PLEASE WAIT: Graham wants lawmakers to pursue Medicaid reform and delay expansion.

By Dustin Hurst | Watchdog.org

As a legislative coalition key to expanding Montana’s Medicaid program crumbles to the Capitol floor, a key player is pushing lawmakers to pursue aggressive reform of the health program.

Carl Graham, president of the Montana Policy Institute, wants lawmakers to remake the program rather than swelling its ranks as allowed under the 2010 health care reform law.

“Montana should resist any Medicaid expansion until the federal government gives states more control over how the money is spent to get the best care at the lowest cost for their own citizens,” Graham wrote this week.

Legislative Democrats hope to strike a deal with moderate Republicans in the Montana House to pass the Medicaid expansion measure, which analysts predict will add at least 70,000 to the program.

Democrats and a handful of activist groups believe expansion is an easy path to providing health coverage for the working poor.

The federal government would cover new enrollees for two years before relaxing standards and forcing states to pay more.

Even with the feds footing the bill for the next two years, Grahams says, ballooning program participation will still cost Montana taxpayers.

“The net costs to Montana taxpayers through 2021, with all new taxes and jobs included, range from $50 million to well over $100 million,” Graham explained. “That’s enough to hire 230 to 460 new teachers for the same period.”

The Democrats’ initiative faces steep odds in Montana’s Republican-controlled House, but a Democratic-led coup is possible. Moderate Republicans in the Montana Senate joined earlier this year with Democrats to push the bill through the upper chamber.

Political shenanigans of Democrats’ own making may jeopardize the effort, though.

One week ago, Senate Democrats pulled a procedural maneuver to kill two GOP-backed election bills. The Senate erupted into chaos as Senate President Jeff Essman quashed the effort..

The procedural motion not only failed to block the GOP bills, it might have killed off the fledgling coalition of Democrats and moderate Republicans.

“Friday’s raucous blowup damaged a developing coalition among the Democratic minority and groups of Republican moderates in both the Senate and House on some key issues,” wrote Lee Newspaper’s Mike Dennison a few days ago.

The expansion measure earned key endorsements from the Montana Hospital Association and the Montana Chamber of Commerce.

The chamber, which surprised many by throwing its weight behind the bill, argued expanding the program would create much-needed jobs for Montanans.

Graham dismissed the chamber’s optimism.

“The chamber’s conditional support of Medicaid expansions sacrifices the interests of Montana’s small businesses at the altar of crony capitalism for the big medical industrial complex,” Graham said.

Montana’s Medicaid system, Graham believes, contains systemic flaws that need significant restricting. The proof is in the pudding, he says.

“Medicaid recipients encounter barriers to primary care at nearly twice the rate as those with private insurance,” he wrote. “They use emergency rooms at rates nearly twice those of the privately insured.”

Similarly, Avik Roy, an analyst with the conservative Manhattan Institute for Policy Research, has written that Medicaid patients experience significantly worse medical outcomes than those carrying private insurance or even people without health coverage.

“Now comes word, via a large study by the University of Virginia … that surgical patients on Medicaid are 13 percent more likely to die than those with no insurance at all, and 97 percent more likely to die than those with private insurance,” Roy wrote in August 2010.

Roy also noted that Medicaid patients tended to need longer stays in hospitals and cost more than privately insured people.

If lawmakers can kiss and make up soon, Graham pleads for legislators to delay a final decision until a later date.

“At a minimum, deferring the decision will give Montana’s leaders and citizens ample opportunity to evaluate expansion in other states and make a more informed decision during the 2015 legislative session,” Graham plead.

At least 25 states will expand their Medicaid programs under the health reform law. Montana’s neighbor to the west, Idaho, will examine Medicaid reform in the next few months before finalizing a decision early next year.

Contact: Dustin@Watchdog.org or @DustinHurst via Twitter.

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ALL SMILES: Jon Tester says he wants a balanced approach to deficit, but he’s supported billions in recent tax hikes with few spending reductions.

By Dustin Hurst | Watchdog.org

HELENA — Democratic U.S. Sen. Jon Tester just can’t get enough — money for the ever-growing government, that is.

Most of the Montana media focused on Tester’s call for bipartisanship in his address to state lawmakers gathered in a joint session Monday, but another element received little play: the senator’s push for more federal revenue.

The request is interesting because the federal government about two weeks ago approved billions of dollars in new taxes — some to fund general government operations, others to pay for entitlement spending.

“In Washington and here in Helena, we can’t afford to let brinksmanship replace statesmanship,” Tester said. “The fiscal problems that face our country at the federal level can and must be addressed. It is our biggest challenge. Cutting spending and increasing revenue will be necessary if we are going to solve our budgetary woes.”

While Tester preaches a balanced approach to wrestling with the federal budget and the red ink in which it swims, lately he has leaned heavily on the side of revenue-raising.

Tester supported the so-called “fiscal cliff” deal, which thwarted tax hikes for millions of Americans and blocked deep cuts to government programs. As most D.C. spin doctors will preach, the deal protected 99 percent of American taxpayers from rate hikes.

Examining the other side of the fluff, though, reveals the imbalance of Tester’s approach.

The fiscal cliff deal, passed by the Senate 89 to 9 and the U.S. House 255 to 167, raised from 35 percent to 39.6 percent the income tax rate on workers bringing home more than $400,000 annually  The Congressional Budget Office projects the move will generate about $620 billion through the next decade.

Consider, though, that the fiscal cliff deal includes a mere $15 billion in spending cuts. For those fuzzy with math, that’s about 0.4 percent of 2012 federal spending, or $41 in tax hikes for every dollar in cuts.

How’s that for balance?

