Tidbits Political Quotations
To Accompany the May 28, 2015 edition of Tidbits
Bob Jensen at Trinity University

Only those who will risk going too far can possibly find out how far one can go.
T.S. Eliot

Be brave enough to start a conversation that matters.
Margaret Wheatley,

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

Happiness is like a butterfly: the more you chase it, the more it will elude you, but if you turn your attention to other things, it will come and sit softly on your shoulder.
Henry David Thoreau

Give Michelle Obama a Break: Conservative critics of her commencement address at Tuskegee University are missing its many merits ---

College should be a place of new ideas and challenging views. Instead, liberals have made it a place of fear and intimidation. The root of nearly every free-speech infringement on campuses across the country is that someone—almost always a liberal—has been offended or has sniffed out a potential offense in the making.
The Daily Beast --- http://www.thedailybeast.com/articles/2015/05/11/how-liberals-have-ruined-college.html
Jensen Comment:  What's surprising is that The Daily Beast is a liberal news reporting service closely linked to Newsweek.

Black Professor Barely Reprimanded for Horribly Racist Tweets
She later apologized.

Ahmad is a parliamentarian in a rogue Middle East nation where women 17 and under are the property of their fathers. Each year, thousands of young girls are sold into sex-slavery by age 7. Typically, a girl’s father signs a lucrative 10-year contract with an adult male who in turn possessed the girl as his slave until she turned 18. At that time, he returns the girl to her family and pays for a special surgical procedure that restores the appearance of physical virginity, allowing her father to re-sell her to another man in marriage. Ahmad is deeply grieved by...
Scott Klusendorf --- http://townhall.com/columnists/scottklusendorf/2015/05/18/when-perfection-kills-n2000496

Stronger El Niño Could Bring Drought Relief to California (but not Australia) ---

About 15 percent of the 561,000 pensioners in the California Public Employees’ Retirement System live their golden years outside the Golden State, according to a first-of-its-kind analysis of fund data by The Sacramento Bee. The vast majority have flocked to low-tax or no-tax states, creating a veritable river of cash that flows out of California and into cities such as Las Vegas; Reno; Tucson, Ariz.; and Grants Pass, Ore.

A 90% tax rate sounds fine to me (by far the highest in the world)
USA Presidential Candidate and Socilist Bernie Sanders ---
Where's the incentive for entrepreneurs to take on financial risks? Sanders wants everybody to work for the government.

Bernie Sanders' Foul Socialist Odor
Michelle Malkin ---

Mayor of Antwerp, Belgium threatened: 'Convert to Islam or die' ---
Belgium's version of a New Hampshire License Plate

California is one of the five least friendly retirement states in terms of taxation
Among the 41 states with a broad - based income tax, 3 6 offer exclusions for some or all specifically identified state or federal pension income or both , a retirement income exclusion , or a tax credit targeted at the elderly. The District of Columbia provides an exclusion for District and federal pension income . The five states that offer none of these are California, Nebraska, North Dakota, Rhode Island and Vermont. Practice regarding Social Security income varies somewhat from these generalizations. Federal law preempts t he ability of states to tax income from Railroad Retirement.

States Differ on Retiree Tax Burden ---
Especially note the graph

The Rehab Racket: The Way We Treat Addiction Is a Costly, Dangerous Mess ---

Baltimore Officials: Peaceful Protesters Torched 61 Buildings, Damaged 350 Businesses ... ---

George Stephanopoulos Did More Than Just Give Money To The Clinton Foundation ---

Hillary Clinton personally took money from companies that sought to influence her ---
Jonathan Allen, Vox, May 16, 2015 --- http://www.vox.com/2015/5/16/8614881/Hillary-Clinton-took-money

California has $10 billion debt in traffic fines that people can't pay ---

Rooftop Solar Panels Only Save Homeowners Money Due to Government Subsidies
The Hole in the Rooftop Solar-Panel Craze ---

A costly mistake Energy subsidies do not just gobble money. They help cook the planet too
The Economist, May 22, 2015 ---

Home-Brewed Narcotics
It may, to be fair, also change the businesses of legitimate drug firms, because the authors of this paper, John Dueber of the University of California, Berkeley and his colleagues, have found the last pieces of a jigsaw puzzle that will permit opiates to be made from glucose through the agency of yeast. They have still to fit them with the other pieces, to form a single picture. But when they do so, which is likely to be soon, instead of fermenting sugar into alcohol, you will be able to ferment it into morphine—and into many other pharmacologically active molecules as well
The Economist, May 22, 2015 ---
Is this the best thing that could happen to rid the world (think Latin America) if crime?

PRISM: Political & Rights Issues & Social Movements


We'd rather be obese on benefits than thin and working.
Janice and Amber Manzur
John Hill, http://www.telegraph.co.uk/news/uknews/11347454/Mother-and-daughter-weigh-a-total-of-43-stone-and-get-34k-a-year-handouts-but-refuse-to-diet.html 

Moocher Hall of Fame --- https://danieljmitchell.wordpress.com/the-moocher-hall-of-fame/

A Misleading Number Due to Actuarial Lies
"$25,887,000,000,000 Uncle Sam still stands behind 60% of all U.S. financial liabilities," The Wall Street Journal, May 25, 2015 ---

Entitlements Actuarial  Lies
A trillion lie here and a trillion lie there and pretty soon you're talking about an unsustainable future covered up by lying in politics.

Social Security is Going to Be Insolvent Before Anybody Thinks.
New studies from Harvard and Dartmouth researchers find that the SSA's actuarial forecasts have been consistently overstating the financial health of the program's trust funds since 2000.

"Social Security May Be in Worse Shape Than We Thought: Study," by Tom Anderson, NBC News, May 12, 2015 ---

The Social Security Administration projects that its trust funds will be depleted by 2033—not an optimistic forecast. But it may be even bleaker than that.

