IRS can’t do their contracts right either

The IRS’ nefarious actions toward center-right organizations has had one unexpected consequence: it has kept attention away from the Agency’s appalling record in contract compliance.

Government contracts are regulated by the Federal Acquisition Regulation (FAR), which gets revised often. As it happens, according to Jeryl Bier (Weekly Standard), “Congress had passed legislation in 2008 to address high-risk contract awards” – a reference to cost-reimbursable awards, in which the government is basically on the hook for whatever the contractor says is cost incurred.

By 2011, the Congressional changes were worked into the FAR. Yet according to the IRS Inspector General (same link):

The IRS did not issue internal procurement policy guidance to implement the FAR revisions that were required by the Act.  Although the revised FAR became effective on March 17, 2011, the IRS has not issued any procurement policies and procedures to implement recent FAR changes for cost-reimbursement contracts.  Instead, the IRS has used the prior FAR and its existing internal procurement policies and procedures[.] [B]ecause no guidance had been provided, the COs (RWL note: COs is short for “contracting officers”) who we interviewed were not aware of revisions to the FAR required by the Act as they related to documentation requirements in the contract file.  One CO stated there was no communication from the Office of Procurement regarding any FAR revisions on the subject of cost-reimbursement contract documentation requirements.

Uh oh.

Sure enough, the IG looked at 49 cost-reimbursable contracts and found…

The IRS did not comply with the majority of the new FAR requirements for 46 of the 49 cost-reimbursement contracts entered into between March 17, 2011, and June 30, 2012, totaling nearly $47 million.

But the Tea Party groups are the problem. Right…..

Cross-posted to Virginia Virtucon

E.W. Jackson for Lieutenant Governor

As the Republican convention met last weekend, Susan Stimpson was my first choice for Lieutenant Governor, and the four tax-hikers in the field were, for me, unacceptable. While the convention did not choose Simpson, neither did they choose any of the tax-hiking four. The resultant selection, E.W. Jackson, was a good choice, and I endorse him for LG in the general election.

Jackson is known first as a social conservative, but the economic positions he adopted in this campaign are very encouraging. He opposed Plan ’13 From Outer Space, and he clearly understands the danger excessive government can bring to an economy.

I would also note that Jackson is African-American, and the first African-American the party has nominated for statewide office in 25 years. Of course, it will take more than nominating one African-American to win over that group of voters, but you have to start somewhere. Moreover, African-Americans in Virginia are not the monolith for the Democrats that they have been elsewhere. In the 1990s, Allen and Gilmore each won nearly 17% of the African-American vote (Allen even managed 15% in his 2006 race – “macaca” and all), while Governor Doug Wilder has shown that African-American and big-government-liberal are hardly synonymous.

In short, Jackson has good economic views, an understanding of the dangers of big government, and an opportunity to appeal to African-Americans in a way the GOP hasn’t had in many a year. These make him a good nominee, and I believe the first two will also make him a good Lieutenant Governor.

Whoops! Scientists ask out of the global warming “consensus”

The latest attempt of the global warming alarmists to silence debate – by screaming, “Consensus!” – has hilariously come a-cropper.

As usual, the good folks at Watts Up With That have the details, from three paper authors who take great issue with the characterization of their papers as endorsing global warming.

For those who are keeping track (admittedly not easy given the numbers), we have now reached forty-four examples of data manipulation, errors, and other shenanigans from global warming alarmists, and that’s just from what I’ve been able to blog on this subject since Climategate broke in November of 2009, just under three and a half years ago.

More to the point, they don’t seem capable of stopping.

London Meteorological Office caught upping the temperature data – again

“The Met” – as it is known – didn’t bother to warn anyone that is had “updated” their temperature data for their HADCRUT4 and CRUTEM4 data sets, choosing instead to simply unleash them on the public.

The folks at WUWT couldn’t help but notice that the data “updated”….

…are concentrated in the last 16 years, a period that the Met Office is under scrutiny for the lack of warming in their data.

Also, some of the regional changes appear quite contrived, e.g. it looks like they found five hundredths of a degree of extra warming in the Northern Hemisphere in the last couple years.

South America they found almost a tenth of a degree of warming over the last decade;

Africa, had five hundredths of a degree of extra warming in the last few years;

and Australia/New Zealand a tenth of a degree of additional warming over the last few years.

