QUOTE OF THE DAY

Chicago Tribune: IRS scandal a reminder of how I learned about The Chicago Way

The Internal Revenue Service scandal now devouring the Obama administration — the outrageous use of the federal taxing authority to target tea party and other conservatives — certainly makes for meaty partisan politics.

But this scandal is about more than partisanship. It's bigger than whether the Republicans win or the Democrats lose.

It's even bigger than President Barack Obama. Yes, bigger than Obama.

It is opening American eyes to the fundamental relationship between free people and those who govern them. This one is about the Republic and whether we can keep it.

And it started me thinking of years ago, of my father and my uncle in Chicago and how government muscle really works.

Because if you want to understand The Chicago Way of things in Washington these days, with the guys from Chicago in charge of the White House and the federal leviathan, there's one place you start:

You start in Chicago.

My father and uncle ran a small business, a supermarket on the South Side. Uncle George worked in the front, my father in the butcher shop in the back. My uncle had been a teacher. My father had plowed his fields with a mule.

They were immigrants who came here from Greece with nothing in their pockets but a determination to work, and the belief that here, in America, no other power could roll in with tanks and put their boots on the necks of their children.

My father and uncle, like the rest of the family, valued education and books and free political debate. And so at large extended family Sundays, we'd all sit around the dinner table, many uncles and aunts and cousins, young and old.

There were conservatives and socialists, Roosevelt Democrats and Reagan Republicans and a few bewildered, equivocal moderates in between, everyone squabbling, laughing, telling stories.

No matter whose house we were visiting, the TV was never turned on after dinner. Instead, we'd have coffee and fruit and dessert and argument. We had different views, we loved each other, and even strangers who showed up were expected to join in, to debate education, the presidency, social issues, the war, drugs, bluejeans, long hair, baseball, everything.

Uncle Alex was the uncle who told us young people how best to make our points. He ran a snack shop in the Bridgeport neighborhood — the legendary home of Chicago mayors and Democratic machine bosses.

"Don't wait for a ticket," he'd say, and puff on his cigar, always in a white shirt and tie, on those family Sundays. So we'd just jump in when we could, like the rest.

Sacramento Bee: California's health exchange to serve as voter registration hub

Millions of Californians who contact the state's new health exchange to buy insurance will be given the opportunity to register to vote, too, a move that some Republicans fear could benefit Democrats.

Secretary of State Debra Bowen made California the first state to designate its health exchange as a voter registration agency Wednesday but others are expected to follow suit, said Shannan Velayas, Bowen's spokeswoman.

"This is about making sure that all eligible Californians are offered the chance to register to vote," Velayas said Thursday.

A 1993 federal law requires states to designate their agencies and offices that provide public assistance or disability services as voter registration agencies, Velayas said.

The federal law commonly is known as "motor voter" because it ensured that applicants for drivers' licenses nationwide would be asked if they wanted to register to vote.

Public agencies in California that currently serve as voter registration outlets include the Department of Motor Vehicles and offices overseeing the state's welfare, tax collection, and in-home supportive services.

California's health-care exchange, Covered California, is creating a marketplace for millions of uninsured Californians to compare prices and buy health insurance policies this fall to take effect Jan. 1.

Many of Covered California's clients are expected to be families of low and moderate incomes. Some will be eligible for taxpayer subsidized policies and others will have incomes low enough to qualify for Medi-Cal.
Senate GOP leader Bob Huff said he supports the notion of all Californians registering to vote but that targeting specific populations of people creates the possibility of partisan advantage.

"It does beg the question about whether it's a systematic attempt to try to empower people more predisposed to vote their way," Huff said of the designation by Bowen, a Democrat. "And that would be concerning to us."

Reuters: Unemployment rates drop in most states, Illinois climbs

Unemployment rates dropped in 43 out of the 50 U.S. states and in the District of Columbia in April from a year before, according to Labor Department data released on Friday.

A handful of states, including Illinois, Delaware, Indiana, Wisconsin, Mississippi and New Hampshire saw their jobless rates rise over the year. Illinois' rate fell in April to 9.3 percent from 9.5 percent in March but rose from 8.8 percent a year before.

"April data reflects the unevenness of this recovery," said the director of the Illinois employment department, Jay Rowell, in a statement. "This uneven path forward likely will continue until consumer and business confidence can be sustained at the national level."

Even though Nevada registered the largest rate drop of all the states over the year, it still had the highest unemployment rate in the country at 9.6 percent in April. The state, which reaped economic fortune during the housing boom, saw its rate spike to 14 percent in September 2010, the highest on records going back to 1976, and then steadily drop.

After Nevada the next higher rates were Illinois, Mississippi and California. In California, where the economy is on the mend, the state unemployment rate continued its decline falling to 9 percent from 9.4 percent in March - a record low since December 2011.

North Dakota's unemployment rate, the lowest in country for half a decade, inched up to 3.3 percent. The state is in the grips of a commodities boom, with North Dakota's 28,600 mining and logging jobs in April 321 percent more than five years before.

Still, it was one of seven states where the jobless rate rose over the year. In April 2012, North Dakota's jobless rate was 3 percent, and in March it was 3.2 percent. The increase may be due to its swelling labor force, which also grew since April 2012.

Seasonal factors could also be in play, according to Michael Ziesch, a manager of labor market information for the state, who noted "April rates have historically always posted a decrease from prior month, this year was no exception."

"Current period rates are slightly higher than a year ago and reflect longer winter type weather in the period that delayed many outside projects," he added.

From March, unemployment rates fell in 40 states and Washington, D.C., and were unchanged in seven. Rates rose in two other states besides North Dakota: Louisiana and Tennessee.

CNBC: Recession Will Haunt Gen-X Into Retirement

The Great Recession hurt a lot of people and this loss of wealth will follow millions into retirement, according to a report released Thursday.

Early baby boomers (those born between 1946 and 1955) may be "the last group on track to retire with enough savings to maintain their financial security through their golden years." the study finds. But the rest of us are in for a world of hurt -- especially Gen-Xers (born between1966 and 1975).

The study by Pew Charitable Trusts, "Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?," shows that early boomers lost 28 percent of their median net worth; late boomers (born between 1956 and 1965) lost 25 percent from 2007 to 2010. However, Gen-Xers lost nearly half (45 percent) of their wealth – about $33,000 on average – during that same time period. And they didn't have that much savings to begin with.

"Gen-X is the first generation that's unlikely to exceed the wealth of the group that came before it and face downward mobility in retirement," said Erin Currier, director of Pew's Economic Mobility Project. "They have lower financial net worth than previous groups had at this same age and they lost nearly half of their wealth in the recession."

