“Public Goals, Private Interests”: In Debt Campaign, Business Executives And Former Legislators Defending Their Narrower Interests
When Jim McCrery, a former Louisiana congressman, urged lawmakers last month to pursue entitlement cuts and tax reform, he was introduced on television as a leader of Fix the Debt, a group of business executives and onetime legislators who have become Washington’s most visible and best-financed advocates for reining in the federal deficit.
Mr. McCrery did not mention his day job: a lobbyist with Capitol Counsel L.L.C. His clients have included the Alliance for Savings and Investment, a group of large companies pushing to maintain low tax rates on dividend income, and the Win America Campaign, a coalition of multinational corporations that lobbied for a one-time “repatriation holiday” allowing them to move offshore profits back home without paying taxes.
In Washington’s running battles over taxes and spending, Mr. McCrery and his colleagues at Fix the Debt have lent a public-spirited, elder-statesman sheen to the cause of deficit reduction. Leading up to the fiscal negotiations, they set up grass-roots chapters around the country, met with President Obama and his aides, and hosted private breakfasts for lawmakers on Capitol Hill. In recent days, Fix the Debt has redoubled its efforts, starting a new national advertising campaign and calling on Mr. Obama and Congress to revise the tax code and reduce long-term spending on entitlement programs.
But in the weeks ahead, many of the campaign’s members will be juggling their private interests with their public goals: they are also lobbyists, board members or executives for corporations that have worked aggressively to shape the contours of federal spending and taxes, including many of the tax breaks that would be at the heart of any broad overhaul. While Fix the Debt criticized the recent fiscal deal between Mr. Obama and lawmakers, saying it did not do enough to cut spending or close tax loopholes, companies and industries linked to the organization emerged with significant victories on taxes and other policies.
“Some of these folks who are trying to be part of the solution have also been part of the problem,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a liberal-leaning advocacy group, and a former economic adviser to Vice President Joseph R. Biden Jr. “They’ve often fought hard against the kind of balance that we need on the revenue side. Many of the people we’re talking about are associated with policies that would make it a lot harder to fix the debt.”
Sam Nunn, a former Democratic senator from Georgia who is a member of Fix the Debt’s steering committee, received more than $300,000 in compensation in 2011 as a board member of General Electric. The company is among the most aggressive in the country at minimizing its tax obligations. Mr. McCrery, the Louisiana Republican, is also among G.E.’s lobbyists, according to the most recent federal disclosures, monitoring federal budget negotiations for the company.
Other board members and steering committee members have deep ties to the financial industry, including private equity, whose executives have aggressively fought efforts to alter a tax provision, known as the carried interest exception, that significantly reduces their personal income taxes.
Erskine B. Bowles, a co-founder of Fix the Debt, was paid $345,000 in stock and cash in 2011 as a board member at Morgan Stanley, while Judd Gregg, a former Republican senator from New Hampshire and a co-chairman of Fix the Debt, is a paid adviser to Goldman Sachs. Both companies have engaged in lobbying on international tax rules.
Mr. Gregg also sits on the boards of Honeywell and IntercontinentalExchange, a company that has warned investors that a tax on financial transactions would lower trading volume and curtail its profits. The two companies paid Mr. Gregg almost $750,000 in cash and stock in 2011.
In all, close to half of the members of Fix the Debt’s board and steering committee have ties to companies that have engaged in lobbying on taxes and spending, often to preserve tax breaks and other special treatment.
Fix the Debt does not endorse specific tax proposals. Instead, it advocates broad principles for debt reduction, including “comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.” A spokesman, Jon Romano, said that the executives involved with the campaign were committed to tax reform, even if it closed loopholes that benefited their companies.
“All the people involved in this campaign have said from the beginning that everything has to be on the table,” Mr. Romano said. “Our C.E.O.’s, our state chapters, our small-business leaders — they are all willing to give something up for the sake of the country.”
Those involved with the campaign say they have tried to separate their advocacy for Fix the Debt and their private work for clients. Vic Fazio, a former Democratic congressman from California who is on the campaign’s steering committee, is a lobbyist at Akin Gump, a firm whose clients include KKR, a leading private equity shop, and the Private Equity Growth Capital Council, an industry trade group.
Mr. Fazio said that he and other people involved with the campaign had tried to set aside their parochial interests and had assumed that any grand bargain between Mr. Obama and Congress would include some elements they did not like.
“The people who have signed up to work with Fix the Debt are people with lots of tax preferences that are important to their business model,” Mr. Fazio said. “But they go along with it because they think there is an overriding benefit to their companies and to the country.”
But so far, at least, the companies and industries most closely linked to Fix the Debt have been aggressive in defending their narrower legislative interests.