New studies from Harvard and Dartmouth researchers find that the SSA's actuarial forecasts have been consistently overstating the financial health of the program's trust funds since 2000.

"These biases are getting bigger and they are substantial," said Gary King, co-author of the studies and director of Harvard's Institute for Quantitative Social Science. "[Social Security] is going to be insolvent before everyone thinks."

The Social Security and Medicare Trustees' 2014 report to Congress last year found trust fund reserves for both its combined retirement and disability programs will grow until 2019. Program costs are projected to exceed income in 2020 and the trust funds will be depleted by 2033 if Congress doesn't act. Once the trust funds are drained, annual revenues from payroll tax would be projected to cover only three-quarters of scheduled Social Security benefits through 2088.

Continued in article

Entitlements --- http://en.wikipedia.org/wiki/Entitlement

Harvard, Dartmouth:  Social Security forecasts have been too optimistic — and increasingly biased ---

Republicans have tried a decade ago to reform the Social Security system, warning that the program would tip over into the red earlier than expected and the trust fund would entirely dissipate while some current recipients were still alive to see it. Democrats led by Harry Reid and Nancy Pelosi claimed the crisis didn’t exist when George W. Bush proposed limited privatization options, and the 2008 financial-sector crash put an end to further GOP reform efforts. Studies from Harvard and Dartmouth this week corroborate Bush’s warnings on Social Security, and further accuse the SSA of increasing bias in its analyses in order to maintain the illusion of a slower decline:

New studies from Harvard and Dartmouth researchers find that the SSA’s actuarial forecasts have been consistently overstating the financial health of the program’s trust funds since 2000.

“These biases are getting bigger and they are substantial,” said Gary King, co-author of the studies and director of Harvard’s Institute for Quantitative Social Science. “[Social Security] is going to be insolvent before everyone thinks.” …

Researchers examined forecasts published in the annual trustees’ reports from 1978, when the reports began to consistently disclose projected financial indicators, until 2013. Then, they compared the forecasts the agency made on such variables as mortality and labor force participation rates to the actual observed data. Forecasts from trustees reports from 1978 to 2000 were roughly unbiased, researchers found. In that time, the administration made overestimates and underestimates, but the forecast errors appeared to be random in their direction.

“After 2000, forecast errors became increasingly biased, and in the same direction. Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds,” wrote the researchers, who include Dartmouth professor Samir Soneji and Harvard doctoral candidate Konstantin Kashin.

How bad is it? Barron’s notes that the estimates are off by $1 trillion, maybe more.

Continued in article

Jensen Comment
If Tom Brady had cheated like that he'd be expelled for good. There will, however, be no punishments for the liars who gave false estimates of the entitlements liabilities of the future. That type of deflation goes unpunished in Washington DC.

Bob Jensen's threads on the "Entitlements Crisis" ---

The Road to Hell is Paved With Good Intentions

"Audrey Hepburn Teaches Economics," by William McGurn, The Wall Street Journal, May 25, 2015 ---

. . .

In a 2001 column, no less than Paul Krugman noted a similar case of good intentions that had terrible unintended consequences, citing a bill proposed in the 1990s by Sen. Tom Harkin (D., Iowa) to outlaw child labor in products made overseas. The threat of the legislation succeeded in the sense that some companies in Bangladesh stopped hiring children.

But Mr. Krugman noted that follow-up research by Oxfam found that the displaced child workers ended up in even worse jobs, or on the streets—and that a significant number were forced into prostitution.

Whether by minimum-wage boosts that make them more expensive to hire, licensing requirements that make it more difficult to get a job, or other forms of regulation that will likely mean fewer nail salons and fewer jobs, it’s not hard to imagine displaced nail salon workers in America driven more deeply down into the black market, or into something worse, such as prostitution.

By contrast, wouldn’t a simple guest worker program help those here illegally more than a higher minimum wage? Likewise, wouldn’t a concerted effort that helped these women learn English do more for their opportunities in life than enforcing paid sick leave? Come to think of it, wouldn’t a rapidly growing economy creating jobs give them more avenues of escape from an abusive boss than piling more regulations onto an already sluggish economy?

In the end, the only real leverage a worker has over a boss is her ability to tell him where to get off—secure in the knowledge that she has other opportunities. Which is exactly what Eliza Doolittle does at the end, when she’s acquired the English and manners that mean she no longer has to put up with the bullying of Professor Henry Higgins.


How to mislead with statistics
The Most Expensive Wars in United States History
--- Click Here

Jensen Comment
The trend in warfare is the replacement of labor with capital. Soon wars will be fought by robots and drones on both sides of battles. However, we may never be able to eliminate collateral pain, suffering, and death of civilian casualties.

In recent wars medical (think antibiotics) and transportation (think helicopters) technology for battlefield casualties soared in terms of saving lives. This is a mixed blessing from a financial standpoint since mental and physical casualties returning from war often need subsequent lifetimes of support. It's terrible even today to recall the pain and suffering of soldiers left to die on the battlefields of the USA's Civil War. But a cold and calculating accountant would view this as less costly than treating a generation of casualties on both sides.

In the article cited above the costs are understated.
Firstly, there's the lifetime cost of casualties returning from war. Secondly, there's the cost of casualties left to die on historic battlefields --- such as the cost of not having them come home to support their families. The other costs not included in the article are mind boggling.

"Better Than Raising the Minimum Wage Help Americans who need it with a major, carefully crafted expansion of the Earned Income Tax Credit," by Warren Buffet, The Wall Street Journal, May 21, 2015 ---

. . .

In my mind, the country’s economic policies should have two main objectives. First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity.

That second goal crumbles in the face of any plan to sizably increase the minimum wage. I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.

