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Wednesday, November 27, 2013

New IRS Regulations Target Nonprofits' Issue Advocacy

Must you be willing to be subject to reprisal, boycotts and social disapproval from political opponents as the price for political speech?

Yes, according to proposed new Internal Revenue Service regulations that would move us towards a regime where your right to political speech is conditioned on others being able to know who you are and where you live and work.

The ability to anonymously fund issue advocacy and political speech (even if not directly related to any campaign) without having your name publicly disclosed will become virtually impossible if these new regulations that will be formally published Friday are enacted.

(For those of you seeking legal guidance, bring your checkbook and form a line to the right.)

So-called Section 501(c)(4) organizations have been able to engage in certain political speech (not within proximity of an election) as "social welfare" groups and enjoy tax exempt status on their income.  The catch is that they must not be primarily engaged in political activity.  The new regulations would expand the definition of several terms in order to reach much more political activity. Organizations that evaluate judicial nominees might not be able to remain under the Section 501(c)(4) exemption, for example.  

This is moving towards content-based regulations targeting certain speech. That phrase has been used by federal courts when ruling certain laws, regulations and ordinances unconstitutional, usually as violations of the Equal Protection Clause. To flesh out my original thoughts, the new proposed regulations dramatically expand the definitions of "candidate" to include any government nominee or appointee -- so criticizing a judicial nomination or Cabinet nominee is verboten! The regulations would exclude political speech from "social welfare" (which is the permitted use for a (c)(4) org), but the danger is that relatively benign, nonpartisan issue advocacy -- such as criticism of a government policy -- can potentially run afoul of the IRS or any politically overzealous examiner. 

The new regulations are disappointing, because the IRS recently tried to solve the problem of uneven or inconsistent fact-based investigations and evaluations of (c)(4) groups with a new mid-2013 guideline of sorts that used a 60/40 rule.  Under special guidelines, a handful of groups applying for (c)(4) status were allowed to receive recognition under that section of the tax law if they certified that the group's time and monetary expenditures on political activity were less than 40% of the group's total time and money spent on all activities.  Why such a baseline (or even a lower threshold like 80/20) could not be used in the proposed rules now is a mystery, unless the unspoken bureaucratic intent is to really deter such activity at all. 

If the regulations are enacted (probably in early 2015 after the public comment period ends), the result will be that any organization that wishes to engage in anything but the blandest (and thus meaningless) issue advocacy will have its (c)(4) exemption status in jeopardy and may be treated under the tax code as a "527" or other organization.  This is like telling the cook of a five-star restaurant he can only cook oatmeal.  That way, the regulators can avoid being accused of shutting down the place, but by so restricting the choice of meals they will drive away customers and eventually shut it down by destroying its revenue stream.  The means are different, but the end -- shutting it down -- remains.  When the government has the ethos that the end justifies any means, this is what you can expect.

What else can we expect? Perhaps we will have inventive ways to obey the letter of these regulations, with the use of allegory.  Alas, only a sliver of the population is apt to "get it."  After all, how many people get the meaning of George Orwell's "Animal Farm"?

What's the relevance? Any other non-(c)(4) treatment means the organization must disclose its donors. You see, you can still engage in political speech and criticize government policies or the government itself.  That is the letter of the regulations -- i.e, the law.  But the spirit of the regulations is what is concerning.  The spirit -- and very much the catch -- is that under the new proposed regulations, you will have to disclose your name, address and occupation.  The better for your opponents to harass and boycott you.  

This is what's called a chilling effect on political speech.  And that is very much the point.

Eric Dixon is an attorney handling regulatory, corporate and select litigation matters for business, political and individual clients in New York and New Jersey.  Nothing here is intended as legal advice.  He can be reached at edixon@NYBusinessCounsel.com. 

Friday, November 22, 2013

The Obamacare Subsidy Trap

UPDATE: The post below was picked up and republished Tuesday morning by RealClearMarkets.com at http://www.realclearmarkets.com/research_reports/ under the title "Obamacare Could Turn Millions Into Criminals."

Obamacare may create a new wave -- maybe millions -- of criminals consisting of the poor and the poorly-educated.  This analysis I have published through the Financial Policy Council explains more.


