Conservatives Split Over Copyright Law

This article by Josh Peterson was published by, a Franklin Center website.

WASHINGTON — Nearly two years after losing his job with the House Republican Study Committee over a controversial copyright paper, Derek Khanna now represents one side of a split among conservatives over copyright reform.

Conservatives are split over how the importance and implications of current U.S. copyright law in the smartphone era.

On Friday, Khanna — now a tech policy consultant — debated Phil Kerpen, president of the free market advocacy nonprofit American Commitment, over what the Founding Fathers believed about copyright and whether it is protected by the Constitution as a property right.

For Khanna, current copyright law, which grants the author rights to their work for the duration of their life plus 70 years after their death, provides a government-sanctioned monopoly over the rights of a creative work. That monopoly stifles creative innovation, and is contrary to what the founders intended.

Copyright law first passed after the Constitution was ratified granted copyright to the author for 14 years, with the option to renew it once more for another 14 years.

“The thing is the founders had copyright for books, maps and charts, that’s it,” Khanna told audience members.

“They didn’t allow copyright for written music, they didn’t allow copyright for art, they (didn’t allow it) for sculptures,” he said.

Policymakers’ sparring online and on Capitol Hill is not without context; debates over the current copyright regime’s implications for new technologies have been raging for more than a decade.

Khanna was one of several activists pushing for Congress to allow smartphone users to unlock their devices, which had been previously banned by the Librarian of Congress, and switch to other services.

While advocacy for strict copyright enforcement is associated with the U.S. Chamber of Commerce’s interests, broadcasters also benefit from current law.

The Supreme Court, for example, ruled in June that Boston-based start-up Aereo violated broadcasters’ copyrights by capturing broadcasters’ airwaves and streaming the content over the Internet.

The music and movie industries also depend on copyright enforcement to protect their own revenue streams, the most recent example being a fight between Disney and music producer Deadmau5 (pronounced “dead mouse”) over alleged copyright violations.

For Kerpen, however, to reform copyright law threatens private property protections. If copyright is simply a government-granted monopoly over intangible and literary works, that same logic could be extended to physical property like land and cattle.

“The property rights view is the decentralized, free-market, individual rights-oriented view and I believe the correct one,” Kerpen told audience members.

“No property is more clearly a person’s own than the product of his or her own mind,” he said, stating that protecting property rights were “why governments were instituted in the first place.”

Many of the copyright reform advocacy organizations are also the pro-net neutrality groups funded by left-wing foundations aiming to turn the Internet into a public utility.

The progressive Ford Foundation, for example, granted $200,000 to Creative Commons for “(general) support to increase access to education, science, data, culture, and governmental and philanthropic works.”

Creative Commons, a nonprofit organization co-founded in 2001 by campaign finance reform and pro-net neutrality activist Larry Lessig, provides authors with licenses that help to legally modify the copyright of their work to better suit their needs.

Public Knowledge, a major player in the pro-net neutrality movement, was founded during the same year with the help of the now-defunct Center for the Public Domain to promote a “vibrant public domain.”

But the dividing line between protecting or weakening copyright doesn’t fall cleanly between big business and nonprofit interests.

Google’s business model, Kerpen pointed out, depends on “monetizing other people’s content and has been putting an enormous amount of muscle into undermining copyright.”

The number of lobbying reports Google filed in 2011 on copyright, patent and trademark issues was second only to the Pharmaceutical Research and Manufacturers of America, surpassing even both Comcast and the Recording Industry Association of America, according to the Center for Responsive Politics.

Each year since 2012, Google has filed the most lobbying reports on intellectual property issues out of any company or trade association.

“And so I actually think that right now most of the corporate financial lobbying muscle is actually on the side of weakening copyright enforcement,” he said, “and if you don’t have meaningful enforcement it really doesn’t matter what the copyright term is because the effective term is 60 seconds, not 50 years.”

Contact Josh Peterson at Follow Josh on Twitter at @jdpeterson

Josh Peterson is a Washington, D.C.-based tech reporter for the Franklin Center’s news site. Peterson previously spent two years at The Daily Caller covering tech and telecom regulatory policy as the publication’s Tech Editor. During that time, he focused on cybersecurity, privacy, civil liberties and intellectual property issues, and in addition to covering political protest movements. Prior to joining The Daily Caller in October 2011, Peterson spent time in D.C. researching and reporting on technology issues in internship roles with Hillsdale College’s Kirby Center, Broadband Breakfast and The National Journalism Center, and The Heritage Foundation. Peterson has a B.A. in Religion and Philosophy from Hillsdale College. He is also a musician and music enthusiast, and an avid martial artist.

State Police Now Fingerprinting Every Texan

This story by Jon Cassidy originally appeared at

HOUSTON — The Texas Department of Public Safety has quietly embarked on a project to take the fingerprints of every Texan old enough to drive over the next 12 years, and add them to a statewide criminal history database.

Not only has the department made that momentous decision on its own, it doesn’t even have clear legal authority to do so.

The credit for breaking the news on those two items goes to consumer affairs columnist Dave Lieber of the Dallas Morning News, whose long-running “Watchdog” column often shows up in my Google Alerts, for obvious reasons.

As an old-school columnist, Lieber tends to keep his opinions subdued, and he doesn’t generally call people dishonest. But I have no problem with doing that, so I’d like to point out that the DPS spokesman he quotes at length is less than straightforward about his department’s legal authority.

Last month, Lieber broke the news that DPS had started collecting full sets of fingerprints on everyone who went in to renew their license.

Friday, he followed up with a story on DPS’ dubious legal authority to do so, and then posted lengthy quotations on the issue to his blog.

Lieber quotes an entire email from DPS spokesman Tom Vinger, who quotes Transportation Code Sec. 521.059 at length, including the key phrase, “The department shall establish an image verification system based on the following identifiers collected by the department: …an applicant’s thumbprints or fingerprints.”

So clearly, the law contemplates the collection of fingerprints under some circumstance, but the passage quoted by Vinger doesn’t mention anything else about it.

You could look up that section of law online, but the sections immediately surrounding it in the Texas Transportation Code don’t clarify the matter.

To get the full context, you’d have to go back to the original bill that was signed into law, and then look up the relevant section of law, which states that an application for a drivers’ license  “must include: 1) the thumbprints of the applicant or, if thumbprints cannot be taken, the index fingerprints of the applicant.”

So that’s why the law mentions fingerprints — it’s index fingerprints, not a full set of 10 fingerprints. While the law mentions that those records can be used by law enforcement agencies investigating a crime, it doesn’t say anything about making them generally available in a criminal database.

According to Lieber, a political science professor at Texas Christian University named Donald W. Jackson, who has a new organization called the North Texas Civil Rights Project, is offering legal support if anybody wants to challenge this new policy in court.

Lieber says the solution is for the Legislature to pass a clear law on the matter. I’d add that it throws into question the wisdom of having a law enforcement agency oversee licensing at all. The investigative function will always trump privacy rights.

Contact Jon Cassidy at or @jpcassidy000.

Crony States Of America: Padding Profits At Public Expense

This article, written by Kenric Ward, was originally published by Watchdog on May 28.

WASHINGTON, D.C. — The multibillion-dollar duopoly game known as “economic development” is steadily shifting wealth from taxpayers to large corporations, State by State.

Democrat and Republican politicians bargain with “targeting investments” that purport to pick “winning” companies. Democrats, contrary to their rhetoric, are all in for this style of trickle-down economics — even when winners become losers.

Shrewd and rootless corporations spark bidding wars between States — reaping special tax breaks and handouts, which disadvantage local, usually smaller, companies that stay put.

Statist media outlets ballyhoo groundbreakings, ribbon cuttings, job announcements and all the attendant political grandstanding. But reporters rarely track corporatism’s downstream effects, which are mixed at best.

Study after study show this is a fool’s game for States and taxpayers. New research by George Mason University’s Mercatus Center reports:

  • As of 2013, Walmart had received at least 260 special State benefits worth more than $1.2 billion. For every 100 new Walmart jobs, an average of 50 existing jobs disappear as other retailers are crowded out.
  • Apple got $370 million in State tax breaks for setting up in North Carolina. With just 50 jobs created, that’s $7.4 million per job.
  • New York granted aluminum giant Alcoa free electricity for more than 30 years (estimated value: $5.6 billion). In return, Alcoa pledged to make a $600 million investment and promised not to fire more than 165 workers. Subsequently, New York raised taxes multiple times on its citizens.

Why do these dubious deals persist? Why keep dispensing public funds to pad private profits in ways that would make big-spending John Maynard Keynes cringe?

Lotta Moberg, co-author of the Mercatus report, says crony behavior pays off for politicians… literally.

“As cronyism grows, the benefits that policymakers get from crony relations become increasingly lucrative, which creates a problem of adverse incentives.

“Even if policymakers understand that targeted benefits are not good for the economy, they have the incentive to keep providing them as they benefit from it personally,” Moberg told in an interview.

SUBSIDY TRACKER: See which companies get the most public money in the 50 states.

Mercatus’ free marketers define cronyism as “the practice of exchanging favors between powerful people in politics and business.” Moberg and fellow researcher Christopher Coyne posit the practice “has become entrenched into the social fabric.”

Thanks to what Ronald Reagan biographer Craig Shirley calls “Obama Republicans,” blandishing public benefits on private corporations has more bipartisan backing than ever.

“They have bought into the oligarchy of big business and big government doing business together, at the expense of the little guy,” Shirley says of a long line of corporatist politicians.

Hence, red State Texas awards Berkshire Hathaway, led by Democrat icon Warren Buffett, with $803 billion in incentives.

Coyne and Moberg list four prescriptions to combat cronyism in the States:

  • Allow for current targeted benefits to expire, and abolish State programs that grant them on a regular basis.
  • Ensure targeted benefits cannot be granted by individual policymakers on an ad hoc or informal basis.
  • Broadly lower tax rates to encourage company investments and obtain a more efficient allocation of resources.
  • Cooperate with other States to form an agreement about dismantling targeted benefits.

Moberg admits she knows of no leading State-level leader who has adopted or even advocated these reforms.

Indeed, University of Chicago economist Luigi Zingales sees post-modern America morphing into his home country of Italy — one of the sick sisters of Europe.

Public trust has been “eroded by a betrayal of pro-business elites, whose lobbying has come to dictate the market, rather than be subject to it,” he said.

“This betrayal has taken place with the complicity of our intellectual class,” Zingales explains in his book, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity.

Most insidious, cronyism is not necessarily illegal. And Moberg agrees with Zingales that such political “rent-seeking” is on the rise.

