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Thursday
May282015

Someone Should Ask Sen. Sanders If Ben and Jerry's Offers Too Many Choices of Ice Cream

By my rough count, Ben and Jerry’s sells over fifty flavors of ice cream. Thus, it’s ironic that Ben and Jerry helped Senator Bernie Sanders kick off his campaign for president given the Senator’s recent remarks about having choices:

You can’t just continue growth for the sake of growth in a world in which we are struggling with climate change and all kinds of environmental problems. All right? You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on

For a good laugh, see Reason’s “Bernie Sanders Save The Children Fund”:

Let me make one relatively quick comment:  Sen. Sanders appears to think that a free-market economy is a zero-sum game.  One person wins (the person getting the choice of deodorants or sneakers), while another loses (the hungry child).  Of course, any economist worth his weight will tell you a free-market economy is dynamic.  Both sides of a transaction win.  In the long run, that leads to the creation of more wealth which, among other things, means less starving children.  

I wonder if it ever occurs to Sanders that children are better off in America because we have so many choices of products.  Producing more choices means hiring more people, which means jobs, which means you get to eat.  But, of course, that has probably never occurred to him.  After all, he still believes the bogus notion that there are hungry children in America.

Wednesday
May272015

Krugman Wrong Again? Death Spiral Rears Its Head

In a new National Policy Analysis, I examine whether predictions of an insurance “death spiral” on the ObamaCare exchanges have been proven wrong.  

The first sign of a death spiral is insurance companies requesting big premium increases, usually in the range of at least 20 percent.  However, that didn’t happen on the exchanges in 2015.  Here’s Paul Krugman on that:

“There is no death spiral: On average, premiums for 2015 are between 2 and 4 percent higher than in 2014, which is a much slower rate of increase than the historical norm.” The lack of death spirals is one thing that “should inspire major doubts about [conservative] ideology.” According to Krugman, those who made predictions about death spirals aren’t admitting their errors but “pretend[ing] that [they] didn’t make the predictions [they] did.” This is serious stuff since refusing “to accept responsibility for past errors is a serious character flaw in one’s private life. It rises to the level of real wrongdoing when policies that affect million of lives are at stake.”

As I note in my NPA, “who says that a prediction of a death spiral is completely wrong if a death spiral doesn’t occur immediately? Indeed, while I personally expected the death spiral to begin in 2015, there is no rule saying that it always happens right away.”

Going into 2015, insurers expected that most of the losses they took on the exchanges would be covered by an ObamaCare program known as the “risk corridor.”  Under this program, taxpayers would help offset insurer losses.  As such, there was little incentive for insurers to raise premiums if the medical claims they paid exceeded what they received in premium income.

But now that Congress has stopped the risk corridor from handing out taxpayer money, insurers are starting to ask for hefty premium hikes going into 2016.  For example:

  • Five insurance companies on Oregon’s exchange are proposing average premium increases ranging from 25.6 percent to 52 percent. 

  • In Tennessee, Blue Cross/Blue Shield is asking for an average increase of 36.6 percent and Community Health Alliance is proposing a 32.6 percent increase. 

  • In New Mexico, Health Care Service Corp. is requesting a premium hike of 51.6 percent.

The death spiral appears to be rearing its head.  Of course, these could be just flukes. We’ll know more in the weeks ahead as more companies release their requests for premium increases.  But, as I say in the NPA, “at this point, the one thing that is certain is that it is much too soon for ObamaCare proponents to say that the death spiral prediction is wrong. To do so is to jump the gun. I wonder if Paul Krugman regards that as a ‘serious character flaw’… or just stupidity?”

Tuesday
May262015

ObamaCare Exchange Imposes Cap on Specialty Drugs: What Could Go Wrong?

A while back I predicted that insurers on the ObamaCare exchanges would be able to charge large co-pays for high-priced speciality drugs indefinitely, since only a small number of people take specialty drugs. Given their small numbers they would not to amount to significant political force, at least one strong enough to change policy.

Well, that theory has been proven wrong to an extent, at least in California:

[The Consumers Union] and other advocates took their concerns to Covered California, the agency that implements the Affordable Care Act in the state. The advocates argued there should be a limit on how much consumers have to pay for these drugs. 

 Apparently, they are getting their wish:

The agency agreed, and Thursday the board voted to cap the monthly out-of-pocket costs for specialty drugs. Starting in 2016, most people will only have to pay a maximum of $150 or $250 per prescription, per month. These caps are for Covered California’s so-called silver and platinum plans. Bronze plans will have caps of $500.

This policy will only apply to the 2.2 million people who buy coverage on the individual market. A bill under consideration in the California Legislature would extend that protection to many people with employer-based plans, as well.

Well, since the money to pay for specialty drugs grows on trees, I don’t see a problem here.  I mean, it’s not like anything could happen to health insurance premiums, right?

Friday
May222015

Understanding Exactly Why “Freedom Is Not Free”

As we head into the Memorial Day weekend, Project 21 member Charles Butler has a message for those who might not understand the meaning behind a holiday that many trivialize or merely consider the beginning of summer fun:

People often use phrases and idioms that sound cool and hip without really understanding their true meaning.  We will definitely be hearing one phrase of that sort this weekend: “freedom is not free.”

When people who have never served in the military use the phase “freedom is not free,” I often find it to be done in a very convoluted and disingenuous manner on many levels.  For example, we lost dozens of American lives fighting to hold Ramadi almost a decade ago, and yet campaign promises essentially gave the Iraqi town to ISIS terrorists just this week.  These brave men and women who died in service to our nation will be mourned this weekend.  Fathers, mothers, sons, daughters, husbands and wives will be missed.

A price was paid in Ramadi for freedom, but then the investment was squandered.  That’s not right.

Americans of all ages, socio-economic status, politics, ethnicity and gender use “freedom is not free” as if they know exactly what it means to put service to their country and the commitment to an ideal before one’s own self interest.  They often do not.  The truth is that only a fraction of Americans under 50 have served their country in uniform.  Many really don’t seem to feel it is their obligation these days.

So we can establish people are often unclear on the concept of “freedom is not free.”  It’s a shame.  When people use it, do they at least even know its origins?  The honest answer is probably not.  But that’s OK.  To help, here is some background and credibility for them as we prepare to observe Memorial Day weekend.

The origin of “freedom is not free” is credited to retired U.S. Air Force Colonel Walter Hitchcock of the New Mexico Military Institute.  It is meant to express gratitude for the service of members of the military, implicitly stating that the freedoms enjoyed by those living in democracies today are only possible due to the risks taken and sacrifices made by those in the armed services.  It conveys respect — specifically to those who gave their lives in defense of our freedom.

“Freedom is not free,” for example, is engraved onto a portion of the Korean War Veterans Memorial, Washington, D.C.  While it should be a powerful phrase to all, it is particularly important to veterans.

