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TONIGHT: "Price the Proposals" of the State of the Union Address
Posted By: Dan Barrett - 01/28/14

Expecting More or Less Government from Tonight’s Speech? Guess Right and Win!

Play our 2014 "Price the Proposals" game to test your budget brain power and win prizes!

Click Here to Play the Price the Proposals Game!

There are now just a few hours left for you to guess how much new savings or spending President Obama will call for in his State of the Union Address (SOTU) in our “Price the Proposals" game!

Time is running out, submit your entry now!

If you make the closest guess to what National Taxpayers Union Foundation’s analysis finds, without going over, you win! Runners-up receive prizes too, but you can’t win unless you enter!

Simply go to www.ntu.org/sotu2014.

What you’re playing for:

  • $50 Visa gift card
  • A one-year Reason magazine subscription
  • Special "Team Taxpayer" gear

Watch the speech to find out what the President proposes, and join with the 362,000 members of National Taxpayers Union and staff online for commentary, fact-checking, and taxpayer talk:

Deadline for entry: January 28th (TONIGHT) at 10 p.m. ET

Please don’t set this aside – enter now before you miss out on the fun!

Then, in the days ahead, stay tuned for a special post-SOTU analysis with NTU and NTUF staff, which will be on our blog soon after the President’s speech.

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America’s Unemployed Need Employment, Not Extensions
Posted By: Nan Swift - 01/17/14

Republicans in the Senate threw the brakes on yet another extension of already extended federal unemployment benefits on Tuesday. The motion to invoke cloture on S. 1845, the Emergency Unemployment Compensation Extension Act, failed on a party-line vote.  S. 1845 would have extended federal unemployment benefits through the end of March.

It’s easy to see why such a seemingly small, stop-gap measure, one that would provide tangible help to the many who are struggling to find employment during our ongoing economic downturn, would appear to be a no-brainer to some. However, as I explained in our vote alert issued last week:

The relatively short three-month timeline of this scheme belies its very real and substantial cost. The Congressional Budget Office estimates S. 1845 will increase the deficit by $6.6 billion in 2014. Despite a prolonged fight this fall over out-of-control federal spending, S. 1845 makes no attempt to offset these billions of dollars in new spending.

Our out-of-control national debt and significant deficits each year are creating considerable drag on our economy. It’s irresponsible of Congress to consider new spending without cost-saving reforms or commensurate spending cuts. When it became clear that offsets would be needed to try to move S. 1845 forward, Senator Reed (D-RI) who was also the lead sponsor of S. 1845, proposed an amendment that would have extended benefits for eleven months paid for by prohibiting “double dipping” and tacking on an additional year of spending caps that would keep the sequester in force until 2024. While it’s true that eliminating “double-dipping,” the practice of receiving both unemployment and disability benefits, would be a good, cost-saving reform, another year of sequester is little more than an accounting gimmick.

As evidenced by the Omnibus spending bill in Congress this week, legislators can’t appropriate within even the modest spending caps of the 2011 Budget Control Act now. Assuming they’ll do any better in 2024 is highly questionable. Luckily, the amendment failed, ensuring the cloture vote that followed was also doomed.

It’s worth wondering though, if the unemployment insurance extension was offset, would that be worth supporting? From a strictly budgetary perspective, making sure the new expenditure is paid for is of primary concern to taxpayers. However, research indicates that perpetually extending benefits doesn’t do the unemployed any favors. From the House Ways and Means Committee:

And despite Democrat claims that such spending on UI benefits is the “best stimulus,” all this record-setting benefit spending has bought is the slowest recovery on record.  Perhaps not surprisingly, a new study identifies the EUC program as the cause of the painfully slow labor market recovery – as employers have withheld new job offers until after the Federal extended benefits program ends.  Another study reinforces that such programs have been behind recent jobless recoveries.

