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When the Personal Becomes Political

IRS Agent Tells Pro-Life Group They Can't Bother People And Remain Tax Exempt

In case you were wondering whether the IRS was prone to using peoples' political views as criteria for assessing their eligibility for tax-exempt status, listen to this phone call that a pro-life group recorded with an IRS agent.  The agent, Sherry Wan, clearly does not speak English as her first language, so you may want to follow along with the transcript.  

You could speak to your value. OK. So that’s why, that’s why this is kind of
like you know, kind of, you started from the beginning, I feel that when you’re talking to the [unintelligible] my religion, my religion [unintelligible]. And like I said, you have the right to believe. You have the right to do, your religion told you what’s right. You have a right to, you know, outreach to other people. But meanwhile, you have to know your boundaries. You have to know your limits. You have to respect other people’s beliefs. You have somebody else come to your door and know you don’t like them. When they come to you, how do you feel? [unintelligible]

Sherry Wan does not seem to be worried about whether this group is conducting illegal protests (an activity which is not allowed for tax exempt groups, or indeed, anyone else.)  Rather, she's telling them that activities outside of abortion clinics will disqualify them, because they can't force their views on people who disagree with them.  This will surely come as a surprise to 501(c)(3) Greenpeace.  

I've seen a number of criticisms of this on the grounds that what Pro-Life Revolution was doing was constitutionally protected speech.  This is neither here nor there.  Asking my congressman to pass a law against neighbors who let their crab grass get out of control is constitutionally protected speech, but a 501(c)(3) cannot engage in it while also keeping their tax exemption.

First Person, Obamacare

More Obamacare on the Ground Level

Even governments are cracking down on part-time employees

A reader sends in this notice from their local parks department:  

file

The text:  

The "Affordable Healthcare Act" a.k.a "Obamacare" dictates that beginning January 1, 2014 employers with fifty or more employees that average 30 or more hours per week for a one year period beginning on October 15, 2012 and ending October 14, 2013 and avery year thereafter must provide health insurance to those employees.  If there is a violation of just one employee than the employer must pay a fine of $2,000.00 for every employee employed (not just the one violation).  This could result in a fine of over $2,000,000.00 to the City of Livonia.

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Whistleblowers Are Weird

Edward Snowden doesn't seem all that likable. That's probably how he was able to do what he did.

Last night I saw a few tweets from people I respect noting that in coming days, NSA whistleblower Edward Snowden may not look as noble as we now think him.  (I hope I'm wrong, one added.)  In some ways, this seems inevitable.  Whistleblowers are almost definitionally not normal people.  When the spotlight shines on their lives, the glare makes every irregularity evident.  

What whistleblowers do is usually moral.  A free society depends on people who are willing to go public when they see wrongdoing.  But there are good reasons that whistleblowing behavior is actually pretty rare.  

When you read that, you're probably thinking of the financial dangers, and you're not wrong.  Most people who blow the whistle on an employer end up losing their jobs.  I don't know how much Edward Snowden has managed to save on his reported $200,000 annual salary, but it's unlikely to be enough to live on for the rest of his life.  Yet even those who admire him may have second thoughts about hiring him.  If he will betray one employer . . .

Is Edward Snowden a "hero," "traitor," or "man of God?" Here's what YouTube thinks about the NSA whistleblower.

Denials? Or Non-Denial-Denials?

Just in case you weren't anxious enough about your cell phone, yesterday, the Guardian and the Washington Post dropped news that the NSA is also collecting data from multiple internet providers: Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube, Apple.  Dropbox is allegedly coming soon.

NSA Phone Records Big Data

Responding to the current uproar about NSA surveillance, an Apple spokesman said: "We have never heard of PRISM. We do not provide any government agency with direct access to our servers and any agency requesting customer data must get a court order." (Frank Franklin II/AP)

Yet the companies appear to be offering flat denials:

An Apple spokesman said: "We have never heard of PRISM. We do not provide any government agency with direct access to our servers and any agency requesting customer data must get a court order," he said.

