Kendyll Ferrall

HUD Subsidies Allow Nebraska Millionaire to Pay $300 Rent

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Posted by Kendyll Ferrall on Tuesday, August 18th, 2015, 1:30 PM PERMALINK

An individual worth $1.6 million living in Oxford, Neb. pays $300 a month for a one-bedroom apartment, but not because of the Nebraska housing market.

This tenet is among the more than 25,000 well-off families and individuals that have a taxpayer-subsidized roof over their heads thanks to ‘egregious’ abuse of the public-housing system.

According to an Inspector General (IG) audit of the Department of Housing and Urban Development (HUD) released in July, thousands of ‘over income’ families have received housing assistance despite exceeding the program’s income eligibility limits.

In some cases, the tenets’ income far exceeded the amount to qualify for government assistance, like the case from Nebraska:

Also, this tenant had total assets valued at nearly $1.6 million, which included stock valued at $623,685, real estate valued at $470,600, a checking account with a balance of $334,637, and an individual retirement account with a balance of $123,445. As of April 2014, the tenant paid a flat rent of $300 monthly for the public housing unit.

Taxpayers aren’t just footing the bill for millionaires.

The report found a family of four in New York making nearly $500,000 a year, but paying only $1,574 a month for a three-bedroom apartment and a Los Angeles family of five making over $200,000 but only paying $1,091 a month for a four-bedroom apartment. The low-income threshold in New York was $67,100 and $70,450 in Los Angeles.

Of the 25,226 over income families receiving taxpayer-funded housing, 17, 761 families, or 68 percent, had been earning more than the qualified for over a year. Over half of those families, 13,388, earned more than $10,000 over the 2014 income limits. Seventy-percent of the over income families had resided in government housing for over a year.

The report estimated that taxpayers will pay over $104.4 million this year to keep these families in subsidized housing.

Despite the IG’s report, HUD has no plans to evict any of these families. The department doesn’t require HUD officials to remove over income families –it urges them to stay.

HUD claims that by implementing a policy to evict families that no longer qualify for public housing would ‘negatively affect their employment and destabilize properties.’

Under current regulations, tenets may remain in government-provided housing as long as they want, regardless of income. HUD only considers income when an individual or family applies for housing, it does not perform financial reassessments. 

HUD officials attempted to shrug off the report’s findings, arguing that because families that were found to be abusing the system account for 2.6 percent of the 1.1 million families receiving assistance, it wasn’t necessary to implement any changes.

The 25,226 families in government housing receive it at the expense of over 300,000 families stuck on waiting lists that actually qualify for assistance. According to the report, 65-percent of over income families remain in public housing for up to 8 years and 5-percent stay for over 9 years.

 

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GOP Presidential Candidates Call Out Hillary for Student Loan Debt Tax Hike

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Posted by Kendyll Ferrall on Monday, August 10th, 2015, 4:45 PM PERMALINK

Hillary Clinton delivered a speech on Monday in New Hampshire that outlined her proposal to reduce student loan debt through a $350 billion tax hike. Republican candidates were quick to criticize Clinton’s plan.

Speaking with Fox News on Monday morning, Sen. Marco Rubio (R-Fla.) argued that Clinton’s plans for college financing are outdated.

“All that she’s talking about is ‘let’s raise taxes and let’s pour a bunch of money into a 20th-century outdated model,” Sen. Rubio said. “This is the thing they always do on the left — she has to figure out who to raise taxes on. This is about making, doing business in American even more expensive.”

Sen. Rubio, who spoke to paying off his student loans during the first Republican presidential debate, went on to argue that Clinton’s plan, “pours money into an outdated system,” and explaining that he wants to create a college system that is more flexible and practical.

“A lot of them (college students)are going to graduate with a degree that doesn’t lead to a job,” said the senator, pointing out that students need to be prepared for the current job market. “That’s why I believe that before you take out a loan, for that matter everyone, should be told how much people make when they graduate from that school and with that degree so people have an understanding of what they’re studying and where it’s going to lead."

Former Florida Governor Jeb Bush also came out in opposition to Clinton’s plan, calling it “fiscally irresponsible.” 

“This irresponsible proposal would raise taxes, increase government debt, and double-down on the failed Obama economic policies that have led to a ‘new normal’ of sluggish economic growth, rising college costs spurred by Washington, and limited opportunities for all Americans – including recent college graduates,” said Bush on his website.

Bush went onto say that, “We don’t need more top-down Washington solutions that will raise the cost of college even further and shift the burden to hardworking taxpayers.”

