DELEITURAS

Special counsel Robert Mueller will not be delivered to the Justice Department next week, as CNN reported on Wednesday.

“Any reporting that Special Counsel Mueller’s report will be delivered to the Department of Justice next week are incorrect,” a senior Justice Department official told Fox News on Friday.

CNN reported Wednesday that Attorney General William Barr was preparing to receive the report next week.

The new statement does not indicate when the report will be released, but most observers believe the probe is near its end. CNN reported that prosecutors with the special counsel’s office have been spotted removing boxes of documents from their offices. The grand jury being used in the Mueller probe has also not met since Jan. 24, the same day that Trump confidant Roger Stone was indicted.

NBC News reported back in December that Mueller’s team was in the process of writing a report of the investigation, and could deliver it to the Justice Department by mid-February.

Mueller has been investigating possible collusion between the Trump campaign and Russian government, as well as possible obstruction of justice on the part of President Donald Trump.

Once Mueller does submit a report to the Justice Department, Barr will have the option of providing some or all of it to Congress and to the public. Democratic lawmakers have already started pressing Barr to publicize as much of the report as he can.

Last night, in his response to President Obama’s SOTU speech, Rand Paul, as usual, directed most of his arrows not at Obama and the Democrats, but at his own party and its conservative supporters, and while so doing, he recited his standard litany of blatant lies about defense issues.

He falsely claimed that defense spending is/has been a “sacred cow” that Republicans have protected for long; that it’s time for Republicans to “realize that military spending is not immune to waste and fraud”; he furthermore claimed that “Not only should the sequester stand”, but it should even be increased to 4 trillion dollars.

All of his claims are blatant lies or, in the case of waste and fraud, a straw man argument.

Firstly, defense is not, and has NEVER been, a sacred cow. Here, I will not even delve into the deep defense cuts that Republicans agreed to during the 1950s, 1970s, late 1980s, and 1990s; I’ll assume that Rand Paul meant only the time since 2001. Even then, he’s still dead wrong.

Since 2009 alone, Republicans have agreed to the following defense cuts:

• The massive defense cuts of 2009, which took the form of killing over 30 crucial weapon programs, including the F-22 (the ONLY Western fighter capable of defeating the newest Russian and Chinese aircraft), the Multiple Kill Vehicle for missile defense interceptors, the Kinetic Energy Interceptor for boost phase defense, the AC-X gunship, the CSARX rescue helo, etc. This was followed up in 2010 by further killings of crucial programs, such as the C-17 airlifter and the alternative engine for the F-35 (thus giving Pratt and Whitney an engine monopoly).
• The New START treaty, ratified in 2010, obligating only the US (not Russia) to cut its deployed nuclear arsenal by 1/3;
• The 178 bn Gates Efficiencies of 2011; and
• The 487 bn in further defense cuts mandated by the First Tier of the Budget Control Act, accepted by most Republicans in 2011.

All of this BEFORE sequestration.

To date, the DOD has already contributed 900 bn in deficit reduction since 2009. Any claim that the DOD has been a “sacred cow” are blatant lies.

Moreover, defense is not anyone’s “sacred cow”; it is the highest Constitutional DUTY of the federal government – indeed, the most important one according to George Washington. The majority of Congress’ enumerated powers are related to military matters, and the reason why the federal government was created in the first place was to provide for the common defense, as the preamble to the Constitution explains. It was created because the weak Congress of the Confederacy had no means to provide for the Union’s defense.

Rand Paul chastises his fellow Republicans for wanting to spare defense from sequestration, claiming that “it’s time for Republicans to realize that military spending is not immune to waste and fraud”. But no one in any party and no one in the United States is claiming that it is immune from waste and fraud. (Personally, I’m the author of the largest DOD reform proposals package ever compiled by anyone.)

But there isn’t enough waste and fraud in the defense budget to pay for a 550 bn per decade sequester. Not even close to enough. Thus, sequestration – or any cuts on a similar scale – would have to cut a lot of money out of genuine military capabilities – the meat and bone of the US military. In other words, gut the military.

All members of the Joint Chiefs of Staff, all other military leaders, all civilian leaders of the Defense Department, all non-leftist think tanks (Heritage, AEI, Center for a New American Security, Center for Security Policy, Bipartisan Policy Center) – basically everyone except the Left – have confirmed that sequestration will severely weaken the US military. The military services have already explained in detail how this would happen:

• The Navy would have to cancel the deployment of one aircraft carrier to the Gulf, cancel maintenance on at least 23 ships (including two aircraft carriers) and 250 aircraft this year alone, and cut the ship fleet by 50 vessels, including at least two carriers, down to no more than 8 (and probably fewer) flattops.
• The Air Force would have to delay all of its acquisition and development programs, stop demolishing unneeded buildings, cut flight training by 18%, cut the budget of its Global Strike command (responsible for ICBMs and bombers) by 20%and more broadly will have to curtail the service’s ability to conduct air-to-air refueling, support Army logistical requirements and, by September of this year, train new pilots—reductions that cumulatively will erode America’s vitally important airpower capabilities.
• The Army would have to stop training 78% of its brigades, cancel critical maintenance, and stop training new aviators and military intelligence specialists—delays that, according to the service’s leaders, will result in the “rapid atrophy of unit combat skills with a failure to meet demands of the National Military strategy by the end of the year.”

Recently, 46 former national security officials and defense experts spanning the partisan spectrum, from former Sen. Joe Lieberman (D-CT) to former SECDEF Robert Gates (who presided over the first three rounds of defense cuts mentioned above) to Reagan nat-sec advisor Bud McFarlane have signed a letter underlining sequestration’s grave impact on the military and chastising the President and the Congress for not stopping it. Their letter concludes thus:

“Sequestration will result in unacceptable risk for U.S. national security. It will degrade our ability to defend our allies, deter aggression, and promote and protect American economic interests. It will erode the credibility of our treaty commitments abroad. It will be a self-inflicted wound to American strength and leadership in the world.

History will not look kindly on this abdication of responsibility, but will hold accountable the President and the Congress who together chose such a dangerous course.”

Even if you think there is still enough waste in defense to pay for sequestration (and if you think that, you’re wrong), that still doesn’t help Rand Paul: sequestration will actually AGGRAVATE the problem of waste in the defense budget by forcing the DOD into inefficiencies, such as:

• Cutting weapon purchase rates, thus preventing the realization of economies of scale and leading to cost overruns (because weapons are much cheaper when you buy more of them and faster);
• Delaying and underfunding the research, development, and testing phases of weapon programs, thus delaying their development and the moment that bugs are discovered and fixed in weapons;
• Delaying much-needed maintenance on ships, aircraft, and ground vehicles of all sorts, thus significantly increasing the bill for maintaining and repairing them when such maintenance and refurbishment can no longer be delayed and has to be done;
• Furloughing all DOD civilian employees whose job is to manage the DOD’s programs on a daily basis; and
• Underfunding training, meaning that you’ll have to train people later at a higher cost to regain lost skills.
• Moreover, sequestration will cut everything in the defense budget (except personnel costs) by a uniform percentage – the waste by the same percentage as the essentials. Thus, beef jerky studies will be cut by the same percentage as the Next Generation Bomber.

Also, sequestration does NOT authorize crucial, money-saving reforms for which the DOD has repatedly requested authorization: healthcare and retirement program reforms and base closure. Indeed, the Budget Control Act explicitly prohibits using the sequester to close unneeded bases. So the DOD will be gutted doubly: forced to cut its budget deeply and uniformly while not being allowed to carry out the reforms it does need and has requested authorization for.

In short, sequestration will only make the problem of waste in the defense budget WORSE, not better.

If Sen. Paul were TRULY concerned about waste and fraud in the defense budget, he would be doing everything he can to CANCEL sequestration and, at minimum, give the DOD full flexibility to administer these cuts. But he’s not doing that – because he’s a total fraud and doesn’t give a damn about “waste and fraud” in the defense budget. All he cares about is gutting the US military – a goal he shares with his loathsome, stridently liberal, and stridently anti-American father Ron Paul, who, like his son, is a total fraud (he recently sued his former supporters… at the United Nations).

And if Sen. Paul were a real defender of the Constitution and limited government, he would not have been introducing unconstitutional bills to mandate federal policies on employment and abortion – issues reserved to the states and the people.

But he doesn’t really care about limited government or waste and fraud in the defense budget – all he cares about is gutting America’s defense. That is probably why he has suggested that the sequester should not only be allowed to stand, but even increased to 4 trillion dollars, as if the current sequester of America’s defense was not bad enough.

There isn’t even nearly that much waste in the defense budget. Not even close. Any cuts on the scale of the current sequester – let alone the one that Paul proposes – would have to cut deeply into America’s defense capabilities – and that would only invite aggression that would have to be repelled at a much greater cost.

Shame on Rand Paul for stating such blatant lies, and shame on the Tea Party Express for giving him the platform to do so. No one should ever take them seriously again.

Rand Paul has proven once again that he’s the same anti-American, anti-defense, anti-conservative, pro-weak-defense, isolationist pseudoconservative fraud as his father. He must be denied the Republican presidential nomination – in 2016 and all successive presidential election cycles.

Nothing like a flawed correlation to give liberals the meat they need to boast the benefits of higher taxation

A New York Post op-ed post byJuliet Lapidos uses an Institute of Taxation and Economic Policy Report to create the false correlation of income tax to economic output.

An ITEP report demonstrates that states with no personal income tax don’t have a higher per-capita economic output than those states with personal income tax.

The Post’s article is just wrong. Ms. Lapidos, in an attempt to create red meat for the paper’s liberal readership, re-interprets the ITEP report to refute supply-side economics. The study and Ms. Lapidos artistic attempt at logic do not disprove that economic theory.

Supply-side economics don’t work, but that won’t stop the Mary Fallins of the world from foisting it upon us. They care too much about their ideology to worry about reality.

Instead, the report simply shows that personal income tax rates may not have a significant impact on the economic output of a given state. By looking at only one aspect of state-level economies, the author misses the other factors in-play.

States with no income taxes have other means by which produce income. Higher sales taxes and revenue from state-located businesses are examples. One way or another, the same burden is placed on the consumer as businesses will simply pass taxes on to consumers. In the end, states take in what they need to fund the spending in their budgets.

Supply-side economics isn’t about personal income taxes alone. It is about the burden on those with capital to invest. If income taxes are lower, but sales taxes are an equivalent amount higher then the burden on the taxpayer is the same and therefor the impact to investment is the same. Of course the report and the flawed analysis of it also disregard the economic make-up of each state. States with more rural areas or a more thrifty populace will necessarily demonstrate a lower per-capita economic output. But who’s to say that’s bad for the individuals that chose to keep their cars for ten years instead of three?

There are far too many neglected economic aspects for the study to prove or disprove supply or demand side economics. To do so would require a much more in-depth look at the macro-economy of each state – a task I imagine the author to be unwilling to take on.

The article simply shows ignorance about supply-side economics – not that they don’t work.

Homeland Security Secretary Kirstjen Nielsen pushed back against claims that the U.S.-Mexico border crisis is “manufactured” and warned that crossings are on track to reach levels not seen in over 10 years.

“I want to cut through the politics today to tell you loud and clear: There is no ‘manufactured’ crisis at our southern border. There is a real-life humanitarian and security catastrophe,” Nielsen said Monday at George Washington University during her annual State of Homeland Security address. “The situation at our southern border has gone from a crisis, to a national emergency, to a near system-wide meltdown.”

The Department of Homeland Security, Nielsen stated, is on track to apprehend nearly 100,000 migrants by the end of March as they attempt to illegally cross the southern border — the most apprehensions since March 2007.

The huge increase in migrant apprehensions for this month follows a steady pattern. Immigration enforcement officials arrested about 75,000 foreign nationals in February and apprehended approximately 50,000 to 60,000 in the end of 2018. The Border Patrol captured a total of 361,000 people in fiscal year 2018.

“The system is breaking, and our communities, our law enforcement personnel, and the migrants themselves are paying the price,” Nielsen continued in her speech, which took place in Washington, D.C.

The secretary’s comments come as numerous Democratic politicians and other critics of President Donald Trump have accused him of “manufacturing” a crisis out of the U.S.-Mexico border.

Newly elected Democratic Govs. Tony Evers of Wisconsin, Gavin Newsom of California and Lujan Grisham of New Mexico have announced a withdrawal of their National Guard troops from the southern border. All three governors have criticized the president’s claims that the southern border is undergoing a crisis.

Grisham framed the president’s emergency declaration as “fear-mongering,” Newsom called it “political theatre” and a coalition of former security officials said it was not “remotely” justifiable.

Members of the Trump administration have pushed back against this narrative.

U.S. Border Patrol Chief Carla Provost explained to a House committee in February that while the border crossings are not at the levels seen in the 1990s and early 2000s, the huge increase in Central American migrants — who are not Canadian or Mexican — and the high number of unaccompanied children have stretched her agency thin. Provost said the situation constitutes both a border and humanitarian crisis.

Trump himself has hit back at the “manufactured” framing, calling it a soundbite.

“Well, you know, I watched last night. I saw on your show last night, actually, where you had anchor after anchor using the exact same word. It’s manufactured. Manufactured,” Trump said to Fox News host Sean Hannity in January. “No. It’s a manufactured sound bite. It’s just a soundbite.”

When, on November 15th, Sen. Coburn published his report, The Department of Everything”, documenting non-military and wasteful items in the defense budget, the opponents of a strong defense jumped in joy. They thought they had finally found proof that the defense budget is full of waste and can be cut deeply without jeopardizing national security (not that they care about national security – they don’t).

Uninformed, ignorant journalists and columnists happily jumped on the defense cuts bandwagon. The Washington Times’ Emily Miller falsely claimed that:

“As Republican leaders battle President Obama over his insistence on taking half the Jan. 2 mandatory sequestration from defense, the Oklahoma Republican on Thursday blew the lid off billions that could be saved without actually undermining our troops.

Dr. Coburn labels the Pentagon the “Department of Everything” in his report outlining $67.9 billion in cuts over 10 years. It should guide lawmakers as they begin to consider how to deal with the first $109 billion in spending reductions due Jan. 2 under the terms of the August 2011 debt-ceiling deal. “We are making the point that, if you want to cut another $500 billion out of defense, you can get 15 percent just on things that have nothing to do with defense,” the senator told The Washington Times in an interview Friday. “It’s not hard to cut spending in Washington. It’s hard to get members to cut because they are clueless about the details of the spending and refuse to do the hard work of oversight.””

