Murkowski Has Remorse Over Supporting Blunt
Amendment

Apparently, Lisa Murkowski was unprepared for the impact of her voting for the rule to have employers dictate the health care choices of half the nation's population. Whatever religious freedom case conservatives wanted to make when putting the power of[...]

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Kochs' Attempt at Hostile Takeover of Cato
Exposes Right Wing Non-Profit Abuse

enlargeAs information continues to come to light about the attempted hostile takeover of the Cato Institute to make it into a tool of their political empire, the plan both confirms and exposes the ultimate realization of the Powell memo, which set out to create an indestructible infrastructure to support and sustain the far right as the dominant political force in this country. There was only one purpose to this infrastructure: Consolidation of political power to benefit business in the name of "free enterprise."

As we now know, that infrastructure extends from right wing radio networks to non-profits like Citizens United and Americans for Prosperity. Although the Cato Institute was funded with Scaife, Olin and Koch money, it has managed to remain true to libertarian principles in their purer form.

But no more. With the death of one of the founding board members and shareholders, the Kochs have made a move to pack the board with their ideological counterparts and take majority control of Cato in order to use it as an "ammo shop" for AFP, as Susie wrote about Sunday.

Dave Weigel has more details:

?They said that a principle goal was to defeat Barack Obama,? remembered Levy. ?The way David [Koch] put it was, ?We would like you to provide intellectual ammunition that we can then use at Americans for Prosperity and our allied organizations.? AFP and others would apply Cato's work to advance their electoral goals.?Levy asked them: ?What gives you the impression that [Cato isn?t] providing intellectual ammunition?? He says now: "I never got a satisfactory answer. The only answer that makes sense was that Cato needed to be more responsive to their needs. We would take closer marching orders. That?s totally contrary to what we perceive the function of Cato be.?

Cato?s leadership didn?t respond to this directive, nor did they change anything about the think tank. The Kochs began to change it for them. In February, they nominated 16 people for four slots on Levy?s board. Levy and others were aghast at some of the names. One nominee, Tony Woodlief, a former leader of several Koch-funded groups, had blogged in the past about ?sanctimonious libertarians? who refused to get serious about policy. ?Libertarianism in practice largely consists of a homogeneous group of people talking to one another about a narrow set of things that matter most to them (legalized drugs, lower taxes), and hoping that the rest of America will wake up and elect them to office,? he sneered in a 2002 post. ?The majority of Americans are not, in fact, ?live and let live? types.? John Hinderaker, a lawyer and founder of the blog PowerLine, had backed the Iraq war and called George W. Bush a ?man of extraordinary vision approaching to genius.

?In the end, the board chose the four members that horrified libertarians the least. The four new members were Judge Andrew Napolitano (?the only one of these nominees who actually is a libertarian,? says Levy), former solicitor general Ted Olsen, Koch Industries shareholder Preston Marshall, and Charles Koch himself. Both brothers were now on the board. They or their close allies held seven of 16 seats. Two more, and they would have had control of the board.* That would end Cato as Washington knows it. ?You think I?d WANT to stick around a partisan propaganda farm?? tweeted Julian Sanchez, a Cato research fellow, on Friday. ?The Kochs are making me root for that asshole Ed Crane,? tweeted Will Wilkinson, a scholar with some liberal leanings who left the think tank in 2010, sparking a now-quaint round of speculation about Cato?s politics.

It's not against the law for a non-profit organization like Cato to have political leanings, but it's one thing to swear allegiance to libertarian principles and something else again to directly meddle in political affairs on the taxpayers' dime. And make no mistake, that is what the Kochs' goal is, whether stated or unstated. While this power move on the part of the Kochs makes it clear that non-profits are regarded by their ilk as a tool to more easily finance their efforts to own American politics, it also lays bare the abuse of a non-profit organization which was not created to interfere in elections, but to foster scholarship and research of the principles upon which it was founded.

