Timothy Wilt

"Tremendous Pressure" from White House Costs Taxpayers $535 Million

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Posted by Timothy Wilt on Monday, August 31st, 2015, 3:05 PM PERMALINK

A new report from the Department of Energy’s Inspector General has acknowledged that White House officials placed “tremendous pressure” on DOE employees to process loan guarantee applications. This pressure played a crucial role in the calamitous approval of the 2009 Solyndra loan that cost taxpayers more than $500 million.

Solyndra, a solar-panel manufacture, was approved for a $535 million loan from the DOE under the Obama administration’s American Recovery and Reinvestment Act of 2009. In 2011, just 2 years after receiving the loan, Solyndra laid-off its 1,100 employees and filed for Chapter 11 bankruptcy protection. The political desire for a success-case in Obama’s new program, resulted in negligent loan practices, which tanked the company, cost thousands of jobs and millions of taxpayer dollars.

The new report has found that although Solyndra is blameworthy for providing misleading evidence to DOE officials, political pressure from the Administration and Department leadership, unnecessarily expedited the approval process, resulting in oversight directly related to the loan’s failure. This report corroborates a 2012 oversight report from the House Committee on Energy and Commerce. The E&C committee’s report found that intense political pressure placed on employees at the DOE and Office of Management and Budget (OMB), resulted in clear neglect of procedural elements that would have exposed Solyndra’s duplicitous financials.

In 2009 President Barack Obama signed the Americans Recovery and Reinvestment Act, a massive expansion of the 2005 Energy Policy Act. The new initiative sought to inject billions of taxpayer dollars specifically into renewable energy resources. Solyndra was intended to be a poster-child for the merits of the new program.

In many ways, a poster-child is exactly what Solyndra has become. However, instead of one representing the glory and success of the President’s plan, it signifies the unflattering underbelly of “clean energy” politics, and is drawing attention to the likelihood of these policies creating a “solar bubble” within the economy.

A recent Wall Street Journal Op-Ed, has outlined the disturbing relationship between government subsidies for Big Solar, and the investment interests that are taking advantage of this lucrative opportunity. The uncouth relationship is distorting the energy economy in the U.S., and placing large solar companies on track to becoming “too big to fail”.

The neglect and waste of the Solyndra failure, has clearly not diminished Obama’s willingness to undermine the American economy by picking winners and losers in the private sector. The government created “solar bubble” is speeding to a bursting point. When it bursts, the Administration’s complicit involvement, will make another government bail-out simply too much for the public to swallow. 

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Grover Norquist Simplifies Spectrum

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Posted by Timothy Wilt on Thursday, July 30th, 2015, 3:11 PM PERMALINK

WASHINGTON, D.C. – Wireless spectrum and the federal policies that surround it are complicated. For years, Congress has struggled to establish the necessary and lasting spectrum policies our nation needs to support the growth of wireless communication. Public advocates and Congressional representatives have univocally expressed concern over the government’s current approach to spectrum allocation, keeping the best and most valuable for its own agencies, without even requiring them to declare it as the valuable asset it is.

In his newest op-ed, Grover Norquist explains the value of wireless spectrum, and the pressing need for Congress to establish a plan that will allow spectrum availability to keep pace with the rapid expansion of wireless communication technologies. By 2019, the United States mobile data traffic is predicted to increase 6-fold from the 2014 levels. If commercial spectrum availability does not increase in tandem, Americans will suffer from dangerous levels of congestion and interference.

Spectrum sales are also a government cash cow. If Congress sold just 1 quarter of agency held spectrum for commercial use, it could generate up to $200 billion in pure revenue. That money could be used to reduce the debt or the tax burden on American citizens.

Norquist addresses this and more in his new article:

“Spectrum delivers our wireless communications, like broadcast television, AM/FM radio, WiFi and smartphone traffic, through the air. Our ever-increasing consumption of wireless data coupled with spectrum scarcity, makes it a cherished resource for companies that want to deliver wireless services.

The fed, of course, does not want to part ways with its gold, especially since this particular asset doesn’t have to show up on the balance sheet.