 

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American Action Forum holds Sharing Economy panel

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Posted by Kendyll Ferrall on Monday, August 3rd, 2015, 9:45 AM PERMALINK

American Action Forum (AAF) hosted a three-person panel on Thursday to discuss the emerging sharing economy.

Moderated by the Wall Street Journal’s Eric Morath, the panel covered a variety of economic topics from the benefits of crowdsourcing and direct-selling models to the shift in employment trends as the result of companies like Uber, Lyft and Airbnb.

Participants in the panel included Carl Pierre, the head of DC Operations at WeWork; Lori Bush, president and CEO of Rodan + Fields and Alan B. Krueger, Bendheim Professor of Economics and Public Affairs at Princeton University and former chariman of President Barack Obama’s Council of Economic Advisors.

The panel built on a paper authored by Will Rinehart, AAF director of technology and innovation policy, and Ben Gitis, AAF director of labor market policy. Rinehart and Gitis’ research highlights the positive impact of the sharing economy:

The gig economy is of rising importance in the overall U.S. economy. From 2002 to 2014, workers in the gig economy expanded between 8.8 percent and 14.4 percent. Independent contractors, most notably, helped put 2.1 million people to work, accounting for 28.8 percent of all jobs added from 2010 to 2014. The ride sharing industry alone helped bring in an additional $519 million in economic activity from 2010 to 2013 for independent workers, while injecting 22,000 jobs into the sector. Though it is early, the online gig economy also seems to also be a growing piece of United States’ economy of the 21st century.

 


CEOs receive massive taxpayer-funded raises

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Posted by Kendyll Ferrall on Thursday, July 2nd, 2015, 4:15 PM PERMALINK

Ignoring objections from the White House and the U.S. Treasury Department, the Federal Housing Finance Agency (FHFA) went ahead with its proposal to raise salaries for the chief executives of government-backed Fannie Mae and Freddie Mac.

Despite the $600,000 salary cap implemented by the FHFA after public-criticism of the CEO’s seven-figure salaries, Freddie Mac CEO Donald Layton and Fannie Mae CEO Timothy J. Mayopolous are set to each receive $4 million a year. The six-fold salary increase came after Matt Melvin, the director of the FHFA, raised concerns over a competitive salary being necessary to maintain employees.

Bailed out by the government during the financial-market collapse in 2008 that the two mortgage companies helped to cause, Fannie Mae and Freddie Mac received a combined $187.5 billion taxpayer-funded bailout, the largest bailout given during the crisis. Since the government takeover, there has been little progress made in reforming the U.S. financial housing market.

Mayopolous’ and Layton’s new salaries rival their previous private-sector salaries, but they are not private-sector employees. They are public servants and their salaries should not be comparable to that of private-market CEOs. While the companies have sent the Treasury $230 billion since their bailout, both firms have failed to make considerable progress in reforming or rehabilitating the U.S. housing finance market.

The pay-revamp comes after increasing uncertainty over whether or not Congress will make a decision about the companies any time soon. In 2014, the Senate Banking Committee passed a measure that would dissolve Fannie Mae and Freddie Mac and replace them with a private-market solution. Backed by a bipartisan coalition, the measure was opposed by progressive Democrats and failed to make it to the Senate for a vote. Neither chamber is expected to take up the issue this year.

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States sue over EPA's unprecedented land grab

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Posted by Kendyll Ferrall on Thursday, July 2nd, 2015, 11:00 AM PERMALINK

The Environmental Protection Agency (EPA) had a rough Monday.

Hours after the Supreme Court released its 5-4 ruling that struck down the EPA’s rule on mercury limits, which was a major cornerstone for the Obama Administration’s environmental agenda, 12 states filed a federal lawsuit against the agency and the Army Corp. of Engineers to block the controversial Waters of the United States (WOTUS) rule. 

Attorneys representing Wyoming, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, North Dakota and South Dakota submitted requests to the 8th Circuit Court of Appeals asking for the rule to be thrown out before it takes effect in August.

Released in May, the final draft of the rule would essentially grant the federal government unfettered authority over waterways, allowing the EPA to regulate almost any piece of private land where water can conceivably flow. The finalized WOTUS rule came on the heels of the passage of H.R. 1732, The Regulatory Integrity Protection Act. Passed by a bipartisan coalition in the House, the bill would require the EPA to revoke the rule, but the EPA has ignored the vote.

The rule would result in a massive federal takeover of private property rights and includes bureaucratic red-tape, costly and time-consuming permit requirements, penalties and possible jail-time for failure to comply with the rule’s many requirements.

