Heritage Morning Bell - Taxes

Heritage Foundation
Happy Tax Year!
While millions of Americans are more than ready to put 2009 behind them, they should know that Congress failed to reauthorize dozens of tax breaks for individuals and businesses before the Members scurried home for the Holidays. These “expiring provisions” affect every American in one way or another as individuals or businesses. By allowing them to lapse, Congress has enacted tax increases at time when these taxpayers can least afford it.

The House has passed legislation (H.R. 4213) that would have extended 63 current tax provisions, but the Senate failed to bring this bill to a vote. Thus, all of these provisions expired at midnight last night. Notable provisions as reported today by Tax Notes include:

• Deduction of state and local general sales taxes (section 164) (Personal Tax Incentives)
• Additional standard deduction, up to $500 for individuals and $1,000 for couples, for state and local property taxes (section 63) (Personal Tax Incentives)
• Research tax credit and alternative simplified credit (section 41) (General Business Tax Incentives)
• New markets tax credit (section 45D) (Community Assistance Provisions)
• Empowerment zone incentives (sections 1391 and 1202) (Community Assistance Provisions)
• Renewal community tax incentives (sections 1400E, 1400F, 1400I, and 1400J) (Community Assistance Provisions)
• District of Columbia Investment Incentives (sections 1400, 1400A, 1400B, and 1400C) (Community Assistance Provisions)
• Net disaster loss designation and $500 limit per casualty for personal casualty losses attributed to federally declared natural disasters (section 165) (General Disaster Relief Provisions)
• Expensing for qualified disaster expenses (section 198A) (General Disaster Relief Provisions)
• Biodiesel and renewable diesel incentives (section 40A) (Energy Incentives)
• Alternative motor vehicle credit for heavy hybrids (section 30B) (Energy Incentives)

Although the House has acted and passed its version of the Tax Extenders Act of 2009, the Senate failed to act on similar legislation, as a result the following additional key tax provisions will expire:

• Increased exemption levels for the individual alternative minimum tax (section 55) and personal tax credits allowed against the AMT (section 26)
• Exclusion of unemployment compensation benefits from gross income (section 85)
• Alternative fuel mixture tax credit (section 6426(e))
• Reduced estimated tax payments for small businesses (section 6654(d)(1)(D))

The Senate has had a lot on its plate this year. But it is still unacceptable that they have stalled on the chance to extend these tax provisions that affect every American. By allowing these tax provisions to expire, taxes will rise on many individuals and businesses, and for some of these groups, a punitively steep tax hike.

At the very least, we hope for a New Year’s Resolution from Congress that it acts swiftly in 2010 on passing legislation to amend and extend tax laws that assist every American individual and business which will lead to a stronger, robust economy.

Even better, would be if Congress reformed the entire tax code and brought us a tax system based on one rate, applied once to all income, and in a form every taxpayer can understand.

However, that may be asking too much in one New Year’s Resolution.

Heritage Morning Bell - Healthcare

Obamacare’s Constitutional Problems Proliferating

After the Democrats cleared the second of three 60 vote hurdles last night, Republicans ceded enough debate time back to the majority so that passage of Obamacare through the Senate will take place n Christmas Eve at 8 AM. Conservatives have every right to be disappointed that Senate Republicans did not force the maximum amount of debate possible. But they can take heart in a key point of order that will be voted on later today. Sponsored by Sens. Jim DeMint (R-SC) and John Ensign (R-NV), that vote will lay the groundwork for the possible legal dismantling of Obama’s health program.

As we’ve detailed before, the very core of the Senate health plan includes an unprecedented expansion of the power of the federal government over the lives of every American. For the first time in history, every American would be forced to buy federally regulated and approved health insurance or face a $750 fine.

As the non-partisan Congressional Budget Office (CBO) wrote in 1994: “A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States.” The individual mandate and other questionable measures in the bill raise serious questions as to whether Obamacare could survive a Constitutional test:

Enumerated Powers:
Article I allocates to Congress “[a]ll legislative powers herein granted,” which means that some legislative powers were intended to remain beyond Congress’s reach. The Supreme Court recognized and affirmed this fundamental principle from the earliest days of the republic, as Chief Justice Marshall famously observed: “The powers of the legislature are defined and limited; and that those limits may not be mistaken, or forgotten, the constitution is written.” Nowhere in the Constitution is Congress given the power to mandate that an individual enter into a contract with a private party or purchase a good or service. Democrats have pointed to both the general welfare taxing power and the commerce clause as possible justifications for the mandate, but as a recent Heritage Legal Memorandum details, neither justification withstands scrutiny.

