Section 501(c)(4) of the Internal Revenue Code allows tax exempt status for “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare . . . .”  IRS regulations, rulings, and court decisions summarized here have developed a body of law about what kinds of political activities are permitted and what kinds are not.  The IRS regulations give examples including this one:

Example (2) Organization B conducts research, seminars, forums, and other educational programs for the public on issues of public concern. It also engages in substantial lobbying activities. Its activities are under the direction of a Board of Directors whose members were appointed by the national committee of a major political party. It selects issues to study based on the needs of the party, and receives substantial financial support from the party. B's activities are not primarily "educational," given their partisan nature; accordingly, it does not qualify for exemption under IRC 501(c)(4). 

So here we are, you and I, having responsibility for processing exemption applications and it is reported to us that our processing unit is receiving a large number of applications from organizations that have the word “party” in their names and/or describe political activities as amongst their purposes.  Uh oh, there’s an even more delicate problem:  Most of those applications are coming from organizations with “Tea Party” in the name, such as Georgia Tea Party for a Free America.  We know, because we do read the mainstream media, that there is a nationwide Tea Party movement that works on tax issues, health care, and other public issues, that it is generally hostile to government and especially to the IRS, and that at least some parts of it are partisan in that they select, fund, campaign for, and ultimately elect their preferred candidates for public office.  Indeed, there is a “Tea Party Caucus” of several dozen Republican Members of Congress. 

Staff have requested guidance. What are we going to tell them?  Well there are some things we know for sure, aren’t there?  We know we can’t approve applications from organizations with names like Santa Monica Democratic Club or Peace and Freedom Party of Los Angeles County or California Republican Warriors without some very careful scrutiny because the faces of all those applications scream at us that their primary purpose is to influence partisan elections.  In fact, it could be a major scandal if we approved any of those applications--even if the files contained solid evidence that the names of the organizations were completely misleading, couldn’t it? 

What are our options?  We can agree, can’t we, that we cannot favor, or appear to favor, any one political party or ideology, but that we are legally obliged to deny tax exempt status to any group that engages in partisan political activities and to grant tax exempt status to groups that do qualify?  Clearly, our directive to staff should apply to all applications that use the word “party” in the organization name and/or that state that one of the purposes is to select, fund, or support political candidates because our directive must apply even-handedly to liberal and conservative groups alike.  But the harder question is how to direct staff to handle such applications? 

We could direct that they all be approved.  However, it seems clear that some of these organizations are not entitled to exemption under Section 501(c)(4), and we would face a public scandal and disciplinary action if we approve them despite the obviousness of their disqualifying partisan purposes. 

We could deny all applications that lack clear evidence that they are non-partisan despite their names.  Those denied can appeal, and the final decisions will become somebody else’s problem.  Of course, instead of or in addition to appealing, they may go public and try to embarrass and influence us by creating a public sense of scandal. 

We could process each application, with enhanced questioning and scrutiny, and issue timely decisions to the applicants even though staff will have great difficulty articulating solid distinctions between those that are approved and those that are denied.  Staff will hate doing this because they think these tough decisions are above their pay grade.  They are reasonable to think that, are they not? 

We could keep requesting more information until we run out of questions to ask and then, if necessary, defer decisions until somebody above our pay grade makes a policy decision. 

Is there any other option?  What do you think we should do?  I’m counting on you to get this right. 

If these questions seem difficult, try these:  What policy directives should be issued by the new IRS management that has just taken over this week?  Should it approve all the Tea Party exemption applications?  None of them?  Flip coins?  Instruct front-line reviewers to clear the backlog of decision-making within 30 days applying only existing published guidelines?  Form a team of more senior reviewers to make individual decisions on each of the Tea Party applications?  If so, what guidance will they have that the front-line reviewers haven’t had?  Should the new acting commissioner personally review all these decisions?  