Those of us who have served our country honorably salute and say an often-silent prayer for our fallen brothers and sisters who fought so Americans can enjoy the rights and freedoms granted to them by our Constitution.  When you are at a BBQ or watching the game this weekend, please take a moment to say at least a silent “thank you” to veterans for their service.  You might also donate to veterans’ charity to lend a helping hand to those vets who have fallen on hard times.

And you might also say a prayer for those still serving.  They seem to need it these days.

Memorial Day should not be political.  But the U.S. military has nonetheless been the object of mass social and political experiments under this and other presidential administrations.  The dishonor and immorality now being implemented in the military is an abomination.  I have spoken with many active and retired military personnel, and they all have a common complaint: the Obama Administration is disruptive and degrading to the military’s ability to do its job.  The political agenda imposed by this White House, they say, is endangering lives.

That’s why my prayer is that God protects our brave men and women, and that He gives them the support they need to do their job and return home safely and healthy to their families.   Amen.

Friday
May222015

What Do Corky the Orca and Hercules the Chimpanzee Have in Common? 

Corky Oraca Killer Whale San DiegoW

What do Corky the orca and Hercules the chimpanzee have in common? You’ll have to read my op-ed in today’s San Diego Union-Tribune.

In the piece, I explain how current legal developments that will play out over the next weeks and months, could begin to impact your ability to benefit from medical research or go to a zoo.

Here’s the short answer: 

Although those facts seem noncontroversial, both required adjudication.

In April, it took a correction from Manhattan Supreme Court Justice Barbara Jaffe to establish that Hercules was not in fact a person eligible for a writ of habeas corpus. The New York Post reported that the judge “acknowledged that she inadvertently got turned into a monkey’s uncle by signing court papers, submitted by (The Nonhuman Rights Project) that inadvertently bestowed human status on two chimpanzees” used at a state university.

Chimpanzee DPC W

The case is not over. A hearing on whether the “imprisoned” chimpanzees have special humanlike rights is scheduled for May 27.

In Corky’s case, People for the Ethical Treatment of Animals (PETA) sued Seaworld seeking the release of Corky and four other whales. In the case heard in federal court in 2012, PETA sought to extend the constitutional right against slavery to whales, which the group’s lawyer, Jeffrey Kerr, awkwardly conceded, “happen not to have been born human.” 

Mr. Kerr said that PETA’s “lawsuit stands for the simple but powerful proposition that slavery does not depend on the species of the slave any more than it depends on the gender, race or religion of the slave.” He called the case “the next frontier of civil rights.”  

The piece also explains how the animal liberation movement undermines not only the interests of humans, but of animals.

When animal rights extremists raise huge sums of money off our concern for animal welfare, but use the money to advance a rights agenda, they divert critically needed money, awareness and advocacy-resources away from actual animal welfare.

Radical activists such as PETA and their allies have become better at masking their unpopular agenda. But don’t be fooled. The best way to come together and truly protect animals is to advance animal welfare and reject animal rights.

Tuesday
May192015

New York Times Columnist, Nanny State Foodie War-Monger

Bittman Mark A Bone to PickW

Imagine that. A New York Times columnist is a self-proclaimed leader of the left-wing politicization of food.

In Forbes book review together with Julie Kelly, we explain how Mark Bittman is the foodie version of a war-monger.

“There’s a war here,” the New York Times columnist proclaimed at a food conference last year. His battle is America’s next social justice crusade much like civil rights and suffrage. But this time, the oppressors are McDonald’s, Wal-Mart and Monsanto. From soda to sugar to meat, Bittman has declared war on nearly every ingredient in the American food system.

And if the pen is mightier than the sword, Bittman is the literary Napoleon of the progressive food movement. He depicts our food system as enemy territory that must be conquered then ruled by the omnipotent culinary elite in Manhattan and San Francisco with support from taxpayer-funded bureaucrats in Washington, DC.

His latest book, “A Bone to Pick” (Penguin Random House, May 5), is a collection of Bittman’s NYT columns on how to “un-invent this food system” that has been “a major contributor to climate change, spawned the obesity crisis, poisoned countless volumes of land and water, wasted energy and tortured billions of animals.”

Like all good social warriors, Bittman is armed with a plan for victory. The introduction of the book is his “Food Manifesto for the Future,” which lists a number of government-controlled remedies from the rational (limit subsidies) to the banal (mandate more labeling) to the outlandish (offer cooking classes for everyone and even give free cookware and cooking assistance to poor people.) Nearly every solution requires the reach of the federal government—which Bittman refers to as the “entity that is supposed to be vigilant regarding our health and welfare”—and the largess of the American taxpayer.

Other entries are somewhat comical, such as his suggestion to convert suburban lawns into vegetable gardens. “If you want to plant a lawn, that’s fine though it’s a waste of water and energy…Lawns are an attempt to dominate and homogenize nature.” Another column fantasizes about his “dream food label” designed as a stoplight for witless American consumers.

But few of Bittman’s strategies are revolutionary; in fact, many have been tried with limited or no success. Consider his repeated call to limit consumption of soda, sugar and processed foods by children. He cites California’s ban on sugary drinks and restrictions on unhealthy snacks in public schools over the last several years. The result? By 2010, California’s childhood overweight/obesity rate dropped—by 1%. It’s still an eye-popping 38% among adolescents despite massive statewide efforts to stem the crisis.

He often promotes taxing unhealthy food to fund subsidies and access to healthier food, such as his idea to convert “soda machines to vending machines that dispense grapes and carrots.” Pushing fresh produce is a big goal for many urban leaders and is being tried at great expense and unknown results. The CDC’s Putting Prevention to Work fund is one such example: The federal government gave local governments money to reimburse corner stores to buy refrigerators to sell produce.

Vegetable sandwich LW

Even when food corporations try to satisfy Mr. Bittman’s agenda, he questions their motives and integrity. McDonald’s is one example; it’s a frequent target in his book. He mocks the company’s efforts to please him, writing that McDonald’s wants foodies like “…me to stop kvetching and instead acknowledge that they’re making great strides in promoting health.” He sniffs that “only the most gullible will buy” McDonald’s attempts to offer healthier menu choices. Bittman has pointed to “the decline of McDonald’s” as a win for the food movement. 

Wal-Mart is another product of capitalism on Bittman’s enemies list. Its efforts to offer more affordable produce is lambasted in the book, claiming the retailer will “beat the living daylights out of produce suppliers, crushing a few thousand more small farmers.” Apparently, to Bittman, inefficient organic farmers are more important than struggling families who want inexpensive vegetables. Wal-Mart is the largest grocery store in America with more than 3,000 stores nationwide and could play a major role in the private market’s attempt to shape eating habits. Instead, the company is ridiculed.

But Bittman and his anti-corporate allies insist that industry is the cause of obesity and can’t have a role in addressing the problem. In fact, activists including Michele Simon scoffed when the Healthy Weight Commitment Foundation, a coalition of large food and beverage companies announced a major reduction in calories sold. Now the industry group is funding a study by the City University of New York School of Public Health to assess the impact of the industry’s healthy community programs across the country. No doubt, opponents will show their true colors and scorn the privately-funded science.

