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"Curiosity" Return of American Exceptionalism

FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
August 14, 2012

IN THIS ISSUE:

1.  IRS Doles Out $6.8 Billion in Refunds to Illegals

2.  American Exceptionalism – “Curiosity” Rover Lands on Mars

Today’s Overview

It’s August; it’s hot; the Olympics have snagged our attention as the Americans dominated; and many people are on vacation. Given those distractions – good or bad – we will veer today from our usual discussions on the economy, the markets, investments, etc. to a couple of different topics. First, we look at recent revelations from the Internal Revenue Service that are almost sure to make your blood boil. It did mine anyway.

It turns out, after a government oversight investigation, that the IRS gave $6.8 billion in income tax refunds largely to illegal aliens last year. This is a bizarre story that you just have to read to believe. You wouldn’t think it, but millions of illegal aliens are filing fraudulent tax returns, even though they don’t have Social Security numbers, and the IRS is giving them billions in tax refunds each year.

Following that discussion, I want to steer your attention to the recent US space mission to Mars and the return of American exceptionalism. The historic landing of the “Curiosity Rover” on Mars is an incredible story and, unfortunately, many Americans weren’t paying much attention. This story has fascinated me over the last couple of months, and I want to bring you some of the amazing details in case you missed them.

We’ll get back to our usual buffet of topics next week. In the meantime, I hope you’ll find today’s discussion and several pictures from Mars interesting. 

IRS Doles Out $6.8 Billion in Refunds to Illegals

The Internal Revenue Service regularly issues something called Individual Tax Identification Numbers (ITINs) to people living in the US, but who are not eligible for a Social Security number. The ITIN program was created in 1996 so that these people can file tax returns. However, most of these people are illegal aliens working in the US.

The question you’re probably asking is, why would these illegals want to file a tax return? Don’t they prefer to keep their income hidden from the government? It may surprise you to know that 2.9 million ITIN tax returns were filed last year alone. Well, you probably are thinking, isn't it great that many illegals were filing tax returns and paying taxes?

That is until you learn that they received $6.8 billion in tax refunds (including refundable tax credits) last year! No wonder they were filing tax returns, in some cases multiple returns and lots of fraudulent returns to get refunds. Surprise, surprise! Isn't this a great country?

Actually, the full story is even worse. It turns out that a number of IRS employees recognized that this was/is tax fraud. Numerous employees reported the ITIN fraud to their supervisors, but many IRS supervisors told their employees to ignore the fraud and process the refunds anyway. As we learn below, this practice was widespread within the IRS and it has gone on for at least several years.

Some of the IRS employees were so outraged at what was happening that they went above their supervisors and filed complaints with the Treasury Inspector General for Tax Administration (TIGTA). This story first surfaced about a month ago in a report by Indianapolis TV station WTHR. At that time, the IRS denied the allegations were true. However, when TIGTA investigated the allegations, it found that the IRS employees’ complaints were TRUE.

Not only that, the TIGTA investigation discovered that IRS management was not concerned with addressing questionable applications and was interested only in the volume of applications that could be processed, regardless of whether they are potentially fraudulent. In particular, TIGTA found that IRS management created an environment that discouraged tax examiners from identifying questionable ITIN applications; eliminated successful processes used to identify questionable ITIN application fraud patterns and schemes; and established processes and procedures that are inadequate to verify each applicant’s identity and foreign status.

Actually, TIGTA has been investigating these ITIN tax refunds since at least 2010 and has chronicled the steadily growing numbers of tax refunds going to ITIN filers, which as noted above soared to $6.8 billion in 2011. But nothing has been done to stop this practice until this year. Thanks to complaints filed by IRS employees, TIGTA decided to crack down on the fraudulent tax refunds beginning this year.

TIGTA Inspector General Russell George issued the following statement at the conclusion of its investigation earlier this year: “TIGTA’s audit found that IRS management has not established adequate internal controls to detect and prevent the assignment of an ITIN to individuals submitting questionable applications. Even more troubling, TIGTA found an environment which discourages employees from detecting fraudulent applications.”

The result is that the IRS recently announced a series of improvements that will take effect immediately on an interim basis. TIGTA made nine specific recommendations in its report. The IRS reportedly agreed with seven of the recommendations and has announced plans to implement the changes based on TIGTA’s findings.

Here are a few other details gleaned from the TIGTA’s audit of the IRS that you’ll find interesting. As noted above, not only did the audit confirm that IRS procedures discouraged employees from flagging potentially fraudulent ITIN applications, but also that IRS management went so far as to disband a review group with proven success at identifying fraudulent activity. So it is clear that IRS management did this intentionally, not by accident.

Further, the TIGTA report also uncovered that 154 specific mailing addresses were used 1,000 or more times on ITIN applications. Ten specific individual addresses were used for filing 53,994 tax returns, resulting in the processing of $86.4 million in fraudulent tax refunds. Ten specific bank accounts received 23,560 tax refunds totaling over $16 million. At one Michigan address where the IRS had previously rejected an ITIN application, the agency later went on to issue 640 separate refunds to that address totaling $1.5 million. This is astonishing!

