with their number and what is so important with the 7 million number?

My best guess is that the 7 million number was an arbitrary goal set up by the Administration last year that they thought would indicate an approximate health of the Affordable Care Act(ACA) process and in particular the viability of the exchanges. I don’t think anyone put much thought into the 7 million number. It has always been more of a political goal rather than an operational goal. Considering the ambiguous nature of this number I do not have a problem with the Administration celebrating this achievement since they have so few accomplishments to celebrate. Achieving this goal is something you celebrate at Happy Hour while reminding yourself that the blind pursuit of political goals breeds incompetence. If you really want the ACA to work, you have to throw your political hat into the closet and put on your manager hat . It is time to start managing for success and the road to success starts with effective goal management. If we recognize that the people who signed up for Medicaid is a separate and distinct issue from the issues affecting the viability of the exchange then we can see why FBN  focused on the new, paying enrollees who were previously uninsured. There lies the difference. FBN has the manger hat on and the Administration still has the political hat on and the goal posts have vanished. Obviously the number of new, paying enrollees who were previously uninsured is probably a more important to the health of the individual health insurance market than the Administration’s number of enrollees. It was hoped that the demographics of the new enrollees  would be dominated by healthy millennials to assure the viability of the market. Although it will probably take several months before we get a report on the demographics, Fox and others can and should start making initial assessments based on the information that is available. If FBN’s report of a about a million new, paying enrollees is correct then we probably have too few new people in the market regardless of the demographics. If exchanges are going down a path that looks like a lot like a slow motion death spiral, maybe it is a good time to start looking at a different way to pay for pre-exisiting conditions before it actually becomes a death spiral.

Greg Gutfeld’s #NOTCOOL Tour

IMG_4456Greg was in Cincinnati promoting his new book, Not Cool: The Hipster Elite and Their War on You . He is perhaps best known as the host of the Fox News Channel program “Red Eye With Greg Gutfeld.” Airing at 3 a.m. ET Tuesday through Saturday, that is way beyond our bed time.  My wife and I know him primarily as one of the cohosts of “The Five,” a weekday program at 5 p.m. ET. Although I appreciate the opinions of everyone on “The Five” my ears perk up when he speaks. Like P. J. O’Rourke he always has interesting twist on the subject.

Saturday was a great day to be in Cincinnati. It was sunny and dry with temperatures in the 50s. Although it is not shorts weather for me, I saw some young men playing basketball in their shorts on a court near the freeway.  The bookstore sponsoring the book signing, The Booksellers, was packed. Fountain Square and the sidewalks around the store were packed. It seems everyone wanted to get outside after a long winter. We had a great time and Greg was both witty and gracious.

Brothy, Garlicky Beans ala Food52

This recipe for Brothy, Garlicky Beans comes courtesy of Food52. One of our favorite week day meals is roasting a whole chicken over a bed of vegetables. Typically we have the legs, thighs, and back left over from the meal so we freeze the leftovers. Last Saturday I combined the chicken with vegetable scraps I collected during the week and simmered these ingredients for about six hours. I tasted it during the day and I may have added a few fresh vegetables to balance the flavor. Voilà, I have four cups of excellent chicken stock looking for an idea. Thursday is our soup/light meal day. Before I went to work I put 1 pound of white beans into a pot and covered it with an inch of water. When I got home I drained the beans and started the soup recipe. Since I had some very fine Andouille sausage in the refrigerator I sliced up two links and added it in the last ten minutes to add a little pizazz. I combined the soup with a few slices of toasted French bread and we had excellent comfort food for a rainy day!

