America's independent, non-partisan advocate for overburdened taxpayers.

 

Blog Contributors

Brandon Arnold
Vice President of Government Affairs 

Dan Barrett
Research and Outreach Manager 

Melodie Bowler
Government Affairs Intern 

Demian Brady
Director of Research 

Christina DiSomma
Communications Intern 

Jihun Han
Communications Intern 

Timothy Howland
Creative Content Manager 

Samantha Jordan
Communications Intern 

Curtis Kalin
Communications Intern 

Ross Kaminsky
Blog Contributor 

David Keating
Blog Contributor 

Douglas Kellogg
Communications Manager 

Sharon Koss
Government Affairs Intern 

Michael Liguori
Government Affairs Intern 

Richard Lipman
Director of Development 

Joe Michalowski
Government Affairs Intern 

Diana Oprinescu
Communications Intern 

Austin Peters
Communications Intern 

Kristina Rasmussen
Blog Contributor 


Government Bytes

Improper Payments Cost Taxpayers Billions
Posted By: Michael Tasselmyer - 07/21/14

In June, the Senate introduced the Social Security Overpayments Fairness Act of 2014, a bill that would reinstate a 10-year limit on the period during which the Social Security Administration could recover improper payments to beneficiaries. The high frequency of improper payments on the federal level is a major issue for both government agencies and taxpayers, and it carries billion-dollar consequences.

While receiving a check without earning it doesn't seem likely, according to a recent report published by the Government Accountability Office (GAO), the chances of this happening to you are better than winning the lottery. Their study found that the government spent over $105 billion in improper payments last year, arising from outright fraud, clerical errors, or awards without the proper paperwork and verification.

The GAO conducts the study each year to determine which federal agencies are making wasteful payments and how to minimize the frequency of these payouts. Although improper payments have slowly decreased since 2010 (when they peaked at $121 billion), it is estimated that over the course of five years, about half a trillion dollars will be paid to ineligible individuals. That's $500 billion that could be circulating in the economy and fostering economic growth.

By providing funds or services to individuals without the proper medical documentation, entitlement programs are the largest contributors to wrongful payments. Here are some examples:

  • Medicare, alone, wrongly expended $50 billion dollars -- that's almost 18 billion Starbucks tall coffees.
  • Medicaid spent $14.4 billion in improper payments (enough for 1.6 billion monthly Netflix subscriptions).
  • Social Security wasted $2.4 billion, the equivalent of about 1 billion loaves of bread.

Whether it's coffee or bread, there are countless ways in which this money could be spent in the private sector, but the fact of the matter is improper payments represent a huge deadweight loss in the economy.

Fortunately, there are a number of options to reduce the incidence of improper payments. The first step to reducing these payouts relies on identifying the root cause of the issue, whether it's simply an accounting error or a high frequency of fraud. Secondly, government agencies can implement reforms such as data sharing and training programs to improve up-front validation of eligibility. Many of these steps will increase spending, however, so it is important that these agencies make the most cost effective reforms. Lastly, it's important for the agencies to identify instances of improper payments so that they can then quickly recover the lost funds. If agencies like the Social Security Administration can establish a more efficient and cost effective way to recover improper payments in a timely manner, then there will be no need to pursue indirect beneficiaries for funds allocated more than a decade before. Similarly, a transparent Social Security program with more uniform payments would make it significantly easier for the administration to determine when it has wrongly apportioned funds.

There is no doubt that tax and healthcare fraud pose a serious threat to taxpayers and the economy. With the total estimated costs of healthcare fraud exceeding $270 billion, more than $375 billion dollars in taxpayer funds are being wasted each year -- that's 7.5 percent of all federal tax revenues. Not only does this harm the taxpayer and hinder the recovery of the economy, it also sets tax levels at a higher rate than necessary. By cleaning up our system, we can lower the need for federal revenue and, in turn, leave a few extra dollars in each American's pocket.

Special thanks to NTUF Research Associate Steve Adams for authoring this post.

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Lerner’s Hard Drive Destroyed in 2011, According to IRS; Michigan Voters To Decide On Personal Property Tax Repeal– Late Edition, July 21
Posted By: Jihun Han - 07/21/14

Today's Taxpayer News! 