The better answer is a major and carefully crafted expansion of the Earned Income Tax Credit (EICC), which currently goes to millions of low-income workers. Payments to eligible workers diminish as their earnings increase. But there is no disincentive effect: A gain in wages always produces a gain in overall income. The process is simple: You file a tax return, and the government sends you a check.

In essence, the EICC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment.

The existing EICC needs much improvement. Fraud is a big problem; penalties for it should be stiffened. There should be widespread publicity that workers can receive free and convenient filing help. An annual payment is now the rule; monthly installments would make more sense, since they would discourage people from taking out loans while waiting for their refunds to come through. Dollar amounts should be increased, particularly for those earning the least.

There is no perfect system, and some people, of course, are unable or unwilling to work. But the goal of the EICC—a livable income for everyone who works—is both appropriate and achievable for a great and prosperous nation. Let’s replace the American Nightmare with an American Promise: America will deliver a decent life for anyone willing to work.

Jensen Comment
The famous conservative economist Milton Friedman was an advocate replacing welfare with a "negative income tax" that guaranteed a minimum level of income ---

A common criticism is that the NIT might reduce the incentive to work, since recipients of the NIT would receive a guaranteed minimum wage equal to the government payment in the absence of employment. A series of studies in the United States beginning in 1968 attempted to test for effects on work incentives. Jodie Allen summarizes the key studies:

The Stanford Research Institute (SRI), which analyzed the SIME/DIME findings, found stronger work disincentive effects, ranging from an average 9 percent work reduction for husbands to an average 18 percent reduction for wives. This was not as scary as some NIT opponents had predicted. But it was large enough to suggest that as much as 50 to 60 percent of the transfers paid to two-parent families under a NIT might go to replace lost earnings. They also found an unexpected result: instead of promoting family stability (the presumed result of extending benefits to two-parent working families on an equal basis), the NITs seemed to increase family breakup.

Continued in article

Earned income (tax) credit (EIC) --- 

Since over half of the USA taxpayers pay no income tax, the EIC is not a tax-reducing policy for a taxpayer. Instead the EIC acts more like a negative income tax in which eligible taxpayers get cash from the IRS

The basic premise is that the EIC is preferable to a negative income tax in that it gives more incentives to be employed.
Also the basic premise is that there is more incentive to be legitimately employed rather than being employed in the $2 trillion underground economy where many persons are now getting paid unreported cash for labor plus collecting welfare and other government benefits.

There is also a basic premise that to the extent that the EIC keeps wages lower there is less incentive for employers to turn to the underground economy for lower wage, non-union workers --- also workers who do not require employer taxes such as contributions to Social Security and Medicare. There's also the issue of slowing down use of robots to replace low-skilled workers. In comparison, each serious increase in the minimum wage greatly increases incentives to replace workers with robots. Low skilled workers are usually the easiest to replace with machines in general.

The enormous problem with the EIC to date is that it's a major, I mean really major,  source of fraud, especially IRS payments to millions of persons not eligible for the EIC funds or over payments to fraudsters who file multiple income tax returns for the main purpose of getting multiple EIC payments to which they are not entitled.

Aside from the enormous problem of EIC fraud, there's an added problem of restrictions on who is eligible for the EIC to date. Whereas there almost no restrictions on who is eligible for minimum wage, the EIC is only available to parents of qualifying children. Warren Buffett envisions expanding the scope of eligibility for the EIC.

Still an added problem of the EIC to date is that it usually is not as profitable as being employed in the underground economy while collecting welfare such as when a person on welfare also works as a house cleaner or child care worker in the underground economy.

Still another problem of the EIC for those who do not work in the underground economy there are not enough low-skilled jobs for full-time workers. The EIC creates more demand for the jobs that are available giving rise to an increased gap between workers seeking low-skilled employment relative to the number of such jobs available.

So when Warren Buffet says "carefully crafted" he's leaving out a lot about how carefully crafted the EIC must become to overcome it's major problems to date. Some things would help a great deal. A carefully-crafted child care credit would help to overcome the problem that many parents cannot work full time because of responsibilities in caring for their children.

"The Paradoxical Impact of Corporate Inversions on US Tax Revenue," by  Rita Nevada Gunn Northwestern University  and Thomas Z. Lys Northwestern University, SSRN, April 4, 2015 ---

Do corporate inversions cost the US Treasury billions of dollars in tax revenue, justifying legislative responses and even strong-arming corporations from moving their tax domicile abroad? We show that corporate inversions not only do not appear to reduce, but, paradoxically, are even likely to increase tax collections by the US Treasury

Jensen Comment
Good thing this was not dated April 1. I would have said it must be an April Fool joke

NYC's most legendary prosecutor sees a darker threat in Venezuela's alleged global cocaine hub ---


California has $10 billion debt in traffic fines that people can't pay ---

Jensen Comment
This is an enormous dilemma aside from the issue of amnesty to violators with outstanding traffic fines.

We all have an interest in safe driving an dread those drivers who run red lights, pass other cars dangerously, create safety hazards when parking wherever they choose, etc.

When people ignore driving laws we generally up the punishments to encourage safer driving such as increasing the fine for running red lights. But what do we do in the future about drivers who either cannot or will not pay fines for traffic laws? Do we let people repeatedly off the hood because they are poor or because they are minorities?

Perhaps we should take the lead of Finland on this matter. Finland will put serious violators in jail regardless of income, race, creed or color. As a result is is much safer to drive in Finland on any street and any time of day.

Finland keeps the jail population low because of a willingness to put people in jail. Perhaps the reason we have so many drivers in jail in the USA is an unwillingness to put drivers in jail until they become exceptional safety hazards who repeatedly (like 100 times flaunt the law).

Finland also makes traffic fines proportionate with income for first-time offenders. This works in Finland because Finland does not have a serious  underground economy. In the USA there's a $2 trillion underground economy such that the incomes on record are often not at all equal to the incomes actually earned.

