Two months after the European political establishment suffered a crushing blow in the French elections, on Sunday afternoon we witnessed another demonstration of just how unpopular Europe’s political elite has become when German Chancellor Olaf Scholz’s ruling coalition was crushed in two regional elections in eastern Germany on Sunday, with populist parties on both the right and left winning about half the votes in both Thuringia and Saxony.

#BREAKING #Germany Exit polls indicate the far-right Alternative for Germany (AfD) party is poised to win the state election in Thuringia.

Marking the first time for a Right-wing party to lead in a German state since WWII. pic.twitter.com/sRsmHDlbJ0

— The National Independent (@NationalIndNews) September 1, 2024

The Alternative for Germany, often defined as “far-right” by most liberal media outlets, is on course for victory in Thuringia on 30.5%, according to projections Sunday for public broadcaster ARD; it represents the first victory for a German right-wing party on a state ballot since World War II (history buffs may recall that Thuringia is where the National Socialist German Workers’ Party, aka NSDAP,  won their first state election in 1929).

A German far-right party is projected to win in regional elections for the first time since 1945, exit polls show https://t.co/ydtdPV95A4

— CNN (@CNN) September 1, 2024

What is just as shocking was the voter revulsion to Germany’s ruling coalition: the three parties in Scholz’s ruling alliance — the Social Democrats, the Greens and the Free Democrats — between them got less than 15% in each of the two states, while the FDP missed the 5% threshold for getting into either regional parliament and the Greens fell short in Thuringia. The only mainstream party to do relatively well was the conservative CDU, which is projected to win in Saxony – by the narrowest of margin vs the ADP – and finish second in Thuringia.

Germany’s AfD party on course to become the strongest party in the German state of Thuringia.

Exit polls predict the anti-immigration party has gained some 33% of the vote, neck and neck in Sachsen.

The tide is turning. pic.twitter.com/PL35fJLxJH

— Tommy Robinson 🇬🇧 (@TRobinsonNewEra) September 1, 2024

Alice Weidel, a co-leader of the AfD, called the party’s performance “historic” and “a requiem” for the coalition in Berlin and said voters clearly want the AfD in government as the strongest party in Thuringia. Scholz’s coalition “should be asking itself if it can even continue in office,” Weidel told ARD. While it’s unlikely to be able to convince any other party to join it in coalition, with more than a third of the seats in the state parliament it could potentially block major decisions such as judicial appointments.

It’s not just the right that is soaring: in Sunday’s voting, a new far-left party, the Buendnis Sahra Wagenknecht, was on 15.8% in Thuringia and 12% in Saxony, according to early projections and exit polling. Founded only in January after Wagenknecht split from the Left party, it’s likely to play a key role in attempts by mainstream parties to keep the AfD out of power in Thuringia.

Today’s results are the latest bitter blow to German chancellor Scholz and his deeply unpopular government and highlight the risk it faces ahead of the next national election due in just over a year. The picture looks equally dire for another state ballot in three weeks in Brandenburg: the region that surrounds the capital Berlin and is home to Scholz’s Potsdam constituency.

Parties opposing arms supplies to Ukraine lead polls in the eastern German elections 09/01 pic.twitter.com/nm3Ot2nQwW

— Ignorance, the root and stem of all evil (@ivan_8848) September 1, 2024

After months of squabbling over spending priorities, nationwide support for the three ruling parties has dwindled to record lows, while support for parties opposing financial and weapons supplies to Ukraine continues to soar. Backing for the conservative CDU/CSU alliance is on around 32% – roughly the same as the SPD, Greens and FDP combined – and the AfD is in second place on about 18%.

According to Bloomberg, the crushing defeat for the unpopular ruling parties in Saxony and Thuringia could prompt renewed calls for an early general election and fuel debate about whether Scholz is the right man to lead the Social Democrats into the ballot next September.

Kevin Kuehnert, the SPD general secretary, said the results in the two regions also send a message to the national government in Berlin: “We need to explain and communicate our policies more and much better, this applies not only for Saxony and Thuringia but for Germany as a whole,” Kuehnert told ZDF in a TV interview, adding that “we must become more self-confident within the ruling coalition and show much clearer to voters what the SPD stands for.” Which of course, is not the problem: Germany as a whole knows very well what SPD’s policies are, and is revolting against them.

Despite its victory in Thuringia, the AfD, which Germany’s authorities have classified as “right-wing extremist” in both regions that voted Sunday as well as nearby Saxony-Anhalt, has no clear path to forming a government as all other political groups have ruled out cooperating with the party — a firewall similar to the one that thwarted Marine Le Pen’s far-right National Rally in France after President Emmanuel Macron called a snap legislative election in June. That should limit any impact on financial markets, which were unsettled by the rise in popularity of French fringe parties.

Wagenknecht, whose party’s policies include stopping aid for Ukraine and curbing immigration, again ruled out any cooperation with the AfD in Thuringia. She indicated that she was ready to govern in a coalition with the CDU and the SPD.

“I don’t think that we’re seen by voters as an AfD light,” she told ZDF. “We are simply closing a representation gap in the political spectrum.”

The CDU’s solid performance Sunday could also impact the process of choosing a conservative chancellor candidate. The leader of the party, Friedrich Merz, seems likely to secure the nomination and can claim some credit for the success in Saxony.

