“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
“Enough Already”: Big Oil Lobbyist Lies About Industry Not Getting Subsidies
Just when you think you’ve heard it all from the fossil fuel industry, along comes American Petroleum Institute (API) chief executive Jack Gerard actually claiming on Tuesday that “the oil and gas industry gets no subsidies, zero, nothing.”
Gerard went on to argue that “we get cost-recovery benefits, much like other industries. You can go down the road of allowing economic activity, generating hundreds of billions to the government, or you can take the alternative route by trying to extract new revenue from industry by increasing their cost to do business. We not only pay our fair share, we pay more than our fair share.”
President Obama has proposed eliminating the $4 billion a year in subsidies and tax breaks to an industry that exceeded $100 billion in profits last year. These tax breaks for the oil and gas industry go all the way back to the 1920s and many argue should not be given to such a mature industry, and instead should be redirected to clean energy technologies of the future.
In addition to the $4 billion annual tax breaks, ThinkProgress reports that ExxonMobil, Chevron, and ConocoPhillips pay well below the corporate tax rate of 35 percent, with ExxonMobil paying only a 13 percent tax rate in 2011.
Washington, D.C.-based API is the the largest U.S. trade association for the oil and gas industry and claims to represent 400 companies. API spent $8.6 million on lobbying in 2011 and in last year’s election cycle spent heavily on funding groups running political ads against Democrats and in support of Republicans.
Gerard, who is close to fellow Mormon Mitt Romney and would have wielded enormous influence in a Romney administration, epitomizes the Republican “drill, baby, drill” attitude that ignores the environmental, public health and climate consequences of pumping all that carbon into the atmosphere. With his latest comments, he is ignoring America’s long history of subsidizing Big Oil.
While Gerard, whose salary was $6.4 million in 2010, disengenously states that Big Oil doesn’t receive subsidies, API actually ran ads two years ago against the Obama administration’s proposal to end tax subsidies for the oil and gas industry.
By: Josh Marks, The National Memo, January 10, 2013
“Brewed For Misogynists”: How Not To Defend Yourself Against The “Chauvinism” Charge, Starring Joe Scarborough
As best as I can tell, here is what happened on “Morning Joe” this morning. Wacky jokester morning show host and respected American political figure Joe Scarborough mocked and belittled his co-host, Mika Brzezinski, until she became genuinely upset with him, then he angrily yelled at her for being upset with him until, finally, he got her to apologize to him for calling him on his bullshit.
Brzezinski was defending Obama from complaints that his Cabinet is too male. Scarborough was responding to her comments with snide jokes, including one about the Lily Ledbetter Act. Brzezinski told Scarborough that he was “being chauvinistic right now,” and Scarborough responded with outrage. Soon he was — for real — snapping his fingers to get her to shut up and listen to him berate her.
“Knowing me and seeing me work around here for five years, you want to call me a chauvinist on television?” Scarborough asked Brzezinski. The answer to that question, as anyone who’s watched Scarborough and Brzezinski work together on television for five years could tell you, is an unequivocal “yes.” One of the running jokes on “Morning Joe” is that “Morning Joe” constantly talks over and generally disrespects his co-host, who also happens to make half his salary.
Eventually, Brzezinski apologized for being mean to poor Joe.
My only question is, is Joe Scarborough actually different from Greg Gutfeld? They both do the smirky frat-misogynist who is Allowed To Say That Because He Is “Just Kidding Around” thing for a living. I guess there is the fact that Gutfeld seems to be aware of the fact that he’s an unpleasant character, while Scarborough imagines himself a serious and important person. Also Gutfeld’s show gets much better ratings. (His 5 p.m. show, not his 3 a.m. show.) Other than that, though, they seem like a couple of guys who’d really get along well.
By: Alex Pareene, Salon, January 10, 2013
“The Hitler Gun Control Lie”: Pro-Proliferation Gun Enthusiasts Have Their History Dangerously Wrong
This week, people were shocked when the Drudge Report posted a giant picture of Hitler over a headline speculating that the White House will proceed with executive orders to limit access to firearms. The proposed orders are exceedingly tame, but Drudge’s reaction is actually a common conservative response to any invocation of gun control.
The NRA, Fox News, Fox News (again), Alex Jones, email chains, Joe “the Plumber” Wurzelbacher, Gun Owners of America, etc., all agree that gun control was critical to Hitler’s rise to power. Jews for the Preservation of Firearms Ownership (“America’s most aggressive defender of firearms ownership”) is built almost exclusively around this notion, popularizing posters of Hitler giving the Nazi salute next to the text: “All in favor of ‘gun control’ raise your right hand.”
In his 1994 book, NRA head Wayne LaPierre dwelled on the Hitler meme at length, writing: “In Germany, Jewish extermination began with the Nazi Weapon Law of 1938, signed by Adolf Hitler.”
