Monday, April 21, 2008

H. R. 5719 : Gutknecht’s haunting words still echo

During the course of his unsuccessful re-election campaign against Tim Walz, Republican First District Congressman Gil Gutknecht remarked to the Albert Lea Chamber of Commerce that the US Senate was “the graveyard of all good ideas”.

Those words keep haunting me … and I suspect Tim Walz also.

Congress may be at low-approval ratings yet, it’s “the graveyard” that deserves our anger.
Time and again, as I look at the various pieces of legislation, the House offers superior legislation. Consider just a few of the issues that Congress has debated : FISA, the Farm Bill, Foreclosure legislation ( see H. R. 5720 Housing Assistance Tax Act of 2008 ), and Tax Equity and the House's legislation is more in tuned to the people’s needs.

Last week, the House approved H.R.5719 which is also known as The Taxpayer Assistance and Simplification Act with Minnesota Congressmen Tim Walz (D-01) and Keith Ellison (D-05) as co-sponsors.

H. R. 5719 is a good bill that will reverse unwise expenditures and close loopholes. In my prior commentary, the tax avoidance by American companies shell operations was discussed. But this bill also corrects another government ineffective program – the government’s use of private debt collectors (PDC).

Private debt collectors receive up to 25% for their services which is markedly high when compared to the Department of Education’s Student Loan program which is 16%. The program was started by the IRS at a taxpayer cost of $71 million dollars and has generated just $20 million thus far and is projected to lose money for the next three years.

The Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO) estimate that enacting H.R. 5719 would increase revenues by $41 million and reduce direct spending by $247 million over the 2008-2018 period.

This would seem like a NO-BRAINER yet there was opposition … from Republicans.

Now why would someone who claims to be a fiscal conservative and on a “pork-free diet” like John Kline vote against this?

Pure speculation but could it be to protect the TWO companies that currently are authorized as private debt collectors ?
Pioneer Credit Recovery, based in the western New York district represented by Tom Reynolds (R), which Pioneer Credit employees have given congressional candidates and political action committees $117,450 since 1995; and the CBE Group of Waterloo, Iowa, the home state of Senator Chuck Grassley (R), who helped create the program.

Typically when legislation is passed that benefits only two companies that would be tantamount to an earmark … how can John Kline oppose earmarks for Minnesota projects yet vote to continue allowing these companies to operate at inflated compensation and inefficiently ?

Sadly, since Grassley opposes this legislation, “the graveyard” will allow another good bill to die … while we taxpayers watch our national debt grow.

Remember VOTE 60 .

Sunday, April 20, 2008

Tony Cornish has 27,000 Reasons to want Guns on Campus

Minnesota House Representative Tony Cornish (R-House 24B) has introduced legislation that would permit the carrying of concealed weapons for protection on college campuses.

The debate will begin as to whether this would be effective.

We will never know if it would be effective.

The state of Utah permits guns to be carried on campus and there has not been any mass killing since the law was enacted. Conversely, the other states are silent or prohibit the carrying of concealed weapons.
Have there been mass killings … yes. My first recollection of a campus shooting was the 1966 University of Texas rampage by man who entered a tower and killed 16 people and wounded 31. The next instance was last April when 32 students were killed at Virginia Tech. Most recently, an alumnus armed with a shotgun and two handguns, calmly stepped out from behind a curtain at the front of an auditorium filled with dozens of students just minutes before the end of a Northern Illinois geology class. The gunman killed five people and wounded 15 before turning a gun on himself. Police were in the room within two minutes of getting a call.

It would be pure speculation if someone with a concealed carry permit would have changed the outcome. Would the permit holder be in a position to take down the shooter (right classroom, right time)? Would the killer immediately recognize that someone was armed and go after that person first ?

Publicity makes VT and Northern Illinois memorable, yet history shows that they are rare.
In 2006, the last year that data was released by the FBI, eight students were killed on college campuses across the country — and not necessarily with guns. It’s the lowest number of students killed on college campuses in the past 10 years. Violent incidents in general are also showing a steady decline on college campuses. According to data from Security on Campus Inc., a non-profit organization, violent crime dropped by about 10 percent on college campuses across the country from 1999 to 2006.