We need more spectrum to market. There are plenty of buyers. The feds need an incentive. Senator Rubio has the carrot/stick.

The National Telecommunications and Information Administration, which manages federal spectrum use, must restructure and reclaim under-used spectrum—“clean the attic”. Then let the Federal Communication Commission manage the commercial auctions—“host the yard sale”

Click Here to read the full article. 

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Chicago’s “Amusement” Tax is No Laughing Matter

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Posted by Katie McAuliffe, Timothy Wilt on Monday, July 13th, 2015, 4:20 PM PERMALINK

Convenience has a new price for Chicago residents. Thanks to a fiat administrative declaration by Chicago’s Department of Finance, residents are now burdened with a new online “amusement services” tax. That means if your billing address is within city limits, you will be forced to pay a 9% tax for services like Netflix, Spotify, and Xbox Live.

The new policy is predicted to generate an extra $12 million in annual revenue for the city, and is seen by many as a feeble attempt to quench the city’s $430 million budget deficit, and the $530 million in increased payments to police and fire fighter pension funds for 2016.

Government bureaucracies operate under a “see what sticks” mindset, and have no qualms about throwing all types of new taxes on the Internet regardless of legal precedent and future effects.  Chicago already has one of the highest sales tax rates in the country at 9.25%. Now, the tax collector can literally infiltrate the living room.

The meager money grab by the struggling city is not only bad for Chicago’s economy in both the short and long term, but could also set a dangerous precedent for tax discrimination. Consumers of online amusement services will pay taxes that would not be levied if they had chosen the physical marketplace equivalent. Using the Internet to rent a movie will get you the 9% tax, but buying the movie digitally will be taxed at 9.25%.

This leaves open a number of questions.  For example, Chicagoans pay a cable television tax.  Now if they rent or buy a digital movie from their cable provider, will they be hit with a 9% or 9.25% tax on the movie and then the cable tax on their total bill?  That equals double and discriminatory taxation. Definitely a no-no under the Internet Tax Freedom Act.

In addition to the discrimination, the new amusement tax faces heavy criticism for violating other federal law, state law, and Supreme Court precedent. On the Federal level, the new tax is likely, not only a violation of the Internet Tax Freedom Act, but also the Commerce Clause, and of the first and second prongs of the Supreme Court’s Complete Auto test. On the State level, the Dept. of Finance rulings clash with Illinois’ home rule and uniformity requirements.

Congress could bring more clarity to state tax boundaries by passing the Digital Goods and Services Act.  This legislation would ensure consumers are not punished by multiple taxes when purchasing a digital good or service, modernize Congress’s role in tax policy for interstate and international commerce to better suit the digital age, and clearly establish jurisdiction for the taxation of digital transactions.   

Chicago’s “amusement services” tax is emblematic of the wider government agenda seeking to expand tax revenue by taking advantage of the Internet. The Internet holds the potential for a streamline of new revenue for all levels of government, and the fiasco in Chicago emphasizes the need to establish a federal framework through the Digital Goods and Services Act to combat the trend of government overreach. 

ECPA Reform Finally on House Radar

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Posted by Timothy Wilt on Monday, June 29th, 2015, 2:44 PM PERMALINK

Recent reports indicate that the House Judiciary Committee intends to mark-up a bill that will finally extend Fourth Amendment protections to email correspondence. The bill, H.R. 699, The Email Privacy Act, introduced by Reps. Kevin Yoder (R-Kan.) and Jared Polis (D-Colo.), would update the 1986 Electronic Communications Privacy Act, ensuring constitutional protections and legal standards desperately missing in today’s digital world. 

Although the bill enjoys wide bipartisan support and recently became the most cosponsored bill in the House with 284 cosponsors, the Judiciary Committee has neglected to move the bill. As part of the Digital Fourth Coalition, an ideologically diverse group that actively campaigns for Fourth Amendment rights in the digital world, Americans for Tax Reform has recently penned a letter urging Congress to consider this important piece of legislation.

Shortly thereafter, POLITICO reported a markup expected in July.  