As noted above, a total of $6.8 billion was paid out last year, and who knows how much more was paid out this year. Of course, we’ll never see that money again!

Here again, the question comes up: Did this practice evolve as part of a greater effort to manufacture more dependency on the government and more votes for the Democrats (especially in states with no voter ID requirement)? We’ll probably never know, but it sure fits a pattern, doesn’t it?

American Exceptionalism – “Curiosity” Rover Lands on Mars

Just over a week ago America proved yet again that it can do what no other nation on earth can do. We successfully rocketed a one-ton, six-wheeled scientific laboratory about the size of an SUV some 352 million miles into deep space and flawlessly landed it on Mars within the designated landing zone.

Millions of Americans and others abroad watched live as the “miracle” descent and landing was broadcast around the world. But then again, a multitude of Americans and others around the world knew little or nothing about this breathtaking and dangerous accomplishment.

I must admit that I became fascinated with this mission in the last couple of months once I realized just how difficult it would be to pull it off. Yes, we’ve landed small robots/rovers on Mars before, but nothing remotely on this scale of size and scientific capability. And nothing with a price-tag of $2.5 billion. The odds of a catastrophic failure were enormous!

Getting the Curiosity Rover to Mars was one thing – we’ve done that multiple times before – but never anything remotely this large and heavy and complex. More importantly, the descent into the thin Mars atmosphere at over 13,000 miles per hour initially and slowing it to one mph upon landing – and everything in between – was completely unproven.

America’s space program was believed to be in irreversible decline, especially after President Obama cancelled the Space Shuttle program in 2010 and slashed NASA’s budgets. Thankfully, the Curiosity project, over eight years in the making at that time, was too far along for Obama to abandon it. Overnight, the successful landing of Curiosity Rover on Mars put NASA right back on track as the most enviable space program on the planet.

NASA scientists hailed the Mars rover Curiosity’s flawless descent and landing as a "miracle of engineering" on Monday as they scanned early images of an ancient crater that may hold clues about whether life ever took hold on Earth’s planetary cousin.

The one-ton, six-wheeled laboratory and its space crane that lowered it to the surface of Mars nailed an intricate and risky touchdown just after midnight on Monday, August 6, much to the relief and joy of scientists and engineers eager to conduct NASA’s first astrobiology mission since the 1970s Viking probes.

The Historic Landing Simulation & the Risks

Before you read on, I highly suggest that you click on the link below and visualize the events that occurred soon after the Rover and the space crane were released by the delivery rocket above the Mars atmosphere. It is fascinating! There was SO MUCH that could have gone wrong.

Yet much of what had been planned for years before – unprecedented and unproven as it was – came off almost exactly as expected. Here’s the link to the descent and landing simulation:

http://mars.jpl.nasa.gov/msl/multimedia/interactives/edlcuriosity/index-2.html

Even President Obama acknowledged that it was an historic accomplishment for the United States and a “point of national pride.” Here are some more details about this amazing mission to Mars.

Because of all the dangers involved, Curiosity lead engineer Miguel San Martin admitted after the successful landing, “We trained ourselves for eight years to think the worst all the time. You can never turn that off.”

Mission control engineers at the Jet Propulsion Laboratory near Los Angeles erupted in cheers and applause when confirmation was received that Curiosity, touted as the first full-fledged mobile science lab sent to a distant world, had landed successfully on the Martian surface.

NASA engineers said the feat stands as the “most challenging and elaborate achievement” in the history of robotic spaceflight, and it opens the door to a new era in planetary exploration. The landing also marked a much-welcomed success and a major milestone for a US space agency beset by budget cuts and the recent cancellation of its Space Shuttle program, NASA's centerpiece for 30 years.

The landing was the major initial hurdle for the $2.5 billion project whose primary focus is chemistry and geology. The daredevil nature of getting the rover to Mars captured the public's imagination. An estimated 3.2 million Americans stayed up late to watch the landing on TV or the Internet, as did millions more around the world.

Encased in a capsule-like protective shell, the nuclear-powered Curiosity Rover capped an eight-month voyage as it streaked into the thin Martian atmosphere at 13,200 miles per hour, 17 times the speed of sound.

Plunging through the top of the atmosphere at an angle producing aerodynamic lift, the capsule's “guided entry” system used jet thrusters to steer the craft as it fell, making small course corrections and slowing its downward speed.

Closer to the ground, the vessel was slowed further by a giant, supersonic parachute (the largest ever constructed) before a jet backpack and flying “sky crane” took over to deliver Curiosity the last mile to the surface and the landing zone.

The Rover, about the size of a small SUV, came to rest as planned at the bottom of a vast impact bowl called Gale Crater, and near a towering mountain of layered rock called Mount Sharp.