That only tells half the story, though. Tester supported the 2010 Affordable Care Act, commonly known as Obamacare or the national health reform law. On Jan. 1, billions in new tax hikes enacted by that law took effect.

A new tax on certain investments, plus a hike on the rate workers earning more than $200,000 pay annually combine for the largest of the revenue-raises that began New Year’s Day. Collectively, those two levies will generate more than $318 billion over the next decade.

The medical device tax also began Jan. 1. This fun tax — so bad even some Senate Democrats who supported Obamacare wanted to delay its implementation — adds a government surcharge to pacemakers, MRI machines, wheelchairs, artificial joints and many more devices used in the medical field.

This tax, which industry analysts said would cost between 14,000 and 43,000 jobs, will generate $30 billion through the next decade.

While these taxes may sound rough, there’s more: Between now and Jan. 1, 2018, the Affordable Care Act enacts a few more tax hikes, costing hundreds of billions of dollars.

Some might point out the health reform law also boasts $716 billion in cuts to Medicare through the next 10 years. Although true, the government robs Peter to pay Paul. The cuts may sound nice, but any money saved actually helps fund health-reform initiatives.

Again, no balance.

Tester, like any good federal lawmaker, told state legislators of the need for large-scale tax reform, again throwing his support behind the Simpson-Bowles plan. That plan would, of course, raise at least a trillion in new revenue, too.

That’s exactly what Democrats want, though. According to report by The Hill, Democrats are looking for at least $1 trillion in new tax revenue to couple with the mandatory spending cuts Republicans demand.

Even if lawmakers find a way to thread the needle and strike some sort of grand bargain, the scale already tilts in favor of taxing the rich to find money for anything and everything.

Contact: Dustin@Watchdog.org or @DustinHurst via Twitter.

— Edited by John Trump at jtrump@watchdog.org

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BAUCUS BULL: The Senate Finance Committee chair won’t talk about gift-wrapping tax breaks for clients of former staffers.

HELENA – U.S. Sen. Max Baucus told Montana state lawmakers last week that he clings true to a particular aphorism: When you hold certain advantages, you must utilize them.

It’s an idiom certainly not lost on ex-Baucus staffers whose lobbying clients profited greatly from a tax package the Montana senator created.

Montana’s senior senator, a Democrat up for re-election in 2014, just won’t talk about how lobbying clients of former staffer reaped huge rewards from billions in corporate handouts quietly inserted into the so-called “fiscal cliff” deal at the last minute.

“Well, no, the main thing is just keep our eye on the ball here,” Montana’s senior senator said, deflecting a question about the arrangement from the Great Falls Tribune’s John Adams.

The furor began more than a week ago when the Washington Examiner’s Tim Carney detailed how more than $60 billion in corporate handouts found their way into the fiscal cliff bill. The handouts were copy-and-pasted by the White House into the bill, using the Baucus-created Family and Business Tax Cut Certainty Act of 2012 as the blueprint.

Things only grew worse for Baucus when Carney dug even deeper, finding that the multinational corporations benefiting from the handouts, known in Washington-speak as “tax extenders,” employ a number of the senator’s former staffers who’ve left public service for greener pastures.

Here’s a snippet of what Carney wrote about ex-Baucus staffers:

Pick any one of the special-interest tax breaks extended by the cliff deal, and you’re likely to find a former Baucus aide who lobbied for it on behalf of a large corporation or industry organization.

Baucus won’t talk about his former staffers benefiting from the deal, though.

The tax handouts in the fiscal cliff deal will cost the U.S. Treasury at least $60 billion and go to some of America’s largest companies.

General Electric, for example, will benefit twice from the deal. The package included $12.1 billion in tax breaks for the wind-energy industry, a perk surely to benefit the nation’s largest producer of wind turbines, GE.

The package also extends a tax break for interest earned on overseas profits. While that might not sound substantial, critics claim that the loophole allows Wall Street banks and companies like GE to shift profits overseas, effectively avoiding U.S. taxes.

The bill also includes breaks for improvements to racetracks, companies producing rum in Puerto Rico or the U.S. Virgin Islands, movie production companies and Americans who buy two-or three-wheeled electric-powered vehicles.

CRACK A BOTTLE: Rum producers in Puerto Rico and the U.S. Virgin Islands received a huge tax break in the fiscal cliff deal.

Baucus spoke publicly about those giveaways for the first time Friday, defending the work he did as bipartisan.

“Frankly, I’ve got to be proud of myself,” Baucus told reporters. “Congress was basically totally dysfunctional on this general subject so I got the committee together and said, ‘OK, everybody here, Republicans and Democrats. Let’s work together on this question.’”

Baucus, seeking to reframe the debate in his favor, told the media that members of the Senate Finance Committee he chairs worked together to slash waste and “dead wood” from the collection of tax extenders embedded in federal code.

“And we did reduce some of them by tens of billions of — got rid of some of them,” the senator explained. “My goal is to get rid of as many as we possibly can and I’m hopeful that during tax reform this next year we will be able to eliminate even more.”

This isn’t the first time revolving-door charges have hit Baucus. Earlier this year, Watchdog.org chronicled Elizabeth Fowler’s travels between the public and lobbying sectors. Fowler worked for Baucus for a number of year before joining a one of the nation’s largest health care firms. When Baucus spearheaded an effort to reform the nation’s health care system, he again hired Fowler to write the bill.

After she helped kill the public option, a government-run health insurance option opposed by the country’s insurers, she joined President Barack Obama’s administration for a short time before returning to a lobbying firm.

Contact Dustin Hurst at Dustin@Watchdog.org or @DustinHurst via Twitter.