I left out the accompanying graphs, you can find them here. The WUWT fellows also note how this is part of a pattern of “adjusting” recent temperature data upward.

For those who are keeping track (admittedly not easy given the numbers), we have now reached forty-four examples of data manipulation, errors, and other shenanigans from global warming alarmists, and that’s just from what I’ve been able to blog on this subject since Climategate broke in November of 2009, just under three and a half years ago. More to the point, they don’t seem capable of stopping.

In this case, however, it is especially important to remember that the “adjustments” come right smack in the period of the data that has given alarmists their worst headaches: the post-1996 temperature stability. It could very well be that the “solution” is to simply jack up the numbers to make the stability go away…

Has the GOP become the Tax-The-Poor Party?

In the late 1850s, a Northern performer began playing what he thought was a humorous and biting tune about the South. In less than a decade, to his shock and horror, Dixie became the unofficial anthem (and label) of the South itself. I’m wondering if Rush Limbaugh feels the same way about his 1991 April Fool’s Day rant in favor of taxing the poor…because the Republican Party appears to have made Tax-The-Poor its one consistent economic policy – to its and the nation’s peril.

Contrary to what it might seem, this realization did not hit me with John Cosgrove’s victory last night (although perhaps the inspiration to post did). Cosgrove defeated Stearns (my preferred candidate) for many reasons, some of which Brian Kirwin describes in detail here. That said, the nature of that race – namely that Stearns himself needed to run to ensure an anti-tax-hike candidate was even an available choice – is yet another symptom of the larger disease that is damaging the party: to wit, a desire to avoid reducing the size and scope of government by making poor Americans and Virginians cover its cost.

Moreover, this should not be seen as an indictment of one wing of the party, or a salvo in intra-Republican arguments. The entire party – economic and social conservatives, moderates and “RINOs”, and anyone else I may have missed – are culpable in this, including yours truly.

Admittedly, those who have supported the various GOP-backed tax increases in Virginia seem to be the worst offenders – emphasis on “seem”, because even those of us who are not in that group have shown a refusal to acknowledge the problem, let alone address it.

Think back to last year, when all of the arguments regarding the expiring tax cuts focused on the income tax rates. Obama wanted higher ones; the Republicans didn’t. Everyone quickly assumed their usual positions (such as they were) on taxes.

Yet when Obama asked to extend the payroll tax reduction and Republicans demanded he drop it, hardly anyone in the GOP uttered a word in protest: not the economic conservatives, not the social conservatives, not the moderates, not the “RINOs”, not the squishes.

Why were we all so comfortable letting a tax cut for the poor expire?

Closing in on Virginia, just about every tax increase proposed by Republicans or enacted with Republican support involved taxing the poor, and not lightly (even the 2004 income tax hike in Virginia, whose highest rate begins at $17,000 a year, hit poor Virginians, and the higher sales tax that year certainly did). How have tax-hiking Republicans tried to fund their transportation “fixes” in the past? Higher gas taxes or higher sales taxes. How did they “fix” it this year? Higher and broader sales taxes. Who feels the effect of these regressive taxes the most? The poor.

As for those of us on the opposing side of these tax increases, how have we made our arguments? To be fair, I can’t speak for all, but I can speak for myself, and I have focused largely on the dynamic portions of the economy, and how they are slammed. I have focused on how the regional tax increases were tax-the-rich in disguised. I ripped the lack of budget discipline. I talked about misguided road priorities and dysfunctional systems.

And my posts railing about the effect of the tax hikes on the poor? Don’t bother looking, even I know they’re not there.

We are rapidly approaching a new and dangerous consensus on the size and growth of government: i.e., big is back. The only arguments we seem to be having is whether the rich should foot the bill (as the Democrats contend) or the poor should (as Republicans increasingly contend). However, turning the Republicans into the tax-the-poor party has horrific consequences.

Firstly, as I’ve hinted above, it politically institutionalizes big government. The distance between America and Europe can really be described in one policy: the Value Added Tax. Without it, the half-social-democracy-half-corporatist-democracy we have built is unsustainable within a decade. With it, the thing can wheeze forward for a generation or more – long enough for our children and grandchildren to assume that this era was the economic equivalent of the Wild West.

