Moneybeat: What’s the IRS up to?

MARY REICHARD, HOST: Next up on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: It’s time to talk business, markets, and the economy with financial analyst and adviser David Bahnsen.

He’s head of the wealth management firm The Bahnsen Group and he’s here now.

David, good morning!

DAVID BAHNSEN: Well, good morning, Nick, good to be with you.

EICHER: OK, David, let’s hit two news stories off the top. The March jobs figure stayed over 200-thousand jobs mark. But it’ll be two months in a row where the jobs-added figure fell by about 100-thousand month on month. I wonder what your thought is on employment.

And second, we got a summary of what the IRS plan is for how the agency will use the increased funding for tax collection and audits. It was light on detail, it was late in coming, and Republicans in Congress barked about that last week. What are your thoughts on those items?

BAHNSEN: Well, let's start with the jobs number, which was another pretty good one, it was a little lower than last month's new jobs was. I think we came in at 236,000 in March, and we were at 326,000 in February. So not quite 100,000 less, but nevertheless, in range with expectation. So I don't think that there is any surprising news either good or bad out of the new jobs created. One thing I was a little interested in is that the private sector jobs were down. And that was the first time in about eight months that it correlated to what the ADP private payrolls had reflected a few days before. There's been a real disconnection between ADP private payroll data, and the BLS number, and this month that kind of came in hand in hand. The other thing I would say, though, is that the year over year average hourly earnings were up 4.2%, they were up by 0.3% on the month, and that 4.2% year over year is now the lowest it's been since June of 2021, almost two years. And so this is a very important thing about those who thought that we were going to go into a wage price spiral with inflation The exact opposite has taken place. The annualized growth of wages has continued to go down. And it has not beget more inflation, as many were worried about: quite the opposite.

EICHER: And don’t forget the IRS piece.

BAHNSEN: Well, I don't consider it much of a plan. They call it a strategic operating plan and, using broad terms like improving the taxpayer experience, modernizing IT systems, strengthening tax compliance in an equitable manner, those are all lovely phrases. And I guess giving us the fact that 45 billion of the 80 billion will go to enforcement, 25 billion to operations. Those are numbers we didn't have before. But you know, what do they mean by enforcement? I mean, that's the real question. How do you spend $45 billion of additional money, this needs to be really pointed out. This is not their new budget. This is a new addition to budget. Enforcement is not like a new thing that we're putting on the menu. They've been enforcing tax code and tax policy forever. This is additional enforcement. And so many people would consider the IRS to have been plenty aggressive already. What they plan to do with additional enforcement, to me is the key here and I think a lot of people are right to be skeptical.

EICHER: All right, first listener question today is from Sarah Heitzman-Nolte of Geneseo, New York. And we had a couple questions on this:

SARAH HEITZMAN-NOLTE: My question for David today is in reference to the Fed Now program that was launched on April 3, and should be up and running by July. I would like David to explain the advantages and disadvantages, if there are, of this digital central banking program.

It makes me very uneasy. But on the other hand, I don't want to just be the conservative Christian that says progress is bad, and everything that we do with technology is negative.

So, I would like to hear your thinking on this because I feel like we're just not hearing very much about it. Thank you.

BAHNSEN: I think that the question about a Federal Reserve centrally administered digital currency is getting more traction. And I first want to encourage people to put their fears aside when they consider the inefficiency of governmental administrations. This idea about the Fed modernizing the international flow of funds is something that started five years ago and has still not made any progress at all. And so sometimes they announce a kind of shiny technological project. But when you don't have the profit motive, and it is not core to what the governmental entity exists to do, it really is very hard for them to get anything done. But in this particular case, I remained totally unaware of who exactly the user would be. Those who have an appetite for a digital currency and are looking to see more transactions on the blockchain, whether through Bitcoin, or some other crypto that they believe represents a financial transaction on a ledger that seems to them more stable. Again, I think most of the people that are kind of caught up with that are people who are distrusting of government. And so in that sense, you see already a wild volatility of the value that has made it a totally un-transactable currency, nobody can really use it day to day to buy or sell anything because the value is all over the place.

And then with a Fed, where there is obviously a much more stable medium of exchange, in the short term, I don't know who exactly is appetite has an appetite for a digital version. And so to me, it's just sort of a gnat in search of a windshield. I don't believe they'll get it off the ground. And I think it is being the sort of exploration of the project is being conducted because they feel like they have to, not because there's a real problem or need they're attempting to solve.

EICHER: All right, David, I think you’ll be happy to know that we did receive email about your JP Morgan Chase shareholder resolution. Lizzie Kiesle, for example, wrote and said that our discussion last week reminded her that she has some JP Morgan stock. “As a result,” she wrote, “I voted for the first time in a shareholder meeting and voted for David’s [resolution].” And she added her appreciation that you looked into the issue and took action.

BAHNSEN: Well, I appreciate hearing that, Nick. And I'll let people know that May 16 is the date of the JP Morgan Chase annual shareholder meeting. We're right now working on getting approval not only for me to be making a case for my own resolution at the meeting, but um, to see if they will allow former governor and former Senator Sam Brownback to use some of my time to make comments as well. So there's more to be done here.

And I will say that JP Morgan has been engaged in conversation, they're certainly vehemently denying that their closing of a few of these accounts that we cite had anything to do with religious or political reasons. But nevertheless, they are denying our motion to explore and run a study as to what they're doing to avoid religious and political discrimination. And so there's more to come here and we're going to continue fighting it. And even if this shareholder resolution fails, we've already gotten a lot of attention on the issue, and we certainly appreciate WORLD listeners and their support.

EICHER: Related to that, another email: Meg Cusack of Grand Rapids, Michigan. She says she receives notifications from several companies about proxy voting (including JP Morgan).

She wants to know: Does David know of a resource for shareholders to go to to see recommendations on who to vote for on the boards and how to vote on proposals for all companies that are consistent with conservative values?

BAHNSEN: Yeah, so here's my answer, that may be a little unsatisfying. There are major resources of huge institutional shareholder services that handle proxy voting, and make recommendations, and those services unfortunately, can often be as woke and unaligned with our values as the companies themselves may be. I am working right now through an outfit called Bowyer Research, who I have retained to aid with my efforts here, where we can, at my firm provide an additional service that would include shareholder recommendations, voting, and even proxy and so forth. We're using myself as a guinea pig to try to navigate, understand the landmines, you know, engage certain management teams in conversation, and then eventually be able to offer a more scaled version as a service - not as a cost to others like like this question here. So we don't have it off the ground yet, but we're working on it and I do think gonna be vitally important that if Christians want to complain about things companies are doing that they vote around their own values, and most Christians just simply don't vote. So I think which is understandable. It's always been kind of a check the box red tape, but we're just seeking to address that. And there's more work in play right now and I'll keep you posted.

EICHER: Alright: Thanks this week to Sarah Heitzman-Nolte, Lizzie Kiesle, and Meg Cusack.

We’d love to have your question, too, and you can send it to feedback-at-world-and-everything-dot-com. I’m happy to read your email, but I always think it’s better to hear it. So take a moment, record your question in your voice on your phone’s voice memo app and attach the file. Same email address: feedback-at-world-and-everything-dot-com.

David Bahnsen is founder, managing partner, and chief investment officer of The Bahnsen Group. David, thank you!

BAHNSEN: Thanks so much, Nick.

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