Help Oklahoma

Given the terrible tornado in Oklahoma, it is again a good time to donate to relief efforts. The American Red Cross and the United Way are two good places, but are plenty of others.

Who needs checks and balances?

From here and here, this article tells us how the IRS scandal happened:

The IRS Exempt Organizations division, the watchdog for about 1.5 million nonprofits, has always had to deal with controversial groups. For decades, the division periodically listed red flags that would merit an application being sent to the IRS’s Washington, D.C., headquarters for review, said Owens, the former division head.

…

Because this list was public, lawyers and nonprofits knew which cases would automatically be reviewed.

“We had a core of experts in tax law,” recalled Milton Cerny, who worked for the IRS, mainly in Exempt Organizations, from 1960 to 1987. “We had developed a broad group of tax experts to deal with these issues.”

In the 1980s, the division issued many more “revenue rulings” than issued in recent years, said Cerny, then head of the rulings process. These revenue rulings set precedents for the division. Revenue rulings along with regulations are basically the binding IRS rules for nonprofits.

…

Other checks and balances had existed too. Not only were certain kinds of applications publicly flagged, there was another mechanism called “post-review,” Owens said. Headquarters in Washington would pull a random sample every month from the different field offices, to see how applications were being reviewed. There was also a surprise “saturation review,” once a year, for each of the offices, where everything from a certain time period needed to be sent to Washington for another look.

…

The system began to change in the mid-1990s. The IRS was having trouble hiring people for low-level positions in field offices like New York or Atlanta — the kinds of workers that typically reviewed applications by nonprofits, Owens said.

The answer to this was simple: Cincinnati.

The city had a history of being able to hire people at low federal grades, which in 1995 paid between $19,704 and $38,814 a year — almost the same as those federal grades paid in New York City or Chicago. (Adjusted for inflation, that’s between $30,064 and $59,222 now.)

…

But by 1998, after hearings in which Republican Senator Trent Lott accused the IRS of “Gestapo-like” tactics, a new law mandated the agency’s restructuring. In the years that followed, the agency aimed to streamline. For most of the ‘90s, the IRS had more than 100,000 employees. That number would drop every year, to slightly less than 90,000 by 2012.

…

In 2003, the saturation reviews and post reviews ended, and the public list of criteria that would get an application referred to headquarters disappeared, Owens said. Instead, agents in Cincinnati could ask to have cases reviewed, if they wanted. But they didn’t very often.

“No one really knows what kinds of cases are being sent to Washington, if any,” Owens said. “It’s all opaque now. It’s gone dark.”

By the end of 2004, the Continuing Professional Education articles stopped.

So the problems came about because the number of workers at the IRS were cut (which meant both that the workers had to do more and there was less oversight) and they didn’t pay well enough to get good workers. Also, note that the changes were pushed by Republicans and signed off by the Clinton administration and were mostly done in the Bush II administration. Thanks guys. Also also, notice that this meant that the IRS was tougher on the small money groups than the big ones:

Over the last two years, government watchdog groups filed more than a dozen complaints with the Internal Revenue Service seeking inquiries into whether large nonprofit organizations like those founded by the Republican political operative Karl Rove and former Obama administration aides had violated their tax-exempt status by spending tens of millions of dollars on political advertising.

The I.R.S. never responded.

During the same period, the agency singled out dozens of Tea Party-inspired groups that had applied for I.R.S. recognition, officials acknowledged on Friday, subjecting them to rounds of detailed questioning about their political activities. None of those groups were big spenders on political advertising; most were local Tea Party organizations with shoestring budgets.

They also didn’t go after groups that were very likely breaking the spirit of the law:

A dark money nonprofit group that has run more than $1 million in ads in the Ohio race for U.S. Senate told the IRS last year it did not plan to spend any money to influence elections when it applied for recognition of its tax-exempt status.

David Dayen puts it together here:

According to data from the Transactional Records Access Clearinghouse at Syracuse University, IRS audits of the largest and richest corporations have steadily declined since 2005, down 22 percent in the ensuing four years and even more from 2011-2013. In the same period, the agency accelerated its scrutiny of small and midsize corporations. Since 2000, the IRS has been more likely to audit the working poor, individuals and families making under $25,000 a year, than those making over $100,000 annually. The middle class received disproportionately more audits throughout the past decade as well. An IRS unit formed in 2009 called the Global High Wealth Industry Group, designed to give special attention to tax compliance of high-wealth individuals, performed exactly two audits in 2010 and 11 in 2011.

…

Congress knows full well that defunding the IRS will lead to these outcomes, and that gives a definable benefit to the rich and powerful, who know how to slip through the cracks of the tax code. “For a big corporation wanting to play fast and loose, this is manna from heaven,” David Cay Johnston said. “They’re the ones this is helping: the political donor class. It’s a subtle way of taking care of your friends.”