Financial planners generally recommend that you save enough to replace 70 to 100 percent of your pre-retirement income when you leave the workforce. Pew's research shows the typical Gen-Xer will only be able to replace half of that income.

When it comes to retirement savings, late boomers (born between 1956 and 1965) are more like Gen-X than early boomers. They're on track to replace only 60 percent of their pre-retirement income.

You may be surprised to learn that some people saw their wealth grow during the recession. Pew found that a sizable minority of households – 39 to 44 percent – had a positive change in wealth between 2007 and 2009.

"As an example, more than a third of households in this age group experienced gains in home equity during that two-year period," Currier noted.

Politico: Debt limit won’t be hit until after Labor Day

The government will be able to avoid breaching its borrowing limit until shortly after Labor Day, but that is no excuse for Congress to dawdle when it comes to raising the debt ceiling, Treasury Secretary Jack Lew informed congressional leaders in a letter Friday.

Congress voted earlier this year to temporarily suspend the debt ceiling through May 18, but Lew said that the Treasury Department will begin using accounting maneuvers, or “extraordinary measures,” to delay hitting the borrowing limit.

Lew reiterated the administration’s position that it will not negotiate over whether to raise the debt ceiling and said Congress should not wait until the last minute to lift the borrowing cap.

“The question of whether the country must pay obligations it has already incurred is not open to debate,” Lew wrote. “Congress has no choice but to protect our creditworthiness and our economy.”

Lew said he is unable to offer a specific estimate of when the country will hit its borrowing limit but said the recent announcement that taxpayer-owned mortgage finance giants Fannie Mae and Freddie Mac will send the government about $60 billion has bought some time.

The Treasury secretary also expressed his opposition to a GOP debt prioritization bill that the House passed last week. The legislation would allow the Treasury to continue paying bondholders even if the government hits the debt ceiling.

Democrats opposed the bill, saying it would let the government pay off bondholders like China before the military and the poor who depend on government services.

The Freeman: Advice to Young, Unemployed Workers

We are now in the fifth year of very choppy hiring markets for young workers. The latest unemployment numbers once again leave them out from posted gains. Not even the boom in temporary employment included them.

The United States has one of the highest rates of unemployment amongst 20-to-26-year-olds in the world. Nearly half of the U.S. army of unemployed is under the age of 34. As for those who are hired, there is a huge gap between wage expectations and paycheck realities, which is exactly what you would expect in post-boom world. A survey by Accenture finds that more than 41 percent of recent U.S. college graduates are disillusioned, underemployed, and not using their college degrees in their work.

The young generation faces challenges unlike any that most people alive have seen. This situation requires new adaptive strategies.

What follows, then, is my letter of advice to young workers.

Muniland: California launches the best new source of muniland data

Last December I wrote about a project sponsored by California Treasurer Bill Lockyer that is now up and running:

In the past year, three California cities have filed for bankruptcy. This casts a pall on the bonds of other California cities, because investors wonder if they also contain buried fiscal issues. In an effort to create more transparency, a new open source ratings project was recently launched:

Responding to market concerns about municipal credit quality, the California State Treasurer’s Office has commissioned a San Jose State University economist and a government-bond research group, Public Sector Credit Solutions, to develop a default probability model for city bonds.

The “default probability model” (which is what most credit rating agencies use as a model) was created by former Moody’s executive Marc Joffe of Public Sector Credit Solutions.

The project is a great leap forward for presenting public data. Nothing else like it exists in muniland. Here what it contains:

This website provides financial data and credit scores for most cities in California with population over 25,000 – roughly 260 cities in all. The financial data comes from Comprehensive Annual Financial Reports or Audited Financials that each city is required to file. We have also collected data from pension plan actuarial reports. For each city, we provide links to the documents we used as well as links to each city’s bond offering documents stored on the Municipal Securities Rulemaking Board’s EMMA system. Finally, we provide (hopefully) relevant news headlines for each city gathered from Google News and Yahoo News.

There is discussion on Twitter over whether the platform is the best method for rating municipal securities. That is a worthwhile discussion. But of much greater consequence is the ability to see the bones of municipal finances without having to dig through hundreds of pages of documents. I encourage every other state treasurer to follow Lockyer’s lead and have the same thing built for their cities and towns. Congrats to Marc Joffe of Public Sector Credit Solutions. Open up muniland!

CARTOON OF THE DAY

Brian Costin
Director of Government Reform

Residents of Oak Lawn may soon get a much-needed dose of government transparency.

Sandra Bury was recently sworn in as the new Mayor of Oak Lawn, a village in the southwest suburbs of Chicago.

As one of her first priorities in office, Bury intends to implement the Illinois Policy Institute’s 10-Point Transparency Checklist, increasing the amount of information available to Oak Lawn’s citizens.

From the Southtown Star:

In addition to ethics reform, Bury said she wants to bring a new transparency to the village government. She specifically cited a 10-point transparency checklist put together by the Illinois Policy Institute.

Orland Park was the first village to score 100 percent under the institute’s guidelines.

That checklist requires contact information for elected and administrative officials online, information about upcoming village meetings, copies of the minutes of meetings, information packets from previous meetings, publication of financial audits and budgets, salary and benefit information of public employees and access to public records through Illinois’ freedom of information law.

We applaud elected officials like Bury who are working on improving online transparency for their community.

With new elected officials being sworn in across the state of Illinois, it’s a great opportunity for residents and elected officials to start a new push for improving online transparency.

If you are an elected official and want help implementing online transparency measures for your local government agency, please contact me at bcostin@illinoispolicy.org.

photo credit: Flickr: RickDrew

Ted Dabrowski
Vice President of Policy

John Klingner
Policy Research Assistant

Illinois continues to have the nation’s second-worst unemployment rate, according to the Bureau of Labor Statistics’ April labor report. The state’s unemployment rate dropped to 9.3 percent in April, down from 9.5 percent in March, and is still nearly two percentage points above the 7.5 percent national average.

The state’s drop in unemployment was not due to good news – the fall was due to people leaving the work force rather than an increase in employment. Illinois lost more than 2,000 payroll jobs and more than 30,000 Illinoisans left the workforce, according to the Illinois Department of Employment Security.

The state’s employment numbers have fared poorly compared to the rest of the nation. Compared to April of last year, Illinois’ unemployment rate increased half a point while both the national and Illinois’ neighbors’ averages experienced decreases.

In fact, Illinois was one of only seven states that saw its jobless rate rise since last year. States that saw an increase include: Illinois, Delaware, Indiana, Mississippi, New Hampshire, North Dakota and Wisconsin.