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

H-1b, the "Outsourcing Visa" How H-1b and L-1 visas are being used and abused by US employers to outsource millions of high-tech jobs and to bring in low-wage indentured servants to fill jobs vacated by firing high-wage citizen incumbents.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

Prolonged unemployment has profound life-changing economic and social consequences. Selected findings from a meta-study about how prolonged periods of unemployment for 20-somethings change their lives permanently for the worse. Facts, figures, and anecdotes.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson, Joseph Stiglitz, and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

Why we acquire beliefs and refuse to change them Describing and discussing six reasons with evolutionary advantages why we may cling to our beliefs even after they have become undeniably counterfactual and unreasonable. The original post is supplemented by numerous follow-ups containing examples and views of others including John Maynard Keynes, Sam Harris, David Brooks, John Quiggin, Ashwin Parameswaran, Lawrence M. Krauss, Thomas Kuhn, John F. Kennedy, and David Warsh. This is the first time this has made the monthly hit parade, but it is one of my favorite posts.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

Huffpo adds this:

As unemployment skyrocketed during the economic downturn, job opportunities for everyone -- including college graduates -- narrowed and low-wage work began to replace steady middle-class jobs. Three-fifths of the jobs lost during the recession paid middle-income wages, while the same share of the jobs created during the recovery are low-wage work, according to an August study from the National Employment Law Project.

The result: Nearly half of the college graduates in the class of 2010 are working in jobs that don't require a bachelor's degree and 38 percent have jobs that don't even require a high school diploma, according to a January report from the Center for College Affordability and Productivity. The report called into question whether too much public money is being spent on providing students with degrees that make them overqualified for the only jobs that are available.

And--if it isn't too much trouble--please change some policies that are preventing the creation of 10-20 million jobs.  

H-1b, the "Outsourcing Visa" How H-1b and L-1 visas are being used and abused by US employers to outsource millions of high-tech jobs and to bring in low-wage indentured servants to fill jobs vacated by firing high-wage citizen incumbents.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Why we acquire beliefs and refuse to change them Describing and discussing six reasons with evolutionary advantages why we may cling to our beliefs even after they have become undeniably counterfactual and unreasonable. The original post is supplemented by numerous follow-ups containing examples and views of others including John Maynard Keynes, Sam Harris, David Brooks, John Quiggin, Ashwin Parameswaran, Lawrence M. Krauss, Thomas Kuhn, John F. Kennedy, and David Warsh. This is the first time this has made the monthly hit parade, but it is one of my favorite posts.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

Newspapers are obsolete—Part 3: New Horizons I have no idea why this old post got so many views. It's only one paragraph posted for the purpose of linking to a (gated) NYRB article.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The other American Dream of rising incomes—Horatio Alger stories One of my earliest and perhaps my longest inquiry into upward socioeconomic mobility in America. Spoiler alert: The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

Broockman and Skovron find that all legislators consistently believe their constituents are more conservative than they actually are. This includes Republicans and Democrats, liberals and conservatives. But conservative legislators generally overestimate the conservatism of their constituents by 20 points. "This difference is so large that nearly half of conservative politicians appear to believe that they represent a district that is more conservative on these issues than is the most conservative district in the entire country," Broockman and Skovron write. This finding held up across a range of issues. 

Mathews suggests the legislators are victims of epistemic closure, an inability or unwillingness to comprehend that they have incorrectly assessed their constituents' views. Digby, commenting on this at Campaign for America's Future, suggests that the political media and donor class are both more conservative than the electorate at large.

Years of right wingers playing the refs by accusing the media of being liberal lapdogs has taken its toll. And, frankly, many of the elite political media are extremely well compensated and live in a world filled with rich, powerful people. They naturally identify with them and have less understanding of the average Americans' daily concerns. (And no, it doesn't matter if they came up from the average middle class — our meritocratic ethos says they did it all on their own and everyone else could too. Many of them are more hardcore about this than the children of the aristocracy.)

Perhaps "playing the refs" has also influenced how ordinary people view themselves. In What does it mean that the US electorate is "center-right"? Nothing.--

I found it is true that self-described conservatives have outnumbered self-described liberals in every election year since at least 1970. But I found that when polled on specific policy questions likely voters were apt to skew liberal instead of conservative. In other words, respondents' self-described ideology is useless in predicting public attitudes toward specific policy issues.

