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To Fix The Budget Deficit, Raise Corporate Taxes

Washington is a town currently gripped by deficit hysteria. Various commissions and congressional “gangs” have formed (and broken up) with the goal of crafting a plan to bring the nation’s budget into balance. Even the media has been sucked into this vortex, dedicating far more of its time to covering the deficit than other economic issues, such as unemployment.

At the same time, both parties seem to agree that the nation’s corporate tax code needs to be reformed. President Obama and House Budget Committee Chairman Paul Ryan each dedicated a portion of their respective budget plans to overhauling the federal corporate income tax, which is high on paper, but so riddled with loopholes, deductions, and outright giveaways that few corporations pay the full statutory rate (and several corporations pay no corporate income tax at all).

This, then, should be an excellent opportunity to kill the proverbial two birds with one stone: cleaning up the corporate tax code, lowering the corporate tax rate, and still raising more revenue that can be put towards deficit reduction.

But no.

Despite all the hyperventilating over the deficit, both Republicans and Democrats have said that they want corporate tax reform to be revenue neutral, meaning no more or less revenue will be raised by the new system than was raised by the old. President Obama and Treasury Secretary Tim Geithner have each extolled the virtues of deficit-neutral corporate tax reform. But if this is actually the road that’s taken, it will constitute a colossal missed opportunity.

At the moment, corporate tax revenue has plunged to historic lows. In 1960, the corporate income tax provided more than 23 percent of federal revenue; the Office of Management and Budget estimates that it will provide less than 10 percent this year.

During the 1960s, the United States consistently raised nearly 4 percent of GDP in corporate revenue. During the 1970s, the total was still above 2.5 percent of GDP. Now, the U.S. raises less than 1.5 percent of GDP from the corporate income tax. As the Congressional Research Service put it, “Despite concerns expressed about the size of the corporate tax rate, current corporate taxes are extremely low by historical standards.”

The United States effective corporate tax rate is also low by international standards (though the 35 percent statutory rate is the second highest in the world). There are plenty of reasons for this drop, but chief among them is the proliferation of loopholes and credits clogging up the corporate tax code (alongside the growing use of offshore tax havens and the ability of corporations to defer taxes on offshore profits indefinitely).

Huge corporations, such as ExxonMobil, have recently had years where they paid literally nothing to the U.S. Treasury, despite making huge profits. The New York Times made waves by finding that General Electric paid no federal income tax last year, instead pocketing hundreds of millions of dollars in tax benefits. Mega-manufacturer Boeing has done the same, paying no federal taxes in 2009 while collecting $132 million in tax benefits. Google last year had a 2.4 percent effective tax rate, while California-based Broadcom’s rate was just 1.4 percent, far below the rate that the average American pays.

The Treasury Department estimated in 2007 that corporate tax preferences cost $1.2 trillion in lost revenue over a decade. So there is ample room to remove credits and deductions (like those that benefit, amongst others, hugely profitable oil companies and agribusinesses), lower the statutory rate, while still bringing in more revenue. Some companies would see their taxes go up, but others would see their tax bills drop, and the corporate tax code would be more fair, efficient, and competitive, while ensuring that all corporations pay their fair share.

As the Center on Budget and Policy Priorities put it, “corporate tax reform is a solid candidate to make a contribution to fiscal improvement … Taking a major revenue source off the table for deficit reduction at the outset would be ill-advised.” Indeed, with corporate profits skyrocketing—up 81 percent over a year ago—and corporations sitting on trillions in cash reserves, there is no reason that corporate tax reform should be done in a way that is deficit neutral, besides the fact that raising more revenue will be politically difficult, as corporations will likely throw their considerable lobbying weight against such a move. But in the end, failing to raise additional corporate tax revenue will simply shift more of the deficit reduction burden onto a middle-class already battered by the Great Recession.

By: Pat Garofalo, U. S. News and World Report, May 25, 2011

May 25, 2011 Posted by | Big Business, Budget, Class Warfare, Congress, Conservatives, Corporations, Deficits, Democrats, Economy, GOP, Government, Ideologues, Ideology, Income Gap, Lawmakers, Media, Middle Class, Politics, Press, Pundits, Regulations, Republicans, Tax Credits, Tax Evasion, Tax Loopholes, Taxes, Unemployed, Unemployment, Wealthy | , , , , , , , , , , , , , , , , , | Leave a comment

Drugs and Profits: Pharmaceutical Companies Should First Do No Harm

Last year the Food and Drug Administration rescinded approval of the drug Avastin for treating breast cancer patients, prompting a firestorm of criticism. The decision was denounced by some politicians as health care rationing, and by breast cancer patients who feared that they would be deprived of a drug that they felt had helped them immensely.

But these criticisms ignore the facts: Avastin was rejected simply because it didn’t work as it was supposed to, and the F.D.A. should resist the aggressive campaign by Genentech, the drug’s maker, to get that ruling reconsidered at a hearing in late June.