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GOVERNMENT PAPER FOR SILVER: Silver Airways receives millions in government subsidies annually.

HELENA – Low ridership numbers on a federally subsidized air route means that one rural Montana town could soon lose commercial air service.

The federal government provides more than $1.3 million annually to Silver Airways to help the airline provide twice-daily flights between Lewistown, a small community in the center of the state, and Billings.

A mere 660 passengers traveled the route last year.

Federal regulations say the per-passenger subsidy per route must not exceed $1,000. Any routes violating that regulation risk losing the federal support, which usually means that last airline, propped up by federal bucks, leaves town.

The subsidies come through Essential Air Service, a federal program originally authorized after the 1978 airline deregulation. The program gives subsidies to air carriers providing service to 150 communities nationwide, including nine Montana towns. It costs about $190 million annually, and taxpayers fund it through excise taxes on plane tickets, cargo and jet fuel.

During deregulation, federal lawmakers worried that airlines would pull out of rural markets because some smaller communities could not sustain strong ridership numbers. To keep carriers flying to these small towns, lawmakers struck a deal: One airline per qualifying community provides service, subsidized by the federal government.

Passengers don’t receive free airfare under the program, but rather cheap rates to a nearby hub. A round-trip ticket between Lewistown and Billings costs passengers $150, including fees and taxes.

According to Kevin Adams, an industry economist with the U.S. Department of Transportation, the Lewistown-Billings route saw 660 passengers for the year ending Sept. 30. That’s about 1.8 people per day, or about half a person per flight, assuming a yearly completion rate of 97 percent, the mandated service level.

The federal government pays Silver Airways, the carrier servicing the Lewiston-Billings route, $1.325 million annually, or a whopping $2,008 per passenger.

Some Montana cities receiving federal aid easily surpass minimum service levels. Sidney for example, received $2.9 million last year and had more than 21,000 passengers.

Silver’s FAA contract for the Lewistown route expires in May, and local officials are reportedly eager to renew it.

But they may not have the chance. Just ask people in Ely, Nev.

Ely, a tiny eastern Nevada town with just more than 4,000 residents, will likely lose its EAS service, provided by Great Lakes Airlines, in the coming weeks. The DOT released a finding in December that Ely dipped below required services, thereby making itself a candidate for program expulsion.

According to a document forwarded by Adams to Watchdog.org, Ely performed better than Lewistown in fiscal 2012. The Ely-to-Las Vegas route saw 1,070 passengers in 2012. Great Lakes received $1,637 per person served last year.

On Dec. 14, the DOT opened a two-month comment period for interested parties to weigh in on elimination of the Ely-to-Las Vegas route. If nothing happens to save the contract, Ely would lose air service and would have to jump through several administrative hoops to re-enter the program.

DOT officials haven’t engaged in formal discussions about ending the Lewistown-to-Billings route, but that could soon come. Adams told Watchdog.org earlier this month the department would probably begin evaluating the route’s necessity in “about a month.”

Locals aren’t happy with the news that they might lose contract.

Jerry Moline, the Lewistown airport manager, said in an interview Thursday that losing the federal subsidy with irreparably harm his community.

“It’d be devastating,” Moline said.

He lays some of the blame for the low ridership numbers on the route itself. In a previous contract, Great Lakes Airlines served Lewistown but flew passengers to Denver, with one stop in Wyoming. That’s part of the reason Moline hauled the Great Lakes Vice President Chuck Howell in front of the airport board Wednesday. A prompt return to the old route, Moline said, might help to increase numbers.

The Lewistown airport hasn’t talked much with the Federal Aviation Administration about the sagging figures, but Moline says he had a hunch Lewistown struggled in the past year.

“I kind of sensed it,” he explained.

Although he recognizes the dire situation, Moline pledged a fight to keep the EAS money flowing.

“I’m willing to do as much as I can to keep the service in here,” he vowed, noting that losing regularly scheduled commercial flights would harm the local economy.

While Lewistown’s situation appears dire, having a friend in the right place might help. U.S. Sen. Max Baucus, a five-term Democrat, serves as chair of a key subcommittee that oversees aviation-related issues and regularly showers EAS with glowing praise.

“Essential Air Service is essential to Montana jobs,” Baucus said in a 2011 statement released after U.S. Sen. John McCain, R-Ariz., tried to kill funding for the program. “While it is important to rein in the deficit, axing programs like EAS will actually cut jobs, shrink the economy and diminish our ability in Montana to attract business to our state.“

Baucus has not yet commented on the impending review of the Lewistown route.

Contact: Dustin@Watchdog.org or @DustinHurst via Twitter. 

— Edited by John Trump at jtrump@watchdog.org

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LET’S GROW: Bullock wants to add 60,000 Montana’s to the state’s Medicaid program.

By Dustin Hurst | Watchdog.org

HELENA — Newly sworn-in Democratic Gov. Steve Bullock says he wants to expand Montana’s Medicaid program, but his ambition might leave the state with a time bomb ticking deep inside the biennial budget.

Bullock, inaugurated Monday on the Capitol steps, has kept quiet about expanding Medicaid, which serves 120,000 Montanans and costs the state and federal government just less than $1 billion annually.

Bullock defeated Republican Rick Hill in last year’s gubernatorial election.

Friday, Bullock released his budget ahead of the 2013 legislative session, wherein he included $5 million for Medicaid expansion, a move that could add 60,000 more Montanans to the government-run health program.

The 2010 Patient Protection and Affordable Care Act, one of President Obama’s signature achievements, allows states to expand Medicaid to cover people making up to 133 percent of federal poverty level, up from 100 percent before the law. That means a single person earning less than $14,856 annually would qualify under the expansion.