The studies available at the links above illustrate that extending unemployment benefits increases unemployment as employers are discouraged from posting vacancies and workers are discouraged from searching, creating a lose-lose scenario for the labor market. At the same time, what vacancies are available tend not to go to the long-term unemployed. Because the longer someone is jobless, the harder it is to get hired, perpetual extensions provide the unemployed with little, if any, benefit.

As high unemployment rates continue year after year and increasing numbers of individuals stop trying to seek jobs at all, it’s clear that this business as usual approach to unemployment insurance is failing both taxpayers and the unemployed alike. Rather than rubber-stamp extensions, offset or not, legislators should take the time this national crisis deserves to consider real reforms.  I mentioned just two in the vote alert:

Block-granting federal unemployment insurance would reduce federal meddling and empower states to ensure scarce dollars are allocated where they are most needed, thereby saving taxpayers money. Stricter guidelines to encourage job-seekers to get back to work sooner could help to disincentivize long-term unemployment, itself a hindrance to re-employment.

But there are lots of other great ideas out there that should be on the table as well. Just this month our friends at the R Street Institute rolled out their own proposals to help the unemployed get to where the work is, overcoming one of the biggest hindrances to employment the labor market is facing. The whole paper is worth a read. Congress can also take up other reforms to help spur job growth such as lowering the corporate tax rate, eliminating costly regulations, repealing the death tax, and many others.

Offsetting unemployment extensions is a good first step, but to really help the unemployed, Congress should let business get back to work.

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(AUDIO) “Common Ground” Report Finds $500 Billion in Savings Everyone Should Support - Speaking of Taxpayers, Dec. 5
Posted By: Dan Barrett - 12/11/13

NTU and USPIRG have released a new "Toward Common Ground" report with over $500 billion in savings proposals people from both sides of the aisle can support. Plus, a special chat with our fall interns, Tara Riggs and Curtis Kalin, and the Outrage of the Week! 

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Ac-“customed” to Waste?
Posted By: Pete Sepp - 08/05/13

All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.

Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.

Now for the not-so-good:

  • According to Airlines for America statistics, Abu Dhabi airport accounted for less than 600 passenger arrivals per day to the U.S. in 2012, ranking it #80 on the list of top origin points to our country.
  • Right now, no U.S.-based carriers even fly from the Abu Dhabi International Airport back to here.  All other CBP pre-clearance zones in Canada, Ireland, and the Caribbean serve many airlines, including U.S.-flagged ones.
  • The primary beneficiary of the deal would be Etihad Airways, the state-owned airline of UAE. Thanks to this status Etihad enjoys an advantage over private airlines around the world that are subject to corporate profit taxes of their home countries. Which brings us to …
  • Another advantage conferred by the United States under the auspices of the Export-Import Bank (Ex-Im), whose risk-taking and subsidization have long been a concern for taxpayer advocates such as NTU. Etihad snagged $593 million in loan guarantees from Ex-Im last year for aircraft purchases, and could qualify for preferential financing that our own airlines (by definition) can’t get through Ex-Im.
  • Meanwhile, The Wall Street Journal is reporting that over the preceding year (before overblown sequester scare tactics), the wait times for getting through customs at stateside airports have “increased dramatically.”

All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?

And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.

Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?

Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”

Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.

Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.

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Wal-Mart Facing New Challenges from DC Council
Posted By: Dan Barrett - 07/10/13

The DC Council is expected to adopt new regulations that would force Wal-Mart to play by different rules than other retailers in the District. The measure would require corporations with $1 billion in sales that operate stores with at least 75,000 square feet of retail space to pay their workers $12.50 per hour -- 52 percent more than the District’s $8.25 per hour minimum wage.

What does this mean? Quite a few things. First off, Wal-Mart will reconsider development plans for at least two, if not three, of its stores that are set to open in DC. The stores were a result of years of negotiations between the DC government and Wal-Mart. Now, DC might remain Wal-Mart-free and the avoidable results could be stark. Without the new stores, DC risks losing out on at least 900 jobs and $7 million in annual revenue for crucial items like school repair, community revitalization, or road construction.

