CEO’s And Teapartiers, Shut Up And Pay Your Taxes: Starving The Government Is Not Patriotic
As I sit here in Germany’s financial capital, a few hours by train from where my forbearers set out for the United States a century ago, I’m remembering what antitax Americans are forgetting: Living in a stable and free society that supports economic initiative isn’t a given.
Those who think that U.S. corporations and wealthy individuals already pay too much in taxes and get too little in return are taking for granted social order and economic opportunity. Keeping the peace costs money, and paying police, fire and other emergency personnel requires tax revenue. Just ask U.K. Prime Minister David Cameron, whose plan to make substantial cuts in London’s Metropolitan Police budget now looks ill-timed, amid pictures of looters making off with stolen goods.
U.S. corporations benefit every day from operating in an environment where bricks aren’t flying through windows and gunshots aren’t going off in parking lots. Civil unrest can be expensive, as executives at Sony Corp learned this week after its London warehouse went up in flames.
It also costs money to educate a workforce, something that also seems glossed over by those who want to slash money for federal education grants.
When I first arrived in Germany, people asked me whether the news they saw on TV is true, that “everyone in the United States is lining up for food stamps,” as one Frankfurter put it. Their questions were a reminder that even though Germany’s tax burden is higher than that in the United States, its economy weathered the global recession of 2008-09 better than America’s did, and its unemployment rate today, at 7%, is significantly lower than ours at 9.1%.
People like Grover Norquist, who claim that high taxes are the root of all our economic problems, have no answer for facts like these.
Those who want to lower business taxes often say that the U.S. corporate tax rate of 35% is higher than the 25% average of the world’s developing economies. But that argument ignores the long list of tax loopholes that allow U.S. companies to pay much lower rates in actuality.
Go down the list of second-quarter earnings reports for companies in the S&P 500 Index and stop when you get to one that paid 35% of earnings. That might take a while.
What the United States needs isn’t more tax cuts, but tax reform to eliminate the many loopholes that create an uneven playing field.
Tax corporate cash
Given the sluggish pace of U.S. economic growth, perhaps such reform could include a tax on the enormous amounts of cash that American companies now have sitting on their balance sheets.
Non-financial companies in the S&P 500 are sitting on more than $1 trillion in cash right now — an absurd amount given that many of those same companies are laying off workers. Some estimates put the total closer to $2 trillion.
Forcing corporations to spend that money, either by hiring workers or paying investor dividends, would go a long way toward spurring growth.
When I hear Norquist — along with the candidates active in the tea-party movement that are too weak to resist signing his so-called loyalty oath — complain about actually having to pay for government services, I think we’ve come to take those services for granted.
I also think such whining is the exact opposite of the can-do attitude of the waves of immigrants who helped build the U.S. economy and continue to do so today. I’d like to introduce them to some of the start-up CEOs that I interview every week in Silicon Valley.
During the past few months, I’ve been writing a series of profiles on tech entrepreneurs for the site Entrepreneur.com. Neither I nor my editors planned it this way, but given that recent immigrants tend to be among the hardest-working Americans, perhaps it’s no surprise that none of the first four that I’ve written about are native to the United States.
These executives are people who, like generations of immigrants before them, came to the States and put their energy into building companies, rather than sitting around complaining how terrible a place this is to do business. They also, by the way, create jobs.
They come from across the globe: Victoria Ransom and Alain Chuard of Wildfire Interactive grew up in New Zealand and Switzerland, respectively; Mikkel Svane and his Zendesk co-founders hail from Denmark; Rahim Fazal of Involver is from Vancouver, B.C.
Yet all of them came to the United States to build their businesses. Why would they do that if it’s so hostile to their efforts, as the antitax extremists claim the country to be?
The answer is it’s not. On the contrary, America’s still the most attractive country for entrepreneurs. Keeping it that way costs money — something that tax haters seem to forget.
By: John Shinal, MarketWatch, August 12, 2011
Big Business Has Been Very, Very Good To Mitt Romney
As the noted philosopher and rock ‘n’ roll irritant David Lee Roth once said, “Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.”
I often think of his sage words as I watch the early days of the 2012 political campaigns. For the phrase “buy you a yacht,” simply substitute “buy you an election.” Then behold the havoc wrought by Citizens United and other court decisions that have unleashed a mudslide of corporate cash into our electoral system, much of it anonymous, hurling the average citizen out of the democratic equation.