First Person, Obamacare

More Obamacare on the Ground Level

Using the exchange as a substitute for employer-provided insurance

Two people who are (trying) to use individual insurance as a substitute for employer insurance:

I'm married with a kid on the way, and I'm cautiously optimistic about what my family's options will be next year. I started working for a healthcare company a few months ago, and my job transition happened during my wife's pregnancy. The new company has a somewhat generous health insurance policy, but steers employees to its own hospitals to the point that you basically don't have coverage anywhere else except for emergency room visits. Since my wife and I already had plans for delivery at another hospital, we decided to keep her on COBRA and I would shop for an individual policy. To my surprise, I was unable to get past underwriting, despite my good health, because my wife was pregnant and the insurance company would have been required to cover the new baby if they had issued me a policy, regardless of the baby's health after birth. I'm sucking it up this year on the new company's group plan, even though I don't much care for being told that I can't have surgery at the hospital of my choice. Hopefully the rates on the exchanges for a whole family will make it worth buying (although we wouldn't qualify for subsidies because we are eligible for a group plan).

One thing to keep in mind is that, at least in California, companies going into the exchanges are apparently keeping costs down by . . . restricting your choice of hospitals and doctors.  Given that you'll be paying for that insurance with after tax dollars, I'd look carefully at the options on the exchange before you give up your employer sponsored insurance.

And then a reader from Nevada:

First Person, Obamacare

More Obamacare from the Ground

A graduate student who is looking forward to the exchanges

A letter from a grad student who is looking forward to Obamacare:  

I'm currently a grad student and pretty psyched about Obamacare for myself. I currently get completely free insurance through my school (or, really, the state of Texas - I'm at a public school here) as a graduate TA, but even many people who eventually secure full-time work in academia spend a year or two as adjuncts.

I have savings and can survive a year or two with the extremely low pay of adjuncting, but what I can't do is insure myself under the old system. The last time I looked into buying health insurance, which was over 10 years ago, when I was in my 20's and thinner than now, the only plan I was able to buy for any amount of money (because of my high weight) was a high-deductible plan that was explicitly non-renewable (in other words, it would only last for a year no matter what). That worked for my needs at the time, and I'm fine with high-deductible plans, but I'm not sure I could have gotten insurance the next year.

And the thing is, if/when I graduate from here, I'll be at least 40, so I am really uncomfortable with the idea of not having health insurance. I could go get a job in some industry instead of adjuncting, and then I would be insured, but it's nice to have options.

First Person, Obamacare

More Obamacare on the Ground

A letter from someone who's planning to be uninsured next year.

An email from someone who isn't planning to buy insurance under the new exchanges:  

I'm a 32-year-old, male, married IT consultant in Nevada with a child. My wife and son have insurance through her work. I am presently uninsured and will remain so for the foreseeable future. Why? Well, I work for a small business with limited ability to contribute for health insurance (50% at the moment, though that might decrease) and several of my coworkers have health issues - consequently, to get insured, it would run me $250/month today for a "catastrophic" plan and premiums are expected to go up next year. On top of that, the insurance coverage is too weak for it to do any good - the difference between covering 80% of a $1 million hospital stay and none of it is financially identical for me - I don't have $200,000 lying around, much less $1 million, so we'd have to file for bankruptcy either way - and even if the hospital was willing to let me pay it off for 30 years, why would I want to if I can make it "go away" or get reduced substantially in bankruptcy court? Since doctors here are increasingly comfortable accepting cash payments, I don't even get the purchasing power available from having insurance - it's about the same anyway.

So, to recap, my options are to pay $250 a month (and rising) to pay for an insurance package that won't cover what I need covered anyway, or just pay the IRS and put the difference in savings and loan repayment (I have student loans, but nothing headline-worthy).

If I'm missing something, feel free to fill me in - I'm open to suggestion.

First Person, Obamacare

More Ground-level Views of Obamacare

A bookkeeper offers her experience

Another letter from another previous correspondent, inspired by yesterday's letter from a pastor:

Reading the post today it occurred to me that the pastor you are talking to is completely right for the people that I deal with on a daily basis also. I live in a trailer park in East Tennesse. . . I am a bookkeeper for a small tax business and I do the bookkeeping for very small businesses - sales tax, payroll, business tax - that kind of thing. The people they pay are exactly the people who need health insurance - waitresses, cooks, painters, cleaning services, concrete and paving guys but they won't understand how it works and they won't give up buying a "little more distraction" as Kacey Musgroves sings in "Merry Go 'Round", in order to have health insurance. Your pastor friend is also right that it won't be a conscious decision - they'll just kind of fall into it. I also have to tell you from ground level 4% of your income is huge - you can have insurance or beer for the weekend (or other distraction of choice) - guess which one they're going to choose? I also have the exact same problem as the pastor with Liberal wonks - they have no grasp at all of logical consequences. I can't think they have ever actually met any of the poor people that they seem so anxious to help. Because poor people just don't operate they way they seem to imagine.

