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“On Orders From God And The Founding Fathers”: What Ted Cruz Means When He Says He Mistrusts Both Parties

Okay, class, here’s what should be an easy assignment:

What does it mean when Sen. Ted Cruz says the following on budget negotiations (per TPM’s Sahil Kapur)?

Sen. Ted Cruz (R-TX) on Wednesday defended his objection to initiating House-Senate budget negotiations unless Democrats take a debt limit increase off the table, saying he doesn’t trust his party to hold the line.

“The senior senator from Arizona urged this body to trust the Republicans. Let me be clear, I don’t trust the Republicans,” Cruz said. “And I don’t trust the Democrats.”

On Tuesday, Sen. John McCain (R-AZ) scolded Republicans for blocking negotiations. He was backed by Sen. Susan Collins (R-ME).

“Unfortunately,” Cruz said, “one of the reasons we got into this mess is because a lot of Republicans were complicit in this spending spree and that’s why so many Americans are disgusted with both sides of this house. … And every Republican who stands against holding the line here is really saying, let’s give the Democrats a blank check to borrow any money they want with no reforms, no leadership to fix the problem.”

Does it mean, as political reporters often blandly repeat, that “Tea Party” pols like Cruz are hardy independents who care about principle rather than about the GOP, and represent a constituency that is up in the air?

No, and I might add: Hell no! Cruz specifically and Tea Party members generally, for all their independent posturing, are the most rigid of partisans, and are about as likely to vote with or for Democrats as a three-toed sloth is likely to win a Gold Medal in the 100-meter dash. Yes, they often threaten to form a Third Party, but never do (why should they when their power in one of the two major parties is overwhelming and still growing?), and even more often threaten to “stay home” during elections, but in fact tend to vote more than just about any other sizable bloc of Americans.

So what’s with their inveterate Republican-bashing, if they usually vote and almost always vote Republican?

There are two interconnected explanations. The first is that they want to make it clear that for them the GOP is not a tradition, or a roughly coherent set of attitudes, or a mechanism for civic participation and ultimately the shaping of public policies through democratic competition and cooperation: it’s a vehicle for the advancement of a fixed and eternal set of policies, mostly revolving around absolute property rights and pre-late-twentieth century cultural arrangements. Those who view the GOP as anything other or less than this sort of vehicle are deemed RINOs or “establishment Republicans,” and presumed to be in charge of the party, evidence to the contrary notwithstanding.

So when Tea Party champions or “true conservatives” or “constitutional conservatives” (three terms for the same people) say they’re not willing to sacrifice their principles to win elections, do they really mean it, and is that the difference between them and those “establishment Republicans” like John McCain that they are always attacking? No, not really. They want to win elections, too, but only in order to impose a governing order that they believe should be immune to any future election, immune from contrary popular majorities generally, and immune to any other of those “changing circumstances” that gutless RINOs always cite in the process of selling out “the base.” And that’s why they are willing to use anti-majoritarian tactics when they are in the minority, and anti-minority tactics when they are in the majority: the only thing that matters is bringing back the only legitimately conservative, the only legitimately American policies and enshrining them as powerfully as is possible.

So from that perspective, sure, they’re conservatives first and Republicans second. But this isn’t a “revolt” against the GOP, but a takeover bid, executed through primaries (e.g., Ted Cruz’s victory over “establishment Republican” David Dewhurst) and the power of money and ultimately sheer intimidation. Ted Cruz won’t “trust Republicans” until they’re all taking orders from people like him, who are in turn simply taking orders from God Almighty and the Founding Fathers.

 

By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 22, 2013

May 24, 2013 Posted by | Politics | , , , , , , , , | Leave a comment

“Mitch McConnell Has Your Back”: Conservative Billionaires Oppressed By Liberal Thugs

Fear not, billionaire super PAC and 501(c)(4) funders. You may feel oppressed, you may fear the pitchforks and torches of the unwashed masses gathering at the gate of your manse, you may wake in the night in a cold sweat and bellow to your footman, “Dare I give Paul Ryan $10 million for his 2016 presidential race, lest some bearded plebian pen a vicious blog post aimed at my very heart?” If nothing else, Mitch McConnell has your back.

