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Aberdeen beef plant and EB-5 program under federal investigation

October 31, 2013 9 comments
Angus Cow, Curious by Kim Newberg

Angus Cow, Curious by Kim Newberg

Earlier I posted about alleged misconduct by the Governor’s Office of Economic Development (GOED) before Duagaard took office in 2011. Today the AP has released information on another federal investigation in South Dakota that may be related. This from the AP story posted by the Argus Leader:

Federal authorities are investigating the finances of an idled beef plant and a federal immigration program that supplied much of its funding, two former chief players in the company told The Associated Press on Thursday.

Dennis Hellwig, who stepped down as Northern Beef Packers’ general partner more than four years ago, and Bob Breukelman, the plant’s former construction engineer, told the AP they have been questioned by federal investigators about the idled Aberdeen plant’s financial dealings and the federal EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000.

“There were some discrepancies in the way the EB-5 program was being handled,” Breukelman said.

It is unclear yet if this is part of the same investigation that the feds are directing at GOED. Yet it would make sense that any investigation of GOED would include the Aberdeen Beef Plant and the EB-5 program. This is what I had to say back in July when making the case Daugaard needs to be replaced:

There is nothing free-market about any of the Northern Beef debacles. The EB-5 program is corporate welfare and has nothing to do with free-enterprise. At its core the EB-5 allows foreign investors to buy a green card; at the same time politicians get to funnel a LOT of money to their favored businesses. It’s a win-win. Well, it’s a win if you happen to be one of those investors or politicians. However if you happen to be someone working for an EB-5 welfare recipient it isn’t so good. These programs are well-known for being ineffective and falling way short of the “created jobs” promise that they were created for.

I still believe my words to be true. Programs like EB-5 allow certain politicians and bureaucrats to handle millions of dollars without regards to the existing market and with little or no oversight. GOED was the driving force behind both the Aberdeen beef plant and the EB-5 vista program. Since this was one of the largest projects (failures) of the GOED office during the Rounds administration I would imagine the two investigations are related in one of the two following ways:

  • GOED is being investigated for alleged misconducts; which the Aberdeen beef plant and EB-5 program are a part of.
  • The EB-5 funds used for the Aberdeen beef plant are being investigated; which points back towards GOED.

Either way the result is the same: GOED, the Aberdeen beef plant, and the EB-5 programs are too intertwined to investigate one without looking at the others.

Of course the elephant in the room is if this investigation will impact the Rounds Senate campaign or Daugaard Governor re-election campaign. Rounds was Governor during the time-frame in question and Daugaard was the Lieutenant Governor. If any wrongdoing is found it is not good news for either campaign. Here are some possible scenarios and how both politicians could be impacted:

  • One or both of them are directly implicated in the scandal. If either one is found to be part of the scandal it would be hard for the other to deny knowledge of the events. In this case I believe both politicians would be handing the Republican primary election to the best conservative opponent. I also feel this scenario would give a Democrat contender a lot of support (no matter who gets the Republican ticket).
  • Neither of them are directly implicated in the scandal. This scenario would be worse for Rounds than Daugaard. In this scenario Rounds would be compared to Obama’s leadership style of “I had no idea that was going on”. Daugaard could maybe come out of this scenario clean by claiming to have created a more accountable GOED.
  • The investigation ends with no wrongdoings found. This scenario would of course be the best-case scenario for both Daugaard and Rounds. They could ironically use the investigation as proof their political enemies are using the system against them. I don’t see this scenario as likely, but it is possible.

Personally I think this investigation could (and should) point to why South Dakota needs to go a more fiscally conservative route for both the Governors race and the US Senate race. Corporate welfare abuse cause situations such as the Aberdeen beef plant. As a state I believe it is time for us to look in a direction that is willing to put fiscal conservatism over cronyism and corporate welfare.

Will South Dakota be the spotlight in a political corruption scandal for the US Senate and SD Governors race

October 31, 2013 1 comment

scales-of-justiceThe big political news in South Dakota was reported by the Mitchell Republic yesterday with an eye-catching title: ‘Misconduct’ at state office was under investigation prior to former official’s death. This investigation revolved around alleged misconduct by the Governor’s Office of Economic Development (GOED) before Duagaard took office in 2011. The Mitchell Daily Republic sheds a light on the connection between this investigation that has been going on and a recent death:

The body of Richard Benda, 59, who oversaw the GOED as state secretary of tourism and development from 2006 to 2010, was found Oct. 22 in rural Lake Andes. The death is still under investigation, but authorities have said Benda died of a gunshot wound.