The federal government deems anyone earning between 100 percent and 133 percent of federal poverty level as “newly eligible,” an important distinction.

For those newly eligible folks, Uncle Sam hands the states a sweet deal, at least initially. For the first few years, the feds will cover 100 percent of the cost of residents joining under the new guidelines. That breaks with normal operating procedure, which usually requires states like Montana to cover about 30 percent of costs, with the feds picking up the rest.

The 100 percent eventually drops, though. In 2017, the feds will dump the rate to 97 percent covered and continue decreasing it until 2020, when it hits 90 percent.

It’s a pricey proposition. The Kaiser Family Health Foundation, a key source of health news, revealed late last year that Medicaid expansion would cost the federal government at least $808 billion over the next decade while costing states $8 billion during the same period.

Therein lies the rub for some governors and state lawmakers. Eventually, the federal government will deal with its budget woes, which could mean lower Medicaid funding for states, which would then have to pay for hundreds of thousands more residents on the health program. According to The Advisory Board Company, some 15 states either will not expand or are leaning that way. Another 14 remain undecided.

Here’s a map depicting where states stand on expansion, via The Advisory Board Company:

Another problem exists.

The Woodwork Effect, as it’s known — which plays on the phrase “people coming out of the woodwork” — could blow holes in state Medicaid budgets nationwide.

As previously mentioned, the feds will completely cover those newly eligible folks who join Medicaid if Montana expands. Another class of folks, though, causes concern among lawmakers — people  ”previously eligible” for Medicaid but not enrolled in the program. Essentially, these people make so little that they qualify for Medicaid benefits but, for one reason or another, haven’t signed on.

In Montana, just less than 70 percent of the people who qualify for Medicaid actually participate. That means another 20,000 or so Montanans could conceivably join the program in the next few years as the federal government imposes the mandate that Americans buy insurance or pay a penalty.

That scenario could prove dire to Montana’s budget, costing millions annually and eating up critical state dollars for other programs and projects.

CHECK IT OUT: Miller wants to examine all Medicaid’s potential costs before swelling the program.

State Rep. Mike Miller, R-Helmville, told Watchdog.org on Tuesday that lawmakers must examine the possibility of future budget trouble resulting from Medicaid expansion.

“I believe there will be a big push to enroll people in Medicaid if we approve the expansion,” Miller wrote in an email to Watchdog.org. “This would most likely pick up a lot of the currently qualified people which the State would have to pay for.”

Health reform itself creates the problem. On Jan. 1, 2014, Americans will buy health coverage or pay a penalty to the IRS. That means millions of uninsured Americans will scramble to consider their options, and Medicaid will serve as a backstop for the poorest.

The health exchanges, another creature of health reform, will also compound the problem. The exchanges, one in each state, will act as an online marketplace for health insurance. Middle-class families will buy health care through these portals and likely receive a government subsidy along with it. The exchanges will direct the poorest folks to Medicaid or Medicare, if they qualify.

That, too, will add takers to Montana’s Medicaid program, including those previously eligible residents.

The Congressional Budget Office estimates that more than 6 million previously eligible Americans will join Medicaid in coming years, adding millions of dollars to state and federal budgets.

Former Montana Gov. Brian Schweitzer, also a Democrat, opposed Medicaid expansion for years before including it in his final budget late last year. Schweitzer said the 100 percent match represents a sweet deal for the state.

Before flip-flopping, Schweitzer said Medicaid expansion could bankrupt Montana and warned that the federal government would renege on its pledge for high funding for newly eligible enrollees.

Contact Dustin@Watchdog.org or @DustinHurst via Twitter. 

— Edited by John Trump at jtrump@watchdog.org

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LET ME TELL YOU: A finger-waving Baucus avoided questions about this love affair with corporate welfare.

By Dustin Hurst | Watchdog.org

HELENA — The Washington Examiner’s Tim Carney delivers a scathing indictment of Montana U.S. Sen. Max Baucus’ affinity for corporate welfare and he scoffs, shrugs it off and delivers his pre-prepared talking points.

Such is the strategy for an entrenched Beltway insider.

In the past week, Carney’s bludgeoned Baucus, the Democratic chair of the powerful Senate Finance Committee, twice — the first time for aiding the White House’s quest to stuff into the fiscal cliff legislation billions in corporate tax handouts to some of the nation’s largest corporations and the second occurrence for the senator’s penchant for delivering sweetheart breaks to lobbying clients of former staffers.

But Montana’s senior senator, up for re-election in 2014, won’t answer questions about the two articles or his well-recognized affinity for backroom politics.

Aaron Flint, host of the AM radio talk show Voice of Montana, asked Baucus about the tax breaks and the lobbyist favors Monday night after the senator spoke to a Chamber of Commerce dinner here in Helena. Baucus, first elected to the U.S. Senate in 1978, offered his well-oiled response to Flint.

“I don’t know what you’re talking about,” Baucus said when asked about Carney’s work. “I haven’t seen it.”

Flint persisted, walking with the senator as he exited the event, prodding for an answer. The radio host queried why corporate interests should receive $60 billion in breaks while ordinary Americans face $125 billion in payroll tax hikes.

The fleeting Baucus fell back to finger-waving and tired talking points to defend the fiscal cliff bill. “Ninety-nine percent of Montanans’ income taxes did not go up,” Baucus redirected. “That is very good news and that’s permanent.”

Baucus wasn’t lying. In the so-called fiscal cliff bill, Congress made permanent the Bush-era tax cuts for about 99 percent of the population. Lawmakers did hike taxes on those making $400,000 a year or more, taking their rate from 35 percent to 39.6 percent.