They’re all wrong.

While the items identified in that report by Sen. Coburn are indeed wasteful, their total annual scale is small – just $6.8 bn per year – meaning that they are a drop in the bucket. They’re not even close to being enough to pay even for one year of sequestration, let alone an entire decade. Coburn’s estimate that the defense budget can be cut by 15% simply by cutting waste, or that 15% of the sequester’s cuts can be paid for just by cutting waste, is false. By his own numbers, it’s only $6.8 bn per year. The sequester, if it kicks in, will make $60 bn cuts in the defense budget EVERY YEAR from FY2013 through FY2022.

There isn’t enough waste in the defense budget to cut the budget that deeply. Not even close.

To be clear: I’m not making excuses for wasteful spending. I’m just pointing out the fact that its scale is too small to pay for the cuts that the sequester would require, let alone to balance the federal budget.

In the federal budget, there is a lot of waste, but not even CLOSE to enough to balance the federal budget. It’s a drop in the bucket. “Cut wasteful spending” is the favorite excuse of those cowardly politicians who want to avoid the hard choices that Washington will have to make to balance the federal budget, especially on entitlements, tax reform, and domestic welfare programs, which now cost over $600 bn per year, more than defense.

In order to meet the First Tier pre-sequestration BCA requirement to cut $487 bn out of its budget over the next decade, the DOD had to make many tough choices, including:

• Calling for significant reforms of the military’s healthcare and retirement programs, including TRICARE premium hikes;
• Retiring 7 young, very capable cruisers (4 of which are based in the Pacific, including one based in Japan);
• Retiring hundreds of aircraft, including dozens of F-16s, A-10s, C-130s, C-23s, C-27s, and C-5s (thus divesting itself of the entire C-23 and C-27 fleet);
• Retiring Global Hawk Block 30 aircraft;
• Withdrawing two Army brigades from Europe;
• Cutting 16 ships out of the shipbuilding plan for the next 5 years;
• Cut submarines and destroyers out of the shipbuilding plan;
• Delay the SSBN replacement program;
• Deny the Air Force a JSTARS replacement program;
• Deny the Air Force a new air-to-air missile;
• Lay off 80,000 troops.

Sequestration would require even deeper budgetary cuts, and thus, even tougher choices in much larger numbers, with much deeper force structure and programmatic cuts. In other words, it would be even more destructive. Eliminating “waste” would not even come close to paying for sequestration.

Moreover, the opponents of a strong defense conveniently omitted the parts of Coburn’s report that they don’t like and which don’t jibe with their agenda, such as this part of the report’s conclusions (with which I agree):

“Before being forced to cut active duty troops or delaying modernization of strategic ships and planes, Congress should first eliminate these types of programs, policies, and agencies within the Pentagon that duplicate the missions and initiatives of other government agencies.”

And in the introduction, Coburn rightly wrote that:

“These long overdue reforms could pay for a third of the cost of the planned fleet of new strategic bombers for the Air Force. It could, likewise, pay a third of the cost of the fleet of Ohio-class replacement nuclear submarines for the Navy. For the Army, $16 billion over ten  years could mean robust funding for modernization or purchase of new rifles, new ammunition, and new machine guns for infantry troops. Adopting these recommendations could also help DOD reduce the need for cuts to National Guard troops, aircraft modernization, and shipbuilding.”

The only thing he’s wrong about here is that adopting these reforms would pay for more than 100% – not merely a third – of the cost of the planned Next Generation Bombers which, with all R&D monies included, will cost only $550 mn per copy ($55 bn over the life of the program) to buy, assuming a planned order of 100 aircraft. Sen. Coburn’s proposals would save $6.79 bn per year, i.e. $68 bn per decade – $13 bn more than enough to pay for the Next Gen Bomber fleet.

So these savings would pay for the entire Next Gen Bomber fleet and still leave $1.3 bn per year unspent in taxpayers’ pockets, or could be devoted to shipbuilding or other defense priorities.

In the Defense Reform Proposals Package, I have called for the full implementation of these reforms.

A medical helicopter set to pick up a patient crashed 70 miles southeast of Columbus, Ohio, killing all three people on board Tuesday.

Pilot Jennifer Topper, 34, nurse Bradley Haynes, 48 and nurse Rachel Cunningham, 33, died, according to a statement from the Ohio State Highway Patrol Tuesday. Nobody in the surrounding area was injured.

The plane was going to pick up a patient in an Ohio hospital, but crashed at 6:50 a.m., ABC News reported.

“We are obviously devastated,” Vice President of Emergency Medical Services for Survival Flight Inc. Andy Arthurs said, according to ABC News.

The state’s highway patrol found the wreckage of the Bell 407 helicopter at 10:16 a.m.

It is unclear how the crash occurred and an investigation is ongoing.

Survival Flight Inc. focuses on air medical transportation and has bases in Arkansas, Missouri, Illinois and Oklahoma. The planes, however, will fly to any part of the U.S., according to the organization’s website.