However, a number of other hopefuls can’t yet be ruled out, including North Rhine-Westphalia Premier Hendrik Wuest and Bavaria Premier Markus Soeder, who leads the Christian Social Union, the CDU’s sister party in the southern region.

Merz has said the CDU and CSU will decide on their joint candidate after the Brandenburg vote. The final state election before the next national ballot is at the beginning of March in Hamburg, the port city where Scholz used to be mayor and his SPD rules in coalition with the Greens.

Some 3.3 million people were eligible to vote in Saxony, which borders Poland and the Czech Republic, and about 1.7 million in Thuringia.

By Peter Tchir of Academy Securities

I could be extremely lazy this weekend and just repost (with an updated chart) the Heads I’m Smart, Tails I’m Stupid report as the market continued to flip-flop around. On Friday alone, the Nasdaq 100 rose 1.2%, gave it all back, and then ended up 1.2% (with a good chunk of the gain coming in the last 10 minutes of trading). And that was somewhat “mellow” compared to the price action after some earnings reports. I continue to remain concerned that liquidity is abysmal, though maybe that will improve as we enter September.

But I won’t be totally lazy, though we will try to keep this weekend’s note short.

My First Wargame

Two weeks ago, I had the pleasure of attending and speaking at the Naval War College. I learned a lot about wargames, both from a historical perspective and regarding their current application. I did not know that Fleet Admiral Nimitz credited much of the success in the Pacific to the time they had spent wargaming (and that the main thing they had not prepared for was Kamikaze pilots).

Our wargame was centered on a theoretical blockade of Taiwan by China in 2027. It was very interesting to watch how the teams responded and how easy it was for miscommunication to occur, even in a small room, with no separation in time zones. I was part of the China team (almost as though the organizer had read a lot of T-Reports and felt that was fitting). Despite what seemed like efforts to deescalate, it was eye-opening to see how easy it was to slip into escalation as one nation’s “deterrence” was another’s “provocation.” The organizers of the wargame did admit that earlier in the month they had run the same wargame, mostly with economists, and it very rapidly descended into calling in aircraft carriers (the one I participated in had a mix of people, including many veterans).

There were a few recurring themes, none of which were a major surprise, but still warrant just a couple of moments:

• Military competition with China. From ships, where China is rapidly outbuilding the U.S., to “efficient systems” (expensive missiles vs. drones), to technologies that we’ve “shelved” (like hypersonic weapons to some extent), adversaries have advanced significantly, and there were a lot of warnings. Not necessarily alarming, but certainly a potential “wakeup call” if we continue on the current path of increased competition.
• Chips. The importance of chips and manufacturing technology came up over and over again, and it was touched on during every part of the symposium. The most informative part of the symposium (for me) was that one of the heads of the “foundry” effort for a major U.S. chip company spoke. The scale and size of what “we” need to do is enormous – the CHIPS Act is just a starting point in terms of funding. It is encouraging that there is support from D.C. for the chip industry that seems highly likely to remain in place regardless of who wins the election. On a personal note, I did get some confirmation of Academy’s theory that the “traditional industrial areas” of the U.S. will benefit as we get more serious about reshoring manufacturing.
• Water. The availability of water for any type of manufacturing activity is likely to be key, and much of the traditional manufacturing base has an abundance of water (as well as students graduating from technical programs). Companies need to be thinking about the possibility that at least some portion of the demographic shift that we’ve seen over the last decade will slow (if not reverse) as we re-industrialize the nation. Maybe the rising inventory in homes for sale in Floria and Texas is a sign that this “pet theory” is starting to occur?

Whether we need a “Man on the Moon” or “Manhattan Project” type of moment to rapidly grow our capabilities remains unclear. That sort of “national agenda” might not be necessary, but it would go a long way and seems to create a lot of potential for the next president to act.

The Fog of War and the Economy

The “Fog of War” describes uncertainty (and to some extent confusion) in military planning and decision making. It seems to apply incredibly well to the economy (and markets) at the moment.

• Inflation. We are done arguing that inflation is coming down and that the spike in the first quarter was a statistical anomaly. We continue to stick to our simple “COVID Bump” model where goods had a sharp spike that has largely declined already, and that the services sector took longer to ramp up to “peak” inflation, but is also coming down. The real question now (since so many seem to finally have given up on inflation resurgence fears) is what is the floor on inflation? We have argued that Geopolitical Inflation will provide a floor on how low inflation can go. The process of “securing” supply chains, in a variety of forms, will be inflationary. The geopolitical risks to commodities will provide a floor to inflation. I’m starting to question that assumption, as the efforts so far to reshore, reindustrialize, and expand both traditional and nontraditional energy sources have been slower than I’ve expected. While I’m not there yet, I’m starting to think that the 2.5% crowd (which I’ve been in) might be too high and that we could see further reductions in inflation as more products become deflationary.
• The Consumer. The consumer will have a great say in the inflation story, but it is incredibly difficult to figure out where the consumer stands. For every good data point on the consumer, I’m pretty sure that we can come up with a weak data point. The data has been mixed. The consumer credit side of things seems the weakest. The current spending seems the strongest. I’m still leaning towards a slowdown in consumer spending, largely based on the view that the recent sales pulled forward demand and this caused the strong spending so far this summer, which will slow as we enter the autumn.
• Jobs. What to do with Friday’s NFP? One of the favorite activities of the T-Report (and hopefully a useful one) is examining the data for consistency. Are headline numbers consistent with the internal details? What things (like birth/death) seem off?
  

