Sequestration: Federal Court-Appointed Attorneys Face $15/Hour Cut

    If last week's announcement by the IRS that corporate tax credits were the latest victim of sequestration didn't garner much sympathy, then an even smaller violin might be needed for this week's victim: lawyers.  As of September 1, court-appointed panel attorneys for the federal defender program will be hit with a $15/hour reduction in compensation.  The following announcement appeared Monday on the United States Courts website:

In an emergency move to preserve Federal Defender staffing in FY 2014, the Executive Committee of the Judicial Conference of the United States has reduced hourly rates for court-appointed panel attorneys by $15 an hour. Payments to panel attorneys for up to four weeks of work done in FY 2014 will be deferred to FY 2015. An Aug. 16 letter described the moves as temporary and undesirable, but said they "are necessary to avoid permanent damage to the federal defender program."

    In the letter explaining the decision, the Executive Committee of the Judicial Conference raised concerns that the move could "impact the delivery of justice":

In taking these measures, the Executive Committee shares your view that reducing panel attorney compensation rates, deferring panel attorney payments, and limiting federal defender organization funding to the maintenance of current on-board staff are undesirable, and may impact the delivery of justice, but are necessary to avoid permanent damage to the federal defender program.  Measures of this kind, however, are not sustainable in the long term, and certainly would not be required if the judiciary were receiving an appropriate level of funding in this account.  The Committee nonetheless remains committed to the goal of ensuring that the defender program can operate within its annual appropriations.  With that in mind, we will continue to monitor developments and intend to revisit the matter when, in our opinion, events warrant.

    Currently, the maximum hourly rate in such cases is $125.  The $15/hour cut reduces the maximum back to 2010 levels.  The maximum rate in capital cases is $178/hour.


Note: A version of this article first appeared at The Weekly Standard.

Latest Sequestration Victim: Corporate Tax Credits

    Sequestration has been blamed for everything from cancelled White House tours to military cutbacks that threaten national security to government worker furloughs.  The latest victim of sequestration might have a more difficult time garnering sympathy, however: corporate tax credits.  The Internal Revenue Service has just announced that for corporate tax returns filed or amended on or after August 13, 2013, the "refundable portion of the credit for prior year minimum tax liability" will be cut by 38%. The announcement was made on the IRS website under the heading "Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations":

The Balanced Budget and Emergency Deficit Reduction Act of 1985, as amended, requires certain spending cuts during Fiscal Year 2013 due to the sequester triggered earlier this year. These required cuts reduce the refundable portion of the credit for prior year minimum tax liability made to corporations, which will be effective for original or amended tax returns beginning August 13, 2013.  As a result, the refundable portion of these credits will be reduced by 38 percent.  The sequestration reduction rate will be applied until the end of fiscal year (September 30, 2013) at which time the sequestration rate is subject to change depending on congressional action. 

A corporation that can claim an additional first-year depreciation deduction under section 168(k) can choose instead to accelerate the use of its prior year minimum tax credits, treating the accelerated credits as refundable credits.  Corporations making this section 168(k)(4) election and claiming a refund of prior year minimum tax credits should complete Form 8827.  These corporations will be notified that a portion of their requested refund was subject to the sequester reduction. 

Corporations making the section 168(k)(4) election but not claiming a refund of prior year minimum tax credits are not subject to this reduction. 

Note: A version of this article first appeared at The Weekly Standard. 

For $221k, July 4th Fireworks Show on National Mall in Washington Will Go On

    The show will go on.  Sequestration may have cost Washington D.C. tourists a chance to tour the White House, but the Independence Day fireworks will go off as planned.  A contract was awarded today to Garden State Fireworks of Millington, NJ for $221,819.77.  The listing for bids on the typically business-like fbo.gov website contained this somewhat colorful solicitation:

Provide supervision, labor, materials, supplies and equipment necessary to present an innovative, bounteous, dynamic and attractive fireworks display for Independence Day on the Grounds of the Washington Monument, Washington, D.C. on July 4, 2013.

    The National Park Service that puts on the fireworks show each year offers several suggestions for enjoying the show which is scheduled to begin at 9:10 on the evening of the 4th:

• Consider wearing hearing protection. These fireworks are BIG and LOUD.
• Consider wearing eye protection to protect yourself from falling debris.
• Consider not bringing pets.

Note: This article first appeared at The Weekly Standard.

