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“Corporations Are Artificial, Too”: Modern Corporate Capitalism Is Anything But Natural

One of the reasons it’s difficult for liberals to easily and effectively win arguments about economics with conservatives is that conservatives have a very simple mantra: let the natural forces of the market do their work. Government is seen as an interloper and distorter of Darwinian forces that would otherwise ultimately let all goods and services achieve their perfect prices with maximum efficiency.

There are a number of gigantic problems with that worldview, of course. The free market refuses to pay for a wide variety of crucial infrastructure items and investments in public health and safety; consumers are at an information and power disadvantage against unscrupulous companies; and human life and dignity are unacceptably cheap on the open market.

But there’s another key lie in the conservative “natural economy” story, which is that modern corporate capitalism is anything but natural. It’s an artificial system encoded arbitrarily into law and interpreted in a specific way that tends to give maximum advantage to executive and shareholders at the expense of society. Kent Greenfield examined right here at Washington Monthly one way in which that is true: the Dodge v. Ford case that explicitly denied corporations the right to engage in more socialistic practices and demanded that they only serve the bottom line for their shareholders. The corporate veil itself another artificial legal construct, as is the notion of corporate personhood.

Our society is built on rules and regulations, all of them socially and legally built out of artifice. That is just as equally true of business as it is of government.

 

By: David Atkins, Political Animal Blog, The Washington Monthly, January 24, 2015

January 25, 2015 Posted by | Capitalism, Corporations, Free Markets | , , , , , | 1 Comment

“Chief Tax-Dodging Officers”: It’s Gotten Pretty Easy For Large Corporations To Avoid The Taxman

Republican and Democratic leaders don’t often see eye to eye on taxes.

But surprisingly, corporate tax reform looks like one area where there might actually be some potential for bipartisan action in Washington. This should be good news, since our corporate tax system is clearly hopelessly broken.

Here’s a stark indicator of just how broken: Last year, 29 of the 100 highest-paid CEOs made more in personal compensation than their companies paid in federal income taxes. That’s according to a new report by the Institute for Policy Studies and the Center for Effective Government.

Source: Fleecing Uncle Sam,  an Institute for Policy Studies and Center for Effective Government report

Source: Fleecing Uncle Sam, an Institute for Policy Studies and Center for Effective Government report

Yes, it’s gotten that easy for large corporations to avoid the taxman.

This is true even for the country’s wealthiest companies. Citigroup, Halliburton, Boeing, Ford, Chesapeake Energy, Chevron, Verizon, and General Motors all made more than $1 billion in U.S. profits last year, but still paid their CEOs more than they paid Uncle Sam. In fact, most of them got massive tax refunds.

How is this possible?

While big businesses moan about the U.S. corporate tax rate of 35 percent, most of them pay nowhere near that. Between 2008 and 2012, the average large corporation paid an effective rate of less than 20 percent.

Hiding profits in tax havens is one of the most common ways large corporations avoid paying their fair share to the IRS. And indeed, the 31 firms who paid their CEOs more than Uncle Sam operate 237 subsidiaries in low- or no-tax zones like the Cayman Islands and Bermuda.

But that’s just one tax-dodging trick. Corporations have lobbied successfully for a plethora of other tax loopholes and subsidies.

Boeing, for example, has figured out how to double dip in the Treasury’s pool.

The aerospace giant hauled in more than $20 billion in federal contracts in 2013. According to Citizens for Tax Justice, taxpayers also picked up the tab for $300 million of Boeing’s research expenses last year through a tax break that Congress is now considering making permanent.

When tax time came, Boeing got $82 million back from the IRS, despite reporting nearly $6 billion in U.S. pre-tax profits. Meanwhile, Boeing chief executive Jim McNerney made $23.3 million.

Corporate tax dodging is bad for ordinary Americans — and our nation’s long-term economic health.

For example, if Boeing had paid the statutory corporate tax rate of 35 percent on its $6 billion in profits, it would’ve added an extra $2 billion to the funds available for public services. That sum would’ve covered the cost of hiring 2,775 teachers for a year.

Shirking taxes may boost the bottom line in the short term, but in the long run it erodes the economic infrastructure businesses need to be competitive.

Unfortunately, the current political rhetoric has little to do with cracking down on corporate tax avoidance.

Republicans are hooked on corporate tax giveaways. And President Barack Obama has suggested that he’s ready to reward corporations for stashing money overseas by giving them deeply discounted tax rates on their profits if they’ll just agree to bring them home.