As this paper explains, a takeover of a nonprofit organization differs from a for-profit corporation in significant ways:

Fiduciaries of a nonprofit faced with takeover efforts or preparations view insurgents as desiring to transform their organization?s mission illegitimately. The clearest and legally-binding statement of a nonprofit?s mission can be found in the statement of purposes in its corporate charter.3 Barring amendment of these purposes, any new control group can make only programmatic and policy changes within the range of this mission. Thus, an insurgent group mounting takeover efforts or preparations generally will explain its plans as furthering the mission the nonprofit states in its charter.4 This limitation often will be of little comfort to incumbents facing takeover activity, however, as the expressions of mission in corporate charters are typically quite broad. The sense of a nonprofit?s leaders of its appropriate mission will be more specific, shaped by the history of the organization, the trend in its policies and activities, and the plans and strategies its fiduciaries have laid out for it over time. Despite insurgents? ability to frame their plans for the nonprofit as existing within the terms of the mission the charter technically states, incumbent leaders may view these plans as a serious compromise of the organization?s true mission ? one that they have seen evolve firsthand.

Indeed. Don Bordreaux, a Cato adjunct scholar and advisory board member, writes:

As the narrative is taking form now ? on the morning of March 4th, 2012 ? the Kochs seem to want to gain greater control over Cato so that they can turn it to play a more prominent role in influencing current political outcomes ? that it will work harder at pushing into the public mind the case for today?s pro-freedom political candidates and (hence) less hard at nurturing ideas whose effects on political outcomes will not be felt for years, perhaps decades.

If, in fact, the Koch brothers' strategy is to use Cato to influence political outcomes, they have a problem. Via the Washington Post, a former IRS attorney comments on Cato's unusual shareholder structure:

The unusual structure for Cato raises questions about whether it meets the requirements for a nonprofit under federal tax law since the board could essentially agree to allow control of the organization to be sold to the highest bidder ? a highly unlikely scenario but one with possible legal ramifications.

?That is completely at odds with the requirements for [a nonprofit],? said Marcus Owens, a lawyer with Caplin & Drysdale in Washington. Owens was a lawyer with the IRS for 25 years and ran its nonprofit division for a decade.

?The Cato Institute is at risk of retroactive revocation of its tax-exempt status back to 1977,? Owens said.

If the IRS were to decide that Cato should not be exempt from federal taxes, it could order the organization to pay taxes on income from a limited number of years at the corporate rate of 35 percent. The organization had revenues of $39.3 million in 2011, according to its tax forms.

That assessment only addresses the arrangement under which a nonprofit can be usurped by its shareholders. The more important question is whether or not their plans for Cato would also cause it to lose its tax-exempt status. Here are the general IRS guidelines:

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively forexempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Here's the question. If the goal isn't to push Cato into direct electoral influence, what IS the goal? Why have the Kochs decided that right now, in this day, and this time, they should sue to gain control over Cato in order to install their board?

Jerry Taylor, a senior fellow at the Cato Institute, seems to have the answer as it relates to the conversion of Cato from think tank to "ammo shop" for AFP:

That statement of intent is certainly consistent with what we?ve been hearing from both Kevin Gentry and Nancy Pfotenauer. They?ve frequently complained during their short time on our board that Cato wasn?t doing enough to defeat President Obama in November and that we weren?t working closely enough with grass roots activists like those at AFP.

I'm no fan of Cato's libertarian, Randian philosophy. That said, it seems clear that Ed Crane and current Cato scholars are fighting for their right to be scholars instead of partisan hacks. It may take the clout of the Internal Revenue Service to protect that right.

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Stating the Obvious, with Regret

There's nothing I hate more than getting dragged into silly score-keeping sessions about which outrage was worse. There's a huge crack team of folks on both sides that manage this task quite well. I'm not particularly good at it and find the whole[...]

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Obama moves G8 to Camp David for more intimate
conversations

Joyce L. Arnold, Liberally Independent, Queer Talk, equality activist, writer. Late yesterday, with media well into non-stop Super Tuesday coverage, Mr. Obama announced that he?s moving the May G8 conference from Chicago to Camp David. His administration[...]

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Netflix is 30th advertiser to drop Limbaugh

Via ThinkProgress.

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Obama Hits GOP Presidential Candidates For The
‘Casualness With Which’ They ‘Talk About War’

President Obama warned on Sunday in his speech at the AIPAC conference of the “loose talk of war” with Iran, which he said is only serving to benefit the regime in Tehran. But of course the bellicose rhetoric hasn’t subsided. Senate Majority Leader Mitch McConnell (R-KY) just yesterday in his own speech to AIPAC threatened to introduce a resolution authorizing war with Iran.