Unlike Illinois, the state’s neighbors are in line with most of the nation. If Illinois could reach its neighbors’ average unemployment rate, more than 140,000 Illinoisans would be employed.

Illinois’ stalled recovery is a direct consequence of the failed policies the state has pursued. Illinois stalled on pension reform, increased taxes and spent far beyond its means. Our neighbors have done the opposite and have seen their economies markedly improve.

Springfield’s current policies aren’t working. The fact that Illinois is one of only seven states worse off than it was a year ago is proof.

Fortunately, there are ways Illinois can move forward. The Illinois Policy Institute has laid out a plan to end the fiscal and budgetary crisis in Illinois, a prerequisite to creating more jobs and restoring economic prosperity.

The road to recovery begins with politicians adopting pro-growth policies.

QUOTE OF THE DAY

WSJ: The Modern American Boomtown

Houston

'Redneck white city down in Texas."

That's how Houston Mayor Annise Parker sums up the caricature of her town, and she wants everyone to know it's bunkum. Houston is "a really cool city," she says. "Open and entrepreneurial and welcoming." It's also booming.

The mayor herself is a walking testament to the cosmopolitan contrarian reality of modern Houston. Annise Parker is a Democrat in a deep-red state, the first openly gay mayor of a major American city. She's a social liberal who's also a former oil-industry executive with a pro-business attitude running what may be the nation's least-regulated metropolis.

Houston's recent track record is startling. For the calendar year ending in February, it saw the fastest pace of job growth (4.5%) among the country's 20 largest metropolitan areas. (With a population of 2.1 million, it's the fourth-largest U.S. city.) In 2011, the last year such data are available, Houston had the fastest-growing large metropolitan economy, at 3.7%.

Add to that a cost of living that is 7.8% below the U.S. average—New York is 53.4% above the average—and you can see the attraction for waves of new arrivals. Housing costs run a third less than the average in the 29 largest metro areas. Adjusting for these lower costs, Houston has the highest per-capita income of any city in the nation.

The mayor, who is 56, and I are discussing the city's makeover at one of its hottest new restaurants. Underbelly, Ms. Parker's choice for lunch, is in the Montrose neighborhood where she lives. "This was a huge lesbian bar," she says, before the neighborhood turned "trendy" and places like Underbelly moved in. As diners fill the capacious restaurant, Ms. Parker notes that Houstonians eat out more often than anyone else in America.

Like Texas as a whole, Houston sells itself as "business friendly," and Ms. Parker ticks off the attractions—ease of permitting, unobtrusive regulations and low taxes. She also supports Houston's limited restrictions on land use, which some here call its real secret sauce. Without zoning, Houston can adjust to shifting market demands—whether for townhouse complexes or retail outfits—faster than most any other city. It looks unwieldy to anyone of the urban-planning persuasion, but it also keeps prices down.

Tory Gattis, who writes the Houston Strategies blog, says: "I'd argue we may be the most libertarian city in America. Live and let live; strong property rights; not much corruption; small business culture."

Washington Times: PETA accuses IRS of ‘Nixon’ and ‘totalitarian’ tactics

Add to the list of IRS targets: People for the Ethical Treatment of Animals.

PETA said it’s been targeted, too. Politico reported that Jeffrey Kerr, the general counsel for the animal rights group, sent a letter on Thursday to the Treasury Department alleging that PETA was unfairly audited on three separate occasions: Between 1990 and 1992, from 2003 to 2005 and in 2009.

It’s not just conservative groups, Mr. Kerr wrote in his letter, Politico reported.

“PETA’s harassment by the IRS includes the 20-month audit in 2003 to 2005 and another in 2009, both of which resulted from what the IRS agents admitted — and we have verified from Freedom of Information Act materials — were politically motivated attacks and pressures by members of Congress who were doing the bidding of the meat, dairy, experimentation, tobacco and other industries whose animal-abusing practices PETA opposes,” he wrote, Politico reported.

IRS agents didn’t find anything of concern with PETA following all three audits, Mr. Kerr said, Politico reported. But the group was seriously distracted from its core mission for a period of years.

“[PETA] endured an unconscionable diversion of charity resources to fend off these attacks on its tax-exempt status, which were reminiscent of the Nixon years and tactics more commonly attributed to totalitarian regimes,” Mr. Kerr said, in his letter reported by Politico.

New York Daily News: New York City will double money for training teachers

Officials have set aside about $100 million to help prepare teachers for new Common Core standards, Chancellor Dennis Walcott said.

Starting in June, the city will more than double its funding for teacher training, Schools Chancellor Dennis Walcott said.

Officials have set aside about $100 million to help prepare teachers for more difficult Common Core standards that were introduced on new state math and reading exams this spring.

A portion of the funds will go to help schools prepare for the impending teacher evaluation system that the state will impose on city schools June 1 for the next academic year.

Principals will have access to the money starting next month, Walcott said Wednesday. The one-time budget boost means thousands in additional funds for every school.

The city spent about $50 million on teacher training last year.
“Doubling down like this is a significant step,” said Walcott. “It will build the strength and capacity of our teachers to deliver everything we expect of them.”

Principals at the city’s 1,800 public schools can use the new funds as they see fit, as long as the money goes to prepare students for tougher new academic standards or the implementation of the new teacher evaluation system.

Points and Figures: It’s A Continuous Game: Individual Rights and Freedom Will Win

If you haven’t read Ben Domentech’s article, you should.  He makes a lot of sense if you are a small government conservative.  This IRS scandal that shows how politicized the agency has become is getting broader and deeper.  Republicans need to avoid trying to score political points.  This scandal goes the crux of who we are as a people.   Ben says,

The scandals we are talking about in Washington today are not tied to the individual of Barack Obama. While there’s still more information to be gathered and more investigations to be done, all indications are that these decisions – on the AP, on the IRS, on Benghazi – don’t proceed from him. The talk of impeachment is absurd. The queries of “what did the president know and when did he know it” will probably end up finding out “just about nothing, and right around the time everyone else found out.”

The IRS was deliberately trying to derail the First Amendment; freedom of speech.

Peggy Noonan says to stay shocked.  I agree, but would go further.  Stay or get engaged on this issue.  Just because you are a liberal and the IRS was on “your team” doesn’t make it better.  Reverse the roles and imagine what you would think if George Bush used the IRS to target unions, liberal organizations and liberal think tanks.  If this precedent by the Obama administration is okay, and stands, then when the other side gets power the first salvo will be to use the IRS to attack.

Going after someone’s money when they are in power steps over every line.  That government tyranny should be reserved for socialist, communist, and monarchy states.  Not a republic.

Washington Examiner: Insurers predict 100% to 400% Obamacare rate explosion

Internal cost estimates from 17 of the nation's largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent, crushing the administration's goal of affordability.