The IRS revealed under oath on Friday that the hard drive containing Lois Lerner's emails was destroyed in 2011 to protect "confidential taxpayer information". Most of the testimony on Friday reacpitulated most of John Koskinen's congressional testimony a month ago. The Hill has the latest!

Michigan voters will have a chance to decide and approve a personal property tax reform package in Agusut. The reform would eliminate the personal property tax in Michigan. Read here for more! 

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Operation Choke Point: Consumer Protection or Troubling Government Overreach?
Posted By: Michael Liguori - 07/18/14

The recent House Financial Services Committee hearing regarding the Department of Justice’s “Operation Choke Point” made the shady overreaches of government look even more commonplace. The ominously named DOJ program has been billed as an attempt to slow fraudulent businesses from taking advantage of consumers.

This goal was repeated by many of the Democrats attending the hearing, who attempted to shed mostly a positive light on the DOJ’s motives. However, testimony from the witnesses assembled suggested something to the contrary. The witness panel was comprised of the DOJ’s Assistant Attorney General Stuart Delery, the Federal Reserve’s Scott Alvarez, the FDIC’s Richard Osterman, and the Comptroller of Currency’s Daniel Stipano. The witnesses stated repeatedly that the program only existed to target businesses acting unlawfully, and that banks facilitating legal enterprises had nothing to fear.

It certainly appears that things are not quite that simple. Representative Patrick McHenry (R-NC) led the hearing, and called attention to a list that the DOJ sent around to banks designating “high risk businesses” that were likely to incur subpoenas and investigations. The problem with the list, however, is that it doesn’t just cover specific businesses—it lists whole industries. The types of industries listed are varied, including strictly illegal operations like Ponzi and credit card schemes right next to entirely legal enterprises like tobacco sales.

Rep. McHenry tore into this list, calling it a “government hit list” and a tool for the Obama administration to intimidate banks into not interacting with legal businesses it dislikes. This allegation was reinforced throughout the hearing. Besides very recently informing banks that they were not being asked to stop working with lawful, “high risk” businesses, the witnesses failed to demonstrate that they had done anything to discourage the kind of intimidation the DOJ is being accused of using.

The most fiery and cutting remarks came from Representative Sean Duffy (R-WI), who asked  Delery to state if the DOJ has actually pressed charges directly against the supposedly fraudulent businesses in question, or obtained a single guilty adjudication. Although Delery could name a few banks that had been fined, he could not answer Rep. Duffy with any fraudulent businesses that had been tried and found guilty. Rep. Duffy pointed out the danger of an overzealous government: “We have a federal government that’s out of control, and we have bureaucrats who think they can get a swift idea and impose the heavy hand of government on legitimate businesses that have no adjudication of fraud.”

The fact that the Department of Justice was at such a loss in its defense of Operation Choke Point is extremely concerning. The program is easy to exploit, and even worse, people across the country are employed by the industries the DOJ has deemed “high risk,” and these citizens have faced a withdrawal of financial services by their bank after regulators came knocking. Representative Andy Barr (R-KY) shared the story of a family land lender to the coal industry having their loan no longer facilitated by their bank. Representatives Ann Wagner (R-MO) and Stephen Fincher (R-TN) also attested to job losses in their states due to Choke Point’s crackdown on low-interest, short-term pay day loans.

The defenses offered for Operation Choke Point were weak at best, citing a few cases of levying fines against banks, but no guilty verdicts were described. Though a consumer protection in theory, practice shows that the program is little more than a means of politicized persecution of any business the Executive branch views unfavorably. While its drawbacks are being felt across entire industries, Choke Point’s benefits remain to be seen. If officials from the Federal Reserve and the Department of Justice can’t formulate rejections of the criticisms provided and demonstrate real consumer benefits, it’s doubtful that this discriminatory and damaging program has any real use.

You can read more about NTU’s take on the unfolding Operation Choke Point scandal here.