But really doesn't it get down to this simple fact: A politician's true constituents are his/her donors and the media, not the voters? Those who represent their true constituents can get reelected, and those who represent only the voters in their districts will likely be replaced.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

While Some Cities Conquer Economic Issues with High Tech Masters Programs, Others Struggle. (Guest Post) Education researcher Bree Hernandez says there is projected to be good jobs growth for STEM graduates but these jobs are destined to be concentrated geographically. She suggests that low-tech communities can improve their chances of becoming technology hubs by establishing STEM programs in local colleges and universities.

The Recession is Coming! The Recession is Coming! December 2007 post with charts showing America's middle class had been in recession for 7 years and asking if we really care.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

American Youth: Digitally Skilled and Unemployable. A graph shows that Americans under 25, who presumably are the most familiar with digital technology, are losing employment share to those over 55, who presumably are least at home in the digital age. This counterintuitive trend started long before the Great Recession.

My initial reaction was that something happened to accelerate the rate of spending increases in America. It did not occur to me that there had been a divergence in life expectancy improvement. However, taking the data apart revealed just the opposite: The rate of increase in real US per-capita health care expenditures has been steadily shrinking since at least 1960 but, starting in about 1983, America diverged downward from the peer nations in the rate of life expectancy improvements. 

Digging a little deeper it appeared that most of the adverse divergence was attributable to females and that males continued to have life expectancy gains at about the same rate as in the recent past. 

Why that happened was a complete mystery to me until the publication last month of U.S. Health in International Perspective: Shorter Lives, Poorer Health by the National Academy of Sciences. Hat tip Sabrina Tavernise at NYT. This is a monumental report of nearly 400 pages that is by no means focused on my question, "What's killing American females?" but there are clear partial explanations.

First, the study confirms that the US has been at or near the bottom in life expectancy and in the rate of increase in life expectancy and that the adverse divergence is almost entirely caused by US females.

These charts show the probabilities of surviving to age 50, which the report tells us is the age range that primarily accounts for the US's life expectancy disadvantage. Indeed, after age 75, the life expectancy of Americans is higher than in peer nations. At 3.

One striking finding is that US death rates are higher than the mean of peer nations for almost all causes of death and is not near the best with respect to any cause of death. Table 1.2.

The report doesn't tell us what changed since 1983, but it does tell us which causes of death account for the poor showing of American females versus the mean of 16 peer nations in the 2006-08 time interval.  Fully 37% of the excess deaths of American females occur from accidents and homicides, which are not normally thought of as "medical problems" that a better "health care system" might ameliorate.  

On the other hand, American females also lag their peers in deaths due to perinatal conditions, cardiovascular diseases, and other non-communicable diseases. Do American females have higher incidences of those maladies, or are they not getting as good treatment as in the peer nations? I don't think this report answers that.  

Because the report provides only a snapshot from 2006-08, the report is unable to identify the causes of death most responsible for putting American females on their lower life expectancy trajectory in about 1983. Indeed, Recommendation 6 is to investigate how different policies may explain cross-national differences over time.

I'm sure this is not the most important health policy question of all time, but I found it intriguing and am glad to have partial answers. I'm even more pleased that the NAS and others are addressing in a thorough fashion what is making us sick and killing us and what policies have been found effective to improve our health.

None of this should distract us in any way from the disastrous growth since the early 1980s in per-capita health care spending that did not improve our lives. Well, I guess it improved the lives of health care vendors, but not my life.  Or yours. 

Yes, you need a good education to get a good job, but in the 21^st Century you also need a good education to get a bad job. A recent study found that 46.3% of the projected beneficiaries of an increase in the Maryland minimum wage from $7.25 to $10.00 per hour have at least some college education. Yes, college educated people working for minimum wage, many of them full time. See the comments on Mark Thoma's post What's the Cost and Financial Value of College.