The $5 Million Sprained Ankle:  The Sharpton's are Sharp
"Al Sharpton's Daughter Sues The City of New York For $5 Million After She Fell In The Street," by Steelfish, Daily Mail, May 17, 2015 ---

The eldest daughter of civil rights activist Al Sharpton has launched a bid to sue the city of New York for $5 million after she fell in the street and sprained her ankle.

Dominique Sharpton, 29, said she was 'severely injured, bruised and wounded' when she stumbled over uneven pavement at the corner of Broome Street and Broadway downtown last year.

According to the lawsuit obtained by The New York Post, Sharpton now wants millions of tax payer money to compensate her for the fall which occurred on October 2, 2014.

Continued in article

From the New York Post on May 17, 2015 --- http://nypost.com/2015/05/17/al-sharptons-daughter-sues-city-for-5m-after-spraining-ankle/

. . .

The legal shakedown is right out of her dad’s pay-to-playbook.

Al Sharpton has used threats of protests and boycotts against large companies as a way to generate huge corporate donations, his critics charge.

Everyone from McDonald’s, Verizon, Macy’s, General Motors, Chrysler and Pfizer have forked over cash to the elder Sharpton.

The Rev on Saturday said he didn’t know the status of his daughter’s legal claim. “She’s 29 years old. Why would she have to talk to me about that?” he said of Dominique, whose mother is Sharpton’s ex-wife, Kathy. “I just know that she was hurt and that she got a lawyer and she’s a grown woman. [Where] she goes from there, I have no idea.”

Broken sidewalks and rough pavement can be a windfall for pedestrians. One plaintiff, Denise Giles, snagged a cool $2.25 million settlement seven years after suing the city’s Health and Hospitals Corp. for failing to fix a broken sidewalk outside one of its clinics. Giles claimed she needed ankle surgery as a result of her fall.

Her payout was one of 885, or $60 million worth, that the city made over 22 months for defective sidewalks.

Dominique Sharpton claims she fell in a crosswalk, which would make hers a “defective roadway” claim. The city received 774 such claims in the 2014 fiscal year alone.

She was left with “internal and external injuries to the whole body, lower and upper limbs, the full extent of which are unknown, permanent pain and mental anguish,” she alleges.

The younger Sharpton is seeking the damages for “loss of quality of life, future pain and suffering, future medical bills, [and] future diminution of income,” according to court papers.

Sharpton’s lawyer, John Elefterakis, said she had “multiple ligament and tendon tears” and “has not had any involvement in selecting a figure that would be fair and adequate compensation for her pain and suffering. The number was selected by my firm and is meant as a safeguard for Ms. Sharpton in a worst-case scenario.”

If she scores her legal windfall, she might want to give her dad a handout; he reportedly owes $4.5 million in unpaid taxes.

Continued in article

"Sharpton’s daughter hiked up mountain on ‘sprained’ ankle," by Michael Gartland and David K. Li , NY Post, May 18, 2015 ---

Jensen Comment
Winning this lawsuit could make similar lawsuits explode into the millions in cities across the USA. The good news is that she could then help her father pay his back income taxes.

This is probably only the first stop in claiming lifetime Social Security Disability and Medicare Benefits.

This reminds me of a case in which a woman broke her leg in her apartment. She called a taxi, crawled by herself down to the curb, and had the taxi driver help her into the cab. She directed  him to let her out in front of a supermarket where she then dialed 911 and her lawyer. She lost the case, however, when the store's insurance company managed to locate the cab driver.

"As A Major Retraction Shows, We’re All Vulnerable To Faked Data," by Carl Bialik, Nate Silver's 5:38 Blog, May 20, 2015 ---

Professors and Soon-to-Be Professors Who Cheat ---

Jensen's Comment
When faked data can influence political outcomes the losers still win. When Harry Reid was confronted in the USA Senate for lying his response was:  "Se won the election,"

"Teacher assails practice of giving passing grades to failing students," by Jay Mathews, The Washington Post, May 17, 2014 ---

Caleb Stewart Rossiter, a college professor and policy analyst, decided to try teaching math in the D.C. schools. He was given a pre-calculus class with 38 seniors at H.D. Woodson High School. When he discovered that half of them could not handle even second-grade problems, he sought out the teachers who had awarded the passing grades of D in Algebra II, a course that they needed to take his high-level class.

There are many bewildering stories like this in Rossiter’s new book, “Ain’t Nobody Be Learnin’ Nothin’: The Fraud and the Fix for High-Poverty Schools,” the best account of public education in the nation’s capital I have ever read. It will take me three columns to do justice to his revelations about what is being done to the District’s most distracted and least productive students.

Teachers will tell you it is a no-no to ask other teachers why they committed grading malpractice. Rossiter didn’t care. Three of the five teachers he sought had left the high-turnover D.C. system, but the two he found were so candid I still can’t get their words out of my mind.

The first, an African immigrant who had taught special education, was stunned to see one student’s name on Rossiter’s list. “Huh!” Rossiter quoted the teacher as saying. “That boy can’t add two plus two and doesn’t care! What’s he doing in pre-calculus? Yes of course I passed him — that’s a gentleman’s D. Everybody knows that a D for a special education student means nothing but that he came in once in a while.”

Continued in article

Bob Jensen's threads on grade inflation ---

Denmark Preparing to be the First to Eliminate Cash ---

Jensen Comment
What a marvelous weapon for the war on drugs and crime in general. However, don't hold your breath for cash to be eliminated in the USA. There are two many vested interest in cash, including parties on both sides of transactions in the $2 trillion annual underground economy where nothing gets reported to government, including those cash wages to maids cleaning houses and newly disclosed cash payments to people to riot in Ferguson ---

How to Mislead With Statistics
"Stop using income as a guide to economic class," Updated by Matthew Yglesias, Vox, May 12, 2015, ---

Rooftop Solar Panels Only Save Homeowners Money Due to Government Subsidies
The Hole in the Rooftop Solar-Panel Craze ---

A costly mistake Energy subsidies do not just gobble money. They help cook the planet too
The Economist, May 22, 2015 ---

IG mistakes in economic policymaking abound. But it would be hard to find a worse one than energy subsidies. Recent research has shown that they enrich middlemen, depress economic output and help the rich, who use lots of energy, more than they do the poor.