An estimated $40 million will be spent in those nine Wisconsin state Senate recall elections — most of it from outside, third-party interest groups and twice what was spent last year on all 116 of the state’s legislative races. Most believe President Obama will raise a billion dollars or even more for his reelection bid; enough, as NPR’s Peter Overby observed, to buy up all the TV ads on the Super Bowl — four times.
The Republican nominee may also raise and spend a billion. If it turns out to be former Massachusetts Gov. Mitt Romney, buying that electoral yacht will be a tad easier than for others. Back in 2007, the New York Times estimated his worth at nearly $350 million, and he plowed a reported $44.5 million of his own money into his 2008 presidential campaign.
Certainly, there has been a deep strain of noblesse oblige throughout the history of American governance, the wealthy feeling the urge (and having the disposable income and free time) to come to the aid of their country, both for good and ill. But with Romney, so much a complaisant creature of the corporate culture that dropped us into our current mess without a parachute, we have a tsunami-in-waiting.
As he scurries to the right, running away from his moderate record as Massachusetts governor (although there’s no escaping the irony of this week’s reports that the state’s upgrade to an AA rating from Standard & Poor’s during his tenure was achieved, in part, through tax hikes), it’s illuminating to remember not only how Romney amassed his personal fortune but also how the fundraising apparatus surrounding him probes for yet more ways to scam the system. Not content with the freewheeling liberties already granted by the courts, his money machine relentlessly pursues ever more insidious routes to the fattest wallets and checkbooks.
The opening chapters may be familiar to you. As a June 2007 article in the Times reported, Romney’s personal fortune was amassed from his leadership at the private equity firm Bain Capital. “Mr. Romney’s Bain career — a source of money and contacts that he has used to finance his Massachusetts campaigns and to leap ahead of his presidential rivals in early fund-raising … exposes him to criticism that he enriched himself excessively, sometimes by cutting jobs to increase profits.” The newspaper quoted Boston University business professor James E. Post: “Increasingly, this world of private equity looks like a world of robber barons, and Romney comes out of that world.”
A similar article that same month and year in the Boston Globe noted that Bain Capital specialized in leveraged buyouts and cited MIT Sloan School of Management professor Howard Anderson. Bain, he said, would do “everything they can” to increase the value of the companies it bought. “The promise [to investors] is to make as much money as possible. You don’t say we’re going to make as much money as possible without going offshore and laying off people.”
Stephen Colbert may have summed it up best:
“Mitt Romney knows just how to trim the fat. He rescued businesses like Dade Behring, Stage Stories, American Pad and Paper, and GS Industries, then his company sold them for a profit of $578 million after which all of those firms declared bankruptcy. Which sounds bad, but don’t worry, almost no one worked there anymore.”
Another of the companies sucked into Bain’s gravitational pull was the medical testing firm Damon Corp. that, according to the Globe,
“later pleaded guilty to defrauding the federal government of $25 million and paid a record $119 million fine.
“Romney sat on Damon’s board. During Romney’s tenure, Damon executives submitted bills to the government for millions of unnecessary blood tests. Romney and other board members were never implicated… But court records suggest that the Damon executives’ scheme continued throughout Bain’s ownership… Bain, meanwhile, tripled its investment. Romney personally reaped $473,000.”
But unlike the companies it bought, at Bain itself, even failure could be rewarded — even if your name was Mitt. Take a look at the sweetheart deal Romney got when he took over Bain Capital, a spinoff of consulting firm Bain & Company where he had been an executive. In an arrangement any start-up enterpriser would kill for, as per the Globe, founder Bill Bain guaranteed that if the Bain Capital experiment tanked, “Romney would get his old job and salary back, plus any raises handed out during his absence.” What’s more, if he proved unfit for the task, “Bain agreed to craft a cover story if necessary, promising to bring Romney back to the consulting firm and explain Romney’s return as a matter of his being more valuable to Bain as a consultant.”
Nice. No wonder Romney told an Iowa crowd this week that, “Corporations are people, my friend.” Like Garrett Morris’ Chico Escuela in the early days of “Saturday Night Live,” big business been berry berry good to him. Would that it had been berry berry good to the hundreds fired at companies taken over by Bain Capital.