Though he didn’t fib, he didn’t speak to the issue, either. The White House, at President Barack Obama’s behest, copy-and-pasted Baucus Family and Business Tax Cut Certainty Act of 2012 into the fiscal cliff bill at the last minute, adding billions in pork for General Electric, Wall Street banks, NASCAR and Disney, among many others.

Analysts say the corporate handouts will cost at least $60 billion.

Simultaneously, many Montanans will receive their first paychecks of 2013 this week, only to realize they’ll have less to spend on gas, groceries, rent and other necessities. That’s thanks to the expiration of the payroll tax holiday, originally authorized in 2010.

The expiration brings the rate back to 6.2 percent after spending two years at 4.2 percent. A worker earning $50,000 annually will see about $1,000 less in 2013, or approximately $83 each month.

Neither party seemed interested in renewing that reduction as part of the fiscal cliff package.

Here’s Flint’s video of the short exchange:

Contact Dustin Hurst at Dustin@Watchdog.org or @DustinHurst via Twitter. 

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‘LIKE RAW STEAK ATTRACTS WOLVES:’ Carney says lobbyists targeted a special Baucus bill.

By Dustin Hurst | Watchdog.org

HELENA — With the country teetering on the edge of a full-blown meltdown warmly known as the “fiscal cliff,” the White House busily negotiated with Congress to strike a deal, but not without stuffing billions in corporate welfare into the final product.

For the quick assist, White House staffers turned to Montana U.S. Sen. Max Baucus, a Democrat regarded as a legislative errand-boy for the nation’s corporate elite.

Don’t believe it? Ask General Electric, Diageo, the Motion Picture Association and myriad other companies benefitting from the welfare included in the cliff compromise.

Tim Carney, the Washington Examiner’s crack political reporter and columnist, provides a full rundown of just how the White House snuck $76 billion in corporate handouts into the fiscal cliff legislation.

In short, White House officials copy-and-pasted the text from Baucus’ Family and Business Tax Cut Certainty Act of 2012, shoving it into the final fiscal-cliff bill. Lawmakers had about six minutes to read the entire 154-page bill before casting votes, as Utah Republican U.S. Sen. Mike Lee pointed out, and no one in the upper chamber cried foul.

The special breaks run the gamut, from the silly to the egregious. Congress included credits for rum produced in the U.S. Virgin Islands and Puerto Rico, “motorsports entertainment complexes,” two- or three-wheeled electric vehicles and certain movie and television film productions.

On the egregious side of the scale — and the costliest — lawmakers approved a one-year extension of a loophole that helps monster companies avoid their share of federal income taxes.

AVOIDANCE: GE avoids a significant amount of taxes each year through federal loopholes.

The extension of the active finance exception, a favorite of GE and some of the country’s biggest banks, checks in as the most expensive handout in the package. Some analysts say this loophole costs the American government $9 billion annually.

But just what is it? In layman’s terms, the federal government taxes interest earned on profit generated overseas, but this break, created in 1997 and extended nearly every year since, waives that levy on certain types of transactions.

Advocates for this giveaway say it helps American companies create jobs overseas. Conservative and libertarian types might wax fond of this measure because they believe the federal government holds no power to tax foreign profits.

While justified in some of their ire, those same people might express horror knowing that hulking multinational corporations and banks ship their domestic profits overseas to avoid paying taxes to Uncle Sam.

Remember the unfettered populist indignation when news outlets reported that GE paid zero income taxes in 2010, even while earning $5.1 billion in domestic profit that year? This loophole contributed to that fiasco.

Corporations mean business when Congress examines this credit every few years. The Active Finance Working Group, a coalition of moneyed interests benefitting from the bypass, have reportedly paid a K Street lobbying firm more than $1.2 million to push it forward.

The lobbying firm, Elmendorf Ryan, employs at least one staffer with close ties to Baucus and his Senate Finance Committee.

Elmendorf Ryan’s tight relationship with the Montana senator paid off for at least one other group: The American Wind Energy Association.

Another fiscal-cliff provision hands at least $12 billion over the next decade to wind-energy producers that start construction on wind-energy farms. The Production Tax Credit, as it’s known, hands 2.2 cents per kilowatt hour back to producers.

Interestingly enough, GE, the nation’s largest producer of wind turbines, will likely benefit from this credit, too.

Other interests pushed their favors into the Baucus bill.

The credit for motorsports entertainment arenas probably edges others as most interesting of the bunch. News outlets dub it the “NASCAR loophole,” and rightly so. The credit, expected to cost about $78 million, allows those building or improving motorsports facilities to deduct construction costs from federal taxes.

Here’s an official explanation, via Jalopnik:

It lets race tracks depreciate the costs of things like capital improvements over a faster, seven year period, instead of a longer one, like 15 years. In the end, they pay less in taxes this way.

Of course, NASCAR wasn’t the only entertainment complex benefitting from the deal. Remember the animated mouse with the big ears?

Florida Watchdog bureau chief Yael Ossowksi reviewed the film handout earlier this week.

“The film credit, first introduced in the American Jobs Creation Act of 2004, allows production companies to deduct the first $15 million in filming costs from taxes, $20 million if the project is completed in a low-income community, according to the IRS,” Ossowski wrote.

“In 2010, Disney received $110 million through the federal tax credit, nearly 75 percent of the total $150 million allocated by Congress.”

INSIDERS: For Disney, Washington, D.C., serves as a place where dreams come true.

Why did the mouse trap the money? The company’s lobbying disclosure shows it pushed Baucus’ committee and the White House for the extension.

While Disney stands as the top beneficiary of this credit, it’s not the only company reaping rewards. Analysts project this credit will cost $430 million.