According to the story Governor Daugaard released this statement yesterday:

“Earlier this year, I became aware of alleged misconduct, prior to my administration, at the economic development office,” Daugaard said in the statement. “I asked the state Attorney General to investigate and provided all relevant materials to him. There has also been a federal investigation. I refer any further questions regarding the investigations to the Attorney General and the U.S. Attorney.

At this point I would like to highlight the fact Daugaard said “prior to my administration” in his statement. That is ‘trueish’. The prior Governor was current US Senate candidate Mike Rounds. Daugaard was the Lieutenant Governor during the Rounds administration. It is too early to know if this story will blow up into a full-blown scandal. If this does become a full-blown scandal it will be hard for Daugaard to disconnect himself from it since he was a part of the administration in question. Plus pointing too hard at Rounds will potentially kill the Senate campaign.

The other big news from this story is the fact that Brenden Johnson is involved in the investigation. Here are some snippets from the Argus Leader story by David Montgomery:

Daugaard referred all further questions to Attorney General Marty Jackley and U.S. Attorney Brendan Johnson.

Johnson said he “can’t confirm or deny the existence of any federal investigation” despite statements by Daugaard and Jackley that it exists, citing his office’s policies and ethical guidelines.

If Benda was related to the investigation, his death wouldn’t necessarily halt it. Speaking in general terms, Johnson said in some cases investigations continue even if the central figure dies during the process.

Even though Johnson won’t admit to being a part of the investigation, the circumstantial evidence seems to point towards his involvement. I concur with Mr Heidelberger at the Madville Times when he connects the dots of Johnson working on this case and choosing not to enter the US Senate race. This could be the big story for the 2016 election (assuming it is too late for Johnson to enter any 2014 race when this investigation is done). If this story becomes a full-blown scandal and Johnson is spearheading this investigation it will make him a tough opponent to beat for Senator Thune’s Senate seat. That is a big ‘IF”, but I would say it is likely. I wonder if that possibility would change Thune’s motions towards running for President?

When more information actually becomes available I will post more. Right now there is honestly too little information available to analyze the situation. It will be interesting to see if Rounds or Daugaard are involved in this potential scandal and how that will impact their support from DC special interest groups. It will also be interesting to see if this investigation will turn Brendan Johnson into a political powerhouse. Finally I would be interested to know if whispers of DCI misconduct also ring true. It is definitely looking like 2014 will be an interesting campaign season! We may see South Dakota highlighted for the wrong reasons in the Mainstream Media (they are going to love a Republican political corruption story!)

Would it really be illegal for Sebelius to enroll in the ACA Marketplace Exchange

October 30, 2013 9 comments

Updated 10-31-13 – It was reported after I wrote this that Sebelius is on Medicare, and thus does not qualify for the exchange. However Medicare is a voluntary program. She could theoretically dis-enroll and then be eligible for the exchange. It would not be a wise financial move for her to move to the exchange, but that was the point of the question.

Today I watched the Congressional hearing about the healthcare exchange problems with the US Health and Human Services Secretary Kathleen Sebelius in the hot seat. Honestly most of the hearing was a waste of time. Most of the Republicans spent their time attacking Obamacare instead of determining why the website roll-out of healthcare.gov had been such a debacle. By contrast most of the Democrats spent their time praising Obama and Sebelius for such a great healthcare plan. Neither side spent a lot of time actually looking at what went wrong or what should be done now. To make matters worse Sebelis had the standard answer of “I was not aware” for far too many questions.

There was one very interesting interaction towards the end however. Sebelius was repeatedly asked if she would put herself on the exchange like members of Congress are being forced to. She tried not to answer, but eventually said it would be illegal for her to do so. I found that odd. Having researched the Affordable Care Act for many projects over the last few years I felt pretty confident her statement did not ring true. So I decided to research and find out if her statement was in fact truthful.

First I decided to check out healthcare.gov (it was actually up, it went down just before her hearing) and found this topic:

Am I eligible for coverage in the Marketplace?

Most people will be eligible for health coverage through the Health Insurance Marketplace.