“Many of the observations of favorable regulations, subsidies, bailouts, loan guarantees and targeted tax breaks are quite recent and point to an unhealthy environment in government today,” Moberg said.

“It doesn’t have to be cash under the table — it can be a legal contract. But as an economist, I would say it’s draining the economy.”

Kenric Ward is a national correspondent for and chief of its Virginia Bureau. Contact him at or at (571) 319-9824. @Kenricward

Red Light Cameras Tough To Turn Off, Despite Growing Opposition

This article, written by Eric Boehm, was originally published by Watchdog on May 27.

Red light cameras have generated millions of dollars in revenue for towns and cities across the country, but they’ve brought plenty of controversy, too.

More than 500 municipalities are using red light cameras, which have proliferated, as have efforts to limit or ban them.

But opponents are learning the cameras, like many government programs, are difficult to shut down.

In Colorado, a bipartisan group of State lawmakers supported a bill to shutter the State’s automatic enforcement camera program, including red light and speed cameras. Armed with a scathing audit that revealed serious flaws with the camera program in Denver and the support of the speaker of the House and other legislative leaders, State Senator Scott Renfroe (R-Weld) thought he was on the brink of success.

Ultimately, his effort fell short.

Renfroe’s bill mustered only enough votes to pass the Senate. A House committee gutted the bill and instead called for a statewide study of existing red light camera programs, but even that version failed to cross the finish line before the session ended.

Even if it had passed, Governor John Hickenlooper didn’t indicate he would sign it.

“It was no secret the governor did not want to make a decision on this bill and, sadly for the citizens of Colorado, he convinced enough House Democrats to kill a bill that places raising revenue above public safety,” said State Representative Steve Humphrey (R-Severance), who sponsored the House version of the bill.

Speaker of the House Mark Ferrandino, a Democrat like Hickenlooper, said he was disappointed with the outcome.

The 10 cities in Colorado with red light camera programs are a small portion of the 503 communities that use the devices, according to the Insurance Institute for Highway Safety. Only nine States have bans on their use.

Support for and opposition to red light cameras tends to cross party lines. Small-government Republicans and libertarian-leaning progressives have teamed up to fight the cameras in other states, too.

But support for red light camera programs comes from a collection of powerful interests. In Colorado, law enforcement groups wanted the cameras to stay, mayors from nine cities wrote a letter urging lawmakers to oppose the ban, and companies that make them have employed teams of lobbyists.

Similar coalitions defeated legislation that would have banned red light cameras in Florida and Ohio.

In Florida, cameras have targeted drivers who were turning into the emergency entrance of a Miami hospital, and a report showed accidents increased at intersections where the cameras were deployed.

That’s part of the reason critics of red light cameras, like John Bowman, say they won’t solve problems at unsafe intersections.

“Looking at standard traffic engineering practices, and making sure the intersections comply with those practices is really the way to go,” said Bowman, spokesman for the National Motorists Association. “But that also decreases the number of violations that are generated, which cuts into the revenue for the camera companies and the municipalities that use them.”

In some cases, municipalities have gone even further to take advantage of the cameras. A investigation in Virginia last year found Virginia Beach was shortening the timing of yellow lights to generate more revenue from red light violations.

David Kelly, executive director of the National Coalition for Safer Roads, a nonprofit funded in part by a company that makes red light camera systems, doesn’t try to downplay some of the high-profile issues red light cameras have raised in certain cities.

But on the whole, he argues, they make roads safer.

“Traffic safety camera systems have been a successful tool for folks who are designing safety programs in their cities,” Kelly said. “These systems are saving lives and reducing crashes.”

He points to Roosevelt Avenue in Philadelphia, where the city installed cameras at two intersections in 2004 as part of an overall strategy to make the road safer after State Farm named it one of the most dangerous places in the county to drive. Since then, accidents at the intersections have declined.

In places such as Denver and Virginia Beach, where problems have been identified, local officials should make changes to ensure safety is the top priority, Kelly said.

“It’s important to go in and not say, ‘Let’s just get rid of the entire program,’ but fix the individual problems,” Kelly said. “Make adjustments to it.”

Critics say local governments have little incentive to fix those problems because cameras generate much-needed revenue.

In Denver, the city government has yet to make any changes to its red light camera program, even after a 2011 audit questioned the cameras’ effectiveness.

“Because these programs were sold as public safety enhancements but are widely viewed as a cash grab, it undermines public trust to maintain photo enforcement programs that are profitable but whose safety impact has not been conclusively shown,” wrote city auditor Dennis Gallagher at the time.

But Denver has continued to collect revenue — more than $1.3 million during 2013 alone — from the cameras. Red light cameras in nine other Colorado cities brought in another $6.6 million for local governments’ coffers.

“Municipalities that use them get addicted to the revenue,” said Bowman.

Jenny Robinson, spokeswoman for AAA Mid-Atlantic, which has examined red light camera programs across several States, said the devices aren’t fundamentally good or bad. Like any machine, it depends on how they’re used.

Robinson said AAA has a set of guidelines to determine whether cities are using red light cameras for revenue or safety purposes, though the two goals often intersect.

Cities should pay vendors a flat fee instead of a per-ticket fee, which removes any incentive for the red light camera companies to increase the number of tickets. They should also use the cameras sparingly, as part of an overall crash reduction plan that targets specific intersections and is used with other traffic engineering efforts.

“The equipment has to be tested, we have to know that it is accurate,” Robinson said. “The governments that operate these camera programs need to be continually testing and monitoring, and they should be making that information available to the public.”

State legislatures have made little progress in killing the cameras, but voters have opposed them 28 out of the 31 times the issue appeared on a local ballot.

Boehm can be reached at and follow @WatchdogOrg on Twitter for more.

Government Jobs: Nice Work If You Can Get It

This article, written by reporter M.D. Kittle, was originally published May 13 by at

MADISON, Wis. — Liberals have spent the past two election cycles frothing at the mouth about “equal pay,” as Mitt Romney’s former deputy campaign manager Katie Packer Gage put it, trying to “paint Republicans as backward cavemen” on the issue as part of their so-called “War on Women.”

But you don’t hear much indignation from the left about equal pay when it comes to the public and private sectors.  They don’t seem offended that heavily unionized public-sector employees, on average, earn more than private-sector employees in like positions.

While it’s difficult to precisely compare government and private-sector compensation due to differences in education, average age and other factors, the general data show government work is a comparatively good gig if you can get it.

A recent Rasmussen Reports poll finds a majority of Americans feels the same. The survey of 1,000 adults, conducted on April 30-May 1, shows 51 percent of the respondents believe government workers not only earn more money than those in the private sector, but also work less and have more job security. Half as many (26 percent) disagree, while 23 percent are not sure, according to the telephone survey, which has a margin of error of plus or minus 3 percent.

On average, the majority is right.

Private-industry employers spent an average of $29.63 per hour worked for total employee compensation in December 2013, according to the most recent report from the U.S. Bureau of Labor Statistics. Total compensation costs for state and local government workers averaged $42.89 per hour worked, according to the BLS report, released in March.

A study published in 2010 by the Center for State & Local Government Excellence and the National Institute on Retirement Security asserts the numbers are misleading. The authors, University of Wisconsin-Milwaukee economics professors Keith A. Bender and John S. Heywood, insist that, on average, State and local government workers are better educated and have more work experience than do their private sector counterparts, demanding higher compensation.

“Thus, the fact that public sector workers receive greater average compensation than private sector workers should be no more surprising than the fact that those with more skills and education earn more,” the study’s authors conclude.

In terms of salary, the pay differences often are marginal. Depending on the state or local government, public-sector wages are often lower than in the private sector. Wisconsin employees, for instance, earn about 10 percent lower salaries than similar private-sector employees in the Badger State, according to a new study by the American Enterprise Institute.

A 2012 Congressional Budget Office report found that, overall, the Federal government paid 2 percent more in total wages than it would have if average wages had been comparable with those in the private sector.

But it’s the benefits that ultimately tip the balance for the Federal government’s approximately 2.3 million civilian workers who claim a combined $200 billion in total compensation.

“On average, for workers at all levels of education, the cost of hourly benefits was 48 percent higher for Federal civilian employees than for private-sector employees with certain similar observable characteristics,” CBO estimates.

In its latest study, “Overpaid or Underpaid? A State-by-State Ranking of Public-Employee Compensation,” AEI tracks public-sector pay in all 50 states.

“There are big differences state to state,” said Andrew Biggs, resident scholar at the American Enterprise Institute and co-author of the study. “Some states pay over, some states pay less than the market value.”

On average, thanks mainly to generous benefits packages, the public sector earns 13 percent more than the private sector, the study finds.

Connecticut, for instance, pays its state employees 42 percent more than what similar private-sector workers receive, while Virginia pays 6 percent less, according to the analysis.

While Wisconsin public-sector employee salaries are about 10 percent less than similar positions in the private sector, state workers’ total compensation — thanks to very generous health care and pension benefits — comes out about 11 percent higher than their private-sector peers, according to the AEI study.

Wisconsin’s government employees still fare well post-Act 10, Govorner Scott Walker’s reforms of public-sector collective bargaining, according to a report Biggs published in 2012, nearly a year after the law took effect. Though public employees are now expected to contribute 5.8 percent of their pay for their pensions, a private-sector worker would have to save over 30 percent of her salary in a 401(k) to receive the same retirement benefits.

“Nationally, it matches up to what you would expect,” Biggs said. “The states that overpay you expect are going to be union-heavy states like California, Illinois, Pennsylvania,  New York, states with big pension benefits, as opposed to states like Indiana or Virginia.”

And Big Labor can make a big difference on pay scales.

A Congressional Research Service study issued in March finds the wages of union workers may be 10 percent to 30 percent higher than the wages of nonunion workers.

Final Tally Of Job Losses From The Federal Sequester: One

This article, written by Eric Boehm, was originally published by Watchdog on May 9.

The Government Accountability Office has finished its analysis of the across-the-board Federal budget cuts known as the sequestration and determined that exactly one Federal employee lost a government job.

The GAO surveyed 23 Federal departments affected by the budget cuts for its 200-plus page analysis released this week. The report shows that most departments had to cancel or limit monetary awards like grant programs, many reduced employee training or travel and seven agencies reported furloughing a total of 770,000 employees for at least one day and up to as many as seven days.

But only one agency actually cut their staff: the U.S. Parole Commission.

Not So Bad

The much-feared Federal sequestration turned out to be bad news for just one person, a Federal employee in the Department of Justice who was the only one fired as a result of the cuts, according to a new GAO report.

It laid off one person.

Senator Tom Coburn (R-Okla.) is now calling for a Congressional investigation of the sequestration and its effects on the government workforce.

