Where do your government tax dollars go?

While disclosing how tax revenues are spent will require added work for governments, added transparency could benefit them in the long term. We explain why.

By Joe Dalton and Aidan Manktelow
Photo credit: Thomas Koehler, Getty images         
Governments are increasingly finding themselves under the spotlight as the tax transparency debate continues to evolve. While multinationals may be challenged on how much tax they pay, governments are challenged on how they spend their revenues.
Brazil’s Football World Cup in 2014, billed as a way to showcase the country’s culture and growing stature as the world’s seventh largest economy, instead kicked off with controversy over unfinished infrastructures and protests outside resplendent stadiums by thousands demanding better health, transportation and education services.
In the United Kingdom, the activist group UK Uncut pairs its criticism of corporate tax avoidance with protests against reduced government services in the budget. The EU has faced calls to create an investment fund to pay for infrastructure. Government inspectors in the United States regularly make headlines with lists of wasteful spending projects.
Around the world, scrutiny of how governments spend tax revenue is the flip side of the additional transparency demands on taxpayers, leaving many officials feeling pressure to respond to constituent concerns.
“As many governments are facing economic crisis and imbalanced budgets, there is much more focus on the efficiency of the dollars that they spend on certain programs. And, of course, these issues are being discussed much more than they were in the past,” says Jean-Pierre Lieb, EY’s EMEIA Tax Policy Leader and former Director General of the tax authority in France.
Are governments opening up on spending?
While many taxpayers may see voting to remove an incumbent government from office as their primary means of holding them to account for misspending tax revenues, the rise of the tax transparency agenda may ultimately mean that citizens get a greater say over how tax revenue is spent.
International transparency initiatives are driving some countries to become more transparent about where revenues are spent. The Extractive Industries Transparency Initiative (EITI), for instance, has led to the increased disclosure of payments made to governments by the extractive sector and, therefore, increased the accountability of tax-collecting authorities and governments.

“Governments should investigate the potential benefits offered by the changing transparency landscape.“

In the Democratic ­Republic of the Congo, for example, recent EITI reports helped identify a shortfall of US$26 million in royalty tax collections not properly accounted for by authorities.
The EITI also encourages informed debate among citizens about how revenues generated from the oil and gas sector should be used, putting pressure onto member governments to be more open about how they spend their revenue.
“The increased availability of this data will enable ­extractive stakeholders, analysts, journalists and ­citizens themselves to engage in debate about the management of natural resources, the impact this has on the economy, the medium- and long-term perspectives of the extractives sector and how revenues are shared between owners, operators and all levels of government,” EITI said in a recent progress report.
“EITI data will also create a better understanding of the volatility of the sector, optimal taxation regimes and, crucially, how mineral wealth translates into social benefits.”
The pressure’s on governments to open their books
In addition, civil society organizations such as the International Budget Partnership (IBP) and NGOs such as the Publish What You Pay (PWYP) coalition are also applying pressure on national governments to open their books. The IBP has created the Open ­Budget Index that assesses the transparency of government spending around the world.
Some governments are launching their own programs to increase transparency around where tax revenue is spent. As one example of this, in October, the UK Government, for the first time, sent a personal tax statement to its citizens detailing pound by pound how their tax payments contribute to public spending.
EY’s Jean-Pierre Lieb points out that countries such as Australia, Canada and France have appointed judicial bodies to control public accounts and issue a public statement on the quality and the fairness of public accounts. “These bodies will ensure that the money spent on those programs is well used and that there is a real economic or financial impact,” he says.
Citizens being directly consulted on government programs is perhaps the most transparent approach available to deciding government spending and taxation policies. Switzerland is one example of a country taking this approach, where direct votes by ­citizens are still held to approve budgetary measures.
Why transparency is good for governments
While disclosing how tax revenues are spent will require added work on the part of governments, transparency could benefit them in the long term. A government that responds more specifically to the priorities of its citizens will clearly be able to better target spending, which could boost its chances for officials’ re-election.
“The more transparency there is from governments about where they are spending ­revenue, the more individuals, electors and communities can assist those judgments and hopefully ensure that they align with the expectations and the aspirations of the people who our legislatures represent,” argues David Bradbury, Head of the Tax Policy and Statistics Division at the OECD.
New Zealand features at the top of the IBP’s Open Budget Index and similarly scores highest on the Corruption Perceptions Index 2013. It could be argued, therefore, that greater transparency from government helps to engender trust among the population.
The Open Budget Index suggests several other advantages of governments disclosing its tax receipts and spending:

• It closes the door to waste and misappropriation of public funds.
• It can lead to more efficient and effective government spending.
• It helps governments to match national resources with national priorities.
• It supports government efforts to manage debt.
• It helps governments to secure cheaper international credit.
• It helps build trust between governments and citizens and empowers citizens by giving them a voice on government spending.