Saturday, November 16, 2013

Jonathan Martin's NFL Career Is Over

Workplace bullying is a problem -- nothing new about that, either -- but the story of Miami Dolphins player Jonathan Martin makes a mockery of true victims of workplace intimidation and sexual harassment.

Martin claims that bullying by a Dolphins teammate has forced him to retire from the game of professional football.  The counterclaim is that the teammate (and others) were just trying to toughen up Martin for the occupation he chose -- and for which there are undoubtedly thousands of other men who would be willing to endure abject public humiliation for the opportunity to replace Martin and at a fraction of the salary Martin was receiving.

Let's make a few points clear.  Although this is an era where the proper lines are rarely drawn, lines separating proper from improper, workplace from therapist's couch, private matter from broadcasting "too much information" from Oprah's couch, we need to draw lines and bold ones at that.

The workplace is a sacred place.  It is a place for work.  Sports lockerrooms are no different -- sports are about achievement, about results, and those who do not achieve results (winning) are soon gone.  People who interfere with the workplace objective get fired and behavior in the workplace which undermines group harmony (the concept of "works and plays well with others" or "fitting in") is criticized, discouraged or outright prohibited.

However, the current controversy has drawn in a lot of attention. That indicates there are much larger issues than that of football players not getting along. The Martin controversy is just one scene in a much bigger drama which attempts to undermine and destroy the results-oriented, achievement-driven nature of all competition, of capitalism itself, and ultimately to attack and subjugate the men who are considered evil for creating that construct. 

Cultural elitists and emasculators deride sports as just a game, as in a game for kids.  That is a subtle way of trying to emasculate the men playing them by implying they really are men-children or boys playing a child's game and thus are not adults, they certainly are not mature, henceforth they are not worth the respect accorded or earned by, well, real adults. (A movie analogy comes to mind: The derisive term "man-animal" used by the condescending character played by John Travolta in an obscure movie called Battlefield Earth.)

These people (no, not the man-animals, I'm talking about the cultural elitists, the Ivy League snobs, the ones who profess to only watch PBS, listen to National Public Radio and read The New York Times) refuse to accept professional and even collegiate sports as legitimate businesses, because they wish to attack and destroy the concept of achievement and specifically of male achievement.  This is nothing less than an attempt to reorder the entire concept of achievement, of worth, and even of gender roles.  It is a stone thrown in the battle to define men punitively and solely along the terms favorable to women (and certain women at that, mind you), terms defined by women and used only by women.

The Jonathan Martin whine-fest is an opportunity for this crowd to undermine the achievement aspect of not only sports, but any institution created, inspired or run by men. This is an attack on business, on capitalism, on any male hierarchy which prizes achievement as measured by objective metrics like, well, winning.  The strategy in this assault on the Y chromosome is to attack the cultural and fraternal ties that lead to effective and often winning, if not championship, teamwork. 

The supervillain in this hysterical drama is Martin's "tormentor," teammate and Miami Dolphins lineman Richie Incognito.  Mr. Incognito has become the quick stand-in to signify all that the man-haters hate about men. All the hatred, all the venom, all the vengeance, all the pain women have felt, all of this is being directed at Incognito -- who is privately assuredly gaining in stature by holding firm on this issue of just trying to motivate an underperforming co-worker.

I will predict that the so-calling bullying by the villainous, horrible man is nothing more than a teammate trying to improve the productivity of another teammate not quite pulling his weight. The object here is to win, to achieve, and for heavens' sake we cannot have that, hence the attacks on Incognito for being a terrible bully. To be clear, the object being to win, to improve production, and bullying is counterproductive in that it clearly reduces performance.  But bullying is also not about performance enhancement; it is about control, domination and causing the suffering of its victim.  None of those objectives appear to be at work here.  Instead, this seems to be a contrived claim by an underperformer who needed an escape hatch and is now seeking to capitalize on victim status.