Brothy, Garlicky Beans

Serves 6

1 pound white beans, rinsed and drained
3 cups chicken stock (homemade or low sodium)
2 medium shallots, halved and peeled
4 fat cloves garlic, peeled and smashed
1 stalk of celery, preferably with its leaves, cut into 3-inch lengths
1 large carrot, peeled and halved
2 scallions or spring onions
1 sprig thyme
1 sprig rosemary
2 tablespoons good olive oil, plus more for serving
Sea salt
Parmesan rind (optional but recommended)
1 cup canned chopped tomatoes
Grated Parmesan for serving

  1. Put the beans in a large heavy pot and cover them by about an inch with cold water. Bring the water to a boil over high heat. Let the beans boil for one minute, then remove them from the heat and cover the pot. Set aside for one hour.
  2. Drain the beans and return them to the pot. Add the chicken stock, and if the beans aren’t quite covered in liquid, add a little bit of water. Add the shallots, garlic, celery, carrot, scallions, thyme, rosemary, Parmesan rind, olive oil and a teaspoon of salt. Bring to a boil, then lower the heat until the beans are just simmering. Cook uncovered for about 40 minutes, until the beans are almost tender. Add the tomatoes and cook gently for another 10 to 20 minutes.
  3. Remove the aromatics and extra vegetables if you like (or save them for yourself like I do), taste and add more salt if necessary. Serve drizzled with a little olive oil and a shower of Parmesan.

The HealthCare.gov Mistakes

Now that the enrollment period is closed it is probably a good time to start looking back at the mistakes made. Since HealthCare.gov is attempting to act like a private business it is fair to use compare their practices to those of existing businesses. As a prospective customer and IT guy I have to say I was dismayed on many different levels. Here are some of my complaints.

  1. Better Project Planning and Execution
    1. The website planning, execution, and testing was a total disaster. It took me a couple of weeks before the front end was fixed enough to allow me to log in.
    2. They should have finished testing the easy part, the front end, at least 90 days prior to the roll out. I first used www.healthcare.gov in 2010. There is nothing new or novel about the front end. There was no excuse for the front end not to be ready on October 1st.
    3. The application process was unnecessarily complicated. They should have copied the code and work flow where appropriate from some else’s web site such as www.ehealthinsurance.com or www.anthem.com.
    4. Maybe they should have delegated income verification to the insurance companies.
    5. The site and back end specifications should have been locked down 90 to 180 days in advance of the roll out.
    6. The backend should have been tested by the time the web site went online.
    7. Management reports should have been available on October 1st.
    8. They should have enlisted www.ehealthinsurance.com and the others to sell subsidized health insurance on October 1st for redundancy.
  2. Better Customer Marketing
    1. They should have been honest about the benefits and drawbacks of the new health insurance plans compared to the old plans.
      1. They should have enlisted someone to do a non-partisan price and product comparison with last year’s insurance products. Most of the comparisons I read sounded more like political propaganda rather than Consumer Reports. I ended doing my own comparison and as a result was not happy. Now they are stuck trying to sell to a customer who is not happy and doesn’t trust you. Good luck with that strategy!
      2. They should have used a proactive approach towards explaining the drawbacks of narrow market insurance plans and how it affects doctor choice. This should not have been something we stumble upon after the web site is up and running.
      3. We should have been talking about high or increased deductibles before October 1st.
      4. They should have used a “go slow” approach towards canceling existing heath insurance plans. If they are willing to grandfather my current health insurance plan for another two years, they should have said this in October 2013.
    2. The website should have proudly demonstrated how HealthCare.gov respects the customer’s privacy and security concerns. The HealthCare.gov did almost nothing to alleviate customer security concerns. It was as if they did not care.
    3. The Administration’s marketing plan was questionable at best.
      1. It is very hard to build customer interest and satisfaction with the Affordable Care Act when a significantly large group of people are mad that they are being ripped off. You have to wonder about marketing strategy when an integral part of the plan appears to be to ignore those customers.
      2. I will reserve my judgment on the success of the Between the Ferns and other youth oriented marketing until we see how many young customers are still paying their health insurance premium six months down the road.
      3. Over the last 11 days I received at least eight emails very similar to the email above but with different subject lines. Since my existing health insurance is grandfathered I chose to ignore the emails but the tone sounded more like nagging rather than trying to be helpful. Sending nagging emails once a day was not helpful and I suspect that some people clicked the spam button to get rid of them. As a person familiar with email marketing this is a major faux pas.