Cornish makes the argument that "This is going to be 21 year old students that have already been, possibly fought in the war for three years. They should sure be trusted to defend themselves."
True enough, but he might be better to argue that teachers should be licensed since they will be over 21 and by profession on campus for longer than a typical student.
Yes, we discriminate against our returning veterans … they cannot even have a beer until they are 21 despite being able to consume when overseas. Yet, I wish if Cornish was going to use our veterans as a political ploy to help advance this legislation, that he would also address unemployed veterans, PTSD and suicides, and educational benefits. {Note : Cornish is one of John McCain’s early members of Team Minnesota and McCain opposes the proposed Webb-Hagel GI Bill.}

For the record, I am not opposed to this legislation being enacted. After all, someone with a conceal/carry license would have the same responsibilities walking on off-campus streets as they would once they cross the line onto the college grounds.

All that said, the likelihood of this legislation being passed is iffy at best.
His HF498 known commonly as the “Castle Doctrine” legislation failed to get approval of the House Public Safety and Civil Justice Committee on March 13. It was opposed by the Minnesota Police & Peace Officers Association and the Minnesota County Attorneys Association. Cornish originally introduced this legislation in May of 2006 … very late in the session.

Why does Cornish wait until so late to offer these bills ?
That’s the 27,000 reasons.
Students for Concealed Carry on Campus was started just after the shootings at Virginia Tech and already there are 27,000 members.
That’s what motivates this bill… those are potential voters … and contributors to Cornish and his friends re-election campaigns. It’s really about money … after all, thus far, this year the concealed carry on college campuses legislation has already been defeated in two states.

Thursday, April 10, 2008

Walz and Ellison Fighting Shell Games

Good News !

Legislation that I strongly support (background here), has past its first hurdle. As happens quite often, bills are combined or segments incorporated from one bill to another. In this instance, H. R. 5719, which is also known as The Taxpayer Assistance and Simplification Act was introduced on April 8th with Minnesota Congressmen Tim Walz (D-01) and Keith Ellison (D-05) as co-sponsors. The House Ways and Means Committee has moved quickly on this legislation passing it on April 9th. Included in this legislation is that US companies that employ workers through foreign shell companies be required to pay Social Security and Medicare taxes if their work was performed under a federal government contract.

Last month, it was reported that companies such as Kellogg, Brown and Root have avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in the Cayman Islands. As a result, these workers cannot receive unemployment assistance should they lose their jobs. While the use of the shell companies saves workers their half of their Social Security and Medicare taxes, it deprives them of future retirement benefits.

The funding of Social Security and Medicare benefits are predicated on participation by everyone. It is un-American that these US firms obtain federal contracts and then establish shell companies to avoid participating.

If you have contacted Congressmen Walz or Ellison as a result of my efforts to promote HR 5602, please let them know that we appreciate their sponsorship of HR 5719.
So often we hear about being fiscally responsible, well, as a fiscal conservative, I believe that everyone paying their share is fiscally responsible.
The Joint Committee on Taxation estimates (see report JCX-30-08) that this will add $480 million dollars to the funds over the next five years.
THANKS Congressmen for being fiscally responsible !

Wednesday, April 09, 2008

How Does Minnesota Rank on Compassionate Conservatism

'Amen, I say to you, whatever you did for one of these least brothers of mine, you did for me.'

Mixing Politics and Religion may not make friendships, but what happens when they intersect ?

In essence, how as a society do (or should) we care for the poor ?

Those are heavy subjects, that everyone can ponder for themselves. That is not for me to comment on, but Poverty is everywhere in America including right here in Minnesota. While the headlines are full with stories of 80,000 jobs lost in March and over 30,000 foreclosures in Minnesota, poverty is a daily fact of life for too many in our communities.

The Sargent Shriver National Center on Poverty Law has recently issued its 2007 Poverty Scorecard. It assigns letter grades to each member of the United States Senate and House of Representatives according to their voting records on the most important poverty-related issues that came to a vote in 2007, including legislation on affordable housing, health care, education, labor, tax policy and immigrants' rights. With the help of a national advisory board and other anti-poverty experts, the Shriver Center identified and analyzed fourteen critical Senate votes and fifteen critical House votes.

Poverty shouldn’t be a partisan issue, yet I notice that Republican Senators with longevity seem to get higher scores. The list is headed by Arlen Specter (R-PA) rated B scoring 71; Dick Lugar (R-IN) C-57, and Olympia Snowe (R-ME) B-64. Also, those Republicans who terms will be decided this November, also scored higher than others; such as Susan Collins (R-ME) B-71, Gordon Smith (R-OR) C-54, and our own, Norm Coleman who is rated C scoring 43.