The challenges of open budgets
Of course, open budgets bring their own challenges too. While a small country like Switzerland has proven it is possible to open up key spending decisions to a public vote, countries with larger, geographically dispersed populations or without advanced ­infrastructure and access to technology may face higher barriers to implement such a system.
There are also challenges in determining where to draw the line and how to overcome regional rivalries. For local councils and city administrations, there is also the concern that few have the time, the training or the inclination to really engage on anything other than fundamental issues.
Governments should investigate the potential benefits offered by the changing transparency landscape. Opening up tax revenue and spending information to engage the public in the budget process can deliver some valuable advantages, not least in enabling better targeting of revenue spend.
There are clearly significant practicalities that would have to be addressed, but the progress that has ­already been made in countries where a more open approach to revenue and budget spending is happening makes a case for additional transparency on the part of governments going forward.
Key action points

• Consider the advantages of disclosing tax receipts and spending for building public trust as demonstrated, for example, by the IBP’s Open Budget Index
• Study other government models for increasing transparency and consider which elements might be effective in your country
• Understand that greater openness brings its own challenges, too, and anticipate them

Congress OKs stopgap DHS funding bill, lawmakers remain at impasse in immigration fight

After a dramatic and chaotic day of votes, Congress late Friday approved a stopgap bill to keep money flowing to the Homeland Security Department past a midnight deadline and avert a partial agency shutdown -- though Congress is no closer to a long-term deal.
The House voted 357-60 for a mere one-week spending bill. With the Senate already having approved the measure. President Obama signed the bill into law late Friday night.
But that legislation was passed only after efforts to pass a slightly more substantial stopgap – a three-week funding bill – melted down on the House floor Friday afternoon. Though it had been expected to pass, 52 Republicans defected and joined Democrats in opposing the leadership-backed legislation.
This led to bad blood late Friday between House Republicans who joined Speaker John Boehner in supporting the bill, and those who peeled off. One senior House GOP source told Fox News that the nearly 200 Republicans who backed that bill were “super mad” at those who left them hanging.
"There are terrorist attacks all over world and we're talking about closing down Homeland Security. This is like living in world of crazy people," tweeted Rep. Peter King of New York, a former chairman of the Homeland Security Committee.
In the end, Boehner was able to pass the one-week measure with the support of some Republicans, as well as Democrats – after Leader Nancy Pelosi, D-Calif., told her caucus they could reverse course and back the last-ditch measure.
While DHS is funded for now, however, Congress’ punt only underscored the deep divisions over the way forward in a debate that centers not on DHS funding but the president’s controversial immigration executive actions.
Conservative Republicans want to reverse those actions as a condition for funding DHS. Democrats want to pass a stand-alone, full-year funding bill with no immigration provisions attached. But while some corners of the Republican caucus have backed down – namely in the Senate -- rank-and-file Republicans in the House have not.
"I am not going to vote under any circumstances to fund illegal conduct," Rep. Mo Brooks, R-Ala., said earlier. "If it's illegal, it's illegal."
Their insistence on using the DHS funding as leverage to reverse or undermine the president’s immigration agenda leaves Boehner in a tough spot.
At some point, he could potentially resolve the stand-off by steam-rolling his rank-and-file to work with Democrats and pass the kind of long-term “clean” funding bill they want. There was speculation in the run-up to the late-Friday vote that he and Pelosi had struck a deal to do exactly that next week. (A spokesman for Boehner denies this.)
But on the Senate side, Majority Leader Mitch McConnell, R-Ky., has already met Democrats' demands to deal with the two issues separately. With his blessing, the Senate on Friday approved a longer-term, stand-alone DHS funding bill. However, House Republicans stalled that bill, voting instead for a so-called conference committee -- a way for lawmakers to hammer out a compromise measure.
But Senate Democrats have called this a "non-starter," and are trying to block it, teeing up another set of votes on that next week – unless the House takes a different tack. Meanwhile, Senate Democrats on Friday also blocked a separate bill undoing Obama's immigration actions.
The complicated debate leaves unclear how lawmakers can resolve the impasse, with Democrats not budging and Republicans divided over how far to take their fight against Obama's immigration plan, which gives millions of illegal immigrants work permits and a deportation reprieve.
Some argue that with a federal judge, for now, blocking the plan from going forward, there's less urgency to use legislation to achieve the same goal. Other conservative Republicans say the legislation is necessary.
"Some folks just have a harder time facing political reality than others," said Rep. Charlie Dent, R-Pa., speaking of other Republicans.

Fence Cartoon

Why final two years under Obama are extremely dangerous

He can’t bring himself to call Islamic terrorists what they are, but President Obama finally said something with which we can all agree. Speaking of his remaining time in office, he said: “Two years is a long time.”
He can say that again — and did, attaching a scary promise about his plans for the twilight of his ­tenure.
“Two years is also the time in which we’re going to be setting the stage for the next presidential election and the next 10 years of American policy,” he told wealthy ­donors in San Francisco. “So I intend to run through the tape and work really hard, and squeeze every last little bit of change.”
There you have it. Instead of cleaning up the messes he’s created, Obama is hell-bent on making more of them.
To continue reading Michael Goodwin's column in the New York Post, click here.
Michael Goodwin is a Fox News contributor and New York Post columnist.

FCC approves sweeping Internet regulation plan, Obama accused of meddling

The Federal Communications Commission on Thursday adopted sweeping new regulations sought by President Obama for how Americans use and do business on the Internet, in a party-line vote that is sure to be challenged by the broadband industry.
The commission, following a contentious meeting, voted 3-2 to adopt its so-called net neutrality plan -- a proposal that remained secret in the run-up to the final vote.
On its surface, the plan is aimed at barring service providers from creating paid "fast lanes" on the Internet, which consumer advocates and Internet companies worry would edge out cash-strapped startups and smaller Internet-based businesses. Chairman Tom Wheeler said it would ensure an "open, unfettered network."
But the rules, more broadly, would put the Internet in the same regulatory camp as the telephone by classifying it like a public utility, meaning providers like Comcast or Verizon would have to act in the "public interest" when providing a mobile connection to your home or phone.
Republican Commissioner Ajit Pai, who delivered some of the most scathing criticism of the plan Thursday, warned the policy represents a "monumental shift" to "government control of the Internet."
Further, he accused the FCC of bending to the will of Obama, who last fall came out in favor of such a sweeping regulatory plan.
Pai said the FCC was reversing course from past positions for one reason: "President Obama told us to do so."
He warned of a litany of negative consequences, intended or not, from the net neutrality plan. He said it allows rate regulation -- and, ultimately, rates will go up and broadband service will slow.
Pai said that while the plan defers a decision on applying a service fee to Internet bills -- much like is applied to phone bills -- that surely will change.
"The order explicitly opens the door to billions of dollars in new taxes," he said. "Read my lips: More new taxes are coming. It's just a matter of when." 
Further, he pointed to slower Internet speeds in Europe, which largely treats the Internet as a public utility, in warning that the additional regulation will lead to less investment and slower speeds in the U.S. as well.
"The Internet is not broken. There is no problem for the government to solve," Pai said.
Fellow Republican member Michael O'Rielly called the plan a "monumental and unlawful power grab."
Republican lawmakers, as well, blasted the proposal as an antiquated solution that would hurt, not help, Internet innovation.
"The Obama Administration needs to get beyond its 1930s rotary-telephone mindset and embrace the future," Senate Majority Leader Mitch McConnell, R-Ky., said in a statement.
While the broadband industry is expected to sue, Republicans in Congress said they will try to pass legislation scrapping the rules, although it's unlikely that such a bill would be signed into law by Obama.
But Democrats on the commission hailed the plan. To charges that the plan represents a secret scheme to regulate the Internet, Wheeler said: "Nonsense."
He claimed it was no more a plan to regulate the Internet "than the First Amendment is a plan to regulate free speech."
Democratic Commissioner Mignon Clyburn -- despite reports she was seeking last-minute changes in the plan to scale it back -- also voted with Wheeler on Thursday. She said it "strikes the right balance."
At stake, Clyburn said, is the risk of businesses getting preferential treatment over start-ups by getting better Internet speeds, or teachers having to worry about whether students can do research online without websites loading at "dial-up speeds."
Twitter said the new rules were a matter of protecting free expression.
"Safeguarding the historic open architecture of the Internet and the ability for all users to `innovate without permission' is critical to American economic aspirations and our nation's global competitiveness," Twitter wrote in a company blog post this week.
Net neutrality is the idea that websites or videos load at about the same speed. That means you won't be more inclined to watch a particular show on Amazon Prime instead of on Netflix because Amazon has struck a deal with your service provider to load its data faster.
For years, providers mostly agreed not to pick winners and losers among Web traffic because they didn't want to encourage regulators to step in and because they said consumers demanded it. But that started to change around 2005, when YouTube came online and Netflix became increasingly popular. On-demand video became known as data hogs, and evidence began to surface that some providers were manipulating traffic without telling consumers.
By 2010, the FCC enacted open Internet rules, but the agency's legal approach was eventually struck down. FCC officials would erase the legal ambiguity by no longer classifying the Internet as an "information service" but a "telecommunications service" subject to Title II of the 1934 Communications Act.
That would dramatically expand regulators' power over the industry by requiring providers to act in the public's interest and enabling the FCC to fine companies found to be employing "unreasonable" business practices.
The FCC says it won't apply some sections of Title II, including price controls. That means rates charged to customers for Internet access won't be subject to preapproval, though critics warn of future regulation. But the law allows the government to investigate if consumers complain that costs are unfair.

