Ed Tibbetts, Iowa Capitol Dispatch

Now, it’s your retirement money.

The woke mob, it seems, is everywhere.

Luckily, Republicans are manning the ramparts.

The latest battlefield was Congress, where last week the GOP came to the defense of your 401(k) by mounting a courageous attack against the U.S. Department of Labor’s radical new rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.”

Scary, right?

In short, the rule pertains to an investment approach that takes into account Environmental, Social and Governance (ESG) factors in addition to the usual considerations. It’s been around for decades and is increasingly popular with young people.

Lately, though, ESG has become the latest target in the Republican War on Wokeness. And with the aid of two red-state Democratic senators who are up for re-election this year, Republicans in the House and Senate approved a measure that would squash the new rule.

President Biden has vowed to veto the move.

Still, Iowa Republicans are ready to fight. U.S. Sen. Joni Ernst, for example, proclaimed that “Biden’s radical rule promotes a reckless social agenda over Americans’ financial security.”

Instead of making investment decisions “solely based on profitability,” as it used to be, her office says, the new rule will allow Wall Street to spend your nest egg on “woke corporations” based on their donations to “left-leaning charities” and “diversity and inclusion trainings.”

Before you get scared, though, it might be a good idea to step back and look at the facts.

What exactly does this new rule with the really long name do? What does it change?

The answer appears to be: “not much” and “well, not much.”

Consider this summary of the new Biden rule that was posted on the web site of the Harvard Law School Forum on Corporate Governance in early February:

This was written by Max Schanzenbach, a Northwestern Pritzker School of Law professor and Robert Sitkoff, Harvard Law School professor. The two also co-authored an opinion piece in the Wall Street Journal last December that was entitled, “No, Biden isn’t forcing your retirement money into ESG funds.”

Don’t believe them?

How about this blog post from last December by Chantel Sheaks, vice president for retirement policy at the U.S. Chamber of Commerce:

ERISA is the Employee Retirement Income Security Act of 1974.

Now, Sheaks does go on to criticize the Biden rule for “tie-breaker” language, which she writes says “if two investments serve the financial interest of the plan equally, additional factors, also known as collateral benefits (such as promoting union jobs), can be used to make a determination in favor of one of those investments.”

But she adds the chances such a tie breaker would come into play are “extremely rare.”

It’s beginning to sound like the Biden rule isn’t much different than the Trump rule, isn’t it?

If you’re still not convinced, read the lawsuit 25 Republican attorneys general, Iowa’s Brenna Bird included, have filed challenging the rule.

According to the suit, the Biden rule’s language says, “[a] fiduciary may not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to other objectives, and may not sacrifice investment return or take on additional investment risk to promote benefits or goals unrelated to interests of the participants and beneficiaries in their retirement income or financial benefits under the plan.”

The Republican AGs concede that this language “appears similar” to a Trump-era rule, but they claim there are “key differences.”

If this is a bit confusing, I understand. I suppose the courts will sort out the technicalities and decide whether they’re “key” or lacking practical import — if the lawsuit gets that far. But what I think is abundantly clear by now is this: The politicians who are screaming this is a radical change that will let woke capitalists take your life savings and squander it on left-wing charities and woke corporations aren’t being honest.

In addition, the folks telling you Biden is just reversing Donald Trump’s ban on ESG investing aren’t telling the truth, either.

That includes some congressional Democrats – and, well, Trump himself. A week ago, the ex-president posted a video claiming credit for being the first – in the world! — to ban retirement accounts from sending money to ESG investments.

“These people are sick,” Trump said for good measure.

Such investments are “woke financial scams” that are “radical left garbage,” said the originator of Trump Steaks.

I can understand why Trump wants to claim credit for an ESG ban. Ron DeSantis, the Florida governor and likely challenger for the Republican presidential nomination, has already said the ESG movement should be crippled, according to CNBC. He’s even devoted several chapters of his new book to the subject, the network says.

I’m sure this will be a key battleground between the two, and when Trump and DeSantis come to Davenport this month, I can’t wait for them to lock horns and debate the merits of collateral benefits and the tie-breaker provision as it pertains to a fiduciary’s prudence and loyalty obligations under the Employee Retirement Income Security Act of 1974.

No doubt, that’ll pack them in at Davenport’s Adler Theater.

The truth is this: With politics, as with investing, it’s a good idea to read the fine print.

It might be a bit dry and boring, nuanced and technical. Some of it may even lack practical import. Still, if you do your homework, you’re less likely to get taken in by a press release, a politician or a con man.

Iowa Capital Dispatch is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com. Follow Iowa Capital Dispatch on Facebook and Twitter.

U.S. Sen. Joni Ernst loves to talk about “making them squeal” in Washington, D.C.

Frequently, the Iowa Republican will target an often-obscure part of the federal budget and complain about waste.

Lately, the Internal Revenue Service has been in her sights.

Over the last few weeks, she’s complained about the Democrats’ plan to hire thousands more people at the IRS to try to improve customer service and recover hundreds of billions of taxes that go unpaid each year.