Today, McConnell takes to the pages of The Washington Post to defend the right of America’s millionaires and billionaires to pour their funds into campaigns while remaining anonymous. Those with long memories may recall that when the McCain-Feingold campaign finance law was being debated, McConnell and others said that the answer to the problem of money and politics was disclosure: Let the wealthy give as much as they want, but disclose contributions quickly, and with everything out in the open we could forestall the possibility of corruption. But with McCain-Feingold safely struck down and Citizens United inaugurating a new dawn of American liberty, disclosure is now McConnell’s enemy:

These tactics are straight out of the left-wing playbook: Expose your opponents to public view, release the liberal thugs and hope the public pressure or unwanted attention scares them from supporting causes you oppose. This is what the administration has done through federal agencies such as the FCC and the FEC, and it’s what proponents of the Disclose Act plan to do with donor and member lists.

The fearsome “liberal thugs” notwithstanding, this gets to the heart of democracy’s messiness. You can have a political system where everyone is unfailingly polite to each other, or you can have a system where people are free to express their views, but you can’t have both. By choosing to have a democracy, we make a series of bargains. We enshrine freedom of religion, even though we know that means people who believe in idiotic faiths (i.e. those different from our own) will be able to practice them, too. We create a system of due process, even though that means guilty people, even monstrous people, will be given fair trials with at least the possibility of getting off. And we defend freedom of speech, knowing that that means we’ll have to tolerate the voicing of abhorrent ideas, not to mention Two and a Half Men and the career of will.i.am.

And if our election rules will allow the Sheldon Adelsons of the world to put millions behind their favorite candidate—something which, by the way, residents of most of the world’s democracies find beyond absurd—it isn’t too much to ask that if you choose to use your enormous wealth to attempt to shift the outcome of elections, if nothing else the public should know who you are. That way we’ll know whom our elected officials are indebted to. And yes, there is a price to pay for that participation: people might say you’re wrong, or even call you a jerk. Money is speech, you say? Well freedom of speech means the right to say whatever you want, not the right to be immune from criticism. It’s amazing how often conservatives can’t see the difference.

By: Paul Waldman, Contributing Editor, The American Prospect, May 23, 2013

May 24, 2013 Posted by | Campaign Financing, Democracy | , , , , , , , | Leave a comment

“Tied At The Hip”: E.W. Jackson Throws A Wrench Into The Ken Cuccinelli Plan

Ken Cuccinelli’s plan for winning the Virginia gubernatorial race is straightforward. Avoid outspoken statements on social issues—the same ones that alienate most Virginians but excite his rightwing base—and focus the campaign on jobs and growth.

So far, he’s done exactly that. Of his three television advertisements, for example none mention abortion or same-sex marriage. Instead, the first—narrated by his wife—presents Cuccinelli as a defender of the vulnerable, highlighting his time working in homeless shelters and prosecuting human traffickers. The second is a straightforward ad on the economy—where he touts his Ryan-esque tax plan of cuts—and the third is meant to humanize Cuccinelli, and features the widow of a slain Fairfax County police officer, who endorses the attorney general.

E.W. Jackson, the newly-minted GOP nominee for lieutenant governor, throws a huge wrench in this strategy.

Jackson is known for his outspoken social conservatism. He routinely denounces LGBT equality—calling gay Americans “sick people psychologically, mentally, and emotionally”—and has compared Planned Parenthood to the Ku Klux Klan, accusing them of engineering the mass slaughter of black children through their support for abortion rights. Indeed, this rhetoric is the whole reason for his popularity among Virginia conservatives and the reason he was able to win the nomination.

Which means he’s unlikely to abandon it on the campaign trail. Cuccinelli is a deft politician, but not so deft that he’s able to distance himself from someone who—ostensibly—is his running mate. And so, at a campaign stop in Abdingdon—in the southwest corner of the state—Cuccinelli told supporters that he’s “glad” Jackson is on the ticket. Why? Because the lieutenant governor cast the tie-breaking vote in the Virginia Senate, and at the moment, the senate has an even split between Democrats and Republicans. Here’s more from the Virginian Pilot:

“I don’t need to know what the subject matter that’s going to tie up 20–20 that the LG can vote on will be. I’m confident that we’re going to get the right vote every single time out of E.W. Jackson,” Cuccinelli said of the Chesapeake-based minister. “So I’m glad he’s on this ticket, too.”

Expect this quote to be circulated around the state by Virginia Democrats. And for good reason. Given their demographic challenges, Democrats—and Terry McAuliffe in particular—have to convince Virginians that the GOP is too extreme to trust. With Cuccinelli now tied to someone further to the right than he is, that task has become much, much easier.

