Jack Inglewood's Posts (52)

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Will Republicans Let Schumer Impose Tax Hikes?

Liberal New York Senator Chuck Schumer has brazenly declared that he will work with President Trump only if he stabs his fellow Republicans in the back.  In an interview with CNN, the Senate Minority Leader declared "The only way we're going to work with him is if he moves completely in our direction and abandons his Republican colleagues."  One area Schumer wants to work with Mr. Trump is an effort to raise taxes on the American people.  

One primary target for an tax hike is called the "carried interest" provision.  Veronique de Rugy explains the danger of the GOP adopting the Schumer position on the issue:

Now that Republicans are on the cusp of controlling the White House -- fortifying their control of both chambers of Congress -- you might think they wouldn't be so quick to surrender to the principles of the left. Yet that appears to be exactly what some Republicans are considering on a pair of important tax issues...

During the campaign, Trump and Hillary Clinton both pledged to raise taxes on carried interest. In a private equity firm, carried interest is a share of the profits from an investment that flows to the investment manager above and beyond the amount he or she contributes to the partnership. Back in 2007, the Cato Institute's Chris Edwards noted that carried interest "is typically 20 percent of fund profits." Often times this is referred to as a loophole because it is taxed as capital gains as opposed to ordinary income.

But the truth is that it's more complicated than that, as the underlying source of the income is usually capital gain that's earned as part of an investment partnership. The carried interest is merely the part of that gain allocated to the managing partner. And like other capital gains, it's contingent upon a positive net return on the investment.

Edwards illustrated that point with this example: "So let's say a fund called the Edwards Group bought a poorly managed company called Reynolds Motors for $100 million, then turned the company around with better management, and sold it a few years later for $200 million. The $100 million of capital gain on the sale would flow through to both the limited partners and the general partner, who receives a 20 percent share. The return to both types of partners is taxed at the 15 percent federal capital gains rate, because indeed the underlying transaction generated a capital gain." Today capital gains are taxed at 20 percent, with an Affordable Care Act surtax of 3.8 percent, but the example still stands....

No matter how one defines carried interest, it's harmful to raise taxes on anyone, including important investments that help grow companies and help the American economy become more dynamic and efficient. Republicans need to remember that the left's goal is not fairness but higher taxes. Treating carried interest as ordinary income for tax purposes would simply be the first step toward higher taxes on capital in general. That would be bad for economic growth and for our wallets."

De Rugy and Edwards are correct.  A tax increase on investment capital would destroy jobs and grow government.  Mr. Trump should not, as Sen. Schumer suggests, abandon the GOP on this core issue.  

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4064257228?profile=originalSpaceX, a government contractor, has had multiple launch failures that have cost the taxpayers millions.  Now comes a report that a NASA advisory group has raised concerns about the way SpaceX fuels rockets.  This should give government contracts pause and they might want to consider dropping SpaceX as a source of rocket launches for satellites in the future.

The Wall Street Journal reported on October 31, 2016 in a piece titled “NASA Advisory Group Raises Concerns About SpaceX Rocket-Fueling Plans” the following:

Investigators believe that the SpaceX Falcon 9 blast last month was likely caused by issues linked to fueling procedures rather than manufacturing flaws.

If this proves to be true, it is evidence of gross incompetence on the part of Elon Musk’s SpaceX company.  The WSJ story reported that “months before an unmanned SpaceX rocket exploded on the launchpad during a routine fueling exercise in September, a NASA advisory committee had raised red flags about the company’s intention to use the same procedure to fuel future boosters carrying astronauts.”  If the fueling of SpaceX flights might lead to the deaths of astronauts, then SpaceX’s reckless fueling methods would endanger more than taxpayer paid for payloads and launch pads.

The problem is that SpaceX uses a method of cooling fuel before a launch that may have caused two exploding rockets.  And there is no evidence that SpaceX is backing away from this risky method of launching rockets into space.  The recent news that Musk wants to send astronauts to Mars should give government contractors a good reason to hold off on any decisions until SpaceX can explain why they have had multiple catastrophic failures in two separate launches and to study whether the method of fueling the rockets are the cause.

Elon Musk recently announced that he wants to send humans to populate Mars.  According to a report in Bloomberg Technology, September, 23, 2016, in a story titled Elon Musk to Make Us a Multiplanetary Species (If He Can):

When Elon Musk takes the stage of the 67th International Astronautical Congress in Guadalajara, Mexico on Sept. 27, it won’t be to rehash terrestrial concerns like a fatal Tesla autopilot crash or a poorly received merger proposal. Instead, the space and electric-car entrepreneur will be talking about realizing his boyhood dream: going to Mars.

A story in Vanity Fair, quotes Musk as arguing that his vision is to charge $200,000 per ticket and the trip will take about 100 humans every 26 months. He is pitching a contribution from taxpayers of about $10 billion. In the story he admits that he will not be on the first mission to Mars because of the danger and he admits that astronauts may die on the first few trips.

According to the NASA report, one great danger, among many others, would be the fueling methods of SpaceX.  They have proven to engage in risky behavior and have accepted the idea that astronauts may die during trips to outer space.  If that is what Musk wants, the taxpayers should not give Musk, a billionaire, one dime of taxpayers’ money.  Musk should fund this wild eyed experiment with his own money and anybody wanting to ride of his rockets need to know the terrible safety record of Musk before purchasing a ticket to Mars.

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Today in America, we can’t even go a day without hearing a story about the IRS abusing its power and unjustly harassing American taxpayers. Perhaps the most famous case in recent memory is the IRS’s targeted campaign against Tea Party members. The IRS’s unjust and discriminatory actions led Sen. Rob Portman (R-OH) to write successful pieces of legislation that curtailed the agency’s power, all of which were signed into law by President Obama.

In a further attempt to rein in the IRS’s misuse and misappropriation of power, Sen. Portman has again stepped up to the plate and introduced a new bill, S.2809. This new bill seeks to constrain the agency's aggressive litigation tactics and prevent the outsourcing of audits to private law firms. This is good news, because the IRS has been known to outsource audits to liberal law firms for both political and financial gain.

The agency's audit of Microsoft is the greatest evidence of the need to pass Portman's new bill. Microsoft’s audit began nearly a decade ago and has still not been closed out. Year after year, the IRS has dragged Microsoft through one investigation after another in a desperate attempt to find the elusive smoking gun. Their never-ending request for Microsoft computer files and employee interviews has not been successful, and yet the IRS refuses to close the audit. They have also denied Microsoft’s request to have a hearing before the impartial and independent IRS Appeals Office. Microsoft has even politely asked that the IRS simply give them a dollar amount that they think is owed to the government so that the company can move on with its business. 

