Photograph by Victor J. Blue/Bloomberg

A woman looks at bags inside a Prada SpA store in the SOHO neighborhood of New York, on May 10, 2013.

Data issued last week confirmed the economy grew from January through March at around the 2.5 percent annualized pace calculated by the Commerce Department in its advance estimate released April 26.

What the figures also confirmed is that the pickup from the fourth quarter’s 0.4 percent pace was driven more by consumer spending and less by an accumulation of inventories. That, in turn, is brightening the outlook for the second-quarter, which ends June 30 .

The April retail sales report on May 13 included revisions to March and February data that showed household spending climbed at a faster pace in the first quarter than initially calculated. It increased at about a 3.5 percent pace rather than the 3.2 percent now on the books, according to estimates by economists at JPMorgan Chase & Co. in New York.

Combined with stronger-than-forecast sales figures for April, the JPMorgan economists raised their second-quarter growth forecast that day to 2 percent from 1.5 percent.

Less than two hours after the retail sales report came news that inventories grew at a slower pace in the first quarter than initially estimated. From a growth-accounting perspective, that wiped away most of the benefit of the pickup in consumer spending since gains in stockpiling boost gross domestic product.

Revisions to factory orders on May 16 showed inventories grew at an even slower pace than thought just days earlier, chipping a bit more from first-quarter GDP.

After also taking into account what looks to be a bigger drop in commercial construction than the government first estimated, a smaller gain in business investment on equipment and software and less widening in the trade deficit, that left JPMorgan’s tracking estimate of first-quarter growth at 2.4 percent.

While it may seem little changed from the advance numbers, it’s really a world apart in terms of what constitutes a better foundation for future growth: more spending and smaller stockpiles. It also means the so-called “Spring Swoon” is looking less dramatic.

Original post is Consumer Spending Undercuts ‘Spring Swoon’ Economic Concerns by Political Capital.

Photograph by Victor J. Blue/Bloomberg

Delegates stand at the Republican National Convention (RNC) in Tampa, Florida, on Aug. 30, 2012.

The Republican organization working to secure state offices for the party will focus on recruiting Hispanic and female candidates in the 2014 election cycle, when it plans to raise $50 million.

The Republican State Leadership Committee is “on track” to meet that fundraising goal after raising $39 million for the 2012 election, committee president Chris Jankowski told reporters today. The group focuses on state legislative races and “down-ballot” statewide contests for lieutenant governor, attorney general and secretary of state. As a 527 organization, the RSLC can accept donations in unlimited amounts.

Fielding more Hispanic candidates is a top priority for the group. While the RSLC met its goal of recruiting more than 100 Hispanic candidates for state legislatures in 2012, Jankowski said, they won just 16 races instead of the 30 to 35 he expected.

“The biggest demographic challenge is the Hispanic challenge, but we as a party need to do better, period, and we intend to try,” Jankowski said.

President Barack Obama won 71 percent of the Hispanic vote in the 2012 election, exit polls show, helping him carry politically competitive states like Florida, Nevada and Colorado while aiding Democrats down the ballot.

Jankowski said the Republican party does not always value female candidates “as much, but they are a great asset as candidates” because they “bring a different approach to campaigning.”

“We obviously need more women to enter public office and get on the escalator to higher office so that our leadership reflects stronger women in the Republican Party,” he said.

The RSLC will work to elect more Republicans to state legislatures in Virginia and New Jersey this fall. Both states also are holding elections for governor.

Republicans hold a 67-32 advantage in the Virginia House of Delegates, whose members are up for re-election this November. Each party holds 20 seats in the state Senate, whose members are next up for election in 2015.

The tie-breaking vote is held by the lieutenant governor, an office that’s up for election in November. On May 18, Republicans nominated E.W. Jackson, a black pastor who’s drawn attention for comments opposing abortion and homosexuality.

“It is very important that we can disagree without being disagreeable, that we highlight issues that are relevant and what we can actually accomplish,” Jankowski said when asked about Jackson.

All 120 state legislative seats in New Jersey are on the ballot in November. Even a landslide re-election by Republican Gov. Chris Christie over Democratic challenger Barbara Buono may not be enough to overturn Democratic majorities of 48-32 in the Assembly and 24-16 in the Senate.

Jankowski acknowledged that ”the districts are very unfavorable and present a challenge” for Republicans.

“If Christie stays strong, we think there are some excellent opportunities for pickups in the Assembly and in the Senate, and we will be very engaged to do so,” he added.

Original post is Republican Group Seeks More Hispanic and Female Candidates by Political Capital.

Photograph by Tim Boyle/Bloomberg

A taxi leaves the Hyatt Regency Chicago hotel.