  57% of all YTD jobs are statistical fakes, thanks only to the Birth/Death adjustment pic.twitter.com/utYosI0k7S

  — zerohedge (@zerohedge) August 2, 2024

  Are we seeing consistencies between a variety of metrics, all purporting to measure the same thing, like JOLTS, AFP, and the Household and Establishment surveys (let alone the “employment components” of various other surveys)? The market is going to have to digest the preponderance of evidence on jobs this week! Will the market still react to the headline NFP data on Friday? Sure (and I will be on Yahoo Finance with a longtime friend and excellent economist to give our instant reaction), but for how long? Not only has the bias been towards downward revisions on a monthly basis, but also the annual revisions were quite high. The estimates (on Bloomberg) ran from a high of 208k to a low of 100k (ignoring 2 “outliers” the low is 125k). The average is 162k, with a median of 165k. But how do we react to a number when the “doubters” (I won’t call us conspiracy theorists) turned out to have a valid case? My order of importance on jobs this month will be:

  • Unemployment Rate. While this number is fraught with so many issues, it will likely be the biggest driver. If it improves, does that take the Fed off the table, and maybe reduce the flood of “Sahm Rule” hot takes? If it gets worse, but only due to an increase in labor participation, is it that bad? Not my favorite metric by any stretch of the imagination, but probably the most important.
  • JOLTS Quit and Hires rate. To some extent, I view this as “crowdsourcing” the labor market. People have a good sense of how easy it is to find a job and how likely their company is to let them go (long before the company lets them go). So given all of the uncertainty, I will overweight the importance of this data in my analysis on jobs.
  • ADP. I often wonder, given their dominance in the payroll business, why their data isn’t the “gold standard,” but it just isn’t (or hasn’t been). The fact that they didn’t publish for a period of time while changing their methodology isn’t particularly helpful either. But, I will spend more time than usual on ADP and suspect that the market will react more than usual as well (jobs are clearly the main Fed concern) and with the big revisions to NFP, more people will look to this data than usual.
• Don’t chart any economic data from January 2020 until September 2023. That is probably a bit extreme, but I find ignoring economic data from January 2020 until at least December 2022 is quite useful. We had a reasonably “normal” economy in 2018 and 2019. I want data that goes back at least a year (hence September 2023, though we could go back as far as January 2023). This analysis gives me a better comparison between “steady states” and is more helpful than including data that includes COVID and all the COVID responses/repercussions. It also makes smaller moves in the current data stand out more, as they aren’t dwarfed by the moves in 2020.

Understanding the current state of the economy is difficult enough with the data we have, let alone when we really start to question the accuracy and timeliness of the data.

Given all the uncertainties, I’m still in the “bumpy” landing camp. Not a hard landing, but an economy where the data, over time, shows that both the job market and the consumer are slowing. Not necessarily to recession levels, but to levels that make current valuations questionable.

Bottom Line

8 rate cuts in 8 meetings is too aggressive, unless the data slips to worse than “bumpy.”

• “Normal Yield” curves. I have to assume that every major news outlet has their finger hovering above the send button on a story about how the yield curve is no longer inverted, and I expect they will get to use that soon. 2s vs 10s closed at -2 bps on Friday, and I think that should drift towards 20 as we near the election (if not sooner). The 10-year yield has remained stubbornly below 4%, but the fact that we sold off on Friday, despite good inflation data and the normal “month-end extension” that typically helps bonds, means we can see that get back above 4%.

“Rotation” trades should continue in the equity space. The setup seems similar to last November where we developed consistent outperformance rather than the “crazy” moves we had for a couple of days last month.

Credit. I remain comfortable with credit as my concerns are far more about “valuations” than they are about any deep cuts to earnings and growth (bumpy isn’t the same as recession).

Liquidity remains my number one fear and I think it continues to create asymmetric risk, where moves to the upside are bigger than normal, and moves to the downside will be bigger than normal on steroids!

Normally, we’d be welcoming everyone back to “normality” after a “slow summer,” but this summer was anything but slow.

Trust but verify might be the best motto for all data in the coming weeks!

Former President Donald Trump says he supports a public ban on smoking marijuana, but that people shouldn’t be criminalized for carrying “small amounts” of weed.

“In Florida, like so many other States that have already given their approval, personal amounts of marijuana will be legalized for adults with Amendment 3,” Trump wrote Saturday on Truth Social. “Whether people like it or not, this will happen through the approval of the Voters, so it should be done correctly.”

Florida’s Amendment 3, titled Recreational Marijuana, would allow adults who are at least 21 years of age have up to 3 ounces of marijuana (a ‘small amount’?) and up to 5 grams of marijuana concentrate. At present, the state only allows medical patients with qualifying conditions to legally buy and possess cannabis.

If the measure passes, Florida would become the 25th state in the US to legalize weed for personal use.

That’s cool with Trump, as long as the state prohibits public use “so we do not smell marijuana everywhere we go.”

“At the same time, someone should not be a criminal in Florida, when this is legal in so many other States,” Trump continued. “We do not need to ruin lives & waste Taxpayer Dollars arresting adults with personal amounts of it on them, and no one should grieve a loved one because they died from fentanyl laced marijuana.”

As the Epoch Times notes further, Florida state Sen. Joe Gruters, a former state Republican Party chairman, cheered Trump’s stance on Amendment 3.

