How Exactly Do People Listen To Rush Limbaugh?

Seriously Rush... You're boring people.

Seriously Rush… You’re boring people.

So, I was listening to my favorite “Intelligent Talk” station the other day (they bill themselves as intelligent talk, which is about 50% right, and often wrong), and they happen to be one of those stations that syndicates one Rush Limbaugh for their 9am slot. It’s not a show I usually listen to, because frankly I’ve got better things to do at 9am (like fight for freedom, fantasize about the times when things were really, really great in America).

Anyway, I digress. I’m not sure how many of you out there have actually listened to Rush lately, but if you do, I’m  shocked you have the patience for it. The other day he spent 35 minutes BELABORING the point that the President thought the Debt Ceiling was “not spending”. I mean, yep. We get the point, Rush, but move on.

But no. He didn’t move on. He ranted endlessly about something that most people could have expressed quite effectively in about 30 seconds. And I wondered to myself, “Self, how often does Rush literally blather on about ideas he’s clearly expressed more than 20 minutes ago?” And what’s worse, do some people actually listen intently to what this moron has to say? Seriously. He gives the right wing a bad name!

Are We Idiots?

Maybe it’s just me, but I know of a lot of people on the right who are smart, Republican, and can actually express their points very articulately within a minute or less. What’s more, they don’t go on about what is essentially a minor semantics issue for over 35 minutes. My point is this: who exactly is the audience for Rush? Well, first of all I have to think it’s a lot of Seniors.

Why do I think that? Well, who exactly listens to the radio anyway? What’s more, his show is mostly carried on AM stations, which is probably the lamest early 20th century frequency you can find. I mean, this is basically the frequency of the decrepit!

Anyway. My point is this: how about tightening your message up a bit, Rush? You’re beginning to sound like:

This is the 2010s. Our attention spans are different, my friend. What happened to the young, spritely ideologue that used to make us laugh with his questionable, albeit funny/controversial rhetoric? What happened to that guy?

Ah. Was it the drugs, Rush? Was it the drugs that kept you from lolling on like some kind of forgotten senior in a forgotten hospice?

If it was, how about re-hooking up? I mean, it certainly can’t hurt. People under 75 may actually consider listening to your show now and again? How about a little amphetamine? Cocaine? That outta speed things up.

Let’s Talk About Guns!

Yep, guns are back. They certainly weren’t cool for quite a long time, but with the events of the Sandy Hook Massacre writ large over the American public, people are buying them like M&Ms, afraid that their “legal right” to have weapons that can kill hundreds of people in five minutes might be taken away.

Hey, I’m a 2nd amendment guy. No doubt about it. But, I’m not a smoker of crack. I’m not, as many pundits are, of the belief that having teachers armed with Uzis is actually going to stop madmen with gun collections. Just not going to happen. In fact, you start arming teachers, and I’ll bet you a million that people start “accidentally dying”. In numbers.

The NRA Is The Most Transparent Lobby Ever!

Ok, I know I’m going to take some flak for this, but seriously. These people make money building weapons that slaughter people all over the world everyday. That’s their job. Yes, they might talk up the “self defense” and “right to bear arms”-crap, but let’s face it: Those are sad talking points at this point. People murder. Yes, I get it. But guns do a pretty good job helping them out with that task.

And when the 2nd amendment was written, guns looked like this!
I am incredibly PRO-MUSKET. Seriously. I’d love to see these things all over the place. It would be serious, serious laughs. Ban assault weapons, but assault muskets? Now we’re talking. How about that 1 rounds per minute firing rate? Sign me up!

So anyway. Saw this piece of BS on the web yesterday:

Picked yourself up off the floor yet? You’re really drinking the Smith & Wesson Kool-aid if you believe even a second of this junk.

Let’s call down point one: HE’S THE PRESIDENT! Show me a president of the United States who DIDN’T have the Secret Service protect his kids, and I’ll show you someone who isn’t the President. Point: IT JUST DOESN’T HAPPEN.

The President has a few people out there that do not like him. A lot of those people are crazy and would love to hurt him. So he has guards. Full stop. There is no hypocrisy in this, NRA. You people are just idiots.

The Rest Of The World Have It Wrong

Ok, so gun deaths in the rest of the world are extremely low. It must be a coincidence that they also have stricter gun laws. Seriously effective coincidence, yes, but all just a rare and non-correlated situation.

Of course, America is a different country. We have different needs. And according to the NRA, we ALL NEED TO BE ARMED. I’m sure gun crimes will come down once everyone has a gun.

What do those Canadians, Swedes, British, Norwegians, Italians, Spanish, Portuguese, Greeks, (INSERT REST OF THE COUNTRIES IN THE WORLD) know about REAL GUN CONTROL?

Absolutely nothing. They just happen to have a few thousand less bullet-ridden corpses in their morgues than America does every year.

Wow. Their funeral industry just must be a shambles.

 

Facts Behind The RAID Recovery For RAID 10 Arrays

RAID is an acronym for Redundant Array of Independent Disks.  RAID 10 servers use multiple disks thus allowing the user to have more file space and have amazing redundancy. Two varieties are known to exist: a hardware and software RAID. It also pays to give the difference between the hardware and software RAID. The two differ in terms of pros and cons.

Software RAID is dependent on central processing unit (CPU) use. This type of RAID shares the CPU while the computer runs different applications. This is the reason why it is slower than hardware RAID. Since it does not require the use of other equipment, it is made cheaper. On the other hand, a hardware RAID is made functional by a controller. It functions even in periods of no power. This is a possible reason why RAID recovery is expensive. In selecting from the two types, a certain principle should be followed where the software type is compatible with CPUs.