There are also the reactions of other big box stores to consider. While Lowe’s doesn’t have a store in DC, Home Depot and Target each have one location. These corporations would be affected, while other popular retailers, such as Starbucks and Apple, would not be.

I am usually examining the unintended consequences of government action but this is wholly intended and understood by lawmakers. Although the law is not explicitly directed at Wal-Mart, the requirements were developed as a result of political tension between the retailer and labor groups within DC. By requiring Wal-Mart to pay wages beyond what is already required by District and federal laws, the Council has all but forced the company to avoid operating in an area with rules that are detrimental to its business. The Council could claim that Wal-Mart is only looking out for its bottom line (like all businesses do), but it would be ignoring the fact that other smaller businesses in DC are paying their workers at lower wages.

Supporters of the Large Retailer Accountability Act cite:

Some large retailers pay very low wages and do not provide their workers affordable health benefits. Without safeguards, large retailers threaten to erode both living standards for working families in the District, especially given the cost of living in the District. By adopting living wage standards for large retailers, The District can ensure that economic development better meets the community’s need for family-supporting jobs.

Supporters also believe that Wal-Mart’s threat of pulling out of DC is a bluff to avoid paying the higher wages.

Wal-Mart’s response:

[The Act] means most shopping dollars will stay in the suburbs, unemployment will remain in the double-digits in some neighborhoods and underserved communities will continue to have disproportionate access to affordable groceries.

According to Slate’s Matt Yglasias:

… I do think councilmembers should consider starting over again. If they think a higher minimum wage would be good for the city, then they should raise the minimum wage. If they think a $12.50 minimum wage would crate a lot of unemployment, then they should raise the minimum wage but raise it to something less than $12.50—there's a big gap between that and the generally applicable $8.25 wage. A special minimum wage that applies to retail workers but not janitors or restaurant workers and to Walmart but not the Gap doesn't make a ton of sense.

We will see how this drama of jobs and wages plays out.

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Considerations in Criticizing or Praising the Recovery
Posted By: Dan Barrett - 07/09/13

The Wall Street Journal created this great comparison of the different recessions and resulting recoveries we've been through as an economy. By no means is this a complete picture but indicators like Household Net Worth and Business Investments always need to be considered when addressing government intervention in the economy.

Click on the image to see a larger version.

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Sen. Ted Cruz Condemns Marketplace “Fairness” Act
Posted By: Nan Swift - 05/06/13

In a scathing op-ed at RealClearPolitics.com yesterday, Senator Ted Cruz (R-TX) launched a bold attack on S. 743, the Marketplace Fairness Act (MFA). The Senate is preparing to vote on final passage of the destructive tax legislation later today, and taxpayers can only hope that more Senators will take notice of the many serious reasons to oppose the bill that Cruz lays out:

The misleadingly titled Marketplace Fairness Act is a job-killing tax hike, plain and simple. It is, in effect, a national Internet sales tax, which would hammer the little guy and benefit giant corporations.

Senators who vote for it are voting to impose audits, compliance costs, lost wages, and inefficiency on small businesses in every state. And they are potentially crippling an engine of new job creation at a time of economic struggle. This bill will not create jobs; it will not create new opportunities; and it will not create the economic growth our country needs and our people deserve.

The Senator goes on to explain that “Big business supports this bill because it will drive smaller competitors off the Internet and out of business.” When our economic growth is still in jeopardy and newly minted college graduates are facing a dismal jobs market, to support legislation that spells death by a thousand cuts via costly burdens for small businesses is legislative malpractice.

Sen. Cruz also points out what should be a fundamental concern to Senators:

Last but not least, this bill doesn’t pass constitutional muster. The MFA overturns the fundamental idea that states’ taxing authority ends at their borders. The Supreme Court has said that an out-of-state business could subject itself to a state's taxing power if due-process concerns are satisfied, namely that the business purposefully targets its activities in that state. But because pure Internet sales by their nature don't target any one state, this legislation presents a serious constitutional problem.