Whatever Martin is claiming Incognito said or did, the object was about producing winning and it seems Jonathan Martin was at least perceived as not being anywhere near close to tough enough to survive in an environment where men are paid six-figure and seven-figure salaries to go to near-literal war each weekend -- and where all of this is funded by fans who are not paying thousands of dollars for season tickets to watch the politically correct hold hands, eat Quinoa burgers and sing "Kumbaya."  Whether the politically correct police like it or not, mental toughness and, yes, the ability to withstand verbal abuse from opponents on the battlefield (er, the football field), are not desirable attributes; they are necessary qualities to survive in the occupation of professional football.  The trash-talking in professional sports is not incidental; it is often a critical feature of the contest.  Players seek to annoy their opponents to gain a mental advantage.  Anything to win.  And someone with a known weakness for a thin skin will become a huge target for abuse, not because of cruelty but because the stakes are very high.

Achievement and results are paramount.  What Martin is trying to do is, indirectly, to attack and destroy the results-oriented end game of all of capitalism, of all competition.  His claim to victim status also rests on flawed logic which, if accepted, would wreak havoc on our society as we know it.

First, it implies that all competitors (indeed, everyone) is entitled to perform in the field of their choosing.  Simply stated, this means anyone who wants to run onto the field at the Super Bowl has a right to do so! Ergo, the objects of my desire, my fantasies, become my rights.  That is fine for the utopians, who ignore the true nature of a right as something inalienable and not infringing on the rights of another.  Instead, the "Martin rights" require others to bear the burden of his self-declared right. If Johnny wants his victory lap, by golly, we are obliged to give it to him. (Cue up Lady Gaga's "Applause.")

By this tortured and defective logic, what protection would our laws afford the object of obsessive desire?  Would our laws allow, or mandate, that the poor sap who finds himself the target of desire of a Genevieve Sabourin (just sentenced to prison for stalking Alec Baldwin) must submit to her?  What would be the limit? Would there even be limits?

What is missing here, folks? It is the simple concept that achievement is earned.  You want that promotion, you have to work for it. You want to win the Super Bowl? You have to work really hard -- and work in tandem with your teammates -- to even get close to it.

The audacity of Jonathan Martin is the demand, not spoken necessarily but implied, to revise the rules and requirements of the occupation to suit his eggshell-skull sensitivities.  It is narcissism gone mad on the sports field.  I want to be a winner, therefore I am a winner, and how dare you question me otherwise! But Martin has no right to receive special treatment; no one does.  No one has the right to a desired outcome, not in a free society.  Jonathan Martin is not the Pharaoh.  Jonathan Martin is not, ahem, special.

The PC police would have you believe the thin-skinned player is a victim. I consider that player the weakest link, the vulnerable player who is almost certain to be targeted by the opposition also trying very hard to win. Martin must be considered unsuited for professional football and his NFL career should by all rights be over. It should be, if there is justice and respect left for the concept of objective achievement. Maybe some team executive will be pressured into signing him.  But don't expect his new teammates to embrace him.  Jonathan Martin is not tough enough to take professional sports -- and may not be tough enough to take many workplace environments, for that matter.  Worse, by demanding special treatment, he disrespects his teammates who have been held to -- and achieved -- a higher standard.

In an environment where winning is paramount, pressure is high and individual financial rewards are also high, Jonathan Martin's presence is now likely to undermine group harmony and the teamwork necessary for high achievement in pressure-packed situations. Martin is simply a man not likely to help a team win.  

There are thousands of players who would gladly sacrifice bodily functions and future health -- many have made those sacrifices, knowingly, for decades -- for a shot at the National Football League.  Almost every current NFL player has buddies who didn't make the cut.  Don't expect any of them to welcome Jonathan Martin with open arms.

Martin is no victim.  He is exploiting his failure under a cloak of victimhood.  I'd bet he already planned his second career -- perhaps as a commentator on the aggression in sports -- before he disqualified himself from his first career. That's right, I think this is all contrived, all plotted out.  I'm telling you readers out there not to be suckered into the sob story.

Jonathan Martin was a failure. There is no shame in not being able to "cut it" in the National Football League.  But the attempt to cash in on weakness and contrived victim status should be greeted with deep cynicism and rejection.

From here on out, Martin should get from the sports world the reaction which he has earned.

Indifference.