For plutocrats and employers, declining wages is a feature, not a bug. They want taxpayers to train their workers so they don't have to, and they want labor costs to keep going down. They are apparently not even embarrassed by this assault on American workers. Lumina Foundation and the Bill and Melinda Gates Foundation funded a study at Georgetown University's Center on Education and the Workforce to calculate how many more college graduates the US would need to turn out in order to drive down the college-versus-high-school wage premium from 74% to 46%! That's the goal—reduce the value of a college education by churning out an even bigger glut of degree holders. Even the study's authors question whether it will be feasible to get more Americans to complete college when they have to pay/borrow more as the incremental value of the degree is declining.

So here's my modest proposal: Declare a moratorium on hand-wringing about how to improve our educational system and instead focus serious national attention on creating tens of millions of jobs. Then we'll have the money to pay for more education for more people and a rising financial incentive for people to pursue higher education.

Why have we had for 12 years a chronic shortage of jobs up and down the education scale? Recently there has been a spate of punditry to the effect that American workers are being displaced by robots (shorthand for all sorts of automation). Well of course they are, and have been since the beginning of the industrial revolution, but I'm willing to bet that in the last 12 years many more American workers have been displaced by ill-treated Chinese teenagers than by robots.

Hat tip to Anne for the link to Census data. 

Lilly Ledbetter Act

Student Loan Reform

Auto Industry Rescue

Stimulus Bill

Healthcare Reform

Financial Reform Bill

Repealing DADT

Killing Osama bin Laden

To that we could add withdrawing troops from Iraq (pursuant to an agreement between his predecessor and the Iraqi government) and, of course, the facts that he is our first non-white President and was reelected. Are there other significant accomplishments that will impress historians a few decades hence? I don't think so, and if he had died yesterday in a prosaic, non-political way, such as by choking on a pretzel, he would be remembered 25 years from how for just one thing—being black.

Some might argue that he will be remembered for "Obamacare," officially the Affordable Care Act, but we don't seem to be remembering George W. Bush for the Medicare prescription drug plan, which is about as significant and a great deal more popular. Maybe the auto industry rescue will be remembered by some, but does anybody remember that President Carter rescued Chrysler in 1979, that President Ford bailed out New York City in 1975, or that President Nixon rescued Lockheed in 1971? (Other government bailouts are listed here.) No? Didn't think so.

It seems to me that none of the other accomplishments on the MSNBC list (or any others to date) are going to be remembered for long, let alone thought of as legacy material. So, if Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term.

Others have noticed this, of course, and describe Obama as having been so far a "transactional" President who would like to be a "transformative" President but isn't doing what he would need to do to get there. Tom Friedman nails the problem in yesterday's NYT op ed, More Risk-Taking, Less Poll-Taking: Obama is not articulating a vision of what America should and could be in five or ten years or a generation. He has been content to advocate for what he judges can be achieved under current political realities. He is not attempting to change how voters think about themselves and America. He's going with the flow. Friedman says this (emphasis added):

Maybe Obama has a strategy: First raise taxes on the wealthy, which gives him the credibility with his base to then make big spending cuts in the next round of negotiations. Could be. But raising taxes on the wealthy is easy. Now we're at the hard part: comprehensive tax reform, entitlement cuts, radical cost-saving approaches to health care and new investments in our growth engines. This will require taking things away from people — to both save and invest. A lot of lobbies will fight it. The president will need to rally the center of the country and the business community to overcome them. He'll have to change the polls, not just read the polls. He will have to take on his own base and the G.O.P.'s.

I'm sympathetic to the argument that transforming the American mindset is very difficult and perhaps impossible, but if Obama thinks that's reason enough not to try, then he's giving up the possibility of having a transformative position in history. I hoped for more, but I didn't really expect it. By the way, my agenda for transforming the nation would not be the same as Friedman's; in my opinion the transformational changes we most need are getting money out of politics and restoring full employment.