But now a new working paper by the International Monetary Fund highlights another cost too: damage to the environment. Including this, the authors reckon that the total drag on the global economy caused by fuel subsidies now amounts to a stonking $5.3 trillion each year, or 6% of global GDP—more than world spends on health care. Poorer countries dole out the largest amount of subsidies; some spend up to 18% of their GDP a year on them. The lion’s share goes to coal, the most polluting fuel. By contrast renewable-energy subsidies, mainly given out in the rich world, amount to a mere $120 billion. And they would vanish if fossil fuels were taxed properly.

Continued in article

Note that this was not the usual 5-4 USA Supreme Court Liberal-Conservative Split
"Supreme Court: Maryland has been illegally double-taxing residents who pay income tax to other states," by Bill Turque, The Washington Post, May 18, 2015 ---

A divided Supreme Court said Monday that Maryland’s income tax law is unconstitutional because it does not provide a full tax credit to residents for income tax paid outside the state, a ruling likely to cost Maryland counties and localities across the country millions of dollars in revenue.

The court voted 5-4 to affirm a 2013 Maryland Court of Appeals decision that the state’s practice of withholding a credit on the county segment of the state income tax violated the Commerce Clause because it might discourage individuals from doing business across state lines.

In most states, income from elsewhere is taxed both where the money is made and where taxpayers live. To guard against double taxation, states usually give residents a full credit for income taxes paid on out-of-state earnings.

Maryland residents are permitted to deduct income taxes paid to other states from what they pay in Maryland state income tax. But the state did not allow the same deduction to be applied to a “piggy back” tax that is collected by the state for counties and some cities.

The ruling means that Maryland taxpayers who tried to claim the credit on their county income tax returns between 2006 and 2014 are likely to be eligible for refunds, which the state Comptroller’s office says could total $200 million with interest.

Going forward, Maryland residents who pay income taxes to another state on income earned in that state will be able to claim a credit for both the state and county portions of the Maryland tax, costing Maryland an estimated $42 million a year in revenue.

The ruling is also likely to affect thousands of other cities, counties and states with similar tax laws, including New York, Indiana, Pennsylvania and New York.

Continued in article

Chilton & Posner Present An Empirical Study Of Political Bias In Legal Scholarship At Today's ALEA Annual Meeting at Columbia ---

Adam S. Chilton (Chicago) & Eric A. Posner (Chicago) present An Empirical Study of Political Bias in Legal Scholarship at the American Law & Economics Association Annual Meeting today at Columbia:

Law professors routinely accuse each other of making politically biased arguments in their scholarship. They have also helped produce a large empirical literature on judicial behavior that has found that judicial opinions sometimes reflect the ideological biases of the judges who join them. Yet no one has used statistical methods to test the parallel hypothesis that legal scholarship reflects the political biases of law professors. This paper provides the results of such a test. We find that, at a statistically significant level, law professors at elite law schools who make donations to Democratic political candidates write liberal scholarship, and law professors who make donations to Republican political candidates write conservative scholarship. These findings raise questions about standards of objectivity in legal scholarship.

Continued in article

Bob Jensen's threads on liberal bias in the academy and in the media ---

From the From the CFO Journal's Morning Ledger on May 14, 2015

Politics of Tax Reform in the 114th Congress

Despite numerous obstacles in getting tax reform legislation enacted into law in the near-term, tax reform is likely to stay on Congress’s agenda, regardless of how long that takes to address. As the debate on tax reform moves forward, businesses and individuals would be well served by analyzing and understanding developments as part of their efforts to prepare for a transition to a revised tax code. Continue »

Read more Deloitte Insights »

Junk (High Yield) Bond --- http://en.wikipedia.org/wiki/High-yield_debt

"Why Chicago’s Bonds Are Junk." The Wall Street Journal, May 13, 2015 ---

Illinois’s domination by public unions has the state dancing on the edge of fiscal freefall. The state Supreme Court ruled last week that Springfield can’t alter pension benefits, prompting Moody’s this week to downgrade the debt of the city, its public schools and park district all to junk status. Now the Chicago Teachers Union wants to make another contribution to the collapse.

In May the union filed an unfair labor practice complaint with the Illinois Educational Labor Relations Board, accusing the school district of failing to bargain in good faith and rejecting mediation to reach a new contract. The union’s complaint? The school district wants teachers to chip in more for their pensions. The horror.

The dispute goes back to 1981, when in lieu of larger pay raises the district agreed to pick up seven percentage points of the teachers’ contribution of 9% of their salaries to their pensions. This is on top of the district’s own contribution. Teachers have since become accustomed to paying only 2% of their salaries for pensions, about $1,496 a year on average.

Many current teachers weren’t in the school system in 1981, but they like the perk of paying a fraction of their pension cost. Who wouldn’t? The 2% contribution is far less than the 9% contributions made by many other public employees in Illinois, let alone the 6.2% payroll tax for Social Security or what private workers pay into 401(k)s.

Continued in article

Jensen Comment
One reason the bonds are in junk status is that Chicago itself is on the verge of Detroit-like bankruptcy. What hurt Chicago's bond market is the precedent set in Detroit that pensions take priority over bond payments such that Chicago's bond investors face high risks of losing all or most of their investments.

