by Bradley A. Smith
December 8, 2013
Six months after the Internal Revenue Service’s inspector general revealed that the tax-collection agency had been targeting conservative organizations for added scrutiny and delaying their applications for tax-exempt status, the IRS has proposed new rules for handling political activity by nonprofits. The proposed rules would plunge the agency deeper into political regulation.
The rules would upset more than 50 years of settled law and practice by limiting the ability of certain tax-exempt nonprofits, organized under Section 501(c)(4) of the Internal Revenue Code, to conduct nonpartisan voter registration and voter education. Such organizations would be forbidden to leave records of officeholder votes and public statements on their websites in the two months before an election.
It is tempting to pick the proposed rules apart—and there is much to pick, such as restrictions on a nonprofit discussing any aspect of a president’s judicial nominees in a public communication any time between Feb. 2 and a national election day nine months later. But it is more important to ask how we got here. Why is the IRS regulating political activity at all?
The answer is that many Democratic politicians and progressive activists think new rules limiting political speech by nonprofits will benefit Democrats politically. Stymied by judicial decisions restricting direct government regulation of political speech, and by a Federal Election Commission whose bipartisan makeup prevents Democratic commissioners from forcing through partisan rules on a party-line vote, these politicians and activists have decided to dragoon the IRS into doing their work.
Nobody will admit that the goal is to hamper the political opposition. To make the case for IRS regulation of politics, these progressives, such as Sen. Sheldon Whitehouse (D., R.I.) and the Campaign Legal Center, have promulgated three myths.
Myth No. 1: 501(c)(4)s are “charities,” and doing political work abuses their charitable status. The tax code contains at least 30 different categories of nonprofits. What we think of as “charities” are typically organized under Section 501(c)(3). That section exists for “charitable” and “religious” organizations, and it is where one finds organizations such as churches, the Red Cross, the American Cancer Society and so on. Section 501(c)(4) is traditionally reserved for advocacy organizations. The National Rifle Association, the Sierra Club, Planned Parenthood Action Fund, and the Brady Campaign to Prevent Gun Violence are 501(c)(4)s.
Myth No. 2: 501(c)(4)s must be operated “exclusively for the promotion of social welfare,” not politics. While Section 501(c)(3) of the tax code specifically bars those organizations from engaging in political activity, no such statutory prohibition exists in Section 501(c)(4). Furthermore, while Section 501(c)(4) states that it applies to organizations operating exclusively for the promotion of “social welfare,” the statute does not define “social welfare.” Since when, in a democratic society, are nonpartisan get-out-the-vote drives, voter registration, voter education, and meet-the-candidates nights—all of which will be limited by the IRS’s proposed rules—not activities in support of social welfare?
The statute leaves it to the IRS to define “social welfare” in that context, and for half a century the agency has defined it to include political-campaign activity. The 501(c)(4) category has always been the home of political-advocacy groups.
Myth No. 3: Political activities shouldn’t get tax breaks. There are no tax breaks for 501(c)(4) groups. Contributions to these organizations are not tax deductible, and the tax liability of the 501(c)(4)s wouldn’t change if they were reclassified as political committees.
This is not about taxes, so what is it really about?
What the left wants is the disclosure of private information about conservative donors. In cases involving unions, the NAACP and other civil-rights organizations in the 1940s, ’50s and ’60s, the Supreme Court made clear that people have a right to engage in anonymous political activity.
In the 1976 Buckley v. Valeo case, however, the court carved out a narrow exception, allowing the government to compel the disclosure of information about donors to groups controlled by political candidates and parties, or that have the primary purpose of engaging in political campaigns. But the court also defined political activity narrowly, to include only the express advocacy for the election or defeat of a candidate. The ruling specifically did not include the discussion of candidates and issues as a political-campaign activity.
None of this was perceived as a major problem so long as the 501(c)(4) category was dominated by the political left. Beginning in the 1990s, however, and especially since 2010, organizations that were more conservative began using the 501(c)(4) category to engage in public education as well as political activity, thus challenging liberal dominance in nonprofit advocacy.
In response, the left has attempted to silence conservative 501(c)(4)s by unveiling and harassing their donors. This has included boycotts of businesses—such as Coca-Cola and Wendy’s—that contribute to free-market causes and candidates, and of businesses whose employees gave to such candidates and causes. It has included harassment, threats and vandalism aimed at conservative donors and churches, particularly in California during the campaign over the Proposition 8 initiative to bar same-sex marriage.