While Americans busily enjoy their subsidized stops at Disney’s Magical Kingdom or the Talladega Superspeedway, why not grab a drink? Congress covers those, too.

For all the non-teetotalers out there, federal lawmakers extended the rum tax credit for produces in the U.S. Virgin Island and Puerto Rico. Here’s how it works: Congress levies a $13.50-per-gallon tax on rum produced in or imported to the U.S., or about $2 per bottle. Under the loophole, the federal government turns around and sends a good deal of that back to the governments of the two island communities, which, in turn, offer generous subsidies to producers like Diageo, which, like others, lobbied the Senate Finance Committee for the favor.

The break may cost more than $200 million.

Of course, folks need transportation to the rum store, Disney World, or the race track and, again, Congress steps in. The fiscal cliff bill includes a subsidy for two- or three-wheeled electrics vehicles able to top 45 mph. This nifty loophole hands back to purchasers up to 10 percent, or $2,500, of the tag price of the designated transports.

A silver lining exists alongside this provision, though. According to the Senate Finance Committee’s journal, the latest renewal rewrites language blocking golf carts from credit qualification.

So, there’s that.

For his part, Baucus praised the legislation’s bipartisan nature.

“My Montana bosses gave me clear marching orders: get it done — and that is what this compromise does. It isn’t perfect, but it will protect Montana families from tax hikes and give small businesses the certainty they need to grow and create jobs,” the senior senator wrote in a prepared statement.

Bipartisanship played a key role in not only the fiscal cliff deal as a whole, but also the inclusion of the special-interest handouts. Some of the Senate’s most-reliable conservatives, including Idaho Sen. Mike Crapo, South Dakota Sen. John Thune and Iowa Sen. Chuck Grassley, supported the the Baucus bill when it came to a vote on Aug. 2, 2012.

While Baucus and Montana junior Democratic Sen. Jon Tester jumped for joy at the bill’s passage into law, others were less-than-thrilled about the package, with special emphasis on the corporate handouts.

“Baucus is a crony capitalist,” the Montana chapter of Americans for Progress, a conservative activist group, gleefully tweeted last week. “Yo’ Occupiers. Where’s your outrage?”

The Wall Street Journal panned the corporate welfare, urging Republicans — at least those who didn’t vote for it on the Senate floor or in committee — to use the fiscal cliff nonsense as a rallying cry against Democrats.

“The costs of all this are far greater than the estimates conjured by the Joint Tax Committee,” the publication wrote. “They include slower economic growth from misallocated capital, lower revenues for the Treasury and thus more pressure to raise rates on everyone, and greater public cynicism that government mainly serves the powerful.”

Even the far-left joined in the Baucus-bashing. “#Corruption,” tweeted staunch progressive Bob Brigham in reference to Carney’s story.

Contact: Dustin@Watchdog.org or @DustinHurst via Twitter.

— Edited by John Trump at jtrump@watchdog.org

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I’ll TAKE THAT: Montana’s minimum wage workers will hand their shiny new raises straight to Uncle Sam.

By Dustin Hurst | Watchdog.org

HELENA – Some 22,000 Montanans were likely delighted New Year’s Day, realizing they’d just received an overnight raise in the form of a cost-of-living hike in the minimum wage.

Unfortunately for the state’s lowest-paid workers, the raises won’t mean all the much: the payroll-tax expiration okayed by Congress will eat up all the new money.

The state government giveth and the federal government taketh away.

In fact, thanks to the payroll-tax hike, minimum wage workers will make less this year than they did in 2012, raise included.

On New Year’s Day, the state’s minimum wage jumped from $7.65 an hour to $7.80, a 15-cent increase. But just as the sparkly ball fell from high above Times Square, the federal payroll tax increased from 4.2 percent to 6.2 percent.

It might not sound like much, but the hike, expected to generate more than $125 billion this year, will affect paychecks nationwide. For example, a worker making around $50,000 this year will see about $1,000 less in take-home pay, or about $83 less each month.

The impact on lower-income workers is far more dramatic. Consider that at $7.65 an hour and the previous 4.2 percent payroll-tax rate, workers would bring home $15,244 before state income taxes and other federal levies. The new 6.2 percent rate will eat up all of the cost-of-living increase and then some: those same workers will bring home $15,219, or $25 less than if 2012’s policies remained in effect.

That might surprise these 22,000 workers, some of whom apparently had big plans for their newfound fortunes.

Kaylee Freight, a 21-year-old from Hawaii, works at the Helena Quizno’s. She celebrated the slight raise to the Associated Press this week, telling the news outlet that something is better than nothing.

“I’m going to pay off my car faster,” she explained.

But for workers like Freight and others, the payroll tax, a Social Security funding mechanism, raises will pay for benefits later in life. (The Wall Street Journal offers this fun calculator to project how much more you’ll pay in taxes this year.)

Myriad groups across the political spectrum detest the return of the higher payroll tax, originally passed in late 2010. The Economic Policy Institute, a liberal Washington, D.C. think tank, says the tax’s re-implementation will lessen economic growth by about 1 percent and kill about 1 million jobs.

SILENCE: Hatzius burned Congress for ignoring the $125 billion payroll tax hike.

Goldman Sachs economist Jan Hatzius expressed his fear over the tax hike in October.

“We are surprised that neither party has seriously challenged the case for near-term fiscal retrenchment,” he told Business Insider. “In particular, the expiration of the $126 billion payroll tax cut (1 percent of disposable income) is almost universally accepted.”

Hatzius figured the return of the higher tax rate will shave about half a percent from the country’s economic growth this year alone.

Matthew Iglesias, a liberal blogger over at Slate, urged Congress to re-deploy the tax cut as a form of economic stimulus for the working class.