Updated 3:20 p.m. EST

Hotel and restaurant union workers plan to protest President Barack Obama’s pick of billionaire Hyatt heiress Penny Pritzker to lead the U.S. Department of Commerce.

“Hyatt has singled itself out as the worst hotel employer in the United States, leading the industry in outsourcing practices that destroy good jobs and hurt housekeepers,” UNITE HERE said today in a statement. The labor group has about 250,000 members.

For years, working conditions have prompted labor strikes and boycotts of Hyatt Hotel Corp., based in Chicago — also Obama’s home before he was elected president in 2008.

UNITE is a member of the umbrella labor organization AFL-CIO, which has documented labor problems at the hotel chain in years past.  AFL-CIO spokesman  Jeff Hauser declined to comment on UNITE’s protest of Pritzker when reached this afternoon.

Hotel workers affiliated with UNITE plan to gather today from 4:30 p.m. to 6 p.m. Chicago time at the Hyatt McCormick Place. Organizers say they expect about 1,000 protesters. The New York Daily News first reported plans for the rally earlier today.

“Under Pritzker’s direction, Hyatt has led the hotel industry in a race to the bottom by aggressively subcontracting out career hotel jobs to minimum wage temps,” Cathy Youngblood, a Hyatt housekeeper and advocate for electing  a hotel worker to Hyatt’s board of directors, said in UNITE’s statement today. “This is not the model that will lead our country to a bright economic future.”

The rally comes as Senate confirmation hearings are scheduled to begin this week. Top Republicans told Bloomberg News they plan to ask tough questions of the billionaire heiress based on her disclosure of income from a trust in the Bahamas. Obama derided his 2012 Republican challenger Mitt Romney for having offshore accounts.

“It isn’t just about her or the offshore stuff, it’s about the fact that the president made a big deal out of Romney’s offshore accounts,” Senator Charles Grassley, an Iowa Republican, said in an interview with Bloomberg’s Laura Litvan.

Original post is Hotel Union Protests Obama Commerce Nominee by Political Capital.

The FEC announced today that Ensign and his committees will pay $32,000, while the parents owe $22,000.

At issue has been whether $96,000 paid by Ensign’s parents, Michael and Sharon Ensign, to Cindy and Doug Hampton and two of their children was a campaign contribution in excess of legal limits.  Cindy was the former campaign worker that Ensign had the affair with while her husband, Doug, worked for the senator.

Ensign disclosed the affair in June 2009. His lawyer, Paul Coggins, said a month later that the payment was made “out of concern for the well-being of long-time family friends during a difficult time.”

Ensign resigned his Senate seat in May 2011 after the chamber’s Ethics Committee announced it was hiring an outside counsel for the investigation into the payment, which could have resulted in public hearings.

In announcing his resignation on his website, Ensign said that “while I stand behind my firm belief that I have not violated any law, rule, or standard of conduct of the Senate, and I have fought to prove this publicly, I will not continue to subject my family, my constituents, or the Senate to any further rounds of investigation, depositions, drawn out proceedings, or especially public hearings. For my family and me, this continued personal cost is simply too great.”

Ensign had won his Senate seat in 2000. It is now held by Republican Dean Heller.

Original post is Ensign to Join Parents in Paying FEC Fines Totaling $54,000 by Political Capital.

Photograph by Alex Wong/Getty Images

Treasury Inspector General for Tax Administration J. Russell George, left, and Former Acting Commissioner of the Internal Revenue Service Steve Miller testify during a hearing before the House Ways and Means Committee on May 17, 2013 on Capitol Hill in Washington, DC.

The Internal Revenue Service wrote and planted the question asked on May 10 that led to the IRS scandal, the questioner said in a statement today.

Celia Roady, a partner at Morgan, Lewis & Bockius LLP in Washington, said that she received a call May 9 from Lois Lerner, the mid-level IRS official in charge of tax-exempt organizations. Both were planning to attend a tax conference the next day in Washington.

Lerner “asked if I would pose a question to her after her remarks,” Roady said in a statement released today by her firm. “I agreed to do so, and she then gave me the question that I asked at the meeting the next day.”

According to Talking Points Memo, which got a recording of the event, the question came a few minutes after Lerner finished her prepared remarks. It was: “Lois, a few months ago there were some concerns about the IRS’s review of 501(c)(4) organizations, of applications from tea party organizations. I was just wondering if you could provide an update.”

In response, Lerner acknowledged that the agency used words such as “Tea Party” and “patriot” to decide which applications for tax-exempt status should get tougher scrutiny. Lerner apologized for the agency’s actions.

Roady said she didn’t know how Lerner would answer.

Steven Miller, the acting IRS commissioner who is being forced out, said today in testimony before the House Ways and Means Committee that the agency and Roady had talked in advance. He hadn’t said that the IRS had written the question.

Original post is IRS Planted the Question that Started Scandal by Political Capital.

Photograph by Alex Wong/Getty Images

Rep. Mike Kelly (R-PA) speaks during a hearing before the House Ways and Means Committee on May 17, 2013 on Capitol Hill in Washington, DC.

Rep. Mike Kelly came to politics late and, only in his second term at 65 years of age, the actuarial tables don’t favor him rising to become a Capitol Hill kingpin. He could retire tomorrow, though, and know that he made the most of one moment in the spotlight.

As a member of the House Ways and Means Committee that held a hearing today on the the IRS political scandal, the Pennsylvania Republican did more than just join in the expected bipartisan grilling of outgoing agency boss Steven Miller — he scorched him, and in the process earned a prolonged standing ovation from spectators.

As you can see here, Kelly starts out in fairly routine fashion but then gets to the bottom line that most citizens can relate to — IRS chieftains can offer all the excuses they want about a poorly managed agency being the root cause for the untoward scrutiny given Tea Party groups, but John Q. Public doesn’t get cut that type of slack when its audit time.

Addressing a clearly chagrined and morose Miller, Kelly noted: “If you think it’s uncomfortable sitting over there, you ought to be a private individual when the IRS is across from you questioning.”

At the risk of causing his own immediate family to perhaps squirm a bit, Kelly later used a personal anecdote to speak truth to bureaucrats: “I have a grandson who’s afraid to get out of bed at night because he thinks there’s somebody under the bed that’s going to grab him. And I think most Americans feel that way about the IRS. I mean, you get a letter from you folks, or a phone call, it’s with terror that you look at it.”

Gaining a head of steam, he drove his point home with gusto: “You talked about — you’re a horribly run organization. If you’re on the other side of the fence, you’re not given that excuse.” When a taxpayer deals with the IRS, he continued, “You’re not allowed to be shoddy, you’re not allowed to be run horribly, you’re not allowed to make mistakes, you’re not allowed to do one damn thing that doesn’t come in compliance. If you do, you’re held responsible right then.”

The Mediaite website headline sums it up: “GOP Rep. Mike Kelly Delivers Brutal Takedown of IRS to Audience’s Applause.”

Kelly came to Congress as part of the 2010 Republican tsunami, knocking off a one-term Democratic incumbent in a district in Pennyslvania’s northwest corner. Owner of a Chevrolet-Cadillac deadlership he took over from his father, Kelly’s previous political experience consisted of four years on the city council in Butler, a Pittsburgh suburb.

The one time he had strayed from his Keystone State roots was to attend the University of Notre Dame, where he was recruited to play football. He got his degree there, though his athletic career was quickly sidetracked by a knee injury his freshman year.

Today, he got the ball and ran with it.

and look who was watching:

Must watch! RT @caintv: Rep. Mike Kelly levels blistering attack at IRS Comm. Steven Miller bit.ly/Z1QJu0

— Herman Cain (@THEHermanCain) May 17, 2013

Original post is Mike Kelly’s IRS Spotlight for John Q. Public: Standing Ovation by Political Capital.

Photograph by Greg Johnston

Cayman Islands

Social welfare nonprofits, which can keep their donors secret, are a lot like Russian nesting dolls: Open one, and you’ll find a smaller version inside.

That’s what courts in California discovered last year when they tried to figure out who paid for TV ads attacking Gov. Jerry Brown’s tax increase plan. The courts forced an out-of-state nonprofit to reveal its donors only to find out that the ad money came from … another out-of-state nonprofit. That’s where the trail ended.

Prompted by a revelation last week that the Internal Revenue Service improperly targeted Republican-leaning nonprofit applicants, Congress is plunging  into the thicket of tax rules governing those entities. Hearings continue next week.

Campaign-finance watchdogs such as the Sunlight Foundation, Democracy 21, Common Cause and the Campaign Legal Center are imploring lawmakers to look broadly at whether politically active nonprofits are misuing their tax-exempt status. A Bloomberg story today highlights two groups — one Democratic and one Republican — that appear to be gaming the system by buying campaign-style ads and doing most of their work in election years.

There’s yet another way social welfare nonprofits participate in politics: They move dark money, Cayman Islands style. Sometimes a nonprofit gives money to a political committee that can more freely spend on politics, in effect keeping the real donors hidden. Bill Allison, editorial director of the Washington-based Sunlight Foundation, has called that phenomenon a “campaign-finance haven.”