“I am incredibly proud to have President Trump stand alongside us in our effort to end needless arrests and incarcerations of adults for simple possession of marijuana and to give Floridians the same individual freedom to choose safe, tested products that more than half the country already enjoys,” Gruters wrote on X.

Gruters has pledged to push legislation to make sure public spaces remain smoke-free if voters approve the ballot measure in November, a proposal that now has Trump’s backing.

“President Trump’s call for smart implementation is exactly why I filed a bill to prevent smoking in public,” the Gruters said. “Marijuana should be consumed at home, and I will work alongside my colleagues in the legislature to ensure Florida does this right.”

The ballot measure faces opposition from Gov. Ron DeSantis, other state Republican leaders, and police groups including the Florida Sheriffs Association. Critics of Amendment 3 say it will go beyond decriminalizing personal use of marijuana and lower the Sunshine State’s overall quality of life.

“It’s basically a license to have it anywhere you want,” the governor said in April at a press conference. “So no time, place, and manner restrictions. This state will start to smell like marijuana in our cities and towns.”

The Florida Sheriffs Association issued more severe warnings, arguing that the legalization would increase criminal activity, illegal use among adolescents, traffic accidents, homelessness, and hospitalizations.
“Marijuana legalization advocates have argued that legalization will reduce overall crime, but in ‘legal’ states, marijuana crime rates have risen at a faster rate than other states across the country,” the group stated in a resolution opposing Amendment 3.

To help defeat Amendment 3, DeSantis has launched Florida Freedom Fund, a political spending committee chaired by James Uthmeier, his chief of staff who served as his campaign manager during the unsuccessful bid to win Republican nomination for White House. The group is also devoted to stopping Amendment 4, which would establish a constitutional right to abortion before fetal viability.

The measures need approval from at least 60 percent of voters to become part of the state’s governing document.

Authored by Chase Spears via RealClearDefense,

There is a saying among veterans that we’re hard on one another, but that we’ll circle the wagons when civilian outsiders attack. Perhaps in another time that was truly the rule. If so, such a tradition expired long before my enlistment in the fall of 2003. Regardless, one rule remains intact for generations of veterans: lie about your military service record at your own risk. Governor of Minnesota and vice-presidential candidate Tim Walz is learning that lesson. It’s one he should have known long ago as a retired senior noncommissioned officer.

In the Army, the noncommissioned officer (NCO) leads troops directly. Officers command, plan, and make policy. NCOs make it happen. Good NCOs are the repository of common sense in the ranks, the ones who know their troops well. Having worn the rank of Sergeant, and then becoming an officer myself, I often spoke of the importance of officers having NCO supervision. There’s a reason most U.S. Army officers have an enlisted counterpart, wisdom that was baked into the system long ago. They are integral to a healthy balance of leadership in the military setting.

It is against this backdrop that Tim Walz’s behavior stands out in such stark relief to the Creed of the Noncommissioned Officer, which states, “I will not use my grade or position to attain pleasure, profit, or personal safety.”

The problem is not Master Sergeant Walz moving on to a political career as a civilian. He is following in the wake of many who have come before him—all the way back to the nation’s early years. In the U.S., doing time in the military is frequently a catalyst for one’s political ambitions given the favorable view the public has toward the troops. Consider John Glenn: he was recruited to run for senate specifically for being a Marine and an astronaut. The same can be said of Senator Mark Kelly. Though Americans do not often elect veterans as presidents, they routinely elect them to Congress.

Had Walz retired, gone back to civilian life, and been honest about his military record, this discussion would not be happening. Had he spoken of himself as a “retired Master Sergeant, and former Command Sergeant Major of the 1st Battalion, 125th Field Artillery,” that would have been fine. I retired last year having been selected for promotion to Lieutenant Colonel. But I chose to depart as a Major rather than waiting months for the date of promotion and completing an additional three years to maintain the higher rank in retirement. Walz himself made a deliberate choice not to complete the requirements to remain a Command Sergeant Major and was returned to the rank of Master Sergeant in retirement.

Everyone in the military leaves eventually, one way or another. Originally planning for a 30-year career, I chose to leave at 20 years for reasons of conscience and a desire to be more present with my family, after having served tours in combat zones. It seems Walz timed his retirement out of a desire to avoid combat deployment altogether, despite claims of reenlisting specifically to fight in the Global War on Terrorism. There were plenty of reasons why one would dislike the idea of deploying to Iraq, a war the Bush Administration never should have started. Having completed the initial requirements that he signed up for, Walz had every legal right to drop out of the Sergeant Majors academy and retire, instead of continuing to lead his battalion. It is fair to debate the associated honor or dishonor of Walz stepping away as a senior leader when his unit needed him and going behind the back of his immediate supervisors to do so. But the fact remains, it was his choice to make as a free citizen. Many others have made the same choice.

But choosing to step down and then create a false war hero identity for political benefit is deserving of the loudest contempt. Walz attempted to cast himself in the likeness of Rambo, but proves to be more of an emasculated, dancing retired Master Sergeant on the political stage.

Once freed of the shackles associated with his military status, Walz falsely branded himself a combat veteran, a claim debunked by the same left-leaning press that’s doing all it can to ensure he and Harris win in November. Every bit as lacking in ethical prowess, the acolytes running Walz’s public relations effort claim that he merely “misspoke.” That is a lie. Veterans know if they served in a designated combat theater and if they carried a weapon in a war zone. These are not distinctions taken lightly. Suggestions otherwise spit in the faces of those who have been on the ground in dangerous places, putting their lives on the line in America’s defense.