Both of these positions are based on the unfounded claim that smaller corporate tax burdens translate into more good jobs.

In a Hart Research poll of voters on election night, only 22 percent favored taxing corporations less. In the same poll, less than 30 percent wanted Congress to make tax cuts a higher priority than investments in education, health care, and job creation.

The American people have their priorities straight. They deserve leaders who do too.

 

By: Sarah Anderson and Scott Klinger are the co-authors of “Fleecing Uncle Sam”; The National Memo, November 19, 2014

November 24, 2014 Posted by | CEO'S, Corporations, Tax Loopholes | , , , , , , , | Leave a comment

“The Koch-Tested, Koch-Approved Version”: Paul Ryan’s Faux Populism Isn’t Going To End Poverty Or Reduce Inequality

Paul Ryan’s fellow Republicans are quick to dismiss Elizabeth Warren as too radical, too progressive, too populist.

But Ryan is trying—a bit clumsily, but trying all the same—to borrow a page from the Massachusetts senator as he seeks to remake himself in anticipation of a potential 2016 run for the Republican presidential nomination. He’s talking about poverty, about inequality, about shifting the focus away from meeting the demands of corporations and toward meeting the needs of Americans.

Mitt Romney’s running mate is abandoning Romneyism for populism—or what former Secretary of Labor Robert Reich has referred to as “Paul Ryan’s Faux Populism.”

Instead of repeating the Mittnomers of 2012—“Corporations are people, my friend”—Ryan is suddenly informing fellow conservatives, “There’s another fallacy popular among our ranks. Just as some think anything government does is wrong, others think anything business does is right. But in fact they’re two sides of the same coin. Both big government and big business like to stack the deck in their favor. And though they are sometimes adversaries, they are far too often allies.”

It is hard to argue with Ryan’s reasoning. Populists and progressives have warned for more than a century that corporations are “boldly marching, not for economic conquests only, but for political power.” The author of those words, former Wisconsin Supreme Court Justice Edward Ryan , asked in 1873: “Which shall rule—wealth or man; which shall lead—money or intellect; who shall fill public stations—educated and patriotic free men, or the feudal serfs of corporate capital?” Elizabeth Warren confirmed Ryan’s worst fears when she addressed Netroots Nation last week and declared, “The game is rigged and the rich and the powerful have lobbyists and lawyers and plenty of friends in Congress. Everybody else, not so much.”

And now, Paul Ryan is on-message, announcing as only a career politician can, that “our country has had enough of politics.” He’s proposing to “reconceive the federal government’s role in the fight against poverty.” And he is even ripping corporations, decrying the way in which big government has become “a willing accomplice” of big business.

Ryan explained last week at Hillsdale College’s Center for Constitutional Studies and Citizenship session that “crony capitalism isn’t a side effect; it’s a direct result of big government.”

Grab the pitchforks!

But don’t look for Paul Ryan on the front lines of actual fights to reduce inequality or address injustice.

The House Budget Committee chairman, who on Thursday released an “anti-poverty proposal” that rehashed decades-old schemes to scale back anti-poverty initiatives and regulatory protections for low-income Americans, offers scant evidence of a serious determination to solve the problems that have got Americans up in arms. If Ryan was serious, he wouldn’t be proposing, as his “Opportunity Grant” plan does, to “consolidate” existing federal programs to aid the poor into block grants to the states—an approach that would allow Republican governors who have already shown a penchant for undermining healthcare, food-stamp and education initiatives the “flexibility” to do even more harm.

Congressman Chris Van Hollen, a Maryland Democrat who serves with Ryan on the Budget Committee, nails it when he warns about a proposal that “uses the sunny language of ‘reform’ as a guise to cut vital safety-net programs.”

So if the congressman is not worried about developing a serious response to the problem of inequality, what is on his mind?

Ryan is worried about solving his own problem: an association in the public’s mind with the failed messages of the 2012 Romney-Ryan campaign.

Last week’s populist speech at the Center for Constitutional Studies and Citizenship and this week’s poverty speech at the American Enterprise Institute begin the roll-out of Paul Ryan Version 2.0. Next comes the August publication of Ryan’s 2016 campaign book, The Way Forward: Renewing the American Idea, complete with its epic cover shot of Americans reaching out to touch a triumphal Ryan. Then there’s the bus tour.

Yes, the bus tour.