Katie McAuliffe, Federal Affairs Manager at ATR, released this statement supporting the bill:

“When ECPA was written in 1986, most Americans did not have email accounts. It was impossible for Congress to foresee the type of technological advancements nearly three decades later. As a result, our emails, photos, documents and other items stored in the cloud are in jeopardy of government intrusion. Privacy rights should not stop online. The Email Privacy Act is an important bill to protect the privacy of all Americans and should be voted on without delay.”

The Email Privacy Act would require government agencies to get a warrant before searching through an individual’s private emails, which is a more stringent requirement than the mere subpoena needed to do so under current law. There should be no discrimination between a citizen’s physical mail and their electronic mail, and yet under ECPA electronic mail is given vastly fewer protections.

The Fourth Amendment rights guaranteed by the Constitution do not apply to only some forms of communication, but are rather safe-guards against all forms of government intrusion into the privacy of citizens.  In 1986, when the ECPA became law, few considered the Internet the robust medium for interaction that it is today and it is understandable the policy reflects this sentiment.

Today, however, we live in a world that can no longer deny the prolific role of Internet for communication. In this world, every day that passes without sensible policy that acknowledges electronic correspondence as the same as physical mail, and thus worthy of the same privacy protections, is an insult to the founding principles of our nation.

The time to end digital discrimination is now. The Email Privacy Act is the first step in this fight, the people want it, all political ideologies agree on it, and it is time for Congress to act.

Please Click Here to sign a petition urging the House Judiciary Committee to approve the bill. 

Proposed Internet Sales Tax Bill Sacrifices Fairness and Federalism to Private Interest

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Posted by Timothy Wilt on Wednesday, June 17th, 2015, 11:00 AM PERMALINK

In the latest assault on Internet freedom, Rep. Jason Chaffetz (R-Utah) introduced the Remote Transactions Parity Act (RTPA). Americans for Tax Reform strongly opposes this piece of legislation, and joined a coalition criticizing Rep. Chaffetz’ (R-Utah) new bill. The coalition penned an open letter to the U.S. House of Representatives explaining the gross injustice of the proposed legislation.

In 2013, Congressman Bob Goodlatte (R-Va.) Chairman of the House Judiciary Committee, released a set of 7 principals to which any internet tax legislation should adhere. 

Rep. Chaffetz bill violates nearly every one of these guiding principles. In particular, the bill places small businesses at a significant disadvantage to larger retailers. Unsurprisingly, the bill’s support is derived primarily from the large retailers who recognize the advantage it gives them over their competition, and software companies who will profit off the accounting programs that will be needed to deal with the outrageously complex requirements the bill will impose.

Rep. Chaffetz’ (R-Utah) congressional district just so happens to include Provo, Utah, one of the fastest growing cities in the nation, largely due to the recent influx of software companies, many of which specialize in accounting software programs. Salt Lake City, which lies just outside Rep. Chaffetz’ (R-Utah) district, has also seen significant investment from accounting software firms. Many of the employees of these companies vote in Rep. Chaffetz (R-Utah) district, and they are certainly aware of the profit they stand to make if RTPA is passed.

Contrary to declarations from supporters of this bill, it seems unlikely that fairness was really the force motivating its creation. Especially considering the bill was penned by Rep. Chaffetz’ former legislative director Mike Jerman. Mr. Jerman has recently flipped to the private sector, taking a position with Taxometry, a Salt Lake City based Certified Solutions Provider (CSP), which would benefit immensely from this legislation. RTPA is clearly an attempt for Rep. Chaffetz (R-Utah) to achieve a big win for his home district, at the expense of the rest of the United States.

RTPA is a re-incarnation of the failed Marketplace Fairness Act (MFA) from last session. Although RTPA is billed as a bi-partisan effort to overcome the problematic aspects of MFA, in reality it not only fails to solve the key issues that led to MFA’s failure, but also ushers in new and worrisome statutes which threaten the core tenants of tax equity.

RTPA also undermines the recent progress towards a national taxation framework that protects traditional federalist values and ensures politicians remain accountable for their policy. This progress includes legislation such as: the Digital Goods and Services Tax Fairness Act (H.R. 1643), the Business Activity Tax Simplification Act (H.R. 2584), and the Mobile Workforce State Income Tax Simplification Act (H.R. 2315).