No deal? House eyes stopgap to buy time as DHS funding deadline nears

House Republican leaders are looking at passing a stopgap funding bill to prevent an imminent partial shutdown of the Homeland Security Department, Fox News is told, as lawmakers struggle to reach a long-term deal.
The House is now weighing a roughly three-week funding bill, to buy time ahead of a Friday midnight deadline. This comes as the Senate prepares to move a longer-term bill -- after GOP Leader Mitch McConnell met Democrats' demands to remove provisions blocking President Obama's immigration actions -- but Fox News is told House Republicans plan to reject that.
Instead, they want to try and hammer out a new measure with the Senate in a so-called conference committee -- something Senate Democrats call a "non-starter."
The last-minute maneuvers continue to raise doubts about any long-term funding plan.
Earlier in the day, House Speaker John Boehner was coy about disclosing his chamber's next move and even blew kisses to reporters at one point.
On the Senate side, McConnell struck a deal with Democrats on Wednesday. He agreed to drop a GOP demand that President Obama's immigration actions be reversed as a condition for funding DHS. The problem, though, is dozens of Republicans want Boehner to keep fighting on the House side even if that means risking a funding lapse.
Boehner was coy when asked about the next step.
"We're waiting to see what the Senate can or can't do, and then we'll make decisions about how we're going to proceed," he said.
But alternative options appeared to be emerging late Thursday. One option is for Congress to move a short-term, stopgap bill to buy time -- something Congress often does when stuck in tough negotiations.
House Appropriations Committee Chairman Hal Rogers, R-Ky., said such a measure would likely last three weeks. He said an interim bill would be "ready to go."
Still, there’s concern Democrats could balk at another stopgap solution.
Lawmakers might have a little more time, though. While the funding deadline technically is Friday at midnight, lawmakers might -- practically speaking -- have until Monday morning, allowing them to work through the weekend to reach a funding deal. The idea is that if it looks like Congress is working toward an agreement, they wouldn't have to formally notify the federal government's equivalent of an HR office that DHS workers were losing funding -- at least until Monday.
For now, on the Senate side, things were going more smoothly. McConnell on Wednesday earned support from senior members of his caucus, with fellow GOP leaders making clear that the approach may be the only way to fund DHS past the deadline.
“This is crunch-time,” DHS Secretary Jeh Johnson said Wednesday. “The clock is ticking. We’re running out of money.”

32,000 emails recovered in IRS targeting probe amid allegations agency chief may have lied

