2011 - %3, July

Election Watchdogs vs. IRS

| Wed Jul. 27, 2011 8:15 PM EDT

A recent petition by a pair of election watchdogs is calling on the IRS to crack down on organizations that have been exploiting a loophole in the campaign finance system. Democracy 21 and the Campaign Legal Center filed a joint petition with the agency on Wednesday, challenging its definition of a tax exempt-501(c)(4) social welfare organization.

Tax exempt-501(c)(4)s can take in unlimited amounts of money without disclosing their donors and they are not beholden to the contribution limits established by the Federal Election Commission. But poorly defined rules surrounding 501(c)(4)s have allowed groups like Karl Rove's Crossroads GPS to spend millions on campaigns. "A growing number of these organizations have nothing whatsoever to do with the promotion of 'social welfare' and everything to do with the promotion of 'partisan warfare,'" said the Campaign Legal Center's Paul Ryan.

So how much can these groups spend? On this point, the IRS is maddeningly unclear. Groups can engage in political activity, so long as that isn't their "primary" focus. Sound a little…vague?

Democracy 21 and the Campaign Legal Center think so. Their petition argues that the IRS' "primary" activity standard is bogus, and has allowed 501(c)(4)s to define the rule for themselves. Their interpretation: that they can spend up to 49 percent of their expenditures in a tax year on campaign activities without breaking the rules.

But the joint petition cites court rulings suggesting that 49 percent is too much, and that 501(c)(4)s shouldn’t be able to spend that much on campaign activities while hanging onto their tax exempt status. "In fact, the court cases go in the completely opposite direction to limit spending to no more than an insubstantial amount of campaign expenditures," said Democracy 21 President Fred Wertheimer.

As Mother Jones has reported, these dark money groups—mostly Republican-leaning—were the prime driver for financing attack ads in the 2010 elections. "What we have seen in recent years is a proliferation of c4 political front groups that abuse their privileged tax exempt status to evade campaign finance disclosure laws," said Ryan. "What was once a small trickle of abuse by these organizations is now a gusher."

The petition makes a simple request of the IRS: fix the loopholes that allow groups like Crossroads and newly established Demoratic group Priorities USA to potentially overstep the limits of their tax exempt statuses, and cap political spending for 501(c)(4)s at 5 to 10 percent of an organization's expenditures in a given tax year. But will that be restrictive enough?

Granting 501(c)(4)s any degree of wiggle room at all ignores the central problem: that both parties can and will continue to use them for political activity that's unregulated by the FEC. Until the IRS builds a firm firewall between social welfare organizations and campaign fundraising outfits, expect that to continue. 

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Watch Rick Scott's CNN Implosion (Video)

| Wed Jul. 27, 2011 7:40 PM EDT

When not looking for national security news, I like to check in on Florida politics, which are a great bellwether for the nation at large. Specifically, I like to track tea party Republican Gov. Rick Scott, who lives just a couple blocks from me, and who's setting records for unpopularity, just months into his tenure.

Scott's latest crusade is to argue against any rise in the federal debt ceiling—an issue in which he has no official say, and whose basic economic consequences he seems to grasp not one jot. (This week, Scott said Florida would see no effects from a US default; his opponent in last year's gubernatorial race, former state CFO Alex Sink, called his statement "clueless...That's Florida Budgeting 101.") The beleaguered guv took his case to CNN today, and managed to get himself yelled at by two anchors. At one point, Ali Velshi gave up. "Why is this difficult for you to understand, governor?"

A failure to articulate basic principles of macroeconomics is all the more disturbing when you consider all of Scott's corporate work before taking over the Sunshine State. That MBA really paid off.

In any case, more on Scott's political plans later...especially his budding plans to "improve" higher education. Until then, watch the beatdown:

Planned Parenthood Clinic Bombed: Whodunit?

| Wed Jul. 27, 2011 6:58 PM EDT

Via Think Progress:

A spokesperson for Planned Parenthood confirmed today that one of their Dallas-area clinics was the target of a violent attack last night. Holly Morgan, director of media relations and communications for Planned Parenthood in Dallas said that at around 11 pm last night, the attacker(s) threw a Molotov cocktail, consisting of diesel fuel in a glass bottle with a lit rag, at the building. "It didn't penetrate the health center office and none of the staff or patients were there, which is great," Morgan said.

Two observations:

1) I'm betting the firebomber wasn't an Islamic extremist. Just a guess.

2) Whoever the attacker is, if he isn't smart enough to know the difference in flashpoints between diesel fuel and gasoline, he's probably not qualified to have a say in when life begins.

Tooth Fairies and Quarters

| Wed Jul. 27, 2011 5:13 PM EDT

A survey by Visa says that the recession has caused a drop in the average amount the Tooth Fairy pays for a tooth, from $3 to $2.60. Jon Chait comments:

Clearly this is a prime expenditure to cut back when you're feeling strapped. But $2.60 seems really high to me. My kids each lost a tooth the other night — actually within seconds of each other, strangely enough — and I gave them each a dollar. I thought it seemed high. When I was a kid I got a coin — either a dime or a quarter, I can't recall which.