It is definitely worth your time to read the whole thing. But the anti-MFA fun doesn’t stop there, Sen. Cruz kept up the attack by posting this awesome video with a short, to the point, explanation of exactly what is at stake if the dreaded MFA passes.


You can help support Sen. Cruz’s fight against MFA by calling your Senators TODAY. It will only take two minutes (one for each Senator) and your call could make a big difference in this important fight. Go here to find our toll-free taxpayer hotline and more information on how you can join the fight.

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Sandy Relief Act for Fisheries: $193 Million Cost
Posted By: Dan Barrett - 05/03/13

While NTUF highlights at least four newly-scored bills in our weekly newsletter, The Taxpayer's Tab, we have a lot of legislation that don't necessarily fall into the "Least Expensive" or "Most Friended" categories. So, as a supplement, here's another bill introduced in the 113th Congress that taxpayers may find interesting. Just as the bills that appear in the Tab, this is a preliminary score and may be updated with new information.

The Bill: H.R. 1445, the Sandy Disaster Fisheries Relief Act

Annualized Cost: $96.5 million ($193 million over two years)

After Hurricane Sandy, much of the East Coast is still recovering from the effects of wind, rain, and flood damage. For fishermen, the National Oceanic Atmospheric Administration (NOAA) found that the storm wreaked havoc on the fishing industry. New Jersey's fishery infrastructure suffered between $78 and $121 billion in uninsured losses. To attempt to help quicken the recovery, Congress passed a large relief package in January that included $5 million for these fisheries. Then, Congressman Frank Pallone (D-NJ) introduced a bill that would add additional emergency funds to assist fishing on the East Coast. He said that "[n]ow, it is our turn to support our fishermen by making a commitment of fisheries disaster assistance that really takes into account the amount of damage they suffered."

The Sandy Disaster Fisheries Relief Act would authorize NOAA to spend up to $193 million between 2013 and 2014. Funding would be limited to operations, research, and maintenance of fishing-related facilities and channels still recovering from Sandy. Since the spending would be deemed as an emergency measure, spending limitations related to any budgetary caps or sequestration would not apply, and therefore be wholly counted as new spending. There are no offsets included in the proposal.

Note: The sponsor's office confirmed that the text of the bill contained a drafting error that authorized "$193,000,000,000" instead of "$193,000,000" as detailed in a press release. Under BillTally rules, NTUF scores the intention of legislation and so will record the potential spending as a $193 million new two-year cost.

To receive the latest Taxpayer's Tab, subscribe here.

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Made It in America, Government Gives You Millions
Posted By: Dan Barrett - 03/29/13

Throughout the last two years of budget negotiations, debt ceiling fights, and the supposedly economy destroying sequestration, legislators have pointed to government grants as an easy way to cut down on spending. Yet indiscriminate across-the-board cuts in one form or another have occurred without eliminating what many Americans feel are real cases of government waste. Here’s just one government grant that we could do without: the Department of Commerce’s Make it in America Challenge.

From a 2012 summary, $40 million of federal tax dollars will be made available to levels of state and local governments as well as nonprofit organizations in the form of up to 15 projects, each at $4 million maximum allotments. Grants will be used to “encourage insourcing, either through on-shoring of productive activity by U.S. firms, fostering increased foreign direct investment, or incentivizing U.S. companies to keep their businesses and jobs here at home, as well as train local workers to meet the needs of those businesses.” Funds will be provided through the existing budgets of:

  • Economic Development Administration (Department of Commerce);
  • National Institute of Standards and Technology Extension Partnership (Department of Commerce);
  • Employment and Training Administration (Department of Labor);
  • Rural Community Advancement Program (Department of Agriculture); and
  • Rural Business Opportunity Grant Program (Department of Agriculture)

The Make it in America Challenge would also accept additional appropriations from Congress, which would likely require new spending. However, as the program is set up, budget outlays would not increase.