"Barack Obama vs. Elizabeth Warren on Trade:  An economic clash emerges between two liberal titans, by Ira Stohl, Reason Magazine, May 11, 2015 ---

There are two kinds of Washington fights, the theatrical and the genuine.

In a theatrical fight, both sides go through the motions. They may look like they are really fighting, but it’s really just a charade designed to communicate to constituents and interest groups. The final outcome is preordained.

In a genuine fight, the outcome is actually uncertain, and the combatants are really annoyed, not just pretending. That kind of fight creates real winners, real losers, and, sometimes, lasting rifts and scars.

The fight under way right now about trade between Elizabeth Warren and Barack Obama is starting to look more and more like a genuine fight.

President Obama got testy in a recent interview with Yahoo! News, calling Senator Warren “absolutely wrong” and noting, “The truth of the matter is that Elizabeth is, you know, a politician like everybody else.”

The Yahoo! News reporter, Matt Bai, said Obama “seemed unusually irritated.” Bai wrote, “like a marriage in which the spouses pretend to be happier than they really are, Obama’s polite alliance with the populist left appears to be suddenly crumbling under the weight of free trade.”

Senator Warren, for her part, responded by accusing Obama of trying to pass a secret deal. She told The Washington Post: “the president won’t actually let people read the agreement for themselves. It’s classified.” And in a move that can’t have pleased President Obama, she not-so-subtly suggested that Hillary Clinton—his one-time-rival and would-be-successor—has a firmer grasp of the matter: “Hillary Clinton in her book raised concerns about precisely this issue.”

Continued in article

Jensen Comment
Hilary Clinton is staying clear of the dispute until she tallies up which side gives the most to the Clinton Foundation.

"Mattress Girl Lawsuit: Can Paul Nungesser Beat Columbia in Court? Experts Weigh In," by Robby Soave, Reason Magazine, April 30, 2015 ---

. . .

Dillon: Columbia’s treatment of Paul Nungesser shows everything that is wrong with the current system. Here is a man who was found innocent of all charges but whose primary accuser has actually been given course credit for continuing to call him a rapist—and making national news in the process. He is living every innocent person’s worst nightmare. Some of his legal claims are stronger than others, but it seems clear that Columbia should have to pay a price for how it’s treated him. If this case goes to trial, I look forward to seeing how Columbia justifies what it did and how Ms. Sulkowicz performs under cross-examination.

This article seems quite plausible to me
"Pakistan’s former ambassador to the US at the time of the bin Laden raid tells a VERY different story than Seymour Hersh," by Natasha Bertrand and Michael B Kelley, Business Insider, May 14, 2015 ---

"Bladeless Wind Turbines May Offer More Form Than Function:  Startup Vortex Bladeless makes a turbine that looks intriguing, but it may not solve wind power’s challenges," by Phil McKenna, MIT's Technology Review, May 27, 2015 --- Click Here

Jensen Comment
Other experimental technologies are discussed in this article including merry-go-round wind power (no prancing horses).

The Hamilton Project (Brookings studies of economic growth) --- http://www.hamiltonproject.org/

"We test-drove the Toyota ‘future’ car that Elon Musk hates," by Drew Harwell, The Washington Post, May 11, 2015 ---

You expect a certain sort of magic from a car like Toyota's Mirai, the world's first mass-market, hydrogen-powered all-electric named after the Japanese word for "future." It maxes out at 300 miles, refuels in five minutes and spits out zero emissions except for water, all for tens of thousands of dollars less than Tesla's electric Model S.

But behind the wheel of the four-door Mirai, which California drivers can buy in October for around $50,000, what you get is something much more, well, boring: a smooth, quiet, mid-size sedan you wouldn't find out of place in a school pick-up circle. And that's what makes it so fascinating.

Toyota let us test-drive one of its prototypes this week, and it became clear why one of the world's biggest automakers is making a huge bet on hydrogen as a future fuel for the world's roads. The Mirai is responsive, futuristic, fully featured and fun to drive, the kind of car you can see beating gas guzzlers at their own game.

Continued in article

Jensen Comment
This article illustrates how difficult it is to compare the benefits and costs of products subject to enormous technology unknowns for the future. Japanese automobile manufacturers are betting that there will be breakthroughs in the cost of producing hydrogen. Elon Musk is betting on breakthroughs in battery technology such as batteries that do not diminish in cold weather and batteries with longer ranges between charges. Elon Musk also faces a huge problem of dependency on rare earth metals mined in only a few countries outside the USA. Hydrogen cars face unknowns in explosion and fire safety.


Nearly half of states expected to confront big budget gaps ---

By Christina Cassidy (Associated Press), includes “With the nation's economy at its healthiest since the Great Recession, a surprising trend is emerging among the states - large budget gaps. An Associated Press analysis of statehouse finances around the country shows that at least 22 states project shortfalls for the coming fiscal year. … "After all, if a state is grappling with a budget deficit now, with the economic expansion approaching its sixth anniversary, what will be its condition when the next slowdown strikes?" credit analyst Gabriel Petek wrote in a recent report.”

. . .

The forces at work today are somewhat different than when the recession took hold in 2008. In some states, revenue growth has been stagnant, missing projections and making it difficult to keep pace with expanding populations and rising costs for health care and education. Other states have been hurt by a steep decline in oil prices or seen their efforts to promote growth through tax cuts fail to work as anticipated.

The result is a nation divided between states such as California and Colorado that are riding the wave of the economic recovery and others such as Illinois and Pennsylvania that appear closer to bust than boom.

A majority of states have failed to climb back to their pre-recession status, in terms of tax revenue, financial reserves and employment rates, said Barb Rosewicz, who tracks the fiscal health of states for The Pew Charitable Trusts.