So Ryan is campaigning. To the extent that it is possible he will do so in populist style and with populist rhetoric about crony capitalism and fighting poverty.

But don’t be confused.

This is still the same Paul Ryan who went to the floor of the House in 2008 and rallied Republicans to support the Wall Street bailout. This is still the same Paul Ryan who opposed regulation of the big banks. This is still the same Paul Ryan who supported and continues to support) the free trade deals demanded by multinational corporations. This is still the same Paul Ryan who has peddled Social Security, Medicaid and Medicare “reforms” that would turn sound programs into vehicles for steering federal funds into the accounts of Wall Street speculators and health-insurance corporations.

This is still the same Paul Ryan who during the current election cycle has padded his campaign committee and “leadership PAC” accounts with almost $9 million in donations—with Wall Street securities and investment interests and the health-insurance industry giving most generously. And this is the same Paul Ryan who, when Congress took its August break in 2013 jetted home to Wisconsin via Arizona—where he was a featured speaker at the annual retreat for billionaire donors organized by the Koch brothers.

The other featured speaker was then–House majority leader Eric Cantor, for whom the ensuing months did not go well. Cantor’s Republican primary defeat—at the hands of a critic of “crony capitalism”—provided an indication that the American people are increasingly agitated. And increasingly disinclined toward the sort of insider politics practiced by career politicians such as Ryan.

Ryan got the signal.

He is rebranding himself.

He has downloaded some populist rhetoric to go with his “kinder, gentler” talk about poverty.

But Paul Ryan’s populism is not the real thing. It’s the Koch-tested, Koch-approved version.

 

By: John Nichols, The Nation, July 24, 2014

July 25, 2014 Posted by | Inequality, Paul Ryan, Poverty | , , , , , , | Leave a comment

“An Incongruous Spectacle”: Dave Brat’s Win Over Eric Cantor Exposed The Unholy Tea Party-Wall Street Alliance

The Tea Party wave that built around the country in 2009 and 2010 was fueled by many thingsresentment over foolhardy homeowners getting mortgage relief, backlash against the Affordable Care Act, and anxiety over federal spending. But if its rhetoric was to be believed, the movement was also driven by a healthy dose of old-fashioned anti-Wall Street populismanger over the TARP bailouts, the AIG bonuses, the Obama administration’s failure to prosecute any of the bankers who’d brought us close to ruin.

Something funny happened, though, as the pitchforks made their way to confront the money changers at the temple: Wall Street and big business co-opted them. It turned out that some elements of the Tea Party movement were much more opposed to Obama than they were to self-dealing CEOs and bankers, and perfectly willing to join with the latter to fight the former. This quickly produced the confounding spectacle of a purportedly populist uprising that was working hand in hand, and in many cases funded by, the business elite. And the nexus for this alliance was the Republican leadership in Congress. When Republicans were trying to block the Dodd-Frank financial reform bill, they took Frank Luntz’s devious advice to label the bill a “bailout” for the banksdeploying Tea Party rhetoric to attack a bill that was in fact bitterly opposed by the bailed-out banks. In recognition of this effort, Wall Street in 2010 swung its campaign spending sharply toward GOP candidates, including many running under the Tea Party banner.

And when the Tea Party wave reached Washington, after the Republican rout in the midterm elections, who put himself forward as the new arrivals’ standard bearer within the House leadership? None other than Eric Cantorthe top recipient of financial industry money in Congress, the longtime protector of one of the most notorious Wall Street favors of all, the tax loophole for the carried-interest income of private-equity and hedge-fund managers. It was an incongruous spectacle, but so muddled had the right’s populism become by that point that the opportunistic Cantor was able to brazen his way through it. It was he who goaded the insurgent congressmen to make the raising of the debt-ceiling limit in June of 2011 their big stand against Obama: “I’m asking you to look at a potential increase in the debt limit as a leverage moment when the White House and President Obama will have to deal with us,” Cantor told the rank-and-file in a closed-door meeting in Baltimore in January 2011. It was he who undermined Speaker John Boehner’s effort to reach a grand bargain with Obama to pull the nation back from the brink, by riling up rank-and-file conservatives against the deal. It was a brilliant display: in one fell swoop, Cantor was able to protect the financiers’ carried-interest loophole (which Obama sought to close as part of the deal) at the same very time as he was serving as the champion of the Tea Party insurgents.