Yes, corporate people power has served Romney well, especially when it comes to political fundraising. As Huffington Post reported this week, “According to disclosure reports filed at the end of July, 61 registered lobbyists and five lobbyist-linked political action committees contributed $137,650 to Romney’s campaign between Jan. 1 and June 30, 2011. The former Massachusetts governor raised more money from lobbyists during this period than all of his competitors combined … Craig Holman, legislative representative for the watchdog group Public Citizen, told HuffPost that Romney’s lead in lobbyist cash ‘strongly suggests that Romney is the favored candidate for wealthy special interest groups, especially K Street. They clearly think that they can get their foot in the door with Mitt Romney.’”
Then there’s this in the July 20 Washington Post:
“The largest corporate sources of money for Romney are mostly finance industry leaders, including Morgan Stanley and Bank of America. Goldman Sachs employees have given nearly a quarter of a million dollars in contributions… The keys to his success appear to be large donors and contributors from the New York area. Nearly three-quarters of Romney’s money came from donors giving the maximum $2,500 contribution, and one in eight of Romney’s donors live in New York City and its suburbs.”
Of the $18 million raised by his campaign in the second quarter this year, one million came from a single trip to New York in May, including a University Club event crammed to its poshly appointed walls with banking executives.
So it’s not surprising that in the Romney camp, the creative accounting techniques perfected by Wall Street are a specialty. It was again The Boston Globe — which seems to have covered Romney’s political ambitions since they first danced in his head — that wrote back on April 15, “The former Massachusetts governor has become a master of a controversial but legal fund-raising technique that relies on a network of loosely regulated state political action committees to collect those funds.”
Example: Four members of the Marriott hotel family, close friends with the Romneys and fellow Mormons, wrote checks totaling $215,000 to Romney’s campaign, far more than an individual is allowed to give to federal political committees. According to the Globe:
“Romney, more fully exploiting the system he employed in the 2008 election cycle, got around those restrictions by taking in contributions through political committees set up under the rules of individual states. Most of the money was then transferred to Romney’s federal political action committee, Free and Strong America, and used to pay the salaries of top aides, political consultants, and traveling expenses.”
Consider, too, the super PAC Restore Our Future, supposedly independent, but run by former Romney political aides in support of their man’s candidacy. Restore Our Future raised $12.2 million in the first half of 2012. Under the new, relaxed rules it can raise unlimited funds but must disclose who contributes and cannot legally coordinate with the candidates themselves or the candidates’ official campaign committees. Of Restore Our Future’s 90 wealthy donors so far, the ubiquitous Marriotts among them, four gave a million dollars apiece. One was John Paulson, described by the website Politico as “a New York hedge fund billionaire who became famous for enriching himself by betting on the collapse of the housing industry.”
The other three allegedly are corporations but none of them conduct any real business. Two, Eli Publishing and something called F8 LLC, each list the same Provo, Utah, address as trusts set up by the families of two executives at the anti-aging product company Nu Skin Enterprises. Nu Skin founders and fellow Mormons Stephen Lund and Blake Roney were big contributors to Romney’s first White House campaign in 2008. (For what it’s worth, twice in the ’90s, Nu Skin was hauled before the Federal Trade Commission and paid a total of $2.5 million to settle allegations of unsubstantiated product claims.)
The other shell company, W Spann LLC, was even more mysterious. As first reported by Michael Isikoff of NBC News, it was dissolved only months after it was created, and just two weeks before Restore Our Future reported the company’s donation. As Isikoff wrote, “Campaign finance experts say the use of an opaque company like W Spann to donate large sums of money into a political campaign shows how post-Watergate disclosure laws are now being increasingly circumvented.”
After days of media demands and questions, the man behind W Spann finally came forward: Edward Conard, a retired managing director of — surprise — Bain Capital. But he only stepped up after the groups Democracy 21 and the Campaign Legal Center requested investigations by the Justice Department and the Federal Elections Commission. He made his donation “after consulting prominent legal counsel regarding the transaction,” Conard said, “and based on my understanding that the contribution would comply with applicable laws.”