Rather than working with Microsoft to find a resolution to the audit process, the IRS made the unlawful decision to bring in two private law firms to continue the audit investigation. The first is Quinn Emanuel, a liberal-leaning law firm that does not even list tax law as one of its 33 areas of practice. The other is David Boies’ law firm Boies, Schiller & Flexner. David Boies’ name may sound familiar -- he was the Department of Justice lawyer assigned to break up Microsoft under the Clinton Administration.

Through the use of  private law firms, the IRS is able to illegally sidestep many of the laws and principles our government was founded upon. Quinn Emanuel and Boies, Schiller & Flexner have been authorized to conduct examinations and take sworn testimony, and yet federal law states that only the Treasury Secretary and his limited delegates may perform such activities. As Senator Hatch stated:

"Unlike private contractors, Treasury Department officials are required to swear an oath to the Constitution and are subject to rules of conduct and federal law regulating their interactions with taxpayers.”

This action sets a dangerous precedent. By outsourcing their authority, the IRS is able to conduct investigations beyond the limits of the law and without any requirements for accountability.

Sen. Portman’s bill will place restrictions on the various tactics that the IRS employs in order to keep an audit going on infinitude. Taxpayers will now have a path to resolution that does not include going to court. Portman's bill will also put an end to the IRS’s ability to hire private law firms, all while ensuring that taxpayers have the right to an appeal with access to the independent IRS appeals office.

IRS Commissioner John Koskinen was correct when he stated that "Taxpayers need to be confident that they will be treated fairly, no matter what their background or affiliations." The Republican-controlled Congress should make the commissioner's vision a reality and pass the Portman Bill immediately. The American taxpayers are counting on the body to do so. 

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Obama's War on Seniors

Since 2009, the Obama Administration — whether intentionally or not — has been crippling the well-being of our senior citizens. Under the fiscal irresponsibility of Obama’s reign, inflation has risen by over 12%, leaving seniors on fixed incomes with less money in their wallets and purses. Last year, Obama’s budget deal extorted $150 billion from the Social Security trust fund in order to finance other areas of the budget. And now, Obama is planning his most egregious action yet — he wants to meddle with the elderly’s Medicare benefits and impose a hidden tax on their drugs.

Medicare Part D, better known as the Medicare prescription drug benefit, is a federal government program that subsidizes the costs of prescription drugs for Medicare beneficiaries.  While there is plenty for conservatives to not like about the program, it has at least brought free market prices back to the drug industry. Although Part D drugs are subsidized, prices are still determined through private negotiations between insurers and pharmaceutical companies. And, since the prices are negotiated through the private sector, costs have successfully spiraled downward. In fact, seniors can now often purchase drugs at a 30  percent discount from their originally marked prices. The cost-effectiveness of the drug benefit program has actually exceeded expectations —  to date, it has only cost taxpayers 55 percent of what it was originally budgeted for.

Although Medicare Part D has thrived under the restraints of private market forces, the White House is requesting that the public sector intervene in the program. In his recent budget proposal, President Obama asked that Congress repeal the non-interference provision, a clause which inhibits the U.S. Department of Health and Human Services (HHS) from interfering in Medicare Part D price negotiations. 

Translation: Obama is asking Congress to price-fix Medicare Part D drugs. If this country’s last two generations of senior citizens have learned anything, it’s that price-fixing never works  — it always leads to problems, normally shortages of the given product. We saw this with food during World War II and gas during the Jimmy Carter Administration. By setting the price of these goods artificially low, demand skyrocketed, causing their supply to run out. 

Price-fixing is not something that we can afford to let happen in the drug industry. Senior citizens need their medicine — they are dependent on it for survival. Interfering with the free market in the drug industry is not just bad economics, it also jeopardizes the health and safety of millions.

But President Obama’s budget proposal won’t just price-fix drugs, it will also impose a hidden drug tax on senior citizens. Obama requested that pharmaceutical companies return up to 40 percent of their sales back to Medicare. Unfortunately, this “gift” to Social Security will result in drug makers selling their goods at a loss, causing them to peddle the difference onto consumers. Prices will rise, and seniors will have less money in their already cash-strapped pockets.

Clearly, the potential effects of this Obama budget proposal are staggering. Thankfully, the conservative intellectual class is onto Obama’s Medicare schemes, and they’re doing everything they can to stop them. Last week, 26 leading conservative organizations, including Americans for Prosperity, the American Conservative Union, and the Center for Freedom and Prosperity, sent a joint letter to Congress cautioning the body from adopting the Obama Administration’s fiscally irresponsible Medicare Part D plan.

“Government forcing companies to turn money over to the Treasury is not a rebate, it’s a tax,” the coalition letter stated. “This tax will have a significant impact on the market. Drug companies will respond by embedding the cost of the tax in the price of their drugs, driving up the total cost of insurance. Increasing the price of insurance—due to direct government involvement—is a de facto tax increase on America’s seniors.”

While conservative advocacy groups outspoken opposition to this budget proposal will certainly be helpful in striking down these Medicare Part D provisions, the proposal’s fate lies in ultimately lies in the hands of the Republican-controlled Congress. The GOP holds a comfortable majority in both the House and the Senate — it can easily stop this fiscally irresponsible bill if it wants to. America’s seniors are counting on them to do so.


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When Sen. Lindsey Graham announced his run for the presidency he had limited support but one of his donors was none other than Las Vegas casino owner Sheldon Adelson.  That should come as no surprise.  After all, Graham is the chief sponsor of Adelson's legislation to outlaw is competition -- state regulated online gaming. 

New Jersey, Delaware and Nevada have all exercised their power under federalism to legalize online gaming for their residents.  Other states like Illinois and Georgia sell lottery tickets online.  Adelson views this as competition for his brick and mortar casino empire.  His lobbyist, according to the Washington Post, drafted legislation to override state law and the bill was introduced by Sen. Graham.

After conservative groups and conservative champions like Mick Mulvaney noted that the bill trampled on the Constitution, was an example of cronyism and would ultimately promote efforts to regulate the Internet, the bill seemed dead.  Then Graham insert language into a major spending bill that just passed the Senate.  

