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“While The Rest Of The Country Suffers”: The Republican Congress Has Done Nothing But Help Big Business

On Thursday and Friday this week, House and Senate Republicans are at a joint retreat in Hershey, Pennsylvania, to listen to an array of speakers on different policy and political issues. This brief respite offers an opportunity to examine what the Republican priorities have been in the first 10 days of the 114th Congress, and it shows one clear winner: Big Business.

House Republicans began 2015 by immediately trying to roll back or delay a number of regulations in the Dodd-Frank regulatory reform law. Just a day into the new Congress, the House voted on a fast-track bill that would have watered down and rolled back a number of important regulations. In fact, the legislation, officially titled the Promoting Job Creation and Reducing Small Business Burdens Act, was the combination of 11 bills that would, among other things, delay the Volcker Act for years and weaken derivative regulations. The bill was brought up under suspension of the rules and thus required a two-thirds majority to pass. It fell short of that goal, with 276 legislators voting for it and 146 against. It was an unexpected victory for progressives after 44 Democrats changed their votes, after voting for a similar bill in the 113th Congress.

But Republicans were not to be denied. They brought up the bill under the normal rules where a two-thirds majority was not required. On Wednesday, it passed, 271-154. It’s not clear if the Senate would take it up, or if Democrats would have enough votes to filibuster it. But Wall Street received another gift in the Terrorism Risk Insurance Act, which expired at the end of 2014 and allows the federal government to backstop commercial insurance companies in the case of a terrorist attack. Even if you think terrorism risk insurance should be the government’s prerogative, it undoubtedly benefits large corporations, insurers, and real estate companies. Wall Street’s real victory, though, was the inclusion of a provision to roll back another, albeit smaller, component of Dodd-Frank. President Barack Obama signed it on Monday.

In other words, Wall Street is a fan of the new Republican Congress. Other industries are, too. Republicans have also focused on energy regulations, most notably approving the Keystone XL pipeline. Last Friday, the House passed a bill to approve the pipeline. The Senate voted to allow debate on the bill and will likely take a final vote on it next week, when it is expected to receive more than the 60 votes necessary to overcome a filibuster. The question is whether Congress has the two-thirds votes necessary to overturn Obama’s veto.

The House also took a whack at Obamacare by passing a bill that would change the definition of a full-time worker from 30 hours to 40 hours for purposes of the employer mandate. The Congressional Budget Office estimated that the bill would increase the deficit by $53.2 billion over the next decade, much of it from employers no longer having to pay a penalty for not offering health insurance for employees who work between 30-40 hours. The Senate is also readying a bill to repeal the medical device tax, which a new report this week estimated would cost 47-1,200 jobs, in total.

It wasn’t hard to predict that the new Republican Senate’s top priority would be helping Big Business. Partially, that’s because enough Democrats have been eager to support these bills and overcome filibusters in the Senate (such as on the Keystone pipeline or medical device tax). Utah Senator Mike Lee explained this in November in The Federalist:

[T]he easiest bipartisan measures to pass are almost always bills that directly benefit Big Business, and thus appeal to the corporatist establishments of both parties. In 2015, this “low-hanging fruit” we’ll hear about will be items like corporate tax reform, Obamacare’s medical device tax, patent reform, and perhaps the Keystone XL pipeline approval.

As it happens, these are all good ideas that I support. But if that’s as far as Republicans go, we will regret it. The GOP’s biggest branding problem is that Americans think we’re the party of Big Business and The Rich. If our “Show-We-Can-Govern” agenda can be fairly attacked as giving Big Business what it wantswhile the rest of the country sufferswe will only reinforce that unpopular image.

Lee’s worries were prescient. The 114th Congress has only just begun, of course, so Republicans have plenty of time to put forward an agenda focused on the middle class. Senate Majority Leader Mitch McConnell could support other moderate Republicans in crafting a compromise to increase the minimum wage. The GOP could make an expansion of the Earned Income Tax Credit a priority. Lee and Florida Senator Marco Rubio have proposed a number of other policies that are focused on the middle class.

But right now, there are few signs that Republicans are going to do anything like that.

 

By: Danny Vinik, The New Republic, January 15, 2015

January 17, 2015 Posted by | Big Business, Congress, Republicans | , , , , , , , , | Leave a comment

“Corporate Tax Deserters”: Shirking Their Responsibility To Pay For What They Get

Corporations love to wrap themselves in the flag with sun-drenched TV commercials that proclaim a deep devotion to American workers and communities. But when it comes to actually taking responsibility for supporting the workers and communities that create the conditions for corporate profits, a record number of big businesses are deserting America.