I'd like to hear more from people who have first-person experiene doing financial work with the folks that Obamacare is going to serve.  If you're one of them--or have other relevant experience--you can email me at mcmeganmoney@gmail.com

Don’t blame the administration. We’re doing this to ourselves.

The Guardian dropped quite a scoop last night: the NSA has been collecting phone records from millions of Verizon customers. The full extent of the order is not entirely clear, but this much is: if you are a Verizon customer, the National Security Agency may know who you have called, when, and approximately where you were when you called them. But don't think you can necessarily rest easy just because you're on AT&T. We don't know if there were other orders for other telecom providers.

Verizon

How much protection is all this spying and searching and herding giving us? (Don Ryan/AP)

This is not the first time we've heard this: similar stories broke under the Bush administration. But now we know that this is an indiscriminately bipartisan vice. Regardless of who's in the White House, they will secretly collect massive pools of data on U.S. citizens. As an intelligence official told Wired magazine last year, "Everybody's a target; everybody with communication is a target." Let that sink in: your government views you as a target for surveillance because you talk to other people on the phone. Welcome to the 21st century.

Liberals blamed Republican police-state tactics back in 2006; now some conservatives are happy to blame Obama's arrogance and overreach. Libertarians, of course, have grimly wished a pox on both their houses of Congress. But these are at best accomplices to the crime. The criminal mastermind is us, the American people, the ones who demanded that our public servants do anything to make us safe.  

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How Obamacare Looks On the Ground

A pastor on how Obamacare will work with his flock

A pastor who occasionally corresponds with me about financial issues wrote in response to some of what I've been writing about Obamacare over the last few days.  I found his letter very interesting, because he's working with the target demographic:

I was the pastor/CFA/MBA who wrote you a note some time back about EITC wrinkles. Your last couple of Obamacare/ACA posts bring up something that from my experience I think is just being completely missed.

I work with what I’d call median Americans. Incomes right around the median. Family structure and dysfunction right around the median. You get the picture. And to work on spiritual issues often requires dealing with financial ones at the same time. (Often they are the same problem.) Everything that I’ve seen about the ACA and its implementation seems completely divorced from how say 35%+ of these median Americans function on a daily basis. The ACA and every wonk assumes rational people who can make good financial decisions. Instead what you have is people with $100K of school debt because it compounded when they stopped paying it, who are leasing a new car, who have an interest only mortgage (or a HELOC to help them pay the original mortgage), who have at least 3 credit cards maxed, maintain a pay-day loan they got scammed into, and yet find cable with HBO and an iPhone 5 with all you can eat plan necessities. It is not that on a median salary it is not possible to live a good and prudent life; it just requires some restraint and a minimum amount of simple rules. (Rules like Dave Ramsey talks about, or Benjamin Franklin divorced from the Christian content). But this is what the ACA mandate and cost is going to mean to many of these people: do I keep HBO & Cable, my iPhone, or buy medical insurance? Which bill that I already have must be done without? They will refuse to even think about that.

On top of that, if they recognize Obamacare at all what they think it means is “universal free health care” with emphasis on the free. When you try and say that it will cost them at least 4% of their income, they go directly into denial.

What I’m saying is that for a large minority of people opting out of the ACA probably won’t even be a conscious choice. It will just happen because of the complexity, the upfront sticker cost and the lack of ability to make good financial decisions. They will deal with it later when they file taxes which won’t be until September, because when their tax guy tells them they won’t get the refund they were expecting, they will file the automatic deferral to “put it off” for a little while. My only political axe to grind is that Liberal wonks just never design anything for reality. (I figure it is because they haven’t had to rub shoulders with it since high-school, and even then many went to places where reality doesn’t intrude.) They have no idea how bad this is going to be.  

He's certainly right that most journalists don't know a lot of folks whose household income is likely to top out at $48,000 a year.  So it's good to have the perspective of someone who counsels those folks every day.  4% of your annual income doesn't sound like a lot to me to spend on health insurance.  But of course, I'm not pulling shifts at Walmart.  And what he is saying to me does roughly mesh with what I know about consumer finance.  