Eric Dixon is a New York City-based attorney and consultant who handles matters in New York and New Jersey.





Wednesday, November 6, 2013

Serious Cracks in Christie's Premise of Electability

We've been hearing for years how larger than life approval ratings indicated that New Jersey Governor Chris Christie (a/k/a, the Big 4-5) was electable, that he would be the type of Republican "who could win" nationally.

Ummmmm. Not so fast, fellas.

The preliminary numbers show that:

* Christie barely got more votes this year in a two-person race -- preliminary numbers are about 65,000 more -- than he got in a three-way race in 2009 to first win as Governor. Compare his 2013 vote total of 1,242,568 with 99% reporting (caution: all numbers are preliminary until certified) to his 2009 certified vote total of 1,174,445.  Christie's numbers barely budged -- his vote totals may be 5% higher than four years ago. That's it.

*  The aggregate vote totals in the 2009 and 2013 gubernatorial elections show that overall votes were down this year, about 10% down from 2009. If voters are excited about a candidate, whether or not he (she) has national prospects, voter turnout goes --- up. The common wisdom was that voters in 2009 were angry about incumbent Jon Corzine, but take this year; do you honestly suggest voters in 2013 are not angry about --- Obamacare?  (Yes, that's a federal issue, the governor's race is a state issue, but most voters don't split those hairs.) 

If Christie was getting "crossover" support or building support from new constituencies (read: Latinos), overall voter interest, vote total numbers, all of those metrics go up.  But as explained above, Christie's vote totals barely nudged higher. (And now New Jersey has early voting by mail, which enhances rather than suppresses voter turnout, so scratch that excuse.)  Overall voter sentiment might be expressed with one word: Meh. Indifference is not a sign of voter excitement or coalition-building or a shift in the political tectonic plates. 

The bottom line:  Declining numbers are never evidence of voter enthusiasm. (Well, some delusional Republican fundraisers might disagree, but that's desperation talking more than intellectual honesty.)

* Christie has barely any coattail effect. The GOP appears to have picked up all of one legislative seat in the entire state.

* Arguably, Christie has negative coattail effects among Democrats, and especially among -- gasp! -- the aforementioned Latinos.  The very premise of Christie being a break-the-mold candidate shakes if not disintegrates upon looking at the evidence.

Exhibit A for this phenomenon is the heavily Hispanic Hudson County city of Union City, in which its State Senator (and Mayor) Brian Stack (D-33rd District) appears to have suffered a victory margin that shrank by about 10% this year running with the very explicit and oft-repeated endorsement of Governor Christie than he did in his last general election for State Senate in 2011. (Note: Raw vote totals are up this year, 2013 being a gubernatorial top of the ticket year whereas 2011 had State Senate at the top of the ticket; turnout, however, lifts all boats so percentage of the vote indicates the presence, or absence, of coattail support.)

Taken together, these facts undermine (and certainly do not establish) that Christie "runs well" with Hispanics or Democrats. The inability to build on vote totals from four years ago in a clear-shot general election is more of an indication that the support level of the opponent crashed.  That fact by itself would make Christie's vote percentages increase, even with his support plateauing, because the denominator (that being aggregate votes cast for all candidates) would shrink.  Hence, as long as you're just taking the headline percentage and not digging further, Christie would "appear" to gain more Democratic vote-share and Hispanic vote-share.  But just like with federal government statistics on unemployment, you have to drill down into the results, look at historical trends.  The Christie spin-meisters and GOP establishment already preparing fundraising solicitations don't want you to do this. Here's why:

When the down-ticket results for people running with or endorsed by Christie show that their actual 2013 vote percentage margins of victory declined against their last general election.  The aforementioned Stack is Exhibit A.  There will be more.

COME BACK FOR UPDATES THIS WEEK AS MORE RESULTS ARE MADE AVAILABLE AND ARE ANALYZED.