Despite relentless warnings about the dire consequences of sequestration’s budget cuts, it appears sequestration resulted in only one layoff,” Coburn said in a statement. “While that’s good news for federal employees and other workers, it is devastating to the credibility of Washington politicians and administration officials who spent months — and millions of dollars — engaging in a coordinated multi-agency cabinet-level public relations campaign to scare the American people.”

Two of the oft-cited predictions about Federal layoffs as a result of the sequestration estimated between 100,000 and 1.5 million jobs would be cut, he said.

“Taxpayers expect us to root our predictions in fact, not ideology and spin,” Coburn said.

Coburn sent a letter to the Office of Management and Budget, the arm of the White House that handles budgetary issues for the executive branch, seeking answers about layoffs and other staffing cuts at Federal agencies.

The OMB issued guidance for how Federal departments should deal with the sequestration cuts and had a degree of authority over how those cuts were made.

Starting in March 2013, the sequestration required $85 billion in cuts to all parts of the Federal budget. Even though almost all the so-called “cuts” were actually just reductions in planned future spending — as reported at the time — politicians promised that the effects of the sequester would be cataclysmic.

Media reports at the time painted a very different picture of the sequester.

Driven by the Barack Obama Administration’s messaging machine, the sequestration was portrayed as the governmental equivalent of the end of days.

The Administration claimed the sequester would mean up to 1,000 fewer FBI officers, mass layoffs of government meat and food inspectors, and welfare benefit cuts for low-income women and children.

“Sequester is a blunt and indiscriminate instrument that poses a serious threat to our national security, domestic priorities and the economy,” Danny Werfel, a senior official at the White House budget office, told reporters at a briefing.

Then, when sequestration went into effect in March, the White House did its best to make it look as devastating as possible. Tours of the White House were canceled, military bands stopped performing and national parks and monuments were closed — even some that did not require anyone to staff them.

Meanwhile, the Feds posted more than 400 job openings during the first week the sequester was in effect. Assuming more than two of those job openings were filled, it would mean the Federal government actually hired more people during the sequester period than it laid off.

In the aftermath, the Nation trudged onward and Republicans took the blame for forcing the budget cuts into place.

Then the budget cuts were repealed entirely in September 2013 when Congress passed a new budget, albeit one with far less media fanfare and doom-and-gloom.

Although, to be fair, the sequestration must have been pretty rough if you were that one guy who got canned.

Government Turns Vermont Business Owners’ American Dream Into Nightmare

This article, written by reporter Bruce Parker, was originally published by Watchdog on May 8.

When Dave and Eileen McKnelly bought the Newbury Village Store in picturesque Newbury, Vt., the former New Hampshire couple thought they had made it.

Photo courtesy of the Newbury Village Store

“We came here to fulfill our dream, the American Dream, to raise and provide for our three children, be part of a community and make a positive impact,” Dave McKnelly told Vermont Watchdog.

But the owners of the 175-year-old country store say Vermont’s business environment may now force them to close the store for good, turning their lifelong dream into a nightmare.

“With the taxes we’ve been encountering this year, one of the serious options my wife and I looked at is Dec. 31 we’re going to close the store,” McKnelly said.

McKnelly said policies by Governor Peter Shumlin’s administration have forced costs to escalate far beyond what his business can manage.

“It’s not just the minimum wage increase — it’s the increased payroll tax, increased Medicaid, increased workers’ comp fees and increased unemployment fees,” McKnelly said.

Not only would a mandatory wage hike force McKnelly to pay an additional $100 or more per week to minimum-wage employees, it would require him to give raises to higher-wage workers as well — labor costs he said he can’t afford.

“For me to be able to raise my revenues to a point where I can offset the minimum wage increase is daunting,” McKnelly said.

In addition to labor-related costs, the Newbury resident said a single-payer health plan tax hike looms for his store.

“With Shumlin’s new budget proposal, one of the line items he’s proposed is to help pay for the single-payer medical program. So it means my payroll tax is going to increase 12 percent per employee to pay for that — and my employees are going to pay between 5 and 6 percent.”

Situated on the Vermont-New Hampshire border just 35 miles from Dartmouth College, Newbury Village Store serves customers with backgrounds ranging from farming and academia to logging and professional services.

Despite the store’s broad appeal, McKnelly said new taxes are forcing Vermonters to cross the border to buy goods.

“We live in a border town with New Hampshire, which doesn’t have a sales tax. They have a minimal cigarette tax and beer tax — so they’re my major competition,” he said.

New Hampshire’s 0-percent sales tax is a threat to Vermont businesses.

Not only does Vermont have a 6 percent sales tax for most items, tobacco and alcohol get taxed at extremely high rates — and customers notice.

According to McKnelly, cigarettes that cost $8.64 in Vermont cost $5.65 across the river in New Hampshire. The price difference explains why the Newbury Village Store sells $1,500 of tobacco products a week while competitors across the border sell $25,000.

“I’ve often joked that if I could shut this place down, pick it up, and move it across the river to New Hampshire, I could literally look at the entrance to my backyard and I’d be doing great,” he said.

Some businesses are moving to New Hampshire.

“Trout River Brewing Company is looking to close down in Vermont and go to Lebanon, New Hampshire, because of the tax base,” McKnelly said. “Other companies are shutting down and moving across the border as well.”

Although McKnelly gave his testimony at the statehouse this year, lawmakers didn’t seem to be listening.

“Governor Shumlin thinks the state of Vermont is doing phenomenal. My comment to him was if you continue to impose taxes on small and medium-sized businesses, we’ll be forced to close down or go across the border.”

The problem with Montpelier, McKnelly said, is that lawmakers don’t notice when small businesses close shop or lay off employees — yet closings and layoffs quickly add up.

“If you take all of the little retail stores in the state of Vermont, and you look at all the people they employ and the taxes we pay, if they all decided to close down their stores, the state would go belly up in about a week. We employ a majority of the people in the state of Vermont.”

U.S. Leads The Way In Drop In Global Greenhouse Gas Emissions

This piece, written by reporter Rob Nikolewski, was originally published at on May 6.

SANTA FE, N.M. — Plenty has been written about the amount of greenhouse gases getting pumped into the atmosphere, but a recent international study shows the amount coming from industrialized nations is actually declining. And the U.S. is leading the way.

Compiling data submitted to the United Nations, the Reuters news agency determined that greenhouse gas emissions fell by 1.3 percent in 2012, with the U.S. reporting a decrease of 3.4 percent — down to 6.5 billion tons, the lowest amount since 1994.

“The fall was linked to low natural gas prices, helped by a shale gas boom and a shift from coal,” Reuters reported.

“The success story is the declining emissions in the United States,” said Glen Peters, of the Center for International Climate and Environmental Research in Oslo, Norway.

New Mexico has one of the largest natural gas deposits in the world, located in the San Juan Basin in the northwestern part of the State. Natural gas producers have been calling on the Barack Obama Administration to increase and develop liquefied natural gas exports to foreign countries such as Japan.

The report said the European Union saw a dip in emissions of 1.3 percent in 2012 to 4.5 billion tons. That’s down 19.2 percent from 1990 levels, the European Environment Agency said.

But there’s concern that emissions from emerging nations such as China, Brazil and India are more than making up for the reductions seen in the U.S. and other industrialized nations.

The U.N.’s Intergovernmental Panel on Climate Change has called for cutting global greenhouse gas emissions of 3 percent per year; and Corinne Le Quere, professor of climate change at Britain’s University of East Anglia, said far tougher action was needed.

“It requires a transformation in the way we use energy,” she said.

Watchdog Takes A Look Inside The Secret Leftist Billionaire Club

This piece, written by reporter Tori Richards, was originally published at on May 2.

This weekend, a shadowy leftist group named Democracy Alliance will meet in Chicago to figure out a way to thwart conservative rivals.

As the adage goes, imitation is the most sincere form of flattery.

While top liberal organizations blast the right for accepting dark money, the Alliance’s entire business model is based on maintaining secrecy akin to the Illuminati.

“Like a lot of elite groups, we fly beneath the radar,” Oakland lawyer and Alliance donor Guy Saperstein told the Washington Post in 2006, a year after the group was formed. “We are not so stupid though (to) deny our existence.”

The group requires some hefty financial backing. It costs $25,000 just to join, yearly dues of $30,000 and an additional $200,000 donation to Alliance causes. Donation recipients must sign confidentiality agreements, the Post reported.

The Alliance was founded by a group of billionaires, including George Soros and philanthropist Peter B. Lewis, as a result of George W. Bush’s re-election. Its goal was to fund think tanks and media organizations to move societal change toward a more socialist agenda. But the focus changed to funding political endeavors after Vice President Joe Biden asked for help in 2011 for the upcoming election.

Obama’s campaign and his umbrella activist group Organizing for Action have received millions from Democracy Alliance members.

This caused Lewis to quit because the group had become too partisan and wasn’t concentrating on infrastructure, according to media reports.

Lewis, who died last year, hasn’t been the only high-profile defector.

One Alliance member who owns a cell phone company turned on Obama last year over a scandal involving telephone surveillance of ordinary American citizens.

CREDO Mobile’s Michael Kieschnick told CNN Money he was “deeply disturbed” at Obama’s “growing record of executive power grabs at the expense of constitutionally guaranteed civil liberties.”

Neither Kieschnick nor Democracy Alliance responded to requests for comment.

The left’s biggest mouthpiece for bashing the right over dark money and civil liberties issues has been the Center for Media and Democracy, also funded by Soros. CMD has been at the forefront of cheering on a secret investigation into dozens of conservative organizations, led by a Democrat district attorney. The prosecutors’ theory, questioned by the investigation’s own presiding judge, is that the groups illegally coordinated with Wisconsin Governor Scott Walker’s campaign during the state’s Democrat-driven recall elections.

The investigation issued more than 100 subpoenas last year to conservative individuals and organizations as part of the probe, which, sources have told, included “paramilitary-style” pre-dawn raids at the homes and offices of conservative targets. CMD, however, was on a public crusade to unseat Walker.

One target was the consumer-advocacy group Club for Growth, which CMD claimed “was at the center of a tangled web of undisclosed dark money in 2011, raking in millions from out-of-state secret donors and shuffling it to other nonprofits that in turn spent millions on the 2011 and 2012 elections.”

When asked about CMD’s own finances, its director, Lisa Graves said, “The question of conservative funders versus liberal funders, I think, is a matter of false equivalency.”

After Lewis left, the Alliance apparently dropped groups that didn’t agree with its new stance. Favored organizations that have remained include two Soros-funded groups: think tank Center for American Progress and Media Matters, a self-appointed media police for “monitoring, analyzing and correcting conservative misinformation.”