Many problems can come out of having the government pay for businesses to re-shore or pay to prevent those firms from leaving the country. Living in Ohio for years, I saw this first hand. Companies were given tax or other deals to stay in the Buckeye State but when the terms expired, the companies responded to incentives and expected an equal or better deal to remain in the state. When the state could’t or refused to comply, the company left for a better business environment (sometimes for better deals, more consistent or lower tax rates, or more competitive labor markets). In other words, the act of giving individual businesses (at times, picking winners & losers) results in unintended consequences that left the state worse off.

Now, potentially expand Ohio’s example to the entire nation. Some companies could not afford to leave for better fiscal pastures (think your local hair stylist or car mechanic) but with e-commerce expanding fast, many corporations would leave or threaten to leave without a government handout. This is not an example of businesses, or even capitalism, being evil. It’s a situation where people seek scarce resources and jump on opportunities. We all do the same thing picking store brand canned goods because of the lower price or use a coupon to get $10 off an oil change.

What would be better is to allow companies to move about freely (domestically or internationally) to encourage greater tax competition and competitiveness across all boarders. That starts with having a freer marketplace. By allowing firms to succeed and fail because of their own choices and workers to have earned success by taking less out of their paychecks, the economy will grow and erase the need for government handouts. Plus, saving $40 million is no small feat.

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The Cost of Fighting Currency Manipulation
Posted By: Michael Tasselmyer - 11/02/12

In its analysis of multiple Senate races as well as the 2012 Presidential campaign, NTUF has noted several candidates making reference to currency manipulation in some countries - particularly China - and the need to "crack down" on our trading partners' monetary practices. The position has found its way into the agendas of:

Currency Manipulation

The alleged issue is that some countries artificially lower the value of their currency. This increases the cost of U.S. exports to those countries, and decreases the cost for the U.S. to import those countries' goods. Policymakers have proposed various regulations in response, hoping to make U.S. exports more competitive on the international market.

The topic can be a confusing one to examine from a taxpayer's perspective not only because of the complexity of international trade, but also because these types of policies can significantly affect revenues in addition to outlays.

However, there are some regulatory and administrative costs associated with these policies that we can examine. Let's take a look at how the campaign proposals might translate into actual dollar figures.

What Has Been Proposed

The basis that NTUF used for its analysis of the above candidates' "currency crackdown" proposals was Senate Bill 1607, the Currency Exchange Rate Oversight Reform Act of 2007, which lawmakers introduced in the 110th Congress. That bill would have directed the Treasury to:

  • identify currencies that were "fundamentally misaligned" with equilibrium exchange rates; and
  • change international monetary policy accordingly to penalize them should they not address the problem. The penalties would be coordinated with the World Trade Organization and the International Monetary Fund.

The bill as introduced would apply to the currencies of countries with whom the United States has "major" trade relationships. Clearly, China would be included amongst those countries: in 2011, the U.S. Department of Commerce reported $103.9 billion in exports to China, and imports of $399.3 billion.

What It Could Cost

The CBO's report on S. 1607 estimated that the bill would cost about $4 million per year to implement; over the course of 5 years, that would amount to $20 million. Part of the cost would be a result of the extra workload imposed on the Treasury: tracking exchange rates and identifying whether or not certain countries may be manipulating them.

Additionally, the legislation would require the formation of an entirely new federal agency, the Advisory Committee on International Exchange Rate Policy. The Committee would advise the Treasury on how to penalize countries found to be manipulating the value of their currencies. These penalties would depend on Congressional approval and would be proposed after consulting with the WTO and IMF.

Be sure to take a look at NTUF's candidate studies for more on how this issue fits in to the rest of the candidates' proposed spending agendas.

NTUF does not endorse any candidate or position mentioned.

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