Of course, I opposed Obamacare, so I'm more likely to get letters from folks who are worried about it.  So if you do consumer finance work with folks at the median income, and you think it's going to be great, email me!  I'll post those letters, too.

A new report says Obamacare will help boost firm formation. Don't break out the champagne just yet.

Is Obamacare about to unleash a wave of entrepreneurship?  A National Journal article, based on a new report from the Robert Woods Johnson suggests that it will.  The researchers estimate that as many as 1.5 million new people may enter self-employment now that they can count on getting insurance.  If they're right, we could certainly use the boost: young firms are responsible for a disproportionate share of job creation, and they're also the engine of creative destruction in the American economy.  And since the financial crisis, new firm creation has declined.

But will it actually happen?  A reader asks, in re the National Journal piece "What should we all think about this?"

That it's certainly possible, in theory.  Obamacare is supposed to do away with what economists call "job lock": people who stay in a steady corporate-type job because of the health benefits.  Though it's hard to estimate how big the effect is, most of the researchers who have investigated the question have ended up concluding that it's substantial.  

I mean, it makes intuitive sense, right?  You can imagine a guy who's got a great idea for a startup, but whose wife has multiple sclerosis, making it imperative for him to maintain health coverage.  So long startup, then.  You can easily picture that guy waking up in 2014 and deciding that now that he no longer needs to worry about health insurance, it's time to take the plunge.

Obamacare will raise insurance costs, not lower them, for a lot of young, childless adults. What will happen when they find out?

There's been some pretty fierce back and forth in the preceding week over the question of "rate shock": the hefty increase in insurance premiums that people--particularly young and healthy people--can expect to pay for health insurance come 2014.   I don't really want to recap here, so if you want to follow the blow-by-blow--and the blows got pretty fierce--Will Wilkinson has a pretty good summary over at The Economist.  

I don't really want to play referee, either, but I'll try.  I think a fair summary would be that some older and/or sicker people will find health insurance cheaper and easier to obtain, while some young people will find it a lot more expensive than they were expecting.  People who supported Obamacare think that the former is important and the latter is relatively trivial, while people who opposed Obamacare believe the reverse.  People who supported Obamacare are very angry at people who opposed it for emphasizing the rate shock, rather than pointing out all the benefits to other people, which would obviously present Obamacare in a much more favorable light.  People who opposed Obamacare think since Obamacare was sold on the grounds that it would make insurance cheaper for everyone except rich people, the fact that a lot of non-rich people will apparently pay more deserves some individual focus.  And since the supporters do not regularly caveat their articles extolling the benefits of Obamacare with a note about all the bad possible side effects, it's hard to argue that the opponents are obligated to do the opposite.

Who's right?  At some level, this is a theological debate, not a technical analysis.  I am going to argue that rate shock does matter, for a number of reasons.  Then you can decide for yourself which aspect matters more.  

The most basic reason that rate shock matters is that I don't think young single people were expecting it.  It's true that during health care reform, the reformers acknowledged that some people would end up with a big health insurance bill they hadn't had before.  But I wouldn't say that they exactly emphasized this aspect.  The implication that I, for one, took away from their analyses was that the subsidies would substantially reduce the cost for even quite middle class people.   Maybe a successful young IT contractor living in a nice condo would have to pay a few thousand dollars for the insurance he hadn't been buying, but I was under the impression that your average scraping-by clerical worker would pretty much have their bill covered, or reduced to some negligble sum.

The connection between house prices and interest rates isn't as clear as you think.

Here in the District of Columbia, where I live, housing prices have become . . . well, I believe that the technical term economists use is "totally insane".  A house (admittedly, an unusually large one) just went for nearly a million dollars in Trinidad, a neighborhood that five years ago was being sealed off by police with roadblocks because of the gang warfare.  One block over from us, unrenovated houses with only marginally more space than ours are selling for 50% more than we paid in 2010.  People who don't own homes yet are beginning to despair that they will ever be able to afford anything besides an attractively placed refrigerator box beneath the 14th Street Bridge.  People who own homes alternate between gleefully calculating their paper gains, and reminding each other that it can't possibly last.  Those of us with a wonky bent are prone to say things like "When Bernanke finally raises interest rates . . . "

This often spurs sour talk that Washington is booming thanks to Obama's massive federal expansion, but we aren't the only ones having these conversations. Home prices are rising by double-digit percentages across the country.  The New York Times is dispensing advice on how to win a bidding war in the brutally competitive local market. Even Las Vegas and Phoenix are having a boom.  Pick your explanation for the phenomenon: is it a bubble, or merely the inevitable recovery from the panic of 2009?  (As traders like to observe, even a dead cat will bounce if it falls from a great height.)  Or is it, as I've suggested, the handiwork of Helicopter Ben Bernanke, keeping interest rates low by airdropping oodles of cash into the financial markets?  