Moreover, it marginalizes poor Americans politically. Was there any discussion of the poor in the 2012 presidential campaign? Has there been any in the current races this year? Are we really that convinced, as Republicans, that we have nothing to offer the poor but higher tax bills? The poor have to deal with big government as much as we do – in many cases, more so. They know as well as anyone how inefficient, demoralizing, and draining of human capital it really is.

Finally, it puts us at immediate electoral disadvantage. If the Democrats talk about higher taxes for the richest 5%, while Republicans talk about taxes for the poorest 25%, we’re 20 points behind from the get-go. Not smart.

The Republican Party has much to digest from the last year, and we need to ask, as a party, what we wish to be. There can be several answers, good and bad. I humbly submit a tax-the-poor platform is just about the worst of the lot.

Cross-posted to Bearing Drift

Sanford wins special election to Congress

I am surprised at how the blogosphere seems to have missed the pertinent lesson of Mark Sanford’s return to Congress last night.

Yes, it’s a highly Republican district (SC-1). Yes, Sanford has had some personal issues. Yes, he ran about 8 points behind Tim Scott (although, this being a special election, weird things can happen).

What seems to have slipped past…well, everyone…is that Sanford also had a political record, one of the strongest in the country on spending and taxation. With his election, he is now the first member of Congress to to sign the Reject the Debt pledge from the Coalition to Reduce Spending, a great leap forward for accountability on the spending side of the budget.

Last night was a great day for limited government, and a sign that economic matters are once again firmly at the forefront of the political discussion today.

Take note, folks.

Cross-posted to Virginia Virtucon

Data issues and errors spread from global warming alarmism to economics…and from left to right

Whenever I mention the statistical chicanery, data manipulation, and errors behind “global warming,” my friends on the left go into high dudgeon. They can’t fathom that such things could occur among the “experts.” Well, this week, a new example of data issues (along with an error) popped up – in my discipline (economics), and from a paper largely used on the American and European right.

James Kirkup (Telegraph) explains the importance of the paper, known in academic-speak as Reinhardt and Rogoff, for the Conservative/Liberal Democratic Coalition in the United Kingdom:

“Rogoff and Reinhart” are Kenneth and Carmen, two economist (sic) whose influence over the Coalition’s economic policy is hard to over-state.

In essence, the economists argue that government above a certain level – 90 per cent of GDP – is catastrophically bad because it exerts a “significant negative effect on economic growth”.

Their argument, backed up with empirical data from lots of countries, played a major part in persuading Mr Osborne and his colleagues that the No 1 priority for the Coalition’s economic policy should be the reduction of the deficit and, ultimately, a check on UK government debt levels.

Mr. Osborne is George Osborne, the Britain’s Conservative Chancellor of the Exchequer, but Paul Ryan has also relied on the R&R paper as evidence to bring the American budget into balance, and it has also been part of the inspiration behind the Mediterranean being driven to Fauxsterity.

So when three economists at the University of Massachusetts (Thomas Herndon, Michael Ash, and Robert Pollin) tried to replicate R&R’s work – and couldn’t – they were naturally concerned. They were, however, able to access Reinhardt and Rogoff’s data…and what they found stunned them.

To wit….

• Regarding data itself, Herndon et al found ”data exclusions with three other countries: Australia (1946-1950), New Zealand (1946-1949), and Canada (1946-1950).” Now while one could argue that post World War II data should be excluded due to unusual circumstances, it does not explain why United States data was not excluded. As a result of the exclusion, Australia and Canada went from five years where the Debt/GDP ratio was above 90% to zero.  Meanwhile, New Zealand’s data went from five years (with an average of +2.8%) to one (with GDP growth at -7.9%). Speaking of the Kiwi data…
• “RR adopts a non-standard weighting methodology for measuring average real GDP growth within their four public debt/GDP categories. After assigning each country-year to one of four public debt/GDP groups, RR calculates the average real GDP growth for each country within the group, that is, a single average value for the country for all the years it appeared in the category.” Translation: Britain’s 19 years of data at high debt levels were given equal weight with New Zealand’s one year. I don’t think I need further explain the problem with this, especially given New Zealand’s prior data issues. It should be noted that Britain averaged 2.4% growth during the aforementioned 19 years. Belgium had 25 years of relevant data, but in addition to the weighting issue, the Belgian data was felled by…
•  ”A coding error in the RR working spreadsheet (which) entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis.” As it happens, the first problem already dropped Australia and Canada, while Austria and Denmark had no relevant data anyway, but Belgium’s 25 years were excluded by the error.