5th Amendment:
The Fifth Amendment of the U.S. Constitution reads in part: “No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” Sen. Ensign will argue today: “The Democrats’ health reform bill would require an American citizen to devote a portion of income – his or her private property – to health insurance coverage. … But, Mr. President, if a Nevadan does not want to spend his or her hard-earned income on health insurance coverage and would prefer to spend it on something else, such as rent or a car payment, this new requirement could be a “taking” of private property under the Fifth Amendment.”

Racial Discrimination:
On December 10th, the United States Commission on Civil Rights sent a letter to the Senate regarding racially discriminatory provisions in Obama’s health plan. The letter reads: “No matter how well-intentioned, utilizing racial preferences with hope of alleviating health care disparities is inadvisable both as a matter of policy and as a matter of law. … Ensuring that all Americans, regardless of race, have access to quality health care requires both creativity and hard-nosed attention to data. It also requires staying within the requirements of the Constitution. The current race-based provisions of the Senate Health Care bill display none of these qualities.”

Unequal State Treatment:
Speaking to Fox News, Sen. Lindsey Graham (R-SC) described Sen. Ben Nelson’s (D-NE) deal to support Obamacare in exchange for a bailout Nebraska’s Medicaid costs as “disappointing, sleazy, unconstitutional.” Graham is not the only one examining Cornhusker Kickback. The Attorneys General of Alabama, Colorado, Michigan, North Dakota, South Carolina, Texas and Washington state are jointly investigating the deal to see if special treatment for only one state in the nation at the expense of the other 49 violates the Constitution.

The leftist majority in the Senate is likely to vote down the DeMint/Ensign constitutional point of order, but the very objection itself will help build a record that courts will look at when determining whether or not Obamacare is unconstitutional. The Senate is not the final arbiter of whether or not the laws it passes are consistent with the United States Constitution. That question was settled over 200 years ago in Marbury v. Madison.

Although it is always difficult for the Supreme Court to thwart what is perceived to be the popular will, polling consistently shows that this legislation faces strong popular opposition. If that remains true after enactment, the majority of the Justices who are inclined to preserve the enumerated powers scheme and adhere to the original meaning of the text will have little inclination or incentive to stretch the Constitution to reach so decidedly unpopular and far-reaching a law as this one.

Heritage Foundation and Prince Harry's Healthcare

MyHeritage.org
If you don't get MyHeritage, you are under-informed, my friend.

October 28, 2009 By Amanda Reinecker

'Gigantic, unintelligible, unaffordable, over-regulatory, federal legislation'

After 13 days of secret, closed-door negotiations on health care legislation, Senate Majority Leader Harry Reid (D-NV) announced Monday that he had reached an agreement with Senators Chris Dodd (D-MT) and Max Baucus (D-CT), and three top administration officials. Unfortunately, Senator Reid did not tell the American people much else.

Even many lawmakers remain in the dark regarding the outcome of this "secret deal that Senator Reid wants to get passed and signed into law 'this year,'" writes
Heritage Senate Relations expert Brian Darling.

Mitch McConnell, the Senate minority leader, summed it up: "It will be a thousand-page, trillion-dollar bill that raises premiums, raises taxes and slashes Medicare for our seniors to create new government spending programs. That's not reform."

Even as some of the final details of the bill do go public, it is likely that lawmakers won't know in advance entirely what it is they are voting on. This is because the legislation the Senate Finance Committee "agreed" to -- all 1,502 pages of it -- is the most massive piece of legislation ever introduced by Congress.

But length isn't the only record the "America's Healthy Future Act of 2009" claims, as Heritage health policy analyst Ed Haislmaier notes. "For the first time in fifteen years, [Congress] has set a new all-time division record for gigantic, unintelligible, unaffordable, over-regulatory, federal legislation."

What we do know about Reid's 'secret deal'

Although Senator Reid did not go into great detail about the health care "reform" legislation, he did mention that bill includes a government-run health insurance "option" that would "compete" against private health plans.