Interest rates must have something to do with it . . . after all, people generally calculate how much house they can afford by looking at the potential mortgage payment.  Say you're a two-career couple with a combined household income of $175,000 looking at a lovely formstone-covered fixer-upper in DC's historic Eckington neighborhood, close to all major amenities such as the Big Bear Cafe, the NoMa metro stop, and the Exxon Mobil station at Florida and North Capitol Avenue.  The house is listed at $540,000.  What will you actually be willing to pay?

Assuming that this couple has no children and are sensibly putting at least 10% of their annual income into their 401(k), they should be bringing home about $9750 every month.  They probably have a student loan or two, and because we said they're sensible, they don't want more than a third of their income to go to housing costs.  That means a monthly mortgage payment of no more than $2850 a month, to leave room for insurance and property taxes.  (Property taxes in the District are thankfully very low).  

Both boys and girls can get cancer from HPV. Protect them now, before it's too late.

In a wide-ranging interview, Michael Douglas says that his throat cancer was probably caused not by a misspent youth of drinking and smoking, but by HPV. Yes, HPV, the same virus that causes cervical cancer. The same virus that got Texas Gov. Rick Perry in trouble when he tried to make vaccination for it mandatory.

In general, I'm not in favor of expanding the power of the state over private decisions. But I make an exception for public-health issues—genuine public-health issues where you're stopping epidemics from spreading, not noninfectious pseudoepidemics like obesity and smoking. So I sided with Rick Perry: girls should be vaccinated for HPV. The chance to prevent more than 12,000 annual cancer diagnoses, and 4,000 deaths, is worth the very small risks of side effects.

But as Michael Douglas's case illustrates, Rick Perry did get one thing wrong: he left out boys. Thanks to the rise of oral sex, we now know that HPV doesn't just cause cervical cancer; it can also cause throat cancer. Ear, nose, and throat doctors are now seeing more and more cases of throat cancer in younger men, caused not by drinking and smoking, but by human papillomavirus.  

HPV-linked throat cancer is still rarer than cervical cancer, but it's also more dangerous, because there's no throat equivalent of a Pap smear. Cervical cancer has a very high survival, because most women now get regularly checked for it, so it's caught early. Throat cancer, on the other hand, tends to get caught when you have a lump large enough to be noticeable, or a bloody cough, or some other symptom that says "this has already gotten really bad." 

What we read into racist messages isn't necessarily what others saw when they were created

Last week, professional golfer Sergio Garcia joked about having Tiger Woods for dinner and serving him fried chicken.  Oh, ho, ho!  Black people sure do love that fried chicken, don't they?  Garcia has since apologized, but the uneasiness remains.  How can a professional in this day and age think it's okay to make racist jokes in public?  

We'll never know what he was thinking, except that whatever it was, it was pretty stupid.  So NPR turns to a question that we possibly can answer: where did this stereotype come from, anyway?

After all, it's a fairly weird stereotype.  I mean, while I haven't done a survey, I'm sure that most black people love fried chicken, because everyone loves fried chicken except vegetarians and women from New York who have convinced themselves that they don't like anything with more than 15 calories.  Fried chicken is sublimely delicious when done right, and even when it's done wrong, it's not bad.  How did people get the idea that loving tender, crispy fried chicken was some strange thing that only racial minorities do?

I asked Claire Schmidt for help. She's a professor at the University of Missouri who studies race and folklore. Schmidt said chickens had long been a part of Southern diets, but they had particular utility for slaves. They were cheap, easy to feed and a good source of meat.

About the Author

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Megan McArdle

Megan McArdle is a special correspondent for Newsweek and The Daily Beast covering business, economics, and public policy. A former senior editor at The Atlantic and writer for The Economist, Megan has a diverse work history including three small startups and a disaster recovery firm at Ground Zero.

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