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onekidanddone

Shutdown stories

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GreyhoundFan

"‘Could you make these guys essential?’: Mortgage industry gets shutdown relief after appeal to senior Treasury officials"

Spoiler

After an intense lobbying campaign by the mortgage industry, the Treasury Department this week restarted a program that had been sidelined by the partial government shutdown, allowing hundreds of Internal Revenue Service clerks to collect paychecks as they process forms vital to the lending industry.

The hasty intervention to restore the IRS’s income verification service by drawing on revenue from fees — even as 800,000 federal employees across the country are going without their salaries — has intensified questions about the Trump administration’s un­or­tho­dox efforts to bring certain government functions back online to contain the shutdown’s impacts.

Critics, including many former IRS officials, described the move as an act of favoritism to ease the burden on a powerful industry.

“It seems crazy to me that a powerful bank or lobby gets to bring their people back to do their work,” said Marvin Friedlander, who served as a senior IRS official in the mid-2000s. “How about the normal slob who can’t even pay his rent?”

Administration officials said they are simply seeking to minimize the harm caused to the public by the budget standoff, which on Saturday will become the longest in modern U.S. history.

Because of the shutdown, the IRS was unable to process a key form that lenders use to confirm borrowers’ incomes before they can grant home loans — a roadblock that threatened to bring the mortgage industry to a halt.

The IRS said it was able to restart the program by using fees paid by companies that provide the transcripts to lenders.

“We were advised by various parties that the shutdown of [the program] was creating significant issues for certain borrowers,” the Treasury Department said in a statement. “We are pleased to help taxpayers by ensuring this service continues despite the lapse.”

Craig Phillips, a counselor to Treasury Secretary Steven Mnuchin, was among the officials to whom the mortgage industry appealed directly, but he said in an email to The Washington Post, “This action was not taken to benefit the industry. It benefits the consumers that have made loan applications.”

The IRS clerks, who are paid $13-$18 an hour, process 400,000 tax transcripts a week — helping potential home buyers verify their incomes and the $1.3 trillion mortgage banking industry earn millions of dollars in fees.

The effort to restart the processing of those transcripts came after direct appeals by the trade association that represents credit reporting companies and top mortgage industry officials. The lobbying was led by Robert Broeksmit, chief executive of the Mortgage Bankers Association, who took the matter to Phillips, Mnuchin’s senior adviser, Treasury officials confirmed.

“I said, ‘Look, this is starting to be a problem for the lending industry,’ ” Broeksmit said. His group, one of the most influential trade associations in Washington, represents 2,300 mortgage companies, brokers, commercial banks and other financial institutions.

Broeksmit said he asked whether the IRS clerks could come back to work, saying: “Could you make these guys essential?”

Phillips declined to comment on their exchange.

The answer came the next day, Broeksmit said: The IRS employees would be called back to work.

After hearing concerns that the program had gone dark, top Treasury officials called senior officials at the White House Office and Management and Budget to consult on a solution, according to people familiar with the discussions.

On Monday, 400 furloughed IRS clerks in Fresno, Calif., Cincinnati, Kansas City, Mo., and Ogden, Utah, were called back to work, according to employees and union officials.

“I’d like to take some credit,” Broeksmit said, adding: “Our direct request got quite rapid results.”

Unlike the vast majority of the 420,000 federal employees who have been required to work during the shutdown because they are essential to national security or public safety — among them airport screeners, food inspectors and Border Patrol agents — the IRS clerks are being paid, to their surprise.

Their salaries — normally funded by congressional appropriations — are being financed by industry user fees, an un­or­tho­dox strategy that the administration is also using to put some National Park Service employees back on the job.

Some legal experts questioned the IRS maneuver.

“They’re only allowed to keep open essential activities, and processing mortgage applications is valuable and appreciated, but do not rank with air traffic controllers,” said Charles Tiefer, a former deputy general counsel in the U.S. House of Representatives. “The administration is playing fast and loose with the shutdown to prevent it from becoming unpopular with their own base.”