A number of RAID arrays are known to exist with different recovery requirements. This ranges from RAID 0 to RAID 10 arrays. Regardless of the type of array, RAID recovery of data is possible with the help of professionals. The main reason professional help is necessary is due to the complexity of restoring files from RAID arrays.

RAID 10 recovery should be carried out by the companies that are recognized and have some experience. If you use a company that is not recognized you might end up regretting it after having lost all your data which might be very important to you in one way or the other. Some of the RAID 10 recovery service providers offer great price discounts to students, registered charities and also local authorities. This comes in handy for improving customer loyalty because the customer will prefer their discount services over other service providers that do not offer the discounts. Some companies also offer door to door server collection and delivery.

Some of the RAID 10 recovery companies charge a fixed rate for their services despite the time used and the extent of the damage. They will retrieve your data from inaccessible hard drives with specialized processes. The competition is high in this arena and you will typically get good services for a fair price. You are not expected to pay for the examination fees to get the services. To add to that, there is secrecy to your data and you are assured on confidentiality of your data when in the process of recovery.

More About RAID 10 Recovery

RAID 10 recovery is a hot topic in today’s world. Many people have been trying to solve the problem on their own by using online professional software but are often still unable to recover their data.

Are you one of the people struggling with RAID recovery?

Here is another way to look and work out the problem/issue regarding your server recovery. You can always use a professional’s help. Professional companies are available online and also they have stores for their service. They consist of mostly engineers or experts in the field with many years of experiences. Many service providers work 24/7 to provide you with their service. As each person will have different problem with their RAID array and because of complicated setup, recovery is highly delicate; so, getting RAID array recovery should usually be done by a professional company like http://www.raidrecovery.ws/. Usually for a professional, it takes 2 to 5 days to recover the data fully and you will be updated regularly about the progress of recovery. Confidentiality and data security is a cornerstone of the policies of many companies. Most service providers will let you know beforehand about what they cannot recover and some of them will also give you back your RAID array if it looks unrecoverable.

How A RAID Server Fails

There are major reasons that can be associated with RAID 5 and 10 failure. These reasons are some of the main ones in relation to multiple drive failures. They are all linked to configuration. They include RAID controller failure, RAID array failure; rebuild failure, damaged strip and configuration failures. It is good to note that there are varieties of RAID levels and they need different ways to handle them. Their storage patterns are different. The simplified version are RAID 1 o RAID 5.The other complex ones include RAID 10 arrays. Most of the service providers have spread their wings and gone to very many parts of the world so that they can provide the very valuable service of data recovery.

RAID 10 recoveries assure maximum recovery of data and that is why it has become an all time favorite to very many people who want to have their data retrieved safely. You should be very cautious because if any wrong step is taken it can lead to a failure. The cost of using RAID 10 is efficient; so much so that it is unlike any other server available today.

Where, Oh Where Is Pete Wilson?

At the hot start of a hot August long ago, Governor Pete Wilson reached agreement with legislative leaders on the largest tax cut in California’s history — a $1.4-billion cut next year, rising to $3.6 billion over four years — and breathed a sigh of relief. With the full tax cut under his belt, Wilson claims an overall tax reduction of about $2 billion in his two terms. With only the first installment, he would still be a net tax-cutter — just. Without it, his record would be that of a man who had raised taxes net by more than $1 billion. Not a reputation to brandish in GOP presidential primaries. So the tax cut is the final but indispensable stage in the careful transmogrification of Pete Wilson from GOP moderate to conservative warrior.

Surprised? Don’t be. Wilson’s quiet revolution has received little attention outside California. He is now rarely mentioned among potential GOP candidates for 2000. Yet he will be leaving office on a high note. The California economy is in its 62nd month of economic expansion. A large budget surplus allows him to have both tax cuts and hikes in spending — e.g., to cut class sizes in the public schools. He has won his major political battles, notably the initiatives opposing illegal immigration, quotas, and bilingual education. And most watchers think he would be easily re-elected if he ran in November.

Given California’s electoral importance, this record should entitle him to glowing media profiles as GOP front-runner. Why his present obscurity?

The answer appears to be that he has succeeded deplorably — at least from a media standpoint. Republicans are supposed to start on the Right and move to the Center, even perhaps a few yards to the Left. Wilson has done just the reverse. He started in the Center and moved Right. Instead of “growing,” he has shrunk. By all the rules, he ought now to be an unpopular failure. And there is little appetite in the media for addressing his current embarrassing success. It is worth examining nonetheless.

It is hard to recall today just how disastrously liberal — with equal emphasis on adverb and adjective — Pete Wilson was at the beginning of his first term. He arrived in Sacramento apparently determined to transform the conservative California GOP into a socially liberal, good-government, public-interest group; an aide said at the time that he aimed to purify the party “as if 1964 [i.e., Goldwater and Reagan] had never happened.” In the 1992 Assembly primaries, he even supported moderate clones of himself against the now alienated conservatives. (His people mostly lost.) But his decision to compromise with the majority Democrats and raise taxes in his first budget by $7 billion — the largest single tax hike in California history — did most damage, turning off the voters and making him a pariah in his own party

Wilson reluctantly defended the tax hike in an interview with us as a case of fiscal necessity: “I hated doing it at the time . . . [But] we closed a gap of $14.3 billion. . . . That amounted to a third of the General Fund.”

Whatever its merits as good government, the tax hike was bad economics. Imposed as the California economy was being led by the defense industry into a recession, it deepened the misery and retarded the recovery even as neighboring states like Arizona rebounded.