The book identifies a number of heroes, including organic products, Whole Foods and Chipotle. No doubt the Mexican restaurant chain will earn high praise from Bittman for its dubious PR stunt announcing its food is now GMO-free even though the author clearly struggles with a position on GMOs. You get the sense he supports the biotechnology—but that would be anathema among his pals in the culinary elite—so he splits the baby by supporting labels on GMO food. (Chipotle’s anti-GMO campaign is a perfect example of how difficult and questionable any nationwide labeling effort would be.)

Bittman reserves praise for another important player in the fight against food: himself. He refers to himself as a “pioneer” of the food movement and boasts that people say to him, “You’ve helped me change my life.”

But make no mistake; Bittman’s battle plan puts little emphasis on people changing their own lives. To him, “personal responsibility” is a right-wing idea that’s been proven wrong. That’s why Bittman finds it necessary to slam the private sector while advocating for shifting more resources, control and power to government officials.  Unfortunately, Bittman’s ideas are the public policy equivalent to the negative attributes of fast food he decries; slickly marketed, bereft of substance, and over time, will lead to buyer’s remorse.

Thursday
May142015

The Impact of King v. Burwell

If the Supreme Court rules in favor of the plaintiffs in King v. Burwell, what impact will it have on our health care system and our economy more broadly?  

Obviously, many people in the 37 states using the federal ObamaCare exchanges will lose their premiums subsidies.  On the other hand, many individuals in those states will no longer be subject to the individual mandate, and businesses will be free from the employer mandate.

The American Action Forum has a new study out examining those impacts entitled “TaKing Stock: The Potential Impact of King v. Burwell.”

From the report, here is the estimated impact a favorable King ruling would have on individuals:

 

 And here is the effect on employer markets:

 

 

The report also contains two interactive graphics.  The first reveals how many people in your state will be exempt from the individual mandate if the plaintiffs win in King:

 

The second shows the job effects in the 37 states with federal exchanges:

 However, it is important to note that the authors of the study “assumed that no federal congressional action would be taken between the announcement of a ruling in King and the beginning of the 2016 open enrollment season; in reality there is every indication Congress would take some action, but it is impossible at this stage to predict what it would be.”  So, Congress may yet mess it up.  But this study shows that King gives us a good starting point when it comes to regaining liberty and creating jobs. 

Wednesday
May132015

Je Suis Pamela Geller

If Pamela Geller doesn’t stand up for free speech, who will?

That’s a serious questions we need to be asking ourselves, as it is deadly obvious that one of the biggest threats to free speech comes from radical Islam.  Adherents of that ideology have shown time and again that they will kill someone who draws a cartoon of a religious icon, an activity that is protected by the First Amendment.  If freedom is to prevail, then someone like Geller must stand up to such thugs.

After all, appeasing radical Islamists won’t work.  If we were to promise the thugs that we wouldn’t draw Mohammed anymore, they’d be embolden to threaten more of our freedom.  What would they target next?  Would it be people who condemn suicide bombings, criticize the leadership of Iran, or speak out against ISIS?  Frankly, I don’t know.  All I’m certain of is if we give in on what they demand now, they’ll return with their guns drawn for more.

To stop it, someone has to draw a line in the sand.  Right now, Geller and the brave souls who participated in her “Jihad Watch Muhammad Art Exhibit and Cartoon Contest” in Garland, Texas are the only ones who have shown the courage to do so.

Clearly the establishment won’t. That became clear back in 2005 when the Danish newspaper Jyllands-Posten‍ published 12 cartoons of Mohammed. Despite death threats made against the newspaper and attacks against a number of Western embassies, most newspapers in the West refused to stand up for free speech by re-printing the cartoons. 

That portended the reaction to the incident in Texas. The New York Times wrote that Geller engaged in an exercise of “bigotry and hatred posing as a blow for freedom.  Even conservatives like Bill O’Reilly and Laura Ingraham waffled.  O’Reilly claimed that Geller had “spurred a violent attack,” while Ingraham said, “I don’t think that our effort to combat the Islamization of the globe is necessarily helped by putting on Muhammad… art contests.” That’s unfortunate, because Geller fights for the free speech of everyone, including the New York Times, O’Reilly, Ingraham and even of the left-wingers who condemn her in the harshest terms.  

Is Geller a nice person?  Clearly, she’s shrill and obnoxious.  But what type of person do you think is willing to stand up to murderers?  Besides, I don’t care to be friends with her or even have her over to dinner.  I only care that she fights for free speech.  

Worse than her personality is the possibility she is a racist. For the sake of argument, let’s assume she is.  Then you should suck it up, for two reasons.  First, it’s a lot harder to fight racism without freedom of speech.  Second, the thugs Geller is fighting are possessed of a racism that is exponentially more brutal than the one Geller allegedly has.  Let’s go with the lesser of two evils.

None of this would even be a concern if more in the media stood up for free speech against this barbarism.  (On that note, kudos to Megyn Kelly and Chris Hayes.)  As David Frum recently put it, “if the people doing the standing up are not in every way nice people—if they express other views that are ugly and prejudiced by any standard—then the more shame on all the rest of us for leaving the job to them.”

Until there is an alternative to Geller, she’s pretty much all we’ve got in the fight for freedom of speech against radical Islam.

Geller has said she’d be holding another event like the one in Garland, Texas at some point in the future.  I’ll be cheering her all the way.

UPDATE: Welcome Instapundit readers!

Tuesday
May122015

Health Care Odds & Ends: ObamaCare State Exchanges Disaster Edition

According to a recent article in the Washington Post, “Nearly half of the 17 insurance marketplaces set up by the states and the District under President Obama’s health law are struggling financially.”

Here are some of the worst:

1. Hawaii.  The Hawaii Health Connector won’t be struggling anymore as it is being put out of its misery. The Connector has “prepared a contingency plan to shut down operations by Sept. 30 after lawmakers failed to pass legislation to keep the state’s troubled Obamacare insurance exchange afloat.”  The Connector charges fees on insurance, like most exchanges do, to help keep operations going.  Unfortunately, enrollment has not been high enough to raise the fees needed to cover the Connector’s costs.

2. Vermont.  Technical failures and security problems have plagued the Vermont Health Connect almost from the beginning.  A recent audit found that “serious problems remain with the troubled Vermont Health Connect insurance exchange and questions whether the state can meet deadlines for needed system developments to address the shortcomings.”  Vermont is considering dumping its exchange and joining the federal one.

3. Minnesota.  Pretty much the same problems as Vermont, with same possible result: dumping the whole mess over to the Feds.

4. Colorado. Annual budget shortfalls for Connect for Health Colorado range from $28 million to $55 million in the next few years.  One of the board members, Arnold Salazar, said“Clearly our fees are too low.”  Do you suppose we’ll ever see the day when a government functionary, facing a budget deficit, says, “Clearly, our costs are too high”?  The fees on insurance are currently 1.4 percent and may triple to 4.5 percent.