Burger King is the latest corporation to announce it is moving to Canada — at least on paper — where it will pay lower taxes. In the past three years alone, at least 21 companies have completed or announced mergers with foreign corporations to avoid taxes in an operation known as “inversion.” That compares with 75 over the past 30 years. These only-on-paper moves will gouge a $20 billion tax loophole over the next decade.

These companies may be moving their taxes overseas, but they’re not ending their reliance on the U.S. government to operate profitably. They are just shirking their responsibility to pay for what they get. The companies still make money in the United States, where they hire workers educated by public schools, ship their goods on public roads, are kept safe by local police officers and firefighters, and protect their patents in America’s courts.

Of course, small businesses and American families can’t play the same traitorous game. We can’t hire lawyers and accountants to pretend to ship our homes and our income overseas. And most of us wouldn’t do that if we could.

We understand that paying taxes is part of our basic obligation as citizens and essential to building strong communities.

What we do resent about taxes is that the current system is upside down — big corporations and the wealthy game the system so they pay a smaller share of their income in taxes than working families and small business. The share of profits corporations spend on taxes stands at a record low. And those profits are reaching record highs.

It’s time to turn the tax system right side up by closing the tax loopholes that allow billionaires and huge corporations to escape paying their fair share to support the country that made them rich.

The Obama administration just took a major step to do that. Tiring of Republican objections to closing the corporate tax deserter loophole, Treasury Secretary Jack Lew announced he was issuing new regulations aimed at making it much harder for companies to reap tax benefits from an offshore move.

This step may curb some corporate desertion. In the long run, it would be best if Congress took action. Two bills (S2360 and HR4679) would end the current practice of treating corporate deserters as foreign companies when they are still really based right here.

Consumers can play a role too. In August, Walgreens — which bills itself as “America’s drugstore” — abandoned its plan to dodge $4 billion in taxes in the next five years by changing its corporate address to Switzerland. Walgreens reversed course when outraged consumers protested at its stores and on the Internet.

This nation faces huge challenges in building an economy that works for all of us. If we plan to build a better future for our children, we must insist that corporations be held accountable for their responsibilities to our families and communities.

 

By: Richard Kirsch, Senior Fellow at the Roosevelt Institute; The National Memo, September 26, 2014

September 28, 2014 Posted by | Big Business, Corporations, Tax Inversions | , , , , , , , | 1 Comment

“The Increasingly Confusing World Of Campaign Finance”: Koch-Backed Small Business Front Group Added To ALEC Board

The National Federation of Independent Business (NFIB), a big business-funded group that claims to be the “nation’s leading small business association,” has joined the corporate board of the American Legislative Exchange Council, or “ALEC.” It marks perhaps the final step towards the NFIB abandoning any pretense of being a nonpartisan representative of small business owners.

ALEC has been described as a “corporate bill mill” that allows big business interests to peddle influence with ALEC’s legislative members — who are almost entirely Republican — and push “model” legislation that tends to benefit the corporate bottom line or advance an ideological agenda. The NFIB has long been an ALEC member, and this week joined the ALEC corporate governing board, which meets jointly with the ALEC legislative board and helps set the agenda and fundraise for the organization.

The announcement of the NFIB’s board membership came the same day the New York Times revealed that the the health insurance lobby, America’s Health Insurance Plans (AHIP), laundered $1.6 million through the NFIB’s dark money advocacy arm in 2012 to attack Democratic Senator Mark Pryor of Arkansas. This is on top of the $850,000 that the insurance group gave to NFIB the year before.

The New York Times wrote:

“The largely hidden role of the for-profit health insurers highlights the increasingly confusing world of campaign finance, as nonprofit groups such as the National Federation of Independent Business and its Voice of Free Enterprise program can keep their donor lists secret and then present their carefully fashioned message, financed in large part by big business, as if it is coming from, perhaps, a more sympathetic voice.”

Even the small business owner featured in the NFIB’s ad, John Parke of Little Rock, Ark., said he didn’t know the message was being bankrolled by the insurance industry — but says he should have been told.

“It is relevant to understanding who is sponsoring the message,” he said.

AHIP represents dozens of insurance companies, some of which are ALEC members, such as Guarantee Trust (which chairs ALEC’s Health & Human Services Task Force) and State Farm (which is also part of the ALEC corporate board).

Yet the insurance lobby donation wasn’t the NFIB’s biggest grant in 2012, which is the most recent year that records are available. The biggest donor to NFIB and its affiliated groups was the Koch brothers-backed Freedom Partners, an outfit that Politico described as “the Koch brothers’ secret bank.” Freedom Partners gave NFIB and its affiliates $2.5 million in 2012. NFIB received an additional $135,000 that year from another Koch funding outfit, the Center to Protect Patient Rights.

A Koch representative also sits on the ALEC corporate board.

A small business owner who joins the NFIB pays $195. Which means the Koch network’s donations to NFIB in 2012 was the equivalent of over 13,500 individual memberships. AHIP’s money amounted to more than 8,200 memberships.