The fiscal deal preserved the carried interest loophole, eliminated most of a large prospective increase in dividends taxes and preserved a tax break, known as the active financing exception, that allows G.E. and other multinational companies to avoid paying United States taxes on overseas profits.
The deal also forestalled large automatic cuts in military spending, a boon to contractors like Honeywell. The company’s chief executive, David M. Cote, is a co-founder of Fix the Debt; the group’s “core principles,” which call for retrenchment in entitlement programs like Social Security, make no mention of military spending, which constitutes about a fifth of the federal budget.
“It’s easier to get face time in Washington as a deficit hawk than as a corporate hack,” said Kevin Connor, the director of the Public Accountability Initiative, a watchdog group. “They are spending millions, but they are protecting billions in defense contracts and tax giveaways that would otherwise be on the chopping block.”
Yet after an election in which many industries, including Wall Street, bet heavily against Mr. Obama, Fix the Debt has also had more credibility among Democrats than some traditional business groups like the United States Chamber of Commerce. The chamber, by far the largest business advocacy group in Washington, staunchly opposed proposals to raise taxes before the fiscal deal.
At a news conference in New York on Tuesday, Mr. Bowles suggested that Fix the Debt was just getting started.
“I’m not a quitter,” he said at the event, which was sponsored by Nasdaq, the country’s second-largest stock exchange. “We’re going to stay until we get the job done.”
By: Nicholas Confessore, Nelson Schwartz, Contributor; The New York Times, January 9, 2013
The Republican National Convention’s organizers probably thought they were being clever. They announced this week that on the second night of the gathering — with local, state, and federal officials standing by to help in the event of a hurricane — they’d host a “We Built It” day.
The idea, of course, is to mock President Obama’s belief that public institutions and government investments help create a society in which the private sector thrives. Republicans intend to host their “We Built It” day in an arena largely financed by taxpayers.
Wait, it gets worse.
On the day that the GOP convention will tout Fox-fueled myth “We Built It” as its primary theme, Delaware Lt. Gov. candidate and small business owner Sher Valenzuela is slated to deliver a speech about small business issues. But contrary to the evening’s theme, Valenzuela’s company, First State Manufacturing, has received millions of dollars in federal loans and contracts. Valenzuela has not only attributed her success in part to this outside assistance, but urged other small business owners to follow the same strategy of seeking government funds.
Media Matters found that Valenzuela even gave a presentation earlier this year on her small business success, crediting the use of “millions of dollars in secure government contracts.” She encouraged other entrepreneurs to take advantage of public institutions and government investments to help their businesses get ahead.
Making matters slightly worse, a featured guest at a Paul Ryan event yesterday boasted about getting government funding to help build his business, and in a new op-ed on his private-sector background, Mitt Romney boasted today about the success of many Bain businesses, several of which have benefited from government largesse.
As attacks go, this out-of-context smear has always been problematic. Romney was desperate to prove that American free enterprise thrives without the support of government, but when he pointed to examples, they all thrived thanks to the support of public institutions and tax dollars. This happened over and over and over and over again, ultimately proving that the entire line of attack is self-defeating.
And the problem will apparently continue, as if self-awareness no longer matters at all.
By: Steve Benen, The Maddow Blog, August 24, 2012
Greg Sargent has a fine post today about how Scott Brown has picked up on the Romney campaign’s effort to spin a mendacious take on the “you didn’t build that” quote, making it a double lie by tying it back to Elizabeth Warren (whose actual words were being paraphrased by what the president actually said). Indeed, Greg puts his finger on the broader message that both Republicans are trying to send:
The whole ”didn’t build that” dust-up is important, because the larger falsehood on display here — that Obama demeans success — is absolutely central to the Republican case against Obama. The Republican argument — Romney’s argument — is partly that Obama’s active ill will towards business owners and entrepreneurs is helping stall the recovery, so you should replace him with a president who wants people to succeed.
What makes this “vote Republican or the economy gets it” tactic devilishly effective is that its major premise—Obama hates “job creators”—doesn’t have to be true to wreak political damage so long as its minor premise—if “job creators” think Obama hates them they’ll stop creating jobs—is credible. And so it all turns into what amounts to blackmail: people like Mitt Romney are not “confident” in Obama’s stewardship of the economy, and if they don’t get ther way in November, they’ll tank the economy. This is also the threat behind all the “fiscal cliff” talk: we’re being told the financial markets will panic if there’s any chance the Bush tax cuts on the wealthy will lapse or that Pentagon spending will be cut at the end of the year. Somehow or another, the prospect of a Republican victory that will lead to very deep federal spending cuts, reductions in consumer buying power, and the elimination of many thousands of public sector jobs isn’t said to be a problem.