5. Massachusetts. The Commonwealth Connector has faced not only serious technical difficulties, it now faces a federal investigation.  The “administration of Republican Governor Charlie Baker [has] confirmed that the FBI and U.S. Attorney for Boston have subpoenaed records related to the commonwealth’s ‘connector’ dating to 2010,” according to the Wall Street Journal.  Josh Archambault of the Pioneer Institute has released a report on the Connector mess, claiming that “Our 
public officials not only were incompetent from a managerial perspective, but appear to have lied to the federal government to cover up mistakes made by both the state and CGI.”  Good summary here.  Report here.

Monday
May112015

RAD Calls Out Caving Corporations

“More Saving. More Doing.” That’s the Home Depot slogan. But after reading this NRO op-ed I co-authored with the Hoover Institution’s Dr. Henry I. Miller, you might think it should be, “More Caving. Less Flooring.”

And of course, Lowe’s, “Never Stop Improving,” would be “Never Stop Giving Up.” 

Why? Because these home improvement mega-chains would rather stick their consumers with higher prices and inferior products, than take on left-wing activists.

As we wrote,  

Both of the nation’s retail hardware behemoths, Home Depot and Lowe’s, recently sold out to activists in ways that are the corporate equivalent of a dog’s putting his tail between his legs and slinking away from a bully. Home Depot announced that by the end of this year it will stop selling vinyl flooring that contains a class of chemicals called phthalates. It described the move as an effort to “continually challenge our suppliers to develop new, innovative options for our customers.” Baloney. What the company did was abandon both science and its customers under pressure from the activist group Safer Chemicals, Healthy Families, which sponsors the “Mind the Store” campaign that has been strong-arming retailers to remove safe, useful, and affordable products from shelves.

LowesLogoW

Determined not to lag in the Stupid-Strategy Sweepstakes, Lowe’s announced not only that it will follow Home Depot’s lead on phthalates, but also that it will phase out the sale of products that contain neonicotinoid pesticides — which are widely used on turf and ornamental products as well as on corn and soybean seeds — supposedly because of their adverse effects on pollinators. “Lowe’s will include greater organic and non-neonic product selections, work with growers to eliminate the use of neonic pesticides on bee-attractive plants it sells and educate customers and employees through in-store and online resources,” the company said.

The people who need education are the ones at Lowe’s who decided to phase out “neonics” to protect bees. Contrary to oft-repeated claims, honeybee populations are not declining. According to U.N. Food and Agriculture Organization statistics, the world’s honeybee population rose to 80 million colonies in 2011 from 50 million in 1960. In the U.S. and Europe, honeybee populations have been stable (or even rising slightly over the past couple of years) during the two decades since neonics were introduced, according to U.N. and USDA data. Statistics Canada reports an increase to 672,000 honeybee colonies in Canada, up from 501,000, over the same two decades.

When retailers such as Home Depot and Lowe’s capitulate to pressure groups rather than stand up for science, they actually harm consumers. Products won’t become any safer, while the replacements will often be of inferior quality, more expensive, or, most likely, both. The European experience with neonics illustrates the flaw in Lowe’s reasoning: The EU’s politically motivated ban on neonics, which began in 2013, has forced farmers to resort to older, more toxic, less effective pesticides — primarily pyrethroids, which had been largely phased out. Moreover, European farmers are now seeing a resurgence of insect predation, and insect infestations may lead to a 15 percent drop in this year’s European harvest of canola, the continent’s primary source of the vegetable oil used in food and as biodiesel.

HomeDepotLogoW

Home Depot and Lowe’s aren’t responding to “consumer demand” or being environmentally responsible; they are simply seeking the path of least resistance, knowing consumers are unlikely to protest much when their floors become marginally more expensive or somewhat less durable, or when they need to shift to alternative pest-control products. They just want to get the pesky activists off their backs.

Market forces actually work; if the replacement products that activists want us to use were better, cheaper, or safer, we’d use them without a pressure campaign directed at retailers. And if the original products were actually harming consumers, zealous regulators (and the plaintiffs’ bar) would have acted. When activists can’t get their way via science, regulation, or litigation, they resort to propagandistic tactics like this one.

History tells us that the approach works — for the activists. These campaigns for what have been dubbed “regrettable substitutions” — substitutions that have undesirable outcomes — have become standard operating procedure. Activists thump their chests, get their way, and go on to raise more money to fund the next campaign. Companies give in to avoid negative press, and cast their cowardice as corporate social responsibility.

It’s not as if consumers benefit when big retailers, under pressure, remove popular products. Consumers who, for whatever reason, want phthalate-free floors or BPA-free bottles already have choices. There are no shortages of so-called “green” products available — for a price. But a small group of vocal activists shouldn’t dictate the availability of safe products the rest of us want — simply because stores such as Home Depot and Lowe’s want to avoid confrontation with groups that are in the business of confrontation.

This is part of a pattern. The “Safer Chemicals, Healthy Families” bullies have a track record of spreading misleading information about the safety profile of chemicals in products that benefit consumers. Their baseless fear-mongering plays to the psychological phenomenon of “loss aversion,” in which people perceive the pain of loss more than they do the pleasure of gain. Their junk science has targeted a wide range of chemicals, including those found in cleaning supplies, furniture, children’s toys, food packaging, water bottles, and even commonly used food ingredients.

If the Home Depots and Lowe’s of the world continue to cave to these campaigns, consumers will be the losers. Activists will consign us to a life of more expensive products that aren’t safer or better. And inevitably, other activists will attack the replacement chemicals — the regrettable substitutions — for their risks, real or imaginary. There will be plenty of regrets for everyone, except the activists.

Friday
May082015

A Better Jobs Report, but Not Good Enough News for the American Economy

According to the new government report on unemployment, April would seem to have been a better month for jobs than last March.  That’s not saying much.

Despite the better-than-anticipated jobless numbers, the devil is always in the details.  Outside of the official jobless percentage, there is further information that doesn’t normally get reported on that makes today’s report less positive.  There’s also been a plethora of additional bad economic news of late makes that this one possibly nice note barely cause for celebration.

This is the message delivered by Project 21 member Derryck Green in his monthly “About Those Jobs Numbers” report:

April’s jobs numbers, much like other economic indicators that were recently released, show that it’s going to be difficult for the Obama Administration and its supporters to continue their glossy spin regarding the health of our economy.

You simply cannot spin these numbers.  You can make excuses for them, but you cannot spin them.

To begin with, first quarter GDP growth took a nosedive — plummeting to 0.2 percent.  That’s way down from the previous (fourth quarter of 2014) report of a 2.2 percent GDP growth spurt.  There are economists who also believe that this number will actually be revised to show negative growth once all the numbers are known.

There’s no spinning this disaster.  The economy did more than stall.  It contracted.  And it may yet be worse than we realize.

And it’s very easy to see why.  According to the federal Bureau of Labor Statistics (BLS), labor costs rose five percent while worker productivity fell 1.9 percent last quarter.  This followed a drop of 2.1 percent in the fourth quarter of 2014.  This inverse relation of costs exceeding worker efficiency is a very bad sign for the economy.