Avastin has been on the market for seven years, and combined with other drugs it is effective in treating, but not curing, some colon, lung, kidney and brain cancers. It inhibits the development of new blood vessels and in so doing can starve a growing tumor.

Treating a breast cancer patient with Avastin costs about $90,000 a year, and Genentech could lose $500 million to $1 billion a year in revenue if the F.D.A. upholds the ban.

A clinical trial published in 2007 demonstrated that Avastin, when paired with the chemotherapy drug Taxol, halts the growth of metastatic breast cancer for about six months longer than chemotherapy alone. Genentech then asked the F.D.A. for approval of Avastin, combined with Taxol, for use against metastatic breast cancer.

This halt in tumor growth is known as progression-free survival. But delaying the worsening of cancer does not necessarily prolong life, and Avastin was not shown to lengthen patients’ overall survival time. So Genentech argued that the drug led not to longer life, but to improved quality of life.

In 2007, an F.D.A. advisory committee rejected the application, deciding that the toxic side effects of Avastin outweighed its ability to slow tumor growth. The F.D.A., however, overrode the committee and granted what is called accelerated approval, allowing Avastin to be used pending further study. The criteria for full approval was that Avastin not worsen overall survival and that the drug provide clinically meaningful progression-free survival.

To support its case Genentech submitted data from two additional clinical trials in which Avastin was paired with chemotherapy drugs other than Taxol. Like the first trial, neither showed a survival benefit. Both showed an improvement in progression-free survival, though this outcome was much less impressive than in the original study. In addition to seeking full approval for the Avastin-Taxol combination, Genentech also asked the F.D.A. to approve the use of Avastin with the drugs used in these follow-up studies.

Genentech presented progression-free survival as a surrogate for better quality of life, but the quality-of-life data were incomplete, sketchy and, in some cases, non-existent. The best that one Genentech spokesman could say was that “health-related quality of life was not worsened when Avastin was added.” Patients didn’t live longer, and they didn’t live better.

It was this lack of demonstrated clinical benefit, combined with the potentially severe side effects of the drug, that led the F.D.A. last year to reject the use of Avastin with Taxol or with the other chemotherapies for breast cancer.

In its appeal Genentech is changing its interpretation of its own data to pursue the case. Last year Genentech argued that the decrease in progression-free survival in its supplementary studies was not due to the pairing of Avastin with drugs other than Taxol. This year, however, in its brief supporting the appeal, Genentech argues that the degree of benefit may indeed vary with “the particular chemotherapy used with Avastin.” In other words, different chemotherapies suddenly do yield different results, with Taxol being superior. The same data now generate the opposite conclusion.

Perhaps more troubling is the resort to anecdote in the brief to the F.D.A. and in the news media.  Oncologists recounted their successes, and patients who were doing well on Avastin argued for its continued approval. But anecdote is not science. Such testimonials may represent the human voices behind the statistics, but the sad fact is that there are too many patients who have been treated with Avastin but are not here to tell their stories.

Avastin will not disappear because of the F.D.A. decision. It remains available for treating other cancers, and research to find its appropriate role in breast cancer treatment continues. In the meantime, the F.D.A., which is expected to make its decision in September, needs to resist Genentech’s attempt to have it ignore scientific evidence.

Serious progress in the treatment of cancer will not be the result of polemics, lobbying or marketing. Genentech’s money and efforts would be better spent on research for more meaningful treatments for breast cancer.

By: Frederick C. Tucker, Jr., Oncologist and Op Ed Contributor, The New York Times Opinion Pages, May 24, 2011

May 25, 2011 Posted by | Big Pharma, Capitalism, Consumers, Corporations, Government, Health Care, Health Care Costs, Health Reform, Pharmaceutical Companies, Politics, Public Health, Regulations, U.S. Chamber of Commerce, Women, Women's Health, Womens Rights | , , , , , , , , , , , , , , , , , | Leave a comment

Privatization: The Road To Hell

Billionaires are different from you and me, for obvious reasons, including the fact that they buy much pricier baubles than we do.

A sleek car costing $100,000? Why, for them, that’s just an easy impulse purchase. A few million bucks for a Matisse original? Go ahead — it’ll liven up the hallway. How about throwing a fat wad of cash at a university to get an academic chair named for you? Sure, it’s all part of the fun of living in BillionaireLand.

Then there is the top crust of the upper-crust — such megalomaniacal megabillionaires as the Koch brothers. Using money from their industrial conglomerate, their foundation and their personal fortunes, these two far-out, laissez-faire extremists are literally buying public policy. Their purchases of everything from politicians to the tea party help them push the privatization of all things public and the elimination of pesky regulations and taxes that crimp their style.

To advance their plutocratic privatization cause, brother Charles has even gone on a shopping spree for an invaluable bauble that most of us didn’t even know was for sale: academic freedom. And it’s surprisingly cheap!