Kaiser Health News is reporting today that Minnesota’s portion of the state’s health care insurance exchange will cost far more than originally anticipated. The state estimated the cost to be between $30 and $40 million. Instead they are now looking at $54 million for 2015. In addition, the state has asked the federal government for $39 million to develop the exchange program.

Ouch.

More ObamaCare fallout.

Minnesota Facing Bigger Bill For State’s Health Insurance Exchange

By Elizabeth Stawicki, Minnesota Public Radio News

Nov 25, 2012

This story is part of a reporting partnership that includes Minnesota Public Radio,  and Kaiser Health News.

ST. PAUL, Minn. — Minnesota’s state health insurance exchange will cost $54 million in 2015 to operate, according to the Gov. Mark Dayton administration.

The cost comes in at greater than earlier estimates of $30 to $40 million. The state would not have to find the money until 2015, when the state exchanges are required to be financially self-sustaining. But the cost rises to a projected $64 million in 2016. State officials are still weighing how the exchange will pay for itself. Options include user fees, a sin tax, and selling ads.

The exchange, a cornerstone of the federal health care overhaul, will create an insurance marketplace where consumers and small businesses can comparison shop for health insurance policies starting in October of next year. Coverage would take effect in 2014.

The Dayton administration also announced it will seek an additional $39 million to fund development of the state’s exchange. If the federal government approve the additional grant, Minnesota will have received a total of about $110 million from the feds.

The new financial details emerged earlier this month when the state submitted its application for the exchange to the federal government.

Many states are behind in their plans for exchanges, and the Obama administration has already agreed to a request by Republican governors for more time to decide whether they’ll build their own state exchange or use the federal alternative. The federal government extended that deadline to Dec. 14.

This story is part of a reporting partnership that includes Minnesota Public Radio, NPR and Kaiser Health News.

Reprinted with permission from Kaiser Health News.

Democratic U.S. Rep. Joe Neguse of Colorado, a freshman member of the House Judiciary Committee, told constituents that the panel will likely investigate Justice Brett Kavanaugh for perjury.

“There’s no question [Kavanaugh] committed perjury during the confirmation hearings and so forth,” Neguse said when asked if the justice might be impeached. “I think the Judiciary Committee is likely to take that up.”

A conservative opposition research group obtained and disseminated video of Neguse’s comments.

The congressman was not specific as to which of Kavanaugh’s statements might rise to the level of perjury. Democrats have put forward various theories as to how Kavanaugh misled the Senate Judiciary Committee during his confirmation hearings: one theory, which NBC News advanced, held that he lied concerning when he first learned about the allegations of Deborah Ramirez, a Yale classmate who accused Kavanaugh of drunkenly exposing himself to her at a party.

In response to questions from lawmakers during his second confirmation hearing, Kavanaugh said he first learned of Ramirez’s claims from the New Yorker, the venue in which her story appeared. NBC subsequently recovered text messages revealing that the justice and his allies were discussing Ramirez’s allegations before the story’s publication, prompting charges of perjury.

However, Kavanaugh told Senate investigators before the hearing that he learned Ramirez was searching for witnesses to corroborate her story well in advance the New Yorker story’s publication, thereby belying the perjury charges. The NBC report was stealth edited, and a correction was never issued.

Other theories suppose that the justice lied about the contents of his high school yearbook or hid his complicity with a White House staffer who stole strategy memos from Senate Democrats during his service in the George W. Bush administration. Neither of those propositions has been substantiated.

Requests for comment from the congressman’s office went unanswered.

Kavanaugh has kept a low profile since joining the high court in October 2018. Though the justices often teach in law schools or speak to various professional groups when the Court is not hearing cases, Kavanaugh’s schedule of public engagements appears rather thin. Similarly, his maneuvers on the Court reflect a sense of caution: he joined Chief Justice John Roberts and the liberal bloc to keep the Court out of controversies relating to abortion and the census, while his style at oral argument is deferential and inconspicuous.

Democratic U.S. Rep. Jerry Nadler of New York, the new chair of the Judiciary Committee, was overheard discussing a prospective Kavanaugh impeachment at some length on board the Acela train to Washington, D.C. just days after the midterm elections.

All of us have experienced the merciless effects of the “law of unintended consequences” at one time or another. We do something that we think is good or proactive, only to discover that there are negative effects produced as byproducts of our good intent. The creation of an unanticipated pejorative result from purposeful action is classified as an unintended consequence, and the government is masterful at it. Perhaps the granddaddy of them all is about to be enacted on July 1, 2014.

In March of 2010 the HIRE Act (Hiring Incentives to Restore Employment Act) was signed into law by the president, having been passed by the House under Speaker Pelosi, and the Senate under Harry Reid. It was designed as a bill that would provide incentives for employers to start creating jobs again. The bill’s efficacy could be debated, but one component of the law could prove debilitating to the dollar as the global reserve currency and the nation’s ability to finance our debt and deficit.