Phony businesses set up for the sole purpose of laundering campaign money and shielding who’s really behind massive contributions? The donors responsible for the dummy corporations all say they have nothing to hide. So why hide it? Maybe to keep their distance, because Restore Our Future could be planning attack ads on Republican rivals and President Obama that will be harsher and more truth bending than anything Romney and his nearest and dearest can officially support.
We need to discover this and other answers before the money machine completely supplants the voting machine, and any last chance to have our voices heard is permanently stilled by cold hard cash.
By: Michael Winship, Senior Writing Fellow, Demos, published in Salon, August 12, 2011
Divineless Intervention: Gov Rick Perry’s Unanswered Prayers
A few months ago, with Texas aflame from more than 8,000 wildfires brought on by extreme drought, a man who hopes to be the next president took pen in hand and went to work:
“Now, therefore, I, Rick Perry, Governor of Texas, under the authority vested in me by the Constitution and Statutes of the State of Texas, do hereby proclaim the three-day period from Friday, April 22, 2011, to Sunday, April 24, 2011, as Days of Prayer for Rain in the State of Texas.”
Then the governor prayed, publicly and often. Alas, a rainless spring was followed by a rainless summer. July was the hottest month in recorded Texas history. Day after pitiless day, from Amarillo to Laredo, from Toadsuck to Twitty, folks were greeted by a hot, white bowl overhead, triple-digit temperatures, and a slow death on the land.
In the four months since Perry’s request for divine intervention, his state has taken a dramatic turn for the worse. Nearly all of Texas is now in “extreme or exceptional” drought, as classified by federal meteorologists, the worst in Texas history.
Lakes have disappeared. Creeks are phantoms, the caked bottoms littered with rotting, dead fish. Farmers cannot coax a kernel of grain from ground that looks like the skin of an aging elephant.
Is this Rick Perry’s fault, a slap to a man who doesn’t believe that humans can alter the earth’s climate — God messin’ with Texas? No, of course not. God is too busy with the upcoming Cowboys football season and solving the problems that Tony Romo has reading a blitz.
But Perry’s tendency to use prayer as public policy demonstrates, in the midst of a truly painful, wide-ranging and potentially catastrophic crisis in the nation’s second most-populous state, how he would govern if he became president.
“I think it’s time for us to just hand it over to God, and say, ‘God: You’re going to have to fix this,’” he said in a speech in May, explaining how some of the nation’s most serious problems could be solved.
That was a warm-up of sorts for his prayer-fest, 30,000 evangelicals in Houston’s Reliant Stadium on Saturday. From this gathering came a very specific prayer for economic recovery. On the following Monday, the first day God could do anything about it, Wall Street suffered its worst one-day collapse since the 2008 crisis. The Dow sunk by 635 points.
Prayer can be meditative, healing, and humbling. It can also be magical thinking. Given how Perry has said he would govern by outsourcing to the supernatural, it’s worth asking if God is ignoring him.
Though Perry will not officially announce his candidacy until Saturday, he loomed large over the Republican debate Thursday night. With their denial of climate change, basic budget math, and the indisputable fact that most of the nation’s gains have gone overwhelmingly to a wealthy few in the last decade, the candidates form a Crazy Eight caucus. You could power a hay ride on their nutty ideas.
After the worst week of his presidency (and the weakest Oval Office speech since Gerald Ford unveiled buttons to whip inflation), the best thing Barack Obama has going for him is this Republican field. He still beats all of them in most polling match-ups.
Perry is supposed to be the savior. When he joins the campaign in the next few days, expect him to show off his boots; they are emblazoned with the slogan dating to the 1835 Texas Revolution: “Come and Take It.” He once explained the logo this way: “Come and take it — that’s what it’s all about.” This is not a man one would expect to show humility in prayer.
Perry revels in a muscular brand of ignorance (Rush Limbaugh is a personal hero), one that extends to the ever-fascinating history of the Lone Star State. Twice in the last two years he’s broached the subject of Texas seceding from the union.
“When we came into the nation in 1845 we were a republic, we were a stand-alone nation,” says Perry in a 2009 video that has just surfaced. “And one of the deals was, we can leave any time we want. So we’re kind of thinking about that again.”
He can dream all he wants about the good old days when Texas left the nation to fight for the slave-holding states of the breakaway confederacy. But the law will not get him there. There is no such language in the Texas or United States’ constitutions allowing Texas to unilaterally “leave any time we want.”