Which raises the question, who does the NFIB speak for?

Small business owners run the gamut politically. Around a third say they are Republican, one-third Democrats, and one-third independent. Yet the NFIB’s political spending has not been representative of the small business owners it claims to represent. Its political donations go almost entirely to Republicans. And the NFIB’s funding sources place it squarely within the right-wing infrastructure.

The NFIB’s partisan and big business ties became evident in 2010, when it launched the lawsuit against the Affordable Care Act that eventually reached the U.S. Supreme Court. That year, Karl Rove’s dark money outfit Crossroads GPS gave the NFIB $3.7 million. The Milwaukee-based Bradley Foundation (which also donates to ALEC) chipped-in an additional $100,000.

Prior to the healthcare lawsuit, the biggest contribution to the NFIB from an outside source was $21,000.

 

By: Brendan Fisher, PR Watch, The Center for Media and Democracy, August 1, 2014

August 3, 2014 Posted by | ALEC, Big Business, Koch Brothers | , , , , , , , | Leave a comment

“Meet The American Oligarchy”: “Americans For Self-Prosperity”, Grasping Barbarians Exercising Crude Political Power

Let’s put it this way: If the Koch Brothers were Russians, we’d call them oligarchs: grasping barbarians exercising crude political power.

But this is America, where tycoons can buy respectability by throwing money at their wives’ favorite ballet companies and museums. Also by funding “think tanks” staffed by “resident scholars” keen to enhance the boss’s fondest delusion: that great wealth invariably conveys great wisdom.

Hence “Americans for Prosperity,” the group funded by billionaire brothers David H. and Charles G. Koch that’s spending untold millions in 2014 on TV commercials attacking the Affordable Care Act as a government boondoggle that “just doesn’t work.”

The deeper strategy, AFP president Tim Philips told the New York Times, is to present the law as “a broader cautionary tale” crafted “to change the way voters think about the role of government for years to come.”

Or as the sloganeering sheep in Orwell’s Animal Farm might have put it, “Big government bad, big business good!”

Elsewhere, however, big business hasn’t been looking entirely benign of late. Consider three episodes currently in the news: General Motors, the Toyota Motor Corporation, and Duke Energy, the nation’s largest electrical utility.

As so often happens with corporate malfeasance, the details can be hard to believe. Documents turned over to the National Highway Traffic Safety Administration by General Motors show that company engineers knew about problems with an ignition switch in Chevy Cobalts as long ago as 2001.

That it could be a fatal flaw wasn’t immediately recognized.

The problem appears to have been a defective part manufactured by a GM supplier. Sometimes triggered by a too-heavy keychain swinging from the ignition, it caused the engine to shut off while driving — resulting in immediate loss of power steering, power brakes, and the failure of the vehicle’s air bags to deploy.

By 2009, however engineers concluded that the faulty switch played a causal role in several fatal accidents — although some drivers had been drinking, texting or otherwise distracted — and that while Cobalts were going out of production, hundreds of thousands were still rolling.

Nevertheless, GM did nothing, while company lawyers fought off or stonewalled lawsuits alleging product liability.

Twenty-three fatal accidents and 26 deaths later, GM finally issued a recall notice for 1.6 million vehicles last month. The company’s recently-appointed CEO Mary Barra has been doing public penance and vowing to do everything possible to restore consumer confidence in the GM brand, which will definitely take some doing.

Published accounts of how separate divisions of GM’s giant bureaucracy communicate badly or not at all read like episodes of Catch-22. Customer complaints and warranty claims aren’t shared with safety engineers, who in turn have no communication with company lawyers. Meanwhile, nobody was talking to the National Highway Traffic Safety Administration, the federal agency that belatedly promises a criminal investigation.

Meanwhile, the auto industry press contrasts GM’s “unusually proactive and candid approach” to Toyota’s, which last week admitted criminal guilt and paid a $1.2 billion fine—the largest against an automaker in U.S. history.

Announcing a settlement, Attorney General Eric Holder said the company had “intentionally concealed information and misled the public” and shamefully showed “blatant disregard for systems and laws.”

At issue were faulty accelerator pedals which caused the cars to rocket out of control. Toyota has recalled as many as 10 million vehicles worldwide, and has been forced to pay tens of millions in fines and lawsuit settlements. Hundreds more civil lawsuits await litigation. What the settlement makes clear is that Toyota’s top management deliberately lied to government investigators both about the mechanical issue and their knowledge of it.

Which brings us to the Tea Party paradise of North Carolina and Duke Energy’s massive coal ash spill into the Dan River—spreading as many as 82,000 tons of toxic sludge along 70 miles of scenic river bottom. According to the Associated Press, “coal ash contains arsenic, lead, mercury and other heavy metals highly toxic to humans and wildlife.”

