By John Carney
Lois Lerner, the IRS official who headed the division that targeted Tea Party and other conservative groups for special tax scrutiny, invoked her Fifth Amendment right to refuse questions before Congress on Wednesday.
But that doesn't mean that she won't be forced to answer questions. In fact, it's relatively easy for Congress to force her to testify.
In general, Congress hates when government officials refuse to answer questions. This time, of course, it is especially those in the House's Republican majority who are unhappy.
Republican Darrell Issa, the chairman of the House Oversight Committee, required Lerner to come before the committee and invoke her Fifth Amendment in person at the hearing, rather than just letting her lawyer inform the committee that she's not going to answer their questions. That's not something you do to a witness you regard as friendly.
Her lawyer has said that requiring her to appear at the hearing served "no other purpose than to embarrass or burden her." That's half true. It certainly is a burden and an embarrassment to have to stand up in front of the nation and refuse to answer questions from elected representatives. Regardless of what the law says about this, a lot of ordinary folks think that only criminals fear self-incrimination.
But there's a broader purpose served by making her appear before the committee. Very often seeing public officials appear before Capitol Hill panels helps to focus public attention on government abuse—even when the public officials refuse to answer the questions put to them by lawmakers. Perhaps especially when the officials refuse to testify. Think of Oliver North refusing to testify before the Senate in 1986.
A lot of regular folks watching this unfold will wonder why the sons of guns who refuse to answer questions about possible government abuses cannot just be fired. The sophisticated folks among us tend to shake their heads, wondering why so many people don't understand that the Fifth Amendment right against self-incrimination includes a right not to be fired from a government job for refusing to testify. Threatening a government official's livelihood is just another form of compelling self-incrimination, the sophisticates say.
As is usually the case, however, the ordinary folks are closer to the truth than the sophisticates. Congress can require Lerner to choose between testifying and losing her job. But the cost of putting this choice to her is granting her immunity from any future prosecution based on what she says before Issa's committee.
"[The government] has every right to investigate allegations of misconduct, including criminal misconduct by its employees, and even to force them to answer questions pertinent to the investigation, but if it does that it must give them immunity from criminal prosecution on the basis of their answers," Judge Richard Posner explained in a 2002 case, Atwell v. Lisle Park District.
This is what happened when Oliver North invoked the Fifth Amendment in the Iran-Contra hearings. The Congressional investigating committees found the need for his testimony compelling enough that they granted him immunity from being prosecuted for the contents of his testimony and required him to appear before the committees.
The case for doing the same thing in the IRS case is pretty persuasive. Even if Lerner authorized the targeting of the Tea Party groups, there's a good deal of doubt that she could be criminally prosecuted for doing so. No federal statute that I'm aware of directly criminalizes that kind of behavior, and federal courts refuse to impose criminal penalties for just doing bad things that Congress hasn't specifically outlawed. So granting her immunity from prosecution might not actually involve giving anything up at all.
What's more, Lerner's testimony could be instrumental in understanding two things that are still murky about the IRS targeting scandal.
First, we need to know how deep this goes in the IRS. Is this conduct deeply ingrained in the organization? How many employees were involved? How many different offices? Was this a huge deviation from normal IRS activity or something that involved just inching over very blurry lines?
Second, more importantly, we need to know how high up this goes. Was Lerner the top official involved? Or were her superiors aware of what was happening? Did the IRS see itself as acting alone here or as part of a broader government effort to crack down on the tea-party groups?
Surely a better public understanding of how the IRS targeting program developed would be worth the price of granting Lerner immunity from prosecution for her answers to Congress.
Another advantage to granting Lerner immunity is that it might lead to evidence of actual criminal wrong-doing on the part of others in the IRS or elsewhere in the government. Lerner's immunity wouldn't extend to them and she cannot refuse to testify to avoid incriminating fellow IRS employees.
Lerner is not a big fish and whatever she might have done probably is not a federal crime anyway. If Issa and the GOP are serious about getting to the bottom of the IRS scandal, they should grant immunity and require testimony.
By John Carney
With the $1.1 billion acquisition of Tumblr, Yahoo is putting a serious claim in for the future of social and mobile technology. Whether it turns out to be a boon or a bust for Yahoo shareholders, the deal will be one of the biggest tests for chief executive Marissa Mayer's leadership.