In the run-up to the 1994 election, Wilson’s poll numbers collapsed. Kathleen Brown, his likely Democratic opponent, was 23 points ahead. And an unknown millionaire, Ron K. Unz, won a third of the votes with a shoestring campaign in the GOP primary.

This was a near-death experience and it produced a dramatic reformation. Wilson reprogrammed himself as a tough fiscal and social conservative. He began to prune government, to cut taxes, and to make California a more business-friendly environment. Some of the tax cuts were less than met the eye, but he had signalled a change of direction in economic policy — and it got results. Wilson himself deadpans that California today is so prosperous that “even a penniless Buddhist monk can afford to give thousands of dollars to Al Gore.” He is especially proud that the state has one-fifth of America’s spending on R&D. By various tests, the relative burden of government has fallen modestly under Wilson. Per $1,000 of personal income, for instance, tax revenue has gone from $72.45 to $71.47. And California employs 107 state workers per 10,000 people against a U.S. average of 151.

Such figures explain why many conservatives now take a favorable view of Wilson. The Hoover Institution’s George Shultz chairs his Council of Economic Advisors. Martin Anderson, President Reagan’s domestic-policy advisor, says Wilson has instituted important social reforms — notably “opportunity scholarships.” These are education vouchers for children at poor-performing schools. (A post-mortem conversion, since Wilson opposed the 1992 initiative on school choice — the loss of which causes Milton Friedman to make his verdict a qualified “broadly favorable.”)

But Wilson’s social conservatism was built most dramatically upon two hot-button issues: crime and illegal immigration. In 1992 a citizens’ group had put Proposition 187 on the ballot to deny non-emergency social benefits to illegal immigrants. Kathleen Brown, captive to her party’s ethnic base, called it “barbaric.” Pete Wilson, citing the immense fiscal burden they imposed on the state ($1.5 billion annually for education alone), endorsed it. He was denounced as a “racist,” a “nativist,” etc. But Wilson, an ex-Marine, never refuses a fight. And when the votes were in, Proposition 187 won with 59 per cent, Wilson won with 55 per cent, and the hapless Miss Brown lost with 41 per cent. The lessons of Wilson’s first term were unmistakable: social liberalism and high taxes put you thirty points behind in the polls; social conservatism and tax cuts give you a 14-point victory.

So when Wilson began his brief campaign for the 1996 GOP nomination, he gratefully accepted a journalist’s definition of “moderate” as “a conservative who is pro-choice on abortion” to describe himself. That crossed half the distance to the GOP’s presidential nomination. But in 1996 it could not save his doomed campaign. Not only did Dole have Wilson’s base — the GOP establishment — locked up; but Wilson’s running broke a pledge to his 1994 voters and financial backers that he would stay on for a full term. That was a big blunder, still cited by Californians from pols to Sacramento taxi-drivers as reason to distrust him.

His stance also left him at the 1996 San Diego Convention as the leading pro-choice spokesman in a pro-life party. Even today, abortion remains the most important issue separating Pete Wilson from most conservatives — an issue, therefore he needs to defuse.

Astute enough to know that waffling and wavering opportunistically on abortion is the one position everyone despises, he remains forthrightly “pro-choice” in principle. He therefore opposes a pro-life constitutional amendment as an unrealizable goal that will not prevent a single abortion. But he also deplores the “shocking 1.6 million abortions in America each year” and offers olive branches to pro-lifers in the form of practical measures to reduce this number now. These include such familiar restrictions as parental-consent laws and the ban on partial-birth abortions, but also reducing out-of-wedlock pregnancies in the first place by changing the culture of welfare. “We have cut teen pregnancy in this state since 1991 by almost 20 per cent,” he points out. And in a speech to the Christian Coalition last year, his list of such measures even included “teaching children premarital abstinence.”

From Wilson’s empiricist standpoint, this attempt to shape an all-Republican compromise is a reasonable one, offering pro-lifers a real reduction in abortions. Still, it will almost certainly fail. The abortion debate is about moral principles as well as outcomes. Pro-lifers cannot agree to shelve the principle that the state has a duty to protect innocent life — or the constitutional amendment that embodies it — even in return for a united Republican push for more practical restrictions on abortion. Nor is the moral Right likely to approve of at least one of Wilson’s measures to reduce out-of-wedlock pregnancies: encouraging the spread of contraception. And, finally, other GOP presidential contenders will outbid him for the support of religious conservatives, thus reducing their incentive to compromise. Wilson and George W. Bush are to Steve Forbes today what Forbes was to Pat Buchanan in 1996: the second-best alternative. The most Wilson can gain is to reduce hostility to himself among conservatives whose first priority is halting abortion.

Which makes it all the more imperative for him to win over other constituencies that most Republicans have neglected. One such constituency was obligingly identified for him by a 1997 Fabrizio – McLaughlin study as “cultural populists”: people worried about crime, declining standards, the balkanization of America, and the fraying of the social fabric in general. About a quarter of the electorate, these voters swung heavily GOP in 1994. But Republican politicians, frightened by the instant interpretation of media liberals that they were pandering to “angry white males,” backed nervously away from the cultural issues such as racial quotas and immigration reform. In fact, the liberal analysis was invented: cultural populists are disproportionately white, like most voters, but they are also disproportionately female, disproportionately young, and anxious rather than angry. Given no comfort by a nervous GOP, they swung back to Clinton in 1996.

