Alexander Hendrie

Inspector General: Lois Lerner’s Hard Drive “More than likely crashed due to an impact of some sort”

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Posted by Alexander Hendrie on Thursday, June 25th, 2015, 12:49 PM PERMALINK

Lois Lerner’s hard drive “more than likely crashed due to an impact of some sort,” according to Congressional testimony submitted today from the Treasury Inspector General for Tax Administration (TIGTA).

According to the testimony, Lerner’s laptop stopped communicating with the IRS server on Saturday June 11, 2011, between 5:00 p.m. and 7:00 p.m. On Monday June 13, 2011, Lerner reported the laptop inoperable. Her laptop was then serviced by an IRS IT staff technician and a Hewlett-Packard contractor:

“When asked about the possible cause of the hard drive failure, the HP technician opined that heat-related failures are not seen often, and based on the information provided to him, the hard drive more than likely crashed due to an impact of some sort. However, because the HP technician did not examine the hard drive as part of his work on the laptop, it could not be determined why it crashed.”

Lerner Hard Drive Contained “Scoring on the top platter”

On July 19, 2011, Lerner asked IRS IT to try to recover the lost data in order to find “personal information.” The hard drive was passed from the IRS IT technician to the IRS Criminal Investigation Division (IRS-CI). The attempt to recover the data was not successful.

Curiously, the IRS-CI technician “noted some scoring on the top platter of the drive, and he believed there were additional steps that could have been taken to attempt to recover data. IRS IT management determined the extra effort to recover data from Ms. Lerner’s hard drive was not worth the expense.”

Photo Credit: US House of Representatives Committee of Oversight & Government Reform

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Oh Weird: The IRS Deleted 422 Backup Tapes With Lerner Emails

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Posted by Alexander Hendrie on Thursday, June 25th, 2015, 9:41 AM PERMALINK

The IRS “accidentally” erased 422 backup tapes that investigators believe contained emails to and from IRS official Lois Lerner, according to the Associated Press.

The tapes contained as many as 24,000 Lois Lerner emails. The tapes were erased eight months after Congressional investigators requested all emails to and from Lois Lerner and a month after the IRS informed Congress they were missing some of Lois Lerner’s emails.

“If the establishment press treated Richard Nixon’s missing audio the way they are treating the destruction of emails by the Obama IRS, Nixon would have served a full eight years as President,” said Grover Norquist, president of Americans for Tax Reform. 

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Schumer: Hillary Win Could Pave the Way for Carbon Tax

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Posted by Alexander Hendrie on Wednesday, June 24th, 2015, 3:08 PM PERMALINK

In a recent speech, Senator Chuck Schumer (D-N.Y.) said he hopes for a Carbon tax if Hillary Clinton becomes President in 2016. In particular, he believes Republicans should “compromise” and agree to this tax:

“There's one sort of [value-added tax] Democrats might be for — and that's a carbon tax. So you might get a compromise along those lines.”

President Obama has considered implementing a carbon tax on several occasions during his presidency, however the idea has been met with fierce opposition. 

Schumer characterized the carbon tax as “the best way to fund the government” despite the idea previously being criticized by economists and businesses alike. 

His comments on the carbon tax as a way to address “revenue shortages” mirrors the rhetoric of “revenue enhancements” coming from the Hillary Clinton presidential campaign. Earlier this month, Clinton’s press secretary announced in a tweet that Clinton will be proposing several “revenue enhancements,” or tax increases over the summer and fall. 

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IRS Gave Contracts to Felons, Tax Cheats

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Posted by Alexander Hendrie on Wednesday, June 24th, 2015, 11:16 AM PERMALINK

The IRS has illegally given 57 contracts to 17 companies that owed back taxes or had a felony conviction in 2012 and 2013, according to a newly released report from the Treasury Inspector General for Tax Administration (TIGTA).