One can criticize Walz for his myriad of insane policy choices, a short list of which includes: tampons in boys’ bathrooms, setting up COVID snitch hotlines, letting Minneapolis burn in 2020, joining Minnesota to a list of states that aim to disregard the electoral college, enthusiastic homosexual grooming of children in public schools, and signing legislation that stripped the rights of children who survive an abortion attempt. He deserves condemnation for playing the “military defender of the nation” card while also saying that there is no right to free speech in that pesky Constitution he pledged allegiance to as a soldier. Walz’s record as an elected official is reprehensible. Even without bringing his time in the National Guard into the conversation, he is unqualified for leadership at any level. But since he lied about his military service for personal gain repeatedly over the years, it is right to add that to Walz’s long list of actions that render him unfit for political office.

Chase Spears served as a U.S. Army public affairs officer for 20 years, retiring as a Major-Promotable in 2023. Among other pursuits, he enjoys writing about courage, civil-military relations, communication ethics, and policy. Chase holds a Ph.D. in leadership communication from Kansas State University, where his research focused on the political realities of military norms and actions. He can be found on X, LinkedIn, YouTube, and Substack at @drchasespears.

Former President Donald Trump said on Friday that he would vote no on a Florida amendment that would guarantee the right to abortion before viability – which is typically around 24 weeks of pregnancy, and potentially up until birth.

According to Trump, a six-week ban is too short, and a low allowing a nine-month abortion is too radical. The amendment, the “Amendment to Limit Government Interference with Abortion,” will be on the ballot in November, and seeks to overturn the state’s six-week abortion ban and bar future legislation limiting access to abortion.

During a Thursday interview with NBC News, Trump was asked how he’d vote on the measure – replying that the current six-week ban is ‘too short.”

After the MSM went nuts over his answer, his campaign clarified his stance.

“He simply reiterated that he believes six weeks is too short,” said national press secretary Karoline Keavitt in a statement.

Elaborating further on Fox News Friday, Trump said that he would vote against the measure “because it’s radical.”

“And when you talk about radical … doing an abortion in the ninth month is unacceptable to anybody,” he said. “There’s something in between, but the six [weeks] is too short, it’s just too short a period, and the nine months is unacceptable.

“But for that reason, for the radicalization on the Democrat side, we’re voting no,” Trump continued.

As the Epoch Times notes further, the proposed amendment states that “no law shall prohibit, penalize, delay, or restrict abortion before viability or when necessary to protect the patient’s health, as determined by the patient’s healthcare provider.”

The amendment would not “change the Legislature’s constitutional authority to require notification to a parent or guardian before a minor has an abortion.”

Trump also declined to commit to vetoing a federal abortion ban if elected, saying that states are handling it effectively.

“Well, what’s happening is you’re never going to have to do it because it’s being done by the states,” Trump said. “The states are voting, and the people are now getting a chance to vote, and this is the way everybody wanted it.”

On Thursday, Trump took credit for the U.S. Supreme Court’s 2022 decision that returned power to make abortion laws to the states, having appointed three of the five justices who voted for it.

“If you go back 10 years, 15 years, all they wanted to do is they wanted it back in the states,” he said. “They didn’t want it to be in the federal government. I was able to do that.”

Reproductive issues, including IVF and abortion, have been a key issue of both party’s platforms during this election cycle.

Trump has promised to offer free in vitro fertilization (IVF) to women in the United States, with details to be announced in the next couple of weeks.

He said Thursday that his administration plans to fund or require insurance companies to cover IVF, making it more accessible to Americans. While the plan’s specifics, including coverage for same-sex couples, are still under consideration, Trump emphasized his support for IVF, citing its benefits for families.

“We’re doing this because we just think it’s great,” he said Thursday. “And we need great children, beautiful children, in our country. We actually need them.”

The issue gained attention after Alabama’s Supreme Court ruled that embryos are legally children, leading to a temporary halt in IVF services in the state.

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The IRS has made little progress in complying with a Treasury Department directive that asked the agency not to target people earning less than $400,000 a year with higher audit rates, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA).

In August 2022, the Inflation Reduction Act (IRA) granted the IRS almost $80 billion in funding for a 10-year period, an amount that was eventually reduced to $57.8 billion. Out of this, $24 billion is set aside for enforcement activities. The same month, the Treasury secretary issued a directive to the IRS commissioner asking the tax agency not to use the additional IRA funding to boost audits on small businesses or households making less than $400,000 a year.

The Aug. 26 TIGTA report found that the IRS has made only “limited progress” in developing a methodology to comply with the Treasury directive, citing “planning and implementation challenges.”

To comply with the 2022 Treasury directive, the IRS must first establish a historical “base year” audit rate for taxpayers with incomes less than $400,000 with which to compare future compliance.

Both the IRS and the Treasury have selected tax year (TY) 2018 as the base year. However, as of May 2024, the two agencies “have not finalized the methodology to calculate the TY 2018 audit coverage rate for tax returns with TPI [total positive income] under $400,000,” the report notes.

The primary reason that the 2018 audit rate has not been calculated is that both the IRS and the Treasury have been exploring alternatives to the current methodologies for such calculations, the report notes.

The IRS already calculates audit rates based on income categories every year. For instance, for TY 2018, the audit rate for TPI between $200,000 and $500,000 was 0.3 percent.