To be eligible for health coverage through the Marketplace, you:

  • must live in the United States
  • must be a U.S. citizen or national (or be lawfully present)
  • can’t be currently incarcerated

U.S. citizens living outside the U.S.

U.S. citizens living in a foreign country are not required to get health insurance coverage under the Affordable Care Act. If you’re uninsured and living abroad, you don’t have to pay the fee that other uninsured U.S. citizens may have to pay.

Generally, health insurance coverage in the Marketplace covers health care provided by doctors, hospitals, and medical services within the United States. If you’re living abroad, it’s important to know this before you consider buying Marketplace insurance.

Questions? Call 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325)

Residents of a U.S. territory

U.S. territories can decide whether to create their own Health Insurance Marketplace or expand Medicaid coverage. Residents of a U.S. territory aren’t eligible to apply for health insurance using the federal or state Marketplace.

Check with your territory’s government offices to learn about these options.

Hmm, this aligns with what I remember about eligibility to utilize the marketplace exchange. But then maybe the authors of this website forgot to include all eligibility requirements. So I decided to once again break out the Patient Protection and Affordable Care Act PDF and research eligibility.

Section 1411 of ACA has the eligibility determinations in question. Here is the beginning of this section:

SEC. 1411. PROCEDURES FOR DETERMINING ELIGIBILITY FOR EXCHANGE PARTICIPATION, PREMIUM TAX CREDITS AND REDUCED COST-SHARING, AND INDIVIDUAL RESPONSIBILITY
EXEMPTIONS.
(a) ESTABLISHMENT OF PROGRAM.—The Secretary shall establish a program meeting the requirements of this section for determining—
(1) whether an individual who is to be covered in the individual market by a qualified health plan offered through an Exchange, or who is claiming a premium tax credit or reduced cost-sharing, meets the requirements of sections 1312(f)(3), 1402(e), and 1412(d) of this title and section 36B(e) of the Internal Revenue Code of 1986 that the individual be a citizen or national of the United States or an alien lawfully present in the United States;

The rest of Sec 1411 deals with credits and exemptions (which does not include the Secretary of HHS). This section states individuals must be citizens or nationals of the US or a legal alien living in the US. Three other sections of ACA were referenced, but they do nothing but further restrict what a lawful resident is.

So now it is time to look at what ACA defines as a “qualified individual”. This can be found in Sec  1312(f):

(f) QUALIFIED INDIVIDUALS AND EMPLOYERS; ACCESS LIMITED TO CITIZENS AND LAWFUL RESIDENTS.—
(1) QUALIFIED INDIVIDUALS.—In this title:
(A) IN GENERAL.—The term ‘‘qualified individual’’ means, with respect to an Exchange, an individual who—
(i) is seeking to enroll in a qualified health plan in the individual market offered through the Exchange;
and
(ii) resides in the State that established the Exchange (except with respect to territorial agreements under section 1312(f)).
(B) INCARCERATED INDIVIDUALS EXCLUDED.—An individual shall not be treated as a qualified individual if, at the time of enrollment, the individual is incarcerated, other than incarceration pending the disposition of charges.

Really all this section did was exclude incarcerated individuals. So, unless Sebelius is hiding a secret incarceration, I can’t see how this would apply to her. I searched throughout ACA to see if there was something I missed (quite possible, it is HUGE). If anyone can find something please let me know. But from what I am reading both on healthcare.gov and within the bill as passed into law, it would NOT be illegal for Sebelius to enter into the marketplace exchange.

So was Sebelius willfully lying when she said it would be illegal for her to enter the exchange? I don’t think she sees it as a lie. As I mentioned before those who enter the exchange in 2014 are not allowed employer subsidies. It would be illegal for Sebelius to utilize the exchange marketplace and receive her employer subsidy (taxpayer subsidy, remember she works for us). In order for her to enter the exchange she would have to waive her subsidy and then use healthcare.gov to sign up for a plan in DC.

To summarize:

  • Unless Sebelius is an illegal alien or somehow hiding her being incarcerated there is nothing legal that prevents her from using the marketplace exchange.
  • Sebelius would have to give up her employer contribution to enter the marketplace exchange. It would be illegal for her to be subsidized on the marketplace exchange.
  • The Patient Protection and Affordable Care Act is still a pain the ass to read.

PS. If anyone finds something in ACA that contradicts my findings I would be more than happy to look at it. That is one of the crazy things about reading bills and codified law, there are so many contradictions that exist.

PPS. For some reason I couldn’t get this song out of my head while reading the text of Obamacare this time:

A new tax for miles driven is the wrong solution

October 29, 2013 4 comments

Recently the LA TImes published a story about the government entities looking to implement a new tax system based upon miles driven. A crumbling infrastructure along with increased mileage of newer vehicles are being touted as the reason this new tax is needed. I think the fact a new tax is being suggested highlights the current “lets create a new tax” environment that exists in politics today.

Lets look at the reasoning for this tax. This from the LA Times story:

The push comes as the country’s Highway Trust Fund, financed with taxes Americans pay at the gas pump, is broke. Americans don’t buy as much gas as they used to. Cars get many more miles to the gallon. The federal tax itself, 18.4 cents per gallon, hasn’t gone up in 20 years. Politicians are loath to raise the tax even one penny when gas prices are high.

I do actually believe higher gas mileage has had the consequence of lower tax revenues from the gas tax. For years there has been pressure for better fuel economy. The battle for better use of energy resources is winning! But now, thanks to that battle being won, DC politicians want to use it an excuse to create a new tax. A new tax would be more feasible if the only source of revenue for the government was through gas taxes. It is not.

USGovernmentSpending.com has some interesting numbers to look at for 2013 total federal and state spending. Here is a high level chart showing total 2013 spending in US by Federal, State, and Local governments.

govtspending2013chart

Chart Source USGovernmentSpending.com

Total spending between the Federal, State, and Local governments was projected to be about $6.4 trillion, with $3.7 trillion of that being the Federal government. Total spending on transportation was only 4% from all three sources. Total for the federal government was 3%. States spend a lot more on transportation at 8%. Looking at the above total spending it is not hard to find areas where money can be shifted. Here are a couple of suggestions of how to better spend taxpayer dollars to take care of the crumbling infrastructure:

  • Stop borrowing so much money! Governments spend much more in interest payments from our current ‘put it on the credit card’ policies than go to transportation. Even if 1% of overall spending could be shifted from interest payments to transportation that would be a large increase in the dollars available for infrastructure. This is why so many fiscal conservatives were mad when the debt ceiling was raised yet again with no real cuts. Money borrowed is NOT free! Every dollar going to interest payments could have been better used in other places.
  • Don’t spend so much on Defense! Defense is important and is actually one of the few government responsibilities mentioned in the Constitution. However that does not mean we should spend without regard to cost. DC politicians have been talking about a leaner and smarter military for years. It is time for DC politicians to stop sending pork to the military-industrial complex and actually work on a lean and effective military. Money saved there could easily be shifted to transportation infrastructure.

I could probably look at each spending area and make cases for each to be reduced. However I believe interest payments and defense spending are two easy places to get more resources for the crumbling infrastructure. A new tax is not needed. We need politicians in DC to stop pork spending and over-borrowing so we can actually pay for road maintenance. There may be other solutions as well. I just fear DC will continue its “we need a new tax” attitude without looking at other possibilities.

PS: I am going to blog about the privacy issues of this story on a different day. I will also deal with the supposed libertarian support for this concept at that time as well.

Categories: Taxes Tags: ,

Free Speech Week 2013 Summary

October 27, 2013 Comments off

FreeSpeechWeek_Logo_Main125Today is the final day of Free Speech Week 2013. On a personal level I feel it has been a successful week. I had the opportunity to speak with a couple of youth groups about freedom of speech and do some activities with them. I also found time to write a few blog posts on the subject. Here are my posts from this week:

I also had some other posts throughout the year about freedom of speech. A few of the more important posts include:

I hope to have more posts in the next year about free speech and freedom of choice. I really feel this is an important issue that too few Americans (even politically active ones) take time explore.

Free Speech Week 2013: Freedom of Speech quotes

October 27, 2013 Comments off

It is Day 6 of Free Speech Week 2013. I thought it would be a good time to post some of my favorite free speech quotes. The following list is in no particular order of favoritism or importance.