New regulations, policies, taxes, fees and mandates are the reason for the unexpected "rate shock," according to the House Energy and Commerce Committee, which released a report Monday based on internal documents provided by the insurance companies. The 17 companies include Aetna, Blue Cross Blue Shield and Kaiser Foundation.

The report found that individuals will face "premium increases of nearly 100 percent on average, with potential highs eclipsing 400 percent. Meanwhile, small businesses can expect average premium increases in the small group market of up to 50 percent, with potential highs over 100 percent."

One company said that new participants in the individual market could see a premium increase of 413 percent when new requirements on age rating and required benefits are taken into account, said the report. "The average yearly cost for a new customer in the individual market grows from $1,896 to $3,708 -- a $1,812 cost increase," it added.

The key reasons for the surge in premiums include providing wider services than people are now paying for and adding less healthy people to the rolls of insured, said the report.

It concluded: "Despite promises that the law will lower costs, [Obamacare] will in fact cause the premiums of many Americans to spike substantially. The broken promises are numerous, and the empirical data reveal that many Americans, from recent college graduates to older adults, will not be able to afford the law's higher costs."

Chicago Reader: Mayor Emanuel's FOIA policy: Don't ask because we won't tell

As we approach the midpoint of Mayor Emanuel's first term, I think I've discovered one of his greatest legacies to Chicago, right up there with dismantling public education and making Mayor Daley's god-awful parking meter deal even worse.

The mayor is also undermining the Freedom of Information Act, so that it's next to impossible for ordinary citizens to secure information showing how the government reaches decisions that affect their lives. The mayor and other officials are then free to do pretty much anything they want without fear of scrutiny.

Getting around the FOIA isn't as easy as it looks. The law requires that public officials share records generated by public bodies. In fact, transparency is one of those good-government principles that almost all elected officials feel compelled to endorse, even if it's the last thing they actually want to do.

In his case, Mayor Emanuel boasts of running "the most open, accountable, and transparent government Chicago has ever seen."

Meanwhile he's invented one of the great FOIA dodges of all time: I'd give you the stuff you want, but we threw it out.

That's what has emerged from the twists and turns of a FOIA request made in February 2012 by a north-side public school parent named Glenn Krell.

As you may recall from the first time I wrote about his case, Krell sought records from the Chicago Public Schools related to Mayor Emanuel's longer-school-day mandate.

As you undoubtedly know, the mayor extended the class time in public schools by about an hour without offering enough resources to help use the time effectively. Many schools were then forced to fill it with study halls, where teachers are supposed to provide one-on-one tutoring to 30-some kids. It works out to a couple minutes of tutoring apiece. Great program, Mr. Mayor.

Krell figured CPS had done research on the longer school day because, like every parent in the system, he'd received a letter from Jean-Claude Brizard, then the CEO, claiming that "our elementary school students are receiving 22 percent less instruction time than their peers across the country." So he sent CPS a FOIA request asking for "the reports, statistics, comprehensive city-by-city analysis and other documents that back up the statement by Mr. Brizard."

CPS responded that "the district does not maintain any documents responsive to your request."

Krell appealed to Attorney General Lisa Madigan's office because that's what the law says you should do if you think you're getting stonewalled on a FOIA request.

The longer-school-day records weren't all he requested from CPS. Krell also sought information regarding "selective enrollment tiers."

This has to do with CPS's effort to rank every neighborhood by socioeconomic factors in order to guarantee diversity in limited-enrollment high schools like North Side and Payton. The purpose is to make sure kids from low-income neighborhoods get a shot at admission to the high-performing schools.

For the last year or so, many parents have complained that the formula seems arbitrary and unfair. So Krell sent a FOIA seeking "reports and analyses used to formulate the selective enrollment tiers."

Fortune: Signs of new housing bubble in several areas

Only a year after the U.S. housing market hit bottom, it may be bubbling up -- again. Odd as it may seem, some economists warn the steady rise in home prices, at least in some markets, are inflated and could eventually pop.

Prices nationwide rose nearly 6% last year -- more than most ever expected. While that has continued so far this year, leading builders to build again, prices in some places have risen faster than incomes. Eventually, they could fall back as homes become less affordable.

"If prices keeps going up at this rate for another six months, we will have a bubble, and people will get hurt," Dean Baker, co-director of the Center for Economic and Policy Research recently told Bloomberg.

The housing market may or may not be approaching bubble territory, but a handful of cities have certainly seen home prices soar beyond market value, according to Trulia, a San Francisco-based real estate data company. Of the largest 100 metro areas, Orange County, Calif., appears to be the most overvalued, with prices 9% above Trulia's estimate for fair value. Los Angeles homes are 5% overvalued, San Jose is 3%, and San Francisco real estate is 2% above fair value.

And even though Texas's biggest cities largely avoided the last housing bubble, markets there are also heating up. By Trulia's estimates, prices in Austin are 7% overvalued; they are 5% above fair value in San Antonio and 2% overvalued in Houston.

Indeed, prices across many parts of the country are rising just as rapidly as they did during the bubble years of 2003, 2004, and 2005, but the housing market is still far from bubble territory.

Trulia's economist Jed Kolko says when comparing what traditionally drives home prices, such as rents and incomes, the overall housing market is still undervalued by about 7%. This of course is a big improvement from the bottom of the downturn in late 2011 when prices were undervalued by 15%, but prices are far from the peak of the housing bubble when homes were overvalued by 39% in early 2006.

Some markets are clearly inflated, but there are plenty of big reasons why it's unlikely that buyers will see prices soar that much higher. With the unemployment rate at 7.7%, joblessness has held back many would-be buyers. And while more borrowers are being approved for new mortgages, lending standards at banks remain tight.

And despite big increases last year, home prices in Las Vegas and Detroit are among the most undervalued, according to Trulia. At best, the recovery is choppy. So the bubble that some fear may very well deflate before trouble abounds.

CARTOON OF THE DAY

Brian Costin
Director of Government Reform

The story of the Internal Revenue Service targeting conservative-leaning organizations for special scrutiny in nonprofit status is one of the biggest scandals to hit Washington, D.C., in my lifetime. 

Even U.S. Sen. Dick Durbin – an Illinois Democrat – has weighed in with outrage about the IRS scandal. From the St. Louis Post-Dispatch:

“It is absolutely unacceptable to single out any political group — right, left or center,” Durbin said. “It goes back to the worst days of the Richard Nixon administration.”

But Sen. Durbin had different thoughts on the issue in 2010. Then Durbin singled out Crossroads GPS and other 501(c)(4)s for extra IRS scrutiny just a few weeks before the 2010 election for President Barack Obama’s former Senate seat. 