The Daily Surge notes:  

Las Vegas billionaire Sheldon Adelson has found a way to ban internet gaming by using his friends in Washington to bury a provision into an appropriations bill that will ban internet gaming and gambling so that his casino can increase his profit margin.  Adelson is using his close friends in Washington to sneak a provision in an appropriations report to short circuit the legislative process, because he can’t get Congress to agree to passing his legislation through the traditional legislative process. This provision can be called the “Adelson Earmark.”

Last year, Sen. Linsey Graham (R-SC) and Rep. Jason Chaffetz (R-UT) introduced versions of the so called “Restoration of America’s Wire Act (RAWA) at the behest of Adelson.  It was reported that a lobbyist the Las Vegas Sands, Adelson’s casino, employed wrote the bill for Sen. Graham and Rep. Chaffetz.  According to The Hill, “draft legislation to ban online gambling was obtained by The Hill last year. The document’s metadata revealed that a lobbyist for Las Vegas Sands wrote the bill.”

This bill is an attempt to rewrite a federal law, the Federal Wire Act of 1961, to ban most forms of online gaming and gambling that is legal in some states.  A hearing was held on March 25, 2015 where opponents of the bill raised the issue that this new legislation would violate federalism.  Traditionally the states retain the police powers to regulate activities with a state’s borders. The new law is unnecessary, because states are perfectly capable of policing themselves and either allowing or not allowing online gaming and gambling.

According to the Online Poker Report the bill does the following:

The Department of Justice’s current position on the Wire Act as it applies to online gambling is that the Wire Act only applies to online sports betting.

The use of the term “restoration” in RAWA’s title is a misnomer, as the original Wire Act, passed in 1961, could not (and did not) speak to the use of the Internet as a wagering medium.

To better appreciate what an actual “restoration” of the Wire Act would resemble, refer to Michelle Minton’s recently-published paper that articulates the original legislative intent of the Wire Act.

The bill received a chilly reception from Capitol Hill because it was a naked attempt to favor one gambling interest over another.  The motivation of casino magnate Adelson was not to protect consumers of online gambling and gaming from harm – he wanted to keep the gambling and gaming within the confines of his brick and mortar casino.

News broke on April 26, 2016 on Gambling Compliance that the Senate Report on the CJS Appropriations bill contains language that is a back door attempt to pass RAWA.

One paragraph in a 141-page Senate spending bill endorses the prohibition of Internet gambling, but it is unclear whether the language will boost efforts to overturn the historic 2011 opinion which opened the door for states to legalize online wagering.

The provision is buried on Page 59 of Senate Report 114-239 of the “Departments of Commerce and Justice, Science, and Related Agencies Appropriations Bill, 2017” (CJS Approps) and states the following:

Internet Gambling.—Since 1961, the Wire Act has prohibited nearly all forms of gambling over interstate wires, including the Internet. However, beginning in 2011, certain States began to permit Internet gambling. The Committee notes that the Wire Act did not change in 2011. The Committee also notes that the Supreme Court of the United States has stated that ‘‘criminal laws are for courts, not for the Government, to construe.’’ Abramski v. U.S., 134 S.Ct. 2259, 2274 (2014) (internal citation omitted).

If RAWA was to become law, then the regulated gambling and gaming industry in the United States would be banned.  The federal law would overturn the decisions of many states to allow this type of activity.

Because the full House and Senate has no appetite to pass RAWA, here is how the proponents of the bill will attempt to use insider influence to get this bill buried in either the CJS Approps measure or a Continuing Resolution at the end of the year.

The House Appropriations Subcommittee Chaired by Texas Rep. John Culberson will be holding a mark-up on the bill next week.  Culberson should reject this crony giveaway to a billionaire.  

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When President Ronald Reagan attempted to reform and simplify our tax code in 1985 and 1986, he ran head-long into lobbyists and special interests who came out of the woodwork to protect their designated provisions in the tax code.  The process was detailed in a book called “Showdown at Gucci Gulch.”  The book showed the sausage-making that went into crafting the bill that was finally enacted.  From a conservative perspective, the bill ended up being a sort of Frankenstein monster which lowered rates – a conservative goal – but kept and expanded many special interest provisions that permeate the tax code today. 

Today’s version of “Gucci Gulch” is taking place over the fight to reform Puerto Rico’s economy and to bring it back from the verge of bankruptcy.  The House of Representatives sent out to establish a control board – similar to the one used when Washington, DC, faced a similar crisis.  It is certainly a better option that Chapter 9 bankruptcy which would allow the liberal big spenders to walk away from their debt or a bailout.  That’s why some hedge funds and lobbyists are working to undermine and kill the bill before Congress.  They get a better deal with a bailout than they do a control board.

For instance, President Obama’s former Chief Restructuring Officer at the Department of Treasury Jim Millstein’s firm MillCo Advisors could make hundreds of millions off the debt crisis.  The New York Post reported the former Obama official – who left the government agency in 2011 – was slated to make as $52.4 million off of the contracts it has with the island and could make more if the Obama plan goes through. According to the Office of the Comptroller, Puerto Rico– which is $72 billion in debt  – has around $34 million in contracts with the firm – a number that could skyrocket if they continue to amend and extend their contracts.

Anita Dunn, the former Obama official best known for proclaiming Mao Zedong as once of her political heroes, has been hired by the island (and their taxpayers) to push, not for a control board but for bankruptcy.  

Hedge Funds like Canyon Capital, Aurelius Capital Management and others own about $4.5 billion in general obligation bonds and are working Capitol Hill to see legislation stalled or defeated.  If they win, the taxpayers will lose as inevitably the islands leaders will demand a bailout from the taxpayers.

House Speaker Paul Ryan had promised the House would propose legislation that would help Puerto Rico to arrive at “a responsible solution” to their debt crisis. The House Committee on Natural Resources Committee Chairman Rob Bishop (R-UT) released H.R. 4900, the “Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA).”  “This is the constitutionally-sound solution that will provide real, long-lasting reform to the Commonwealth while respecting the rights of all parties and creditors. It is the Island’s best shot to mitigate its financial collapse and future calls for a bailout, which would be untenable. Congress must act now to avoid a humanitarian crisis that will severely impact 3.5 million Americans living in Puerto Rico and millions of Americans on the mainland,” Rep. Bishop said. 

Some hedge funds and members of Congress are playing a dangerous game of chicken.  The House bill prevents bankruptcy and a bailout.  It isn’t a perfect piece of legislation by any stretch but it is better than the alternative.  Conservatives should work to ensure that Millstein, Anita Dunn and the other Obama cronies who are working to kill the effort in the House can’t keep riding the Puerto Rico gravy train.  