Each year, the Alliance holds an annual meeting where high-profile politicians and their donors meet to raise money and plan a progressive agenda. In keeping with its secrecy, the Alliance’s website has no mention of its annual conference starting Sunday at the Ritz-Carlton in Chicago.

But both Politico and the Chicago Tribune saw agendas listing powerful Clinton and Obama allies along with Illinois Governor Pat Quinn, New York City Mayor Bill de Blasio and Representative Debbie Wasserman Schultz of Florida.

Besides focusing on mid-term and 2016 elections, panel discussions will include issues such as climate change, income inequality, abortion and the death penalty.

Congressman: Spacey’s Frank Underwood Not Far From Washington Reality

This piece, written by reporter Travis Perry, was originally published by Kansas Watchdog on April 30.

OSAWATOMIE, Kan. — Fictitious Congressman Frank Underwood is manipulative, vindictive, ruthless and captivating in the Netflix breakout hit, “House of Cards.”

Adding a final variable to the mix, Kansas U.S. Representative Mike Pompeo says Kevin Spacey’s character isn’t entirely inaccurate.

“(Underwood is) a caricature, but there are folks who are back there (Congress) whose desire is to just continue to be there,” Pompeo said. “They accumulate power for the sake of accumulating power, instead of accumulating influence in order to achieve an agenda, something you want to get done for your constituents.”

The Sunflower State 4th District Republican Congressman added the analytical remarks at the tail-end of an interview with blogger Bob Weeks, who runs Weeks’ conversation with Pompeo originally aired Sunday.

Pompeo and his wife, Susan, have so far only made it through season one of the critically acclaimed political thriller — no spoiliers — and while he says it’s just a TV show, it’s tinged with bits of truth, with regard to whipping votes and drumming-up support behind an issue.

But earlier this year, actress Robin Wright, who plays the cool and calculating Claire Underwood on the Netflix series, said there could be more truth to the show than some let on.

“In Washington, (I) had a couple of people – politicians approach me – and I said, ‘Can you tell me what is inaccurate about the show?’ And they said, ‘Well, I have to tell you tell you it’s about 99 percent accurate, if we’re talking about … It’s like an instruction manual almost for D.C.,’” Wright told National Public Radio. “What’s the 1 percent? And he said: ‘You wouldn’t get an education bill passed that fast.’”

Check out Pompeo’s comments in the video below:

No IRS Scrutiny For Labor Nonprofit That Didn’t Disclose Years Of Lobbying Activity

This article, written by reporter William Patrick, was originally published by Florida Watchdog on April 28.

TALLAHASSEE, Fla. — In an era of heightened scrutiny against tax-exempt nonprofits, one left-leaning labor group may be ripe for investigation.

But that’s up to the Internal Revenue Service.

Critics of the Restaurant Opportunities Center United Inc. have long alleged the 501(c)3 is a union-front group that uses shakedown tactics and taxpayer money to advance its agenda.

According to its website, the group’s charitable nonprofit model involves “workplace justice campaigns” and the promotion of its ideals through research and policy work. The organization is based in New York City and has 10 nationwide affiliates, including in Miami.

On Monday, ROC United co-sponsored a protest outside the U.S. Capitol, where 1,500 participants reportedly gathered to demand federal action on the minimum wage and other social and economic items. ROC United partnered with National People’s Action, a Chicago-based coalition of community organizing groups. The event’s featured speaker was U.S. Rep. Keith Ellison, D-Minn., a “far-left Democrat” according to a bill sponsorship analysis.

Protesters also denounced the National Restaurant Association and corporate lobbying, an odd grievance considering ROC United recently admitted to spending $70,000 on lobbying in one year.

For several years — including the year it was approved for tax-exempt status — the group claimed on its annual IRS forms that it didn’t lobby. It told the IRS a different story in July.

Recently available public tax documents show the Restaurant Opportunities Center United Inc. admitted to spending $70,000 on lobbying in 2012. Moreover, the group amended three previous years’ statements to reflect its past undisclosed legislative and grassroots lobbying expenses.

Jean Souffrant, research and policy director for ROC Miami, admitted to the South Florida group’s lobbying efforts in an interview last year during a campaign to persuade lawmakers to force private businesses to pay benefits to their employees.

“We are on the forefront of talking to legislators and doing grassroots lobbying that allows us to speak up for restaurant workers,” Souffrant told

Floridians aren’t particularly unsympathetic. Florida has one of the highest minimum wages in the country, and local paid sick leave initiatives have garnered significant public support in certain areas. Exorbitant business costs and potential tax-exempt violations complicate ROC United’s aims, especially in light of alleged partisan abuses by the IRS.

As previously reported, ROC United was approved for tax-exempt status in June 2010, by the Cincinnati office of the IRS — the same office implicated in the targeting scandal of various conservative groups before the 2012 national elections.

On its 2012 form, stamped “received” by the IRS in August 2013, the group says it “failed to state lobbying expenses,” and “as a result, this is the filer’s first Form 990 that details lobbying expenses.”

“They were doing this without admitting it,” Mike Paranzino, communications director for ROC-Exposed, told

ROC-Exposed is a consumer watchdog group that receives support from restaurants and other business groups. ROC-Exposed filed an official complaint with the IRS in April 2013, regarding ROC United’s previously unacknowledged lobbying activities. They’ve yet to hear back from the agency, Paranzino said.

According to the documents, ROC United spent more than $269,000 on lobbying from 2009 through 2012 — an amount it now says is within its legal limit.

“Is sounds like they were attempting a liberal risk-taking approach to their lobbying and they decided at a later date that they no longer wanted to be exposed to that risk,” John Samples, director of the Cato Institute’s Center for Representative Government, told

“They probably decided to move away from a test that said lobbying is not a substantial part of what we do and reported how much they’re spending,” he said.

Samples ultimately blames Congress for nonprofit rules that he calls complicated and rooted in ambiguity.

“It’s not like hitting somebody in the face where clearly you’ve violated the law,” he said. “There are no bright lines.”

That leaves the IRS with the power of discretion.

“Given that we had to force them to admit they were lobbying at all should at a minimum lead to an independent audit or IRS investigation,” said Paranzino.

Denying its full scope of activities could have influenced ROC United’s initial IRS approval and helped to avoid subsequent review, Paranzino said. contacted the IRS for a general comment about whether denying lobbying activities during a period of heightened review and then amending previous tax statements at a later date could be grounds for additional scrutiny for any 501(c)3 group.

After repeated requests for comment, an IRS spokesman said in an email, “Federal law prohibits the IRS from discussing specific taxpayers or cases.”

Upon clarifying our request for general information, an agency spokesman declined to be mentioned by name and attested to the agency’s lawful conduct.

The spokesman twice said a technical expert would respond to our inquiry, but did not receive a return response.

Watchdog: Chris Christie Sheds His ‘Open And Honest’ Reformer Disguise

This article, written by Mark Lagerkvist, was originally published April 24 by

Governor Chris Christie’s office sends New Jersey Watchdog a message every other Tuesday — a reminder of how the Governor and his staff flout the law and fight transparency in State government.

“This email serves to hereby request a two-week extension regarding your OPRA request nos. W82964 and W82965,” it states.

Since January, the Governor has so far taken seven two-week extensions.

Under OPRA, the State Open Public Records Act, a governmental agency must grant or deny access to records “as soon as possible but not later than seven business days after receiving the request.” An agency is allowed extra time only if it needs to retrieve records from storage or archives.

In contrast, Christie and company already have had 15 weeks to decide whether to provide records of the State-paid travel expenses of the Governor and his senior staff. Requests for explanation of the delays have gone unanswered.

By stringing out the process indefinitely — a devious tactic that clearly circumvents the letter and spirit of OPRA — Christie’s crew technically avoids making a decision that can be appealed in court. Meanwhile, the public’s right-to-know languishes in limbo.

The great irony is that Christie promoted himself as a champion of reform throughout his first term in office.

“These measures are about good, open and honest government, where the playing field is level for everyone and the rules are unambiguous,” said Christie in 2010 while campaigning for reforms.

While Christie has advanced transparency in some areas, such as the website, he has repeatedly sought to avoid release of information that could be used to hold the Governor’s office accountable.

A Tale Of Two OPRA Requests

The latest battle with all the Governor’s men began with OPRA requests submitted to Christie’s office on Jan. 15. Each request focused on records of different aspects of the travel expenses of the Governor and his senior staff.

W82960 seeks specific records of travel paid for by third-parties on behalf of Christie and his senior staff. After three two-week extensions, the Governor’s office denied the request as being “unclear.”  Javier Diaz, a legal specialist to the Governor, did not respond to questions on what was unclear about OPRA request.

In response, a New Jersey Watchdog reporter is suing the Governor’s office for the records in Mercer County Superior Court. A hearing before Judge Mary C. Jacobson is scheduled for June 23.

“There is the public interest in assessing just who is paying for our government officials to visit with them,” argued attorney Donald M. Doherty Jr., in a brief filed last week. “If a person is judged by the company he keeps, politicians are similarly judged by who they travel to see.”

W82965 seeks specific records of travel by Christie and his senior staff paid by the State taxpayers. Regulations require the documents to be created and kept on file by the Governor’s office.

So far, the only communication from the Governor’s office has been to keep pushing back the deadline without making a decision.

“W82965 is a clear and specific request for public records,” the reporter wrote in a March 12 email to the records custodian. “If, for some reason, you believe it to be unclear, as your office has contended with W82960, please state exactly why you believe that is the case.”

The Governor’s office has not replied. Nor has it acknowledged New Jersey Watchdog’s offer to drop W82964 because it was a duplicate request caused by a snafu in the State’s website.

Christie, meanwhile, postures as a proponent of “good, open and honest government.” Yet the extension notices that delay access to public records continue to arrive every other Tuesday.

DISCLOSURE: Investigative reporter Mark Lagerkvist is the plaintiff in Lagerkvist v. Office of Governor, Mercer County Superior Court, MER-L-821-14

Debate Over Federal Land Heats Up In West

This article, written by Rob Nikolewski, was originally published by on April 23.

Nevada rancher Cliven Bundy may have brought the fight to the forefront, but western States’ public officials for some time have battled to get control of Federal lands back in the hands of the States.

Officials from nine States gathered in Salt Lake City last week for the Legislative Summit on the Transfer for Public Lands, which was planned long before the controversy over Bundy’s cattle grazing on Federal land became a national news story.

The issue is simple, those public officials say. Giant tracts of public land can be better managed by States, not the Federal government.

“It’s the right thing to do for our people, for our environment, for our economy and for our freedoms,” Montana state Sen. Jennifer Fielder said at a news conference.