At the time Crossroads GPS was airing scathing ads against former Illinois Treasurer Alexi Giannoulias. However, Crossroads GPS hasn’t been charged with any wrongdoing.

Durbin wrote a letter to the IRS requesting an investigation into the status of Crossroads GPS and other organizations’ nonprofit status.

"I write to urge the Internal Revenue Service to examine the purpose and primary activities of several 501 (c)(4) organizations that appear to be in violation of the law," he said.

I wonder what the 2013 Dick Durbin thinks about the Dick Durbin from 2010?

image credit: AP Photo/J. Scott Applewhite

Paul Kersey
Director of Labor Policy

In my last post, I called attention to the contract between the Cleveland Teachers Union (an affiliate of the American Federation, just like the union that represents Chicago teachers) and the Cleveland Municipal School District. The union and the district both deserve credit for releasing their contract to the media just two days after reaching a tentative agreement – giving teachers and the public plenty of time to look the thing over before it is ratified and signed.

As for the contract itself, it’s pretty good – given the circumstances. Though it’s the product of collective bargaining, the contract does get rid of the rigid “step and lane” salary schedule in which teacher pay depends entirely on academic degrees and years of service, and replaces it with a “points” system in which teacher evaluations and student growth play major roles. But it turns out that the Ohio Legislature did a lot of the heavy lifting; legislation that took effect last fall calls for all new teacher contracts to provide for a “performance-based salary schedule.” At the end of the day, the district would have had to make similar changes anyway to comply with this law.

Under the points system, a teacher receiving the highest rating (“accomplished”) will be credited with 15 points, which just happens to be the number needed to receive a pay raise every year. Others receiving lower ratings may need to wait an extra year or two.

The problem is the contract leaves a lot to be filled in later by joint committees made up of union and administration members. Among other things, the two committees will determine how many points teachers receive for attendance, or for teaching certain subjects and in certain school buildings. These bonus points might be manipulated to make the regular performance evaluations much less important – and maybe thwart state law.

Still, the Cleveland teacher’s contract gives more respect to education reforms than the recent Chicago teacher contract did. That contract:

• Gave pay increases to teachers with the most seniority – not those who achieve the best results for their students. 
  

• Made the Chicago Public School district’s billion-dollar budget deficit worse.

• Did little to fix the district’s poor student achievement – CPS graduates only 54 percent of its students.

• Watered down teacher evaluation reform efforts.
  

In the end, a lot depends on union and administration working together well. Ohio labor law is similar to that in Illinois. Neither guarantees good relations between teachers unions and school districts. But the situation in Cleveland may work out. Not all teacher unions are like the Chicago Teachers Union. The fact that the union and the district are willing to let the public see their handiwork is a good sign.

image credit: Gus Chan

QUOTE OF THE DAY

Forbes: Two Obamacare Mandates That Dramatically Expand The Internal Revenue Service's Power

Much of the talk in the news this week regards the appalling scandal involving IRS targeting of conservative non-profit groups. So it’s worth noting that Obamacare dramatically expands the authority and the scope of the Internal Revenue Service. Two provisions in particular will require thousands of new IRS agents, and billions in funding, to enforce: the law’s individual mandate, forcing most Americans to buy government-approved health insurance; and its employer mandate, forcing most employers to take money out of workers’ paychecks to purchase costly health insurance on their behalf. Here’s why these two provisions are so intrusive, and why the only solution to the problems they create is to repeal them.

Many people are exempt from the individual mandate

Obamacare requires the IRS to enforce the individual mandate. So let’s first review the precise details of how the individual mandate works. It turns out that many people are exempt from the mandate, and so the IRS has to know a lot about you in order to decide whether you are in compliance with it.

The individual mandate, or what Section 1501 of the Affordable Care Act calls the “shared responsibility for health care,” requires individuals to maintain “minimum essential coverage” or pay a “penalty” (a penalty which Supreme Court Chief Justice John Roberts generously transmogrified into a “tax”).

The mandate is phased in over a three-year period. In 2014, the fine for noncompliance is 1 percent of adjusted gross income, or $95, whichever is greater. In 2015, the fine is 2 percent of AGI, or $325, whichever is greater. In 2016 and thereafter, it’s 2.5 percent of AGI or $695, whichever is greater.

Several groups are exempted from the mandate, including: (1) “a member of a recognized religious sect” that has a moral objection to health insurance; (2) “health care sharing ministries” in which a group of religious believers pool their resources to fund medical expenses, so long as that group has been in continuous existence since 1999; (3) illegal immigrants; (4) incarcerated individuals; and (5) members of Indian tribes.

Individuals who fall below certain income thresholds are exempt from the mandate’s fines. Anyone below 138 percent of the federal poverty level (in 2013, $15,856 for an individual, or $32,499 for a family of four) is exempt from the mandate.

In addition, anyone whose “required contribution for coverage…exceeds 8 percent of such individual’s household income” is exempt. What is a “required contribution? It’s either (1) the portion of an employer-sponsored insurance plan that is paid directly by the individual for self-only coverage; or (2) the premium for the “lowest cost bronze plan available…through the Exchange in the State,” minus the subsidies that the individual would receive from the federal government.

To make that less abstract: the average insurance plan covering a single individual costs around $5,500. If you’re paying for that entire cost yourself, you’re exempt from the mandate if your income is below $68,750. If your employer is paying half the cost on your behalf, then you’re exempt from the mandate if your income is below $34,375.

Reason: Obama’s Scandals Reveal the True Face of Government

The Obama administration has gotten itself into a fix between its contradictory stories about the Benghazi incident, reports of the IRS targeting conservative groups, and the Justice Department’s grabbing of phone records from AP reporters. There are few things more fun to watch than arrogant political leaders -- folks who spend their lives bossing everyone around -- getting a comeuppance.

My favorite take wasn’t from any serious commentator but from comedian Jon Stewart, who noticed that the president routinely claims ignorance about embarrassing events by saying that he learned of them while watching the news: “I wouldn’t be surprised if President Obama learned Osama bin Laden had been killed when he saw himself announcing it on television.”

I take a bipartisan approach to Washington, DC’s political scandals and find myself savoring them all, regardless of the party that is in control of the White House. Any sane person would conclude that all administrations and bureaucracies essentially are corrupt given that they thrive on the exertion of power of other people. We know about the corrupting influence of power, and DC has become like ancient Rome that way. It’s a magnet for those seeking favor, money, or a big title administering some pointless program.