A 2011 report published by the Brookings Institute highlighted the long-standing relationship between economic prosperity and technological innovation. According to a recent survey of 120 countries over a 26-year period, each broadband penetration increase of 10-percent contributed to a 1.3-percent increase in a country's GDP. Additional studies have shown a strong link between "telecommunication investment and economic growth," particularly during post-recession periods. Many of today's industrial sectors are heavily reliant on technology. Physicians and nurses use telemedicine to exchange ideas and information with one another, energy companies supply power using smart grids; and higher learning institutions allow students to enroll in e-courses, among other things. "Technology fosters innovation, creates jobs, and boosts long-term economic prosperity," the report states. "By improving communication and creating opportunities for data-sharing and collaboration, information technology represents an infrastructure issue as important as bridges, highways, dams, and buildings."

According to an April 2012 report by IBISWorld, the U.S. GDP is expected to increase annually by 3.3 percent over the next five years; comparatively, the GDP grew by an average of 0.6 percent between 2007 and 2012. Much of this projected growth is attributed to industrial sectors that are concentrated in the fields of science, technology, engineering and mathematics (or STEM). One burgeoning field is 3-D printing technology, which grew 8.8 percent between 2007 and 2012, and is expected to increase 14 percent over the next five years.

Online technology and social media is another sector expected to grow considerably between now and 2017; this is especially true of the social network game development sector, which grew 128 percent in the last decade and is projected to increase another 22 percent in the next five years. Other STEM-related fields with high projected growth include pharmaceutical manufacturing, green construction, and solar panel development/manufacturing.

In order to succeed in the tech sector, Forbes contributor Jacquelyn Smith urges college and graduate students to choose programs that correspond to fields with high levels of projected job growth. Computer science majors, for example, earn a median mid-level salary of $109,000, while the sector is expected to grow 22.3 percent over the next eight years. A similar field, information systems, awards a median mid-career wage of $95,000, and is expected to grow 23.3 percent between now and 2020. Other lucrative programs include electrical engineering, mathematics and physics. "In a technology driven world, the need for those who not only understand, but can improve upon technology is high," said Katie Bardaro, a lead economist for Payscale.

However, the college or university a student chooses to attend can be just as crucial as the major he or she chooses. Academic experts advise students to choose their campus based on the strength of the local tech sector. A July 2012 report by Simply Hired found that two established tech hubs – Seattle and Portland, Ore. – were among the best cities in which to find a job related to the field of technology. Other cities, such as Newark and Birmingham, Ala., were listed among the "worst cities to find a tech job," due to a low ratio of available technology positions to workers who are currently employed in that field. Not surprisingly, the local economies of these cities reflect the strength of their tech sector. The unemployment rates of Seattle and Portland average around 7.1 percent, while the averaged unemployment rate of Newark and Birmingham exceed 12 percent. Furthermore, businesses in Seattle generated taxable income worth $58.6 billion in 2011, while Portland's job market grew by more than 10,000 jobs between September 2011 and September 2012. Meanwhile, the Newark labor force has been in decline each month since July and the Birmingham job market has lost roughly 2,700 jobs over the previous year.

A recent report by Rick Mattoon highlights the role that colleges and universities play in local economic development and prosperity. He notes that academic institutions are often the catalyst for regional economic shift. In some cases, a local school is the genesis point for a form of technology that evolves into an emerging industry. Other times, academic research and development aid an existing industry and enable it to further expand. In recent years, the University of Washington has exemplified this latter point within the city of Seattle; cutting-edge technology and engineering programs have yielded graduates who are able to contribute to the existing local workforce, while software development and business management programs have allowed graduates to thrive within the city's expansive startup sector. In Newark and Birmingham, on the other hand, academic programs are more geared toward traditional industries because the respective local economies have such weak tech sectors.

In order to bolster the local economy through technological innovation, city officials should encourage colleges and universities under their jurisdiction to adopt cutting-edge tech programs. Not only will these programs yield skilled graduates who are able to productively contribute to the city's workforce, but these institutions can also aid local industries through research and development, as the University of Washington has done in Seattle. Technology is a standard of modern business – no longer a mere luxury – and the varying economic strength between American cities effectively reflects this shift.