Those tactics can bump up against stricter state campaign-finance laws, as was the case in California with the Americans for Responsible Leadership.

Two days before the November 2012 election, a California Supreme Court judge ordered the nonprofit based in Phoenix to reveal who gave it the $11 million that it in turn contributed to a business group opposing Brown’s California tax initiative.

Americans for Responsible Leadership reported that it received its money from the Center to Protect Patient Rights — another nonprofit with secret donors.

An October 2012 Bloomberg News investigation of the Center to Protect Patient Rights, also based in Phoenix, revealed that it raised $62 million for the 2010 elections and parceled out most of its money to other nonprofits.

The center’s donors remain a secret.

Original post is Nonprofits: Cayman Islands of Political Money by Political Capital.

Photograph by Andrew Harrer/Bloomberg

Steven Miller

Speaking of the truth vs. the whole truth, House Republicans did some selective editing of an inspector general’s report during today’s hearing on the Internal Revenue Service.

Steven Miller, the acting — and outgoing — commissioner of the Internal Revenue Service, denied today that the agency had targeted small-government groups for tougher scrutiny of their applications for tax-exempt status.

Republicans at a Ways and Means Committee hearing pushed back on that, noting that the inspector general’s report used the word “target” 16 times.

“It’s a common understanding of the word,” said Rep. Peter Roskam, an Illinois Republican. “And so I would just suggest that it’s a well-settled doctrine and we not waste a lot of time parsing on it.”

The count of 16 mentions is true — on a simple word search.

Each of those 16 references describes the allegations the inspector general researched, which themselves came from congressional Republicans.

None of the uses of the word “target” in the report describes the inspector general’s findings.

What did the report say? That the IRS used “inappropriate criteria” to screen applications.

Original post is IRS: Republicans’ Own Selective Examination: ‘Targets’ by Political Capital.

Maguire, 74, filed a federal statement of candidacy to seek the northern 5^th District seat held by Republican Scott Garrett, according to documents on file at the Federal Election Commission.

Maguire was elected to the House in 1974 at 35, a member of the big Democratic class of “Watergate Babies” elected three months after President Richard Nixon resigned in disgrace. Maguire served through 1980, when he was unseated by Republican Marge Roukema.

Maguire ran for the Senate in 1982, placing second in a Democratic primary won by Frank Lautenberg, who was elected to the first of five terms.

Garrett succeeded Roukema after the 2002 election and is serving his sixth term. He leads the House Financial Services panel that oversees capital markets and government-sponsored enterprises.

New Jersey’s 5^th District takes more than 70 percent of its population from Bergen County, including the communities of Hackensack, Fair Lawn, Paramus and Ridgewood. It also includes parts of Sussex, Warren and Passaic Counties. The district has a median household income of $86,213, 14^th-highest in the nation, according to a 2011 Census Bureau estimate.

The district, redrawn before the 2012 election, backed Republican Mitt Romney over President Barack Obama by 51 percent to 48 percent, according to data compiled by Political Capital.

An e-mail to Maguire’s campaign wasn’t immediately returned.

Original post is Ex-Rep. Maguire Readies New Jersey Comeback Campaign by Political Capital.

Photograph by Chip Somodevilla/Getty Images

First lady Michelle Obama delivers the commencement speech during the Bowie State University graduation ceremony at the Comcast Center on the campus of the University of Maryland on May 17, 2013 in College Park, Maryland. Obama received and Honorary Doctor of Laws degree before addressing the 600 graduates of Maryland’s oldest historically black university and one of the ten oldest in the country.

That midlife crisis is over, it appears:

Credit The Hill for noticing the first lady’s appearance at Bowie State University for a commencement address sans bangs.

The forehead covering first appeared on her 49th birthday in January, just in time for President Barack Obama‘s second inauguration.

“This is my midlife crisis, the bangs. I couldn’t get a sports car,” she later told talk show host Rachael Ray. “They won’t let me bungee jump. So instead, I cut my bangs.”

Michelle Obama ditches her bangsj.mp/15TG2N7 by @emilylgoodin

— The Hill (@thehill) May 17, 2013

The president had said how much he liked those bangs, back during the inaugural ceremonies.

At the National Building Museum, one of Washington’s great public spaces, a freshly inaugurated Obama greeted supporters at the start of his second term, and opened with a comment on his wife’s new hair-do.

“I love her bangs,” the president said of his wife’s cut.

Maybe it was the IRS that got her to reconsider — a subject-changer at 1600 Pennsylvania.

Original post is Michelle Obama: The Bangs Are Gone by Political Capital.