I visited DC last week and was astounded at the booming economy, the endless new construction, the astronomical prices, and garish displays of wealth everywhere -- not to mention the haughty attitudes of every pissant assistant to the whatever. That’s what Other People’s Money buys you. When Ronald Reagan talked about the Shining City on the Hill he was speaking metaphorically about America, but the new shining city is DC -- funded on the backs of all those Americans who blithely vote for people who promise to solve their problems.

That’s the main lesson from this latest mess: the federal government is an untamable beast. These superficial scandals are nothing compared to the things we will never learn -- i.e., the way the CIA conducts its business overseas.

Still, there are so many things to savor as President Obama circles the drain. Obama has always exuded an intellectual arrogance. Yet if he’s so smart, why would his Justice Department target reporters? The national media has fawned over the president, but the quickest way to end that love affair is to go after their personal records.

Unfortunately, many people insist on seeing every scandal in terms of partisanship. Conservatives are aghast, as they should be, at the thought of an IRS auditing groups based on their political views. That is eerily totalitarian. But where would they have been had a Republican administration done the same thing to liberal critics? I doubt the activist groups would be sending out the alarmist direct-mail pieces if the latest Bush were still president.

Muniland: Can Obamacare provide relief to distressed American cities?

A big trip line for states and cities is the host of promises they have made to provide health benefits to retirees (Other Post Employment Benefits (OPEB)). Almost universally, cities and states are shouldering these OPEB costs as they come due. Pay as you go, if you will. From a recent Bloomberg presentation:

These so-called OPEB promises made by the 15 biggest cities alone total $115 billion, with an average burden of $2,300 for every man, woman and child, according to data compiled by Bloomberg. How will local governments manage to make good on their pledges without becoming insolvent? Will we see governments reduce benefits and raise their cost for current workers, as has been the case in several cities and states?

Cities and states cannot unilaterally end these benefits, outside of Chapter 9 bankruptcy, because they are contractual promises. As Stockton, California was entering the bankruptcy process, it eliminated lifetime unlimited health care benefits for former employees and their dependents. Stockton had awarded these OPEBs to former employees who had worked for the city for as little as a month, and the expense helped push the city into bankruptcy. Retirees and former employees took Stockton to court and a judge ruled that, given the city’s fiscal distress, it could cease these benefits.

Now there seems to be another way for cities to get out from under their OPEBs. Chicago’s Mayor Rahm Emanuel is leading the way. Emanuel’s plan is to essentially shift the cost of retiree health benefits from the city budget to the federal budget via President Obama’s Affordable Care Act. From the Chicago Sun Times:

More than 35,000 government retirees have been on pins and needles waiting to find out whether Mayor Rahm Emanuel will continue their city-subsidized health insurance after June 30, when a 10-year settlement agreement that calls for the city to share costs with retirees is due to expire.

They are not likely to be relieved when they find out how Emanuel has decided to resolve the politically volatile issue.

Ahmad disclosed Tuesday that the mayor has decided to extend the 55 percent subsidy for six months — until Jan. 1 — then phase it out for 30,000 retirees over the next three years after giving Obamacare a chance to shake out.

Chicago’s responsibility for this liability ends on June 30. The city will roll over everyone but 5,500 of the most elderly retirees to the Affordable Care Act coverage over a three year period. The city projects savings of $108 million per year, which could help pay its massive pension liabilities. From the Chicago Sun Times again:

“By taking advantage of the Affordable Care Act, which guarantees city retirees access to health care regardless of pre-existing conditions and includes subsidies for lower-income individuals, the city is freeing itself from $540 million in future costs by 2018,” Msall said.

A Wisconsin county is considering the same option. Though, the Sheboygan County case is more about health care cost arbitrage than eliminating a liability. From the Milwaukee Journal Sentinel:

Sheboygan County government retirees may lose their county health insurance benefits and instead be placed under the federal health care program known as Obamacare, the Sheboygan Press reported.

The county is confronting a $2.17 million budget gap for 2014, the Press reports.

County Administrator Adam Payne and Finance Director Terry Hansen estimated the county could save just over $286,000 in the county’s 2014 budget with the assumption that its retirees will be insured under the Affordable Insurance Exchange beginning next year.

The Affordable Care Act may not be fiscally sustainable given large federal deficits and the efforts by Republicans to repeal it. Republicans are unlikely to provide additional funds to support the program that will likely cost much more than is currently budgeted. Even so, cities and states are looking everywhere for cost reductions. Using Obamacare makes sense.

Arthur Brooks: Half the Hispanics eligible to vote don't. They are the ones most likely to call themselves 'political conservatives.'

Before Washington was rocked in recent days by an assortment of brewing scandals, immigration reform was at center stage. And immigration reform will surely return shortly to the heart of Washington debates as Congress considers legislation proposed by Florida Republican Sen. Marco Rubio and his bipartisan "Gang of 8" colleagues.

Their bill would normalize the status of millions of illegal, mostly Hispanic immigrants. This has stimulated a vigorous debate among conservatives over the cost of reform, mostly in the form of public services for those with low skills and high needs.

For many conservatives, however, the economic debate is really a proxy for the political debate. Few things keep conservative strategists awake at night more than the current trends in Hispanic voting patterns.

Mitt Romney lost the Hispanic vote 71%-27% to Barack Obama. As the Pew Research Center declared in a headline the day after the 2012 election, the "Changing Face of America Helps Assure Obama Victory." Pew also predicted that while the non-Hispanic white population will decrease from 63% today to 47% in 2050, the Hispanic population will rise over the same period from 17% to 29%.

In some apocalyptic visions, Republicans become a permanent minority through demographic change and the inability to appeal to a population that is inevitably hostile to conservative ideology. Do the math, the warning goes, and even places like Texas start to turn blue. This will only be accelerated by regularizing the status and citizenship of millions of Hispanics in the coming years. As the old saying goes, when you're in a hole, stop digging. So hit the brakes now on immigration reform.

This political analysis is flawed by two false assumptions. First, it is not true that an increasing Hispanic population means an increasing vote share for Democrats. Second, it is not true that a conservative message will fail to appeal to Hispanics.

According to the National Opinion Research Center's General Social Survey in 2010, Hispanics vote at far lower frequencies than other racial and ethnic groups. For example, 52% of eligible Hispanics (that is, registered adults who are citizens) voted in the 2008 presidential election, versus 78% of non-Hispanic whites and 79% of blacks. This survey is consistent with many others.

What do we know about the Hispanics who don't vote? Among other things, they are the ones most likely to call themselves "political conservatives." Again, according to the 2010 General Social Survey, non-voting Hispanics are 52% more likely than Hispanic voters to label their ideology in this way. In contrast, non-voting whites are 40% less likely than voting whites to call themselves politically conservative. Non-voting Hispanics are also more likely than the voters to express conservative attitudes, such as agreeing that "hard work" is more important than "lucky breaks or help from other people" in getting ahead.