Now this is a very, very old game, certainly as old as the threats issued by business leaders at the behest of Mark Hanna in 1896 that votes for William Jennings Bryan would lose employees their jobs, or the eternal threats of non-unionized companies that they’d rather close their doors than submit to the indignity of collective bargaining. In reality, companies stay in business and investors keep investing not because they have the elected officials they’d prefer, but because they are making money. With profits being at near-record levels (even with the apparent recent softening), I don’t think we are really in any danger of capitalists “going Galt” because their executives’ marginal tax rates went back up to where they were when they were also doing very well in the late 1990s, or because their vast moral worth is being underappreciated by Barack Obama or Elizabeth Warren.
Still, the more aggressively ideological business leaders won’t lose a dime by issuing threats, so they and their political allies will keep doing so, reinforcing the GOP’s many efforts to convince persuadable voters that somehow or other, their jobs or their nest eggs depend on a Republican victory in November.
BY: Ed Kilgore, Contributing Writer,Washington Monthly Political Animal, July 23, 2012
Reading a lot of conservative posts last night and this morning (unfortunately, just part of the gig here), I was mystified at the conviction of so many people that the mangled clips of the president’s “you didn’t build that” quote from Roanoke provided a gigantic, “aha” moment in the campaign that would drive Obama from the White House like a whipped Kenyan dog. The money quote that most of them are tossing around comes from the deep thinker Pat Sajak:
It’s as if President Obama climbed into a tank, put on his helmet, talked about how his foray into Cambodia was seared in his memory, looked at his watch, misspelled “potato” and pardoned Richard Nixon all in the same day.
Really? I mean, even if you buy the twisted, mendacious version of the Obama quote that the Romney campaign is retailing, are Americans really so protective of the tender sensibilities of business owners that they are shocked anyone would suggest that each and every one of them built their businesses strictly on their own? (Aside from from roads and bridges and inheritances, how’s about employees as a significant factor in business success?).
But then Dave Weigel explained it to me:
Call it a magic word gaffe—a statement that reveals not what a politician believes, but what you already feared, in your bone marrow, that a politician believes. Democrats still can’t understand why Obama’s speech is supposed to offend anyone. Republicans know that he’s a closet socialist, and that this sentiment only comes out when his energy is flagging….
A normal gaffe is usually discovered by the “mainstream” press, or by a rival campaign, in real time. Think about the Obama campaign hounding John McCain on his “the fundamentals of the economy are sound” as Lehman collapsed. Think about “the private sector is doing fine” becoming proof, for Romney, that Obama saw no problems in the private sector. The magic word gaffe takes more digging, because the media that mostly covers campaigns aren’t primed to hear what partisans hear.
Barack Obama’s presidency has been full of these moments. If you watched Glenn Beck during his Fox News years, you got endless exposure (more than 100 episodes of it, according to Lexis-Nexis) to an Oct. 30, 2008 quote from an Obama rally in Columbia, Mo. “We are five days away from fundamentally transforming the United States of America,” said the candidate.
Bingo. The “magic word gaffe” is sort of the inverse of the “dog whistle” whereby pols use banal language that has a special meaning to ideologues (“constitutional conservative” being one notable example; “respect for life” being another). For our right-wing brothers and sisters, progressive (itself a magic word—maybe even a secret handshake—connoting Marxist convictions) discourse is full of these signifiers. “Equality.” “Fairness.” “Giving something back.” “Shared sacrifice.” Constant vigilance for these magic words is how conservatives have convinced themselves that the blandly pragmatic center-left politician Barack Obama pursuing leftover moderate Republican policies is a villain-figure straight out of Atlas Shrugged or (for the godly) Left Behind, hating success and righteousness.
The problem with this stuff, of course, is that the low-information swing voters who will decide the present election will require an awful lot of education to understand the magic word gaffes. They haven’t marinated their brains with Beckian revisionist history and don’t run around pasting “Breitbart Is Here!” posters on telephone poles. Many of them, in fact, probably don’t own businesses and don’t much think of their own bosses—much less the Mitt Romneys of the world—as heroic figures. So the nastiness aimed at Obama will inevitably get a lot coarser than what we are hearing today. So what if a few facts get bent or invented along the way? America must be protected!
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, July 20, 2012
Over the weekend I was mulling both of our crises, the political one (dysfunction, paralysis) and the policy one (looming tax-mageddon, sequestration). Yep, I mull these things on Saturdays. How, I wondered for the 486th time, can Obama get the Republicans to dig their heels out of the mud and get the upper hand politically while also doing some good for the country? Here’s how.