So, when all of the above issues are backed out of the data and model, Herndon et al still find a reduction in economic growth when debt/GDP ratio hits 90%, but it’s a much smaller value than R&R found, and it turns out to be statistically insignificant. In fact, a regression analysis of the data found the inflection point (where things go from good to not-so-good) to be at 30% of GDP, not 90% (and that’s if one chooses to ignore the hideous R-squared statistic of 0.04 – on a scale of zero to one – which means the data explains hardly any of the changes in economic growth).

As it happens, my concern regarding government is more about its scope, size, and cost (in that order) than about how much it borrows. That said, many on the right have used R&R in part as justification for reducing deficits and debt. Based on the above, they may want to look to something else.

More to the point, this shows that climate policy isn’t the only political issue that has – to quote Coldplay – “castles stand…upon pillars of salt and pillars of sand.”

The Prez’s budget: higher taxes and higher spending

You read that right: the president’s ten-year budget plan calls for higher spending over the next ten years.

Patrick Brennan (Corner) provides the details on the tax side, and finds that the total tax increase actually comes to just over $1 trillion.

That means less than of the “$1.8 trillion in additional deficit reduction” is actually spending “cuts” (about $800B). Why did I put “cuts” in quotes? Because the president’s budget also cancels the sequester, meaning that $1.2T in cuts are “replaced.”

Thus, actual deficit reduction is roughly $600B, and with the $1T in tax hikes, spending actually rises by $400 billion over the next decade under the president’s budget.

Maddening.

Margaret Thatcher, RIP

Good leaders give us hope throughout their political careers; great ones can do it throughout their lives. Only a special few can also do it with their passing. One of them, Margaret Thatcher, did just that as she departed this life today.

Those of us who admired her from five times zone away (or more) are in the midst of a crisis of confidence that she would remember from her own personal history in post-World War II Britain. You can hear it in the conversations, read it in the private emails (well, if you had access to them), or see them in blog posts or comments across the rightosphere: there is a sense that America is different, never to return to its older, prouder history, destined to a permanent decline along the glide path much of Western Europe has taken over the last 50-60 years.

In her passing, and by leaving us at this moment, Margaret Thatcher reminds us of her 11 years in power – and more to the point, she reminds us again that decline, social democracy, and political squalor are not inevitable, never set in stone, and always ready for a good smack from a decent handbag.

By any indicator, Great Britain in 1979 was far, far worse than we are now. Yet she grabbed the United Kingdom by the scruff of the neck, reversed its economic decline and made it a global power again.

For me, however, what made Thatcher someone to take seriously was the Falklands War. As a nine-year-old geek who thought he knew everything, and full of social studies textbook verbiage about decolonization, I was convinced that Argentina’s seizure of the Falklands was yet another stage in the inevitable decline of Europe and European colonies. It was a shock to see Britain stand up for her countrymen on those far away bits of rock, but she did it – and in the process defended the self-determination of the Falklands, restored British honor, and even scored a bank-shot for democracy in Argentina (the battlefield defeat doomed the Argentine military junta).

More than anyone else, Margaret Thatcher’s life and tenure were proof that the future is far from certain, that the left has no monopoly on progress or power, and that no state of weakness is irreversible.

In passing, Thatcher has reminded us of her past – and thus given us on this side of the Atlantic hope for our future.

House passes amended Plan ’13 From Outer Space (UPDATED: Senate does too)

The House of Delegates approved McDonnell’s changes to HB 2313 (a.k.a. Plan ’13 From Outer Space), by a 64-35 vote. The roll is not up yet, but taxes will go up, including automatically for regions in the future that hit certain population and traffic levels.

I am deeply disappointed. This bill (and I assume the State Senate will grease the skids for this debacle UPDATE: which the State Senate has also passed with the Governor’s changes) will damage the state’s economy, political transparency, and accountability…while doing nothing about its over-centralized and dysfunctional transportation system.

It’s a sad day for Virginia.