The cost of Rep. Chaffetz (R-Utah) political maneuvering will be steep. RTPA will violate one of the most important qualities of our nation’s structure, the ability for states to compete for businesses using their tax codes. As Grover Norquist, president of Americans for Tax Reform, remarked in a recent subcommittee meeting regarding Nexus:

“Politicians love to tax people who can’t vote against them… That’s a challenge because it undermines tax competition between the states. It is what keeps state taxes more responsible than they’d otherwise be and efforts to allow people to tax across state lines, such as taxing online sales, allows you to tax, audit, and harass a business who cannot vote against you and its employees who cannot vote against you, and it’s safe to beat up on them.”

The RPTA paves the way for politicians to take advantage of businesses using the internet, and disregards nearly every taxation precedent in our nation’s history, most notably no taxation without representation. The internet is an emerging and dynamic medium for interaction, one never before seen in history. Its’ novelty however does not justify a complete overhaul of the taxation policy that has allowed businesses and individuals to flourish in our nation. RTPA is an awful piece of legislation that seeks to reinvent the wheel, and in doing so places not only the future of small businesses at risk, but also threatens the very framework of America’s federalist system. 

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3 Out of 10 Taxpayer Dollars Spent on Government Tech Projects Are Wasted

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Posted by Timothy Wilt on Wednesday, June 17th, 2015, 9:30 AM PERMALINK

The stream of failures flowing from the federal government’s information technologies (IT) has been a focal point of public outrage directed towards the current administration. Last week this outrage was revitalized following a new independent watchdog’s report that found nearly 3 out of every 10 taxpayer dollars spent on IT investment is wasted.

The United States Government invests more than $80 billion annually in IT. Even though the nation is crippled beneath $18 trillion dollars in debt, our government has wasted billions of dollars in the last 2 years alone on IT investments that have either failed completely in their initiative, or are currently failing and yet still being funded. The decrepit state of America’s IT is highlighted by events like the recent hacking fiascoes as well as the seemingly unending difficulties with government run websites like the Obamacare online databases.

To counter the recent difficulties, the Federal government has proposed expanding the IT budget.  This spending increase insults the American public, especially considering the money will be put into a flawed system that has failed to institute even 20% of the changes recommended by the GAO 2 years ago in an equally unflattering review of IT investment.  Instead of fixing the broken system and protecting Americans from more government waste, the Obama administration elects to continue its record of irresponsible investment.

The GAO reports serious problems at all levels of IT investment, but they emphasize inadequacies in executive management. Specifically, Chief Information Officers (CIOs) have failed miserably in their duty of informing investment decisions in IT. The problem is individual as well as structural. Most CIOs lack “the authority to review and approve the entire agency IT portfolio”. Putting more money into a system that lacks the proper oversight and accountability, without addressing these problems, is an inexcusable negligence.

The state of the U.S. federal government’s investments in IT is in complete shambles. Currently, the government lacks the security, databases, online platforms, and technology to operate effectively in the 21st century. Unless the IT investment system receives an immense overhaul, the future promises the same failures and dangerous vulnerability that currently grips our nation’s information technologies. Instead of the government suffering from the irresponsibility of their methods, it is the American taxpayer who is forced to finance the government’s terrible investments, and then given no choice but to suffer from the consequences of the pathetic state of America’s IT.

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The Brave New World of Broadband: D.C. Appellate Court Denies Stay on FCC’s Broadband Reclassification

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Posted by Timothy Wilt on Friday, June 12th, 2015, 12:32 PM PERMALINK

Starting today, the FCC will move forth carving out space for the expansion of its power and spending. The new regulations of the Open Internet Order will place internet service under Title II of the 81 year old Telecommunications Act of 1934. Despite numerous lawsuits challenging the legality of the FCC’s actions, the federal agency will have the increased regulatory power for the interim period while these lawsuits are handled in court.