Obama should go to Congress and say: “I offer you the following deal. I will extend all the Bush tax cuts for one year—yes, even for the wealthiest Americans. One year. In exchange, I’d like you to agree to fund the initial, start-up $10 billion for the Kerry-Hutchison infrastructure bank, and the $35 billion I asked of you last September in direct aid for states and localities to rehire laid-off teachers and first responders. Then, after I am reelected, my administration and I will take the first six months of 2013 to write comprehensive tax reform, and Congress will then have six months to pass it, and we’ll have a new tax structure that we’ve both agreed on.
“The business community complains about uncertainty? This is certainty. The Bush rates will stay in place for one more year. We will give corporations our word that the basic corporate rate will be lowered in our package from the current 35 percent. The top marginal rate on the very highest earners will go up—I will continue to insist on that. But not for a year. The rates on middle- and low-income payers will stay the same or go down slightly. We will look at tax expenditures and loopholes and so on and close the ones that aren’t justified. But businesses will now have no reason to doubt what the tax rates will be next January and will have confidence that we’re going to work something out, if you agree to this very reasonable compromise.”
Obama gives some ground, the Republicans give some ground. Nobody gets everything, but everybody gets something. Isn’t that what compromise is? And the “certainty” point is key—it takes away an argument against private-sector investment and job creation that some in the business world have been making, at this moment of record corporate profits.
I’m well aware that liberals may hate this. I’ll get to that. But the politics of this idea seem awfully sound to me. Obama would have the Republicans over a barrel. He will have offered a huge concession on the high-end tax rates, which the media will note. If the Republicans say no, which of course is likely because the infrastructure bank is socialism and no one wants teachers anyway, then it becomes manifestly clear to swing voters that Republicans are the true obstructionists. Voters will get that Obama will have made a major concession here. They’ll see that the GOP fail to respond in kind, and most of them will draw the logical conclusion.
And if the Republicans say yes, then even better: They will have made Obama, at this eleventh hour of his first term, into the bipartisan leader they’ve so successfully prevented him from being. And more important than that, there are the real-world upshots of public investment in infrastructure—a proposal that has the support, by the way, of the left-wing United States Chamber of Commerce—and the rehiring of hundreds of thousands of laid-off workers.
The Republicans will be boxed in. They’ll think up a clever response. They always do. They’ll try to bring in defense spending, perhaps, or insist on two years. They’ll obviously set out immediately on trying to figure out a way to box Obama in and make the Bush rates permanent. They’ll think of nine other things I’m not cynical enough to conjure up. They’ll dismiss it as a gimmick, but I’d wager that Obama can sell the idea that his giving ground on high-income tax rates is serious, not gimmicky. And if Obama stands firm, the lines are simple and clear: “I’m giving up something, and I’m asking you to give up something, for the sake of helping put Americans to work, and of doing the jobs we’re paid to do.”
My idea doesn’t deal directly with budget sequestration, and the huge cuts that are supposed to kick in January 1. Maybe Obama can propose that those be deferred for a while as well. Or maybe he is better off just leaving that to the senators who are allegedly working on it now. It might muddy things up.
Now, liberals. There will be outrage that Obama caved on his one heretofore firm condition on taxes. Under other circumstances, I might be outraged. But these strike me as pretty decent circumstances. Remember, Obama agreed to extend the Bush rates once before, in December 2010, and a fair number of liberals and independent analysts were basically fine with that deal. That time, what did Obama get? His own tax cuts, to the payroll tax, and some unemployment insurance extensions. This time, if the GOP actually agreed, he’d be getting far, far more—Republicans agreeing for the first time in the Obama era to real stimulative spending. Liberals should cheer this outcome—just as they should cheer the idea that, unlike during the December 2010 deal or the debt fiasco of last year, Obama would be looking like the guy who set the terms. He’d look strong, not weak, and he’d be very nicely teed up for reelection.
Which is why the Republicans will say no. Though it’ll be worse for the country, it would be great for Obama politically. Mitt Romney, of course, would dismiss Obama’s offer too, so my ploy would bring the added benefit of making Romney look extreme and unreasonable to centrist voters. Obama could then campaign saying that he tried repeatedly to reason with Republicans and was rebuffed at every turn, even when he offered to lower tax rates for millionaires. Romney and the GOP will campaign saying, “We’ll give you the tax cuts without all this spending.” Obama will then have to make the case that spending—investment—has value. But he has to make that case anyway. In my scenario, he can make it in a context in which he can prove to voters that the other party won’t budge one single inch. He’ll finally look like, to resuscitate a phrase we haven’t heard much of in the last two years, the adult in the room.
By: Michael Tomasky, The Daily Beast, June 12, 2012