“Low payroll taxes boost the economy in several ways,” he wrote. “For starters, the holiday puts more money into the pockets of virtually all Americans. For many of us, that means slightly higher purchases of domestically produced goods and services than we’d otherwise be making. For households constrained by excessive borrowing in the bubble years, it means speedier repayment of debts and a faster return to normalcy. For employers considering expansion, it also means slightly higher real wages for workers at no higher cost to the employer. That means at the margin it makes more sense to hire. So you’ve got more demand, faster deleveraging, and more hiring capacity. What’s not to like?”

The conservative Heritage Foundation, on the other hand, bucks the trend, believing the payroll tax holiday did nothing to create jobs or kick-start the slumping economy. The group says the focus should rest on reducing labor costs for employers.

“There are tax policies the federal government could pursue to increase private-sector job creation,” Heritage analyst J.D. Foster wrote. “The key is to reduce the costs and uncertainties that employers face, not the taxes that employees pay.”

Despite their distaste for the payroll-tax cut as a job creator, Heritage as a whole believes lawmakers should have renewed it, if only to give workers and businesses more tax certainty this year.  

There’s a silver lining for Freight and other Montana workers. Without the 15-cent cost-of-living raise to partially offset the tax hike, minimum-wage earners would’ve pulled down about $923 less than they should bring home in 2013 before other taxes and levies.

Contact: Dustin@Watchdog.org or @DustinHurst on Twitter.

Edited by wswaim@watchdog.org.

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PAY UP: Tester and Baucus supported Obamacare, which contains billions in tax hikes.

By Dustin Hurst | Watchdog.org

HELENA – With the nation’s microscopic attention span fixed on Kim Kardashian’s womb and the fight over the fiscal cliff, few Americans noticed billions of dollars in New Year’s Day tax hikes to pay for the president’s health care reform.

Unlike the fiscal cliff deal, which hikes tax rates for those making more than $400,000 annually, ordinary citizens will shoulder some of the burden of the health care law.

Grateful Montanans can send thank-you notes to Sens. Jon Tester and Max Baucus, who supported the 2010 Patient Protection and Affordable Care Act, otherwise known as Obamacare or the national health reform.

In all, the health reform package includes 18 tax hikes phased in between 2010 and 2018. Remember that 10 percent surcharge on tanning bed appointments created in 2010? That was the $1.5 billion hike that kick-started the process.

On New Year’s Day, the law enacted a handful of new levies that will generate the lion’s share of the revenue required in the health care reform package.

To shore up Medicare, wealthier Americans – single people making more than $200,000 annually or couples pulling down $250,000 a year – will pay 0.9 percent toward the federal health program.

For additional Medicare funding, Congress also created a new 3.8 percent surtax on investment incomes.

Collectively, analysts predict, these two taxes will generate about $317 billion in new revenue through the next decade.

The money will give Medicare, a program once set to go belly up in 2016, a few more years of life. With the new money and some targeted cuts also contained in the health law, Medicare may last until 2024. That’s important for the more than 49 million Americans benefiting from the system.

During his tough re-election battle last year with Republican Denny Rehberg, Tester said he supports the tax hikes as a way to “strengthen” the federal insurance program.

The medical-device tax might edge all others as the least popular of the ACA’s Jan. 1, 2013 tax hikes. This tax affects nearly everyone using medical aids – think pacemakers, wheelchairs, MRI machines and artificial joints.

Granny’s hip costs a little more this year.

Industry insiders say the tax, 2.3 percent of gross sales, will force the loss of between 14,000 and 43,000 jobs. The feds say this tax will generate about $3 billion annually, or $30 billion through the next 10 years.

How bad is this tax, though?

NO JOKE: Tester pal Al Franken asked Harry Reid to delay the medical device task to no avail.

So unpleasant that even tax-and-spend Democrats sought its postponement. Signatories to a letter to U.S. Senate Majority Leader Harry Reid asking for the delay included U.S. Sens. Al Franken, Minn., John Kerry, Mass., and Dick Durbin, Ill., all Democrats who supported the health care law in the first place.

A case of buyer’s remorse, perhaps?

Neither Tester nor Baucus signed the missive. In the end, it didn’t matter: Reid ignored the pleas of the 18 Democrats who pushed for deferral.

The Wall Street Journal  last year predicted, “To the extent they can, device makers will pass this tax on to the hospitals and provider purchasing groups that buy their products, which will ultimately show up in insurance premiums. Or they’ll offset the costs with layoffs or by slashing research and development.”

In short, Americans will pay more for their insurance — and their procedures.

Still, there’s more to come. Full implementation occurs Jan. 1, 2014, when another round of tax hikes hits taxpayers. The federal requirement that every American purchase insurance —  the “individual mandate” that U.S. Supreme Court Justice John Roberts re-classified as a tax in June? Come next New Year’s Day, Americans will purchase insurance or pay a penalty to the federal government.

That tax should generate more than $55 billion between 2014 and 2022.

Another $106 billion will come from the pockets of employers who fail to provide full-time workers with health insurance.

But wait: there’s more. In 2018, the federal government will begin taxing what some call “Cadillac health plans,” grabbing $111 billion by 2022.

Contact: Dustin@Watchdog.org or @DustinHurst via Twitter.

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DR. NO: Bullock promised a veto of any right-to-work bills that hit his desk.

By Dustin Hurst | Watchdog.org

HELENA – Republicans in Montana’s Legislature will likely use their majorities in each chamber to pass right-to-work laws next year, but they’ll send them straight to voters — not the Democratic governor.