Alabama, for example, faces a $290 million shortfall after a voter-approved bailout expires at the end of the current fiscal year. Projected cuts would create a $27 million hole in the state's court system, forcing more than 600 layoffs and leaving just one juvenile probation officer and two clerical staffers in each county, said Rich Hobson, administrative director for the Alabama Unified Judicial System.

Continued in article



Cadillac Tax --- http://en.wikipedia.org/wiki/Cadillac_insurance_plan
President Obama exempted trade unions for political purposes

From the CFO Journal's Morning Ledger on May 26, 2015

Good morning. A provision of Obamacare set to take effect in 2018 will slap a hefty tax bill on employee health plans that exceed certain cost thresholds, and that has CFOs looking at a range of alternatives, from scaling back current offerings to eliminating the plans altogether, CFO Journal’s Kimberly S. Johnson and Maxwell Murphy report.

“To me, it’s a penalty for giving our employees a generous benefits package,” said Action Environmental Group Chief Financial Officer Brian Giambagno. Action Environmental briefly considered doing away with employee health coverage altogether to save money. “I’d be lying if I said we haven’t had that discussion,” said Mr. Giambagno.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Free Good is Not the Same as a Zero Price Good --- http://en.wikipedia.org/wiki/Free_good
Zero Priced Dialysis and Kidney Transplants for Undocumented Immigrants in Illinois

. . .

A free good is a good that is not scarce, and therefore is available without limits.[1][2] A free good is available in as great a quantity as desired with zero opportunity cost to society.

A good that is made available at zero price is not necessarily a free good. For example, a shop might give away its stock in its promotion, but producing these goods would still have required the use of scarce resources.

Examples of free goods are ideas and works that are reproducible at zero cost, or almost zero cost. For example, if someone invents a new device, many people could copy this invention, with no danger of this "resource" running out. Other examples include computer programs and web pages.

Why are undocumented immigrants in need of dialysis and kidney transplants flocking to Illinois?

Illinois is the only state where they can  get free dialysis and kidney transplants if they are not on Medicaid ---

. . .

The Illinois legislature last October passed a law that provides funds for kidney transplants for undocumented migrants, the first such legislation in the United States.

Landaverde acknowledged that the risk of losing funding exists because of the cutback in the state budget, but he said he is confident that Gov. Bruce Rauner will respect the law and will not go to the extreme of interrupting the healthcare services and "condemning thousands of people to death."

Jensen Comment
The problem with the "zero price" of dialysis and kidney transplants is that there is not unlimited funding for these zero priced goods and services. In fact they are quite costly goods and services for which patients from all over the world may flock into Illinois on what becomes a false promise. These patients, in turn, who cannot be treated or for which treatment fails become enormous burdens on the charity medicine services in Illinois such as Emregency Room services, hospital admission services, nursing home services, etc.

Surrounding states like Wisconsin and Iowa should cheer Illinois for taking in many charity medicine cases that are now receiving such charity outside Illinois.

Illinois has a reputation for providing free medical care such as when an audit revealed that half the people receiving free medical care and medicines on Medicaid were not eligible for Medicaid.

This is problematic since Illinois is now the USA state closest to declaring bankruptcy. It would seem that legislators in Illinois need some lessons in economics.

"These Charts Show the Baby Boomers’ Coming Health Crisis," by Dave Johnson, Time Magazine, May 11, 2015 ---

Despite increasing life expectancy, the aging cohort is less healthy than the previous generation

American Baby Boomers are more stressed, less healthy and have slightly less health care coverage than people in the same age group did a decade ago, according to data from a new report released by the U.S. Centers for Disease Control and Prevention (CDC).

Exacerbating the potential for a crisis, those aged 55 to 64—the core of the Boomers—are living longer than their predecessors did 10 years ago. The charts below show that though Boomers are living longer, but aren’t necessarily living healthier lives.

Continued in article

Jensen Comment
This is the worst possible news for both Medicare and Medicaid struggling for survival. Increased life expectancy is bad news from the standpoint of actuarial estimates of cost. And poor health adds pain to financial misery of these two entitlements that pay for medical care and medications.

Bob Jensen's threads on entitlements ---

"Obamacare Exchanges on Life Support," by Michelle Malkin, Townhall, May 15, 2015 ---

. . .

The miraculous, efficient, cost-saving, innovative 21st-century government-run "marketplaces" were supposed to put the "affordable" in Obama's Affordable Care Act. Know-it-all bureaucrats were going to show private companies how to set up better websites (gigglesnort), implement better marketing and outreach (guffaw), provide superior customer service (belly laugh), and eliminate waste, fraud and abuse (LOLOLOL).

You will be shocked beyond belief, I'm sure, to learn that Obamacare exchanges across the country are instead bleeding money, seeking more taxpayer bailouts and turning everything they touch to chicken poop.

Wait, that's not fair to chicken poop, which can at least be composted.

"Almost half of Obamacare exchanges face financial struggles in the future," The Washington Post reported last week. The news comes despite $5 billion in federal taxpayer subsidies for IT vendors, call centers and all the infrastructure and manpower needed to prop up the showcase government health insurance entities. Initially, the feds ran 34 state exchanges; 16 states and the District of Columbia set up their own.

While private health insurance exchanges have operated smoothly and satisfied customers for decades, the Obamacare models are on life support. Oregon's exchange is six feet under -- shuttered last year after government overseers squandered $300 million on their failed website and shady consultants who allegedly set up a phony website to trick the feds. The FBI and the U.S. HHS inspector general's office reportedly have been investigating the racket for more than a year now.

In the People's Republic of Hawaii, which has been a "trailblazer" of socialized medicine for nearly four decades, the profligate state-run exchange demanded a nearly $30 million cash infusion to remain financially viable after securing $205 million for startup costs. The Hawaii Health Connector accidentally disconnected hundreds of poor patients' accounts and squandered an estimated 8,000 hours on technological glitches and failures. Enrollment projections were severely overinflated like a reverse Tom Brady scandal. After failing to secure a bailout, Hawaii announced this week that its exchange would be shut down amid rising debt.