In an attempt to gain much-needed support from skeptical moderates in both parties, liberals have added a new twist to the "public option": a provision allowing states to opt out of the program. This would require states to pass legislation by 2014 rejecting participation in the federal government run plan.

But this new wrinkle is really more of the same, warns Heritage health policy analyst Nina Owcharenko. "This latest Senate ploy creates the illusion of an 'option' rather than making any fundamental changes to the controversial proposal."

Owcharenko explains why this "opt-out" model is just another government-run plan that is guaranteed to fail:

States can only opt-out of the government-run plan, not the entire bill. But the rest of the bill contains hundreds of provisions, such as the expansion of Medicaid, which will place major financial burdens on the states.

It is still a government-run plan because the government will require non-participating states to meet federal conditions. These government-determined conditions could include the creation of state-level public options that mirror the federal plan.

States will likely select the public "option" because of the bureaucracy and enormous administrative complexity required for a state opt-out. Federal conditions will limit states' ability to create alternatives.

State innovation will suffer under the massive health care proposal's employer and individual mandates, and government micromanagement of an industry that represents one-sixth of our economy.

So even though the states would be able to "opt out" of the government-run health insurance program, the federal government will make it very difficult to do so. And for the few states that do succeed in withdrawing, the government will still dominate their health care systems.

A true state "opt-out" provision would allow states to opt out of the bill in its entirety, argues Owcharenko. "Any other opt-out is just another shell game that is intended to appear as a concession but in reality provides for greater federal control and blocks much needed structural changes."

and On the Senate Side

Boxer-Kerry Unveil Their Energy Tax Bill: Incomplete But Still Very Harmful

Senators Barbara Boxer (D-Calif.) and John Kerry (D-Mass.) introduced the Senate companion to the Waxman-Markey climate change legislation today and while many pieces are missing, the framework in place spells bad news for every American energy consumer, especially low income ones.

Like Waxman-Markey, the focus is a cap and trade system, but takes the House bill’s 17 percent reduction of 2005 emissions by 2020 to a more stringent 20 percent cut. Unlike the House version, which gives away emission allowances to special interests groups that lobbied hard to protect their bottom line, the Senate draft does not include how the emission allowances – hundreds of billions of dollars - will be given away.

Co-sponsor Senator Kerry tells us, “This is not a cap-and-trade bill, it’s a pollution reduction bill.” But the simple reality is it’s an energy tax bill. As OMB director Peter Orszag says, “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices.” And the bill’s incompleteness goes to show how impatiently Kerry and Boxer are trying to move a historic energy tax into law.

Justice Obama Style

Heritage Morning Bell

Politics Before Justice at Obama’s DOJ
On Friday of last week, following the announcement that Attorney General Eric Holder would appoint a prosecutor to re-investigate the CIA’s treatment of detainees, former Vice President Dick Cheney taped an interview with Fox News. During the interview, which aired yesterday on Fox News Sunday, Cheney describes Holder’s decision as an “outrageous political act” that will have “devastating” consequences within the CIA.

Cheney is dead on. But unfortunately Holder’s political CIA witch hunt is just the latest example of a troubling pattern of politicization of the Justice Department under Holder Voter Intimidation: On Election Day 2008, members of the New Black Panther Party dressed in military-style uniforms were filmed standing outside a polling place in Philadelphia. According to a complaint filed by career lawyers at the Justice Department, the New Black Panther Party violated section 11(b) of the Voting Rights Act by engaging “in coercion, threats, and intimidation” of voters, including “racial threats and racial insults” as well as brandishing “a deadly weapon.”

One of the defendants named was Jerry Jackson, a Democratic Committeeman of the 14th Ward in Philadelphia. The front-line career lawyers in the Voting Section of the Civil Rights Division recommended that Justice seek sanctions against the party and three of its members after the government had already won a default judgment in federal court against the men. But then Associate Attorney General Thomas Perrelli, the politically appointed No. 3 official in the Obama Justice Department, intervened. Instead of following through and getting an injunction to prevent this behavior in future elections, the suit was dismissed against all defendants, but Jackson, who received a watered-down injunction to prevent him from carrying a weapon in a polling place. But only in Philadelphia and only until 2012!