In addition to imposing unnecessary burdens on landowners, farmers, ranchers and small businesses, the states currently involved in the lawsuit argue that WOTUS violates the CWA and the U.S. Constitution. WOTUS disregards the distinction between federal authority and private or state landownership that was created under the Clean Water Act (CWA). The CWA grants states certain jurisdiction over land and water within its boundaries.

While the EPA claims that the purpose of the rule is to clarify which waters are covered under the CWA, the states affected by the impending regulations believe that it will tremendously expand the regulatory authority of the EPA and the Corp. and is an impermissible expansion of power. WOTUS would allow the federal government to control vast portions of land from areas where water is seasonally found, like ditches, ponds and field waterways, to areas where the flow of water has been altered by the landowners. Private land would essentially be converted to federally-owned land.

separate lawsuit was filed in the U.S. District Court for the Southern District of Georgia by attorneys general in Alabama, Florida, Georgia, Kansas, Kentucky, South Carolina, Utah, West Virginia and Wisconsin. Texas, Mississippi and Louisiana have also filed their own suit.

This growing-group of WOTUS lawsuits adds to the long and litigious history of the EPA’s attempts to expand its authority over private land that began with the 2001 Supreme Court decision that limited the agency’s regulatory power.

 


Amtrak Wastes Billions on Fraudulent Wages

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Posted by Kendyll Ferrall on Thursday, June 25th, 2015, 10:00 AM PERMALINK

Amtrak employees have apparently discovered time travel.

At least, that's one explanation for the report released by the Amtrak Office of Inspector General (AOIG) last week that discovered employees are claiming to have worked upwards of 47-hour days. The report found that discrepancies in employees’ reported hours are largely the result of the increasingly complicated and intricate union agreements Amtrak must enter into every year. The analysis embodied six years of documented waste and abuse stemming from fraudulent and inaccurate timesheets.

Last year, Amtrak entered into 23 separate bargaining agreements with the 14 different unions that cover the train service’s 19,300 employees. Each agreement contains complex and specific rules for calculating an employee’s hours and wages. Under the agreements, Amtrak uses six different timekeeping systems to process the 4.5 million daily timesheets and calculate pay.

In addition to the eyebrow-raising work day claims, the investigation found instances of employees who reported to have worked over 100-consecutive days and who recorded working 957 weeks with only overtime hours and no regular hours. The AIOG report found that employees claimed to work 2,381 weeks with at least 40 overtime hours on top of their regular 40 hours.

The federally-owned rail line spends $1.2 billion on wages as the result of fraudulent and inaccurate timesheet data. Requests for overtime-pay in 2014 totaled $199 million; roughly 25 percent of regular wages paid. Nearly a third of Amtrak’s budget goes to labor costs for employees under the union agreements that are making it difficult for employees to accurately report their hours.

The AOIG found that employees belonging to the Amtrak Service Workers Council were responsible for repeatedly reporting the most overtime hours without regular hours, with the highest claim at 769 hours over nine weeks. Employees covered under the Brotherhood of Railway Signalmen and the Brotherhood of Maintenance of Way Employees had the highest instances of reporting overtime hours that totaled more than 100 percent of their regular hours.

The AOIG’s investigation into wasteful spending at the hands of the unions came on the heels of calls to increase Amtrak’s funding after May’s deadly train derailment. The report was released on the same day that Sens. Corey Booker (D-N.J.) and Roger Wicker (R-Miss.) introduced S. 1626, a bill that would increase Amtrak’s funding to $9 billion over the next four years. The Railroad Reform, Enhancement, and Efficiency Act calls for $1.4 billion more than its House counterpart, but this report shows that the last thing Amtrak needs is more taxpayer money.

If Amtrak wants more money to improve its safety and increase its efficiency, maybe it should start with the millions of dollars that are being wasted on labor.

 

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Swiss Voters Reject Inheritance Tax

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Posted by Kendyll Ferrall on Thursday, June 18th, 2015, 11:00 AM PERMALINK

On Sunday Swiss voters turned out to overwhelmingly reject a ballot initiative to introduce a federal inheritance tax. Opposed by 71 percent of voters, the initiative would have created a 20 percent tax on inheritances over 2 million Swiss francs ($2.2 million).

Proposed as a way to invigorate the shrinking economy, the tax would have potentially affected the majority of the country’s workforce. The businesses that would bear the brunt of the tax, small and midsize firms, employ 80 percent of Swiss workers.

Swiss Businesses, the Swiss cabinet, and both houses of Parliament urged voters to reject the ballot measure, describing the initiative as an effective double-tax that would cripple over 7,000 small businesses and threaten nearly 12,000 jobs per year.

With some estimations ranging up to a 40 million franc tax-bill, Swiss small-business owners raised concerns over how their family members would be able to afford the tax while maintaining their businesses. For many family-owned operations, the money needed to pay the tax is tied up in the company.