New Mexico State Representative Yvette Herrell (R-Alamogordo), who was joined by Wendell Bostwick, president of the New Mexico Association of Counties, at the public lands summit, told New Mexico Watchdog the Bundy standoff “has brought awareness to the general population of what’s happening in the western States.”

However, Herrell said, ”This is not a land grab, and this not about privatizing these lands.”

Herrell said those attending the land summit didn’t take a position in the Bundy standoff. 

Here’s a look at the amount of land the Federal government owns in the West:


Proponents of the land transfers say the Feds take a huge bite out of States’ economies by taking a little more than 50 percent cut in royalties from mining, oil and gas, among others, that operate on Federal land. They also say the Federal forest policy has made wildfires worse in recent years and claim the feds too often over-regulate property through programs such as the Endangered Species Act.

“For instance, in Wyoming, the sage grouse is listed as an endangered species, yet you can still buy hunting licenses and hunt them,” said Herrell, who said 88 percent of the taxable land in Otero County is owned by the Federal government.

But opponents, especially environmental organizations, fiercely oppose the plan, fearing the move will lead to development. They doubt a transfer of public lands will lead to a financial windfall amounting to between $500 million and $1 billion for New Mexico.

“It’s laughable,” John Horning, executive director at WildEarth Guardians New Mexico, told New Mexico Watchdog last fall. “Public lands are a birthright for all Americans … New Mexicans don’t own them, Americans own them.”

“Everybody wants to protect our environment,” Herrell said, adding that transfer would affect U.S. Forest Service land and the Bureau of Land Management, but would not touch tribal lands, designated wilderness areas, national and State parks or property controlled by the Department of Defense, such as the White Sands Missile Range.

“This is not about putting wells in the middle of the forest,” Herrell said.

But politically, the land transfer debate seems to be breaking down along partisan lines. Most lawmakers attending the Salt Lake City meeting were Republicans. Herrell has tried and failed in the past two sessions of the New Mexico Legislature to set up a task force to look into the issue, with Democrats in the House Health, Government and Indian Affairs Committee offering resistance.

“It’s not a red or blue thing, for sure,” Herrell said. “It’s really just the western States sticking together and seeing what they can do in terms of getting their land back.”

Utah has taken the lead, passing legislation two years ago demanding the Federal government give up its land to State control.

But there are questions about whether that would be legal.

For example, the Enabling Act of 1910 that allowed New Mexico and Arizona admission into the Union contains language deferring public land issues to the Federal government.

The act states “that the people inhabiting said proposed state do agree and declare that they forever disclaim all right and title to the unappropriated and ungranted public lands lying within the boundaries thereof.”

But Utah state Representative Ken Ivory said the U.S. government should transfer Federal lands back to the nine western States, as it did in the past for States such as Louisiana, Nebraska, North Dakota, South Dakota and Alabama.

“The Federal government is exerting control over things that it was never supposed to control,” Ivory said Monday in an interview with Fox News. “In short, going from the Revolutionary War forward, the federal government was supposed to be a trustee.”

Opponents to the potential transfer are unmoved.

“I think the State is probably in over its head, acquiring Federal land and managing it,” Horning said.


Experts: Civilians Not Ready For EMP-Caused Blackout

This article by Josh Peterson was published by on April 21.

The catastrophic effects of an electromagnetic pulse-caused blackout could be preventable, but experts warn the civilian world is still not ready.

Peter Vincent Pry, executive director of the Task Force on National and Homeland Security and director of the U.S. Nuclear Strategy Forum, both congressional advisory boards, said the technology to avoid disaster from electromagnetic pulses exists, and upgrading the nation’s electrical grid is financially viable.

“The problem is not the technology,” Pry said. “We know how to protect against it. It’s not the money, it doesn’t cost that much. The problem is the politics. It always seems to be the politics that gets in the way.”

He said the more officials plan, the lower the estimated cost gets.

“If you do a smart plan — the Congressional EMP Commission estimated that you could protect the whole country for about $2 billion,” Pry told “That’s what we give away in foreign aid to Pakistan every year.”

In the first few minutes of an EMP, nearly half a million people would die. That’s the worst-case scenario that author William R. Forstchen estimated in 2011 would be the result of an EMP on the electric grid — whether by an act of God, or a nuclear missile detonating in Earth’s upper atmosphere.

An electromagnetic pulse is a burst of electromagnetic energy strong enough to disable, and even destroy, nearby electronic devices.

The scenario sounds like something in a Hollywood film, but the U.S. military has been preparing its electronic systems for such an event since the Cold War. The protective measures taken to harden facilities against a nuclear attack also help in some cases to protect against EMPs.

The civilian world is another story.

States have been working to fill in the legislative and regulatory gap left by Congress, as previously reported by, and private companies have been developing technologies that would protect against EMPs.

In 2011, state utilities commissioners recognized the need to invest in equipment that could help protect the power grid, but experts continue to warn that time to do so is running out.

Much focus during the past several years has been placed on society’s cybersecurity vulnerabilities. Sophisticated computer hackers working in secret, most likely sponsored by nation-states, can steal identities, money and even potentially hijack airplanes.

National Geographic, in the movie American Blackout, explored the catastrophic effects a cyberattack on the grid would have on society.

The movie premiered in October 2013 at the National Geographic Museum in Washington, D.C., accompanied by a panel of national security experts from the U.S. intelligence community.

Cyberattacks against the grid are possible. Stuxnet, the computer virus developed by the United States and Israel to sabotage Iran’s nuclear enrichment program, demonstrated that such an attack is not only possible, it can be done.

Computer viruses are software programs designed to attack specific entities. But even computers need electricity, otherwise they are little more than expensive paper weights.

Electricity is the lifeblood of the modern world. Food, transportation, medical facilities and communication systems all need it to function.

An EMP attack from a nuclear missile launched by a country like North Korea, on the other hand, would indiscriminately cripple whole regions.

Unlike nation-states, which can be deterred through diplomacy and force, however, the universe acts of its own accord.

An EMP from a super solar flare would behave similarly to one generated by a nuclear missile that detonated in Earth’s upper atmosphere.

Solar flares are explosions on the surface of the sun; coronal mass ejections (CME), a solar flare’s accompanying EMP, can disturb the space weather around the Earth and affect communications signals traveling through the upper atmosphere.

On multiple occasions during the past 155 years, large enough CMEs have disrupted electrical systems on Earth. One of the largest recorded solar flares happened in 1859. The CME, called the Carrington Event, disrupted telegraph systems in Europe and North America, and lit up the evening sky.

A solar flare in 1989 caused a blackout in Quebec that lasted more than nine hours, and systems as far away as New Jersey were also damaged. In 2013, ranked the solar storm that caused the blackout as the fourth worst in history. ranked a solar storm in December 2006 as the worst, and U.S. government officials reported that the event disrupted satellite communications and GPS signals for about 10 minutes and damaged the satellite that took the picture of the storm.

A joint study published in 2013 by researchers at Lloyd’s of London and Atmospheric and Environmental Research found that a similar event today would cost the world economy $2.3 trillion.

Risk of another Carrington-class solar flare is expected to peak by early 2015. In the summer of 2012, Earth narrowly missed one estimated to have been more powerful than the Carrington Event and 35 times the size of Earth.

Watchdog: Tax Dodgers May Be Keeping The U.S. Economy Afloat

Millions of Americans dutifully trudge to the local Post Office each year to mail their tax returns to Federal, State and local governments.

And there’s good reason. Failing to pay your taxes can result in expensive penalties, if you’re lucky, or armed Federal agents breaking down your door to take their share of your pie.

But those who fail to pay their taxes in full might be doing the American economy a favor. And their numbers are growing.

The so-called “shadow economy” in the United States accounts for as much as $2 trillion in economic activity, according to Edgar Feige, a professor of economics at the University of Wisconsin-Madison.

That’s larger than the GDP of Canada and India.

Feige says more people are participating in the shadow economy than at any time since World War II, when strict price-controls and rationing drove many people to the underground economy for goods and services.

In an interview in July 2013, Feige said there are a variety of reasons the underground economy is booming – but it mostly has to do with tax policy.

“The more people view the tax code as inequitable, the more they will try to evade it. The higher the effective tax rate, the higher the incentive to try to evade it,” Feige said. “And of course the greater the complexity of the tax code and the consequent cost of compliance, the more incentive there is to evade it.

In other words, the government can only get its grubby hands on the parts of the economy that it can track. And as tax rates rise, the part of the economy that is beyond governments’ grasp continues to grow.

As Milton Friedman put it: “The black market is a way of getting around government controls.”

Feige estimates unreported economic activity causes the government to miss out on $400 million to $500 million in taxes, which would be collected if there was full compliance.

But the government’s loss might be the economy’s gain.

Last year, the underground economic boomlet in the United States might have been enough to keep the economy as a whole from tumbling back into a recession. And for thousands of workers who have seen hours cut or jobs disappear, the shadow economy provides opportunities.

The effects are seen on a larger scale, too.

Though the officially reported unemployment numbers remain high, consumer spending tallies suggest a lower level of unemployment. One possible explanation: People who are earning their pay in the shadow economy, thus appearing to be unemployed by official measures but still having cash to spend.

In some other countries, the underground economy is so large — in Spain, it’s estimated that 20 percent of all economic activity takes place behind the purview of the taxman — it is the main reason the on-the-books economy can continue to function at all.

From The New York Times in 2012:

The happy news is that the size of the underground economy means that more Spaniards are working than it might seem, and that the official unemployment figure of 24.4 percent — the highest in Europe — may be overstated by as much as five to nine percentage points, economists say. That has given the Spanish government an important safety valve.

“Without the underground economy, we would be in a situation of probably violent social unrest,” said Robert Tornabell, a professor and former dean of the Esade business school in Barcelona. “A lot of people are now staying afloat only thanks to the underground economy, as well as the support of their family network.”

Around the world, the shadow economy may account for as much as $10 trillion, according to Robert Neuwirth, who has written several articles and a book on the subject.

In America, the shadow economy is likely here to stay, with employers reducing hours because of Obamacare and tax rates likely to climb in the coming years.

Who’s Watching Me? Police Took Photos Of My License Plates

This article, written by Kathryn Watson, was originally published by Watchdog on April 14.

ALEXANDRIA, Va. — The police know exactly where my car has been — and when — during the past few months.

They could have the same information — or more — about you.

As a part of my series on the use of automatic license plate readers in Virginia, I wanted to find out what kind of information local police might have. By law, the only information I’m privileged to is my own.