Getting non-voting Hispanics to become voters is more likely to help conservatives than hurt them. But this creates a puzzle: What is suppressing the turnout among all those conservative Hispanics? I believe it is the inability or unwillingness of most conservative politicians to address the issue of primary importance to all groups of Hispanic voters: care for the poor.

Consider the evidence. The 2010 General Social Survey reported that Hispanics are more than a third likelier than non-Hispanics to say that the government should do more to improve standards of living for the needy (39% to 26%). They are 12 percentage points more likely than non-Hispanics to say the government gives "too little assistance to the poor" (74% to 62%).

This is not because Hispanics are poor per se. Controlling for income, as well as age, sex, education, family situation and even political-party affiliation, Hispanics were 16 percentage points more likely than non-Hispanics to say the government should do more to raise the living standards of the poor.

Carpe Diem: In Venezuela, government price controls create economic chaos, so don’t minimum wage laws do the same in the US?

Government price controls continue to create economic chaos and chronic shortages of basic household items in Venezuela. Here’s a news report about the latest price-control-caused shortage:

First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities – toilet paper. Blaming political opponents for the shortfall, as it does for other shortages, the government says it will import 50m rolls to boost supplies. That was little comfort to consumers struggling to find toilet paper on Wednesday.

Commerce minister Alejandro Fleming blamed the shortage of toilet tissue on “excessive demand” built up as a result of “a media campaign that has been generated to disrupt the country.”

MP: As frequently happens, the government imposes mandated price ceilings below the market price, which then lead predictably and inevitably to shortages, which the government then blames on “excessive demand” or “speculators” or ”hoarding” or anything besides the real culprit — the price controls themselves.

Opponents of minimum wage laws correctly anticipate the economic chaos and chronic surpluses of low-skilled workers that inevitably result from artificial, government-mandated wages (prices) above the market-clearing wage. Proponents of minimum wage laws deny any resulting economic chaos or chronic surpluses, or assume the distortions are minimal.

Q: To be logically consistent, shouldn’t advocates of minimum wage laws also support the price controls in Venezuela?

Or stated differently, how is it possible that price controls in Venezuela obviously cause economic chaos and shortages, but minimum wages laws don’t have the same negative effects?  What kind of contorted “logic” would it take for somebody to support minimum wage laws in the US but reject price controls in Venezuela? For consistency, it would seem like you would have to either: a) support both the price controls in Venezuela and minimum wage laws in the US, or b) reject the price/wage controls in both countries, no?

Cafe Hayek: Façade Capitalism Means Façade Freedom

An economy is capitalist in façade-only if much of the direction of resources in that economy is governed by something other than the free choices of consumers and the genuine competition of producers – competition both for customers and for resources to be used to produce what producers anticipate customers will demand.

Likewise, a society is free in façade-only if it is capitalist in façade-only.

The modern “liberal” – in America we increasingly say “Progressive” – ethos features two propositions relevant to the subject of this panel.  The first is that government intervention is a pernicious threat to liberty when exercised over “personal” or “civil” matters such as religious belief, speech, sexual practices, or participation in politics.

The second is that our liberty is somehow enhanced – or at least not threatened – by strong state or collective intervention into the economy.

I believe that the first of these propositions is absolutely valid.  I believe that the second – the one about the economy – is grossly mistaken.  And it’s mistaken in a way that is inconsistent with the very reasons for why the first proposition is valid.

Two facts support my belief.

One, economic liberty cannot be compromised without creating government power that threatens to destroy personal or civil liberty.

Two, the very same arguments that justify personal or civil liberty as being essential for civilization apply equally to economic liberty.

The first fact is – or should be – obvious.  And it is well-known – at least among us students of scholars such as F.A. Hayek and Milton Friedman.

To the extent that government controls the economy it controls – or has the power to control – those areas of life that are classified as “non-economic.”

Chicago Tribune: Making sense of scandals

The Obama administration's first term was remarkably free of scandals. The second term is making up for lost time. Some of the President Barack Obama's harshest critics have even begun comparing him to President Richard Nixon, a byword for corruption, secrecy and abuse of power.

That's a reach. Before any such damning indictment, we need hard evidence and lots of it, not tendentious political ads by Karl Rove. The current scandals need to be investigated thoroughly, and the White House needs to assist by providing documents and witnesses. Only a thorough investigation can restore public confidence.

The Obama administration is already seriously damaged. It has been caught using the full weight of state power to help the president's friends and punish his enemies, financially as well as politically. It has been caught hiding adverse information from the public and, after the Benghazi killings, mangling the truth or perhaps worse.

The fundamental issues are honesty and abuse of power. Sometimes, that power is the ability to help political friends, at the taxpayer's expense. That was the point of funneling money to Solyndra and all the other green energy "investments." They were run by the administration's friends, pursuing its pet projects.

That was the point of the GM and Chrysler bailouts, which helped the unions, punished the bondholders, trampled basic contractual rights and won crucial votes in Michigan and Ohio. That's the point of all those Obamacare waivers, given to friends through some opaque process. That's the point of Health and Human Services Secretary Kathleen Sebelius leaning on the companies she regulates for "voluntary donations," a practice reminiscent of former Mayor Richard M. Daley's administration securing large donations for his wife Maggie's (worthy) charities from companies reliant on city business. This atmosphere of pervasive political leverage, using every budgetary and regulatory tool, surely seeped through to the IRS, even if White House political operatives did not give explicit instructions.

Sometimes, the government's awesome power is the power to harm opponents, as the IRS did to charities with the temerity to use the words "patriot," "tea party" or "constitution." The IRS kept these nonprofits waiting for years to receive tax-deductible status. Some are still waiting. Their letters and pleas have gone unanswered. When one of them (Z Street, a pro-Israel charity) finally sued, the IRS said the suit itself was reason enough to postpone any tax exemption. That's government by fiat, not government by the people, under the rule of law.

Beyond the scandals now roiling this administration, the uproar over government corruption and coercion illustrate why a gigantic state is inherently dangerous.

Detroit Free Press: Detroit's pension boards pay $22K to send 4 trustees to Hawaii

Four trustees of Detroit’s two public pension funds are heading to a Hawaiian beach resort this weekend with their $22,000 tab paid for by the funds, which are mired in claims of mismanagement and said to be at least $600 million underfunded.

Trustees say the conference provides the education they need to manage complex investments for the funds’ retirees and beneficiaries. But other major public pension systems, including the Los Angeles Fire and Police Pensions, avoided sending their officials to Hawaii because of concerns the exotic locale sends the wrong message at a time when pensions nationwide are contemplating or implementing reduced benefits to cope with rising retirement costs and shaky investment returns.