Wilson, however, has assiduously addressed their concerns (and those of constituencies like small business) by intervening in three major battles — the campaigns over Proposition 209, barring race and gender preferences, 227, abolishing bilingual education, and 226, prohibiting labor unions from spending money on political causes without their members’ consent. Proposition 226 was narrowly defeated. But add Proposition 187, and that makes three landslide victories in four elections.

In fighting these California battles, Wilson and his political ally, Ward Connerly, became the spokesmen for conservatives worried about national disunity and social breakdown, in part because national GOP leaders went AWOL. Wilson’s own explanation for their absence under fire is that they are intimidated by the charges of racism and have accordingly allowed liberals to define the political agenda.

Will California ever be up for grabs for the GOP?

Compare this pusillanimity with Wilson’s own unyielding stance. When he was attacked over 187 and 209 for exploiting “wedge issues,” he replied in a public speech (at the California GOP’s Hispanic Summit): “Wedge issues are those that liberals want to duck . . . Wedge issues don’t get to be wedge issues unless the underlying problems are real, and if there is such a pervasive sense of injustice and outrage that they cannot, or morally ought not, to be ignored . . . Slavery was a wedge issue.” The audience applauded.

The reply from Democrats and the media to Wilson’s cultural populism is that it is a shortsighted tactic which alienates Latinos, who are the fastest-growing ethnic group in the U.S. and a natural GOP constituency. This argument has spooked many California Republicans. Gubernatorial candidate Dan Lungren, strongly conservative on most issues, pointedly refused to back the initiative banning bilingual education. His aides subtly distance him from Wilson, even though they are friends and Wilson is co-chairman of Lungren’s campaign. And Lungren presents himself to Latinos as a good Catholic.

Behind these divergent political strategies lies a deep disagreement about how best to win over Latinos (and other minorities) to the GOP. The standard GOP approach, modeled largely on Jack Kemp’s appeals to black Americans, is to treat Latinos as a distinct ethnic group and to emphasize the similarity between certain Latino traits (family values, strong work ethic) and Republican philosophy while avoiding issues which can be stigmatized as anti-Hispanic. In sordid practice, of course, this approach often degenerates into treating the minority in question as a liberal constituency. For instance, the GOP has recently helped restore social benefits to immigrants on the explicit grounds that this would win Hispanic votes. But even in its pristine form, this appeal still emphasizes and so perpetuates ethnic identification.

In the long run, that is bad news for the GOP. As the failure of its wooing of black Americans has shown, ethnic loyalty will trump shared political values every time. The switch in Hispanic voting intentions on both 187 and 227 during a campaign in which these issues were consciously “racialized” by the Democrats further illustrates the point.

The alternative approach, symbolized by Wilson, is to address minorities principally as Americans who share common concerns with the rest of the nation. Such an appeal is based upon the evidence of recent history that the more deeply minorities assimilate — in particular the less they retain a minority consciousness — the more likely they are to vote Republican. Immigrant white ethnics have moved rightward politically as they melted in the American pot, and black Americans have grown less Republican as ethnic ideologies of Black nationalism and Afrocentrism have spread among them. Short of enlisting, voting Republican is just about the ultimate expression of assimilation.

So the propensity of Latinos to vote Republican will increase in line with their assimilation into the American nation. Those Latino voters attracted by a message of American unity rather than by ethnic appeals will be more reliably Republican. In order to attract them, the GOP will not need to dilute its message — or its appeal to non-minority voters (the anxious white females above). What Wilson’s critics gloss over is that he won landslide majorities on Propositions 187, 209, and 227, and in doing so attracted substantial Latino minorities — 31, 24, and 37 per cent respectively. By contrast the Dole – Kemp ticket in 1996 got 21 per cent of Hispanics and 12 per cent of blacks.

What matters long term, of course, is fostering a more rapid assimilation of Latinos. But that also justifies Wilson’s opposition to bilingual ghettos, which perpetuate ethnic loyalties; to racial quotas, which give people a material incentive to think ethnically; and to illegal immigration, which retards the social and economic assimilation of legal immigrants already here. Wilson is even prepared to use the unadorned language of national interest in discussing legal immigration, arguing that America is “the most generous nation in the world. We annually admit more legal immigrants than all the other nations in the world combined. And we have every right to do what the others do — and that is to set definite criteria and admit people based upon our needs.”

If this frankness seems quixotic, the hard evidence is that it wins elections short term and holds out the prospect of making Latinos more amenable to Republican politics long-term.

But this analysis risks making Pete Wilson sound too original. On most issues he steers slightly to the right of his party’s mainstream. As a senator, he strongly backed missile defense and fiscal prudence, repeatedly winning the Treasury Watchdog award. He also enjoyed ratings from 75 to 90 per cent from the American Conservative Union. Today he favors school choice, free trade, NAFTA, and privatization. Asked how he would use the U.S. budget surplus, he says simply: Cut taxes.

IS Wilson now a committed conservative? And if so, what happened? Wilson himself claims a politician’s consistency: not he but the circumstances have changed — e.g., the affirmative action he supported became the quotas he resists. Paradoxically, some of his old critics among California conservatives agree. Assemblyman Tom McClintock argues that Wilson is still the tax-hiker of 1991: the full $3.6-billion tax cut requires revenue rises that will never be met after the Asia meltdown. Taxpayers will still pay $287 a year per family more than under the last governor. Wilson’s budget office replies that it underestimated recent revenues by 14 per cent, and that future cost-of-living adjustments in welfare payments depend upon the tax cuts going ahead.