President Obama’s exhortation to his supporters in September 2008 to “get in the face” of his political opposition has been taken literally. Media Matters, the left-wing outfit that specializes in ad hominem attacks on conservatives, has bragged in fundraising appeals that it will use compulsory donor disclosure to harass donors who contribute to conservative candidates and causes.
To anyone concerned about public confidence in nonpartisan tax collection and preventing future IRS scandals, the solution is not more tax rules. It is for the IRS to get out of the business of regulating politics.
In a June report to Congress, IRS taxpayer advocate Nina Olson wrote: “It may be advisable to separate political determinations from the function of revenue collection.” She suggested legislation requiring the IRS to follow Federal Election Commission rules that define what groups are “political committees” under campaign-finance law, effectively ending the agency’s political activity. But legislation is not required. The IRS could with its own rules follow the bipartisan FEC on the question of a group’s political status.
On Tuesday the Senate Finance Committee will hold a confirmation hearing for John Koskinen, President Obama’s nominee to lead the IRS. Senators concerned about the agency’s behavior during the past presidential election should ask Mr. Koskinen if he believes the IRS should regulate political activity, and whether he supports the proposed rules. The credibility of the IRS may depend on his answers.
Mr. Smith, a former chairman of the Federal Election Commission, is chairman of the Center for Competitive Politics.
Original article here.
by Glenn Thrush, Politico
December 1, 2013
Since he became President Obama’s secretary of defense earlier this year, Chuck Hagel, the ruthlessly candid and occasionally contrarian former Republican senator from Nebraska, has mostly kept his inner maverick in check. He’s been so much of an enigma in nine muted months at the Pentagon that one frequent critic, Sen. Kelly Ayotte (R-N.H.), was heard to ask aloud, “What’s with this guy?” as she emerged from a low-energy meeting with the heavy-lidded defense secretary, according to one fellow senator. So White House officials were stunned when Hagel abruptly spit the bit over the summer
Read more: http://www.politico.com/magazine/story/2013/12/paper-tiger-at-the-pentagon-chuck-hagel-100514.html#ixzz2mKtAHPSp
The law says subsidies can only go through state-run exchanges.
By Oklahoma Attorney General Scott Pruitt
The Wall Street Journal
As millions of Americans see their health-insurance premiums increase, have their coverage dropped as a result of the Affordable Care Act, and are unable to use the federal exchange, Oklahoma has sued the Obama administration. The Sooner State and several others are trying to stop the government from imposing tax penalties on certain states, businesses and individuals in defiance of the law. If these legal challenges are successful, the deficit spending associated with the new health-care law could be reduced by approximately $700 billion over the next decade.
by Elise Viebeck, The Hill
November 25, 2013
A top Senate Republican is blasting regulations he argues will exempt unions’ multi-employer health plans from a key tax under ObamaCare.
Senate Republican Conference Chairman John Thune (S.D.) pointed to a section of a 255-page regulatory filing and said it would amount to a “bailout” for the labor moment, which has grown increasingly dissatisfied with the new healthcare law.
“Despite endorsing ObamaCare and working fervently to get it passed, unions are now experiencing the ugly reality of this law, and they want out. This exemption is crony capitalism at its worst,” said Thune, who is behind a bill to block ObamaCare exemptions for unions.
The Obama administration recently indicated that it would propose exempting certain self-insured, self-administered insurance plans from two of the healthcare law’s three-year reinsurance fees.
The policies that would escape the fees include the multi-employer or “Taft Hartley” plans commonly held by union members. Big business is also working to avoid the tax.
The reinsurance tax is meant to generate short-term revenue that will stabilize premiums on the individual market as sick patients enter the risk pool.
The tax applies to all group health plans, but unions and businesses say it will raise their healthcare costs while providing them no benefit.
According to past regulations, the administration only intends to exempt certain plans from the fee in 2015 and 2016. This would leave some groups on the hook for payment in 2014, when the tax will be highest.
Full article here.
by Jennifer Haberkorn, Politico
November 21, 2013
The minimal testing done four days before the launch of HealthCare.gov failed to handle 500 people applying through the website at one time, according to internal e-mails between the top Obama administration technicians working on the site.