Photo from Mars Lander

A trio of orbiting satellites monitored what NASA had billed as the “Seven Minutes of Terror.” It takes seven minutes for a communication to travel from Mars to Earth, so NASA engineers, scientists and flight controllers had to endure seven minutes before they knew Curiosity had landed safely. Fortunately, everything worked and the anxiety turned to wild celebration.

From an orbital perch 211 miles (340 km) away, NASA’s sharp-eyed Mars Reconnaissance Orbiter snapped a stunning and serene picture of Curiosity gracefully riding beneath its massive parachute en route to Gale Crater, located near the planet’s equator in its southern hemisphere.

At 1:32 a.m. EDT on Monday NASA flight controllers at the Jet Propulsion Lab received the equivalent of a text message from Curiosity that its journey of 352 million miles had ended safely. Seven minutes later, the Rover transmitted a picture, relayed by another Mars orbiter called Odyssey, showing Curiosity on the planet’s gravel-strewn surface.

Photo from Mars Lander

“When you see a picture of the surface of the planet with the spacecraft on it, that is the miracle of engineering,” lead scientist John Grotzinger told reporters on Monday. With the late-afternoon sun slipping behind the crater’s rim, Curiosity relayed six more sample pictures and the results of initial health checks of some of its 10 scientific instruments before shutting down for the Martian night.

Additional photos taken by Curiosity were relayed hours later, including a batch of 200-plus images snapped at nearly four frames per second by the craft's bottom-mounted camera as it was lowered to the ground by parachute, rocket pack and sky crane. They were assembled by NASA into a rough-cut clip of moving footage showing the Rover’s descent from its own perspective, starting from the ejection of its heat shield.

The Intriguing Landing Zone for Curiosity

Curiosity touched down about 6.2 miles from the foot of Mount Sharp, a monstrous formation of sedimentary rock that rises like a stack of cards three miles from the floor of Gale Crater. Higher from base to summit than California’s Mount Whitney, the tallest mountain in the continental United States, Mount Sharp crests above the northern rim of the Gale Crater.

An image of the mountain in the distance was captured by one of the Rover's front-mounted hazard cameras, a flat, gravel-strewn plain in the foreground and the vehicle casting a silhouetted image on the ground. The picture reveals that Curiosity landed virtually face-to-face with the mountain, with no obstacles between the two.

Photo from Mars Lander

Scientists believe Mount Sharp may have formed from the remains of sediment that once completely filled the basin, offering a potentially valuable geologic record of the history of Mars, the planet most similar to Earth. For that reason, it is a key focus of interest for Curiosity scientists looking for evidence of Martian habitats that may have supported microbial life. It may be months, however, before Curiosity heads over to Mount Sharp.

As project manager Pete Theisinger put it, “We have a priceless asset and we're not going to screw it up.” After a flawless landing, the mission’s “surface phase” was starting out as apparently trouble-free. Asked at an afternoon briefing if anything had yet gone wrong, mission manager Jennifer Trosper replied simply, “No.”

The Rover comes equipped with an array of sophisticated instruments capable of analyzing samples of soil, rocks and atmosphere on the spot and beaming results back to Earth. One is a laser gun that can zap a rock from 23 feet away to create a spark whose spectral image is analyzed by a special telescope to discern the mineral’s chemical composition.

As I said at the beginning, I have become fascinated by the Curiosity Rover mission. Assuming it continues to operate as expected, it will deliver volumes of priceless information for the next two years and hopefully much longer.

There are those who say it will not be worth the cost, but we don’t know that yet. My counter point is that we could easily end $2.5 billion in government waste – like paying almost three times that much in tax refunds to illegal aliens last year alone – to pay for invaluable missions like Curiosity.

Finally, I would like to extend my heartfelt thanks to all the brilliant and dedicated engineers and scientists that have devoted much of their careers to making Curiosity a success and putting the US space program at the top of the world again.

On a personal note, my son is studying engineering in college and is now in a summer internship with Boeing Corporation in Houston, which is located right next to NASA. They are working on the next manned space vehicle to the International Space Station, as well as the next NASA space vehicle to go to Mars. How exciting – Dad’s proud!

Speaking of proud, how about those American Olympians in London! Our athletes won more Olympic medals – 104 – than any other country, including a record 46 gold medals for Olympics held in a foreign country. Way to go Team USA!!

Wishing you a fun end of summer,

 

Gary D. Halbert

SPECIAL ARTICLES

Curiosity lands on Mars: US wins space heptathlon
http://www.newstatesman.com/blogs/michael-brooks/2012/08/curiosity-lands-mars-us-wins-space-heptathlon

President Obama: NASA, Curiosity “made us all proud.”
http://newyork.newsday.com/news/world/nasa-curiosity-mars-rover-team-made-us-all-proud-obama-says-1.3901137

 


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Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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