Now, Cantor’s game is up. Many, such as my colleague John Judis and the New Yorker’s Ryan Lizza, have already noted the right-wing populism in the rhetoric of Dave Brat, the economics professor who upset Cantor in Tuesday’s primary. But what is particularly significant about Brat’s victory is that he deployed this populism against the very man who had perfected the art of faking it. “All the investment banks in New York and D.C.those guys should have gone to jail,” Brat said at one Tea Party rally last month. “Instead of going to jail, they went on Eric’s Rolodex, and they are sending him big checks.” Liberals have for some time now been decrying Cantor’s hypocrisy in posing as the tribune of the common man, but here was a fellow Republican calling it out (without, it should be noted, the assistance of any of the self-appointed Tea Party organizations that have been so willing to make common cause with their anti-Obama allies on Wall Street). Yes, some conservatives have for the past few years been making noise about “crony capitalism,” but somehow their examples of this scourge most often tended to be Democratic-inflected rackets, such as the failed solar energy company Solyndra, rather than Republican-tinted ones such as, say, the private lenders who were making a killing acting as taxpayer-subsidized middle-men in the student loan market.

This is why we should be grateful for Dave Brat, beyond the schadenfreude of seeing a widely disliked congressional leader brought low. Yes, Brat’s win will add new kindling to the Tea Party cause just as some were declaring it burned out, thus further reducing the odds of legislative progress in areas such as immigration reform. But his win has, at least momentarily, also brought some clarity and integrity to the insurgency. Here was anti-Wall Street populism in its pure form: aimed, for once, at the right target.

 

By: Alec MacGinnis, The New Republic, June 12, 2014

June 16, 2014 Posted by | Eric Cantor, Tea Party, Wall Street | , , , , , , , | Leave a comment

“Stripping Away The Rhetoric”: Rebuilding The American Dream, One Insurance Policy At A Time

The Republicans give lots of reasons for their opposition to the Affordable Care Act. Only two really matter.

One is politics. The other is money. More precisely, big-business money.

Like Social Security and Medicare, the expansion of health insurance coverage is making voters more predisposed to support the politicians that championed the law — and they’re all Democrats.

Meanwhile, the more Americans benefit from this new law, the more Republicans are being forced to modify and mellow their rejection of it.

Within a few years, it may become as politically suicidal to openly attack the Affordable Care Act as it would be to call for abolishing Medicare.

Of course, Republicans can’t say they oppose the reform law often called “Obamacare” because it boosts the Democratic Party’s prospects. So they say it violates states’ rights. They say it infringes on individual liberty. They say it hurts small businesses. They say it will cost Americans their jobs.

None of these charges is withstanding scrutiny.

The law was written with states in mind. That’s why states can build their own insurance exchanges. It doesn’t erode individual liberty. The Supreme Court said so. And while it will be some time before we know about the law’s full economic impact, the evidence so far suggests that it puts more money into the pockets of people who will spend it, according to a report by the Congressional Budget Office.

Wasn’t that the same report that said Obama’s expansion of health insurance coverage is killing jobs? Indeed, many news outlets reported exactly that. But that’s a misreading of the report.

The CBO found that some workers — mothers with small children, students, and those close to retirement — have voluntarily left the workplace, because they didn’t need a job to maintain access to quality health care anymore.

Once the Affordable Care Act began to take effect, these workers exercised their newfound economic freedom by choosing to quit. They’re now caring for their kids and grandchildren, focusing on their own education, simply opting to enjoy their golden years, or starting their own businesses.

That’s something to celebrate. The critique that the Affordable Care Act somehow reduces the incentive to work doesn’t stand up to scrutiny.

The voluntary exit of more than 2 million workers from the American labor force will benefit many people. These workers are free to follow their dreams. If they are providing care, they will ease our caregiving deficit. And other Americans seeking work may finally find a job.

At the same time, money saved on health care can be spent on things that small businesses sell. Yes, I know. Republicans claim higher wages are bad for small businesses, and because small businesses are the engine of the economy, Obama’s expansion of health insurance is a job-killer. That’s just wrong.

Wages aren’t the top concern of small businesses. Taxes and poor sales are. So with more money in more pockets, sales receipts should climb.

When you strip away the rhetoric and take a good hard look at what the Affordable Care Act actually does, it sure looks like the new law raises wages and increases workers’ bargaining power.

 

By: Jonathan Stoehr, Managing Editor, The Washington Spectator; The National Memo, March 17, 2014

March 18, 2014 Posted by | Affordable Care Act, