Category News

Increase the IRS’s Funding

Danny Vinik Leave a comment
The recent IRS scandal is not a reason to cut the agency's funding.

The IRS scandal is not a reason to cut the agency’s funding.

After the IRS scandal broke in early May, there was no doubt that Republicans would use it as a reason to drastically reduce the agency’s budget. As expected, House Republicans are doing just that. A new bill looks to cut the department’s funding from $12 billion to $9 billion a year – a 25% reduction. This is in contrast to the $1 billion raise that the President outlined in his budget.

There is no doubt the IRS screwed up. It targeted both Tea Party and progressive groups for more intense scrutiny in the approval process for (c)(4) status than it should have. Even worse, the agency singled out Tea Party groups more than progressive groups, making it harder for those organizations to gain 501(c)(4) status. None of that is okay and we need to correct it.

But that has nothing to do with the IRS’s budget. Subtracting money from the agency does nothing to correct the approval process. It just strains the department’s resources and creates the potential for more mistakes. What makes the House Republican’s bill most foolish though is that we should be increasing the IRS’s budget as the President has called for. In fact, increasing its funding saves the country money. The Treasury estimated in May (PDF) that its proposed budget increase would bring in six times that amount in additional revenue!

Certainly the IRS needs to combat waste within the agency – such as the $49 million it spent on conferences from 2010-2012. But squeezing the budget does nothing to directly combat this waste. The department can still fund those lavish conferences and just relax its enforcement. In the end, taxpayers lose (and those who skip out on their taxes win). If House Republicans really want to make the IRS more efficient, it needs to increase its oversight – as should be done anyways given the recent scandal. But don’t slash the budget simply because people hate the agency. After all, these are the same people who’ve been screaming about our budget deficit the last five years. Even though the IRS’s budget proposal reduces the deficit, I don’t hear them clamoring about it anymore.

 

 

Barnes & Noble’s Catch-22

Danny Vinik 1 Comment

A friend texted me yesterday after the resignation of Barnes & Noble CEO William Lynch and asked my thoughts on the company as a whole. I basically repeated what Matt Yglesias wrote yesterday:

Barnes & Noble is a very successful chain of bookstores, except the number of people who want to buy physical books is plummeting. A digital bookstore can stock a much larger inventory with almost no warehousing costs, and can deliver the book of your choice to you within seconds. What’s more, a Kindle Paperwhite or a iPad Mini is lighter than a book and yet can contain many books, greatly facilitating travel. Even better, you can highlight passages of your digital books and annotate them and then have all your annotations available to you on all your digital devices. The only real value of physical books at this point is a kind of nostalgia-soaked experience, and people want to experience that at a friendly independently owned bookstore not an impersonal chain.

She was disheartened by my response, particularly because she had spent hours and hours as a kid reading various books in the now-defunct Borders bookstore. Barnes & Noble is just the next (and largest) chain bookstore to succumb to market pressures. This made me realize exactly who Barnes & Nobles loyal customers are: they aren’t customers at all. They are the kids and adults who sit in the store for hours at a time, reading different selections, moving from chair to chair and not spending any money. These are the people who attach sentimental value to the store, just like my friend. Unfortunately, they also just suck money from the large retailer, taking advantage of the vast book selection without contributing anything to the store’s bottom line.

However, if instead of sitting in the store and reading, my friend had purchased books and taken them home to enjoy, she wouldn’t ascribe the same sentimental value to the store and wouldn’t care about its closure. It’s a catch-22 for B&N and one it can’t find its way out of.

Raul Labrador Has a Point

Danny Vinik 3 Comments

Over the weekend, Raul Labrador appeared on Meet the Press to talk about immigration reform:

In fact, if you look at this Obamacare debacle that they have right now, this administration is actually deciding when and where to actually enforce the law. And that’s what some of us in the House are concerned about. If you give to this administration the authority to decide when they’re going to enforce the law, how they’re going to enforce the law … what’s going to happen is that we’re going to give legalization to 11 million people and Janet Napolitano is going to come to Congress and tell us that the border is already secure and nothing else needs to happen.

Sounds a bit crazy, right? Not really. Republicans have been clamoring for years now about the authoritarian Obama administration. Much of it has been utter bogus, but Labrador has a point here and we can look right back to last week’s delay of the employer mandate to see it.

The employer mandate requires all employers with more than 50 workers to offer affordable health insurance or pay a $2,000 fine. Implementing this policy has proven difficult so the White House announced last week that it was delaying the employer mandate until 2015. Except the Obama Administration doesn’t have the ability to do that. Congress does. Instead, the Administration told the IRS to not enforce the $2,000 fine for a year. That’s not how the government is supposed to work. Here’s Ezra Klein last week:

This is a regulatory end-run of the legislative process. The law says the mandate goes into effect in 2014, but the administration has decided to give it until 2015 by simply refusing to enforce the penalties.

The administration says this kind of thing happens all the time. “I think you’d be harder pressed to find some example where there wasn’t some discretion on how to implement major policies than one where everything went exactly by the books,” says one senior administration official involved in implementation.

Be that as it may, the regulatory solution reflects the fact that the legislative process around the health-care law is completely broken. Republicans won’t pass any legislation that makes the law work better. Improving the law, they fear, will weaken the arguments for repeal. But Democrats, of course, won’t permit repeal. So Congress is at a standstill, with no viable process for reforming or repairing the Affordable Care Act as problems arise. And so the White House is acting on its own.

If the President had come out and asked Congress to pass a bill delaying the employer mandate for a year, do you think legislators would have obliged? I’m not sure. Republicans would be up in arms screaming for repeal again. Would they agree to the delay?  I don’t know. But even if they hadn’t, the White House would have at least tried to adjust the law legally and not used its own authority. Instead, it circumvented Congress without even trying to adjust it legally.

That’s exactly what Labrador feels could happen with immigration reform. The immigration bill that passed the Senate does not have any hard triggers so Secretary of Homeland Security Janet Napolitano wouldn’t actually have to tell Congress the border is secure before illegal immigrants could apply for citizenship. But in any bill that passes the House, hard triggers will almost certainly be part of it and would require such testimony from Napolitano.

Why are Democrats so against hard triggers? They fear that a future Republican Secretary of Homeland Security will never declare the border secure to prevent illegal immigrants from receiving citizenship. Labrador has the exact same fear: that a future Democratic Secretary of Homeland Security will definitely declare the border secure, even if it isn’t, to allow illegal immigrants to apply for citizenship. Republicans favor hard triggers because it’s much harder to declare the border secure when it isn’t than to declare it insecure when it is. Nevertheless, Labrador has the same fear that Democrats have. Both are rooted in a deep distrust of the opposite party with the belief that a future administration will simply bend the rules to get what it wants.

With the employer mandate, the Obama Administration did just that. Raul Labrador isn’t crazy. Conn Carroll isn’t foolish to suggest that “immigration reform is dead and Obamacare implementation killed it.” That may be a bit extreme, but it’s not unfounded. It’s just an ugly component of the dysfunctional, distrustful atmosphere that plagues our political system right now.