According to the report, the IRS does not have effective controls in place to ensure they did not award contracts to corporations that had federal tax debt or a felony conviction. As the report finds:

“the IRS was not in compliance with Department of the Treasury implementing guidance which required COs to obtain a self-certification from corporations as to whether they have certain Federal tax debt and/or felony convictions prior to awarding contracts with FYs 2012 and 2013 appropriated funds.”

This has occurred because the IRS has failed to establish a definition of “federal tax debt” and does not perform any reviews to determine whether contractors are in compliance. As a result, TIGTA’s review identified ZERO contracts that contained the required contract clause and certification guidelines. TIGTA estimates at least 94 percent of contracts are awarded without adhering to this law. As the report states:

“Our review identified zero contracts in which the CO inserted the required contract clause and obtained the required representation and certification prior to contract award. This resulted in a 94 percent error rate….We are 95 percent confident that between 3,738 and 3,970 new contracts (from a population of 3,970) awarded to corporations during our audit period were done so without inserting the required contract clause and obtaining required representation and certification prior to award.”

As a result, TIGTA identified 17 corporations that received 57 contracts valued at $18.8 million despite having outstanding tax debt or a felony conviction.

In its response to TIGTA, the IRS asserted that it was “appropriate” to award these contracts to the companies, despite being prohibited by federal law from using funds in this manner.

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The Ex-Im Bank is an Outdated Relic From a By-Gone Era

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Posted by Alexander Hendrie on Wednesday, June 24th, 2015, 10:00 AM PERMALINK

With the charter of the Export-Import Bank (Ex-Im) set to expire at the end of the month, its supporters are desperately trying to keep it alive, with one supporter warning of “economic catastrophe” if the bank is not renewed. The truth is, Ex-Im is no longer needed. It was established in a different era, and American exporters will be just fine without it.  At the end of the month, Congress must take a stand against crony capitalism and put an end to this out-of-date bank.

The Ex-Im Bank was established in 1934 following an executive order by President Roosevelt, in order to assist American exporters operate overseas at a time of significant trade barriers. In 1934, the average tariff on dutiable imports sat at 46.7 percent around the world. But today, the average tariff rate has dropped to below five percent as more and more countries embrace free trade. At present there are over 400 free trade agreements in effect across the world, with more going into effect each year. As these trade barriers have dissolved, Ex-Im has become less and less a tool for American exporters and more a method for backdoor corporate welfare.

While Ex-Im may have once been a vital tool for American exporters, it has become harder and harder to justify its existence amid countless controversies. In the past six years, the Ex-Im Bank has been involved in numerous scandals culminating in 85 criminal indictments, 48 criminal judgments, and over $250 million in fines, restitution, and forfeiture.

In addition to these scandals, the claim that the bank is needed to help exporters is dubious at best. Currently, the bank assists less than two percent of exports, and those “reliant” on the bank can easily access alternative (and more efficient) sources of financing.

The primary beneficiaries of Ex-Im, corporate giants like Caterpillar and Boeing will have no trouble securing private sector loans. Countless private financiers consider Ex-Im a competitor, and they have said they could easily step in to pick up the slack if need be.

This is not even the only option available for companies seeking financing. In many cases, well-resourced corporations can offer their own financing in order to continue competing. But in many of these cases there probably was never a need for financing in the first place. Emirates Airlines, a major foreign company that benefited from Ex-Im loans has said they utilize the financing even though they do not need it, and they would still buy from Boeing without them. 

Clearly, the Ex-Im bank is no longer needed to support US exports. Not only is the bank a response to a problem that no longer exists, but the companies that overwhelmingly benefit from loans have countless other financing options. Congress must do the right thing by ending the Ex-Im bank and putting a stop to this institution that unjustly picks winners and losers.

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Where Do The GOP Presidential Candidates Stand on the Ex-Im Bank?