Let's start with the obvious point. The purchase price is a lot of money. Yahoo is not getting Tumblr on the cheap. At $1.1 billion, the company will be spending about one-fifth of the cash and short term investments it had at the end of its last quarterly statement. This is a big bet for Yahoo.
So what does Tumblr have to offer Yahoo? For one thing, Tumblr has a great mobile presence. Its users have been quick to download its mobile app. Yahoo would like to leverage the experience of the Tumblr team in growing mobile engagement for its broader offerings. It also gives Yahoo unique insights into the way people interact socially on the mobile web.
Furthermore, there's a certain "coolness" factor here. One of Meyer's challenges has been convincing the tech community that Yahoo will once again be a cutting edge company that programmers, designers and inventors will enjoy working for. Bringing David Karp, Tumblr's founder, on board is evidence that this is possible.
Meyer has promised not to "screw up" Tumblr. Karp will remain in charge of the blogging service he started six years ago. His entire team will remain in place. Tumblr is not about to suddenly transform itself into a heavily-branded Yahoo product. Executives at Yahoo and Tumblr did not respond to requests for comment.
(Read more: Yahoo To Buy Tumblr, Vows 'Not To Screw It Up')
One of the reasons Meyer is so vocal about this is that she wants to reassure Tumblr's community. The Tumblr crowd is notably, well, emotional and somewhat "indy." There is certainly a danger that anything viewed as a Yahoo takeover would send them fleeing to rivals.
But this hands-off policy was probably also a precondition to getting Karp to agree to sell his company to Yahoo and an ongoing condition of keeping him onboard. Although Karp is not as cantankerous as some well-known Internet founders—he's not the type to put "I'm CEO, Bitch" on his business card—he is fiercely loyal to his product and its users. The creation and expansion of Tumblr has been a labor of love. It's doubtful he would have surrendered to a corporate overlord.
There is a specter haunting the Tumblr acquisition, however. It's the specter—or should I say spectr—of the earlier acquisition of a once ubiquitous photo-sharing site called...well, wait. Do you remember? It also lacked an "e" between it's penultimate consonant and the final 'r.' It was everyone's favorite photo-sharing site until, suddenly, under Yahoo, it wasn't.
I'm talking about Flickr. After Yahoo acquired Flickr in 2005, the service stagnated. Its technology just did not keep up with developments at rival sites. Its staff chaffed under Yahoo's bureaucracy. Many of the top people left. The effort to move into mobile was a disastrous failure. Flickr faded from memory and use.
That was long before Meyer's time at the helm of Yahoo. It most likely serves as a lesson in what not to do. The question is whether the broader organization of Yahoo has really learned from past mistakes.
You consider yourself a law abiding citizen, and you are not starting a nonprofit organization with conservative ties.
Even so, you may be a candidate for a tax audit—and you may have no clue what you have done to warrant the attention of the IRS.
The nation's tax collectors have long made it a practice to look for discrepancies, omissions and suspicious activity to uncover tax evasion and fraud. And lately, the IRS has expanded its monitoring to include social media.
The agency now keeps an eye out for online discussions about nonpayment or underpayment of taxes, and even sale prices of goods on sites like eBay that don't match what taxpayers report.
In a world where companies like Amazon can keep tabs on consumers' online activities, the shift by the IRS is reasonable, says Edward Zelinsky, a law professor at Cardozo Law School. "This was always known to people in the tax community that the IRS, like everybody else in the 21st century, was monitoring online."
But Zelinsky is just one expert concerned about the lack of transparency around the IRS' practices. The agency "is so secretive about what is going on that that really erodes public confidence," he said.
(Read More: IRS Mess Could Yield Tax Reform: Baucus)
The American Civil Liberties Union has also expressed qualms about IRS secrecy. That group filed a Freedom of Information Act request for documents explaining whether the IRS always obtains search warrants to read email and other electronic communications. "Unfortunately, while the documents we have obtained do not answer this question point blank, they suggest otherwise," wrote Nathan Freed Wessler, a staff attorney at the ACLU.
So how can you know if you are under scrutiny? You can't know exactly, but some moves are more likely than others to attract attention.