Looking at the Republicans in the House, it is not a surprise to see that Jim Ramstad earned a B rating with a score of 60. For the record, Michele Bachmann was rated a D with a score of 20 while John Kline earned an F with a rating of 7.

In comparison, all Minnesota Democrats were rated A.
In the House, Tim Walz, Keith Ellison, Betty McCollum, and Jim Oberstar scored a perfect score at 100 while Colin Peterson scored a 93. In the Senate, Amy Klobuchar scored an 86.

As I stated, Poverty shouldn’t be a partisian issue yet I have to wonder when some preach the George Bush message of Compassionate Conservatism what they really mean.

Thursday, April 03, 2008

Coleman, Senate Foreclosure Bill – Another Misdirected Bailout

This being an election year there is little surprise that the US Senate is on fast track with a stimulus package of tax incentives for homeowners, homebuilders, and investors.

There is no doubt that there is a foreclosure crisis … but the remedy that Norm Coleman and the Senate are developing offers rewards to those that have not been affected.

Congressman Keith Ellison blogged "For far too long this administration has allowed Wall Street to pursue the politics of greed, the true cost of which we can now see in the form of devastated communities, homeless families, and shattered neighborhoods."

How true !

Senator Coleman also recognizes the problem, but his solution is tilted to the un-needy and business interests.
On the overview, the proposals being discussed may look appropriate but ask yourself Ellison’s key question will this "help our families pay their mortgages and stay in their homes ?"

Coleman’s SAFE Act proposal includes a number of ideas that appear to be in the final version being discussed.

The Senate proposal has a price tag of $10.848 with no offsets, so it’s all borrowed funds.

Coleman calls for a temporary expansion of the Net Operating Loss Carryback tax provision to help businesses affected by the housing downturn. That has the largest price tag in the bill at over $6 billion dollars. Who would this help ? Well, if you are a homebuilder who had profits in 2004 or 2005, you could get that tax payment back. (To answer Ellison’s key question will this help our families pay their mortgages and stay in their homes? Nope ! )

Coleman’s proposal to issue $10 billion in mortgage revenue bonds is still in the bill. The devil is in the details as this includes bonds for multifamily rental housing. The key question is who will own the multiple-family rental properties and are multiple-family properties the target that is in jeopardy of foreclosure?

To encourage the purchase of homes already in foreclosure and of homes on which foreclosure has been filed, a $7,000 tax credit for buyers will be available. This is actually less than the $15,000 tax credit that Coleman proposed. Since many foreclosed homes are from speculatively built homes, this is essentially the government (meaning all us taxpayers) offering an incentive for people to purchase -- in other words, the wealthy may get a better deal. Price tag $1.63 Billion.

Lastly, and totally inappropriate, is $1.476 Billion for property tax relief for those taxpayers that do not itemize deductions. This is wrong on so many reasons. First, people like myself who paid off their mortgage and now claim the standard deduction, just got another tax savings … and my home is not about to be foreclosed. Second, property taxes are used to fund state and local governments … what does the Federal Government have to do with that? Also, just because a property is foreclosed, that doesn’t relieve the bank from being liable.

Helping out the banks and homebuilders should not be the objective. The Economic Stimulus Act of 2008 (which I opposed) already included raising the government-sponsored enterprise (GSE) to well over half-million dollar homes whereas the average home is maybe $200,000. The Senate was discussing raising this limit to $730,000.

The Senate bill, as being finalized, will not include allowing bankruptcy judges to affect a contract term … which is too bad as that could have impacted 600,000 foreclosures (Minnesota expects to have in excess of 35,000 foreclosures this year.)

The Senate bill is too expensive and does not help those that need help.

The unwise Senate bill should be put on the back burner while the House moves forward the FHA Housing Stabilization & Homeownership Retention Act. There are many good provisions of this proposal such as affecting owner-occupied principal residences only (no investors, speculators or second homes). Because this is a shared program between borrowers and lenders the $10 billion cost over five years would have minimal downside risk. The potential benefit is between one and two million loans (and helps these families stay in their homes), protect neighborhoods, and help stabilize the housing market. The House bill answers Ellison’s question.

Minnesota’s representative on the House Financial Services Committee is Congresswoman Michele Bachmann. Bachmann touts herself as a fiscal conservative and as such she should be working hard to promote the House bill.

The outcome is easily forecast … the politicians will announce with much fanfare how they’ve heard from their constituents and have responded with a good bill … the question will be which constituent ... the the home-building industry or homeowners threatened with foreclosure ?