Gucci Gulch showed that legislating is not easy but a final product can be achieved with the right leadership.  In this case, a final product must be accomplished as the alternatives are much worse.  

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Oregon's Obamacare exchange was going to the the model for the nation and it is.  It is a cesspool of waste fraud and corruption.

Former Democrat Gov. John Kitzhaber was touted by the liberal media as "the man who could save health care" in America. The former doctor turned politician grab ahold of Obamacare and the opportunity to spend hundreds of millions of dollars to create Cover Oregon, the state's Obamacare exchange.  $200 million went into building the exchange and more taxpayer money was spent on advertising that looked like Woodstock was coming to town. When they when to turn on the exchange, they ran into the same difficulties as the federal exchange.  It wouldn't work.

Kitzhaber had been warned by contractors who were working on the exchange that they needed more time but ignored their pleas.  As the weeks went on, the failure became a political embarrassment and Kitzhaber tasked his political advisor, Patricia McCaig who called herself the "Princess of Darkness" to oversee all decisions regarding the state's exchange.  When the pressure was too much politically, she pulled the plug on the project. $300 million was wasted but ultimately the decision served its purpose.  Kitzhaber was re-elected.

Since that time, Kitzhaber has been under federal investigation on a host of potential crimes, including giving government contracts to the former first lady of the state.  He remains in legal jeopardy.  

But for the taxpayers, the waste of taxpayer dollars continues.  Dean Chambers, writing on Red State, notes:

A recent federal audit found that Oregon might have saved more than $10 million in the Medicaid-funded Oregon Health Plan that served low-income citizens in the state. The Oregon Health Plan gave health care organizations broad leeway in the spending of billions, leading to money inefficiently spent. The state of Oregon is seeking to recover $50 million allegedly overspent by a group called FamilyCare.

The new federal audit tackles a new, little-noticed aspect of the state’s Medicaid reforms…Specifically, it looks at how Oregon went a different direction from the larger federal reforms called the Patient Protection and Affordable Care Act, or Obamacare. While the federal reforms tacked Medicaid as well as private health insurers, Oregon’s reforms only looked at Medicaid,” the Portland Tribue reported about the federal audit.

In making this exception, it allowed what were called coordinated care organizations (CCOs) broad leeway, not allowed under Medicaid, over the spending of money that lead to the lack of savings discovered by the federal audit. 

The audit highlights one of the many political compromises that went into crafting the reforms. Former Gov. Kitzhaber and the Oregon Legislature didn’t require the coordinated care organizations to meet the same spending standards that private insurance companies must meet,” the Portland Tribue reported.

As a result of the rules created by Kitzhaber and his political cronies, the CCOs were not required to limit their administrative costs to 15 percent as were the private insurance companies providing health care coverage in Oregon. The audit found that 11 of the 16 CCOs in Oregon exceeded the 15 percent limit on administration costs. As a result, they over-spent by about $10 million.

When Kitzhaber attempted to make Oregon a model of Obamacare, he succeeded but not in the way he envisioned.  

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Hollywood's and Washington's Hypocrisy

The Oscars provide Americans an opportunity to peek behind the curtain about the politics of the Hollywood elite.  It is not a pretty sight. From accusations of racism to denunciations of global warming, each and every pronouncement comes chock full of two-faced hypocrisy.

Front and center, of course, was the effort to address the accusations of rank racism by the Hollywood elite for their failure to nominate a black actor or actress in Oscar categories for two years in a row.  Chris Rock, the host of the night, asked "Is Hollywood racist?  You damn right Hollywood's racist."  Watching the liberal Hollywood elite call denouncing themselves almost made the Oscars worth watching.  Almost.

Then there Leonardo DiCaprio proclaiming that "climate change is real" and "it is the most urgent threat facing the entire species."  DiCaprio, according to the leaked Sony emails, happily availed himself of more than $200,000 worth of private jet travel in just six weeks in 2014.  He also has proposed to create in Belize “the World’s first truly restorative island development  – a development completely powered by renewable energy and designed to increase the biological health of species on the island and in the waters around it.”  Too bad, that doing so requires the destruction of some of the finest fly fishing grounds in the world. 

And let's not forget the speech by the screenwriter of "The Big Short" who warned voters of candidates who take money "weirdo billionaires."  Without saying more, there is little doubt that Adam McKay is probably thinking of the Koch brothers when he said those words, but has little or no problem cuddling up to George Soros and Tom Steyer.

In Congress, this rank hypocrisy is on display, perhaps most vividly, by liberal Sen. Ed Markey (D-Mass). Markey introduced legislation to overturn the Supreme Court's Citizens United decision, comparing the decision, which allowed a private group to make a movie critical of Hillary Clinton, to the Dred Scott case. 

If he truly believes millionaires and billionaires are purchasing Congress, what explains Mr. Markey's decision to send a letter to the Federal Trade Commission to help billionaire hedge fund owner Bill Ackman and his short bet against Herbalife, the nutritional supplement maker?

Ackman declared war on the company, taking a billion dollar short position (a bet that the stock would collapse) and then getting his friends on government to join the battle.  Markey's letter was the tip of the spear.  By attacking the company as an alleged pyramid scheme, Ackman hoped to make billions and Markey, and others, were more than willing to help 

Since the letter was sent, Herbalife's stock has rebounded and Ackman's short position is costing him millions.  Yet he still remains eager to find friends in Congress who will help make him richer.  It is worth noting that Ackman is a prodigious giver to liberal members of Congress and the Democrat establishment.  Not so surprising those liberals in Congress and the Obama Administration are more than happy to help him out.

Hollywood and Washington are full of hypocrites and that reality was on full display last night. 

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H.R. 766, the Financial Institution Customer Protection Act of 2015, is expected to pass this week.  This is a bill to stop Operation Choke Point from discriminating against legal business owners in access to financial services.  Rep. Blaine Luetkemeyer (R-MO) should be commended for his fight on this important legislation.

On May 29, 2014, the House Oversight Committee found last year the following in a report titled "DOJ's Operation Choke Point Secretly Pressured Banks to Cut Ties with Legal Business."

The Chairman of the Committee at the time was Rep. Darrell Issa (R-CA) and he put together an excellent oversight report on the issue. 