Embedded in that piece of legislation under Title V is the Foreign Account Tax Compliance Act (FATCA), which was designed to target American taxpayers with assets in foreign banks. It had nothing to do with the intent of the HIRE Act, but that seems to be the modus operandi of the federal government, to hide things in plain sight so as to not arouse suspicion. Forbes calls FATCA “the worst law Americans have never heard about.”

FATCA is creating a data retrieval system that some have compared with the NSA’s (National Security Administration) meta-data information dragnet. It requires all non-U.S. based financial institutions, including banks, credit unions, insurance companies, investment and pension funds, to provide data on all specified U.S. accounts to the IRS (Internal Revenue Service). From that data, the IRS will attempt to collect taxes on revenue from overseas-based accounts of U.S. citizens.

There could be as much as about $800 million a year that could be collected by the IRS from implementation of FATCA, according to the Joint Committee on Taxation. Based on the nation’s current spending level, that’s enough to run the government for about two hours.

While $800 million is still a large sum, IRS Commissioner John Koskinen recently informed Congress that the cost of implementation will zero out any anticipated gain to the treasury. And the IRS’s internal Taxpayer Advocate Service issued a report that came to the same conclusion, indicating, “FATCA-related costs will equal or exceed projected FATCA revenue.”

The questionable enforcement measures implemented in the Act are what could portend ominous consequences for all of us. Beginning July 1, 2014, any foreign institution, including foreign government, failing to fully cooperate in providing the requested information to the IRS, can be classified by Treasury as “recalcitrant.” Such institutions will not be paid the full interest they are due on the U.S. bonds, notes, and bills that they own. The Department of the Treasury will consequently withhold as much as 30% of interest payments to them as an “economic sanction.”

In other words, we will not pay, as we have “guaranteed” in the past, full payment of interest on our debt, at least to those classified as “recalcitrant.” Such a partial payment is classified as a “default.” In this case, it’s a willful default, since the full interest payment will be withheld in favor of a reduced payment.

Even the possibility of the U.S. intentionally defaulting on some of its debt interest payments is creating some uncertainly in foreign markets. This is alarming since according to Treasury, over $5.8 trillion of our debt is held abroad. So far only about two dozen countries have signed FATCA agreements, indicating a willingness to cooperate with the IRS. And China, the largest foreign holder of our debt, is not among them.

James George Jatras, a former U.S. diplomat and U.S. Senate staffer, said recently regarding FATCA, “In the end, no one really knows how this will work, which is part of the problem. Foreign purchases of U.S. Treasury securities and the reliability of interest payments are essential to America’s financial stability. Even a slight market change in U.S. borrowing costs could have a disastrous impact on the deficit and our economy. Why play Russian roulette with the U.S. debt absent a big, identifiable, countervailing benefit?”

The likelihood is that foreign institutions and countries will be less inclined to purchase U.S. debt if they may be denied up to 30% of the interest due them. With our massive debt of nearly $18 trillion, we have bonds and notes maturing every month. What happens if previous buyers of our debt quit buying? For one thing, the cost of interest servicing that debt will rise, and it could be significant.

Two years ago, Erskine Bowles, co-chairman of the president’s bipartisan deficit-reduction commission known as “Simpson-Bowles,” called the nation’s compound interest burden “one of the biggest long-term challenges facing the United States.” He said, “We’ll be spending over $1 trillion a year on interest by 2020. That’s $1 trillion we can’t spend to educate our kids or to replace our badly worn-out infrastructure.” And that was even without factoring in a significant increase in interest rates because of a diminished appetite for U.S. debt due to FATCA.

Our economic stability, and the strength of the dollar as the global reserve currency, is directly dependent on a stable bond market for our debt instruments. With the possibility of pending diminution of appetite for that debt, our economic stability as a country is at risk. Clearly, our massive debt and this poorly conceived and implemented legislation, are posing a national security risk that could potentially affect all of us.

Associated Press award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration.  He can be reached at [email protected].

 

SANTA ANA, Calif. – Following the arrests this morning of three defendants who allegedly operated “birth tourism” outfits that catered to Chinese clients, federal authorities today unsealed indictments that charge a total of 19 people linked to three schemes that operated across Southern California and charged clients tens of thousands of dollars to help them give birth in the United States.

The indictments charge operators and clients of three “maternity house” or “birthing house” schemes that were dismantled in March 2015 when federal agents executed 35 search warrants, which resulted from international undercover operations.

The 17 cases unsealed today contain the first-ever federal criminal charges brought against operators and customers of birth tourism businesses. The birth tourism operations not only committed widespread immigration fraud and engaged in international money laundering, they also defrauded property owners when leasing the apartments and houses used in their birth tourism schemes, according to the indictments.

These cases were investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Los Angeles. Substantial assistance was provided by IRS Criminal Investigation, as well as the Irvine Police Department and the San Bernardino County Sheriff’s Department.