Noncash deductions are a prime example, according to several tax experts. If you donate a car to the American Lung Association, or a large quantity of clothing to the Salvation Army, make sure that the deduction you take is reasonable, and that you can document how you came to that amount.
(Read More: Obama: Miller Out as Acting Commissioner of IRS)
Taxpayers who are self employed often appear to face more scrutiny as well. "If you are in business for yourself, or you work for someone who is, know that the IRS is watching," Frederick W. Dailey III, a tax lawyer and the author of "Stand Up to the IRS," said on his website.
The IRS also keeps an eye out for cash-based businesses, and for mismatches between what others file about you and what you file. For example, if you neglect to include a payment for some freelance work during the year, and the payer reports that as a business expense, you are likely to get some scrutiny. This would also hold true if you neglect to report gains from an investment account, and the investment firm reports them.
(Read More: Daniel Werfel Acting IRS Commissioner)
Wealthier taxpayers seem to be more likely to get chosen for audit, perhaps because that gives the IRS a greater chance to recover significant sums. (Every year the government collects only about 83 percent of what it is owed, a gap of several hundred billion dollars at a time when the budget deficit is a flashpoint.)
According to IRS data, taxpayers making $1 million or more are more than 12 times more likely than the rest of the population to be examined. In 2010, about one in 100 Americans were audited. The IRS audited 3.8 percent of returns for those making $200,000 or higher, versus 12.5 percent of returns for those making $1 million or more.
As for the online monitoring, Zelinsky says it may be simply the application of new tools to old agency search standards. So while he is deeply frustrated by the IRS' lack of transparency, he added, "If they are using social media to find cash based businesses, or looking for phony medical deductions or the other hot buttons, then I would applaud that."
There is no surefire way to prevent an audit. But experts say one practice definitely improves your odds: Don't do what the IRS does. Be open. About everything.
By Prashant Gopal & Kathleen M. Howley
Just a year since the U.S. housing market hit bottom after the biggest plunge in eight decades, signs of excess are re-emerging.
An open house for a five-bedroom brownstone in Brooklyn, New York, priced at $949,000 drew 300 visitors and brought in 50 offers. Three thousand miles away in Menlo Park, California, a one-story home listed for $2 million got six offers last month, including four from builders planning to tear it down to construct a bigger house. In south Florida, ground zero for the last building boom and bust, 3,300 new condominium units are under way, the most since 2007.
The U.S. spring homebuying season has been marked by a frenzy of demand fueled by the Federal Reserve’s drive to push down borrowing costs, a scarcity of listings and Wall Street’s new appetite for foreclosed homes. While values remain well below their peak, economists including Stan Humphries of Zillow Inc. (Z) and Mark Vitner of Wells Fargo & Co. assert prices in some areas are rising at an unsustainable pace -- a dramatic shift from early 2012, when billionaire Warren Buffett said housing “remains in a depression.”
Slideshow: The Top 12 American Boomtowns
“It’s a big change from a year ago,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston. “You’ve gone from hearing horror stories about people losing money to hearing stories of frenzy -- lots of traffic and multiple offers.”
U.S. home prices jumped almost 11 percent in March from a year earlier, the biggest gain since the height of the real estate boom in 2006, CoreLogic Inc. reported last week. Values are rising faster than incomes, an indication that prices may fall in some cities once higher mortgage rates erode affordability, Humphries said. Investor purchases will inevitably cool, adding another potential hit to the market, according to Vitner.
The gains in some U.S. areas aren’t sustainable for a healthy market, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.
“If prices keep going up at this rate for another six months, we will have a bubble, and people will get hurt,” he said in a telephone interview.
U.S. buyers spent three times their annual incomes on homes at the end of last year, and those properties were 15 percent pricier relative to incomes than before the housing bubble of the mid-2000s, according to data from Seattle-based Zillow (Z). Markets such as Silicon Valley, Southern California, Boston and New York will look expensive relative to incomes when mortgage rates rise, Humphries said.
“The Fed has put every home on sale because of its actions,” Humphries said in a telephone interview. “We’re not saying you should ignore the sale sign and not pay a cheaper price. We want people to be aware of the fact that this is unusual and not bake these expectations of high appreciation into their long-term calculus.”
The average rate for a 30-year fixed mortgage was 3.51 percent this week, and reached a record low of 3.31 percent in November, according to Freddie Mac. That compares with an average rate of 6.24 percent from 2001 to 2006.