Tiefer, a professor at the University of Baltimore School of Law, said he believed the Trump administration would lose a lawsuit on the issue if someone could find standing to bring a case, which he said was unlikely.

The Office of Management and Budget approved shifting the fees to the IRS’s salary account because those funds are designated for a variety of agency operations, a senior administration official said.

In announcing the return of IRS employees who process the tax transcripts, the IRS also said it was restarting other fee-based services, including one that provides letters certifying residency for taxpayers in the United States.

“There’s nothing unusual about it, because the account has this flexibility,” said the official, who spoke on the condition of anonymity to describe internal discussions. “We are doing whatever we can, consistent with the law, to keep government programs running as long as possible under the lapse.”

Some agreed, saying the IRS, unlike other federal agencies, has broad leeway.

“It appears that the IRS has quite a bit of legal flexibility to use money it raises from user fees,” said Timothy Westmoreland, a professor at Georgetown Law who has studied federal budgets and legislation. “I can’t say for sure, but it looks like there’s legal ground for this.”

Still, some former IRS officials called the workaround a handout to an influential interest group.

“How do you justify that?” said John Koskinen, who served as IRS commissioner from 2013 to 2017. “There are a lot of things that are inconvenient for people to have. It’s about the law. You can’t incur obligations or take actions unless you’re protecting life or property.”

In recent days, the Trump administration has sought ways to keep some government services going as the shutdown has dragged on, directing furloughed employees to extend food stamp benefits, provide flood insurance, maintain parks and reinstate other services that were prohibited during past shutdowns.

“Every time you turn the corner around here, they are finding another way to somehow appease their pressure points by finding these gimmicks,” said William Hoagland, who was Republican staff director for the Senate Budget Committee during a shutdown in the 1990s.

Under federal law, the government is not allowed to spend money that has not been appropriated by Congress, and agencies are allowed to retain only employees who perform essential functions critical to public health or national security.

That means the IRS has been largely shuttered. The tax agency sent home about 90 percent of its workforce without pay. Call centers used by taxpayers across the country are closed. Audits have been halted, according to the agency’s shutdown contingency plan. There’s no training for thousands of employees to prepare for this year’s tax filing season, which is expected to be particularly complicated as the new tax law fully takes effect.

This week, the administration announced it would bring back furloughed employees who process early tax refunds, but they are not being paid.

The IRS’s contingency plan, which was updated in December, requires staffers in the income verification program to be furloughed in the event of a shutdown, as they were during a similar 2013 budget impasse.

One employee who was told to come in said the agency was bending the rules.

“I don’t feel like this is a national security issue or falls into any of the guidelines of operating under a government shutdown,” said the clerk, who spoke on the condition of anonymity out of fear of retaliation for speaking out.

“It’s just wrong,” the clerk added. “If the American people knew that a small group of people was getting paid just to benefit big corporations, I think they’d be pretty mad.”

Shannon Ellis, president of Local 66 of the National Treasury Employees Union, which represents 4,300 IRS employees in Kansas City, said she was “happy our employees are getting paid,” but noted “this one little area is the only area in the agency where it’s happening.”

Across the industry, there was relief that the transcripts were moving again.

Leonard Ryan, founder and president of the mortgage compliance firm QuestSoft, said his company would have had to lay employees off without a fix.

“We had a severe backlog — now it’s down to two days,” Ryan said. “It’s kind of amazing what they’ve done to get back up. . . . They’ve figured a workaround — but that’s what the mortgage industry does.”

Broeksmit said he was hours into his Christmas week beach vacation when he began getting emails on his phone from members of his mortgage bank trade group nervous about the closing down of the tax transcript program.

Back in Washington, Broeksmit said, he took the matter up directly with someone he knows well at Treasury who serves as a senior adviser Mnuchin. He declined to name the official, but the Treasury Department confirmed it was Phillips, the liaison to the banking industry.