Last week, I filed a public records request with the Alexandria Police Department. I’ve lived in the lovely city of Alexandria for just two years, and my driving record — aside from the occasional parking ticket — is virtually spotless.

What I found, however, left me riveted.

In all, police captured 16 photos of my car — mostly at night — and recorded my license plate eight times on five dates — from October 2013 to as recently as April 1.

In January, a license plate reader captured my plate twice while my car was parked in the lot of my apartment complex, according to latitude and longitude records.

Police also captured records of my car as I drove to Bible study on a typical Wednesday night in March.

Still, others were captured in various spots around Old Town Alexandria.

Per Alexandria Police Department policy, LPR-generated data may be kept on a computer for up to 30 days, pending upload to the LPR database. There, information can be kept for up to six months, according to Crystal Nosal, commander and senior public information officer for the Alexandria Police Department. Police Chief Earl Cook ratcheted down that storage policy from four years to two, and then from two years to six months.

Alexandria police have 13 mobile systems, which are mounted only on police vehicles, Nosal said.

The State’s highest Constitutional office has already said random collection and storage isn’t legal — but many local police departments in Virginia continue to do it.

Last year, then-Attorney General Ken Cuccinelli concluded in an official opinion that “data collected in the continuous, passive manner that is not properly defined as criminal intelligence information and not otherwise relating directly to law enforcement investigations and intelligence gathering respecting criminal activity … may not be lawfully collected through the use of LPR technology.”

The Alexandria commonwealth’s attorney and city attorney disagreed with Cuccinelli’s legal opinion. An attorney general’s opinion doesn’t bear the force of law. That’s left to the courts.

Police say ALPR technology helps police identify and catch criminals in ways other approaches simply can’t.

In January, Alexandria police, guided by ALPR-gathered data, were able to apprehend the suspected robber of a U.S. Postal Service office.

“LPR has been a successful tool in identifying leads in lots of cases from homicide to larceny. There is not one specific crime type,” Nosal said, mentioning that records can be used to find parking violators, too. “Recovering stolen automobiles and detecting parking violations are probably the best examples, however, we do not maintain statistical data on when LPR was used as a tool since it is merely a pointer system.”

That kind of success doesn’t happen every day. A study of Maryland’s use of the technology found that for every 1 million license plates scanned, only 47 were connected with serious crimes, according to the American Civil Liberties Union. The ACLU of Virginia is encouraging people to file records request with their own police departments.

The top-of-the-line ALPR technology allows local police departments like Alexandria’s to capture up to 1,800 license plates per minute, even of cars going up to 160 mph. Police can check license plate data to match one vehicle’s moves, or against things such as DMV records.

That’s exactly why civil rights advocates such as John Whitehead, president of the Rutherford Institute in Charlottesville, said the widespread collection and preservation of license plate data not only potentially violates search and seizure rights in the 4th Amendment, but it also makes people leery to exercise their 1st Amendment rights.

In 2008 and 2009, the Virginia State Police, which now regularly expunges records but still collects them, captured license plate data of people at political rallies for Sarah Palin and Barack Obama.

“It could be used against you later,” Whitehead said earlier this month.

After writing this, I’ll be sure to keep a closer eye on my surroundings. All it would take is a quick search of the records to find out where I live and where I typically travel.

Old Friend Helping In Nevada Secretary Of State’s War On Conservatives

This article, written by M.D. Kittle, was originally published by Watchdog on April 14.

MADISON, Wis. — In the national battle by liberal government officials working to silence conservative activists, one Nevada group is fighting back.

The State Government Leadership Foundation, a conservative nonprofit under attack by Nevada Secretary of State Ross Miller, a Democrat, recently filed an open records request with the agency hoping to track the communications between Miller and his political henchman and former underling, Matt Griffin.

Miller, Nevada’s chief elections official, last month threatened SGLF, demanding it cough up its donors list.

“I will continue to review every legal option to compel this front group to reveal its special-interest donors,” Miller said in March.

Miller is upset about the foundation’s ad and $500,000 Web campaign that, in part, exposes the secretary of state for taking $60,000 in gifts from a variety of donors, many of them corporate contributors.

“He lives the life. You pay the tab. Tell Ross Miller to stop living the high-life at your expense,” urges the SGLF issue ad. That message is accompanied by pictures of Miller posing with ear-biting former boxing champ Mike Tyson and a curvy Playboy playmate, and attending glitzy celebrity receptions.

Miller tried to have the ads removed, but the TV stations refused.

The secretary of state, who is running for state attorney general (Nevada’s top law enforcement post), has gotten some back-up from old chum Griffin, who formerly served as Miller’s deputy secretary of elections.

Griffin, along with the sunshiny sounding political action committee Nevadans for a Brighter Future, filed an “elections integrity complaint” against Miller’s latest conservative nemesis, SGLF.

Miller, son of former Nevada Governor Bob Miller, also a Democrat, demands full donor disclosure by SGLF. But as a nonprofit 501(c)(4) organization, the conservative advocacy group really doesn’t have to. Anonymous speech, after all, is a bedrock of the First Amendment, warmly embraced by the nation’s Founding Fathers, conservative groups demand.

The complaint, dated March 17, 10 days after Miller publicly went on the political war path, asserts the content of the ad constitutes “express advocacy” for a candidate. Under Nevada law, such advocacy demands organizations register as political action committees with Miller’s office.

But the ad doesn’t tell Nevadans who to vote for or to vote against Miller. It doesn’t even mention the candidate’s opponent. Hence, it’s hard to make the case for direct or express advocacy.

“Left unsaid, because the (Miller campaign) cannot dispute this either, is that Ross Miller received these gifts from special interests because of his taxpayer-funded position as Secretary of State. The facts are clear: Nevada’s taxpayers are paying for Ross Miller to be Secretary of State, and he is using that position to live the high life,” SGLF states in a letter to TV stations who were asked to remove the attack ad.

No matter. It’s all so much “dark money” in the minds of the Brighter Futures crowd.

“We are calling for the Nevada secretary of state and the Nevada attorney general to investigate SGLF and bring them out of the shadows,” Dave Kallas, chairman of Nevadans for a Brighter Future, told the Las Vegas Review-Journal.

SGLF wants to know just how chatty Miller and Griffin have been in recent months, particularly whether any of their conversations have involved the conservative group.

The foundation has filed an open records request with the secretary of state’s office seeking copies of all public records of the official calendar and the daily schedule of Miller between March 21, 2013, and March 27, 2014. The group wants emails regarding the mention or discussion of SGLF by Miller or his staff, and any records related to the Miller’s use of state-issued equipment, including cell phones, bill records of such phones, text messages or any pictures stored between March 1 and March 27.

SGLF also has requested all communication between Miller and his former deputy of elections, as well as communication between Griffin and Miller’s staff. has received confirmation that the secretary of state’s office responded to SGLF’s request on April 9. Officials at the agency indicated they would need time to process the significant records request.

Miller and Griffin go way back, apparently to their days on the basketball team at Carson Middle School.

Griffin left the secretary of state’s office in 2011 to take a position as a lawyer in private practice. Miller gushed about his pal and his accomplishments at the state agency.

“His list of accomplishments is long,” Miller said in a statement at the time. “We will miss his wit and wisdom, and are grateful for his service to the state of Nevada in this very important capacity.”

While parting may be sweet sorrow, the two pals have kept in touch. They still like to joke together on Twitter.

Neither Miller nor his campaign returned several requests for comment. Griffin could not be reached for comment.

Matthew Walter, SGLF executive director, told Watchdog last week that Miller’s assault on the group’s First Amendment rights is a “disturbing trend” that transcends Nevada politics.

“This is all about freedom of speech,” Walter said. “Whether it’s President Obama’s Internal Revenue Service and their unbalanced scrutiny into conservative organizations, or whether it’s Ross Miller with his threats and blustering in Nevada, what we see far too often are liberal groups defending the right to free speech until they don’t personally agree with the content. At that point, they throw up every roadblock they can to hinder the individual’s right to free speech.

“People everywhere should be deeply concerned about this,” Walter added. “The fact that he thinks it’s OK to silence political dissenters should be chilling to folks in Nevada and across the country.”

Diverse Coalition Petitions Congress To Permanently Ban Internet Access Taxes

This article, written by Josh Peterson, was originally published by Watchdog on April 11.

WASHINGTON, D.C. — Twenty-nine organizations are banding together to stop a tax for hopping on the information superhighway.

In a letter to members of Congress on Thursday, the group asked lawmakers to support a permanent ban on Internet access taxes.

Congress is currently facing a choice to permanently ban Internet access taxes.

A moratorium on Internet access taxes first enacted in 1998 is set to expire on Nov. 1. That moratorium also included a ban on multiple and discriminatory taxes on e-commerce.

A diverse group of organizations, joined together as the Internet Tax Freedom Act Coalition, asked members in the letter to support legislation that would extend the moratorium permanently — the Permanent Internet Tax Freedom Act in the House and the Internet Tax Freedom Forever Act in the Senate.

Among the groups that signed on to the letter, which circulated on Capitol Hill on Thursday, were the Southern Christian Leadership Conference, Hispanic Leadership Fund, U.S. Black Chambers Inc., Women Impacting Public Policy, Americans for Tax Reform,  and

The coalition also includes three out of four of the nation’s major wireless providers — AT&T, Verizon and T-Mobile — along with CenturyLink, Comcast NBCUniversal, Cox Enterprises and Time Warner Cable. also is a member of the coalition.

“While Congress and the president want consumer adoption, investment, deployment and innovation in broadband services, allowing the imposition of onerous taxes would nullify these goals,” said Steve Pociask, president of the American Consumer Institute Center for Citizen Research.

“We need to not tax what we should encourage,” said Pociask.

“Ensuring that our business members continue to have affordable and reliable internet access will allow them to remain competitive in today’s global economy,” said Ron Busby Sr., president of U.S. Black Chambers Inc., a nonpartisan nonprofit wireless advocacy organization, also is recruiting signatures for a recent petition the organization launched in support of the bills as well.

As of Thursday night, the petition had collected 44,542 signatures.

Contact Josh Peterson at Follow Josh on Twitter at @jdpeterson.

Consumer Beware: Regulators ‘On Steroids’

This article, written by Kenric Ward, was originally published by New Jersey Watchdog on April 9.

WASHINGTON, D.C. — Financial regulations imposed after the 2008 Wall Street crash are backfiring on consumers and pose a “compliance nightmare” for lenders.

“What we have are policymakers on steroids,” Representative Scott Garrett charged Tuesday.

“They have contempt for the public,” said the New Jersey Republican, who complained that the Federal Reserve Board has yet to provide an unredacted report of events leading up to the financial meltdown six years ago.