And it makes a certain amount of intuitive sense: If you’re going to impose a brutal authoritarian regime on your populace, better to disarm them first so they can’t fight back.
Unfortunately for LaPierre et al., the notion that Hitler confiscated everyone’s guns is mostly bogus. And the ancillary claim that Jews could have stopped the Holocaust with more guns doesn’t make any sense at all if you think about it for more than a minute.
University of Chicago law professor Bernard Harcourt explored this myth in depth in a 2004 article published in the Fordham Law Review. As it turns out, the Weimar Republic, the German government that immediately preceded Hitler’s, actually had tougher gun laws than the Nazi regime. After its defeat in World War I, and agreeing to the harsh surrender terms laid out in the Treaty of Versailles, the German legislature in 1919 passed a law that effectively banned all private firearm possession, leading the government to confiscate guns already in circulation. In 1928, the Reichstag relaxed the regulation a bit, but put in place a strict registration regime that required citizens to acquire separate permits to own guns, sell them or carry them.
The 1938 law signed by Hitler that LaPierre mentions in his book basically does the opposite of what he says it did. “The 1938 revisions completely deregulated the acquisition and transfer of rifles and shotguns, as well as ammunition,” Harcourt wrote. Meanwhile, many more categories of people, including Nazi party members, were exempted from gun ownership regulations altogether, while the legal age of purchase was lowered from 20 to 18, and permit lengths were extended from one year to three years.
The law did prohibit Jews and other persecuted classes from owning guns, but this should not be an indictment of gun control in general. Does the fact that Nazis forced Jews into horrendous ghettos indict urban planning? Should we eliminate all police officers because the Nazis used police officers to oppress and kill the Jews? What about public works — Hitler loved public works projects? Of course not. These are merely implements that can be used for good or ill, much as gun advocates like to argue about guns themselves. If guns don’t kill people, then neither does gun control cause genocide (genocidal regimes cause genocide).
Besides, Omer Bartov, a historian at Brown University who studies the Third Reich, notes that the Jews probably wouldn’t have had much success fighting back. “Just imagine the Jews of Germany exercising the right to bear arms and fighting the SA, SS and the Wehrmacht. The [Russian] Red Army lost 7 million men fighting the Wehrmacht, despite its tanks and planes and artillery. The Jews with pistols and shotguns would have done better?” he told Salon.
Proponents of the theory sometimes point to the 1943 Warsaw Ghetto Uprising as evidence that, as Fox News’ Judge Andrew Napolitano put it, “those able to hold onto their arms and their basic right to self-defense were much more successful in resisting the Nazi genocide.” But as the Tablet’s Michael Moynihan points out, Napolitano’s history (curiously based on a citation of work by French Holocaust denier Robert Faurisson) is a bit off. In reality, only about 20 Germans were killed, while some 13,000 Jews were massacred. The remaining 50,000 who survived were promptly sent off to concentration camps.
Robert Spitzer, a political scientist who studies gun politics and chairs the political science department at SUNY Cortland, told Mother Jones’ Gavin Aronsen that the prohibition on Jewish gun ownership was merely a symptom, not the problem itself. “[It] wasn’t the defining moment that marked the beginning of the end for Jewish people in Germany. It was because they were persecuted, were deprived of all of their rights, and they were a minority group,” he explained.
Meanwhile, much of the Hitler myth is based on an infamous quote falsely attributed to the Fuhrer, which extols the virtue of gun control:
This year will go down in history! For the first time, a civilized nation has full gun registration! Our streets will be safer, our police more efficient, and the world will follow our lead into the future!
The quote has been widely reproduced in blog posts and opinion columns about gun control, but it’s “probably a fraud and was likely never uttered,” according to Harcourt. “This quotation, often seen without any date or citation at all, suffers from several credibility problems, the most significant of which is that the date often given [1935] has no correlation with any legislative effort by the Nazis for gun registration, nor would there have been any need for the Nazis to pass such a law, since gun registration laws passed by the Weimar government were already in effect,” researchers at the useful website GunCite note.
“As for Stalin,” Bartov continued, “the very idea of either gun control or the freedom to bear arms would have been absurd to him. His regime used violence on a vast scale, provided arms to thugs of all descriptions, and stripped not guns but any human image from those it declared to be its enemies. And then, when it needed them, as in WWII, it took millions of men out of the Gulags, trained and armed them and sent them to fight Hitler, only to send back the few survivors into the camps if they uttered any criticism of the regime.”
Bartov added that this misreading of history is not only intellectually dishonest, but also dangerous. “I happen to have been a combat soldier and officer in the Israeli Defense Forces and I know what these assault rifles can do,” he said in an email.