Boeksmit said Treasury officials were not aware that the IRS’s closure was causing problems for mortgage lenders, in part because tax transcripts are now required far more often than before the recession.

Members of the Mortgage Bankers Association originate the vast majority of loans in the real estate financial market, valued last year at $1.6 trillion. The group spent $2.2 million on lobbying in 2018, according to lobbying records filed with the House Clerk’s Office.

Broeksmit was not the only one in the industry to lobby the Trump administration to get the program restarted. Top Treasury and IRS officials also heard from the Consumer Data Industry Association, which represents credit reporting companies, according to one of the group’s members.

“We are communicating with multiple federal agencies during the shutdown to make them aware of issues negatively impacting consumers and our customers,” Jacob Hawkins, a spokesman for the credit rating agency Equifax, which buys transcripts from the IRS to provide to lenders, said in an email.

Rep. Gerald E. Connolly (D-Va.), a member of the House Oversight Committee, said he is likely to seek an investigation into why the IRS restarted the tax-transcript program: “We now have government by carve-out, and the carve-outs are apparently determined by how powerful and influential you are.”

 

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nvmbr02
 
This is so frustrating! Stories like this just prove how the shutdown is more than just some employees losing their paychecks (which is bad enough on its own) but has far reaching consequences for families. 
3 hours ago, fraurosena said:

Is there any way McTurtle could be removed from office? Other than being elected out, I mean.

I am no expert so someone correct me if I am wrong but I think the only way would be for his state to vote to recall him. I do think he could lose his spot as majority leader, but that would have to be done by the GOP senators and I don't think that will happen. 

Edited by nvmbr02
changed wording

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SilverBeach
8 hours ago, GreyhoundFan said:

Shoemaker is one of 36,000 federal prison workers deemed “essential employees”

The official term is "excepted". The rest of us are "non-excepted". We are all essential.  I hate when news organizations use incorrect terminology, creating a false dichotomy between federal workers. It also feeds the misconception that some could never return to work and it wouldn't matter because we are non-essential, which is so untrue. 

I broke down and filed for unemployment today. 

I can't believe this nation is headed by a lunatic. Laws should be changed so that a shutdown can never happen again.

 

Edited by SilverBeach

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Ozlsn
3 hours ago, SilverBeach said:

Laws should be changed so that a shutdown can never happen again.

At the very least it should be amended so Congress and the Senate go into lockdown until it's resolved. No one in, no one out. I think it'd last 48 hours, tops.

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Ali
6 hours ago, Ozlsn said:

At the very least it should be amended so Congress and the Senate go into lockdown until it's resolved. No one in, no one out. I think it'd last 48 hours, tops.

I would add the president to this list. No way out except to meet in order to come to a resolution.

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fraurosena

 

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Tired
Audrey2
12 hours ago, Ali said:

I would add the president to this list. No way out except to meet in order to come to a resolution.

I agree. While we're at it, could we take away his phone as well? If he really notices maybe we could give him and out-of-date and unconnected old phone to let him play with and type on, but one that won't send anything.

  • Upvote 7
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fraurosena

 

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fraurosena

If somebody dies and the cause of death is directly attributable to the shutdown, could the presidunce and/or the GOP (namely McTurtle) be indicted for manslaughter?

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GreyhoundFan

WTAF?

 

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onekidanddone
29 minutes ago, GreyhoundFan said:

WTAF?

 

Right I'm so much better off being late on my mortgage. 

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Cartmann99
1 hour ago, GreyhoundFan said:

WTAF?

 

Honey, when tempers are running high like they are right now, it's not wise to poke the bear by telling folks how good you think they have it. :pb_rollseyes:

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onekidanddone

Shutdown Lockout Day 23:

I've put on almost five pounds in the past week or so. Stress eating.