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Posted by Alexander Hendrie on Monday, June 22nd, 2015, 10:00 AM PERMALINK

On June 30, the charter of the Export-Import Bank (Ex-Im) will expire. The bank, which purportedly exists to assist American exporters, has come under scrutiny because of countless cases of waste, fraud, and abuse. The bank does not serve the best interests of American exporters, and the overwhelmingly majority of its loans go to a select few well-connected businesses that can compete with or without Ex-Im.

With the 2016 election fast approaching, many presidential candidates have spoken out against this wasteful institution, while others remain determined to retain the status quo of crony capitalism even as the bank’s functions have been called into question.

As ATR, and others including AEI’s Tim Carney have noted, Hillary Clinton is a strong supporter of the bank. In her own words: “I’d like to put Ex-Im Bank On Steroids.”

In contrast, many declared GOP presidential candidates oppose Ex-Im, with the notable exceptions being Lindsey Graham and Rick Santorum, who support the bank. See where the candidates stand below:

Marco Rubio: “I don’t believe taxpayer money should be used as corporate welfare.”
Senator Rubio (R-Fla.) has been consistent in his opposition to ending Ex-Im. Rubio characterizes it as an unnecessary institution that picks winners and losers and he voted against the bank’s reauthorization in 2012.

Rick Perry“The best way to mend Ex-Im is to end it.”
In an op-ed to the Wall Street Journal, Perry said he can no longer justify supporting it amid “deeply disturbing” revelations of corruption and bribery within the bank.  

Rand Paul“The American people know corporate welfare when they see it”
Senator Paul, like many of his fellow Presidential hopefuls is opposed to renewing Ex-Im. Paul has argued that loans to Solyndra, Brightstone and numerous Fortune 500 companies prove that the bank is not working in the best interests of the American people.

Lindsey Graham: “I want a vote on the bank to be reauthorized.” 
Unlike his fellow GOP candidates, Senator Graham (R-S.C.) unreservedly supports the Ex-Im bank, recently saying there is “no way in hell” he would let the bank shut down. His unwavering support for the bank, even as controversy after controversy piles up aligns him firmly with Hillary Clinton as a supporter of crony capitalism.

Carly Fiorina: If we’re serious about stopping cronyism, we must do away with Ex-Im.”
 As Fiorina has said, Ex-Im is a vehicle of corporate welfare that picks winners and losers.

Ted Cruz: “The Export-Import Bank operates outside of commonsense.”
Senator Cruz has been vocal in his opposition to Ex-Im, describing it as “big businesses’ big-government bank backed by US taxpayers.”

Jeb Bush: “We should find ways to lessen the contingent liability of the federal government."
Governor Bush has called for the bank’s charter to expire saying that, “most of these things should be phased out.”

Rick Santorum: “I think it’s a mistake for us to be out there focused on the Export-Import Bank.”
Santorum, like Graham supports the Ex-Im bank despite the numerous controversies over its loans. As recently as 2014, Santorum criticized efforts to end the bank arguing it would be “tying the hands of our manufacturers.”

Photo Credit: Gage Skidmore

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Billions More Could Soon Be Spent on Obamacare State Exchanges

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Posted by Alexander Hendrie on Monday, June 22nd, 2015, 9:00 AM PERMALINK

The Obama administration has already given almost $5.4 billion in federal taxpayer dollars to states for the attempted construction of Obamacare exchange websites starting in 2011, according to official data. With the Supreme Court set to rule on the constitutionality of federal subsidies by the end of the month, there is the very real possibility that dozens of new exchanges will be set up, with billions more spent. Already, two states – Pennsylvania and Delaware – have announced they will construct their own exchange if the court removes federal subsidies.

The first round of state-run exchanges performed disastrously by any measure, with over half struggling financially or outright failing.

Oregon’s exchange was shut down earlier this year after burning through $305 million in federal funds - but not before spending an additional $41 million in taxpayer dollars to move back to the federal exchange. Oregon officials have since come under investigation over accusations they made decisions about the exchange based on political considerations.