It’s too early to say another bubble is emerging. So far, the biggest gains are limited to hard-hit markets such as Phoenix and Las Vegas and thriving job centers such as San Francisco, while prices are falling in cities such as Chicago and Indianapolis, according to CoreLogic. Nationally, existing-home sales are about a third off a 2005 peak and home construction is down by 66 percent. Also, in contrast to the easy lending of the boom years, mortgage standards are strict.
In areas such as Long Island, New York, and Omaha, Nebraska, price gains are within moderate growth levels of 3 percent to 5 percent, according to the National Association of Realtors. In other cities, demand remains stagnant and the market is far from overheated.
Homebuyers in Erie, Pennsylvania, a port on Lake Erie in the northwest part of the state, are still finding plenty to choose from, said Debra Fries, a local agent with Coldwell Banker Select. The median home price in the area fell 5 percent to $105,000 in the first quarter from a year earlier, according the Realtor group.
“We don’t have any bubbles,” Fries said. “We’re steady as a stream.”
U.S. home prices fell 35 percent from their July 2006 peak to the bottom in March 2012, and are still 29 percent off their high, according to the S&P/Case-Shiller index measuring 20 U.S. cities. Nationally, prices dropped so much during the crash that they remain about 7 percent undervalued, based on comparisons with historical prices, incomes and rents, Trulia Inc. said this week, introducing a feature on its website called “Bubble Watch.”
Still, the recent price surge has made eight U.S. markets - - including Orange County, California; Houston; and Portland, Oregon -- overvalued, the San Francisco-based real estate data company said.
The housing market has defied predictions of a tepid recovery by many economists. A year ago, Moody’s Analytics Inc. said prices in 2013 would climb 1.6 percent. The company revised its projections upward for each of the last six months and now expects an increase of 7.5 percent this year. Gains probably will moderate in 2014, said Celia Chen, a Moody’s housing economist who predicts a 4 percent rise as homebuilding ramps up and underwater homeowners regain enough equity to sell.
CoreLogic said today that it projects prices will rise at an annualized rate of 3.9 percent through 2017 after climbing 7.3 percent in 2012.
Of the 150 metropolitan areas tracked by the National Association of Realtors, 9 out of 10 showed price increases in the first quarter from a year earlier and areas such as Silicon Valley, California; Phoenix; Atlanta; and Reno, Nevada, saw gains of more than 30 percent, the group said. Prices declined in 17 markets, including Edison, New Jersey; Champaign-Urbana, Illinois; and Allentown, Pennsylvania.
“This is a good spring for sellers in a hurry,” Jed Kolko, chief economist for Trulia, said in a telephone interview. “Buyer demand is stronger than we’ve seen it in years and it’s been strong enough to lift sales despite tighter inventory.”
The buying frenzy was on display at a March open house in Brooklyn, a borough of New York City where the median price rose 14 percent to $515,000 in the first quarter from the prior year as the number of listings plunged 45 percent, according to Douglas Elliman Real Estate and appraiser Miller Samuel Inc. Over two hours, 300 visitors streamed into a three-story brownstone in Crown Heights and it went under contract for more than the asking price less than a week later, said Barbara Brown-Allen, a Douglas Elliman agent who represents the seller.
The fear of losing out on mortgage rates that are close to the lowest on record is spurring the rush, Brown-Allen said. The up-and-coming Brooklyn neighborhoods of Crown Heights, Bushwick and Bedford-Stuyvesant have surged in popularity during the past year because buyers have been priced out of Manhattan and more exclusive Brooklyn neighborhoods, such as Park Slope and Cobble Hill, she said.
“It was a zoo -- sometimes there were over 100 people in the house at a time,” Brown-Allen said. “Once the inventory is this short, you have a lot of people vying for the same properties.”
Even in markets like Boston, where CoreLogic put home-price gains at a moderate 8 percent in March, demand is high. Often, homes spend only one day on the market, said Cliff London, a broker with the RE/MAX Home Team in the suburban town of Needham, Massachusetts.
“By the time the first open house is over the offers are coming in, sometimes above asking price,” London said. “There’s a lack of quality inventory -- that’s fueling it.”