Job creation was really no better.

Private payroll processor ADP estimated that only 169, 000 jobs were created in April, down from the revised number of 175,000 (and down from an initial 189,000 estimate) that were created in March.  The BLS, however, estimated higher — claiming that 223,000 jobs were created last month. 

These job creation numbers alone are enough to show the economy is in dire straits.  But there’s more bad news.

The official national unemployment rate did drop slightly to 5.4 percent.  Don’t forget the devil in the details here.  The U-6 jobless number, which includes those on the fringes of the economy, was 10.8 percent.  Once again, this is double the official rate.  And this is the rate many consider to be a more realistic report since it includes the officially unemployed as well as those who are underemployed or removed themselves entirely from the workforce.

There’s also a problem that the workforce participation rate rose only a tenth of a percent to 62.8 percent.  It has remained in this zone not seen since the Carter era for the past year.

The rate for blacks among the unemployed went down to 9.6 percent in April, while the jobless number for black teens rose to 27.5 percentOver 56 million women were out-of-work last month, bringing the unemployment rate for women up to 5.4 percent.  For Latinos, it rose to 6.9 percent.

No matter what these numbers are, New York Post writer John Crudele warns people not to believe them.  He claims that the Labor Department intentionally inflates job creation numbers, especially in the spring — even though they lack the data to back up their report.  He also rightly notes that the official national unemployment rate is inaccurate because it doesn’t take into consideration those who are long-term unemployed who’ve given up hope and stopped looking for work.  Those are the ones counted in the U-6 rate.  Only those people who are actively looking for work are counted in that official unemployment rate.

It was Crudele, by the way, who broke the story a year ago about how a Census Bureau staffer fraudulently collected data that contributed to curiously low unemployment rates around the 2012 election.

And, according to the National Bureau of Economic Research, no matter how many jobs are created — because of the high rate of the underemployed and hidden unemployment — the economy is still 3-6 million jobs short of where it should be.

So, while the economy isn’t creating the jobs our nation needs, the federal government is taxing us as much as it can get its confiscatory hands on.  A record $1,477,901,000,000 in tax revenue was collected since just the start of Fiscal Year 2015, which started on Oct. 1, 2014 and ended April 14, 2015 (before tax day!), according to the Daily Treasury Statement.  Nevertheless, the government ran a deficit of almost $440 billion from October 2014 through March 2015.

It doesn’t stop there.  Other bad economic indicators include:

  • A study by the Congressional Research Service found that, as immigration surges, middle class incomes drop.  Remember that the next time you hear a politician extolling the benefits of an open-border system that will likely lead to amnesty;
  • A survey conducted by the Employee Benefit Research Institute (EBRI) and Greenwald and Associates found only 65 percent of workers polled have anything saved for retirement.  Only 28 percent say they have more than $1,000 saved for retirement, and more than a third said they haven’t saved any money at all for retirement.  It’s hard for some people to save money when they don’t have jobs, and those who do aren’t in much netter shape as they are often experiencing stagnant wages;
  • The homeownership rate — the number of homes owned compared to the overall number of homes — is slightly under 64 percent for the first quarter if 2015, according to the Census Bureau.  That’s the lowest number in 25 years.   It’s no wonder that the rental market is close to an all-time high;
  • Data from the BLS shows that last year, in 20 percent of American families (16,057,000 families out of 80,889,000 nationally), no one had a job;
  • According to consultant group Challenger, Gray & Christmas, Inc., there were 61,582 job cuts in April — most of which were attributed to falling oil prices.  This number was up from the 36,594 job cuts in March — a 68 percent increase.  The April total was up 53 percent from April of 2014. 

This is a very ugly jobs picture for America, the lower official unemployment percentage notwithstanding.  As usual, the Obama Administration will probably have a number of excuses to blame on the economy’s poor showing, while supportive economists will likely act confident in projecting that the second quarter will see a rebound.  And how could it not rebound from 0.2 percent first quarter growth (possibly revised downward at a later date)?

But there’s no denying it — the blame falls squarely on Obama’s narrow shoulders. Sadly, there’s probably nothing that can be done to change course until Barack Obama leaves office.  And that day, in my opinion, cannot come soon enough.

Thursday
May072015

Are More Young and Healthy People Signing up for ObamaCare?  No.

I got a call from One News Now the other day asking me if more young and healthy people, particularly those ages 18 to 34 who are often known as “young invincibles”, were signing up for ObamaCare.  What prompted the question was this piece by Bruce Japsen at Forbes:

As health insurance companies tally up the second year of enrollment of individuals from public exchanges under the Affordable Care Act, they are noticing younger customers that tend to submit fewer medical claims.

Several insurance companies, including Aetna AET +0.66% (AET) and Anthem (ANTM), this week during their first quarter earnings calls said those purchasing subsidized coverage may have been younger than last year. That could be a good sign for health plan profits and next year’s rate increases for everybody buying coverage on government exchanges.

While it is possible that Aetna and Anthem are seeing a greater share of young invincibles, the ObamaCare exchanges, as a whole, are not.  Well, to be fair, in an absolute sense, yes, there are more young invincibles on the exchanges.  Enrollment reports show that there were about 2.2 million enrolled in 2014 and 3.2 million enrolled in 2015, an increase of about 1 million.

But in a relative sense, the number is not increasing.  Young invincibles made up 28 percent of exchange enrollees in 2014 (see page 4), and they make up 28 percent this year (see page 24).  In other words, the exchanges are not attracting the 18-to-34-year-olds at a rate greater than any other age group.

So, if the number is holding steady at 28 percent, is that good news or bad?  At this point is it hard to say.

Preferably, the percentage of young invincibles on the exchanges should be expanding, as more young and healthy people would do much to stabilize risk pools which, in turn, would keep premiums from skyrocketing. The 28 percent is still far from the 38 percent that the Obama Administration said were needed to keep the risk pools on the exchanges stable.  

On the other hand, insurance premiums on the exchanges didn’t rise much at all from 2014 to 2015, sugesting that having a risk pool with 28 percent young invincibles may be sufficient.  Yet, it may have been the ObamaCare risk corridors that kept prices from spiking this year.  (If you don’t know what a risk corridor is, go here and scroll to the end.)  However, that may change very soon.

Wednesday
May062015

Medicare's Victims: How the U.S. Government's Largest Health Care Program Harms Patients and Impairs Physicians

Two months from today, the National Center for Public Policy Research will be releasing my book, Medicare’s Victims: How the U.S. Government’s Largest Health Care Program Harms Patients and Impairs Physicians.  It is currently available for pre-order at Amazon. 

 

In 35 words or less, the book examines patients and physicians who suffer because of Medicare and finds that what they have in common is a lack of political power sufficient to compel Congress to make changes to Medicare’s policies.  A more detailed description is below.