In Spite of Sequester: $63K for Russian Walrus Skin Biopsies

    While Vice President Biden's limo and hotel costs certainly attracted a lot of attention a few weeks ago after my Weekly Standard posts, those expenses arguably served national security purposes.  But while Drudge is currently headlining "Bagpipes for Homeland Security," my current personal favorite sequester-busting government spending example involves the Fish and Wildlife Service's latest contract award:

    Although the description is a little different, the bid solicitation a few months back explained a little more about the need to sample the skin of the large marine mammal:

The U.S. Fish and Wildlife Service has a requirement procuring all necessary permits and working with our Russian partners to coordinate all Russian logistics associated with conducting a biopsy sampling program in the Bering and Chukchi Sea in the spring and summer of 2013.

    I'm not a marine biologist so I do not know how large a sample is taken from a walrus for a biopsy.  But it's a safe bet that most taxpayers won't believe a pound of flesh from a walrus is worth a pound of theirs.

U.S. Embassy in Macedonia Hosts Fashion Show

    Last week, the US Embassy in Macedonia hosted a fashion show "with a goal of supporting Macedonia’s economic development, the fashion and textile sectors, and youth entrepreneurship." While the continuing sequester had White House Press Secretary Jay Carney speculating that the "damage" done by the sequester might not be immediately known, that "damage" will apparently not include the Macedonian fashion scene.  According to the Washington Post, the sequester cut the State Department's diplomatic functions by $650 million.  However, the day after Carney's comment, the US Embassy put on the fashion show for the second year in a row.  Called “POP! Fashion”, the show was held on a runway constructed in the atrium of the embassy building:

Ambassador Wohlers opened the “Pop! Fashion” fashion show yesterday as part of Skopje Fashion Weekend. Government ministers, donors, and invited guests from the business, fashion, textile, and media communities attended the event that was hosted in the Embassy Atrium. Working with Fashion Weekend Skopje, the Embassy selected a mix of fifteen established and new designers from thirty two applications, with a goal of supporting Macedonia’s economic development, the fashion and textile sectors, and youth entrepreneurship.

The embassy's Facebook page included numerous photos of the event:

    The local Macedonian Information Agency reported on the event as well, providing some additional photos of the fashions on display.

    An email to the embassy inquiring about the cost of the event was not immediately returned.


Note: The article first appeared at The Weekly Standard.

Feds Sign $6M Helicopter Contract for 'Wild Horse and Burro' Program

    As the sequester bore down on Washington, the dire warnings from the Obama administration gave the impression that wild horses couldn't drag another dime out of the treasury for a whole host of vital government services.  Aircraft carrier refueling, the Head Start program, and White House tours were among the high profile victims.  However, as it turned out, wild horses, with a little help from burros, managed to drag $6,000,000 out of the taxpayers' wallets for Helicopter Flight Services two weeks after the sequester went into effect.  The same government website that posted the contracts for Vice President Biden's London and Paris hotel costs and Paris limo costs has the details:

    Related documents show that the purpose of the contract is to provide

on call helicopter flight services to support transportation of personnel and/or cargo in support of natural resource missions along with other administrative and related activities as directed by the Government in support of the Wild Horse and Burro (WHB).

When asked for clarification on the contract, Joshua Carter of the Interior Department replied via email:

The contract awarded to Skyhawk Helicopter Services is an indefinite delivery indefinite quantity type contract, which means that while the Government knows they will need these services at some point over the course of the next year, we don't know exactly when we'll need them nor do we know exactly how much of the service.  Actual services will be ordered via the issuance of task orders for specific amounts and timeframe.  The $6M figure is the contract ceiling meaning that the total of all orders issued over the life of the contract will not exceed $6M.  So while the contract is considered a $6M contract, the likelihood of the actual workload reaching that amount is minimal.

    According to a Bureau of Land Management budget document, a total of $76,758,000 was included for the National Wild Horse and Burro Program in the Fiscal Year 2012 continuing resolution passed by Congress and signed by the president.

    Days after the sequester took effect, a two-day Wild Horse & Burro Advisory Board Meeting was held at the Sheraton Oklahoma City Hotel in Oklahoma and included discussions on Population Growth Suppression, Ecotourism, and Herd Area Repopulation.

Note: This article first appeared at The Weekly Standard (minus the photo.)

Vice President Biden's One-Night Paris Hotel Tab: $585,000.50

    As it turns out, Vice President Joe Biden's London stay in February was not the most expensive part of his trip.  A government document released on February 14, 2013 shows that the contract for the Hotel Intercontinental Paris Le Grand came in at $585,000.50.

    The documentation for this contract is not as detailed as the London one, so the cost per room is not available.  However, just as the Hyatt Regency in London, the Hotel Intercontinental Paris Le Grand is a five star hotel.  Again, security concerns prevent these type of contracts from being open to bidding, but if the government was able to do some comparison shopping, the Hotel Intercontinental has a special offer.  "Find a lower price elsewhere and your first night is free."  The Vice President stayed in Paris for one night.