Time will resolve the narrow statistical dispute. But McClintock is right to point out that there is a lot of new spending in the budget. Probably there will always be a good-government moderate inside Wilson, struggling to get out. His instinct is for cutting class sizes as much as government (Friedman wryly says: “At least it’s better than spending it on more bureaucrats.”) as long as it can be done with fiscal prudence.

Still, it can hardly be denied that Wilson has become conservative in a broader sense — perhaps pushed into conservatism by fiscal and social crises that came his way and the popular sentiments they aroused. Columnist and former NR publisher Bill Rusher gives that explanation a twist of bitter lemon: “Wilson is not a convinced philosophical conservative,” he says. “He is an opportunist. But unlike most politicians, he is a courageous opportunist. Once his calculations point to conservatism, he will not be blown off course by attacks from the media. If his political calculations do not change, he may even die a conservative. This is less than ideal, but better than most.”

“Most” here means Wilson’s rivals in the primaries — notably Texas governor George W. Bush. Bush is an untested figure alongside a big-city mayor, U.S. senator, two-term governor, and “Comeback Kid” like Wilson. Bush has faced no crises and advanced few causes. In his first term, as W. S. Gilbert said of the House of Lords, he “did nothing in particular — and did it very well.”

 

Looking Back At Surpluses – So Long Ago.

(from 1998!) There is good news and bad news on the budget front. The good news: this year will be the first time since Lyndon Johnson’s Presidency that the fiscal year has ended in the black. When the Republicans took over Congress in 1994, they inherited $200-billion deficits for as far as the eye could see. Their promise to balance the budget in seven years was widely regarded as unrealistic. As it happened, they helped produce a $50-billion surplus in three. Newt Gingrich and Trent Lott, take a bow.

The bad news: the budget is being balanced not by federal retrenchment but by higher taxes. The latest Treasury Department report indicates that for the first six months of fiscal year 1998, tax receipts are up 10 per cent over last year. (As proponents predicted, capital-gains tax cuts are contributing to increased revenues.) From 1998 to 2002, tax collections will now be roughly $500 billion higher than projected in last year’s budget agreement. Yet this new tax windfall has not emboldened GOP tax cutters. Last month the Senate considered a tax cut so microscopic that, as Sen. John Ashcroft (R., Mo.) calculates it, the typical family would be able to afford a Big Mac with each month’s $1.87 savings.

Big spenders in both parties have shown no such timidity. Their plans for new health-care programs, federal day- care subsidies, federalization of the schools, and highway pork projects in every district can be fended off only by taking the money out of their hands. Congress should return at least half the windfall — $250 billion over five years — to the taxpayers who produced it.

There is no shortage of possible tax cuts on offer. Simplifying the capital-gains tax, making the cost of medical insurance deductible for individuals as it now is only for companies, expanding the 15 per cent tax bracket, and eliminating the marriage penalty are all options. Any of them would be preferable to the status quo, but some have strategic advantages over others.

A major factor driving the Federal Government’s current growth is real-income bracket creep. Because of the steep progressivity of the income tax, economic expansion pushes more and more American families into higher brackets each year. Over the past three years revenues have been climbing nearly twice as fast as wages and income. Moving most middle-income workers from the 28 per cent to the 15 per cent tax bracket, as proposed by Lawrence Kudlow and Stephen Moore in these pages, would roll back these unlegislated tax increases. (It would also reduce the marriage penalty.) Such increases should be blocked in the future as well, as Milton Friedman suggests, by indexing tax brackets for real income growth in addition to inflation.

These moves should be combined with measures to promote investment, thus expanding the constituency for further market-based reforms. Sen. Paul Coverdell’s bill for educational savings accounts has already passed the Senate. Rep. Bill Archer (R., Tex.) is considering similar tax breaks for health care, and Sen. Phil Gramm (R., Tex.) and Rep. John Porter (R., Ill.) have proposed private investment options for Social Security. Republicans should do as much along these lines as possible as early as possible, to get the ball rolling.

But before they get to the details, they must resolve to cut taxes in the first place. It’s why they were put on this earth. If President Clinton wants to veto tax cuts, let him do so — and hand the GOP a neatly gift-wrapped campaign issue for the fall.

NYC Budget Cutting At Not For Profit Theatre

During Mayor Rudy Giuliani’s tenure, the budget process has largely consisted of his recommending arts-funding cuts, ‘and the council replacing them when it finally approves his budget. But this year, the council stomped on the mayor’s foot, stalking past him and his executive budget as he lawmakers created and approved a financial plan of their own. They restored budget cuts to DCA and added council funding initiatives for a total departmental budget of $21.1 million. This included restoring a 50% cut to the program services budget, the primary city funding source for nonprofit theatres. The mayor vetoed the council budget. but the council overrode it.

Smarting from the rebuke, the mayor began waving the budget ax, hut has yet to make clear where it will fall.

“When he comes up with his spending plan for this quarter, the mayor has the ability to withhold funds,” said Norma Munn, chair of the New York City Arts Coalition. She said Giuliani made clear in his budget veto message he wouldn’t accept the council’s $3.5 million in add-ons, which included monies for a number of nonprofit arts organizations, among these theatres.

“No matter what language you use, that’s a cut to a person on the receiving end.”

She added that if you accepted the mayor veto message, you’d assume program groups will be significantly cut.”

Munn pointed out that theatre companies, particularly those with summer programs, are suffering because “these things have monetary costs” and also because wasted time could mean “you may also lose a site or a performer, It’s also tough to advertise.”

Munn said that the may or h is given the DCA a “preliminary set of guidelines,” but that decisions “are still up in the air.”

Back Stage called Katherine Hughes, DCA’s assistant commissioner, to cheek on the status of the department’s budget; but an assistant referred the call to the mayor’s press office. Despite a number of lawsuits challenging the mayor’s avoiding the Freedom of Information Act, his administration evidently still forbids departmental personnel to speak to the press directly without his press office’s s approval. A press spokesperson wasn’t available when called at press time,

“My advice to groups, if they should ask me,” added Munn, “is that, if the money isn’t a part of regular funding, but is an add-on [provided by the council], you’ll probably not be funded. The mayor won’t spend that money.”

Shakespeare Shunned

Shakespeare would be shocked…

One such program to receive the unkindest cut of all was The Shakespeare Project, a theatre company which performs in eight city parks throughout the summer This season’s play about to be iced by frozen funds is, appropriately, “The Winter’s Tale.” Scott Cargle, the project’s artistic director, who is now out of a job, is warning callers on the project’s information line that the show may have to be cancelled after July 19 “due to the budget crisis in City Hall” which would delay the project’s last three weeks of funding.

“The mayor has vetoed member items, and we were one,” explained Cargle. “Now I understand’ he’s instructed the [DCA] commissioner to make cuts. Even though we. were allocated $19,000, we don’t know how much we’ll get. I can go borrow the money if the DCA tells me we’re going to get money, hut at this point, the DCA doesn’t know what the budget looks like”

Cargle said the project, which pays its actor under Equity contract, has a $15,000 payroll. He had estimated that about 4,000 people would see this summer’s production, which was scheduled to run for 32 performances, June 18-Aug. 9.

“When we found oat at the end of lone that the money might not come through, I took a quick look at the budget and realized, if it didn’t, we were screwed. The company hoard of directors laid me off,” because there was no money on hand.

So Cargle has returned to a temp job he performs in the off-season, and is trying to raise capital from private sources to get the project back on its feet. He’s raised close to $6,000 which, including audience contributions from current performances, may total $7,500.

Deficiency And Interest Computations – Heady Stuff

If the government owes a corporation taxpayer $100 for 2011 and the taxpayer owes the government $100 for 2012, then as of March 15, 2013 when the 2012 tax liability became due, there is a mutual indebtedness between the government and the taxpayer until such amounts are refunded or paid. If the debts are not offset or netted, the taxpayer will pay a 4.5 percent differential on the interest it pays on the $100 it owes for 1996 as compared with the interest it receives on the $100 the government owes the taxpayer for 1995.

Section 6621 provides four rates of interest to be charged or paid by the government:

* Overpayment rate – Federal short-term rate plus 2 or .5 percentage points, depending on the amount of the overpayment. IRC [section]6621 (a)(1).

* Underpayment rate – (1) Federal short-term rate plus three percentage points [IRC [section]6621 (a)(2)]; (2) on certain large corporate overpayments – Federal short-term rate plus five percentage points [IRC [section]6621 (c)(1)]. This results in a maximum 4.5 percent spread between rates paid versus charged by the government.

Deficiency interest is only charged when a liability is both due and unpaid. (Avon Products, Inc. v U.S., 78-2 USTC [paragraph]9821 which resulted in Rev. Rul. 88-98, 1998-2 C B 356 and GCM 39,772, January 11, 1989). To determine when a liability is both due and unpaid, statutory and factual considerations must be analyzed.

Rev. Rul. 84-58 provides that absent an affirmative election on a return first showing the overpayment, an overpayment will be applied as a payment of the first quarter estimated tax installment. In addition, and something a taxpayer may be unaware of is under IRS [section]6402, the IRS has the authority to apply overpayments to any outstanding liability of a taxpayer. This can significantly alter the interest computations unless the taxpayer review, his IRS transcript.

All of the above rules lead to the need to compute restricted interest. What is restricted interest? Restricted interest is interest computed where the start and stop dates are other than the due date of the return to the date of payment of the tax. The most common situation in which restricted interest arises is with net operating loss carrybacks. See Mann v Seeley Tube & Box Co., 50-1 USTC [paragraph]9163. The court’s interpretation of IRC [section]6601(d) and 6611(f) was that carrybacks had no impact on the computation of interest prior to the due date of the loss year return.

As mentioned above, under the 45 day rule of IRC [section]6611(e)(1) the IRS is not required to pay interest if the refund is made within 45 days after the return is filed. On IRS initiated adjustments, the number of days on which interest would otherwise be allowed is reduced by 45 days. Section 6611(e)(3).

Upon the completion of an examination or appeals conference, if a deficiency is not assessed within 30 days of execution of the waiver, interest ceases to accrue after the 30th day and does not begin again until the date of notice and demand. IRC [section]6601(c).

What can a practitioner do to insure accurate interest computations? For one thing, ask the IRS to provide its complete workpapers including Form 2285 that reflects all the steps in the process. Another is, if you have questions, request a meeting with the employee who prepared the calculations. Of course, to begin with, review and become familiar with IRM 31(59)(0), the IRS’ internal interpretations of how interest should be calculated.