The revelation comes about a week after Republicans in Michigan, the most unionized state in the union, rushed right-to-work laws through a lame-duck legislative session, despite the angry protestations of organized labor.

While Michigan lawmakers had a Republican governor willing to sign their bills, Montana Republicans don’t enjoy the same perk. Republicans hoped Republican Rick Hill would replace outgoing Democratic Gov. Brian Schweitzer in January, but Hill lost this year’s gubernatorial to Attorney General Steve Bullock, also a Democrat.

Throughout the campaign, Bullock vowed a veto for any right-to-work bills hitting his desk.

After the Bullock triumph, conservative hearts statewide wilted, believing they lost the chance to implement their agenda after eight years of Schweitzer’s reign.

Instead of hoping the newly crowned Bullock bends to the Republican will, GOP lawmakers and conservative activists will likely take their case straight to voters, at least on right-to-work laws.

Former state Sen. Joe Balyeat, now the head man for Americans for Prosperity’s Montana chapter, told Watchdog.org on Wednesday he envisions Republican state legislators passing right-to-work laws applying only to public sector unions in the 2013 legislative session, but then sending them to the ballot for a referendum in the 2014 general election.

Balyeat said part of AFP’s 2013 agenda includes aggressively forwarding right-to-work, under the banner that lawmakers “should pass a law giving government workers the freedom to join a union or not join a union.”

Right-to-work laws block unions from requiring workers in certain shops to join their ranks. Democrats and organized labor despise the laws because they believe non-union workers ride for free on union-negotiated perks and benefits.

END-AROUND: Balyeat predicts lawmakers will circumvent the governor on right-to-work.

The shady left-wing MTStreetfigher blog wrote about the coming right-to-work fight, labeling right-to-work laws as “right to freeload.”

“Right-wingers and their corporate allies are looking to spread ‘right-to-freeload’ legislation to every state they can,” the anonymous blog wrote last week. “Montana is at the top of that list.”

Conservatives contend the laws create business-friendly economies.

There might be something to that, too. On the newly released Forbes “Best States for Business” list, nine of the top-10 states boast right-to-work laws. Montana sits at 26 on the annual ranking.

Unlike Michigan, Balyeat expects any right-to-work legislation moving through the Capitol in Helena will affect public unions only, not touching private unions. Public unions use their influence to elect lawmakers friendly to the interests of organized labor, Balyeat contends.That means healthy health benefits and fat pay raises, all at the taxpayers’ expense.

“The taxpayers’ money is being used to extract even more money from taxpayers,” Balyeat said.

Evidence of that trend starts at the top. In closed-door negotiations with union leaders, Schweitzer promised 4 percent raises for state workers through two years just before the 2011 legislative session. When Republicans blocked that plan, Schweitzer tweaked state worker health benefits to cut their out-of-pocket expense.

Earlier this year, Schweitzer promised 10 percent pay hikes over two years, a plan Republicans say is dead-on-arrival next year.

If Balyeat’s plan to chase public unions is one of principle, it’s also a move of practicality. According to Bureau of Labor Statistics data, only 13 percent of Montana workers take part in unions. That masks, though, the wide imbalance between membership in public and private unions.

Only 5 percent of private workers are unionized, while a whopping 38 percent of public workers fit that distinction.

In essence, Balyeat wants to punch the big dude in the jail lunchroom square in the jaw, though he denies that’s the point.

“We’re not singling them out,” he says, reaffirming that pursuing right-to-work serves only to deliver freedom to public employees who may not want to take part in unions.

AFP’s call will likely find many allies among Montana Republicans.

GO FOR IT: Taylor says she generally supports right-to-work, but wants to see the bills.

State Sen. Janna Taylor of Dayton told Watchdog.org on Wednesday she would probably support right-to-work passage in 2013, though she stopped short of guaranteeing her vote. She wants to see the details of any bill before going all-in for the effort.

While she recognizes the historic contributions of unions throughout the years, Taylor sometimes wonders why state workers need representation of that type. She, like Balyeat, contends public unions serve merely to elect lawmakers who will deliver fat perks to state workers, thereby fattening the coffers of organized labor in the process.

“The union lobby is pretty powerful,” Taylor remarked. While she’s generally in favor of right-to-work, Taylor also wants union re-certification votes every three years, as well as public audits of labor organizations.

State Rep. Mike Miller, a Republican from Helmville, emailed Watchdog.org Wednesday voicing his support for right-to-work, though he breaks with Balyeat on singling out public unions. “I do support right-to-work and think Montanans in general support right-to-work,” Miller wrote. “I think any right-to-work legislation should apply to all unions.”

Miller, like Taylor, sought to preemptively dispel the notion that support for right-to-work equals an anti-union stance.

“If a person wants to belong to a union, that is fine by me,” Miller explained. “I just do not think you should be forced to be in a union to get (or) hold a job. I always fought for and negotiated my own salary, benefits and pay raises. I do not believe that every employee in a union deserves the same pay raise.”

Taylor affirmed that sending right-to-work to voters on the November 2014 ballot might be the right move.

“Montanans sure like to vote on stuff,” she quipped.

For his part, Balyeat optimistically envisions 2014 as the year Montanans will have the final say on right-to-work, though a victory there is anything but guaranteed. He believes most Republicans will likely join the effort, but he also predictors some defectors.

“Herding Republicans is like herding cats,” he joked. “It’s the Democrats who vote in lockstep.”

Sending a statutory referendum to the ballot requires simple majorities in the House and Senate.

“I suspect there will be enough Republicans who will support the measures and send them to the ballot,” Balyeat said.

Contact: Dustin@Watchdog.org or @DustinHurst on Twitter. 

— Edited by johntrump at jtrump@watchdog.org

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