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Time to Rethink the F-35
Posted By: Melodie Bowler - 07/18/14

The F-35 Joint Strike Fighter Program has ground to a halt yet again. Toward the end of June, a pilot at Eglin Air Force Base in Florida was about to begin a routine training exercise when the tail of his F-35 caught on fire. Following that incident, Pentagon officials decided to ground the jets indefinitely on July 3rd. The fleet had previously been grounded in early June due to an oil leak during flight. Unfortunately, for proponents of the acquisition, this news comes right before several exhibition events in the UK. At the Farnborough International Airshow, the Pentagon and Lockheed Martin (the company building the jets) had planned on demonstrating the F-35’s capabilities. The much-anticipated jet is now highly unlikely to be seen at Farnborough, which runs from July 14-20.

The planned demonstration at the airshow this week was geared to garner interest in the F-35 from potential buyers. More orders of F-35 jets would lower the price of each, but Lockheed Martin has only seen cancellations lately. Canadian authorities recently paused their order of F-35s, stating a need to view other options through a procurement competition. Italy already cut its original order from 131 jets to 90, and speculation suggests they will cut that number further. Australian officials had similar thoughts, reassessing their schedule for purchasing the troubled planes. For the Pentagon, this means the price of each jet will rise. For taxpayers footing the bill, more of their dollars will be pledged to this enormously expensive acquisition.

The F-35 Joint Strike Fighter Program has repeatedly exceeded cost estimates and failed to meet deadlines. In 2001, the Government Accountability Office (GAO) estimated the entire program would cost $233 billion. In 2012, when the program had already missed every operational deadline by at least four years, GAO reassessed costs to reach $395.7 billion. In 2005, the Air Force expected to be the first military branch to receive its F-35s, but that deadline has since moved to 2016. The Marines will now be getting their jets beginning in 2015, nine years later than originally planned. The Navy will receive their jets last in 2018, a full ten years late. As timelines extend, costs grow. Research, Development, Test, and Evaluation (RDT&E) continuing longer than planned adds costs the Pentagon never predicted. If this portion of the program is complete by 2018, the additional RDT&E will cost taxpayers $39.1 billion. With no certainly that the F-35s will be operational by the new deadline, costs could continue to soar.

The Cost Assessment Program Evaluation (CAPE) office estimated in 2012 that the long-term costs of procuring and operating F-35s will be $1.45 trillion over 50 to 60 years. While taxpayers have invested considerably in the F-35 jets, it is better to stop investments now than continue to waste resources on a broken program. With dangerous malfunctions, demand dropping, and no end in sight, Congress should immediately reevaluate the future of the F-35 Joint Strike Fighter Program. Some have suggested scrapping the program altogether in favor of procuring upgrades of proven designs like the F-18 or renovating venerable performers such as the A-10. Others, including NTU, have suggested a hybrid fleet that allows a right-sized purchase of F-35s for the Air Force (assuming performance issues are resolved). Either way, elected officials owe our service people and taxpayers a more thoughtful, vigorously overseen procurement process.

If ever there were a time for a prudent pause in a terribly troubled program, it is now.

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Profiles in Liberty: Catherine Fitzhugh
Posted By: Dan Barrett - 07/18/14

NTUF research interns often have the opportunity to do work other than BillTally. More than half of our interns have written for the Government Bytes blog, and two compiled the state analyses for the BillTally report, which was released last week. These are only some examples of the work that we encourage our interns to do as part of our holistic internship program.  It’s our goal to give interns every opportunity to develop their skills to spread economic liberty.

NTUF Research Intern Catherine Fitzhugh

Catherine Fitzhugh, a research intern, comes to NTUF from Grove City College, where she is the Secretary of her sorority, Sigma Delta Phi. She is a Student Research Fellow at The Center for Vision and Values at Grove City College, where she has assisted two professors with five research projects throughout the school year. These projects included a testimony presented to the Pennsylvania House of Representatives Committee on Ethics and several book projects. 

What do you enjoy doing outside of the office?

CF: I have many friends from school who are interning in the Washington, D.C. area this summer, so I’ve been spending a lot of time with them. I’ve also enjoyed sightseeing, particularly on the National Mall, and going to the Smithsonian Museums.

How did you become interested in politics?

CF: I sort of fell into politics. For years, I would listen to my father and brother criticize politics and big government, but I didn’t want to let my family’s ideology be my sole influence, so I set out to discover what I personally believe, and became very interested in policy along the way. Though I chose to major in political science on a whim, I have found that I love studying state and local level politics.