Obama picked up on this theme during a White House press conference this afternoon, specifically targeting the Republican candidates for president. “Those folks don’t have a lot of responsibilities,” he said, “And when I see the casualness with which some of these folks talk about war, I’m reminded of the costs involved in war.” Obama also noted that, outside of the militaristic rhetoric, the GOP presidential contenders aren’t offering any different Iran policy than the one he has been pursuing. He added that if they want a war with Iran, they should say so and explain the consequences:

This is not a game, and there’s nothing casual about it. And, you know, when I see some of these folks who had a lot of bluster and a lot of big talk, but when you actually ask them, specifically, what they would do, it turns out they repeat the things that we’ve been doing over the last three years. It indicates to me that that’s more about politics than actually trying to solve a difficult problem.

Now, the one thing that we have not done, is we haven’t launched a war. If some of these folks think that it’s time to launch a war, they should say so and they should explain to the american people exactly why they would do that and what the consequences would be. Everything else is just talk.

“Typically it’s not the folks who are popping off who pay the price [of war],” Obama said, adding, “it’s these incredible men and women in uniform and their families who pay the price.” Watch the clip:

“It is my belief that we have a window of opportunity where this can still be resolved diplomatically,” Obama said later. “That’s not just my view — that’s the view of our top intelligence officials, it’s the view of top Israeli intelligence officials.”

Indeed, there would be “a number of destabilizing” consequences to war with Iran, from sparking a regional war to providing incentive for the Iranian regime to weaponize its nuclear program. The IAEA and U.S. intelligence have warned that Iran may be on the path to a nuclear weapons capability but have said that the regime has not decided on whether to pursue a bomb.

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Netflix Becomes 30th Advertiser To Drop Limbaugh

Moments ago, Netflix emailed a statement to the tech website Boing Boing indicating that the company will ensure that its ads never appear on Rush Limbaugh?s radio show again:

Spotted your tweets and wanted to let you know that Netflix has not purchased and does not purchase advertising on the Rush Limbaugh show. We do buy network radio advertising and have confirmed that two Netflix spots were picked up in error as part of local news breaks during the Rush Limbaugh show. We have instructed our advertising agency to make sure that this error will not happen again.

According to a ThinkProgress count, Netflix is now the 30th company to issue a public statement expressing its intention to pull ads from the Rush Limbaugh radio show as a result of his derogatory, sexist, and insulting attacks on Sandra Fluke.

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Marriage Equality Could Pump $119M Into NJ
Economy

A new study from the Williams Institute finds that New Jersey could generate as much as $119 million in just the first three years of marriage equality, including as much as $8 million in pure tax revenue. By vetoing the legislation, Gov. Chris Christie (R) deprived his entire state of that economic benefit, but the legislature has until the end of 2013 to overturn that veto.

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How Fast Would The Economy Have To Grow To Keep
Romney’s Tax Plan From Adding To The Deficit

Our guest bloggers are Michael Linden, the Director of Tax and Budget Policy at the Center for American Progress Action Fund, and Seth Hanlon, the Director of Fiscal Reform at the Center for American Progress Action Fund.

Mitt Romney?s latest tax plan would reduce federal revenues by more than $6 trillion over the ten year period from 2013-2022, and that?s on top of the more than $4.5 trillion cost of extending all the Bush tax cuts. But Romney insists that his tax plan will not add to the deficit. He claims that a mixture of ?stronger economic growth? and ?base broadening? will make up for the lost revenue.

So, just how strong would economic growth have to be to make his plan add up?

The economy would need to grow at a real rate of 6.8 percent every year for the next five years! In other words, without additional measures to raise revenue, the only way Romney?s tax plan will raise the same amount of revenue by 2017 as the current tax code would, is by having the economy go on an unprecedented tear like nothing this country seen in generations. 6.8 percent real growth for five straight years is ?implausible,? to say the least.

To put that in perspective, the Congressional Budget Office currently projects that the economy will grow by an average of 3.3 percent annually over the next five years. The very best five year period in American post-war history was from 1961 to 1966 when economic growth averaged 5.8 percent. Former Romney opponent and now Romney-backer Tim Pawlenty?s economic plan relied on consistent 5 percent real growth and he was basically laughed out of the room for making such outlandish assumptions.