In addition to the “accidental” spill, caused by a collapsed corrugated pipe seemingly uninspected since 1986, environmental activists photographed Duke employees pumping an estimated was 61 million gallons of coal ash-contaminated water into the Cape Fear River further east.

The resulting uproar has persuaded GOP governor Pat McCrory, a 28-year Duke Energy employee (and recipient of some $1.1 million in Duke-sponsored campaign donations) to change his mind about burdensome federal regulation. His state’s toothless regulators will now “partner” with the U.S. Environmental Protection Agency to pursue joint enforcement against the utility.

Previously, McCrory had scorned the feds as an impediment to efficient business practices, and made a great show of turning down EPA grant money. Meanwhile, arguing strenuously against stricter regulation of coal ash has been an industry front group called ALEC (the American Legislative Exchange Council) largely financed by — you guessed it — those well-known philanthropists, David and Charles Koch.

Americans for Prosperity, indeed.

 

By: Gene Lyons, The National Memo, March 26, 2014

March 27, 2014 Posted by | Big Business, Corporations, Koch Brothers | , , , , , , , | Leave a comment

“The Real Tax Threat To American Businesses”: Big Corporations Don’t Pay Their Fair Share

American businesses face some serious challenges from taxes. But it’s not due to America’s tax rates, as many big business CEOs would have you believe. Our corporate tax problems stem from a corporate tax code with so many perks, credits and loopholes in it that many U.S. multinational corporations pay little to no taxes. This starves our national budget and imperils public education, innovative research and infrastructure, the sort of public investments that help make our businesses and economy competitive. And, maybe even worse, it’s unfair.

I’m an accountant. I know about taxes. I help my clients take advantage of the deductions and incentives to which they are entitled. But because of accounting tricks my clients cannot use, many giant U.S. corporations pay taxes at effective rates far lower than most small businesses and many middle class families. The average U.S. multinational corporation paid just 12.6 percent of its income in taxes in 2010, according to the Government Accountability Office.

Some of the most unfair corporate tax loopholes for America’s competitive position in the world are the offshore tax loopholes. These loopholes alone cost the U.S. Treasury an estimated $90 billion a year. They also create an unfair playing field between domestic businesses like I serve in my practice, and the large multinational firms, whose high priced tax attorneys and lobbyists have devised ways to shift profits earned in the United States to the world’s tax haven countries where those profits are taxed lightly, if at all.

For instance, some software companies take patents on products developed in the U.S. and register them in a foreign tax haven. When a U.S. customer purchases the product, the company sends a large chunk of the purchase price to the tax haven to pay for the use of the patent. Thus the company reduces its effective corporate tax rate – sometimes even below 10 percent.

My clients don’t have this option. Nor would they want it. They are restaurants and dry cleaners, medical practices, small manufacturers and auto repair shops. They work hard and they expect to pay their fair share of taxes. They are the engines of our local economy, just as similar small companies are the engines of local economies across the country. They provide needed goods and services. They provide needed jobs. And they pay needed taxes.

Their taxes help pay for public investment in schools, roads, courts, public transit, public safety, public health – all of the basic infrastructure that enables all businesses to function and thrive. Since they benefit – as we all do – from those tax investments, it’s only fair that they should pay their share.

But their counterparts at large US multinationals don’t have to. And it’s the tax code that lets them. It’s as if the tax code pretends that they are operating in a third world country with no infrastructure to support. That’s ridiculous, of course. I’m good at accounting and bookkeeping, but I sure wouldn’t want a client trying to operate their entire business in a rural part of a third world country.

Our tax code should be fair and should encourage investment in our shared future. When we invest together we start a virtuous cycle of growth. But when people, whether individuals or business owners, think the tax system is rigged in favor of one group or another – say U.S. multinational companies using overseas tax havens – they rightly feel that they are paying more than their fair share. They lose faith in the system.

And when tax revenues are lower than they would be without such loopholes, policymakers look for ways to cut spending. This starts a vicious cycle of ever-shrinking economic activity and ever reducing tax revenue.

Fixing the tax code is the answer, and a good place to start is with the unfair overseas loopholes that undermine our faith in the tax system and rob our communities and the nation of vital investments in the future.

It makes no sense for our tax code to be hurting domestic job creators and undermining the tax base for our schools, roads, police and other vital services and infrastructure.

The tax reform America needs is one that closes many of the unfair loopholes won by big business lobbyists over the last three decades. We need the extra revenue collected to invest in the 21st century economy that will sustain our families, our communities and our businesses.

 

By: Brian Setzler, U. S. News and World Report, January 17, 201

January 22, 2014 Posted by | Big Business, Tax Loopholes | , , , , , , , | 2 Comments

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