What are your career aspirations?

CF: I’d like to work in a state capital, eventually, because I feel the smaller environment would better suit me. It’s generally noted that more things get done in the states, so I’d have more of an opportunity to influence policy by working at the state level. NTUF has given me the leg-up on policy research that I need to accurately determine how legislation would affect spending and taxpayers.

What projects have you been working on at NTUF?

CF: I’ve been working on BillTally research mostly, and I’ve been writing the Profiles in Liberty series as well. I’ve enjoyed writing about the other interns, as each person is so unique, and it really comes out in their answers to questions.

What have you learned at NTUF that has most interested you?

CF: I’ve been amazed by the number of bills that are introduced in Congress compared to the number that are voted on. Before coming here, I didn’t know how many bills Representatives introduce. I researched three bills in a row, once, that were introduced by the same Congressman. Despite the number of bills introduced, it seems like a relatively small amount go to the floor for votes, and it’s been interesting to see which bills get stuck in committees versus which bills are signed into law.

What is the most interesting bill you have researched this summer?

CF: I researched the authorization act for the U.S. Coast Guard for 2015 and 2016. At first, I was amazed by the amount of money which the Coast Guard needs to operate, but, after some further research, I realized that, as it was originally written, this bill was giving the Coast Guard fewer tax dollars than last year. This bill was also interesting because of the different categories into which the money was portioned. The funds were given to the Coast Guard pre-divided into pools for research and development, maintenance, and for the alteration or removal of bridges over navigable waters which obstruct the flow of boats, to name only a few of the categories.

Why did you choose to work at NTUF?

CF: Several friends who have interned at NTU and NTUF highly recommended NTUF to me. Aside from their recommendations, I wanted experience with reading policy and knowing how legislation works in real life versus in a textbook. It’s been a great experience so far, and I’ve learned a lot through it!

The last of our Profiles in Liberty series for this summer will be highlighting Michael Liguori, an NTU Government Affairs Intern. Be sure to check out our most recent interview with Melodie Bowler.

How can you help? Join with thousands of Americans committed to fiscal transparency by making a tax-deductible contribution. The more you give to NTUF, the less you hand over to Uncle Sam.

Thanks to Catherine Fitzhugh for developing the Profiles in Liberty series and interviewing our interns.

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House Passes Budget Cuts for the IRS & Approves Bill to Allow Banks To Do Business With Marijuana Shops – Late Edition, July 17
Posted By: Jihun Han - 07/17/14

Today's Taxpayer News! 

The House voted to cut more than $1 billion from the IRS’s Tax Enforcement budget. The spending cuts will likely result in fewer audits for American taxpayers. The bill heads to the Senate floor for consideration.

Keeping busy, the House also passed a bill to make it easier for banks to conduct business with marijuana shops and medical dispensaries. Rep. Earl Perlmutter (D- CO) is skeptical of the bill and believes crime rates will rise. Read here for more!

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House Passes Highway Trust Fund Bill; Are Tax Cuts the Reason for Kansas’ Supposed Woes – Late Edition, July 16
Posted By: Jihun Han - 07/16/14

Today's Taxpayer News!

The House of Representatives approved a bill to temporarily fund the Highway Trust Fund. The bill passed by a 367-55 margin and has the approval of the White House. Read here for more!

In Kansas, some have questioned the economic impact of a historic tax cuts package. However, an op-ed from Forbes explores whether the tax cuts are a failure or not. What do you think?

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Interns Meet with Congressman Justin Amash
Posted By: Dan Barrett - 07/16/14

Today, NTU and NTUF summer interns had a special meeting with Congressman Justin Amash who represents the Third District of Michigan for the House of Representatives. On the steps of the Capitol building, the interns were able to learn through a Q & A session the importance of transparency, bipartisanship, and using technology to your advantage. Social media, he said, is a great tool to show more people the effects of legislation and how such an attitude helps continue to build trust with his constituents. Rep. Amash emphasized the need to work in a bipartisan fashion on issues while learning to find common ground helps to avoid “political thumb wars.”

These were valuable lessons learned and it gave the NTU and NTUF interns a good introduction into the real workings of the Legislative Branch and elective politics. Thanks to Congressman Justin Amash for allowing us to meet with him!