Note: This article first appeared at The Weekly Standard.

Student Loans and Sequestration: More Devastation?

    The White House has been trumpeting the devastating effects of sequestration for weeks.  Everything from the military to Head Start to White House tours have been cited as victims.  However, some effects are less than disastrous.  For instance, student loans.  Here's a sample letter to prospective recipients of direct student loans from the Department of Education:

Dear <first name of borrower>:

Our records indicate that you either recently received or are scheduled to receive a Direct Loan from the U.S. Department of Education to help meet your educational expenses.  We want to bring to your attention some recent changes in the law that will affect your Direct Subsidized and/or Direct Unsubsidized Loan.  

On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as the “sequester.”  While this law does not otherwise change the amount or terms or conditions of your Direct Loan, it does increase loan fees on Direct Subsidized and Direct Unsubsidized Loans first disbursed after March 1, 2013.  Specifically, the fee on your loan will increase from 1.0 percent of your loan amount to 1.051 percent.  For example, the fee on a $5,500 loan will increase by $2.80 from $55.00 to $57.80. 

If you accept the loan that has been or will be disbursed for you, you will be agreeing to this higher fee and there is nothing you need to do at this time.  However, if you wish to cancel or reduce your loan, you may do so by contacting your school’s financial aid office.  Requests for cancellation should be made as soon as possible.  If you have additional questions about your loan, please do not hesitate to contact your school’s financial aid office. 

We wish you good luck in your educational pursuits.

    While $2.80 might not seem like much, the Obama administration made quite a big deal back in the summer of 2012 over saving student loan recipients 25¢ a day, so perhaps the president can spin this as yet another tragic result of the heartless intransigence of Congress.

President Obama Appears to Have Exaggerated Effects of Sequester on 'Head Start'

    In the days leading up to sequestration, President Obama and other administration officials often singled out Head Start as one of the vital programs that would be severely impacted by the automatic spending cuts.  Phrases like "70,000 kids get thrown off of Head Start" and "70,000 young children would be kicked off Head Start" were common refrains.  On Friday, as the sequester went into effect, President Obama himself said:

[F]olks who suddenly -- might have been working all their lives to get an education, just so that they can get that job and get out of welfare and they've got their kid in Head Start, and now, suddenly, that Head Start slot is gone and they're trying to figure out how am I going to keep my job, because I can't afford child care for my kid...

    That same day, the Department of Health and Human Services (HHS) put out a memo to Head Start personnel echoing the same claims, albeit in less dire language:

As you are likely aware, in accordance with the Budget Control Act of 2011, a series of spending cuts, called sequestration, will cancel approximately $85 billion in budgetary resources across the federal government for the remainder of the federal fiscal year.  The President is required to issue a sequestration order today, March 1, resulting in spending reductions of approximately 5 percent for the remainder of the federal fiscal year.  We estimate that approximately 70,000 children will lose access to Head Start services because of this reduction.

    The Obama administration has not released its calculations on how its arrived at the 70,000 figure, but based on past experience, it seems likely that the number is simply an estimate based on the dollars that will not be spent.  However, a look at recent Head State enrollment numbers and budgets calls the assertion into question.

    Just a little over a year ago, HHS issued this memo regarding Head State after President Obama signed the Consolidated Appropriations Act of 2012.

TO: Head Start and Early Head Start Grantees and Delegate Agencies 

SUBJECT: FY 2012 Head Start Funding Increase 

INSTRUCTION:
President Obama signed the Consolidated Appropriations Act of 2012 on December 23, 2011. This Act included the Fiscal Year (FY) 2012 appropriation for programs under the Head Start Act of $7,968,543,933. This represents an increase of approximately $409 million over the FY 2011 appropriation level.

    So the amount budgeted represented an increase of $409 million over the previous year, an increase of approximately 5%.  The bottom line is that the 5% cut by the sequester simply brings head start levels back to where they were a year ago, hardly a doomsday scenario.  And the 70,000 children who will be thrown off Head Start?  According to the Annie E. Casey foundation, an organization that compiles numbers on Head Start enrollment, Head Start enrollment for 2012 totaled 1,128,030.  Enrollment for the year before, 2011, was 1,125,209, a difference of less than 3,000, a far cry from 70,000.

    Obviously these enrollment figures are not unimpeachable and the time periods may not match up precisely, but it would appear ludicrous to say that 70,000 will be kicked off.  Unless the administration can back up its claims with hard data, questions may continue to be raised about the dire consequences being predicted by the president and his officials.


Note: The story first appeared at The Weekly Standard.