I don't remember either. But let's say it was a dime back in 1965, my prime tooth-losing year, which is roughly the same as a quarter in 1979, Chait's prime year. Adjusted for CPI, that only comes to about 75 cents today, which does indeed make three bucks seem pretty high. On the other hand, that dime in 1965 represented 0.00028% of per-capita GDP, which comes to about $1.40 today. Or maybe income is a better measure. In 1965, a quarter represented 0.0078% of the median income. The equivalent today would be about a dollar.

That's quite a range, which just goes to show that it's harder to figure out this stuff than you'd think. In any case, an exodontic payoff of about a dollar or so is definitely in the same range as my dime or Chait's quarter. His kids have no reason to feel ripped off. I am, however, now suspicious of Visa's survey methodology. I know my readers are hardly a cross section of America, but how much do you give your kids for a tooth under the pillow?

Republicans Try to Halt Obama's Immigration Authority

| Wed Jul. 27, 2011 4:53 PM EDT
House sponsor of the HALT Act, Rep. Lamar Smith (R-Texas).

A new immigration bill in Congress, the Hinder the Administration's Legalization Temptation (HALT) Act, which a subcommittee of the House Judiciary Committee heard testimony on yesterday, has come under fire for a variety of reasons, from its, er, unusual name to its dramatic curtailment of the executive branch's immigration prerogatives. As the Center for American Progress points out, the law would, among other things, prohibit the Department of Homeland Security from granting a waiver for the undocumented spouse of a soldier serving overseas to temporarily remain in the US. Perhaps its most radical feature, though, is its expiration date, which just happens to be January 21, 2013—the day after Inauguration Day.

Crazy coincidence? Not a chance. In a letter to congressional colleagues (PDF), the bill's sponsor Rep. Lamar Smith (R-Texas) wrote, "Because of the Obama Administration's record, it cannot be trusted with these powers." He went on to urge, "Let's remind the Obama Administration that the founding fathers put Congress in charge of setting the nation's immigration policy."

Climate Change With a Side of Plague

| Wed Jul. 27, 2011 3:56 PM EDT

There have been several studies tying climate change to increases in the plague. The latest of them came out just a little while ago in Proceedings of the National Academy of Science, and stated that "plague outbreaks, both among rodents and humans, have been linked to climate variability." The study focused on outbreaks of pneumonic plague, a deadly respiratory disease caused by the same bacteria as bubonic plague. Pneumonic plague, in the words of the authors, "is transmitted through inhalation of aerosolized, infection-laden droplets from human to human and is less common but more virulent than bubonic plague."

Unfortunately, the study's authors didn't seem sure of exactly how climate change would foster further outbreaks in the US. Using historical outbreaks in China as a model, they found that sometimes increased rain flooded rodent burrows, reducing plague by killing rodents along with their plague-carrying fleas. Other times, increased rain helped rodent populations by making more crops grow. More rain could drive shelter-seeking rats into human-populated areas, but then again, many rats already live near humans.

Overall, it seemed like a mixed bag. The study's authors say plague outbreaks have been tied to the El Nino effect in the US, but openly state that "the relationship between human plague and climate variation is still not fully understood." They assert that climate change definitely does have an effect on plague outbreaks, but that effect is currently "non-linear."

Even if changing climate does increase plague outbreaks, it's not a reason to panic. Every year there are about 15 cases of plague in the US, and antibiotics can help control the disease, reducing its death toll from 90% to 14%. However, in order to save those lives, people must be promptly diagnosed with the disease, since it has a short incubation period before becoming fatal. Pneumonic plague can kill just 24 hours after initial infection. A timely diagnosis might be hindered by the fact that plague symptoms are similar to those of more common illnesses like the flu: fever, chills, coughing, to name a few. After diagnosis, antibiotics must be administered quickly. Thankfully for those living in the US, there are plenty of antibiotics here and lots of doctors and hospitals. In developing nations, the effects of climate change are already being felt, including disease prevalence. WHO has been fighting plague outbreaks around the world, but developing nations shouldn't expect too much help from the US, one of the world's top greenhouse-gas producing nations. A recent GOP spending bill would slash funding to help poorer nations fight climate change, and would stop US contributions to the UN 's Intergovernmental Panel on Climate Change.

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Chart of the Day: Yet More Bad Job News

| Wed Jul. 27, 2011 2:42 PM EDT

Via Economix, this chart comes from a new study by the National Employment Law Project, and it shows yet another way in which our jobless recovery is grim news. As you can see, we lost only a small number of low-paying jobs during the Great Recession and we've since gained almost all of them back. But mid-wage and high-wage occupations? Those are the jobs that really drive recovery, and they're still very deeply in the hole. Ugh.