NTU and NTUF Summer Interns Meet with Congressman Justin Amash

A special thank you goes to Hayley Alexander for making this meeting possible.

In NTU Foundation's recently released BillTally report on the First Session of the 113th Congress, researchers found that Rep. Amash proposed an $83.2 billion net annual spending cut agenda. This means that if all of the bills that he sponsored and cosponsored in 2013 were enacted, federal spending would decrease by $83.2 billion for each of the next five fiscal years. Check out Congressman Amash's line-by-line BillTally report!

Interested in doing research, communications, development, or government affairs work at NTU and Foundation? Check out the details and help us keep a tab on Congress!

Thanks to Ian Johnson for drafting this post.

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Profiles in Liberty: Melodie Bowler
Posted By: Dan Barrett - 07/16/14

The National Taxpayers Union (NTU) has two interns this summer working in their Government Affairs department. Government Affairs interns are tasked with finding the latest news articles about state and federal tax issues. Their dedication ensures that Nan Swift, NTU’s Federal Government Affairs Manager; Lee Schalk, NTU’s State Government Affairs Manager; and Brandon Arnold, NTU’s Vice President of Government Affairs, have the best information to fight for taxpayers around the country.

NTU Government Affairs Intern Melodie Bowler

Melodie (Mel) Bowler is one of these two Government Affairs Interns. Mel went to the University of North Carolina at Chapel Hill, and graduated with degrees in Public Policy and Philosophy. She is interested in state tax policy, and recently interned in the State Affairs department at Americans for Tax Reform. Her internship with NTU marks her second internship in the tax field.

What have you enjoyed about working at NTU so far?

MB: I love writing blog posts. It’s a great opportunity for my opinions to be published on the web by a respectable organization like NTU. I also enjoy going to meetings in Washington, D.C. The Capitol Hill meetings are interesting, but the state tax and policy meetings are my favorites, since progress can be made more quickly at the local level.

What is a standard day like for you?

MB: I come in and get started on the daily state tax news update. I read local new about state taxes, budgets, pension reform, and anything that has to do with spending taxpayers’ money. I then send a list of all the relevant news articles to Lee Schalk and Brandon Arnold. After that, I blog for Government Bytes, and I often attend meetings in the city. I’ve written three blog posts so far, one about a record-setting budget in California, another about the monetary gift from the state of New Jersey to a basketball team, and one about the minimum wage hikes in Seattle. I have several more in the works.

Why did you choose to work at NTU?

MB: I have a really specific focus on state-level taxation. My previous studies hadn’t focused on social issues, so I wanted to avoid larger non-profits that cover many topics. Since I had already interned at Americans for Tax Reform, and since NTU one of the places that I really wanted to work at, it seemed like the logical next step.

What are you hoping to learn this summer at NTU?

MB: I am hoping to improve my writing skills and become a more effective communicator. Each time I write a new blog post, NTU staff will read through it and give me advice. Their edits have been invaluable so far in helping me to better my writing.

How did you become interested in politics?

MB: I first became aware of politics when I was ten years old and President George W. Bush was running for office for the first time. I remember asking my father what the difference between a Republican and a Democrat was. He very simply explained that, generally, Republicans want smaller government and Democrats tend to want to grow the government. After that discussion, I knew I was going to work in politics or design clothes and accessories. Around fourteen, I realized that my life would be better spent in politics.

What advice do you have for future interns?

MB: Don’t be too concerned if you haven’t interned in Washington, D.C. yet. The first time I interned here I wasn’t 21 yet, and being 21 is a prerequisite for so many of the networking events in D.C. Also, I’ve found it more useful to network this summer (as opposed to during my last internship), because I’m actively looking for a job now. The contacts I am making now have more value because I can actively use them to find a job. So, don’t worry if you haven’t had a chance to intern in Washington, D.C. yet, but when you come and you’re looking for a job, take advantage of the connections you make.

Next in the Profiles in Liberty series will be an interview with NTUF intern Catherine Fitzhugh. Be sure to read our post about NTUF research intern Alex Eblen.

Thanks to Catherine Fitzhugh for developing the Profiles in Liberty series and interviewing our interns.

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