 

By: Jamelle Bouie, The American Prospect, May 22, 2013

May 24, 2013 Posted by | Politics | , , , , , , , , | Leave a comment

“Crossing The Line”: Tea Party Group Protesting IRS Has History Of Questionable Political Involvement

Tea Party Patriots, originally formed as a 501(c)(4) non-profit corporation in 2009, has a history of questionable electoral activity.  Nevertheless, as one of the largest of the movement’s national factions, it is taking advantage of the so-called IRS scandal to re-ignite the anger of Tea Partiers, encourage their (false) sense of victimhood, and increase their ranks.

Dubbed “Rein in the IRS,” nationwide rallies were organized to protest IRS scrutiny of Tea Party non-profit applications. The announcement, posted on the group’s website Monday, called for “anyone and everyone to protest the IRS’ complete abuse of power” at noon local time on Tuesday. Dozens of local Tea Party Patriots chapters around the country emailed their members about the protests.

The Tea Partiers claim that “the IRS has waged a three-year war against the Tea Party, harassing our groups and even auditing our individual members. This abuse of power is unacceptable and un-Constitutional, and it must stop.” No mention was made of the Inspector General’s findings that that not a single Tea Party group has been denied 501(c)(4) non-profit status, and that more than two thirds of the scrutinized Tea Party-like groups had engaged in political activity that would usually disqualify them.

The effort is also being used to fuse anger over several different political issues, from the Affordable Care Act to immigrants. For instance, in sample Letters to the Editor they distributed, the group links the IRS controversy with their attack on comprehensive immigration reform. “The IRS’s abuse of power highlights why the Senate needs to slow down with its amnesty bill. We simply cannot trust bureaucrats to make the right decisions. Immigration policy is too complex and too important for us to delegate to a group of bureaucrats who may be pursuing an agenda that doesn’t match Americans’ best interest.”

It should be noted that until late Monday, the Tea Party Patriots were using the official group website listed on their IRS form 990, and the resources of their 501(c)(4), plus their network of local groups—many of which have filed for 501(c)(3) or 501(c)(4) status)—to organize the protests against the IRS. Suddenly Monday evening, after a day of soliciting volunteers to organize anti-IRS protests, all traffic to the group’s domain name teapartypatriots.org was directed to the group’s political action committee, The Tea Party Patriots Citizen Fund (http://teapartypatriotscitizensfund.com), which features a “protest the IRS” page alongside a photo of Tea Party Patriots co-founder, Jenny Beth Martin.

The new PAC was formed in January 2013. Despite the current enmeshing of the 501(c)(4) and the PAC on the IRS protests, forms filed with the Federal Elections Commission curiously state that the PAC has no connected organization.

The sudden crossover to the group’s political action committee may be at least a tacit omission of questionable activity for a 501(c)(4) non-profit organization. It also begs the question as to why any Tea Party groups so focused on politics would want to be a non-profit rather than a PAC.

Such concern about crossing the line and engaging in political activity was absent from the Tea Party Patriots, Inc. a year ago when the group threw its support behind Wisconsin governor Scott Walker in his recall election.

As IREHR noted last year, Tea Party Patriots, Inc., which registered with the IRS as a 501(C)(4) non-profit organization, may have run afoul of its tax exempt status with this electoral activity.  Federally registered non-profit organizations with a 501c4 status are prohibited from devoting a majority of their energy and resources to support electoral campaigns.

On April 29, 2012, local Tea Party Patriots groups across the country voted 98 percent to 2 percent to throw all their energy and resources into Wisconsin for the recall elections. “We are deploying hundreds of volunteers into each of the targeted recall districts,” noted Tea Party Patriots co-founder Jenny Beth Martin in an email to supporters. “That’s 4,000 patriots going door to door and making phone calls” she added.

Tea Party Patriots brought activists to Wisconsin and did door-to-door canvassing, and had others make calls from their homes and spread the word on social media. Some of those activists were sponsored, with their costs covered by Tea Party Patriots.

At times, Martin and other Tea Party Patriots leaders have tried to suggest that the group was just engaged in GOTV (Get Out the Vote) efforts or some form of civic engagement, other times they’ve told their supporters that they’re directly intervening politically: “Tea Party Patriots—in conjunction with other local and national Tea Party groups—will spearhead efforts to help Walker and other candidates.”

There is also a question as to whether the funds of the group are going to “social welfare” as required. In 2010, the organization raised $12 million in fiscal 2010. But only about $3 million of that went to its “social welfare” mission, according to an IRS 990 form filed in May 2012. For fiscal year ending May 31, 2012, Tea Party Patriots raised over $20 million, but spent just $5.9 million on program service. Millions of dollars went to pay professional telemarketing firms, extensive travel costs, and legal fees from suing other Tea Party groups over control of the “Tea Party” brand.

Tea Party Patriots leader Martin has had her fair share of troubles with the IRS before. As noted in Tea Party Nationalism, according to court documents, Martin and her husband, Lee Martin (who served at the group’s “assistant secretary” and was intimately involved in the group’s financial matters), owed over $680,000 in tax debt, including over half a million dollars to the Internal Revenue Service, when the pair filed for bankruptcy in August of 2008.

Whether or not Tea Party Patriots, one of the largest national factions, can turn this scandal into a chance to regain lost ground will, in some measure, depend on the reception their protests receive by an informed public.

 

By: Devin Burghart, The National Memo, May 23, 2013

May 24, 2013 Posted by | Internal Revenue Service, Tea Party | , , , , , , | Leave a comment

“Separate But Unequal”: Why Do We Tax Ourselves Today So Apple Can Pay Its Taxes Someday?

The richest of the rich are different from you and me because instead of paying taxes, Congress lets them pay interest.

This little-known difference was on full display before the Senate Permanent Investigations subcommittee this week, though you would hardly know that from the news reports of testimony by Apple CEO Tim Cook and his top finance and tax executives.

The reality is that America has two income tax systems, separate and unequal. And as with all such separate and unequal systems, the powerful benefit by sticking everyone else with the costs.

The system is so unequal that corporate tax departments at the biggest multinationals have been transformed from cost centers into what Enron called its tax office: a profit center.

To most Americans, taxes are an expense. The idea that a tax can make you richer may seem hard to believe, but as the Apple executives showed in their testimony, it is standard operating procedure these days.

But instead of reporting this, we got mostly fluffy political stories. The New York Times account was typical, focusing on how Cook so charmed senators he had them “practically eating out of his hand.”

What Apple is really doing is eating your lunch.

Let’s start with how Congress taxes most people. It does not trust them to report their incomes in full or to pay their taxes, and with good reason since numerous studies show that a third or more of self-reported income simply does not get written down on income tax returns.

We all know this as the “underground economy” of people who get paid in cash; clean pools, cut grass or sell another type of grass. (Many drug dealers, however, report their incomes in full knowing that if they get caught dealing and cheating on their taxes their prison terms will be longer.)

People who work, and pensioners, have their taxes taken out of their checks before they get paid — which is why we call the shrunken cash that we pocket “take-home pay.”

Because Congress also does not trust workers and retirees to report their incomes in full, it requires their employers and pension plans to verify how much they make. The Social Security Administration adds up all the W-2 wages-paid forms for people with any paid work. In 2011 there were 151,380,759 people who earned  $6,238,607,249,941.26, which would usually be written up as $6.2 trillion.

Congress also says you can defer tax on money you save in a 401(k) plan if your employer offers one, a maximum of $23,000 for older workers. If you do not have a 401(k) you can save no more than $6,000 this year and pay taxes when you withdraw.

In other words, you get fully or almost fully taxed when you earn.

But Apple operates under very different rules. At the end of March it has more than $102 billion of mostly untaxed profits. If Apple were a worker it would have paid the federal government $36 billion in taxes.

Instead of paying taxes, Apple has taxes that are deferred for as long as it chooses.

In total, I estimate from corporate disclosure documents, American multinational companies have $2 trillion of untaxed profits offshore because they did just what Apple has done.

Had Congress required those companies to pay up last year it would have been the equivalent of all the income taxes paid by everyone in America from January until July 10. Imagine that, all the income taxes taken out of your pay or pension from January into the middle of summer just so Apple and other multinational companies can profit today and pay their taxes someday.

The $700 billion of income taxes that would have come due without deferral would also have reduced the federal budget deficit last year by more than two-thirds. Instead, the federal government borrowed a little more than a trillion last year to pay its bills.