Hawaii’s exchange is the latest exchange to shut down after an announcement earlier this month. The website failed to become financially viable, enrolling half the number of individuals as was needed. Hawaii received $205 million in federal funds and it is estimated they will need $30 million to transition back to the federal exchange – if it is still around at the end of the month.

Needless to say, Pennsylvania, Delaware, and any other states considering setting up their own exchange must not make the same blunders that Hawaii, Oregon and many other states have made.

The billions in Obamacare grants were funneled through the Department of Health and Human Services (HHS) to almost all 50 states as well as the District of Columbia, although only 15 states chose to set up their own exchange. As a result, these states received over 80 percent of the existing $5.37 billion in grants. However, they received these funds with zero oversight and no strings attached.

Federal grant money was divided into four categories. Planning grants were given to almost every state and DC, although three states returned all or part of their planning grant (Florida, Louisiana and New Hampshire).

Level one establishment grants provided one year of funding to states following their planning grants. Level two grants provided funding to states that were further along in the establishment of their exchange and met certain criteria established by HHS.

HHS also awarded seven states with “early innovator grants” with the goal of assisting these states in the development of IT models that could later be adopted and implemented by other states. This initiative was largely unsuccessful.

See the list, and breakdown of grant type here.​

Information on each grant can be found here. 

See the total funding each state received below:






Did not apply













Washington, D.C.










































New Hampshire


New Jersey


New Mexico


New York


North Carolina


North Dakota










Rhode Island


South Carolina


South Dakota














West Virginia










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IRS Woes Due to Incompetence, Not Funding Level

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Posted by Alexander Hendrie on Friday, June 19th, 2015, 9:40 AM PERMALINK

According to a recently released report produced by the Treasury Inspector General for Tax Administration (TIGTA), reductions in the IRS’s budget have impaired the agency’s ability to collect taxes and assist taxpayers. In reality, the agency’s poor performance is not because of its funding level, but due to its inability to complete even the most basic tasks, as has been detailed on numerous occasions.

Detailed reports have shown the agency cannot justify its spending decisions, has repeatedly failed to produce complexity reports, has failed to strengthen data protections, and has continually spent its finite resources in inappropriate ways.  

Unable to Justify Spending Decisions

According to the National Taxpayer Advocate’s Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated:

“The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”

As the report noted, the agency’s decision making has been questioned by watchdog groups on numerous occasions. The IRS’s response has not been satisfactory: 

“the IRS has come under scrutiny by external oversight organizations who have questioned the IRS’s rationale for its budget decisions. They have not been satisfied with the IRS’s response to their inquiries.”

Failure to Produce Legally Required Tax Complexity Reports

The agency has also repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS's specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002. When the agency completed these reports, the recommendations helped Congress make improvements to the tax code, which in turn made the IRS’s job easier.

When questioned about the costs behind compiling these reports, the IRS said it would take “about two full time employees working for about a year.” But as the NTA points out, any costs associated with compiling these reports “pale in comparison to the costs of complexity.”

Outdated Technology

The IRS continues to use decades old technology to serve taxpayers, including some applications over 50 years old. As Commissioner Koskinen recently admitted:

“In regard to software, we still have applications that were running when John F. Kennedy was President.”

In addition, the IRS still uses COBOL, a programming language, that Koskinen characterizes as being “outdated back when I served as Chairman of the President’s Council on Year 2000 Conversion.”

It is difficult to believe that the IRS has willingly ignored updating these applications given that Koskinen has stated that tax-filing season “is a tremendously risky operation to run with outdated equipment and applications."

Inability to Adopt Watchdog Recommendations

Following the recent hack in which the personal information of 100,000 households was compromised, IRS Commissioner John Koskinen admitted that the hack was not due to reduced budgets. Instead, a possible reason for the hack is the failure of the agency to implement 44 recommendations that would strengthen data protections. 