  • Operation Choke Point was created by the Justice Department to “choke out” companies the Administration considers a “high risk” or otherwise objectionable, despite the fact that they are legal businesses.  The goal of the initiative is to deny these merchants access to the banking and payments networks that every business needs to survive.
  • Operation Choke Point has forced banks to terminate relationships with a wide variety of entirely lawful and legitimate merchants.  The initiative is predicated on the claim that providing normal banking services to certain merchants creates a “reputational risk” sufficient to trigger a federal investigation.  Acting in coordination with Operation Choke Point, bank regulators labeled a wide range of lawful merchants as “high-risk” – including coin dealers, firearms and ammunition sales, and short-term lending.  Operation Choke Point effectively transformed this guidance into an implicit threat of a federal investigation.
  • The Department is aware of these impacts, and has dismissed them.  Internal memoranda on Operation Choke Point acknowledge the program’s impact on legitimate merchants.  Senior officials informed Attorney General Eric Holder that as a consequence of Operation Choke Point, banks are exiting entire lines of business deemed “high risk” by the government.
  • The Department lacks adequate legal authority for the initiative.  Operation Choke Point is being executed through subpoenas issued under Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.  The intent of Section 951 was to give the Department the tools to pursue civil penalties against entities that commit fraud against banks, not private companies doing legal business.  Documents produced to the Committee demonstrate the Department has radically and unjustifiably expanded its Section 951 authority.
  • Contrary to the Department’s public statements, Operation Choke Point was primarily focused on the payday lending industry.  Internal memoranda and communications demonstrate that Operation Choke Point was focused on short-term lending, and online lending in particular.  Senior officials expressed their belief that its elimination would be a “significant accomplishment” for consumers.

The Luetkemeyer bill is a great first step to stem the discrimination against legal businesses coming from the Obama Administration and his appointees at the Department of Justice.

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It's the "crisis" you never heard of, but thanks in part of Anita Dunn (who was forced to resign from the White House after showing affection toward Mao) and her public relations firm, you soon will.

The bill for decades of liberal spending programs fueled by borrowing by politicians in Puerto Rico has come due.  Not surprisingly, the politicians want a bailout in the form of bankruptcy protection.  Paying off the debts is the last thing on their minds.

Now the media is filled with stories designed to pressure Congress to give the big spenders another blank check.  President Obama and his Treasury Secretary Jack Lew are demanding Congress act to save Puerto Rico from itself.  House Minority Leader Nancy Pelosi reports that Speaker Paul Ryan has agreed to move some sort of legislation before the end of March.

There are many problems but one of them, according to conservative lawyer Bruce Fein, is passing bankruptcy would be unconstitutional: 

The contemplated bankruptcy legislation, however, would enable Puerto Rico to discharge or plunge the value of its existing debt without doing these things. The beneficiaries would be government employees, enterprises and contractors who profit from Puerto Rico's bloated and wasteful expenditures and handcuffs on free markets.

But the Contracts Clause of the U.S. Constitution, as expounded by the U.S.  Supreme Court in U.S. Trust Co. v. New Jersey (1977), would invalidate a retroactive bankruptcy law for Puerto Rico. Congress should stand pat, and members should honor rather than evade their oaths to uphold and defend the Constitution. Puerto Rico and its creditors relied on existing laws when they negotiated lending terms, and there is no constitutional justification for changing the rules in the midstream.

Article I, section 10, clause 1 stipulates: “No State shall … pass any … Law impairing the Obligation of Contracts.” The text excludes the federal government. But Supreme Court decisions such as Eastern Enterprises v. Apfel (1998) have equated federal due process or takings clause limitations on retroactive impairments of property rights as coequal with Contract Clause limits on state impairments of contract obligations.

James Madison, father of the Constitution, defended the Contracts Clause in Federalist 44 as a bulwark against crony capitalism:

“The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less informed part of the community.”

In Federalist 62, Madison expanded on the cronyism and economic mischief that spring from mutability in the laws:

“[I]t gives [unreasonable advantage] to the sagacious, the enterprising, and the moneyed few over the industrious and uninformed mass of the people. Every new regulation concerning commerce or revenue, or in any way affecting the value of the different species of property, presents a new harvest to those who watch the change, and can trace its consequences; a harvest, reared not by themselves, but by the toils and cares of the great body of their fellow-citizens. This is a state of things in which it may be said with some truth that laws are made for the few, not for the many… “What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not but that his plans may be rendered unlawful before they can be executed? What farmer or manufacturer will lay himself out for the encouragement given to any particular cultivation or establishment, when he can have no assurance that his preparatory labors and advances will not render him a victim to an inconstant government?”

In addition to the questions of the constitutionality, there remains a bigger political question -- why should the GOP hand the big spenders another lifeline?  The time has come from free market reforms not for bankruptcy protection.  Cut the size and scope of government in san Juan.  Eliminate laws that drive out business.  Reform welfare.  Enact Right to Work provisions that protect workers from forced unionism.  These are some positive steps the GOP can take.  But giving Obama and his allies an escape route is not only bad politics, it is bad policy.  

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Obamacare Official Under Fire

Republicans on the House Energy and Commerce Oversight Subcommittee have demanded answers from the Obama administration on whether it is requiring states to pay back millions in federal dollars they used to build marketplaces that later failed.  The White House spent over $4 billion to fund state efforts to build their own exchanges.

The failure of the state exchanges have been well documented.  The crown jewel of disaster was Oregon where a corrupt governor and his political operation pulled the plug on their exchange despite a $200 million investment for fear it was doing political damage to their re-election chances. Nevada and Hawaii's exchanges were a complete bust while Maryland, Minnesota and Massachusetts couldn't get things up and running without major glitches.  Republicans became concerned about the perception that the Obama administration was using the federal exchange as a blue state piggy bank.  After the federal government paid for Maryland's exchange, the federal government sued and won a signification amount of money -- only to share some of the proceeds with the state even though Maryland never invested a dime into the exchange.  Most political observers saw the payment as hush money or an "atta boy" to reward a Blue State for their efforts to build and expand government-run health care.  

HHS' Andy Slavitt, was pressed by Rep. Tim Murphy (R-PA) at a hearing on whether states face any consequences for using federal money in ways that didn't result in successful outcomes.  

"They failed but they spent all this money and then said 'gee sorry, it didn't work out,'" Murphy said. "Is that acceptable?"

Callously, Slavitt responded that "States have the right to change their mind for a variety of reasons including technical or otherwise."  Slavitt is turning his back on the fraud and corruption in places like Oregon.