Public Corruption: In 2008, a federal grand jury began an investigation into a possible pay-to-play scheme in which lucrative work on New Mexico bond deals went to a Gov. Bill Richardson (D) donor. But then just last week, news leaked that that no one would be charged in the investigation with sources telling the Associated Press: “It’s over. There’s nothing. It was killed in Washington.”

Heritage senior legal fellow Hans von Spakovsky explains why this is so troubling: “For anyone familiar with internal Justice Department procedures, this is particularly suspicious. The DOJ has a manual called “Federal Prosecution of Election Offenses” (I helped edit the latest edition when I was at Justice) that sets out the rules and procedures for U.S. attorneys when they are investigating these types of public-corruption cases. It is the U.S. attorney in New Mexico who would normally make the final call on a local public-corruption case, not ‘top Justice Department officials’ in Washington.”

Undermining National Security: In 2004 the CIA Inspector General issued a report documenting alleged detainee abuse by CIA interrogators and contractors. The DOJ’s career, not political, prosecutors then examined that document and other incidents from Iraq and Afghanistan for legal accountability. In one case, the DOJ decided to prosecute, and has already obtained a criminal conviction of a CIA contractor.

Furthermore, the CIA has also taken their own disciplinary action against others involved in the incidents. As Heritage senior fellow Peter Brookes explains, Holder’s decision to re-investigate the CIA will have a chilling effect on the morale at the agency and will leave officers in the field wondering whether they should be more concerned about getting terrorists or getting lawyers.

Anyone familiar with Holder’s history should not be surprised by the politicization of the Justice Department under his leadership. In 1999, Holder promoted clemency for 16 members of FALN and Los Macheteros, terrorist organizations linked by the FBI to more than 130 bombings and six murders. Then in 2000 Holder played a prominent role in the pardon of Marc Rich, whose ex-wife gave considerable sums to the Democratic Party ($867,000) and the Clinton Library ($450,000).

Now, as the head of DOJ, Holder’s political decisions are undermining core rule of law concerns including the integrity of elections, ethical governance, and national security. Holder reports directly to his boss, President Barack Obama.

Someone needs to be held accountable.

Heritage Morning Bell

The F-22 Raptor is the baddest airplane ever invented. The only aircraft I can think of that is better is actually a helicopter, the RAH-66 Comanche, which has also been discontinued.

The Raptor is a stealth fighter jet. It is scary fast and practically invisible.

But we can't have scary weapons, now can we? I mean, we want everyone to like us, right?

Obama Just Made Us More Vulnerable… Again
In Word War I Eddie Rickenbacker downed 26 enemy planes. In Word War II Richard Bong notched 40 while Francis Gabreski killed 34 across World War II and Korea. In contrast, when Cesar Rodriguez retired from the Air Force two years ago, his three-air-to-air kills (two over Iraq in 1991 and one over Kosovo) were the most of any American fighter pilot on active duty. The steep decline in these numbers is no accident. They are the residue of a purposeful strategy to avoid war through unquestioned strength. As Ronald Reagan told the Republican National Convention in Dallas in 1984: “There are some who’ve forgotten why we have a military. It’s not to promote war; it’s to be prepared for peace.”

Yesterday the Obama administration significantly undercut our strength by killing production of the Air Force’s best fighter: the F-22. For Obama, the victory was purely symbolic. While he sends our nation spiraling into trillions of new debt, his $1.75 billion in savings by cutting the F-22 amounts to a third of one percent of the overall 2010 defense budget. So if killing the F-22 was not about savings, what was the motivation? The New York Times reports: “Senate aides said that some Democrats who otherwise might have voted for more planes sided with the President out of concern that a loss could have hurt him in the fight for health care reform.”

So at what cost to our national security did Obama trade political momentum for his domestic initiatives? Russia is expanding its fighter forces more than at any other time since the end of the Cold War. The Russians plan to field 300 Su-Fullback strike aircraft by 2022 and an additional 300 Sukhoi Pak fifth-generation fighters. Meanwhile, China has ordered an estimated 76 Su-30MKK Flanker-Gs and can produce an additional 250 under license, including at least 100 “knock-down kits” to be assembled in China. If China modernizes its 171 Su-27SK/UBs to the Su-27SKM standard and assembles another 105 Su-27SKMs under license, it will have roughly 626 multi-role fighters available for air superiority missions. This would place China in the same league as the U.S., which has 522 F-15A/B/C/Ds, 217 F-15Es, and a planned end strength of 186 F-22s.