Countless Wasteful Spending Habits
Other reports have detailed the countless wasteful spending habits of the agency. A recent report found the IRS spends over 500,000 hours per year on “union activities” which could instead be used to answer 2.3 million additional phone calls. Last month, it was revealed that the IRS was spending $1,000 an hour hiring a litigation-only white shoe law firm for an investigation, despite having over 40,000 employees dedicated to enforcement efforts. In the past, the agency has been caught red-handed wasting taxpayer dollars on Nerf footballs, the world’s largest crossword puzzle, and extravagant $100 dollar lunches.


While the IRS continues to blame poor service on budget reductions, countless reports point to the real problem – the inability of the agency to competently complete basic tasks and spend taxpayer dollars in a responsible way.


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Lindsey Graham Calls for $3.3 Trillion Tax Hike

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Posted by Alexander Hendrie on Wednesday, June 17th, 2015, 12:16 PM PERMALINK

Senator Lindsey Graham (R-S.C.), a candidate for President of the United States, recently called on Congress to pass the Simpson-Bowles budget plan during an interview on CNN’s “State of the Union.” Simpson-Bowles would raise taxes by as much as $3.3 trillion over ten years, but has failed to gain traction in Congress since being released in 2010.

If Senator Graham has his way, taxes will be $3.264 trillion higher over the next ten years, and already-overtaxed businesses and families will be taxed a total of $5.8 trillion in 2025. Under current law, taxes as a percentage of GDP are projected to reach 18.3 percent by 2025. But if Simpson-Bowles goes into effect, taxes as a percentage of GDP will spike to 21 percent. 

Senator Graham’s support for Simpson-Bowles places him at odds with rival GOP Presidential candidates, many of whom have come out against new tax hikes. Already, a number of Graham’s rivals have made firm commitments not to raise taxes if elected President. This list includes Senators Rand Paul, Ted Cruz, and Marco Rubio; Former Governors Mike Huckabee, and Rick Perry; Former Senator Rick Santorum, and Carly Fiorina.


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IRS Continues to Stonewall Release of Emails in Lois Lerner Scandal

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Posted by Alexander Hendrie on Tuesday, June 16th, 2015, 3:37 PM PERMALINK

Almost three years since the Lois Lerner Tea Party targeting scandal broke, the IRS remains unable, or unwilling to comply with investigators seeking to find the truth.

The IRS has received 6,400 new emails from Lois Lerner’s server that were recovered by the Treasury Inspector General for Tax Administration (TIGTA), however the agency is refusing to hand them over. Instead, the agency has taken it upon themselves to check the emails for duplicates despite TIGTA already having done so.

As the Daily Caller reported, TIGTA received a special program to check that all duplicates had been removed. Even though this has occurred, the IRS is still insisting that they perform manual deduplication, in addition to cross checking these emails with the thousands they have already given to Congressional investigators. As the Daily Caller reported:

“The Service is in the process of conducting further manual deduplication of the 6,400 forensically-recovered emails to supplement the automated deduplication conducted by TIGTA. TIGTA also is further reviewing the 6,400 emails to verify that they were not already produced to the Congressional Committees by the Service.”

But for this to happen, the IRS is insisting it complete a review of Lerner’s communications that have not yet been recovered. The agency has been unable to provide an estimate for how long this process will take.

The IRS’s insistence on moving forward at a snail’s pace demonstrates the agency's unwillingness to be held accountable before the American people. Unfortunately, this problem is not limited to the IRS, but stretches across the entire administration. The Justice Department continues to refuse to prosecute Lois Lerner on criminal contempt charges despite ample evidence available. Congress has requested newly appointed Attorney General Loretta Lynch consider opening the case, but it appears the administration would rather sweep this scandal under the rug than figure out what happened, and who is at fault.

It is unacceptable that the IRS, and the administration as a whole continues to play dumb when “cooperating” with ongoing investigations. Nearly three years on, the American people deserve to know the truth behind the systematic targeting of conservative groups. 

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