For only $1.5 million, Koch bought a big chunk of the economics department of Florida State University a couple of years ago. His donation gives him control of a new “academic” program at this public institution to indoctrinate students in his self-serving political theories.

The billionaire gets to screen all applicants, veto any he deems insufficiently ideological, and sign off on all new hires. Also, the department head must submit yearly reports to Koch about the faculty’s speeches, publications and classes, and he evaluates the faculty based on “objectives” that he sets.

Charles has made similar purchases of academic freedom at two other state universities, Clemson and West Virginia. Also, in a May 20 piece at Alternet.org, investigative researcher Lee Fang reveals that Koch has paid $419,000 to buy into Brown University’s “political theory project,” $3.6 million to establish Troy University’s “center for political economy” and $700,000 for a piece of Utah State’s Huntsman School of Business, which now has the “Charles G.
Koch Professor of Political Economy.”

Imagine the screams of outrage we’d hear from the Kochs if a labor union were doing this.

A recent article in The Onion, the satirical newsweekly, printed a downsize-big-government spoof that Charles and David would love to turn into reality. The parody disclosed that President Obama had come up with a surefire plan to balance the federal budget: Rob Fort Knox! “I’ve got the blueprints,” Obama is quoted as saying, “and I think I found a way out through a drainage pipe.”

Unfortunately, with today’s political climate dominated by howling winds from the far-right fringe, there’s no longer any room in American culture for satire. Sure enough, some laissez-faire extremists at such Koch-funded corporate fronts as Cato Institute and Heritage Foundation are presently howling for the government to sell all of America’s gold stored in Fort Knox. Noting that we have billions worth of bullion in the vaults, a fellow from Heritage made this keen observation: “It’s just sort of sitting there.”

Uh, yeah, professor. Like Mount Rushmore, the Grand Canyon, the Lincoln Memorial and other national assets — being there is the point.

Yet these ivory tower ideologues are using the current brouhaha over the budget deficit as an opening to push their loopiest fantasies of selling off all of America’s public properties, facilities, systems and treasures to create a no-government, plutocratic paradise. Just spread our public goods out on tables, like a flea market from hell, and invite the global rich to buy it all.

For example, a fellow from another Koch-funded front, the American Enterprise Institute, observes that the government could raise billions of dollars to retire that pesky deficit simply by selling our interstate highway system. Americans would then have to pay tolls forever to the corporate owners, but hey, he exclaims, remember that tolls “work for the River Styx, why not the Beltway?”

What a perfect metaphor for privatization! In ancient mythology, dead souls must pay a toll to be ferried across the River Styx and enter the depths of hell.

By: Jim Hightower, CommonDreams.org/Creators.com, May 25, 2011

May 25, 2011 Posted by | Democracy, Government, Ideologues, Ideology, Koch Brothers, Politics, Regulations, Republicans, Right Wing, Taxes, Tea Party, Unions, Wealthy | , , , , , , , , , , , , , , | Leave a comment

The Continuing Fight Against Women: House Passes Amendment To Defund Medical Schools That Teach Abortion

Not content to defund health care for women, the Republicans in Congress, who just can’t stop obsessing about abortion, have now passed yet another bill, brought to us by the lovely Rep. Virginia Foxxxxxxxxx, to prohibit government funding of abortion. Only this one also bans medical programs that receive government dollars from even teaching students how to perform abortions. Because taxpayers shouldn’t have their hard-earned dollars spent on training doctors to provide health care to women.

And, in case we didn’t get the message the first gazillion times Republicans mentioned it, the amendment re-reiterates that taxpayer dollars should not be used to fund abortions. Which they aren’t.

But despite the endless parade of bills to make it really, really, really clear that taxpayers should not pay for abortions, Rep. Foxxxxxxxxxx still wanted to make it “crystal clear.” In case the bill they passed three weeks ago didn’t quite get the message across.

The measure is an amendment to H.R. 1216, the Republicans’ latest never-gonna-happen attempt to repeal the Affordable Care Act. Because nothing creates jobs like passing ideologically-driven symbolic measures to appease teabaggers and woman-haters everywhere.

Next up: a bill to ensure that taxpayer dollars are not used to repair roads that lead to medical schools that teach doctors how to perform abortions, and to re-re-reiterate that taxpayer dollars should not be spent on abortions. And then I’m sure they’ll get around to that jobs, jobs, jobs thing.

By: Kaili Joy Gray, Daily Kos, May 25, 2011

May 25, 2011 Posted by | Abortion, Affordable Care Act, Class Warfare, Congress, Conservatives, Equal Rights, GOP, Government, Health Care, Health Reform, Human Rights, Ideologues, Ideology, Lawmakers, Planned Parenthood, Politics, Pro-Choice, Public Health, Republicans, Right Wing, Tea Party, Women, Women's Health, Womens Rights | , , , , , , | Leave a comment

   

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