The fighter gap is often considered to be far in the future, but the reality is that future short falls must be addressed today. The President’s fighter cuts would eliminate one of the two remaining fifth-generation fighter production lines. This would severely limit the options available to Congress if it wants to restart production at some later date. The cost to the taxpayer would also be much higher than if production continues.

Earlier this month, the Obama administration weakened our defenses on another front, agreeing to reduce the number of strategic launchers despite receiving no real concessions from the Russians on Missile Defense.

You can join Governor Mitt Romney, Speaker Newt Gingrich, Republican Whip Eric Cantor, and Senator Kay Bailey Hutchison and send the President a message that weakness invites aggression, not peace. You can join the 55,000 other Americans who have signed the 4% for Freedom petition which calls on the President and Congress to protect America by:
1) restoring missile defense funding;
2) giving our troops the equipment they need to complete their missions; and
3) not including war funding, maintain a minimum defense budget of 4% of GDP.

Heritage Foundatio Morning Bell

Waxman-Markey Bill Is An Energy Tax That Doesn’t Work
Later today, the House of Representatives is slated to vote on the most convoluted attempt at economic central-planning this nation has ever attempted: cap and trade. The 1,200-plus page Waxman-Markey climate change legislation is nothing more than an energy tax in disguise that by 2035 will raise:

Gasoline prices by 58 percent
Natural gas prices by 55 percent
Home heating oil by 56 percent
Worst of all, electricity prices by 90 percent

Although proponents of the bill are pointing to grossly underestimated and incorrect costs, the reality is when all the tax impacts have been added up, the average per-family-of-four costs rise by $2,979 per year. In the year 2035 alone, the cost is $4,609. And the costs per family for the whole energy tax aggregated from 2012 to 2035 are $71,493.

But on second thought, cap and trade is much more than that.

It Kills Jobs:
Over the 2012-2035 timeline, job losses average over 1.1 million. By 2035, a projected 2.5 million jobs are lost below the baseline (without a cap and trade bill). Particularly hit hard are sectors of the economy that are very energy-intensive: Manufacturers, farmers, construction, machinery, electrical equipment and appliances, transportation, textiles, paper products, chemicals, plastics and rubbers, and retail trade would face staggering employment losses as a result of Waxman-Markey. It’s worth noting the job losses come after accounting for the green jobs policymakers are so adamant about creating. But don’t worry because the architects of the bill built in unemployment insurance; too bad it will only help 1.5% of those losing their jobs from the bill.

It Destroys Our Economy:
Just about everything we do and produce uses energy. As energy prices increase, those costs will be passed onto the consumer and reflected in the higher prices we pay for products. Higher energy prices will cause reduced income, less production and an economy that falls way short of its potential. The average Gross Domestic Product (GDP) lost is $393 billion, hitting a high of $662 billion in 2035. From 2012-2035, the accumulated GDP lost is $9.4 trillion. The negative economic impacts accumulate, and the national debt is no exception. The increase in family-of-four debt, solely because of Waxman-Markey, hits an almost unbelievable $114,915 by 2035.

It Provides Red Meat for Lobbyists:
Businesses, knowing very well this would impose a severe cost on their bottom line, sent their lobbyists to Washington to protect them. And it worked. Most of the allowances (the right to emit carbon dioxide) have been promised to industry, meaning less money will be rebated back to the consumer. Free allowances do not lower the costs of Waxman-Markey; they just shift them around. In other words, every day Americans are going to be footing the bill. Although the government awarded handouts to businesses, the carbon dioxide reduction targets are still there, and the way they will be met is by raising the price of energy and thereby inflicting more economic pain. Prices have to go up enough to force people to use less energy, and so if anyone is bought off with free allowances, the costs for everyone else are that much higher.

There’s one thing the Waxman-Markey cap and trade bill doesn’t do: Work. All of the above-mentioned costs accrue in the first 25 years of a 90-year program that, as calculated by climatologists, will lower temperatures by only hundredths of a degree Celsius in 2050 and no more than two-tenths of a degree Celsius at the end of the century. In the name of saving the planet for future generations, Waxman-Markey does not sound like a great deal: Millions of lost jobs, trillions of lost income, 50-90 percent higher energy prices, and stunning increases in the national debt, all for undetectable changes in world temperature. Who’s buying that?