The problem is that neither of these explanations helps the Republican party, so you’re not going to hear this at the Republican investigation.

John Barrett is a disgusting human being

This is what corporate America is all about:

Western & Southern executives, whose headquarters sit across a park from the Anna Louise, offered to buy the Anna Louise for $1.8 million several years ago, less than half its value. The Anna Louise declined and won $12.6 million in federal and state tax credits to renovate the home, where some rooms are smaller than 100 square feet and all the women have to share bathrooms and one kitchen.

Days before the renovation was to begin, Western & Southern sued over a zoning issue and a judge ordered an immediate construction halt until the legal fight was resolved. The Anna Louise and its supporters didn’t back down, vowing to fight Western & Southern with everything they had — until last week when they inked a deal with the company to sell the home for $4 million.

This sounds bad, but it’s even worse:

Letters acquired by CityBeat show  Western & Southern playing hardball with Cincinnati Union Bethel  from 2005-09 when CUB was considering selling the building because it  needed expensive renovations. The final Western & Southern offer was made in 2009 for $1.8 million, just $50,000 more than its first offer  back in 2007. The property in 2011 was valued at $4 million by the  Hamilton County auditor.

In a letter dated Dec. 1, 2008, Eagle  Realty President Mario San Marco offered $1.8 million for the Anna  Louise Inn. Eagle Realty is the real estate arm of Western &  Southern. Cincinnati Union Bethel President & CEO Stephen MacConnell responded two months later with a counter offer involving the $1.8  million plus a combination of other contributions that would total $3  million in value. MacConnell suggested Western & Southern include  things like endowment contributions, office space and moving expenses.

But Western & Southern didn’t take  the offer. Six months later, San Marco wrote MacConnell a letter saying  Eagle Realty couldn’t raise its offer higher than $1.8 million because  of “challenges and complexities of development in our (Central Business  District).” 

…

It was about one year later, July of  2010, when Cincinnati Union Bethel won state-distributed federal funding to renovate the building. And it was around this time that Western & Southern realized it had blown its chance to acquire a property it wanted much more than San Marco let on.

The property was clearly worth the $3  million MacConnell was trying to get, because Western & Southern  soon offered that much or the higher of two independent appraisals for  it.

But the Anna Louise Inn was no longer on the market thanks to $10  million in tax-credit financing from the Ohio Housing Finance Agency. It later secured a $2.6 million loan funded by the U.S. Department of  Housing and Urban Development that was awarded by the city. These pieces of federal funding are set aside for historical renovations and  affordable housing.

…

According to  Cincinnati Union Bethel’s records, Western & Southern from 2007-09  donated $1,000 four different times to the Anna Louise Inn’s Off the  Streets program, which helps women involved in prostitution turn their  lives around. Back in 2005 Western & Southern donated $5,000 to  Cincinnati Union Bethel to celebrate the organization’s 175th  anniversary. By 2010 Western & Southern had apparently run out of  giant checks to pose with.

But that’s not to say the corporation was without interest in the Anna Louise Inn’s programs — it just thought  they were really bad now. One month after CUB got the $10 million loan,  Anita Collins Purnell, Eagle Realty assistant vice president and  director of multi-family management, wrote a letter to neighbors in the  Lytle Park district on Eagle Realty letterhead describing Cincinnati  Union Bethel’s renovation plan. 

…

City Council approved Cincinnati Union  Bethel’s development agreement, but that didn’t mean the Anna Louise Inn was home free. Western & Southern filed a lawsuit on May 27, 2011,  five days before the Inn’s scheduled renovation, claiming the building  was improperly zoned. The lawsuit, against the Anna Louise Inn and city  of Cincinnati, froze both the state- and city-distributed federal loans  and put the renovation on hold indefinitely. 

So Western and Southern made a lowball offer because they thought the charity had no other option (making a profit of desperate people is the American way). When the charity suddenly had another option,  Western and Southern went into overdrive: using their influence to change things, filing a series of lawsuits to delay the project knowing that the charity wouldn’t be able to afford long delays, and maligning the women who stayed at the Inn. And they won, as big money usually does. John Barrett doesn’t think anyone cares:

W&S is now dusting off plans to transform southeast Downtown after riding out what it knew would be a PR challenge. The Anna Louise Inn currently offers living space for about 75 low-income women; W&S earned $280.6 million in 2011 on $2.9 billion of revenue and was viewed by critics as something of a bully.

“This will all work out,” Barrett said in an exclusive Enquirer interview. “Nobody will remember the consternation, and they’ll all say, ‘Wow.’ ”

What’s sad, is that he’s probably right. If you, like me, feel different you will stop doing business with any of Western and Southern’s companies–listed here and here.

Black Hole

Another lazy day. Here’s a picture of jets of particles pushed away from a black hole at millions of miles per hour (Credit: NASA):

At some point someone will invent space surfing. Imagine riding a wave of particles going a million mph (hmm, I wonder how well you can judge your speed in space?).