John C. Goodman, president of the Goodman Institute, author of Priceless: Curing the Healthcare Crisis, and godfather of Health Savings Accounts, has had this to say about Medicare’s Victims: “David Hogberg has produced a tour de force. He has identified Medicare’s hidden victims and explained why bureaucracy, price-fixing, suppression of the marketplace and unwise regulations all combine to deny millions of patients the high quality, low cost medical care they should be receiving. I know of no other place where you can find a more comprehensive treatment of Medicare’s worst problems. This is must reading for everyone in health policy.” 

For those who want a sneak peek, Chapter 7, which deals with primary care physicians, was published as a National Policy Analysis a few years ago here.  Parts of Chapter 9, which shows how big hospitals used Medicare to shut down smaller competitors, are available here.

Here is the full description:

Medicare’s Victims examines Medicare beneficiaries and physicians who are harmed by Medicare’s policies. The patients who are victims are often the sickest of the sick, whether it is the disabled who are on Medicare’s two-year-wait period; seniors who fell into Part D’s donut hole; or patients who are harmed because they receive too much treatment or not enough. The physicians who are victims are ones who struggle to provide the best care for their patients while Medicare’s reimbursement system, in effect, punishes them for it. They all tend to have one thing in common: lack of political power. For example, people who are seriously ill are relatively few in number. As such, they do not have the numbers necessary to impact elections. Further, people who are ill are generally not engaging in the networking, meetings and other activities necessary to form effective political organizations. Thus, Congress seldom feels the pressure to change the policies that harm these people. In this book, you’ll read the intimate stories of patients and physicians who have struggled with Medicare, and then you’ll learn how the particular Medicare policy has caused their plight. In the end, you’ll learn how we can reform Medicare so that patients and physicians are put in control of their own medical decisions and, thus, will be much less likely to be victimized.

Tuesday
May052015

Surprise! ObamaCare Medicaid Expansion Leads to Increase in ER Visits

That title of this blog post, of course, is intended to be sarcasm.  That an expansion of Medicaid would lead to a rise in emergency room (ER) visits is about as unexpected as looking to the east sometime early in the morning and seeing the sun.

ERs have long been the haven of Medicaid patients in large part because its low reimbursement rates make it difficult for such patients to find physicians willing to see them.  Exactly how expanding Medicaid under ObamaCare was supposed to result in anything different was never clear. (Perhaps Governor John Kasich was going to ask God to produce a miracle).

Anyway, a new survey by the American College of Emergency Physicians finds that 75 percent of emergency room physicians have seen an increase in ER visits in the last year:

As the Manahattan Institute’s Avik Roy put it in USAToday, “It goes to the false promise of the ACA… [Medicaid recipients are] given a card that says they have health insurance, but they can’t have access to physicians.”

Adding to the false promise is the fact that Medicaid is ineffective an improving the health of recipients, as the Oregon Experiment study found back in 2013.  

So, the Medicaid expansion hasn’t resulted in easier access to health care and probably has not led to any improvement in health for recipients.  But, hey, at least some hospitals seems to be making money.

UPDATE:  One commenter on our Facebook page asked how I knew that the increase was largely due to the Medicaid expansion.  Good question.  According to the article, “56% of doctors in the ACEP poll reported increases in Medicaid patients.”

Friday
May012015

Project 21 Members Speak Out on Baltimore Riots

Beginning on the night that the Baltimore riots started, members of the National Center’s Project 21 black leadership network have been in demand by a media trying to figure out why the looting and rioting there is being favorably compared by some to the historic protests of the Civil Rights Movement.

Project 21 members have done or are scheduled to do dozens of interviews on Canadian television, two 50,000-watt stations in Detroit and another 50,000-watt station in Boston as well as with nationally-syndicated talk radio hosts such as Mike Siegel.

On 4/27/15, Project 21 member Joe Hicks appears twice on the Fox News Channel.  On “The Kelly File,” Joe explained to host Megyn Kelly:

There’s no correlation between poverty and trying to burn down our own centers of the city in places that you need… to have places to go to work at…

What I think has happened here… is a pattern that’s emerged, starting with the Trayvon Martin case… But then we had Ferguson, and the Staten Island case.  And now we have a series of other incidents concluding with Freddie Gray.  And it’s almost this notion that this has become the new civil rights movement… [T]his has gotta have people like Martin Luther King spinning in their grave, to hear people describing this as some sort of movement now…

[T]here’s almost an infantile urge here [on the part of the protesters] to get what they want and get it now… That’s not the way things operate… We knew what the protesters were trying to get in the old days, if you will, of Dr. King and others.  It was about justice.  It was about becoming a part of American society…  The early civil rights folks were after something very different.

The question needs to be asked: what are these folks after [today]?  And that’s the mystery.  If you ask them, you get a mélange of all sort of issues from “capitalism is horrible” to “we want jobs.”  But then there seems to be an impulse [in which] they’re burning down places offering jobs…

After all the progress, after a black president, after a black attorney general, you’ve got these thugs in the street that do create real issues for race relations in this nation.

Joe was also on later, well past midnight on the East Coast.  During continuing live coverage of the violence in Baltimore, Joe spoke about the radicalism of some members of the protests.

Later in the week, on the 4/29/15 edition of “The Rick Amato Show” on the One America News Network, Project 21 Co-Chairman Horace Cooper also brought up the suggestion that the Baltimore rioters were akin to the Civil Rights Movement.

Horace told host Rick Amato:

[Martin Luther King] would be heartbroken.  This goes completely counter to the whole notion of the Dream that he told us we ought to, as a nation, embark upon — a dream where people were going to be judged not by the color of their skin but by the content of their character…

There is some frustration over the fact that the aspirations that every American has hasn’t been achieved.  It’s not the case that it’s okay to engage in these kinds of criminal actions as a result.

In assigning blame, Horace said that President Barack Obama and his policies share much of the responsibility for the way people are being motivated these days.  And, when things don’t go as planned, race is used as a means of drawing blame elsewhere.

But we also have to look at the President and the policies that he has promoted and watch and see why what people said when they were first being presented — they wouldn’t work, and they haven’t, and they have made it more difficult for people.  In fact, black America is worse off under the Obama Administration than it was before he arrived.

[Obama] has continued to push us further and further down the track of saying “it’s just that we haven’t done it enough.”  We’ve spent almost a trillion on his stimulus plan.  We did a near government takeover of the health care industry.  We’ve regulated the Wall Street community.  We continue to push efforts to eliminate our access and availability to one of our greatest resources — natural gas and oil.  But [he says] we need to do it more, and then we would see all of these great results.  Meanwhile, you need to understand that the reason that you are not seeing the great achievements that you should expect is that white America is holding you back.

Wednesday
Apr292015

Justin Danhof Explains Our Work at GE on the O'Reilly Factor

For those who missed it, here's Justin Danhof's appearance on the O'Reilly Factor in which he describes asking General Electric's Jeff Immelt if he will release GE's written communications with the State Department relating to State helping GE with a $1.9 billion deal -- and GE making a nice donation to the Clinton Foundation.

For more information, read our press release here.