The indictments describe birth tourism schemes in which foreign nationals, mostly from China, applied for visitor visas to come to the United States and lied about the length of their trips, where they would stay, and the purposes of their trips – which were to come to the U.S. for three months to give birth so their children would receive U.S. birthright citizenship.

“America’s way of life is not for sale,” said Joseph Macias, Special Agent in Charge of HSI Los Angeles. “HSI will aggressively target those who would make a mockery of our laws and our values to benefit and enrich themselves. No one needs to be reminded about the national security and public safety implications of visa fraud and the crimes associated with it. Anyone who would exploit our nation’s generosity and our legal immigration system should be on notice – they may end up being the ones to pay a very steep price.”

According to the indictments that charge the operators of the schemes, they coached their Chinese customers how to pass the U.S. Consulate interview in China by falsely stating that they were going to stay in the U.S. for only two weeks. Their clients were also coached to trick U.S. Customs and Border Protection (CBP) at ports of entry by wearing loose clothing that would conceal their pregnancies. The indictments also allege that the customers were directed to fly to Hawaii from China – instead of directly to Los Angeles – because it was easier to get by CBP in Hawaii. The indictments allege that many of the Chinese birth tourism customers failed to pay all of the medical costs associated with their hospital births, and the debts were referred to collection.

“These cases allege a wide array of criminal schemes that sought to defeat our immigration laws – laws that welcome foreign visitors so long as they are truthful about their intentions when entering the country,” said Nick Hanna, U.S. Attorney for the Central District California. “Statements by the operators of these birthing houses show contempt for the United States, while they were luring clients with the power and prestige of U.S. citizenship for their children. Some of the wealthy clients of these businesses also showed blatant contempt for the U.S. by ignoring court orders directing them to stay in the country to assist with the investigation and by skipping out on their unpaid hospital bills.”

Three indictments returned Wednesday by a federal grand jury charge the operators of large birth tourism operations based in Orange, Los Angeles and San Bernardino counties. Pursuant to this week’s indictments, federal authorities this morning arrested three defendants: Dongyuan Li (李冬媛), 41, of Irvine; Michael Wei Yueh Liu (刘维岳), 53, of Rancho Cucamonga; and Jing Dong (董晶), 42, of Fontana. All three are charged with conspiracy to commit immigration fraud, international money laundering and identity theft. Liu is also charged with filing three false tax returns.

According to the indictments charging the operators, all three businesses touted the benefits of giving birth in the U.S., rather than in China, with claims of the U.S. having “the most attractive nationality”; “better air” and less pollution; “priority for jobs in U.S. government”; superior educational resources, including “free education from junior high school to public high school”; a more stable political situation; and the potential to “receive your senior supplement benefits when you are living overseas.”

The indictment naming Li alleges that she operated an Orange County-based business named You Win USA that advertised its “100-person team” in China and the U.S. had served more than 500 Chinese birth tourism customers. Li allegedly used 20 apartments in Irvine, charged each customer $40,000 to $80,000, and received $3 million in international wire transfers from China in just two years. The indictment details communications in which Li referred to U.S. immigration authorities as “the foreigners” and also discussed whether to refund a down payment because, once the customer found out “the baby is a girl, her husband arranged abortion for her.”

“Receiving a tourist visa from the United States Government is a privilege, not a right,” stated IRS Criminal Investigation Acting Special Agent in Charge Bryant Jackson.  “The indictments announced today confirm IRS Criminal Investigation’s commitment to following the money – from China to the United States – to help identify the promoters of this alleged illegal international birth tourism scheme. Using cash, fabricated financial documents, and nominee names for the transfer of money from China to the U.S., the promoters attempted to further their lucrative birth tourism enterprise.”

(The investigation into Li’s operation led to another investigation, which resulted in criminal charges against the 20th person to be charged in this matter. Attorney Ken Zhuyin Liang was sentenced to 21 months in federal prison for helping material witnesses flee to China in violation of court orders.)

Another indictment filed this week charges Wen Rui Deng (邓文瑞), 65, a former Irvine resident who is believed to now be in China, with operating Star Baby Care, a Los Angeles County-based operation that is believed to have been the largest birth tourism scheme in the U.S. On its websites, Star Baby Care boasted that it was founded in 1999 as the “number one designated maternity service to the pregnant mother from China, Hong Kong, and Taiwan,” and had “provided services to 8,000 pregnant women (4,000 from China) since we established.” The indictment alleges that Deng’s scheme used 30 apartments in Rowland Heights and 10 properties in Irvine, including some houses. Deng’s scheme served many customers alleged to be Chinese officials, including some associated with Chinese Central Television, China Telecom, Bank of China, and two local taxation bureaus.