Friday, November 1, 2013

New York City Marathon: What To Expect Sunday

Eric Dixon is a veteran 10-time marathoner (personal best: 3:34) who declined to run the 2014 New York Marathon to protest the New York Road Runners' initial decision to run the race after Hurricane Sandy despite relief efforts occurring virtually alongside the race route.  Mr. Dixon much prefers the Philadelphia Marathon and Long Island Marathon and is scheduled to run both (this month and next May, respectively). Forget the "experts." Here is candid advice from someone who's actually run the race...and ended up in the hospital one year as a result!

While the New York City Marathon is a challenging course for the most experienced world-class runners, weather conditions for this Sunday's 2013 New York City Marathon will be especially difficult for all competitors.

Let me stop holding you in suspense: All but the fastest runners should expect significantly slower times Sunday due to the wind. Taking five percent off your goal time should be a good expectation (that means a three-hour racer should expect to run about 10 minutes slower; a four-hour racer, about 12 to 15 minutes slower).

First, the weather. The temperature forecast has been steadily dropping all week, and now the official National Weather Service forecast is for highs Sunday in the upper 40s.  This would be ideal, except for the wind. A brisk wind of 15 to 20 miles per hour will be blasting runners. Even worse, it will come from the north-northwest.  This means runners will be going into the wind virtually the entire first 20 miles! 

UPDATE: For current National Weather Service forecasts for New York City, click here.  NWS now predicts gusts upwards of 20 miles per hour, mainly from the north, lasting throughout the morning and early afternoon -- right during the Marathon. 

What are the effects of this? Runners will feel much colder, and in fact should dress for conditions in the mid-30s.  In addition, the wind is a factor not just for cutting times and comfort, but also poses a safety hazard.  The wind tunnel effect from the numerous buildings and skyscrapers means runners should expect particle debris and flying debris during the race and will need eye protection. Sunglasses or googles are well-advised.  

As for spectators, you are all fools for standing for hours on the side of the road. (Do what my wife does: she stays home and waits for the 911 call to tell her which hospital I've ended up in!)(Seriously, that did happen one year when it was very humid and I cramped up before the race.) Anyone watching the race in person will be miserable. Even worse, New York City has an open container rule, so you cannot -- repeat, cannot -- get drunk while watching the race in person.  Find a good pub where you can at least relieve yourself in semi-privacy for a few hours.   

Back to the race.  Runners will face immediate discomfort upon starting the race.  The first mile is one mile straight up the Verrazano Narrows Bridge.  This is the longest suspension bridge in the world and so long that its construction and design account for the curvature of the Earth!  Do not be impressed by that fact, for it hurts your time. (See below.)  But much worse for the unsuspecting runner is the tendency of thousands of other runners, with little or no running experience, little or no business running a competitive race of any distance and similarly, no experience holding their water, to urinate off the side of the roadway after the race has begun! Remember I mentioned the wind? That means all that bodily effluent will be blown back into the faces of other runners -- so upon beginning the race you will be covered in sticky urine from absolute bloody strangers!  This is not a factor that contributes to enhanced running times, and it is not a good idea to ever start a marathon sprinting up a one-mile bridge for any reason (hygienic or otherwise). You've been warned. 

Coping mechanisms? Resist the impulse to push these runners off the bridge in a fit of earned anger. Keep going straight ahead. Run at close to the middle of the bridge as possible, so there are always several runners between you and the side of the roadway to get in the path of all aerosolized urine particles. (And do not -- repeat, do not -- show this column to anyone who is meeting you after the race.) 

The Verrazano Narrows Bridge will hurt your time. Use mile one as a warmup to get loose (as your other runners get loose with their fluids).  Don't watch the watch until after mile two which is on the other side of the bridge.  Anticipate running these two miles at least one minute per mile behind your "goal time" or "pace time" for various factors including the arc of the bridge and the crush of the crowd -- another 40,000 runners sharing a race course designed for 10,000 (an excellent reason to avoid the New York race altogether and run Philadelphia instead). 

After the bridge, you are in Brooklyn and headed due north for about seven miles. This is the best part of the race -- friendly crowd, few tourists, real New Yorkers, and a flat and relatively pothole-free course -- and your chance to settle in on your pace.  Find taller runners to run behind so you can use their height as wind resistance, and "draft" behind them. The lessened wind resistance may gain you a few seconds each mile and you'll be thankful for that later on.