Records obtained by the Free Press under the Freedom of Information Act show the expenses cover airfare — including a first-class flight for one trustee — lodging at the Hilton Hawaiian Village Waikiki Beach Resort in Honolulu, registration fees, meals and a per diem for miscellaneous expenses.

The city’s two public pension funds — the General Retirement System and the Police and Fire Retirement System — each are sending two trustees to the six-day National Conference on Public Employee Retirement Systems (NCPERS) conference, which starts Saturday. The retirement systems, which are funded by contributions from workers and the city, have combined assets valued at more than $5 billion and provide benefits to about 20,000 retirees and beneficiaries.

Stanford University professor Joe Nation, who specializes in public employee pensions, criticized the trip.

“Trustees don’t need to go to Waikiki to learn about best practices,” he told the Free Press. “Everyone knows they go there and they don’t work very hard. That’s just the nature of it.”

ABC News: IRS Official in Charge During Tea Party Targeting Now Runs ObamaCare Office

The Internal Revenue Service official in charge of the tax-exempt organizations at the time when the unit targeted tea party groups now runs the IRS office responsible for the health care legislation.

Sarah Hall Ingram served as commissioner of the office responsible for tax-exempt organizations between 2009 and 2012. But Ingram has since left that part of the IRS and is now the director of the IRS’ Affordable Care Act office, the IRS confirmed to ABC News today.

Her successor, Joseph Grant, is taking the fall for misdeeds at the scandal-plagued unit between 2010 and 2012. During at least part of that time, Grant served as deputy commissioner of the tax-exempt unit.

Grant announced today that he would retire June 3, despite being appointed as commissioner of the tax-exempt office May 8, a week ago.

As the House voted to fully repeal the Affordable Care Act Thursday evening, House Speaker John Boehner expressed “serious concerns” that the IRS is empowered as the law’s chief enforcer.

“Fully repealing ObamaCare will help us build a stronger, healthier economy, and will clear the way for patient-centered reforms that lower health care costs and protect jobs,” Boehner, R-Ohio, said.

“Obamacare empowers the agency that just violated the public’s trust by secretly targeting conservative groups,” Rep. Marlin Stutzman, R-Ind., added. “Even by Washington’s standards, that’s unacceptable.”

Sen. John Cornyn even introduced a bill, the “Keep the IRS Off Your Health Care Act of 2013,” which would prohibit the Secretary of the Treasury, or any delegate, including the IRS, from enforcing the Affordable Care Act.

“Now more than ever, we need to prevent the IRS from having any role in Americans’ health care,” Cornyn, R-Texas, stated. “I do not support Obamacare, and after the events of last week, I cannot support giving the IRS any more responsibility or taxpayer dollars to implement a broken law.”

Senate Minority Leader Mitch McConnell also reacted to the revelation late Thursday, stating the news was “stunning, just stunning.”

CARTOON OF THE DAY

This week in Springfield, the focus shifted from pension reform to policy issues certain members of the Illinois General Assembly deem important, such as the Lion Meat Act.

The Illinois Policy Institute had a big victory this week, as our workforce transparency measure passed the Illinois House and Senate and now heads to Gov. Pat Quinn for consideration.

This measure is meant to provide greater transparency on state government workforce information, and passed the Illinois House on Wednesday by a 114-0 vote. It had previously passed the Senate on a 53-0 vote.

Senate Bill 1670 has its roots in a 2011 study from the Illinois Policy Institute, which focused on pay disparities between government and private sector workers.

SB 1670 requires the Illinois Department of Central Management Services, or CMS, to serve as a data collection point for each state agency to report on their annual workforce characteristics, compensation and employee mobility. This information will then be published annually on the Illinois Transparency and Accountability Portal.

The Institute is excited to see this sensible initiative gain traction after years of persistently encouraging its passage.

Progressive tax opposition gains momentum

State Rep. McSweeney’s resolution opposing the progressive tax continues to gain momentum. To date, the Institute-backed legislation, House Resolution 241, has 45 House sponsors. To put this in perspective, state Rep. Naomi Jakobsson’s measure to amend the Illinois Constitution and impose a progressive income tax, HJRCA 2, has 20 House sponsors.

Approaching the last two weeks of session, it is a top priority of the Institute’s Government Affairs team to continue to educate members of the General Assembly on the perils of a progressive income tax.  

General Assembly mulls over Medicaid expansion

There was lots of buzz about Medicaid expansion in the House this week. While no floor debates or votes took place, it is speculated that an amendment will be introduced early next week to push forward the expansion – and thereby, the implementation of President Barack Obama’s Affordable Care Act. In late February, the Senate passed a Medicaid expansion bill, Senate Bill 26, on a 40-19 vote.

The Institute applauds state Rep. Patti Bellock for relentlessly holding the House Republican Caucus together on this front. Lawmakers who stand strong in their opposition to the expansion of a broken Medicaid system understand that Illinois will face future credit downgrades if it expands Medicaid.

The Institute’s Government Affairs team continues to promote solutions that would truly reform health care in Illinois, in a way that does right by both patients and taxpayers. 

photo credit: Hemal Mamtora

Paul Kersey
Director of Labor Policy

Americans for Tax Reform compiled a list of tax increases associated with Obamacare, and union workers in particular are staring at a whopper in a few years – a hefty tax on premium health insurance plans that could easily cost them $1,000 per year. According to ATR:

Obamacare Tax on Union Member and Early Retiree Health Insurance Plans:  Obamacare imposes a new 40 percent excise tax on high cost or “Cadillac” health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans. This Obamacare tax will be levied on insurance policies whose premiums exceed $10,200 for an individual and $27,500 for a family.  Middle class union members tend to be covered by such plans in states like Ohio, Pennsylvania, Wisconsin, and Michigan.

Lots of Illinois families will be affected by this, too. Premiums on the more generous health insurance programs are expected to be well over the limits employers and employees are allowed to spend under ObamaCare, triggering the 40 percent tax. In the course of collective bargaining, many unions traded higher wages and other perks in order to get these benefits, and now the value of these generous health insurance plans will be dramatically reduced because of the high-tax price tag they will carry.

Workers might wish that they had gotten plain old pay raises instead, or that ObamaCare had never been passed. But if history is any guide union officials’ commitment to big government programs, and to the Democratic Party, will prevent them from strongly challenging this provision, let alone ObamaCare itself. Workers need to keep this in mind: the union establishment has political allegiances that are prone to get in the way of their looking out for workers bests interests.

photo credit: AP Photo/Alex Brandon