In the third indictment filed this week, Liu and Dong are accused of operating USA Happy Baby Inc., a San Bernardino County-based company that charged “VIP” customers as much as $100,000. Using apartments in Rancho Cucamonga and Irvine, USA Happy Baby allegedly also served Chinese officials, including people associated with the Henan People’s Radio Station in Zhengzhou, the Public Security Bureau in the Beijing Municipal Government, and the Harbin Medical University in Heilongjiang Province. Liu and USA Happy Baby are also charged with filing false tax returns that failed to report more than $1.9 million received over three years. The indictment also alleges that Liu and Dong used 14 different bank accounts to receive more than $3.4 million in international wire transfers from China during 2013 and 2014 alone.

There are 16 fugitive defendants whose indictments were unsealed today include. They are:

• Qiang Yan (闫强), 42, who is Dongyuan Li’s husband, was indicted in December 2018 on three counts of visa fraud for filing an application for an “O” visa premised upon being an “alien of extraordinary ability,” which falsely claimed that he had co-authored two books and attached fake copies of those books. The indictment naming his wife notes that when Yan was interviewed during a search of Li’s multi-million-dollar residence in Irvine, he told the federal agents that his birth tourism business investment was “chump change,” because he had more than $10 million in his bank accounts in China.
• Xiao Yan Liu (刘小燕), 39, who was indicted in November 2018 for two counts of visa fraud and one count of lying to federal law enforcement. According to her visa application, she was the “Chief Physician” at the Henan Shangqiu Power Supply Company Staff Hospital.
• Jun Xiao (肖俊), 30, and LongJing Yi (易珑静), 30, who were indicted in February 2018 on charges of conspiracy, visa fraud, obstruction of justice, and criminal contempt. According to their indictment, Xiao and Yi made false statements on their visa applications, namely that they would be staying in the United States for only 15 days. According to court documents in their case, Xiao and Yi paid only $4,600 of the $32,291 in hospital charges related to the birth of their baby. The indictments detail communications from Xiao after he had fled to China, where he continued to denigrate the Court’s Order requiring him to stay in the U.S.: “Anyway, I’m already home. U.S. can’t do anything to me.”
• Dongjiang He (贺东江), 46, was indicted in February 2018 for fleeing with his wife to China, in violation of a federal court order. On his visa application, He listed his occupation as “Government” and his position as “Project Manager and Secretary General” for the China Nonferrous Metals Techno Economic Research Institute, which is located in the Haidian District in Beijing. He’s wife, Zhichan Yu (余芝婵), 40, also was indicted in February 2018 on charges of visa fraud, obstruction of justice, and contempt of court after fleeing to China in violation of a federal court order.
• Jia Luo (罗佳), 30, was indicted in February 2018 for fleeing to China in violation of a federal court order. According to court documents, Luo lied on her visa application and lied to U.S. Customs officers in Hawaii when asked her if she was planning on having a baby in the United States.
• Renlong Chen (陈人龙), 34, and his wife Wei Wang (王伟), 33, were indicted in February 2018 for fleeing to China, in violation of federal court orders. Chen and Wang are accused of making false statements on their visa applications by stating they would be visiting the United States for only eight days, when they actually made arrangements to stay at a maternity house in Rancho Cucamonga for three months so that Wang could give birth in the United States.
• Jie He (何洁), 29, was indicted in February 2018 for fleeing to China in violation of federal court order. He allegedly made false statements on her visa application, including that she planned to stay in the United States for only 20 days, when she actually entered into a contract to pay approximately $50,000 to obtain a visa and stay in the United States for several months to give birth. According to court documents, Jie He told HSI special agents that she flew into Las Vegas, rather than Los Angeles, because the Chinese maternity operator had advised her that it was easier to enter through Las Vegas.
• Eryun Zhang (张尔芸), 25; her husband, Liang Ni (倪梁), 25; and her mother, Ji Xu (徐激), 50, were indicted in February 2018 for fleeing to China in violation of federal court orders. According to court documents, Ni admitted that, during an interview conducted at the U.S. Consulate in China, he falsely stated that the purpose of their trip was for their honeymoon, rather than the true reason for Zhang to give birth in the United States.
• Chao Chen (陈超), 34, a partner in the You Win USA scheme, was indicted in December 2018 with one count of contempt of court for fleeing the U.S. while he was pending sentencing. Chen previously pleaded guilty to visa fraud, marriage fraud and tax fraud.
• Ji Zhu (朱洁), 31, who was indicted in March 2018 for one count of marriage fraud, for allegedly marrying a U.S. citizen to obtain U.S. citizenship, even though she really was married to Chao Chen. Zhu fled to China with Chao Chen, where they remain fugitives from justice.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The three defendants arrested this morning are expected to be arraigned on the indictments this afternoon in U.S. District Court in Santa Ana.

HSI’s investigation into Dongyuan Li’s You Win USA scheme has resulted in seizure and/or forfeiture proceedings against three real properties with millions of dollars in equity, including her $2.1 million residence in Irvine; six vehicles, including four Mercedes Benz vehicles; more than $1 million from bank accounts; and many gold bars and coins.