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Apply 10th Amendment to Online Gambling

Tomorrow the House Government Oversight Committee will hold a hearing on Las Vegas casino owner Sheldon Adelson's pet project -- an effort to stifle his potential competition by outlawing the ability of states to legalize online gaming.  Dan Schneider of the American Conservative Union makes a persuasive case why such an effort is not only folly, but destructive of the Constitution:

The 10th Amendment to the U.S. Constitution was ratified 224 years ago — almost to the day — to ensure that the rights of the people would be protected from a government in Washington, D.C., eager to impose its will on them. Unless a power is specifically delegated to the federal government under the Constitution, it is “reserved to the States respectively, or to the people.” 

The Framers called for this protection — and the American people ratified it as part of the Bill of Rights — because they did not want a national government hundreds of miles from their homes dictating how they lived their daily lives. Except to preserve our constitutionally guaranteed rights, that kind of authority must reside with the people and is shared only with their state legislatures.

Of course, liberals bent on forcing their collective will on the public do not like the 10th Amendment. That is why every conservative congressman must stand firmly with the 10th Amendment and resist the temptation to impose their own policy preferences when they fall outside the powers delegated to the federal government. 

Rep. Jason Chaffetz (R-Utah), chairman of the House Oversight and Government Reform Committee, is a good conservative with a Boehner-era American Conservative Union (ACU) rating of 88 percent. That is a very respectable score that roughly correlates with his alignment to the 10th Amendment. Chaffetz and many of Utah’s political leaders strongly support transferring certain federal lands back to the states. Clearly, Chaffetz understands that state and local governments are better equipped and motivated to enhance environmental health and economic productivity than nameless, faceless bureaucrats in Washington can ever hope to achieve. The ACU also applauds Chaffetz’s efforts to restore the rights of the states to establish their own taxing systems. This issue is often horribly mischaracterized by certain opponents, so the congressman’s support of states’ rights in this instance shows courage, and we respect him for it. 

However, conservative principles are not something that members of Congress can pick and choose to adopt when it’s convenient. To do so would create a slippery slope that would erode the basic foundations of our federal-state system. Just as we encourage every member of Congress to strengthen their conservative ratings, we hope that all members make this point clear in the upcoming hearing in the Oversight Committee that Chaffetz has called to consider the issue of Internet gambling later this week. 

The ACU understands that gambling harms some people. Scientific American magazine recently cited surveys showing that about one-half of 1 percent of Americans are addicted to gambling. While we do not want to diminish the tragedy of addiction, we don’t see how federal intervention could be superior to a state response to this problem, or why the heavy hand of the federal government should be allowed to trump the 10th Amendment when the percentage of impacted Americans is so miniscule. States have already proven that they have the ability to prohibit gambling or approve and regulate it. 

It is also important to note that no bill in Congress would or could ban online gambling, in part because it is impossible to prevent foreign operators in places like the Caribbean, China, and Russia from bringing their gambling business into U.S. markets. Moreover, Chaffetz’s bill would allow some domestic Internet gambling and prevent others, essentially picking the winners and losers. FanDuel and DraftKings are just two examples. And, for years, Americans have been legally allowed to bet on horse racing over the Internet.

As strong supporters of the 10th Amendment, the ACU will never forget that when we grow the power of the federal government to limit people’s freedoms, we also empower it to mandate other aspects of our lives (e.g., the Little Sisters of the Poor under the ObamaCare mandates). Therefore, we would need to see significant, broad-based harm before even entertaining the idea of federal usurpation of states’ rights. We do not see that kind of harm here, nor do we see any tangible benefit from adopting such a scheme.

Similarly, as explained in an interview with William F. Buckley Jr. in 1967, then-California Gov. Ronald Reagan explained there is, in fact, “a very practical advantage” for allowing the states to govern themselves on thorny issues. Reagan noted that the advantage is this: If conditions are so terrible in one state, the federal system of 50 states gives citizens the right to vote with their feet. As long as the rules and the regulations and the taxes are not uniform, there’s a kind of built-in control on how bad a state government can get, because if it passes a certain point, the people just pack up and move to another state where things are better. We should look very carefully on throwing away this control. Let’s say that all the rules become uniform; then, if you object to the policies of government, where do you go?

Reagan got it right. Honoring the rights of states not only generates the kind of laboratories of learning envisioned by the Framers, it also prevents one state from forcing its will on another. It would be a sad day, indeed, if Nevada were permitted to dictate to the people of Utah what kinds of gambling would be permitted in Salt Lake City.

Moreover, it’s not Congress’s job to pick winners and losers. Using the federal government to target certain competitors may be very good for the profits of some favored businesses, but it is by no means an appropriate way to set policy. Although we understand the substantial downside to irresponsible gambling, it is not a proper use of the federal government to preserve the profits and success of a single company’s business plan.

Conservatives recognize and understand that each state should set its own policies under the rights guaranteed by 10th Amendment to the U.S. Constitution. Conservatives trust the states to know what is right. Furthermore, conservatives trust our fellow Americans to understand that all people should be treated equally under the law with favoritism toward none. We urge all members of the House Oversight Committee to stand for the principles in our Constitution. 

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Who Will Lead the Way on Tax Reform?

Rep. Paul Ryan has been elected Speaker of the House and the next battle for conservatives centers on who will take his place as chairman of the powerful House Ways and Means Committee.  The Ways and Means Committee is the central battleground for the future of tax reform.  If we are ever to limit the power of the federal Leviathan, we will need a chairman willing to fight on principle for key conservative reforms.  That person is Rep. Pat Tiberi (R-OH).

Tiberi is one of two members who have declared their candidacy for the vacant chairmanship.  If you can tell a man by his friends, Tiberi is the right person to take the gavel.  Tiberi has a perfect pro-life position throughout his career in Congress.  Likewise he is pro-gun and has been endorsed repeatedly by the National Rifle Association with an "A" rating.  He has also scored 90% by Gun Owners of America and has an outstanding record on tax issues, including support for the Americans for Tax Reform "No New Tax" Pledge.

On tax issues, which are the most pertinent for the Ways and Means Committee, Tiberi has supported reducing the capital gains tax, he supported effort to make the Bush tax cuts permanent, and wanted to eliminate the death tax.  Most critically, Tiberi has pledged to push for a Reagan-type tax reform that will limit the power of the Internal Revenue Service (IRS) and reduce the tax burden on all Americans.