Edited by onekidanddone

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Tired
fransalley

My husband works for the IRS and he's currently on furlough.  We saw this coming around the beginning of December, and fortunately, we have savings and I work part-time from home.  I was also able to put my student loans on deferral (I went to court reporting school a number of years ago and did not finish; long story there. :-) )  If necessary, we can survive on peanut butter, bread, potatoes, onions, and macaroni and cheese!

We went through this in 2013 and we survived, and I believe we will survive this as well.  

But my disgust for politics is bipartisan.  (In fact, I cast a protest vote for Snoopy for president because I couldn't bring myself to vote for either candidate.  I voted down ballot for legitimate candidates.)

 

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onekidanddone

#TrumpShutdown Day 24:

A friend (really a friend of a friend) send me a gift card in the mail.  I was stunned, honored, and humbled. A reminder that there is still good in this world.

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Tired
fransalley
16 minutes ago, onekidanddone said:

#TrumpShutdown Day 24:

A friend (really a friend of a friend) send me a gift card in the mail.  I was stunned, honored, and humbled. A reminder that there is still good in this world.

That is wonderful!

14 hours ago, onekidanddone said:

Shutdown Lockout Day 23:

I've put on almost five pounds in the past week or so. Stress eating.

My stress eating food is chocolate and I've been resorting to that in the last few days. 🙂  Is is OK if I ask what agency you work for?

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Tired
fransalley
On 1/12/2019 at 12:14 AM, SilverBeach said:

The official term is "excepted". The rest of us are "non-excepted". We are all essential.  I hate when news organizations use incorrect terminology, creating a false dichotomy between federal workers. It also feeds the misconception that some could never return to work and it wouldn't matter because we are non-essential, which is so untrue. 

I broke down and filed for unemployment today. 

I can't believe this nation is headed by a lunatic. Laws should be changed so that a shutdown can never happen again.

 

My husband has also filed for unemployment.  I'm sorry you're having to go through this. 

The FACT of Congressional and Presidential salaries is written into the Constitution, so those who are saying that "Congress and the President shouldn't get paid" will need to have the Constitution changed.  

I personally would lock the President, Vice President, and all 535 members of Congress into the House chamber and tell them that they can't come out until they reach an agreement.  Oh, by the way, they get a diet of bread and water and if they have to use the bathroom, they can go to a Porta-Pottie!

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fraurosena

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WhatWouldJohnCrichtonDo?

That's a good summary, @fraurosena. It would be good if they had also included the situation at federal prisons; guards working without pay, and working double shifts to cover for the high number of guards who call in sick. The only place I've heard anything about that is on this thread. I don't know how many people have heard about the prisons.

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Satisfied
church_of_dog

Not an emergency and nowhere near the urgency of the prison guards, TSA, or even the IRS, but here's another manifestation:  in my community there is a small non-profit whose focus is building local food capacity -- they oversee a budding local food hub, our seasonal farmer's markets, gardening and nutrition information and a community garden, etc.  Last year they were awarded a grant from USDA toward their projects.  The grant covers myriad costs including project funds and, I'm sure, at least one person's salary.  And now they can't access the grant funds until the shutdown is resolved.

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onekidanddone
8 hours ago, fransalley said:

My stress eating food is chocolate and I've been resorting to that in the last few days. 🙂  Is is OK if I ask what agency you work for?

I'd rather not say which Agency. I'm more that a little bit paranoid I'll get in trouble for speaking my mind.  Free speech or not, I worry my management finding out. 

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Depressed
Maggie Mae

Air Traffic Controllers were already facing a shortage of workers, and it's a job where you need to be "on" 100% of the time while you are at work. Forcing people to go without a paycheck and work for free is selfish and dangerous. And for my state, all of our food and supplies are either flown in or barged up. (And the main port is at the end of its lifespan and undergoing a multiyear revitalization project, so not operating at  capacity) 

https://www.washingtonpost.com/local/trafficandcommuting/air-traffic-controllers-sue-trump-for-being-forced-to-work-with-no-pay 

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