Continued in article


"Massachusetts’ Botched Obamacare Exchange Build May Have Been Illegal As Well As Incompetent," by Peter Suderman, Reason Magazine, May 12, 2015 ---

Report finds that state misled federal officials about progress on the $135 million project.

When Obamacare’s health insurance exchanges officially launched in October, 2013, one of the worst performers was, somewhat ironically, located in the one state that already had a functioning health insurance exchange: Massachusetts. The state had been running its own online insurance portal for years as part of RomneyCare, the coverage expansion that would become the model for Obamacare. But the exchange the state already had in place, while functional, didn’t have all of the features required by Obamacare. A total overhaul was required.

But when Obamacare’s exchanges went live, the upgrade turned out to be a downgrade. Despite years of administrative planning and development, funded largely by $135 million federal grants, the Massachusetts Health Connector basically didn’t work at all during the first open enrollment period. Repair efforts stalled, and eventually the entire thing was scrapped so that the state could start all over again on yet another new exchange. The original tech contractor, CGI (which also worked on the botched federal exchange) was fired from the project, and a new team was brought in to start over.

It’s been clear for a while now that the project was massively mismanaged, but it now looks increasingly as if development of the exchange may have involved illegality as well as incompetence.

Not only did the officials in charge of the exchange botch the job, they are now accused of having intentionally misrepresented their progress (or lack thereof) to federal officials. A stinging report released yesterday by the Pioneer Institute, based on official contemporaneous audit reports by an outside consultant and unnamed “whistleblowers” who were interviewed by the report’s author, Josh Archambault, alleges that state officials lied to federal overseers about progress on the project and cheated on a key federal connectivity test, employing what was essentially a dummy system in order to cover for work that had not yet been completed.

Continued in article

Bob Jensen's Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm

"What Liberals Still Don’t Understand About Fox News," by Jack Shafer, Politico, May 24, 2015  ---

But Fox in its current incarnation is neither a help nor a hindrance. Fox News—and its Svengali Roger Ailes—aren’t the Republican kingmakers they’re made out to be. I explored this point last month, noting that the network is better at employing presidential candidates than electing them. Whatever ambitions Ailes and Fox chief Rupert Murdoch may have to elect a president—in 2012, Ailes had his heart broken by Chris Christie and David Petraeus, both of whom declined his invitation to run—their first priority has always been to make money, which Fox News does, clearing a reported $1.2 billion a year. If you think of Fox News as a news-entertainment hybrid designed to make money, its combative programming style begins to make more sense.

Like many Fox critics, Bartlett inflates the network’s power. Fox’s most popular program, The O’Reilly Factor, pulls in about 3.3 million viewers on its best nights. In a country whose voting-age population exceeds 234 million, 3.3 million ain’t squat. What’s more, the O’Reilly/Fox audiences aren’t even uniformly Republican! According to a Pew survey from 2012, 45 percent of O’Reilly viewers (and 55 percent of Fox viewers) self-identify as independent or Democrat, which means many of the eyes and ears absorbing the Fox message are only tangentially connected to Republican politics. It’s comic to think of Democratic and independent Fox viewers pushing the Republican Party further to the right.

The Republican Party had been fielding “Foxy” presidential candidates for decades before the network’s 1996 launch, such as Barry Goldwater in 1964 and Richard Nixon in 1968 (Ailes, by the way, was his media consultant), which suggests that the network isn’t leading the right-wing parade but has only positioned itself at the front of the procession. Another Foxy candidate on the 1968 general election ballot was George Wallace, who collected 13.5 percent of the presidential vote as a third-party candidate. Wallace traversed the sort of outré political frontiers that have become Fox territory. His politics make the Tea Party’s look like a very weak brew. To suggest that Fox alone pushed the GOP in the direction of radicalism is to ignore the political history that followed: After wounding Gerald Ford in the 1976 presidential campaign, Reagan completed the reset of the GOP as an ideologically driven conservative party in 1980, and there it has largely remained. (Also unexplored by Bartlett is that the Republican Party, allegedly radicalized by Fox to the point that it can’t attract centrists, has built majorities in both the House and Senate. If this is failure, the Republicans probably don’t covet success.)

One thing Bartlett gets absolutely right in his critique is how Fox seized on the repeal of government censorship of the airwaves (also known as the Fairness Doctrine and the equal-time rule) to create a news outlet that would cater to the country’s underserved conservative audience. You don’t have to be a Fox fan to credit the network with reintroducing ideological competition to the news business, which began to fade at the midpoint of the 20th century.

The reliably liberal Frank Rich appreciates better than most Fox’s essential harmlessness. In a piece published last year in New York, he concluded that aside from infuriating liberals, Fox flexes little political power. The median age of a Fox viewer is 68, eight years older than the MSBNC and CNN median age, and its median age is rising. “Fox is in essence a retirement community,” Rich writes, and a small one at that! “The million or so viewers who remain fiercely loyal to the network are not, for the most part, and as some liberals still imagine, naïve swing voters who stumble onto Fox News under the delusion it’s a bona fide news channel and then are brainwashed by Ailes’s talking points into becoming climate-change deniers,” he writes.

In a much quoted television interview five years ago, conservative Republican David Frum said, “Republicans originally thought that Fox worked for us and now we’re discovering we work for Fox.” Bartlett repeats Frum's quip as his paper’s kicker. But catchy as the Frum line remains, it’s just not true. The Fox tail does not wag the Republican dog.

Read more: http://www.politico.com/magazine/story/2015/05/fox-news-liberals-118235.html#ixzz3bHeBTT8Q


Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's threads on medicine ---

The Atlantic: Health: Family --- http://www.theatlantic.com/health/category/family/

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/