  • Frederick Douglass: To suppress free speech is a double wrong. It violates the rights of the hearer as well as those of the speaker.
  • Charles Bradlaugh: Without free speech no search for truth is possible… no discovery of truth is useful.
  • Neal Boortz: Free speech is meant to protect unpopular speech. Popular speech, by definition, needs no protection.
  • Jeff Dunham: I’ve skewered whites, blacks, Hispanics, Christians, Jews, Muslims, gays, straights, rednecks, addicts, the elderly, and my wife. As a standup comic, it is my job to make sure the majority of people laugh, and I believe that comedy is the last true form of free speech.
  • Dana Carvey: I think free speech is probably the coolest thing we have in this country, and again, you can label it hate speech and dismiss it, and then you’re allowed to censor it.
  • Thomas Sowell: Both free speech rights and property rights belong legally to individuals, but their real function is social, to benefit vast numbers of people who do not themselves exercise these rights.
  • George Washington: If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter.
  • Brad Thor: I live in America. I have the right to write whatever I want. And it’s equaled by another right just as powerful: the right not to read it. Freedom of speech includes the freedom to offend people.
  • George Orwell: If liberty means anything at all, it means the right to tell people what they do not want to hear.
  • George Carlin: Their only words. You can’t be afraid of words that speak the truth, even if it’s an unpleasant truth.

As a bonus here is one of my favorite Free Speech and Free Choice rants from Denis Leary in the movie Demolition Man:

And finally here is one of the greatest free speech songs out there and is a direct response to Tipper Gore and the PMRC. This is a rap song from Ice T (with Bodycount) and would be considered by many to be ‘explicit’. So if you don’t like a lot of “bad words” I wouldn’t watch it.

Free Speech Week 2013: South Dakota SB200 passed and violates free speech

October 25, 2013 Comments off

1322756701Free Speech Week 2013 continues. For today’s post I thought it would be worth looking at a free speech related item from the South Dakota Freedom Index scorecard. Specifically item number three is about political free speech. This from the index:

Freedom of Speech, Press
Senator Kirkeby introduced SB 200, a bill to criminalize anonymous political communication. Previously, state law mandated anyone spending $1000 or more on political communications, especially within 60 days of an election, to register with the SD Secretary of State and/or publish a disclaimer with the political communication. SB 200 changed the threshold on expenditures to $100 or more (including any in-kind donations) any day of the year. Violation is a misdemeanor. Political surveys and periodicals such as newspapers are exempt.

The SD Bill of Rights says, “Every person may freely [communicate] on all subjects.” The United States would likely have never become a nation nor ratified its Constitution without the use of anonymous political communication. Still, laws against slander and libel were enforced. Bills such as SB 200 tend to be used to silence political enemies through regulation, threats, and lawsuits. It passed the House 61-8 on Mar. 5, 2013 and passed the Senate 34-0 two days later. We have assigned pluses to the nays.

SB200 was a bill to “revise certain provisions concerning campaign finance”. As a political blogger I find this bills passage into law very troubling. Our legislators in Pierre have fallen for the war against the Citizens United that has been waging at the national level. During Free Speech Week 2012 I wrote a post about Citizens United. In that post I made the case tools of free speech, money specifically, should NOT be regulated by the government. Similar arguments could be used against SB200.

SB200 prevents the average citizens from exercising their political free speech anonymously. Without anonymity our country could never have grown to the wonderfully diverse society it has become. If someone is against the anonymous free speech of others they should use their free speech rights to put a different message out. Regulating political free speech just because some people hate ‘money in politics’ or because politicians ‘feel attacked’ is not the right direction for the United States, or South Dakota.

Instead of trying to create regulations to squelch political free speech our legislators should be working to strengthen free speech. Sadly most of our politicians in Pierre do not put free speech high on their priority list. I would like to thank the following legislators in the South Dakota House of Representatives that voted No to restricting free speech:

Feinstein (D-14)
Hawks (D-9)
Kaiser (R-3)
Kirschman (D-15)
Peterson (D-4)
Ring (D-17)
Schrempp (D-28A)
Wismer (D-1)

Unfortunately I am not able to thank any South Dakota Senators. None of them opposed this bill.

The SD Freedom Index scorecard brought up section 5 (free speech) of the SD Bill of rights. I would like to close this post with a portion of Section 26 because I feel SB200 attacked the concept of free government:

All political power is inherent in the people, and all free government is founded on their authority

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