Monday
Apr272015

Black Conservatives on Baltimore Looting, Violence: “Felons Don’t Need ‘Space to Destroy’”

With the nation captivated by the rioting in Baltimore and the initial shocking pro-rioter statement of the city’s mayor, members of the National Center’s Project 21 black leadership network are speaking out about this civic crisis.

Violence there was sparked by the death of Freddie Gray, a young black man with a long string of prior arrests, while Gray was in police custody.  It brought the current trend of anti-police tensions to Baltimore.  As opposed to most other recent incidents reported in the mainstream media, this time the heightened emotions led to attacks on police and innocent bystanders, property damage and looting.

What really didn’t seem to help things at all was a statement essentially endorsing mayhem that was made by Baltimore Mayor Stephanie Rawlings-Blake.  At a press conference, she said:

I’ve made it very clear that I work with the police, and instructed them to do everything that they could to make sure that the protesters could exercise their right to free speech.  It’s a very delicate balancing act because while we tried to make sure they were protected from the cars and the other things that were going on, we gave those who wished to destroy space to do that, as well.  And we worked very hard to keep that balance and to put ourselves in the best position to deescalate.  And that’s what you saw.

Now, with spread of horrific violence in the city she is charged with leading, she’s tried to walk back the comment.  She is presiding over a nightly curfew (starting on Tuesday!), cancelled baseball games and school trips and National Guard involvement.

Project 21 Co-Chairman Horace Cooper, a legal commentator and former professor of constitutional law, said:

Felons don’t need “space to destroy”

Criminals and looters don’t need an excuse to destroy property and to engage in mayhem.  They don’t prey on the rest of us because of perceived societal injustice.  They do so because they are lawless.  It’s incumbent upon our elected officials, including the mayor of Baltimore, to stand with those in her city who respect order and safety — not take actions which sanction criminal acts.

Unfortunately that what she’s done with her misguided rhetoric. 

And, as all the nation can see, tonight’s activities clearly show the need that all Americans — regardless of color — have for law enforcement.   I call upon Mayor Stephanie Rawlings-Blake to switch sides and join with law-abiding citizens against the street thugs who make life miserable for inner city residents all over Baltimore.

Bishop Council Nedd II, a Project 21 member and rector of St. Alban’s Anglican Church in central Pennsylvania, added:

The riots in Baltimore are a beast of the Mayor Stephanie Rawlings-Blake’s own making.

Giving space to those who wish “to destroy” is not a responsible statement from a mayor and chief executive.   In one statement, Mayor Rawlings-Blake effectively gave disgruntled youth an excuse to riot and hamstrung the ability of the police to respond.

I come from a family of police officers.  My father and brother were both police officers in Washington, D.C.  I had several uncles who also served as police officers, as well as two of my closest friends.  While I have never served in law enforcement, my comments are not being made totally void of some insight.

Riots are interesting things.  You have people drawn to those situations for a variety of reasons.  There are those who are interested in perpetrating violence and those who are merely interested in watching and observing the goings-on.  As untenable of a situation as it is, it unfortunately falls on police officers to use their discernment and training to determine the intent of the groups and individuals.

Rioters throwing rocks and bricks at police officers should never be tolerated.  However, under no circumstances do police officers have the luxury of throwing the rocks and bricks back indiscriminately into the crowds.

Project 21 member Nadra Enzi, a community policing advocate in New Orleans, said:

“Will Baltimore burn?” is the question I asked after last weekend’s wild protests struck the city’s downtown to (dis)honor Freddie Gray, the man whose in-custody death still has many scratching their heads.

It’s burning now.

I see visions of the Watts super-riots from 1965 and 1992 being repeated in Charm City.  The fact that this place is already ultra-violent joins the notion that Gray died when he could apparently offer officers no threat.  There is now the threat of recreating and expanding the Watts-style carnage, and Americans are wondering if their town is next.

Black male-police relations are emotional embers soaked with rocket fuel.  There is intensity in the racial resentment.  So soon after the shooting of Walter Scott in South Carolina, this case could spark national rioting.  Advocating police-community unity — always an uphill climb — has now become nearly insurmountable.

The protesters have center stage, and in their ranks are criminals committing chaos in the same way they do when publicized marches aren’t underway.  Protesters who aren’t vandals nonetheless mistrust police.  Advocates for police-community unity who are among them are few and far between.

America’s most logical anti-crime alliance, inner citizens who are against violence and allied with the police, is shoved even further aside as chanting shouts down cooperation.  Against this backdrop, I must ask, will Baltimore and more cities burn on the funeral pyre of failed police-community unity?

Monday
Apr272015

The Health Care You Get Will Depend on Your Political Clout--Specialty Drug Edition Redux

Ben Boychuk of the Manhattan Institute is having trouble with ObamaCare.  Specifically, his son Benjamin needs injections of human growth hormone, a specialty drug.  According to Boychuk:

My son Benjamin has a serious growth hormone deficiency. He’ll be 13 years old in May but could easily pass for a boy of 8 or 9. In fact, many 8- and 9-year-olds are taller than him. He’s a full head shorter than all of his pals in seventh grade….

Several trips to his pediatrician along with a couple simple tests to assess Benjamin’s bone age confirmed with data what we could see with our own eyes. Our boy wasn’t just in the bottom percentile in average height for kids his age – he was in the sub-basement. 

Shouldn’t Benjamin’s growth hormone be covered under health insurance, especially after ObamaCare’s coverage mandates went into effect?  Well, no:

Obamacare’s critics – many on the left as well as the right – weren’t wrong when they complained that the law would be a gift to insurance companies. Although the law capped out-of-pocket medical expenses, specialty drugs were exempt. But that only perverted an already distorted marketplace, encouraging insurers to raise consumer costs while narrowing their choices.

I’d highly recommend reading the full article to see the frustrations the Boychuks are going through as they try get a drug approval from their insurance company and deal with the constantly shifting amount they will have to pay out of pocket.  If you haven’t already guessed, it’s not cheap.  Here’s a Gofundme account to help cover the costs of Benjamin’s treatments that you can donate to, if you are so inclined.

So, why are specialty drugs exempt from ObamaCare’ out-of-pocket cap?  After all, it is generally the sickest of the sick who need specialty drugs, and aren’t those the people that the oh-so compassionate ObamaCare are supposed to protect?

Back in spring of 2013, some press reports came out noting that specialty drugs were exempt from ObamaCare’s out-of-pocket caps.  Here is how I explained the exemption:

The very sick are relatively few in number, which means they amount to a very limited number of voters, too limited to have much impact on elections…

It’s not entirely clear how many people take specialty drugs.  The best statistic appears to come from this study by the Center for Studying Health System Change which estimates that “specialty drugs are prescribed for only one in every 100 commercial health plan enrollees.”

To apply that to enrollees in the exchanges, we’ll add the number of people who, according to the Census Bureau, bought their insurance directly (i.e. didn’t get it from their employer) to those who are uninsured. The first is about 30,244,000 and the second is 48,613,000 for a total of 78,857,000.  One in 100 of those equals 788,570, and that is how we get a rough estimate of the number of people in the exchanges who will need specialty drugs.