In northern Brooklyn, once you are off Fourth Avenue's straightaway and right after you run past the Barclays Center, you start to get into a zigzag of narrowing streets.  This section (the miles 10-13) is also the first point where you should take those energy gels for energy.  Before this point they do little but now you have spent a considerable part of your stored energy.  Take a gel pack but keep the rest for miles 13 and after.  That's when you'll need them. 

If you are on your pace you will already be running past a substantial number of runners who have no idea and no business running a marathon or even a 10-mile race. Don't let this fool you. You are keeping pace, that's all. Now start watching the watch carefully. Fatigue may already set in even in the first half of the race -- even if you've trained properly -- so make sure each mile you are no more than 10-15 seconds behind goal pace. If you fall behind, pump up the intensity right away on the next mile, because the second half of the course is no place to gain time.  

Moving towards the halfway mark of the race, you'll cross a small bridge into Queens.  The course should be opening up for you as stragglers struggling with the distance really start to flag. The downside, however, is that the course becomes much more difficult.

At mile 15 you'll start to move onto the Queensborough (aka Edward I. Koch) Bridge. Another mile up a bridge, and this one is worse than the Verrazano, for while it is shorter and not as high, it is steeper. This is the most serious physical test of the race. Keep moving at all costs, even if you walk.  To stop at this point is to kill any chance at your goal time. And now is the time to have a gel pack since you're not going to be able to run at full speed anyway, not on a steep incline. This will stave off energy depletion which will start to hit you on the Manhattan side of the bridge.

Coming off the bridge, you'll enter First Avenue and the roar of the crowd.  By this time, you'll be covered in a crust of dried liquids of various origin and in no mood to share any emotion with the crowd that can be expressed in a family blog. If you have friends waiting for you on First Avenue, DO have them have a beer (I suggest a can of Guinness) ready for you.  This is serious advice! After two or three hours of running, you do not need more water. You need carbohydrates and beer has that! (And beer is healthier than Gatorade, which I consider nothing but a mix of high fructose corn syrup, water and food coloring.)

On First Avenue you are going up a barely perceptible incline.  Be prepared to have your speed suddenly drop 15-20 seconds per mile. Immediately crank up your engines if that occurs. Watch your watch carefully and look for each mile marker. You are getting close to the "wall" which for humans may feel like a downshift on the transmission.  I have literally felt the wall, knowing the exact moment I've just hit "E" on the meter. It's a wild feeling and it is physical -- it's glycogen depletion -- and knowing that will actually help you cope with the mental side.  By this point, you are in Spanish Harlem and running by steakhouses. Get your mind off the food.  Use your remaining energy gels now -- they won't do you any good after mile 21 or so as you'll be done or close to the finish before you absorb the sugar. Head north past miles 18 and 19.

Crossing into the Bronx and another bridge, you'll now have survived the most grueling six miles I know as a runner. You're approaching mile 20 and now these are a different challenge.  The sun will be going down by this point -- it may be 2pm but the shadows come early in November -- and the cold and wind will mean you'll be feeling cold if you don't keep pace and generate enough heat to compensate for wet clothing (and your clothes will get soaked no matter what wicking material you wear!).  Another reason to keep moving.  If you must stop, you must stay warm and seek shelter immediately.

The Bronx portion is short and you cross back into Manhattan and head south towards Fifth Avenue. There are fewer people now and this can be a grind. Get your last water about mile 22 -- after this the water you take will not be absorbed by your body in time to help you finish -- and then plow through Central Park at miles 23 and thereafter.  Crossing the park is great and these last three miles will be the enjoyment you've been promised.  Trust me, miles 23-26 are easier than miles 13-23.  

Finally, after the race, keep moving as much as possible.  This will keep you from getting stiff. And avoid stairs if at all possible for about two or three days.  But the better conditioned among you will be able to run -- yes, run -- by Wednesday. Trust me. 

When he is not chasing like "60 Minutes'" Mike Wallace after other people, deadbeats or mail carriers, Mr. Dixon is an experienced corporate and regulatory attorney handling cases, investigative matters and sensitive other matters for personal, business and political clients in New York and New Jersey.