Lawyers from four Federal agencies defended their actions, asserting that banks have bounced back under their watch and Dodd-Frank financial reforms.

“Dodd-Frank is designed to strengthen the mortgage market. We’re acting to reduce regulatory burdens,” said Meredith Fuchs, general counsel for the 3-year-old Consumer Financial Protection Bureau.

Representative Jeb Hensarling, chairman of the House Committee on Financial Services, countered that just the opposite is happening.

“There’s a ‘gotcha attitude,’” the Texas Republican said. “It’s led to a downsizing of consumer lending programs.”

Liberal Democratic Representative Keith Ellison agreed.

“The regulatory regime has swung too far. It’s closing off good people trying to do legitimate transactions,” the Minnesotan said.

The Federal Deposit Insurance Corp. reported that since Dodd-Frank was enacted, fewer U.S. banks offer free checking accounts, while customer fees rise. Credit card companies, meanwhile, are shutting down more accounts and lowering credit lines.

Yet Republican efforts to require the Congressional Budget Office to conduct cost-benefit analyses of new Federal regulations were mocked by Representative Maxine Waters.

“Excessive borrowing and risky investments were the problem (in 2008) — not Federal regulators,” said the California Democrat.

Hensarling accused Federal agencies under Dodd-Frank of “engaging in de facto rulemaking without a rulemaking process.”

He charged CFPB with “abusive practices,” citing alleged targeting of third-party (payday) lenders, as well as discrimination complaints by some of its own employees.

“You’re imposing a standard for others that you are incapable of living under yourself,” he told Fuchs.

Barred from a CFPB meeting this year, Representative Sean Duffy (R-Wis.), called the agency “as secret as the CIA.”

“These meetings should be open and transparent,” he said.

Paul Gallagher, on the economic staff of Executive Intelligence Review, told that Dodd-Frank is “riddled with loopholes” that pose a grave, but little-known, threat to U.S. consumers.

“Banks are disappearing. They are being obstructed. Regulators have nothing to claim credit for,” he said.

Gallagher points to Section II of Dodd-Frank, which he says authorizes the confiscation of bonds of unsecured creditors and the seizure of uninsured deposits — as has occurred in Cyprus and Spain.

“This ‘bail-in’ will make the (2008) bailouts look orderly by comparison,” he warned.

Disputing the regulators’ claim of a rejuvenated banking system, Gallagher reported, “The rate at which U.S. banks are disappearing is high and accelerating” through acquisitions.

“We’ve seen the number of banks decline from 8,200 to 6,900” in less than a decade, as larger financial institutions get even bigger.

John Allison, former chairman and CEO of BB&T Bank, says neither Dodd-Frank nor heavy-handed regulators have altered the “too big to fail” philosophy that triggered multibillion-dollar taxpayer bailouts by the George W. Bush and Barack Obama Administrations.

“The most significant damage is the belief that additional regulations are necessary,” Allison wrote in his 2013 book, The Financial Crisis and the Free Market Cure.

Calling the U.S. banking industry “grossly misregulated,” the president and CEO of the libertarian Cato Institute said bureaucrats’ incentives “are political, not economic.”

“If fully implemented, (Dodd-Frank) will make U.S. financial firms less competitive and drive resources out of the United States,” Allison predicted.

“Ironically, it will also increase risk, as unregulated firms headquartered in foreign locations will have a larger market share.”

Kenric Ward is a national reporter for and chief of the Virginia Bureau. Contact him at or at (571) 319-9824.

Vermont Activists Blow Cover On Gun Confiscation Bill

MONTPELIER, Vt. — A bill that passed the Vermont House without controversy is now in doubt after gun-rights advocates exposed provisions allowing police to take guns during domestic disputes.

“It’s a highly illegal confiscation bill,” Gun Owners of Vermont president Ed Cutler told Vermont Watchdog.

“H.735 is a forfeiture bill that tells police if a person gets a temporary restraining order, they have to come into the house and take all weapons — not just firearms, but all weapons.”

At first glance H.735 appears to propose fee updates on mundane items — from lottery ticket sales to license renewals. Yet tucked away in the bill are provisions for the storage of firearms confiscated during domestic disputes. Governor Peter Shumlin requested the gun-related provisions in October.

The seemingly innocuous fees came under fire during last week’s Senate Judiciary Committee hearing.

State Senator Joe Benning (R-Caledonia) blasted the bill, saying Vermonters would be “deprived of their property and … told they have to pay to get it back without ever having had a day in court.” Confiscating Vermonters’ property without due process violates the U.S. Constitution, he said.

“I don’t own a gun, but I do care about the Constitution, and when you bypass that, I find that offensive.”

Cutler told Watchdog the bill applies to any dangerous objects found on site during a domestic-dispute investigation.

“It could be steak knives, it could be firearms, bows and arrows, baseball bats, chainsaws, you name it. It leaves it to the discretion of the cop,” he said.

Sarah Kenney, the public policy director for Vermont Network Against Domestic and Sexual Violence, said the provisions are necessary because of “alarming parallels between access to firearms and lethality in domestic violence cases.” She said women who obtain restraining orders are at risk of violent attack.

Moreover, Kenney said, judges rarely order police to hold guns in domestic dispute cases because law enforcement agencies have nowhere to store them. H.735 would address that by having agencies charge suspects a fee of $4 per week for the storage of weapons confiscated during a dispute.

In the hearings,state  Senator Alice Nitka, D-Windsor, asked whether judges ever tell Burlington police not to hold guns because to a lack of storage space. Burlington Police Chief Michael Schirling responded, “No.”

When Watchdog asked Cutler why the bill sailed through the House without controversy, he replied, “They didn’t know it was a forfeiture bill; they thought it was a fee bill.”

Statutes such as H.735 are popular with gun control groups because they provide for local enforcement of federal gun laws. While federal law — the “Lautenberg Amendment” — prohibits people convicted of domestic violence from owning firearms, enforcement is virtually nonexistent, as it requires action by the Bureau of Alcohol, Tobacco, Firearms and Explosives.

To the dismay of pro-gun groups, the Supreme Court in March broadened the interpretation of the Lautenberg Amendment to include “offensive touching.” Justice Antonin Scalia warned the ruling eventually could require gun confiscation for mere name-calling.

States have reacted to such gun laws by prohibiting local enforcement. According to, a website that tracks state resistance to federal gun regulations, Kansas, Alaska and Idaho have laws banning local compliance with federal gun regulations. Missouri’s Legislature passed a similar bill by veto-proof majority last week.

Cutler told Watchdog he would like to see similar legislation passed in Vermont. Adding amendments to H.735 could provide that opportunity.

“H.735 is a weapons bill. And if it’s a weapons bill, they can put amendments on it.”

Watchdog: Depth Of Federal Arms Race Should Surprise, Shock Citizenry

This article, written by Rob Nikolewski, was originally published by New Mexico Watchdog on April 3.

SANTA FE, N.M. — In late February, four Federal agents carrying side arms with a drug-sniffing dog descended on the Taos Ski Valley in what was called a “saturation patrol.”

Authorities were working on tips of possible drug selling and impaired driving in the ski resort’s parking lot and surrounding area.

But the agents weren’t from the FBI, ATF or even the Drug Enforcement Administration.

Rather, the agents represented the U.S. Forest Service.

“It’s one of the untold stories about government,” said former New Mexico Governor Gary Johnson, who lives in Taos, is an avid skier and has been a leading critic of the operation that turned up only a few minor infractions. “People don’t grasp the size and the scope of these entities and their law enforcement arms.”

It may come as a surprise to many U.S. taxpayers, but a slew of Federal agencies — some  whose responsibilities seem to have little to do with combating crime — carry active law enforcement operations.

Here’s a partial list:

That’s right, NOAA — the folks who forecast the weather, monitor the atmosphere and keep tabs on the oceans and waterways — has its own law enforcement division. It has a budget of $65 million and consists of 191 employees, including 96 special agents and 28 enforcement officers who carry weapons.

“There’s no question there’s been a proliferation of police units at the federal level,” said Tim Lynch, director of the Project On Criminal Justice for the Cato Institute, a libertarian think tank based in Washington, D.C. “To me, it’s been a never-ending expansion, a natural progression, if you will, of these administrative agencies always asking for bigger budgets and a little bit more power.”

It’s been estimated the U.S. has some 25,000 sworn law enforcement officers in departments not traditionally associated with fighting crime. According to the U.S. Office of Personnel Management, and in a tabulation compiled by the Wall Street Journal in 2011, 3,812 criminal investigators are working in areas other than the U.S. departments of Treasury, Justice, Defense and Homeland Security.

Lynch says it’s hard to tell how much money Federal agencies spend on their respective law enforcement divisions.

“We need a fuller accounting of exactly how many police units have proliferated in the federal government and how much it’s costing taxpayers,” said Lynch, who said he would like to see members of Congress ask agency officials direct questions about budget and staffing.

The Wall Street Journal reported that, in 2008, agents armed with assault rifles from NOAA, along with officers from the U.S. Fish and Wildlife Service, raided a businesswoman’s offices in Miami looking into charges that she was violating the Endangered Species Act by trading in coral.

“I felt like I was being busted for drugs, instead of coral,” Morgan Mok said afterward. “It was crazy.”

Mok said she obtained the coral legally and eventually paid a $500 fine and served a year’s probation for failing to complete the proper paperwork.

Why is a law enforcement arm necessary at NOAA?

“NOAA’s Office of Law Enforcement protects marine wildlife and habitat by enforcing domestic laws and international treaty requirements designed to ensure these global resources are available for future generations,” NOAA spokesman David Miller said in an email to New Mexico Watchdog, pointing out that the division has existed since 1970. “Our special agents and enforcement officers ensure compliance with the nation’s marine resource laws and take enforcement action when these laws are violated.”

As for the U.S. Forest Service, Special Agent Robin Poague defended the use of the agency’s law enforcement officers — called LEOs — in the Taos operation that resulted in harsh criticism from many residents.

“Rangers were armed when the Forest Service started 100 years ago,” Poague said. “We have a long history of law enforcement.”

Portions of the Taos Ski Valley sit on Federal land. If there were suspicions of drug activity leading to the operation in February, why not use the DEA instead?

“U.S. Forest Service land is our primary responsibility, it’s not the DEA’s,” Poague told New Mexico Watchdog by telephone from his office in Albuquerque.

A Forest Service recruitment video says the agency employs about 700 law enforcement personnel. Poague said the service’s law enforcement division was created in 1994.

But many other Federal agencies established their own after the Sept. 11, 2001, attacks.

In the aftermath of the attacks, the FBI shifted its attention to tackling terrorism, and Congress gave permanent powers to inspectors general in more than two dozen agencies.