So, how much political power is that?   Well, divide it by 435 House Districts and you get about 1,813 potential voters.  Most House elections are decided by margins considerably larger than that.   Divide it by 50 states and you get about 15,771 votes.  In 2012 only two Senate elections, North Dakota and Nevada, were decided by margins less than that.

And…let’s not forget that people aren’t taking specialty drugs unless they’re quite ill.  That means they probably aren’t organizing get-out-the-vote drives, protests, lobbying efforts, etc.

We’ll be seeing a lot more of this in ObamaCare in the months and years to come.

Saturday
Apr252015

Clinton Foundation May Have an Enron Problem

money

The Clinton Foundation just announced that it will revise its tax returns for 2010, 2011, and 2012 after revelations by the Reuters news organization that it neglected to report foreign government grants on its tax returns as required by law.

Charities are required to provide a breakout of their government grants, including from domestic and foreign sources, in Part VII, line 1e of IRS form 990.

In a statement on its website, the Clinton Foundation explained that it had apparently "mistakenly combined" its foreign government funding with other funding.

This isn't just highly questionable... it's downright improbable.

Having served in senior management of a non-profit with the same tax status as the Clinton Foundation for nearly 30 years, I can testify that it's very hard to mess this up year after year.

Not only would the Clinton Foundation's management need to get it wrong repeatedly, but its CPA would as well.

And even if the CPA messed up, the errors most certainly would have been caught during an annual audit.

Auditors don't just take a charity's word for the sources and amounts of grants, but contact the sources to verify the information supplied is correct.

So, I wondered which firms could have served the Clinton Foundation so poorly from 2010-2012.

It turns out that it wasn't two firms, but a single firm: the Little Rock, Arkansas branch of BKD, LLP.

That the Clinton Foundation chose to use a single firm for both CPA services and its independent audit for multiple years is significant as it violates charitable best practices.

Ever since the Sarbanes-Oxley Act (formally, the Public Company Accounting Reform and Investor Protection Act) was adopted in 2002, the splitting of general accounting and auditing services has become standard practice, not just for publicly-held corporations but charities, too.

The splitting of accounting and auditing services was a direct result of the Enron scandal.

And now, it appears that the Clinton Foundation may be the charitable equivalent of Enron.

The accounting firm Arthur Andersen helped Enron cook its books because by doing so it could also keep much more lucrative contracts with the company.

During the early 1990s, Arthur Andersen learned that it could considerably boost its profits if its auditors approved what the Wall Street Journal called, in a 2002 article, "aggressive accounting tactics" by some of its clients.

One of its first big financial successes from using these tactics was when it helped Boston Chicken hide franchise losses in advance of an IPO.

In the auditor's performance review, he was praised for turning "a $50,000 audit fee into a $3 million full-service engagement."

BKD could have been the Clinton Foundation's Arthur Andersen, approving "aggressive accounting tactics" to hide millions of dollars in controversial government grants in the one document that the public has an absolute right to see - the Clinton Foundation's federal tax return.

It is troubling, too, that like Arthur Andersen, BKD's professional conduct has been questioned by government regulators.

The Little Rock Arkansas branch of BKD, the very branch the Clinton Foundation used for its audit and other accounting services, is currently being sued by the Federal Deposit Insurance Corporation (FDIC) for $17.5 million in connection with the failure of the First Southern Bank of Batesville.

Between December 2008 and September 2010, First Southern Bank purchased $23 million in fraudulent district improvement bonds from Little Rock attorney Kevin Lewis. BKD was the bank's accounting firm at the time and the FDIC says the firm failed to do its job.

Lewis was sentenced to 10 years in prison in 2011 and BKD's association with the case certainly became widely known at that time.

Yet, the Clinton Foundation did not make its curiously-timed switch to the firm Price Waterhouse Coopers until 2013.

If the IRS can free itself for a moment from its witch hunt of conservative non-profits, it might want to examine the books of the Clinton Foundation.

With so much smoke, there's likely to be one heck of a fire.

Friday
Apr242015

Bill O'Reilly is All Over Our Question to GE's Jeff Immelt

***Media alert: Tune in to Fox's O'Reilly Factor tonight to see our Justin Danhof discuss his question to Jeffrey Immelt, our colleague David Almasi's question to Boeing CEO W. James McNerney, and the crime of honest services fraud. It promises to be an exciting show.***

OReillyFoxKrauthammer042215

On Thursday Evening, Fox News Channel's Bill O'Reilly covered our Justin Danhof asking General Electric CEO Jeffrey Immelt if he would release GE's written communications with the State Department during the time State was helping GE with a deal in Algeria, and GE was donating to the Clinton Foundation.

Folks will recall that Secretary Clinton used a personal server for her emails while she was employed by the State Department, so any copies of emails at this point presumably are on the servers of those with whom she was corresponding.

O'Reilly discussed the situation at length in his "Talking Points Memo," and then went on to discuss it throughout his show, including with Fox's Bret Baier...

...and Judge Andrew Napolitano...

The National Center has been questioning why corporations receiving help from the State Department have been donating to the Clinton Foundation since April 2014, when the National Center's Executive Director, David Almasi, a Boeing shareholder, asked Boeing CEO W. James McNerney about possible conflicts of interest between Boeing's philanthropy and actions by senior public officials. David raised the question of whether Boeing had unnecessarily exposed itself to the danger of being prosecuted for honest services fraud.

A description of David's confrontation at Boeing, and Washington Post coverage of it, is available here.

On Thursday night, Bill O'Reilly discussed our question to GE's CEO with Charles Krauthammer, who didn't seem to have heard of honest services fraud. (Again, I suggest he read the press release we issued after David Almasi attended the Boeing shareholder meeting.)

Charles Krauthammer insists this is about specific politicians. We disagree. Politicians and government officials come and go. Corporations have been paying for access for decades. If the public, and corporate shareholders, confront these CEOs, and insist they stop, there is hope for reform.

When it comes to Boeing and General Electric, it is important to note that we have no evidence anything illegal happened here, and there may well have been no wrongdoing at either company. Our concern as shareholders -- and we did approach both companies as shareholders -- is that honest services fraud is vague (once again, see our Boeing press release). A company can be totally innocent and yet get caught up in a defense that costs a lot of money and harms the company's brand. It is much safer for companies to avoid contributions to ALL charities connected to ALL politicians and government officials entirely, but CEOs, at least so far, don't seem to be aware of this.

As Americans, too, we're better off not wondering if our government officials are doing things because they believe those things are in the best interest of the United States, or because a foundation the official is connected to received a contribution.

In short, when it comes to making contributions to government-official-connected foundations, even contributions made with the best and most pure intentions, corporations should "just say no."

On Friday night, Justin is scheduled to appear on the O'Reilly Factor to discuss his question to Jeffrey Immelt, our colleague David Almasi's question to Boeing CEO W. James McNerney, and honest services fraud generally, in much more detail. We encourage everyone to tune in!