Cut the deficits now! Now I tell ya!

The US budget deficit is falling at the fastest rate since the end of WWII:

If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.

Because revenues, under current law, are projected to rise more rapidly than spending in the next two years, deficits in CBO’s baseline projections continue to shrink, falling to 2.1 percent of GDP by 2015. However, budget shortfalls are projected to increase later in the coming decade, reaching 3.5 percent of GDP in 2023, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. By comparison, the deficit averaged 3.1 percent of GDP over the past 40 years and 2.4 percent in the 40 years before fiscal year 2008, when the most recent recession began. During the next 10 years, both revenues and outlays are projected to be above their 40-year averages as a percentage of GDP (see figure below).

The Republican response? We need to cut more:

The lawmakers said the gap between revenue and spending is closing, but not by nearly enough, so they are sticking to their goal of balancing the federal budget within a decade.

On Tuesday the Congressional Budget Office said strong tax and other revenues caused it to slash its fiscal 2013 deficit forecast by more than $200 billion – to $642 billion, the smallest gap since 2008.

CBO said the brighter picture could push a deadline for raising the debt limit – necessary to avoid default on U.S. debt or a partial government shutdown – into November, from previous estimates of late July or early August.

When Republicans agreed to extend U.S. borrowing capacity in February, they had anticipated a summer deadline for raising the limit – over which they would demand cuts to Social Security and Medicare.

“It may change the amount and the size of the debt ceiling but it doesn’t change the reality of the debt ceiling,” said Representative James Lankford, a member of the House Republican leadership and the Budget Committee.

Gee, it’s almost as if they want to cut social spending and are using the deficit as an excuse –now that the deficit is falling, they’ll find another reason to cut (kind of how George W Bush argued for a tax cut because there was a surplus and then when the surplus went away argued for it because there was a recession).

Scandals!!!!!!!!

The Boston Globe details the three BIG scandals affecting President Obama. The three are:

Benghazi: this is a completely Republican generated scandal. Something bad happened and they used that to imply things (there have been so many different implications, it’s near impossible to list them all). Kevin Drum has a nice roundup here.

IRS investigation of Tea Party groups: the IRS should not be political, so this is bad. On the other hand, I really want the IRS to strongly investigate all these new (and existing) 501 (c) organizations that are abusing the system to put unlimited anonymous donations into the political system. All of them should be investigated.

Gathering of AP phone calls by the Justice Department: welcome to the club guys. Many of us liberals, and a few libertarian Republicans, have been complaining about this type of thing since the PATRIOT act was passed. We were in favor of a press shield law. How about Republicans:

The legislation has broad support from journalism organizations and is a compromise worked out by senators, the intelligence community and the Obama administration.

“After years of debate and countless cases of reporters being held in contempt, fined and even jailed for honoring their professional commitment not to publicly reveal their sources, the time has come to enact a balanced federal shield law,” said the committee chairman, Patrick Leahy, D-Vt.

Conservative Republicans and some in the intelligence community believe it can harm attempts to track down leakers of classified national security information.

The ranking Republican on the committee, Sen. Jeff Sessions of Alabama, said the bill “goes beyond protection for journalists. It’s granting journalists a power that is not provided to other people” who possess important information.

It’s good to see that Republicans have come around, it certainly couldn’t be that they’re just trying to hurt Obama.

Update: For example, how many investigations of this were there?

More gay marriage

Rhode Island passed a bill to allow same-sex marriage on May 2, Delaware followed suit last week, and now Minnesota will probably follow today. The change really is incredible, here are the dates:

5/17/2004: gay marriage is legal in Massachusetts

11/12/2008: legal in Connecticut

4/27/2009: legal in Iowa

9/1/2009: legal in Vermont

12/18/2009: legal in District of Columbia

1/1/2010: legal in New Hampshire

7/24/2011: legal in New York

12/6/2012: legal in Washington

12/29/2012 legal in Maine

1/1/2013: legal in Maryland

7/1/2013: will become legal in Delaware

8/1/2013: will become legal in Rhode Island

8/1/2013: will become legal in Minnesota (officially this hasn’t passed, but the governor is supposed to sign it today at 5pm)

There are 56 jurisdictions in the US (the states, DC, Puerto Rico, American Samoa, US Virgin Islands, Northern Marianas, and Guam. According to Wikipedia, 30 have constitutional amendments outlawing gay marriage and 9 have statutes outlawing it, so that limits future progress (although Minnesota was one of the 9 that had a statute and California is likely to have gay marriage soon even though they have a constitutional amendment outlawing it). Still there are only 23 states where polls show less than 50% support for gay marriage, only 11 have less than 40% support, and support is rising very quickly (only 33% supported it in 2006).