Of course, Mitt Romney has also promised to ?broaden the base? by eliminating or limiting some tax breaks for the wealthy, while leaving those for the middle intact ? though he has yet to identify even a single specific one.

But even if we take Romney at his word, the math still doesn?t work without enormous and unrealistic economic growth. Limiting the value of tax expenditures for those making more than $250,000 would generate between $40 and $50 billion in 2017. Romney would still need five years of 6.5 percent real growth to make up the rest. Even completely eliminating all of the major tax benefits for those in the top 1 percent except for the special rates on investment income ? which would generate around $150 billion ? would still leave Romney relying on five years of 5.8 percent real annual growth. In fact, anything under $275 billion in base broadening for 2017 would require 5 percent real growth or better to make the numbers add up to the same level of revenue as current policies would generate.

?Offering gimmicky proposals that rely on implausible levels of economic growth and blow huge holes in the budget is easy,? said Mitt Romney. He might have continued with, ?Now let me show you how easy.?

The Math

Growth Estimates

The Congressional Budget Office projects that, under current tax policies ? with the Bush tax cuts extended permanently ? total federal revenue in 2017 will be a little over $3.5 trillion.

Romney?s tax plan, by contrast, generates just under $3 trillion in 2017, according to estimates from the Tax Policy Center, and including the effects of his corporate tax cuts, estate tax repeal, and Affordable Care Act repeal ? which assume no special economic growth. That translates to about 15 percent of the current CBO projection of gross domestic product for 2017.

For the Romney tax plan ? which raises 15 percent of GDP ? to generate the same $3.5 trillion that current policies would generate under ?normal? conditions, GDP in 2017 would need to be over $23 trillion. That?s about 18% higher than the current projection. To get there from this year?s GDP would require annual 8.5 percent growth in nominal ? i.e. not inflation adjusted ? GDP each year starting in 2013. After using the CBO?s GDP index to adjust for inflation, 8.5 percent nominal growth becomes 6.8 percent real annual growth.

These estimates implicitly assume that the revenue generated from Romney?s tax plan will stay the same ? as a share of GDP ? even if GDP growth is much faster. If, however, the additional economic growth came disproportionately from sources that were tax-favored, that would reduce the revenue generated by Romney?s code, and therefore require even higher economic growth to make up the difference. Conversely, if the extra growth came from higher-taxed activities, that would increase revenue, and reduce the need for extra growth.

Tax Expenditure Estimates

The Tax Policy Center estimates that limiting tax benefits for those making more than $250,000 a year to 2 percent of adjusted gross income (along the lines of a proposal offered by Professor Martin Feldstein, but limited only to high-income taxpayers) would generate $48 billion in 2015. For 2017, it would likely generate around $54 billion, assuming the revenue generated stays constant as a share of total income tax revenues. But those estimates depend, in part, on the current tax rates. With marginal income tax rates 20 percent lower ? as Romney has proposed ? limiting those tax benefits would generate about 20 percent less revenue.

A 2008 Tax Policy Center report determined that eliminating major tax expenditures other than capital gains and dividends would reduce the after-tax incomes of the top 1 percent by 6.2-6.6 percent (depending on whether interactions between them are counted) in 2007. But at Romney?s 28 percent rates, the value of such tax expenditures would be less ? about 5 percent per household. Given that after-tax incomes of the top 1 percent averaged$1.3 million in 2007, a 5 percent decrease in after-tax income would translate roughly into $65,000 per household in the top 1 percent ? or about $79 billion overall. That is approximately 7 percent of individual income tax revenues in 2007. A similar change in revenues would amount to $140-150 billion in 2017.

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From Fracking to Fuel CellsCapitalizing on the
Energy Revolution: Laird Cagan

The Energy Report: Laird, you and your partner are active investors. You are company founders, you sit on the boards and you actually run the businesses in some cases. What kind of advantage does that give you?

Laird Cagan: We are involved with fewer portfolio companies compared to a private equity or larger firm. Because we take a very active role and are starting companies at early stages, our preference is to create a new platform company and a new business opportunity. So the benefit is that we can be very close to the company and try to launch it quickly to take advantage of whatever market opportunity we see. We have a lot of skin in the game, . . . → Read More: From Fracking to Fuel Cells—Capitalizing on the Energy Revolution: Laird Cagan

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