Supporters of the proposal suggested that revenue from the tax should go to Switzerland’s social-security system. Advocates for the initiative estimated that the tax would generate 3 billion francs annually. Currently four of Switzerland’s 26 cantons, similar to U.S. states, impose a tax on heirs who inherit funds from a parent.

Nebraska, Iowa, Kentucky, New Jersey, Maryland, and Pennsylvania are the only states in the U.S. with an inheritance tax. New Jersey and Maryland are the only states that impose an inheritance tax and an estate tax on residents. 

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Adam Thierer: Let the Market Self-Regulate

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Posted by Kendyll Ferrall on Friday, June 12th, 2015, 10:00 AM PERMALINK

The Federal Trade Commission (FTC) held a panel this week to discuss whether or not regulation should play a role in monitoring the rapidly-growing sharing economy.  The sharing economy is a marketplace that promotes competition, innovation and opportunity.

Through the sharing and exchange of transportation, hospitality services and other goods, the sharing economy provides consumers with more choices, drives competitive prices and allows individuals to reap financial benefits by fully utilizing belongings they already own. So naturally, the government is looking to intervene.

Adam Thierer, a senior research fellow at the Mercatus Center, closed out the FTC’s panel by speaking to the damage that regulation can do to young, emerging markets. Arguing that regulations often value private interests over the public, Thierer laid out five reasons why allowing the sharing economy to self-regulate benefits consumers and producers.

1. Regulations Usually Don’t Work

"Just because we label something to be a consumer protection policy or regulation, doesn’t mean that it actually protects consumers in practice. In fact much consumer protection regulation, historically, has had a fairly miserable record of serving consumers and unfortunately a fairly marvelous record of serving incumbent industries… Many regulations in this sector have come to burden innovations and become a formidable barrier to new forms of entry and entrepreneurialism.”

2. The Sharing Economy Solves Problems without Regulations

"New entrance can come in and provide better options to solve complex problems that were previously thought to only be solved by regulation… Reputational feedback mechanisms and product and service review systems create powerful reputational incentives for all the parties involved in transactions to perform better and develop trust. The combination of these factors helps create self-regulating markets where bad actors are weeded out fairly quickly. This alleviates the need for top-down regulation we’ve seen in the past."

3. Sharing Economy Creates More Choices and Competition 

“These platforms wouldn’t be thriving unless there was a clear consumer demand for them and a fairly high level of satisfaction and comfort with them overall. This bears repeating because of the fact that it means that we don’t always need a preemptive regulatory policy in place to solve problems.”

4. Liberalizing Markets Leads to Equality

The best way to level the proverbial playing field is not by regulating up to put everybody on the same level playing field but rather by deregulating down to give everyone an equal level playing field… Our goal should be to have an innovation policy of permission-less innovation, which means that new innovators are free to experiment with new business models and methods and then to the extent that harm develops and accidents happen - we deal with them after the fact.”

5. Regulation Should Encourage Innovation

“The best role that public policy can play at this time is to clear the way for even more sharing economy entry and innovation by removing barriers to entry and trade."

Thierer and the Mercatus Center have written extensively on tech freedom and the economic effects of regulations. By allowing the market to self-regulate, the sharing economy will continue to foster competition, increase opportunities, and improve the economic experience for consumers and producers.

 

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Why Your Obamacare Premiums Could Skyrocket Next Year

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Posted by Kendyll Ferrall on Friday, June 5th, 2015, 2:00 PM PERMALINK

Earlier this week, insurance providers from across the country began submitting proposals to the government seeking higher premiums, with some companies looking to raise rates as much as 85 percent. The looming rate hikes are among the most recent disruption in the health insurance market caused by Obamacare regulations. Here are three reasons why your premiums may skyrocket next year.

1. An Arbitrary Rate-Review Process
Obamacare requires companies that are planning on raising insurance costs more than 10 percent to submit these plans to either a state or the federal government for review. While the Obama Administration is quick to point out that these increases are only proposals, the Administration does not actually have the authority to remove companies from the exchanges or to even negotiate rates. Although some state insurance commissioners can work with companies to set rates, twelve states are denied the power to dispute increased premiums and there are still six states that have been denied the power to conduct their own rate-review process.

2. Providers are forced to Charge More to Cover Claims
Obamacare regulations force insurance companies to offer the same rates to every applicant, regardless of their medical history and health background. Now that the law has been in place for several years, insurers are starting to see the adverse effects of selling plans with little to no information on the health of the buyer. Previously low rates were largely the result of insurers playing a guessing game about the health of customers. Now that there is data available to assess risk pools, insurers are seeking to hike up rates to cover the costs needed to pay claims.

3. People May Lose Subsidies
If the Supreme Court decides to interpret the Obamacare law as it is written in the King v. Burwell case, 85 percent of people using the exchanges will see the subsidies they rely on to pay for their insurance disappear. Come the end of the month, 8.8 million people could face monstrous health care premiums.  But on the bright side, if you lose your subsidy, you can keep your health insurance plan if you like it. 

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Congress Punts on the Highway Trust Fund

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Posted by Kendyll Ferrall on Tuesday, June 2nd, 2015, 3:43 PM PERMALINK

Last week, President Obama signed a two-month extension for the Highway Trust Fund (HTF). The Highway and Transportation Funding Act of 2015 was passed two days before funding was set to run out and marked the 33rd stopgap funding measure for the HTF within the last ten years. Congress has been given the opportunity to truly reform the HTF and practice fiscal responsibility, but instead the government has chosen to use our nation’s infrastructure crisis as an excuse to raise taxes on Americans. 

The most recent round of debates over the way the government fund’s the HTF highlights Congress’ increasingly common practice of kicking the legislative can down the road as an alternative for actually dealing with an issue. The issue at hand is not that the HTF is underfunded or that the current tax fails to meet the rise in inflation, the real problem is wasteful and out-of-control spending. 

With the decline of fuel prices over the last year, many members of Congress have used falling prices as an excuse to propose raising the gas tax in order to make up for the $16 billion deficit in the HTF. Along with the 24.4 cents per gallon diesel tax and other excises, the 18.4 cent per gallon gas tax is the main source of revenue for the HTF. The gas tax adds $34 billion to the HTF annually, but its contribution falls short of the $50 billion spent by the government each year

A common sense solution to the way our highways are funded would be to rein in spending, but some members of Congress would rather increase the gas tax by as much as 80 percent than address the larger issue of wasteful spending at the expense of the taxpayers. Since the 1990’s, the government has overspent in the name of the HTF, using the funds to pay for landscaping, bike trails, trolley rides and even squirrel sanctuaries. According to the Congressional Budget Office, the tax would need to increase by 10 to 15 cents a gallon to maintain the current levels of spending. 

According to the Wall Street Journal, the HTF would be 98 percent solvent if the taxes collected for the HTF actually went to funding for highway projects. Meaning if Congress would actually use the funds allocated for the highway for highway expenses, then there would be no need to even consider raising the gas tax. Using taxpayer funds the way they are intended to be used is apparently a revolutionary idea to Congress. 

For the next two months, Americans are safe from a hike in the gas tax, but a group in the House is working to make sure that the end of July is accompanied by a major tax increase. Congressman Jim Renacci (R-Ohio) introduced the Bridge to Sustainable Infrastructure Act last month that would increase the gas tax by a whopping 67 percent. Co-sponsored by Democrat senators Bill Pascrell (N.J.) and Dan Lupinksi (Ill.), the massive tax increase would almost exclusively target low- and middle-class Americans as the tax naturally affects these socioeconomic groups more so than wealthy Americans. 

Despite Renacci’s plan to raise a tax that has not been raised in over 20 years, there are efforts in the Senate to combat any proposed plans similar to Renacci’s. Senators Tom Carper (D-Del.) and Dean Heller (R-Nev.) are working on a plan that would pair any tax increase with income tax breaks that would benefit the same group of Americans who are adversely affected by the gas tax. While an increased earned income tax credit (EITC) would be a revenue-neutral approach, Republican Leadership has resisted the idea with the exception of House Speaker John Boehner (R-Ohio) who came out strongly opposing any legislation that would raise the gas tax. 
 

Ryan Ellis, tax policy director for Americans for Tax Reform, argued that a deal to counteract a tax increase would be difficult to work through Congress because of the lack of leadership support. Calling the proposed tax increase “radioactive,” Ellis referenced an overwhelming ballot defeat by Michigan voters back in May that would have paired an increase in state levies, including Michigan’s gas tax, with an increase in the EITC

The Obama Administration has not shied away from weighing in on the nation’s infrastructure funding problem, proposing a plan that would raise taxes on offshore, multinational corporations in order to maintain Congress’ frivolous spending habits, but Senate Majority Whip John Cornyn (R-Texas) said last month that the White House’s plan would not be considered by Senate leadership. 

Come July, Congress will have the chance to pass a meaningful, long-term funding bill for the HTF for the first time since 2005. Congress should spend the next two months working on a plan to reduce spending and reform the way HTF funds are used, not proposing tax increases that will hit the majority of Americans the hardest. 

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