Officials from the IRS told the TIGTA that the agency is not considering this standard approach for determining audit rates to meet the 2022 directive because it wants the flexibility to audit taxpayers who may purposefully underreport their TPI below $400,000 given that the agency intends to boost audit rates above this level.

Not an ‘Urgent Matter’

In addition, the IRS does not view the issue as an “urgent matter” since the agency believes it has enough time to develop the methodology, the report states.

The 2022 directive will look at audit rates beginning with tax year 2023, which will only be examined in fiscal year [FY] 2025, beginning in October this year.

“The IRS believes it has more time to work with the Treasury Department to finalize the audit coverage rate,” the report states. “However, given the complexity of developing the methodology and that FY 2025 is only a few months away, we believe the IRS needs to expedite the finalization of its plan to comply with the Treasury Secretary’s Directive.

“The IRS was unable to provide TIGTA with a timetable or milestone dates to ensure that it is progressing toward completion. The absence of timetables and milestones increases the risk that the methodology may not be developed in time to ensure compliance with the 2022 Treasury Directive.”

After a draft of the report was submitted to the IRS, the tax agency’s deputy commissioner, Douglas W. O’Donnell, said the IRS remains committed to administering the tax code in line with the Treasury directive.

This commitment is “reflected in the enforcement efforts” undertaken by the agency since the IRA was implemented in 2022, the deputy commissioner said. For instance, the IRS has taken steps to “shift more tax compliance attention to high-income earners, partnerships, large corporations, and abusive promoters,” he stated.

Auditing Below-$400,000 Earnings

In the IRS’s response to the draft TIGTA report, O’Donnell said that the agency “will not increase audit rates relative to historical levels for small businesses and households making under $400,000 per year.” Jonathan Curry, a media relations officer from the IRS, confirmed this stance in an emailed statement to The Epoch Times.

In September last year, the agency said it was shifting attention to “wealthy from working-class taxpayers.”

However, during an October 2023 hearing at Capitol Hill, IRS Commissioner Danny Werfel hinted that audits could rise for this demographic.

During the hearing, Rep. Virginia Foxx (R-N.C.) asked the commissioner whether he was “guaranteeing” that he would “not increase the number of audits of people making less than $400,000 a year.”

Werfel indicated in his reply that while this was his “marching order” to the tax agency, the IRS may not be able to fulfill its promise.

“If we fall short of that, I will be held accountable for it,” he said.

In a November post, Sen. Mike Crapo (R-Idaho) criticized the “ambiguous” stance on the matter. Crapo claimed that the $400,000 level is applicable to total positive income, which includes all incomes earned during a year without accounting for losses.

“This could impact many taxpayers who in reality make far less than $400,000. How would this affect an Idaho small-business owner whose gross sales generate more than $400,000, but after expenses and losses, takes home much less?” he asked.

“The directive also appears to include a marriage penalty, as the $400,000 threshold applies to a single individual, while couples must share it.”

This issue was mentioned in the recent TIGTA report. Couples who make $400,000 in combined income are seen as exceeding the $400,000 threshold for higher audit rates, even though they may each make less than this amount.

“When asked if this would be unfair to those married taxpayers, the IRS stated that the 2022 Treasury Directive made no distinction between married filing jointly and single households, so neither will the IRS,” the report states.

“Further, the IRS mentioned that it would be best to keep the threshold at $400,000 regardless of filing status to make it easier for the IRS to monitor progress moving forward.”

Democrats (and Neo-Cons) never actually abandon an agenda, even if the majority of the population is against it.  Instead, they look for the backdoor and pass legislation subversively by hiding it within other measures.  The Green New Deal was a wildly unpopular concept rooted in UN-related climate directives on carbon emissions that would, if fully enforced, destroy the US economy in a decade or less. 

The EU in particular has been aggressive in expediting similar programs which now threaten the agricultural base of half the Europe. This has led to rising farmer protests and given momentum to “far-right” movements, a prospect that the social engineers at the EU Commission seem to fear more than anything else.  Their solution?  They are attempting to bribe farmers with subsidies and have offered to lessen the number of visits farms would receive from bureaucratic agents armed with fines and red tape.  How nice of them…

As Jeremy Clarkson has cleverly proven in his show ‘Clarkson’s Farm’, trying to operate an agricultural business almost anywhere in Europe or the UK is a regulatory nightmare that would put most farmers in the US out of business immediately (America is headed in this direction).  And that’s without the benefit of carbon emissions rules.  Subsidies are the only thing keeping them alive, but the real trick is that the strict regulations force farmers into a position where they need subsidies.  It’s a government enforced racket.

Europeans suffered supply chain collapse and true famine during and after WWII and the experience is still burned into their collective cultural memory.  It’s hard to say if the bribery scheme will work out the way the EU elites hope.  Once carbon rules are passed and accepted as the norm, though, there’s no chance that they will be rescinded.  They will continue to be enforced even when food inflation skyrockets again and mass starvation becomes a reality.

In the US, staunch opposition from conservatives prevented the direct passage of the Green New Deal.  Biden denied his administration had any intention of pursuing GND policies in 2020 during a debate with Donald Trump.

Biden was asked by moderator Chris Wallace if he supported the Green New Deal:

“No, I don’t support the Green New Deal,” Biden said. 

“Oh you don’t? Oh, well, that’s a big statement,” Trump interrupted. 