America sits at the tipping point.  If we are ever going to stop the growth of federal power, we must limit the ability of the government to grab money from our wallets and pocketbooks.  It is critical at the next chairman of the tax-writing committee share those beliefs.  With a long history of support on reducing taxes, there is little doubt Tiberi would be a leader in the fight to reduce the power of Washington.  

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Rep. Jason Chaffetz, who is carrying water for casino-owning billionaire Sheldon Adelson, has announced he will be hosting a press conference tomorrow with former Rep. J.C. Watts (who is also a paid lobbyist for Adelson) and a handful of conservative organizations to push for his nationwide ban on states legalizing online gaming for their residents.  Nearly 25 conservative and liberty-minded groups have come out in opposition to the Chaffetz bill.  This afternoon, the American Conservative Union (ACU) blasted the groups that are selling out constitutional principles.  ACU Executive Director Dan Schneider issued the following statement reminding social conservatives that support for the Constitution must take precedent over their opposition to gambling:

Social conservatives all understand that gambling harms some people.  The only question for us is if the heavy hand of the Federal government should be brought to bear in this instance or whether the 10th Amendment to the Constitution should permit states to exercise their police authority.  

It is deceitful to imply that any bill in Congress would or could ban online gambling. There are already many gambling opportunities which are legal and widely available, but left untouched by the Restoration of America's Wire Act. Fan Dual and Draft Kings are just two examples. Similarly, people have been legally allowed to bet on horse racing for many years, and that wouldn't change under this bill.

As strong supporters of the 10th Amendment, the American Conservative Union does not see the kind of broad-based harm to justify Federal intrusion into the rights of states to govern themselves.  We must never forget that when we grow the power of the Federal government to limit people's freedoms, we also empower it to mandate other aspects of our lives.  From the Little Sisters of the Poor to those who wish to feed the hungry in their communities, Americans are now required to violate their conscience precisely because we have failed to reign in the Federal behemoth.  

Moreover, it does not make sense to allow some types of online betting while prohibiting others.  It’s not Congress’ job to pick winners and losers.  Using the Federal government to target certain competitors may be very good for the profits of some favored businesses, but it is by no means an appropriate way to set policy.

Those who are supporting the latest efforts to bring the Federal government into this arena ignore the inevitable results: gambling will continue online both domestically and on sites run by operators in the Caribbean, China, and Russia.  The Web has become a place where many vices flourish but banning certain US companies from this space cedes market dominance to foreign countries and dubious sites. 

Although we understand the substantial downsides to irresponsible gambling, it is not a proper use of the Federal government to preserve the profits and success of a single company’s business plan. 

Conservatives recognize and understand that each state should set its own policies under the rights guaranteed by 10th Amendment to the U.S. Constitution.  Conservatives trust the states to know what is right for each state.  Furthermore, conservatives trust our fellow Americans to understand that all people should be treated equally under the law with favoritism toward none. 

Schneider is spot on.  The Tenth Amendment empowers states to make their own decisions.  Conservatives and libertarians don't have to agree with those decisions but should respect them.  They should also oppose any and all efforts to gut the Bill of Rights -- especially to please a crony businessman who just wants to eliminate one form of competition for his billion dollar empire.  

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Cost to Taxpayers of Doing Favors for Big Phrma

After lobbying for ObamaCare, some members of Congress still are trying to do favors for Big Phrma.  An article entitled The Inter Partes Review Process is Working, Even For Pharmaceuticals made the point that when Congress does favors for the drug industry the taxpayers get stuck with the tab.

Health care is increasingly expensive, thanks in part to government's continued and expanding intervention.

Look back at the Medicare Part D fight that established a program that pushed a massive new entitlement onto the American people as a great example of Republicans pushing for the Big Pharma agenda.

During the Obama years, we have ObamaCare as an example of Democrats doing the bidding of the drug industry.

Now lobbyists for the drug companies are back asking for a special carveout on something called the Inter Partes Review Process.  This is a process that stops big companies from gaming the patent system to keep a patent for longer than allowed under current law or to try to file a bogus new patent on an old drug to continue to overcharge for the drug.  Now that most of health care costs are taken on by the government (i.e. the taxpayer), any increase in the price of drugs will hit the consumers hard.

Big Pharma has invested at least $3 billion on lobbying and they want to take away the one tool that can empower taxpayers to challenge government-granted monopolies. 

Thankfully, Congressman Bob Goodlatte and Senator Chuck Grassley, the House and Senate Chairman of the Judiciary Committee, get it.  They have stood up against special interests in the past and should do it again.  Big Phrma should stand on it's own two feet.  The taxpayers shouldn't be forced to prop them up. 

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Stop Slavitt

The Chicago Way has a simple formula -- reward your friends and punish your enemies.  President Obama plays the game well and rewards those who take care of him -- even when they take care of themselves in the process.  The game is being played out at the Centers for Medicare and Medicaid Services (CMS) where the president has nominated Andy Slavitt to become head of the agency.

Slavitt was the CEO of Optum/QSSI, a subsidiary of UnitedHealth Group, one of the nation's largest health insurers. In order to be appointed to CMS, the administration granted Slavitt an "ethics waiver," allowing him to receive $4.8 million in tax-free money when he joined the Department of Health and Human Services (HHS).  Optum/QSSI had been building the data services hub for the online marketplace Healthcare.gov under an $85 million contract before it was chosen to serve as the systems integrator in late October 2013, just weeks after the website famously imploded. Slavitt may have played a roll in the contract award.

Slavitt has helped turn Obamacare into a slush fund for blue states who were rewarded billions in federal dollars to build state exchanges.  After receiving $179 in federal grants to build a failed state exchange, Maryland sued the contractors who built it.  When the state attorney general received a settlement, Slavitt gave $45 million to the state, a nice pat on the back for building the exchange in the first place -- even though Maryland didn't spend a nickel of their own funds to build it.

Taxpayers want to know what role Slavitt had in covering up the dismemberment of Oregon's health care exchange.  As you recall, Cover Oregon was killed for political purposes when the Democrat governor, John Kitzhaber, who has since resigned in disgrace, tasked his political director to oversee the exchange.  She pulled the plug for political reasons, fleecing taxpayers of $300 million without a howl of protest from. Mr. Slavitt and his team in Washington.

To their credit, the GOP Senate has refused to act on the nomination and is demanding answers.  Senate Finance Committee Chairman Orrin Hatch (R-Utah) said, "Mr. Slavitt will need to answer a number of tough questions regarding his former employer and their relationship with the agency" and Senate Judiciary Chairman Chuck Grassley (R-Iowa) stated, "I have asked CMS to provide details on how it's walling off Mr. Slavitt from potential conflicts of interest. I will continue to ask these questions as part of the nomination process." So far, no answers have been forthcoming.  