One current issue that was just recently resolved involves Rev. Rul. 8458. It states that absent an affirmative election, an overpayment from one year applied as an estimated tax payment to the taxpayer’s succeeding year will be treated as a payment toward the first quarter estimated tax liability. In reality, however, it may be more beneficial to the taxpayer to designate the application of the payment to the estimated tax liability of a quarter other than the first quarter. For example, a taxpayer pays $1mm on April 15, 1996 to cover the first quarter estimate and $1mm on June 15, 1996 to cover the second quarter. The taxpayer has a $5mm overpayment on the 1995 return which IRS will credit to the first quarter of 1996 unless the taxpayer designates a different quarter. In this case, there is no benefit to the taxpayer. He has actually paid early. If the taxpayer designates the third quarter and there is a subsequent examination deficiency of $5mm on the 1995 tax year, there is a significant interest benefit. Deficiency interest would be computed from September 15, 1996 saving five months interest on $5mm. In August 1977, IRS acquiesced in the decision in the May Department Stores Co. v U.S., 36 Fed Cl. 680, 96-2 USTC Section 50,596 (Nov. 4, 1986). The Service recognized that the taxpayer should have the benefit of such funds on the year giving rise to the overpayment for deficiency interest purposes until it is actually needed, in the third quarter of the subsequent year, not the first.

Another issue to be aware of relates to “recomputation of the module” each time a tax increase or decrease is determined on a year. The IRS’ current position is that it is not required to correct all previous errors on an account when computing the current increase or decrease to deficiency interest. Statute of limitations issues and specificity of grounds on a claim have been cited with respect to the position. In CSX v U.S., 95-1 USTC [paragraph]50-291 (Eastern District or Virginia), the court held that a claim for refund of overpaid tax does not include a claim for overcharged deficiency interest. The taxpayer was allowed to request the refund of the additional overcharged deficiency interest (not previously refunded with the tax refund) after all normal statutes of limitation had expired. In effect the court held that the claim had not fully been paid based on the grounds of the original claim. The IRS does not agree with this position and has issued PLR 9702002 dated August 26, 1996 contradicting this case.

The granddaddy issue in deficiency interest is comprehensive interest netting. Rev. Proc. 94-60 requires that the IRS may only charge as much interest on a deficiency as it paid on a refund of up to that amount on the same year. Northern States Power Company, 96-1 USTC [paragraph]50,022, January 2, 1996, involving multiple years, states “netting is not statutorily required, and offsetting is discretionary.” However, the treasury Report on netting of interest on tax overpayments and underpayments issued April 1997, concludes that while “global interest netting would be consistent with the intent expressed by Congress in the past, additional legislation is necessary to achieve it.” Global netting was included in the Administration’s simplification package of proposed legislation, but did not make it into TRA 97.

Troubled Debts And Tax Law – Are You Paying Too Much?

The Tax Court reviewed the confusing case law in the area of bad debts which involves the concept of “unrestricted control” over the funds borrowed. Charles Davison, a CPA and partner with the then Peat, Marwick & Mitchell, argued that a partnership he had set up had possessed unrestricted control over the funds wire transferred from John Hancock and so its transfer of those funds amounted to a “payment.” In Burgess, a 1947 Tax Court decision, a cash-basis taxpayer, just prior to the due date of his interest payment, borrowed additional money from the same lender, deposited the money in an account at a different bank and commingled it with other funds. Six days later he drew a check on that account to pay the interest due the lender. There the Tax Court allowed the deduction for the interest payment. It found that Burgess had not borrowed the money for the sole purpose of having funds to pay the interest due. There were several bills due and he had commingled the funds with other funds in his account causing them to lose their identity. As a result, the Tax Court noted that the loan proceeds in Burgess could not be traced to the payment of interest. It also noted that six judges dissented. Subsequent Tax Court opinions that relied on Burgess focussed more on whether the borrower acquired unrestricted possession or control over the proceeds of the second loan.

In Burck, a 1975 Tax Court decision upheld on other grounds by CA-2, a cash-basis borrower deposited loan proceeds borrowed from one bank into an account at a different bank which until then had relatively little funds. The next day the borrower, pursuant to an agreement with the lender, transferred back to the lender a portion of the proceeds for one year’s prepaid interest on the loan. The Tax Court held that transaction fell within Burgess and allowed the interest deduction. It relied on the fact that the loan proceeds were commingled with other funds in the borrower’s account. It also considered that the borrower owned other assets from which the interest could have been paid and that the interest prepayment was an integral part of the loan agreement. In Wilkerson, a 1978 Tax Court decision that was reversed by CA-9, the Tax Court followed Burgess and Burck and noted that the borrowers needed the loan to pay their interest obligations but that they had acquired control of the proceeds by depositing them in checking accounts “outside the lender’s domain.” This, despite the fact that in Wilkerson, without the loan, the borrowers did not have sufficient funds to satisfy their interest obligations.

Allowing the deduction based only on physical control of the borrowed funds was rejected by CA-5 in 1980 in Battelstein, which rejected the deduction based on a transaction involving a physical exchange of checks. CA-5 also determined that Burgess was applicable only if the purpose of a subsequent loan, such as to pay interest on a previous loan, was not apparent. CA-9 in Wilkerson (1981), which reversed the Tax Court, relying on Battelstein, denied the interest deduction because a portion of the loan was “specifically earmarked” for paying the interest due.

The Tax Court in Davison also recalled its 1983 decision in Menz in which it did not find unrestricted control by the borrower because: (1) the transactions were all simultaneous, (2) other funds in the borrower’s account were de minimis, (3) the loans were made solely to pay the interest, (4) the borrowed funds were traceable to the interest payments and (5) a wholly owned subsidiary of the lender was a 1% general partner of the borrower and possessed approval power over all the borrower’s major transactions.

The Court here concluded that the partnership did not have unrestricted control over the loan proceeds since it specifically agreed to borrow the money to pay its interest obligation. “Use of the funds for any other purposes would have breached the terms of its agreement with John Hancock and would have resulted in White Tail’s default and a likely end to its business operations,” noted the Court. The Court acknowledged that this type of analysis diminished the “vitality” of its earier opinions in Burgess, Burck and Wilkerson. Thus it held that White Tail did not have unrestricted control over the borrowed funds “in any meaningful sense.” It also held that a cash-basis borrower is not entitled to an interest deduction where the funds used to satisfy the interest obligation were borrowed for that purpose from the same lender to whom the interest was owed. The effect of this is to postpone, rather than pay, the interest.