Read more: http://www.politico.com/story/2013/11/emails-show-little-testing-on-healthcaregov-100238.html#ixzz2lfTmCuMj
by Thomas B. Edsall, NY Times
November 19, 2013
Health care as a necessity comes only after food, shelter and income security. The mismanagement of the website HealthCare.gov and the cancellation of millions of policies pushes an underlying question out into the open: Is the federal government capable of managing the provision of a fundamental service through an extraordinarily complex system?
This system requires coordination of over 288 policy options (an average of eight insurers are competing for business in 36 states), each with three or more levels of coverage, while simultaneously calculating beneficiary income, tax credit eligibility, subsidy levels, deductibles, not to mention protecting applicant privacy, insuring web security and managing a host of other data points.
A malfunction at any one of these junctures could prove fatal.
Full article here.
by Robert Pear, NY Times
November 19, 2013
WASHINGTON — Members of Congress like to boast that they will have the same health care enrollment experience as constituents struggling with the balky federal website, because the law they wrote forced lawmakers to get coverage from the new insurance exchanges.
That is true. As long as their constituents have access to “in-person support sessions” like the ones being conducted at the Capitol and congressional office buildings by the local exchange and four major insurers. Or can log on to a special Blue Cross and Blue Shield website for members of Congress and use a special toll-free telephone number — a “dedicated congressional health insurance plan assistance line.”
Full article here.
An insider’s account about top down pressure on jobs data—especially during the months leading up to the presidential election—brings a new level of scrutiny to the reliability of official unemployment rates.
by John Crudele, NY Post
November 18, 2013
In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.
The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated.
And the Census Bureau, which does the unemployment survey, knew it.
Full story here.
The Washington State woman President Obama cited as an Affordable Care Act success can’t afford the coverage after all and plans to pay the penalty.
by John Passantino, BuzzFeed
“I am a single mom, no child support, self-employed, and I haven’t had insurance for 15 years because it’s too expensive,” President Obama said, reading from a letter he received from Jessica Sanford, a Washington State woman, during an Oct. 21 speech in the White House Rose Garden.
“My son has ADHD and requires regular doctor visits and his meds alone cost $250 per month,” the president continued, reading Sanford’s words. “Now, finally we get to have coverage because of the [Affordable Care Act] for $169 per month. I was crying the other day when I signed up. So much stress lifted.”
The president said Sanford’s success story was “not untypical for a lot of folks” who have struggled without health insurance. Despite the problems plaguing HealthCare.gov, he said, the law itself was benefiting people.
But her joy ended there.
Soon after signing up for the health plan, Sanford was informed the state made a mistake calculating her tax credit. Three days after the president delivered his speech, a notice arrived from the Washington state health exchange with her new monthly premium: $280 a month for a “gold” plan.
Despite the error and significantly higher price, she decided to continue purchasing the insurance.
Then more bad news arrived.
Sanford received another notice from the state last week informing her they had once again erred while calculating her tax credit. This time, her health premium soared to $390 per month for a “silver” plan with a higher deductible — a price she simply couldn’t afford.
Once again, she was reduced to tears.
“I had a good cry,” she told CNN. “This is it. I’m not getting insurance. That’s where it stands right now unless they fix it.”
Now the single mom and her son are left without health insurance, and under the Affordable Care Act, face a $95 penalty.
Sanford, who twice voted for Obama, says she isn’t angry at the president for her insurance problems, and instead blames the state of Washington.
“I am so incredibly disappointed and saddened,” she wrote on the state health exchange Facebook page. “You majorly screwed up.”
by Todd Purdum, Politico
November 15, 2013
It’s the cardinal rule of marketing management: Under-promise and over-deliver. If the sign at “Pirates of the Caribbean” says the wait is 45 minutes, and your kids are floating along on the ride in half that time, Disneyland really is the Happiest Place on Earth.
So it’s little wonder that the glaring contrast between the White House’s perpetually optimistic talk about its health care plan — “Try it! You’ll like it!” — and the messy realities of its rollout has sent President Barack Obama’s job approval ratings to all-time lows, and for the first time left the public with a negative view of his honesty in some surveys.
Read more: http://www.politico.com/story/2013/11/the-obamacare-fumble-99906.html#ixzz2kw6zUdYn