The following statement can be attributed to Katie McAuliffe, Executive Director of Digital Liberty:


“While the promise of moving these challenges through the court quickly can possibly mitigate uncertainty; a stay would have avoided unnecessary and egregious harm to the industry during the lawsuits litigation period.  Only an activist court, not an unbiased judiciary could possibly have denied a stay until the existing seven court challenges had been heard." 


Encouragingly, although the D.C. appellate court denied the motion for a stay, the court also chose to expedite the appeal process. This expedition means oral arguments may be heard as early as December. The court declared the cable and telecom ISPs failed to “satisfy the stringent requirements” necessary to block the implementation of rules while awaiting the result of pending lawsuits. Starting today, the FCC will act as a “referee on the field to keep the Internet fast, fair, and open” according to a statement released by the FCC chairman Tom Wheeler.


While the fundamental capability of a federal bureaucracy to do anything in a manner that is fast, fair, and open is laughable, it is none the less the case that the FCC Enforcement Bureau will begin its reign over the relationship between ISPs and consumers. The case-by-case net neutrality complaint process is a key aspect of this new regime Not all of the leaders of the FCC shared Mr. Wheeler’s glee over this development. FCC Commissioner Michael O’Reilly expressed his discontent in a statement yesterday evening, and vowed to “be vigilant in resisting any attempts by the agency to act as referee enforcing rules known to none of the players and made up along the way”.


Under the Title II classification broadband service will be regulated in the same manner as telephone services. A stay is granted only when the rules in question have the potential to cause egregious harm. This court must have an extremely high-tolerance for harm, because this decision will utterly paralyze internet investment and innovation for the foreseeable future. The court did not comment on the strength of the case against the FCC reclassification. Granting the expedition however is a favorable sign for the ISPs.


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Bureaucrats Propose Salary Raises for CEOs, What Does This Tell The American People?

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Posted by Timothy Wilt on Friday, June 5th, 2015, 9:32 AM PERMALINK

The Federal Housing Finance Agency (FHFA), a bureaucratic agency charged with the oversight of Fanny Mae and Freddie Mac, has recently proposed a sly and dangerous salary increase for the CEOs of the two companies. The proposal epitomizes the short-term memory of government regulatory boards, and the inevitable push by unelected bureaucrats to increase government spending as soon as the eye of public scrutiny has waned.

In 2012 the FHFA reluctantly heeded the nation’s call for a different approach to the salary of the CEOs for Fannie and Freddie, and instituted a salary cap at $600,000, a far cry from the multi-million dollar salary previously enjoyed under the government conservatorship. On behalf of the American people Congress strong-armed the FHFA to impose the cap, much to the bureaucratic agency’s chagrin.  Then and now, the bureaucrats argue the higher salary is necessary to attract qualified candidates for this position. The stench of irony in this argument is overwhelming.

Donald Layton, current CEO of Freddie Mac, is an outspoken opponent of the FHFA’s proposal. He considers it an honor and duty to serve his country in its time of need and believes the $600,000 salary is more than fair compensation.

It is no surprise that the unelected leaders of the FHFA are puzzled by Mr. Layton’s contentment with his current salary, as they are bureaucrats whose nature it is to leach off government spending for personal gain. Their role as public servants is subsumed beneath their drive for personal profit, even when those profits are won at the expense of the American taxpayer. The FHFA belief that qualified candidates will only elect to serve if given higher pay, betrays their own disposition to viewing government service as a medium for personal profit.

Disconcertingly, the FHFA has complete authority to determine the CEOs salary. Even though the White House and Treasury Department have condemned the FHFA proposal, without public intervention, it will surely be instituted, and the leadership of Fannie and Freddie will return to bureaucratic minded individuals who wish only to suckle at the teat of unabashed government spending. This insidious new proposal is a backhanded and egregious attempt to undo the progress Americans have made and ignore the lessons we have learned while clawing our way out of the Great Recession.

Congress must strongly advocate against the new proposal, to ensure that the bureaucrats at the FHFA do not take advantage of the public’s inattention to this issue. As long as Fannie and Freddie remain under government conservatorship, the CEOs salary cap is integral in ensuring that those who take the position are aware they do so in service to the American public, a reality the FHFA seems all too willing to dismiss. 

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