A Purpose Test

The Second Circuit Court of Appeals upheld the Tax Court’s denial of the deduction “for substantially the same reasons stated [in the Tax Court's] opinion.” It suggested, however, that while the Tax Court “departed from [its] precedents beginning with Burgess,” the state of this law, especially the “unrestricted control” test, was not completely clear. To the extent the unrestricted control test remains good law, and the cases described above “persuade us that it likely is not,” CA-2 rejects it in favor of the rule applied by the Tax Court in this case. That is, where the agreed purpose and economic substance of the transaction is to capitalize and postpone, rather than extinguish, the interest obligation, a deduction should not be available solely because funds are temporarily placed under the debtor’s control. So while, at first blush, it seems that CA-2 is simply adopting the Tax Court’s reasoning, it actually is throwing out any remaining form of the unrestricted control test and substituting a test based only on purpose and substance.

Tough Road to Hoe

Dr. William Raby, noted tax commentator and consultant to the Raby Law Office in Tempe, Arizona, said, “you’re always better off trying to borrow the money to pay the interest from someplace else, not from the place that you have the principal if you can do that. Many of these transactions are driven more by the transaction itself than by the deductibility question.”

He noted that, “I don’t see [the case] as establishing a bright-line test. If your client has a statement from the bank saying that so much interest was paid during the year, I think that’s the number [the tax return preparer] is going to use. The real question is, is it going to change the way in which banks report the amount of interest that was paid to their customers? I don’t know [if it will].”

Joseph Schneid, of the accounting firm of Aldrich, Kilbride & Tatone, LLP in Lake Oswego, Oregon and also a member of the AICPA’s Tax Accounting Committee, agreed that “the big thing is they need to borrow from a different lender. Overall, [the decision] makes sense to me.” He advised that “the best thing to do is to segregate your funds and to make sure that proceeds borrowed for business purposes go into a business account and stay there. When you borrow funds, you need to have a good idea as to how you’re going to pay back the funds. Thus, you should have some kind of reasonable debt-to-equity structure so you don’t get into this situation.”

Schneid added that realistically, “when they borrowed the money, they probably weren’t borrowing it for tax reasons. They got into this deal because they thought they were going to make money on it. They had a good deal in that the bank had all the risk. It made sense to deny that deduction.” The bottom line he believes is that, “I don’t think this leaves authority to [take this kind of deduction].”

Steven M. Bullard, director of tax for the Springfield, Missouri-based accounting finn of Baird, Kurtz & Dobson and member of the AICPA’s Tax Accounting Committee, observed that, “one by one, the cases are starting to line up here. Davison distinguishes Burgess that stood for [roughly] that you could trade checks and get away with it and add substance where it might not otherwise be by perfecting form; in Burgess with an oddball set of facts, they got away with it back in 1947. These situations always come up in troubled lending situations where you can’t pay the interest and the bank wants to do something as an accommodation. The moral of this story is if you’re going to deal with the same lender, even if you go the extra step of writing checks to each other, you’ve got an almost impossible road to hoe.”

Bullard added that, “the only possible way [to avoid this] and this in itself is by no means foolproof is based on a 1952 Fifth Circuit decision, McAdams: if you borrow money from lender A and use that money to pay off lender B plus the accrued interest on lender B, the fact that you’ve extinguished the obligation with lender B gives finality to it and you could deduct the interest paid. This principle has even been extended in some cases to participations with the same lender where one lender is the lead lender and he participates out a large loan to other lenders; that has been held in certain cases to work.

You have to add more substance [to the transaction for the deduction to work] and such substance is, at a minimum, that you have to go to a different lender. You have to take into account that this [case involved] business indebtedness and that this was a cash-basis partnership. Cash becomes the linchpin of the deduction. It’s easier to say go to a different lender [than to actually do it]. This was a troubled partnership; the reality was they probably could not walk down the street to another lender.”

Helpful Guidelines

“I think the [Davison] Court was right in finding that the substance of the transaction, rather than the form should control,” said David Wilsey, tax manager with the Great Falls, Montana office of the accounting firm of Junkermier, Clark, Campanella, Stevens, P.C. “The Court had gotten itself into a corner using the unrestricted control test for all those years because they were kind of blindly applying it without much thought to what the substance of the transaction was. The test in this case is probably correct but more difficult to apply,” added Wilsey.

He observed that the Tax Court in Davison provided factors to consider near the end of its decision: Were the transactions simultaneous? Other factors in the decision include: Were there other funds available to pay the interest? Were the funds traceable and was there any realistic choice by the borrower to use the funds for any other purpose? “These can help in determining whether there is substance over form,” added Wilsey.

Wilsey suggested the following: “I wouldn’t draft it into the loan agreement that the loan is for interest [as was done in this case]. I’d try to follow the Court’s guidelines and avoid simultaneous transactions. I’d allow some time between them, maybe a week would be better. Robert Pielech, tax partner in his own New Bedford, Mass. accounting firm, agreed with that point. He suggested that if the proceeds were held more than just one day, the outcome might be different. “In Burgess, the taxpayer borrowed the money on Dec. 20 and repaid the interest on Dec. 26.” Wilsey also suggested that if you can commingle the funds, do that to make them untraceable.”