Investigators said Thursday they have recovered 32,000 emails in backup tapes related to the Internal Revenue Service targeting of conservative organizations.
But they don't know how many of them are new, and told a congressional oversight committee that IRS employees had not asked computer technicians for the tapes, as directed by a subpoena from House oversight and other investigating committees.
That admission was in direct contradiction to earlier testimony of IRS Commissioner John Koskinen.
“It looks like we’ve been lied to, or at least misled," said Rep. John Mica, R-Fla. at a congressional hearing Thursday evening,
J. Russell George, the IRS inspector general, said his organization was investigating possible criminal activity.
The emails were to and from Lois Lerner, who used to head the IRS division that processes applications for tax-exempt status. Last June, the IRS told Congress it had lost an unknown number of Lerner's email when her computer hard drive crashed in 2011.
At the time, IRS officials said the emails could not be recovered. But IRS Deputy Inspector General Timothy Camus said investigators recovered thousands of emails from old computer tapes used to back up the agency's email system, though he said he believed some tapes had been erased.
"We recovered quite a number of emails, but until we compare those to what's already been produced we don't know if they're new emails," Camus told the House Oversight Committee.
Neither Camus nor George would describe the contents of any of the emails at Thursday's hearing.
The IRS says it has already produced 78,000 Lerner emails, many of which have been made public by congressional investigators.
Camus said it took investigators two weeks to locate the computer tapes that contained Lerner's emails. He said it took technicians about four months to find Lerner's emails on the tapes.
Several Oversight committee members questioned how hard the IRS tried to produce the emails, given how quickly independent investigators found them.
"We have been patient. We have asked, we have issued subpoenas, we have held hearings," said Rep. Jason Chaffetz, R-Utah, chairman of the Oversight Committee. "It's just shocking me that you start, two weeks later you're able to find the emails."
Rep. Carolyn Maloney, D-N.Y., questioned the significance of the recovered emails in an exchange with Camus.
"So as I understand it from your testimony here today, you are unable to confirm whether there are any, to use your own words, new emails, right?" she asked Camus.
"That is correct," Camus replied.
Maloney: "So what's before us may be material you already have, right?"
Camus: "That is correct"
Maloney. "So may I ask, why are we here?"
The IRS issued a statement saying the agency "has been and remains committed to cooperating fully with the congressional oversight investigations. The IRS continues to work diligently with Congress as well as support the review by the Treasury inspector general for tax administration."
The IRS estimated it has spent $20 million responding to congressional inquiries, generating more than one million pages of documents and providing agency officials to testify at 27 congressional hearings.
The inspector general set off a firestorm in May 2013 with an audit that said IRS agents improperly singled out Tea Party and other conservative groups for extra scrutiny when they applied for tax-exempt status during the 2010 and 2012 elections.
Several hundred groups had their applications delayed for a year or more. Some were asked inappropriate questions about donors and group activities, the inspector general's report said.
The week before George's report, Lerner publicly apologized on behalf of the agency. After the report, much of the agency's top leadership was forced to retire or resign, including Lerner. The Justice Department and several congressional committees launched investigations.
Lerner's lost emails prompted a new round of scrutiny by Congress, and a new investigation by the inspector general's office.
Lerner emerged as a central figure in the controversy after she refused to answer questions at two House Oversight hearings, invoking her Fifth Amendment right not to incriminate herself at both hearings. At the first hearing, Lerner made a statement saying she had done nothing wrong.
Last year, the House voted mostly along party lines to hold her in contempt of Congress for refusing to answer questions at the hearings.

Conservative media may be asking the questions, but presidential hopefuls shouldn't expect a walk in the park

NATIONAL HARBOR, Md .– Republicans said after the 2012 election that they wanted to radically change the model for presidential debates in 2016 and have conservatives do more of the question-asking, rather than the "liberal media."

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On Thursday at the Conservative Political Action Conference, the GOP got a first look at how that might go.

Talk radio personality Laura Ingraham conducted a 20-minute question and answer session with New Jersey Gov. Chris Christie, and Fox News host Sean Hannity queried Texas senator Ted Cruz, in a departure from the regular standard speeches that presidential hopefuls give to this annual gathering of activists.

Ingraham’s session with Christie heavily focused on Christie’s vulnerabilities – his recent political struggles, his volatile temperament, and his changes of position – while Hannity’s briefer interview with Cruz was marked by an awkward exchange over former President Bill Clinton’s libido. And Walker gave an ill-advised answer to a totally innocuous foreign policy question, an unforced error.