Congress has cut the IRS’s budget for years. But Ernst says the agency ought to clean up its own house before hiring more people, and she’s highlighted a 2019 report by the Treasury Inspector General for Tax Administration, or TIGTA, that says in 2017 the IRS flagged 1,250 agency employees who underreported their income or filed late tax returns. That amounts to roughly 1.5% of the agency’s current workforce of nearly 79,000 workers.

Of the 1,250 employees, about 800 worked in “tax-related positions,” TIGTA said. The largest group were “contact representatives,” or employees who worked on the IRS’s customer service phone system. The inspector general also identified 334 employees who had substantiated non-compliance in prior years.

“Innocent, hardworking Americans should not be subjected to unfair and costly IRS audits when the agency is ignoring tax cheats on its own payroll,” Ernst said in a letter to the inspector general for tax administration, J. Russell George.

Congressional oversight is important, but Joni Ernst is looking in the wrong place. She’s failing the Willie Sutton Test.

Sutton is the Depression-era thief who said he robbed banks because “that’s where the money is.”

If Ernst really wanted to make some of the more prolific tax cheats squeal, she would look at a couple different TIGTA reports.

Federal contractors owe millions

Just a couple weeks ago, the inspector general reported that over a 14-month period in 2018 and 2019, the federal government awarded roughly $10 billion to more than 3,000 contractors who were delinquent on $621 million in taxes.

Meanwhile, more than 900 federal grant winners were awarded almost $23 billion while owing $269 million in delinquent federal taxes.

Nearly 100 of those contractors and grantees owed more than $1 million in taxes apiece – totaling $696 million.

Now, that’s serious money.

This kind of delinquency isn’t new, either.

It’s been going on under Congress’s nose for years.

In 2007, the Government Accountability Office found thousands of federal contractors had “substantial amounts of unpaid federal taxes.”

In 2019, the GAO reported that in 2015 and 2016, 2,700 contractors – out of 120,000 – owed $350 million in taxes.

Ernst might also look at a 2020 TIGTA report that said from 2014 to 2016, nearly 880,000 high-income non-filers (those making $100,000 a year or more) owed roughly $46 billion in federal taxes.

Remarkably, the cash-strapped agency didn’t even work 369,000 of those non-filers, leaving more than $20 billion on the table.

No wonder these folks don’t bother to file their taxes. If the IRS doesn’t have the staff to go after them, why worry?

If Congress isn’t paying attention, why worry?

Federal law prohibits the IRS from sharing tax information about contractors with agencies making the awards. Instead, the government maintains a system where contractors and grant-seekers report their own tax status.

Not surprisingly, delinquents aren’t turning themselves in.

The TIGTA report said 93% of those who were delinquent on their taxes, didn’t accurately report their tax status.

The GAO found the same thing.

If one really wanted to be a budget watchdog, this is pretty fertile ground.

To be sure, these scofflaws represent just a fraction of the overall number of contractors who bid for government business. But I’ll bet they owe a whole lot more in unpaid taxes than the folks at the IRS.

As for those IRS cases, the agency said that of the 1,250 who were flagged, just 90 were willful violations. A 1998 law requires the termination of IRS workers who willfully fail to file their taxes on time or underreport their income, unless they have a reasonable excuse.

TIGTA, however, estimated that in 530 of those cases, the IRS didn’t make a proper determination whether a violation was willful or not.

Look, I understand. Republicans in Congress aren’t happy that the Democrats are trying to get the IRS back on its feet after years of budget cuts. The agency is stretched so thin it can’t answer 90% of the phone calls it gets from the public, and it has a backlog of millions of unprocessed paper tax returns.

Still, it doesn’t make a lot of sense for a country with more than $30 trillion in debt to hamstring its revenue agent and look the other way while hundreds of billions of dollars of legally owed taxes aren’t being paid every year. In 2019, the “net tax gap” was $554 billion, or 15% of what was owed, according to the Committee for a Responsible Federal Budget.

This kind of cheating – unchecked by Congress year after year – is what makes innocent taxpaying Americans squeal.

No requirement for Congress members to disclose tax returns

One other thought on this subject: I could find no federal agency, other than the IRS, where a law requires employees to be subjected to termination if they willfully fail to follow the tax laws.

There is some logic to that. As TIGTA noted, the people who work for the nation’s tax collector have a heightened obligation to follow the tax laws themselves.

In that same vein, so do the people who write those laws – our representatives in Congress.

To date, though, we have no way of knowing whether they follow the law. There is no requirement that representatives and senators disclose their tax returns. They do file personal financial disclosures, but those offer only limited information.

Interestingly, amid the outcry over former President Trump’s refusal to release his tax returns in 2017, the Capitol Hill newspaper Roll Call said it sent a request to every member of Congress, asking each to release their own tax returns.

The result: Of the more than 500 members, only 37 bothered to respond – and only 6 disclosed their tax documents.

Nobody is squealing there.

Iowa Capital Dispatch is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com. Follow Iowa Capital Dispatch on Facebook and Twitter.