“I support the Biden plan that I put forward,” Biden said, “which is different than what (Trump) calls the ‘radical’ Green New Deal.” 

Of course, Biden would later covertly embed carbon policies into his “Inflation Reduction Act” – A piece of legislation that utterly failed to accomplish its name (CPI measurements have gone down, but inflation has not), but succeeded in launching the first stage of climate controls outlined in the GND.  Biden has continued to deny that the GND is a goal of his administration, but Kamala Harris seems to have spilled the beans in her first major media interview since she became the Democratic candidate.   

Holy Shlit this is so bad

In the first clip, Kamala just admitted that the Inflation Reduction Act was a backdoor way to get the Green New Deal passed

She totally forgot the cover story they’ve been saying all alongpic.twitter.com/MeijpHA5lX

— Jack Poso 🇺🇸 (@JackPosobiec) August 29, 2024

“I think the most important and most significant aspect of my policy perspective and decisions is my values have not changed…You mentioned the Green New Deal. I have always believed – and I have worked on it – that the climate crisis is real, that it is an urgent matter to which we should apply metrics that include holding ourselves to deadlines around time.”

Running damage control, the Harris campaign claimed after the interview that she “does not” support the Green New Deal.  Except, she just said that her “values have not changed” in reference to the Green New Deal.  The ‘Inflation Reduction Act’ was a Trojan horse, and it’s only the beginning if Harris becomes president.

Man-made climate change theory is perhaps the biggest scientific fraud in our modern era, with absolutely no hard evidence that global warming is caused by human industrial or agricultural activity.  Official temperature records used by climate scientists only date back to the 1880s; this is a tiny sliver of time in the Earth’s climate history.  When we examine the long term temperature record there have been numerous warming periods long before human created emissions.

When we compare long term temperature records to the long term carbon record, it becomes clear that carbon-based emissions have little to no influence over the Earth’s climate.  Correlation is not proof of causation, and in many cases there isn’t even evidence of correlation.  

The Green New Deal has nothing to do with global warming and everything to do with environmental communism.  One of the primary reasons why the GND failed to gain public support was because it included “Climate Justice” protocols which are designed to redistribute the wealth of richer nations over to poor nations.  This same agenda has been promoted by globalist institutions like the Summit For A New Global Financing Pact, which has called for the IMF and World Bank to “administrate” these carbon taxes. 

In other words, the globalists get billions (or trillions) in funds annually through carbon regulations, then they use that cash as leverage to pressure nations to adopt whatever policies they want.  In the meantime, richer western nations break down economically until everyone is equally poor and the globalists control the planetary pocket book.  In essence, it’s a modern-day form of feudalism in the name of a climate crisis that doesn’t exist. 

Authored by Ben Bartree via Armageddon Prose,

Berkeley Law School Dean Erwin Chemerinsky, promoting his very patriotic book “No Democracy Lasts Forever: How the Constitution Threatens the United States,” recently penned an op-ed and appeared on MSNBC to float the idea that we need to toss out the United States Constitution — arguably the most eloquent and functional if imperfect governing document ever written, which every Western nation has modeled their own on — and replace it with something a little more Democratic™.

Here the psychopathic cross-eyed nerd — who would be the first to go in the kind of French Revolution-style chaos he’s fomenting, like Piggy in Lord of the Flies — explains.

Via Los Angeles Times (emphasis added):

“No matter the outcome of the November elections, it is urgent that there be a widespread recognition that American democracy is in danger and that reforms are essential. No form of government lasts forever, and it would be foolhardy to believe that the United States cannot fall prey to the forces that have ended democracies in many other countries.

Although the causes are complex, many of today’s problems can be traced back to choices made in drafting the Constitution, choices that are increasingly haunting us. After 200 years, it is time to begin thinking of drafting a new Constitution to create a more effective, more democratic government.

Signs abound that American democracy is in serious trouble. Confidence in the institutions of American government is at an all-time low. The Pew Research Center has been tracking public trust in government since 1958. It has gone from a high-water mark of 77% in 1964 to our contemporary 20%.* A poll in September 2023 indicated that only 4% of U.S. adults said the American political system worked “extremely or very well.” A recent Gallup poll had only 16% of Americans expressing approval for how Congress is performing its job.

Especially individuals in their 20s and 30s are losing faith in democracy. A Brookings Institution study found that 29% of “young Americans say that democracy is not always preferable to other political forms.””

First of all, “democracy” is a broad term that means different things in different contexts. When it’s used generally, it just means rule by the people, and in that sense is the antithesis of authoritarianism of various stripes.

But when it’s used as a specific governing model, direct democracy, of “pure democracy,” is a euphemism for mob rule. This is not what the Founders intended, because anyone who has read Lord of the Flies understands enough about human nature to foresee the outcome.

Second, the reason no one trusts the government is because it’s run by crooked totalitarian bastards — not because of academic concerns over the nuances of the Constitution.

But they’d rather not talk about any of that on MSNBC or any corporate state media, because they are functionally the state.

Continuing:

“There is an alternative to a spate of separate amendments: starting fresh by passing a new Constitution. It does not take much reflection to see the absurdity of using a document written for a small, poor and relatively inconsequential nation in the late 18th century to govern a large country of immense wealth in the technological world of the 21st century.

It may seem strange and frightening to suggest thinking of a new Constitution at a time of great partisan division. But that existed in 1787; in many of the states, the Constitution was just barely ratified.”