Senate Majority Leader Mitch McConnell often seems to care more about making sure the trains run on time rather than standing up to fight on principle.  If there was ever an easy fight to win, this is it.  Slavitt is a walking ethics violation with conflicts of interest coming out his ears.  One can only hope that McConnell and his allies in the Senate don't cut a deal to see that Slavitt is confirmed.  

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Conservatives Should Embrace Free Trade

The late Milton Friedman wrote that there are “few measures that we could take would do more to promote the cause of freedom at home and abroad than complete free trade.” But with a pro-free trade measure at hand, some on the right are letting their objections for President Obama's lawlessness on immigration and other issues to cloud their conviction in this core principle of conservative belief.

At issue is Trade Promotion Authority, which guarantees that international trade agreements struck by the president will receive an up-or-down vote in the House and Senate. The expedited process would extend from the last months of Obama's second term into the next, hopefully Republican presidency. Since the GOP controls both chambers of Congress until Obama leaves office, putting trade agreements to a vote hardly seems like a serious danger, especially for some of the more outlandish “threats” that critics have raised.

Would House Republicans – any House Republicans – vote to curtail the 2nd Amendment, for instance? The idea is, frankly, laughable. And yet this precise worry has been raised by Gun Owners of America (generally a terrific organization) as something Obama may try to sneak through once he has secured an up-or-down vote in Congress.

Fears of a liberal dream agreement gliding through Congress while Republicans watch helplessly look even more outlandish when one considers the politics of the actual agreement at issue: the Trans-Pacific Partnership (TPP), a trade deal that Obama is currently negotiating with Japan and other Asian countries.

They say you can tell who a man is by his friends. For the TPP, it's equally instructive to look at its enemies: an axis-of-liberalism of unions and environmentalists. In Congress, arch-liberal Sen. Elizabeth Warren (D-MA), backed by the nakedly partisan former Senate Majority Leader Harry Reid (D-NV), have lit up Obama for backing the deal, occassionally descending into bitter recriminations. Given that unions have employed truly slash-and-burn tactics to stop the TPP, including warning a Democratic lawmaker they would drop $2 million in the next Democratic primary to take them out if they disobeyed liberal orthodoxy, it's clear the TPP won't be garnering a huge number of Democratic votes when it comes to the House floor. Given that reality, all of the leverage for agreeing to the ultimate deal lies with the Republicans. And if a President Rubio or Walker is negotiating deals in 2017, trade fast-track will help facilitate their deals. It would also be more difficult to pass through Congress then with Democrats likely to be completely unified against it.

Beyond fears about Obama, a more worrying trend in the rhetoric from some critics like Sen. Jeff Sessions (R-AL), generally speaking a conservative champion, is their criticism of trade deals in principle. Sessions has criticized previous free trade agreements, saying they have led to a trade imbalance. The Alabama Republican cites economist Clyde Prestowitz, a former Reagan administration official who has veered sharply left in recent decades, arguing that an increase in imported goods has led to job losses. Here, Friedman is especially instructive. Rather than causing economic harm, the truth about imports is “very different,” he wrote in the late 1990s. “We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports.”

Every industry has what Friedman called a “cacophony of the 'interested sophistry of merchants and manufacturers' and their employees” working overtime to “protect” their narrow interests against trade deals that benefit vast millions of people, a little bit each. As a conservative, I'm worried about representing the interest of the many – I know that each industry will ably represent itself. Conservatives looking at guaranteeing merely a vote on a trade agreement loathed by the left ought to consider their interests, too.

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A Tax Cut for Air Travelers

Conservatives should praise a new effort in the House of Representatives to reform the whole structure of the Federal Aviation Administration (FAA) and, hopefully, lower some taxes while they are at it. 

A Tax Foundation titled Improving Airport Funding to Meet the Needs of Passengers documents the ways the federal government hammers average Americans with tax after tax after tax.   

First they hit the passenger with a 7.5 percent Domestic Passenger Ticket Tax an then a $4.00 Domestic Flight Segment Tax (for international flights the charge is $17.70 per ticket).  There is an additional jet fuel tax and a September 11th fee that is $5.60 per segment per flight.

If you add up the domestic ticket tax and the flight segment tax, the federal government scooped up almost $9 billion in 2013 revenues with an additional amount of almost $3 billion in international flight tax revenues (this includes flights to Alaska and Hawaii).  The security fees made $2 billion for the feds. This money is supposed to go to the Airport and Airway Trust Fund and for the massive bureaucracy that was created at the Transportation Security Administration (TSA).

The problem is that the money is not well spent.  The trust fund money is not distributed on the basis of what airports are in dire need of help.  Representatives and Senators who serve on the committees that dole out the airport cash tend to favor home state airports regardless of need. 

The idea behind tax reform is to restructure the tax code so that it makes sense, is fair and results in economic growth.  If the domestic tax on tickets were to be cut, there will be money on the table to invest in refurbishing airports in need of repair.  Part of the federal tax is supposed to be set-aside for this purpose, yet the feds have a hard time distributing money in an effective and fair way.

One conservative idea that has great weight with the Tea Party is the idea of devolving federal programs to the states.  Senator Jim DeMint, now President of the Heritage Foundation, pushed the idea of devolving the federal gas tax to the states to allow the states to collect more money while the federal government eased out of the highway business.  The same idea can work with our local airports.

Cut federal taxes on air travel and allow local airports to collect more money would cut out the middleman – the feds.  This type of solution would save money for travelers and would help increase air travel. 

The Passenger Facility Charge is a local charge that airports use to collect money for the airport where the travel commences.  This local fee is capped at $4.50 per ticket and the local airports should be allowed to raise that fee while the taxes on domestic and international flights are dramatically cut.  This will convert a tax system into a more reasonable local user fee for air travel. 

The Tax Foundation report concludes “the current system of airport funding is not ideal for air travelers. The most important, most popular airports generate plenty of revenue for the government but do not necessarily get that money back to spend on their own capital expenses. Much of the funding granted by the federal government could be better spent by the airports directly.”

Remove the cap on the Passenger Facility Charge, lower federal taxes on travel and let the local airports to spend the money on their own airports.  Comprehensive tax reform should be tried on the whole federal tax code and it makes sense as a way to restore sanity, local control and free-market capitalism to the air travel market. 

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