He continued: “Their assertion that they need these guns to protect themselves from the government — as supposedly the Jews would have done against the Hitler regime — means not only that they are innocent of any knowledge and understanding of the past, but also that they are consciously or not imbued with the type of fascist or Bolshevik thinking that they can turn against a democratically elected government, indeed turn their guns on it, just because they don’t like its policies, its ideology, or the color, race and origin of its leaders.”
By: Alex Seitz-Wald, Salon, January 11. 2013
“Beware Of Walmart’s Role”: There’s Plenty Of Dark Money Baked Into The Anti-Gun Control Cake
As Vice President Joe Biden plotted his task force’s plan of action on gun control this week, he invited representatives Walmart to the White House to talk about it. That makes sense—as we detailed last month, the retail giant is the biggest seller of weapons and ammunition in the United States. Stakeholders as far-flung as the hunting groups Ducks Unlimited and Pheasants Forever were invited to meet with Biden’s task force, so Walmart surely has a place at the table.
In fact, many progressives and gun control advocates argue this is a very positive development .The thinking goes like this: Walmart would stand to benefit from a strengthened background check system, because independent sellers would have to go to a certified gun retailer (like Walmart) to conduct background checks—or might stop selling guns altogether, thus sending more customers Walmart’s way. The chain also must protect its image as a responsible, family-friendly store: it previously partnered with Mayors Against Illegal Guns to adopt tougher standards for gun sales.
So maybe Walmart can hop on board and advocate for the White House’s gun control package, thus lending a significant voice and lobbying power to the good guys’ side, and creating a crucial rift between gun retailers and manufacturers.
That all sounds good—if it happens like that. (Store officials haven’t yet announced any position on gun control following the White House meetings.) But there’s significant reason to suspect it won’t work out so splendidly. Clearly, the best of both worlds for Walmart would be a strengthened background check system that drives new customers to its stores, and no assault weapons ban.
Gun sales are a key part of Walmart’s recent sales spike, and have shot up 76 percent over the past two years. Walmart doesn’t sell handguns, and so assault rifles make up a significant portion of its gun inventory and thus its increasing sales. Meanwhile, there’s big pressure on Walmart from manufacturers not to stop carrying assault weapons. Freedom Group, a large gun manufacturing conglomerate and maker of the infamous Bushmaster AR-15 assault rifle, said in its most recent financial report that “In the event that Wal-Mart were to significantly reduce or terminate its purchases of firearms, ammunition and/or other products from us, our financial condition or results of operations and cash flows could be adversely affected.”
Walmart has already shown great hesitancy to pull back whatsoever on assault weapons sales. In the wake of the Newtown shooting, as competitors like Dick’s Sporting Goods yanked all assault rifles from shelves temporarily, Walmart didn’t stop selling a single assault weapon.
So: would Walmart be able so support the White House package upfront, perhaps even winning some special goodies that would drive customers specifically to its stores for background checks, while quietly killing the assault weapons ban behind the scenes? It’s happened before, in a very similar dynamic.
During the healthcare reform battles, the Obama White House was eager to get health insurance companies behind the reform push, and they had every reason to do so—the individual mandate meant millions of new customers. So the industry signed on. But there were many other aspects of the legislation it didn’t like, like the medical loss ratio and the public option. So behind everyone’s back, the health industry funneled massive amounts of money—$102.4 million dollars—to the US Chamber of Commerce to fight those aspects of the bill. This dark money was exceptionally difficult to track, but National Journal did it, months after the final legislation was passed.
Walmart, today, already sends significant amounts of money to strong opponents of gun control. The Walmart 1% blog found that between 2010 and 2012, Walmart gave over $1 million to candidates backed by the NRA. They note that “among politicians with 2012 grades from the NRA, 84% of the Waltons’ 2010-2012 cycle contributions went to candidates with scores between A+ and A-.”
So the retail giant already has some money baked into the anti-gun control cake in Washington, and could certainly promise more to these members if they vigorously oppose an assault weapons ban. Moreover, the dark money problem looms large. As Lee Fang has noted, the NRA has a half-dozen legal entities, many of them able to accept undisclosed donations to mount attack ads and lobbying campaigns. Walmart could easily dump money into these groups and it’s likely we would never know.
An outcome where the background check system is strengthened but there is no assault weapons ban is quite possible: even some conservative members of Congress with ‘A’ ratings from the NRA are coming out for better background checks. Walmart, ever the canny DC operator, must know that this is in reach. I would personally be shocked if the two-step strategy described above isn’t what they end up pursuing.
In that scenario, more gun buyers would be herded to Walmart, where there are plenty of assault rifles helpfully on sale. This is not a good result for gun control advocates. A full assault weapons ban should be enacted—and if Walmart is serious about being a good citizen and backing responsible gun measures, it should lead the way by discontinuing all assault weapon sales. Until it does that, beware any role it plays in the reform process.
By: George Zornick, The Nation, January 11, 2013
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