Ben Bartee is an independent Bangkok-based American journalist with opposable thumbs.

Follow his stuff via Substack. Also, keep tabs via Twitter.

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Two Georgia election workers who won a $146 million defamation judgement against Rudy Giuliani have asked a federal judge to grant them control over the former NYC Mayor’s assets.

In a Friday filing in the Southern District of New York, mother and daughter Ruby Freeman and Wandrea Moss asked for control of Giuliani’s Florida condo, New York apartment, and various other assets – including his Mercedes SL500 and numerous watches.

“Now that Mr. Giuliani’s bankruptcy case has been dismissed, Plaintiffs are finally in a position to receive a measure of compensation by enforcing their judgment,” reads the filing.

“In this motion, Plaintiffs seek two remedies to which they are entitled under New York law: an order requiring Mr. Giuliani to turn over personal property in his possession in satisfaction of the judgment, and an order appointing Plaintiffs as receivers with the power to take possession of, and sell, both real and personal property that Mr. Giuliani does not turn over.”

In addition to the above, the mother-daughter pair are demanding sports memorabilia (a signed Yankee Stadium picture, Joe DiMaggio shirt, and Reggie Jackson’s picture), three Yankee World Series Rings, and another diamond ring. In total, the two women are looking to collect around $10 million in assets – a fraction of what a Washington jury awarded him.

As the Epoch Times notes further, Giuliani accused the women of mishandling ballots after a video clip surfaced of them pulling ballots out of large containers from under the tables after observers had gone. An investigation by the Georgia Elections Board cleared Freeman and Moss of wrongdoing, but mother and daughter said the damage had been done.

Prior Legal Battles

Giuliani spokesperson Ted Goodman criticized the filing as a step “designed to harass and intimidate the mayor” while he’s appealing the “objectively unreasonable” judgment.

“This lawsuit has always been designed to censor and bully the mayor and to deter others from exercising their right to speak up and to speak out,” Goodman said. He contends that “the justice system has been weaponized” against Giuliani “and so many others for strictly partisan political purposes.”

The initial verdict was for $148 million but lowered slightly in a subsequent judgment by a judge in Washington. Judge Beryl A. Howell rejected his attempt to dismiss the judgment.

Shortly after the verdict, Giuliani filed for bankruptcy. Troubled by Giuliani’s repeated “uncooperative conduct,” U.S. Bankruptcy Judge Sean Lane decided in July to dismiss the case. Lane labeled Giuliani a “recalcitrant debtor” and said he had thumbed his nose at the bankruptcy process while seeking to shield himself from the defamation judgment and other debts.

According to the filing, Giuliani disclosed that his New York apartment was valued at $5.6 million, while his Florida condo was valued at $3.5 million. The former Trump adviser also testified that the Trump 2020 campaign and Republican National Committee owed him “about $2 million.”

The Aug. 30 filing repeatedly noted Giuliani’s refusal to cooperate with court orders.

In his most recent financial filings, Giuliani said he had about $94,000 cash in hand at the end of May, while his company, Giuliani Communications, had about $237,000 in the bank. A main source of income for the 80-year-old former mayor has been a retirement account with a balance of just over $1 million in May, down from nearly $2.5 million in 2022.

A New York court disbarred Giuliani in July over his statements about the 2020 election.

The Associated Press and Catherine Yang contributed to this report.

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: Between 2013 and 2022, 15 nonprofits each received over $1 billion from the federal government for foreign, nonmilitary projects, according to a new report from the Congressional Research Service.

Key facts: Six thousand non-governmental organizations, or NGOS, received grants and contracts from the U.S. Agency for International Development, but 20% of the money went to just 10 groups. Four of them are for-profit enterprises.

Almost $7 billion went to two particularly unworthy organizations.

Non-profit research group RTI International accepted $2.3 billion for humanitarian projects around the world, even though past reports have warned of issues with RTI’s spending.

Various audits from 2006 to 2014 claimed that RTI invented “fictional beneficiaries” to make an anti-malaria campaign seem more effective than it really was. They also sent computers to a Nicaraguan school that didn’t have electricity and billed the federal government for teacher salaries in Senegal that had already been paid, according to the audits.

Catholic Relief Services was the top recipient of federal money — $4.6 billion — singlehandedly accounting for more than half of the funds sent to faith-based organizations.

Six of their former board members were named by a Pennsylvania grand jury in 2019 for allowing sex abuse in the Catholic Church. Catholic Relief Services was also found guilty in 2022 of discriminating against a gay employee.

The federal government also sent $50 billion in foreign aid to groups whose names are redacted from public databases, according to the report. In total, Congress gave $66 billion in foreign assistance in FY2023.

Background: A significant portion of USAID’s funds go toward the Middle East, amounting to almost $21 billion from 2021 to 2023, according to OpenTheBooks.

That included $1.4 billion in cash transfers to Jordan, more than any other foreign nation received. The Congressional Research Service quantified over $5 billion in budget assistance to Jordan from 2013 to 2022; no other country received more than $2 billion.

OpenTheBooks also identified some odd initiatives funded in the Middle East. The U.S. spent $3.3 million on “women entrepreneurship development” in Gaza and $339,000 to convince Saudi Arabians to stop keeping cheetahs as pets.

Summary: It’s vital for the U.S. to help its allies, but spending should be limited to legitimate entities with proven records of being good stewards of taxpayer money.

 The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com