By last count, 25 agencies with law enforcement divisions fall under their respective offices of inspectors general.

With their growth has come criticism that officers are becoming overly militarized.

“The whole notion of police operations these days, that they’re dressed to kill, that they’re up against an enemy, is wrong,” Johnson said. “Citizens are not the enemy.”

In 2010, the Department of Education defended its purchase of 27 12-gauge shotguns to replace old firearms used by its Office of Inspector General, the law enforcement arm of the department. DoE said the guns were necessary to help combat “waste, fraud, abuse, and other criminal activity involving Federal education funds, programs and operations.”

A year later, DoE Office of Inspector General special agents raided a California home at 6 a.m. to apprehend a man the department said was involved in criminal activity. DoE officials did not say why the raid was conducted, releasing a statement that said, “the office conducts raids on issues such as bribery, fraud, and embezzlement of federal student aid funds.”

“In these cases, it causes you to think, is this agency really necessary, is this unit really necessary,” Lynch said.

In an email to New Mexico Watchdog, a spokeswoman for the DoE Office of Inspector General — the department’s law enforcement arm — reported it has a staff of 260 members, 90 of which are criminal investigators. Its budget is $57.7 million for fiscal 2014.

Defenders of the agencies say armed law enforcement provides a deterrent and that agents need to be armed to protect themselves against potentially dangerous criminals.

In fact, just last month a Forest Service ranger in North Carolina was shot and killed by a murder suspect, who also killed a police dog. On Jan. 1, 2012, a National Park ranger was shot and killed at Mount Rainier, in Washington state.

Cancel The Champagne: Obamacare Tax Predicted To Hit Business Hard

MADISON, Wis. — Call it a case of premature celebration.

As President Barack Obama did his victory dance Tuesday amid better-than-expected (reported) enrollment in his namesake Obamacare, the Affordable Care Act’s health insurance tax looms in the shadows. Its $100 billion impact, business advocates say, could ultimately hurt the people Obamacare claims to help.

In a Wall Street Journal op-ed, Bernie Marcus, co-founder and former chairman and CEO of Home Depot, asserts small and mid-sized business will bear the brunt of the health insurance tax — known as HIT in business circles — and that “Many will be forced to raise their employees’ share of premium payments or, worse, lay off workers to pay the escalating costs of health care for their core employees.”

Hard to party with those kind of possibilities ahead.

Yet Obama insists happy days are here again and here to stay, thanks to his signature legislation. The proof, the President said, is that some 7.1 million Americans have signed up for Obamacare as of the March 31 deadline, according to Administration numbers.

“The Affordable Care Act is here to stay,” Obama triumphantly declared in a Rose Garden speech. Despite all the website “glitches,” the delays and the small matter of the Americans who have lost their insurance, the President calls it all “progress.” He blasted Republicans and other critics of the big-government program.

“Many of the tall tales that have been told about this law have been debunked. There are still no death panels. Armageddon has not arrived,” he said. “Instead, this law is helping millions of Americans, and in the coming years it will help millions more.”

But the worst is yet to come, according to critics closely watching the impending healthcare tax.

The tax is expected to generate revenue of about $8 billion this year and as much as $14.3 billion by 2018.

The Congressional Budget Office has said the tax will be “largely passed through to consumers in the form of higher premiums.”

In his op-ed, Marcus writes that millions of Americans will be “paying much higher premiums because of this tax, with the added cost rippling through the economy and stifling job creation.”

Marcus notes that “the National Federation of Independent Businesses projects the health-insurance tax will add an additional $475 per year for the average individually purchased family policy — nearly $5,000 over the course of a decade. Small businesses will take an even bigger hit, with the cost of an employer-provided family policy rising a projected $6,800 in the next decade.”

And NFIB projects the private sector will trim at least 146,000 jobs through 2022 due to the health insurance tax.

“That’s like vaporizing some of the largest employers in the country. Just the low-end estimate — 146,000 jobs — is still more than the total number of employees currently working for companies like Costco, Microsoft and Delta Airlines,” Marcus writes.

Businesses across the country are expressing concern about the impact of the Affordable Care Act.

A Wisconsin Manufacturers and Commerce survey of 341 Wisconsin CEOs released in January found more than one-fifth of respondents were concerned about health insurance, and 18 percent worried about government regulations.

According to the survey, 93 percent of respondents said they offer employer-sponsored health insurance coverage to their employees. Of those, 87 percent said their costs would increase. Forty-two percent said their premiums would rise between 11 percent to 20 percent; 40 percent said rates would rise between 1 percent to 10 percent.

Respondents say they will pass on some or all of their higher healthcare costs to employees. Specifically, 54 percent said they would increase employee contributions, and 22 percent said they would reduce benefits.

One executive, when asked “what is holding back the economy,” said: “I think most companies trimmed back in (2009) and have been reluctant to make any bold moves because of all the unknown big issues driven by the government,” according to WMC. Another said: “Lack of trust, direction and leadership at the federal level.”

“The jobs never created because of the health-insurance tax will be a ‘death of a thousand cuts’ on Main Street that adds up to a major wound for the economy,” Marcus wrote in the op-ed. “As a result, NFIB predicts total gross domestic product in 2022 will be $23 billion to $35 billion smaller than it would have been absent the HIT.”

The President may want to cancel the champagne.

Chris Christie’s Comeback Faces ‘Doublegate’ Challenge

CPAC 018
New Jersey Governor Chris Christie speaking at CPAC 2014 last month. PHOTO CREDIT: SAM ROLLEY

As Governor Chris Christie proclaimed his exoneration in the Bridgegate scandal, he refused to discuss his lieutenant governor, Kim Guadagno.

“This is my press conference, not hers,” snapped Christie. A reporter who attempted a follow-up question was quickly interrupted.

The internal investigation commissioned by the governor also cleared Guadagno of an allegation she threatened to withhold Superstorm Sandy relief funds from Hoboken unless its mayor supported a project proposed by a developer with ties to the Christie Administration.

Yet Guadagno may still be an Achilles Heel in Christie’s political revival and Presidential ambitions.

Hoboken Mayor Dawn Zimmer’s accusation against Guadagno is difficult to prove or disprove. Guadagno and Zimmer were the only ones present during their private conversation, and each has given a very different account of what transpired.

The big question is whether Guadagno can escape Doublegate — a lesser known controversy loaded with smoking gun documents.

The Birth Of Doublegate

Doublegate first surfaced in 2010 with an investigative report by New Jersey Watchdog detailing false and conflicting statements by Guadagno that enabled one of her top aides to improperly collect $227,000 in pension checks from the Police and Firemen’s Retirement System.

As Monmouth County sheriff in 2008 — the year before she was elected lieutenant governor — Guadagno hired Michael W. Donovan Jr. as “chief of law enforcement division” at an $87,500 annual salary.

Guadagno announced the appointment in a memo to her staff. The sheriff’s official website identified Donovan as “sheriff’s officer chief,” supervising 115 subordinate officers and 30 civilian employees.

Donovan faced a legal problem. He already was collecting an $85,000 a year State pension as a retired investigator for the county prosecutor. While double-dipping is often legal in New Jersey, this case was different.

Since the position of sheriff’s officer chief is covered by the pension system, Donovan should have been required to stop receiving pension benefits, re-enroll in the retirement plan and resume contributions to the pension fund.

Instead, Guadagno changed Donovan’s job title in several documents so her aide could be a double-dipper, collecting  two sets of checks totaling $172,500 a year.

In county payroll records, the oath of office and a news release by Guadagno, Donovan was listed as the sheriff’s “chief warrant officer” — a similar sounding, but low-ranking position that’s not in the pension system. A chief warrant officer is responsible for serving warrants and other legal documents.

However, on Guadagno’s organizational chart, Donovan was listed as chief of law enforcement. The position of chief warrant officer was not on the chart.

While sheriff’s chief, Donovan pocketed $227,000 in checks from PFRS. Since he did not re-enroll in the pension plan, he avoided another $18,000 in contributions. If the State decides Donovan violated pension law, he could be forced to repay $245,000.

Guadagno could face a legal consequence for her role in the double-dipping scheme. Under State  statute, “Any person who shall knowingly make any false statement or shall falsify or permit to be falsified any record or records of this retirement system… shall be guilty of a misdemeanor.”

Conflicted Criminal Investigation

The news reached State pension officials. The PFRS Board of Trustees voted in May 2011 to call for a criminal investigation of Donovan — plus similar cases involving John Dough of Essex County and Harold Gibson of Union County.

The investigation immediately faced a major conflict-of-interest.

The case was assigned to the State attorney general’s Division of Criminal Justice, which Guadagno once supervised. She was DCJ’s deputy director from 1998 to 2001.

As Christie’s second-in-command, Guadagno serves on the governor’s cabinet as a colleague of the attorney general.

The governor has the authority to appoint an independent investigator under Article 5, Section IV, Paragraph 5 of the State Constitution. Instead, the Christie administration chose to let DCJ handle the probe.

The hush-hush investigation is regarded as a State secret. Representatives of Christie, Guadagno and the attorney general’s office repeatedly have declined comment about the probe and its status.

Two months ago, PFRS trustees belatedly learned DCJ had closed the investigation in June 2012.  However, DCJ did not tell the board what it found.

“If this is closed, when are we going to find out the outcome?” trustee John Sierchio asked at the February meeting. “I just want to know how they came to their conclusion.”

The Records Battle In Court

The circumstances raise a troublesome question: Was the investigation a sham used by the Christie administration to bury the controversy rather than uncover the truth?

A New Jersey Watchdog reporter is fighting DCJ in Mercer County Superior Court as part of an effort to get access to records of the now-closed probe.

Over the State’s objections, Judge Mary C. Jacobson ordered the attorney general to submit a Vaughn index of its investigatory files for inspection by the reporter. While the parties argue over which documents, if any, must be released, the index remains sealed under a temporary protective order by the court.

In a parallel case, the reporter also is seeking records of the State Treasury’s internal inquiry into Donovan’s pension eligibility.

In February, Administrative Law Judge Linda M. Kassekert ordered the State Treasury to release 25 of 26 documents to the reporter under the state Open Public Records Act.  Those files have yet to be released as the 3-year-old case — which began as a complaint to the Government Records Council — continues to wind its way through the State’s administrative process.

Hearings in both cases are scheduled for later this month.

# # #

DISCLOSURE: Investigative reporter Mark Lagerkvist is the plaintiff in the public records cases against Treasury (OAL GRC 6985-13 & GRC 2011-110) and Division of Criminal Justice (Mercer County Superior Court, MER-L-464-13).