In effect the federal government loaned Apple the $36 billion in deferred taxes at zero interest. Imagine how rich you would be if you could keep all the income taxes withheld from your paycheck this year and then pay the money, interest-free, 30 years from now.

Because taxes deferred are at zero interest, inflation erodes the value of the taxes owed. If Apple waits 30 years and then chooses to pay its taxes the government will get the equivalent of 40 cents on today’s dollar, assuming 3 percent annual inflation.

Meanwhile, Apple will be investing that $36 billion, earning interest. If it earns 3 percent in 30 years, it will have more than $87 billion.

Now jump forward to 2043. Apple pays $36 billion in taxes from its $87 billion cash pile, leaving it with $51 billion after taxes in 2043 dollars.

As advisors to the very wealthy teach their clients, deferring a tax for 30 years is the functional equivalent of not paying any tax.

In the textbook version of events, that huge pile of untaxed profits that Apple keeps offshore cannot be put to work in America. In reality here is what happens:

—Apple has its tax haven subsidiary deposit the money in the United States at a too-big-to-fail-bank, eliminating any risk of loss it would incur with smaller banks.

—Apple has the American bank buy U.S. Treasury bills, notes and bonds so that its untaxed profits, which force the government to borrow, earn interest.

—Apple can also borrow from itself, making short-term loans from its many separate piles of untaxed offshore profits to fund any operational needs in the U.S.

—Rather than tap its $102 billion of offshore cash, Apple sold corporate bonds for periods of up to 30 years at less than 2 percent interest.

As Cook explained to the senators, why pay taxes at 35 percent when you can borrow at 2 percent? Cook is right from a financial perspective. At 2 percent, the interest on the interest, measured to infinity, will never equal the 35 percent taxes avoided.

But here is the best part of the whole deal, which Cook and Peter Oppenheimer, Apple’s chief financial officer, explained to the senators, but the news media neglected to report.

Apple turns some of the profits it earns inside the U.S. into tax-deductible expenses, which it pays to its offshore subsidiaries.

Now, if you move a dollar you earned from your right pocket to your left, nothing significant happens. Your wealth is unaffected and your tax bill is unchanged.

But Apple and other multinationals have an American right pocket, from which they pull cash to put in their Irish, Cayman Islands, Singaporean and other left pockets. When they do that the profit goes poof on their tax return and a tax deduction gets added.

Accountants use black ink to show profit, and red for losses and expenses. This modern accounting scheme is what the alchemists of old sought, hoping to turn lead into gold. But unlike the fictional philosopher’s stone, this alchemy works.

So, to review, you get taxed before you get paid and can set aside only modest sums with the taxes deferred until your old age.

Apple and its corporate peers get to earn profits now, but pay taxes decades into the future and possibly never, while earning interest on the taxes it defers into the future — interest you must finance as a taxpayer through higher taxes, reduced government services or more federal debt.

The one place Apple cannot escape taxes is on the interest it earns on its untaxed hoard of offshore cash, as Apple’s top tax officer, Phillip Bullock emphasized to Senator Carl Levin, the Michigan Democrat who chairs the investigations panel.

Levin’s staff, its reports issued with bipartisan support, also found that Apple did owe some foreign taxes on profits it earned overseas.

It pays the Irish government a corporate tax rate of 2 percent under a deal made in 1980 when it was a pipsqueak company. On some other earnings its tax rate is 0.05 percent – that is a nickel on each $100 of profit.

Rich individuals – very, very, very rich individuals – get to do the same thing: earn now and be taxed much later, if at all, by paying interest on borrowed money instead of paying taxes.

There are different techniques to defer, delay and escape paying income taxes for executives, business founders, managers of hedge and private equity funds and movie stars, all of which will be explained in future National Memo columns.

One of these techniques explains in good part why companies have been slashing health and retirement benefits for workers – because it masks the real costs of letting executives earn now and pay taxes either later or never.

Another explains why Mitt Romney was never going to release his income tax returns for the years he ran Bain Capital Management, the private equity fund that made him rich.

But the bottom line is the same – America has two tax systems, separate and unequal. There is a word to describe such systems: un-American.

There is also a question to ask: Why do we tax ourselves today so Apple can pay its taxes someday?

 

By: David Cay Johnston, The National Memo, May 23, 2013

May 24, 2013 Posted by | Congress, Taxes | , , , , , , , | Leave a comment

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