In much of the country, inventory has been drained by institutional investors such as Blackstone Group LP and Colony Capital LLC buying single-family homes, often foreclosures, to turn into rentals, said CoreLogic Chief Economist Sam Khater.
Blackstone, the largest buyer in the U.S., spent more than $4 billion on 24,000 rental properties last year. The company recently bought 1,400 residences in Atlanta, the biggest bulk deal for the fledgling homes-for-lease industry. Such purchases helped to drive prices up 12 percent in March from a year earlier in Georgia, where values only rose 1.2 percent six months earlier, Khater said.
Appreciation in Arizona (SPCSPHX) is moderating as investors look in other markets for better yields, Khater said. Prices in the state rose 17 percent in March from a year earlier compared with a 20 percent increase in September 2012, he said.
Vitner of Wells Fargo said investors are buying properties as quickly as they can and when they leave, housing will take a hit. Investors accounted for 19 percent of sales in the U.S. in March and even more in some former bubble markets, according to the National Association of Realtors.
“The problem is if they don’t earn a high enough return, they all walk away,” Vitner said. “Investors accounted for a larger proportion of the housing recovery than people realize.”
While the tightness in the existing-home market is driving up sales for new homes, homebuilders can’t increase production fast enough because of labor shortages and rising competition for lots in the best locations. There were 153,000 new homes available for purchase in March, just 10,000 more than a five-decade low in mid-2012.
In Menlo Park, builders are selling houses long before they’re completed, said Keri Nicholas, a Realtor with Coldwell Banker in the affluent Silicon Valley town. Land is in such short supply that they’re buying million-dollar homes to knock down and put up mansions, she said.
A three-bedroom house Nicholas listed for $2 million last month received four offers from builders. It sold to an owner-occupant who paid all cash, she said.
In south Florida, 20 condominium towers with more than 3,300 units are under construction, according to Peter Zalewski, owner of Condo Vultures LLC, a brokerage and consulting firm based in Miami. Another 14,600 units are planned, about three-quarters of them for Miami-Dade County, where the crash left dozens of unfinished and failed condo projects, now mostly filled with renters, he said.
“I don’t think there’s any question that we’re in the early stages of the next great south Florida construction boom,” Zalewski said.
The conditions that have propelled prices up for the past year won’t last, said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania.
“We’re eventually going to see mortgage rates increase, supply increase, and affordability decline, so you probably cut price gains at least by half,” Naroff said. “It will be a slowdown, not a crash.”
By Amy Langfield
Does this job make me look fat? If you are a bus driver, the answer is probably yes. The news is also bad for manufacturing and production workers, as well as installation or repair workers, according to a survey for the Gallup-Healthways Well-Being Index.
Transportation workers have a 36-percent obesity rate, the highest rate among 14 occupation groups measured by Gallup based on interviews with more than 139,000 American workers from Jan. 2 to Sept. 10, 2012. For manufacturing and production workers, 30 percent are obese, followed by 28 percent of installation or repair workers and 26 percent of office workers.
On the lighter end of the scale, 14 percent of physicians were obese, followed by 20 percent of business owners and 21 percent of teachers.
More from NBC News:
The study found several factors for worker obesity, including exercising fewer than three days a week, not eating healthy, limited access to a safe place to exercise, a history of depression and skipping annual dentist visits.
The bad news for transit workers is no surprise to Ed Watt, who drove a bus in Brooklyn and Manhattan for 20 years and now serves as the Director of Health and Safety for the Transport Workers Union of America AFL-CIO. It's a job that leads to higher rates of medical issues for a number of conditions, including diabetes, high blood pressure, carpal tunnel syndrome and chronic obstructive lung disease, according to information from the National Institute for Occupational Safety and Health.
"First the sedentary nature of the work, sitting much of the day with the inability to move around, even for bathroom breaks," Watt said via email. "The second is the mobile nature of the job leaves poor food choices. So fast food rules."
"The other factor is that these jobs are highly stressful," he said. "The stress of the jobs results from high demand and low control over the work. Traffic, people and schedule are all big items that are beyond your control as a driver. As a result of the stress, many are inclined to mal-adaptive coping mechanism."
The good news, Watt said, is that part of his job is working to make it easier for the transportation workers to lose the top spot on the Gallup list.
Production workers, the game is on.
Page 1 of 93