But Texas is special. By many measures, it is the nation’s most polluted state. Dirty air and water do not seem to bother Perry. He is, however, extremely perturbed by the Environmental Protection Agency’s enforcement of laws designed to clean the world around him. In a recent interview, he wished for the president to pray away the E.P.A.
To Jews, Muslims, non-believers and even many Christians, the Biblical bully that is Rick Perry must sound downright menacing, particularly when he gets into religious absolutism. “As a nation, we must call upon Jesus to guide us through unprecedented struggles,” he said last week.
As a lone citizen, he’s free to advocate Jesus-driven public policy imperatives. But coming from someone who wants to govern this great mess of a country with all its beliefs, Perry’s language is an insult to the founding principles of the republic. Substitute Allah or a Hindu God for Jesus and see how that polls.
Perry is from Paint Creek, an unincorporated hamlet in the infinity of the northwest Texas plains. I’ve been there. In wet years, it’s pretty, the birds clacking on Lake Stamford, the cotton high. This year, it’s another sad moonscape in the Lone Star State.
Over the last 15 years, taxpayers have shelled out $232 million in farm subsidies to Haskell County, which includes Paint Creek — a handout to more than 2,500 recipients, better than one out every three residents. God may not always be reliable, but in Perry’s home county, the federal government certainly is.
By: Timothy Egan, The New York Times Opinion Pages, August 11, 2011
“Enumerated Powers” And The Radicalism of The GOP Thought Process
Republican presidential hopeful Rick Perry chatted with The Daily Beast yesterday, and was asked about his understanding of “general welfare” under the Constitution. The left, the Texas governor was told, would defend Social Security and Medicare as constitutional under this clause, and asked Perry to explain his own approach. He replied:
“I don’t think our founding fathers, when they were putting the term ‘general welfare’ in there, were thinking about a federally operated program of pensions nor a federally operated program of health care. What they clearly said was that those were issues that the states need to address. Not the federal government. I stand very clear on that. From my perspective, the states could substantially better operate those programs if that’s what those states decided to do.”
It’s worth pausing to appreciate the radicalism of this position. When congressional Republicans, for example, push to end Medicare and replace it with a privatized voucher scheme, they make a fiscal argument — the GOP prefers to push the costs away from the government and onto individuals and families as a way of reducing the deficit.
But Perry is arguing programs like Medicare and Social Security aren’t just too expensive; he’s also saying they shouldn’t exist in the first place because he perceives them as unconstitutional. Indeed, when pressed on what “general welfare” might include if Medicare and Social Security don’t make the cut, the Texas governor literally didn’t say a word.
Now, this far-right extremism may not come as too big a surprise to those familiar with Perry’s worldview. He’s rather obsessed with the 10th Amendment — unless we’re talking about gays or abortion — and George Will recently touted him as a “10th Amendment conservative.” Perry’s radicalism is largely expected.
It’s worth noting, then, that Mitt Romney seems to be in a similar boat. He was asked in last night’s debate about his hard-to-describe approach to health care policy, and the extent to which his state-based law served as a model for the Affordable Care Act. Romney argued:
“There are some similarities between what we did in Massachusetts and what President Obama did, but there are some big differences. And one is, I believe in the 10th Amendment of the Constitution. And that says that powers not specifically granted to the federal government are reserved by the states and the people.”
What I’d really like to know is whether Romney means this, and if so, how much. Because if he’s serious about this interpretation of the law, and he intends to govern under the assumption that powers not specifically granted to the federal government are reserved by the states and the people, then a Romney administration would be every bit as radical as a Perry administration.
After all, the power to extend health care coverage to seniors obviously isn’t a power specifically granted to the federal government, so by Romney’s reasoning, like Perry’s, Medicare shouldn’t exist. Neither should Social Security, the Civil Rights Act, the Clean Air Act, student loans, FEMA, or many other benchmarks of modern American life.
And if Romney doesn’t believe this, and he’s comfortable with Medicare’s constitutionality, maybe he could explain why the federal government has the constitutional authority to bring health care coverage to a 65-year-old American, but not a 64-year-old American.
By: Steve Benen, Contributing Writer, Washington Monthly-Political Animal, August 12, 2011
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