The Republican Clown Show Proceeds Apace

| Wed Jul. 27, 2011 1:45 PM EDT

Politico has the latest on the clown show that is the modern Republican Party:

House Republicans on Wednesday morning were calling for the firing of the Republican Study Committee top staffer after he was caught sending e-mails to conservative groups urging them to pressure GOP lawmakers to vote against a debt proposal from Speaker John Boehner (R-Ohio).

Infuriated by the e-mails from Paul Teller, the executive director of the RSC, members started chanting “Fire him, fire him!” while Teller stood silently at a closed-door meetings of House Republicans.

“It was an unbelievable moment,” said one GOP insider. “I’ve never seen anything like it.”....A steady stream of Republicans stood up at the meeting to heap abuse on Teller and the RSC. House Republicans were particularly peeved that that the RSC was targeting some of its own dues-paying members.

I don't really see the case for downgrading U.S. treasury debt, but is it possible for S&P to downgrade the Republican Party? Maybe from Deranged+ to Infantile--? That seems like it would be pretty justifiable.

BY THE WAY: Someone has just got to have video of this, don't they? They just have to. This is late-night gold.

The Truth About Stella Liebeck

| Wed Jul. 27, 2011 1:23 PM EDT

I've long been pissed off over the case of Stella Liebeck. You remember her, right? The woman who spilled some McDonald's coffee on herself while carelessly careening down the highway and then scored a million-dollar jackpot when her high-priced lawyer convinced a credulous jury to stick it to a deep-pocketed corporation.

Except, not quite. In fact, Liebeck's burns were extremely serious, she wasn't the first person this happened to, and when people learn the facts of the case and view the actual injuries they almost always change their minds about it. Scott Lemieux summarizes in a review of a new HBO film, Hot Coffee:

Saladoff’s film lays out the real story in lucid detail, and no matter how many times the suit was used in Jay Leno monologues there was nothing funny about it. Liebeck was not careless, but spilled the coffee when she, as a passenger in a parked car, took the lid off the cup. The spill did not cause a trivial injury, but severe burns that required multiple operations and skin grafts to treat. McDonald’s, which served its coffee at 180 degrees, had received more than 700 complaints from customers, constituting a clear warning, but it nonetheless required its franchises to serve it at that temperature without warning customers.

Nor was Liebeck greedy or especially litigious. Her initial complaint requested only about $20,000 to cover her medical bills and other related expenses, and she took McDonald’s to court only after the corporation offered a paltry $800 settlement. The headline-generating $2.7 million Liebeck was awarded in punitive damages (selected because it approximated two days worth of the revenues McDonald’s makes by selling coffee) was reduced on appeal to less than $500,000. (The case was later settled for an undisclosed amount.) The Liebeck suit was a thoughtful attempt to seek appropriate redress for a serious harm, not about a clumsy woman trying to wring millions from an innocent corporation.

I don't get HBO, but I guess one of these days I'm going to have to break down and do it. This is good stuff, and it's good to see that it's going to find a wider audience.

UPDATE: More about the making of the film here from our own Stephanie Mencimer, author of the wonderful Blocking the Courthouse Door and one of the people featured in the film. My review of her book is here.

Airlines Appear to be Only Winners in Budget Debate

| Wed Jul. 27, 2011 12:53 PM EDT

The noise generated by the debt ceiling debate has largely drowned out the news that the Federal Aviation Administration was crippled last week after Congress failed to reauthorize its funding. This has put 4,000 aviation workers on furlough, halted construction projects, and even stopped the FAA from collecting airline taxes.

But the shutdown isn't hurting the airline industry. Instead of passing the savings from the missing taxes on to consumers, the airlines have decided to increase ticket prices and keep the money that would have gone to taxes for themselves—a windfall of up to $30 million a day. Here's the Wall Street Journal:

The suspended levies include a 7.5% sales tax on domestic tickets, a $3.70-per-takeoff segment fee, a $16.30 (each way) international arrival and departure tax, and an $8.20 tax for flights linking the U.S. mainland to Alaska and Hawaii. Airlines must continue to collect security fees.
Airlines including US Airways Group Inc., AMR Corp.'s American Airlines, Southwest Airlines Co. and JetBlue Airways Corp. began Friday marking up their fares, although the fares didn't appear to be higher because the totals didn't change, says Rick Seaney, chief executive of tracker FareCompare.com.
Over the weekend, more carriers joined in, including Delta Air Lines Inc. and United Continental Holdings Inc., Mr. Seaney says. By and large, they raised fares 7.5% and added charges of $6 to $12 a ticket to account for the other fees.

So in addition to charging you to print a boarding pass, charging you for both checked and carry-on items, charging you for the convenience of using a credit card, and charging you for just booking a ticket to begin with, airlines have now figured out how to profit off the budget stalemate.