The takeaway: getting conservatives to ask the questions might not be as much of a pleasure cruise as Republicans think. The Republican National Committee made the change one of its top priorities and conservative radio talk show host Hugh Hewitt has already been named as part of a panel of questioners at CNN’s primary debate at the Ronald Reagan Presidential Foundation and Library in California this September.
Hewitt is known as a tough interviewer, and former Florida governor Jeb Bush – considered the leader of the pack in the early days of the 2016 primary field taking shape – appeared on his radio show Wednesday. Hewitt asked Bush if he would be afraid of sending U.S. soldiers into combat over concerns it would be labeled “a third Bush war.”
Bush fended off the question, but it was similar in spirit to the ones that Ingraham threw at Christie on Thursday here. The irony may be that because there is no question about where interlocutors like Hewitt, Ingraham and Hannity stand on the ideological spectrum, political candidates may believe they are in for easier treatment, and will have far less ability to point a blaming finger at the media if things go awry, which in recent years has become an easy escape hatch.
Ingraham’s first question for Christie thrust his recent political struggles into his face, while several thousand conservatives watched from the floor of a darkened convention room floor.
“This has been a rough couple of months for you in the media,” Ingraham said, noting that many observers are saying to Christie, “You’re toast.” It gave Christie the opportunity to bash – who else – the media, and particularly the New York Times, but it was still a very public reminder of the many stories about Bush’s domination of the battle for donors and operative talent.
Ingraham then asked Christie why he had signed on to Common Core in 2010, forcing him to admit he regretted doing so. She pressed even further. “Not political regrets? These are regrets, real regrets?”
“Well these are implementation regrets,” Christie said.
Ingraham’s very next question went at him even harder: “Here are words used to describe you: explosive, short-tempered, hothead, impatient. And that’s just what your friends are saying.”
Christie said he was “passionate.” If a journalist from a mainstream TV network had been asking the questions, he or she might have been getting booed by the conservative audience by this point . Ingraham was not. She went on to attempt to draw Christie into criticizing Bush on his immigration positions, and then came back to his woeful standing in current polling.
“You were a frontrunner. Now you’re near the bottom,” she said. “Ben Carson is ahead of you.”
Christie could only point out that in February of 2007 “it was going to be Rudy Giuliani versus Hillary Clinton. That’s what the polls said then. So I feel pretty good.”
Ingraham asked a few more questions. One of them came back to Bush’s current strength, and her final question attempted again to pull Christie into a back-and-forth with his likely rival for the nomination.
It was an interview chock full of horse-race questions and attempts to spark intra-party fighting, two of the very things that RNC Chairman Reince Priebus and other Republicans have complained were problems mainstream media outlets had created in the past.
Wisconsin governor Scott Walker, by contrast, gave a pep rally of a speech to the conservative faithful that brought them out of their seats several times. It helped him continue the momentum he has built since a successful appearance in Iowa last month. But in the few moments that he was asked questions after his remarks, by American Conservative Union board member Ned Ryun, he gave a stumbling answer to a straightforward question about how he would deal with the Islamic State if he were president.
Walker said Americans want a president who does “everything in their power" to fight America’s enemies, and mentioned “confidence” as a key personality trait. He then cited his victory in a 2012 recall election spurred by pro-union activists as experience enough to prepare him for taking on terrorists.
“If I can take on 100,000 protesters I can do the same across the world,” Walker said.
Walker’s response was lambasted even by the conservative National Review. He denied afterward he was comparing Wisconsin protesters to Islamic radicals. “My point was just, if I can handle that kind of pressure, that kind of intensity, I think I’m up for whatever might come, if I choose to run for president,” Walker told Bloomberg News .
And he grew combative, accusing the media of wanting to “misconstrue” his comments. But in comments to CNN and the New York Times, he also backed off the substance of his assertion that facing down peaceful political protestors engaged in the democratic process of trying to oust him from office had prepared him for fighting an international menace. “I'm just pointing out the closest thing I have to handling a difficult situation, was the 100,000 protesters I had to deal with,” Walker said.
As for Cruz, he too gave a red meat speech to the crowd. But in a few minutes of questions from Hannity, it was a digression into Colorado’s legalization of marijuana that took the senator and the Fox News personality down a rabbit hole.
“I was told Colorado provided the brownies here today,” Cruz joked when Hannity asked him about the decision to legalize marijuana. Hannity responded by joking that he had eaten the brownies. “The magical mystery Hannity hour,” Cruz riffed.
Hannity then asked for one-word responses by Cruz to the names he would throw out.
“Hillary Clinton,” Hannity said.
“Washington,” said Cruz.

“Bill Clinton,” Hannity said, and then adopted a Clintonesque southern drawl, and began impersonating the former president ogling a member of the audience. “Hey, by the way, I want to say hi to that really hot chick in row seven over there,” Hannity said, pointing into the crowd as the audience laughed. “Hey, you know sweetheart, I’ll give you a tour backstage.”

Hannity stopped himself. “Sorry, he’s not responsible for this,” he said of Cruz, and then repeated Bill Clinton’s name.

Cruz paused, and then made a veiled reference that followed along with Hannity’s joke about the former president’s extramarital affairs.

“Youth outreach,” Cruz cracked.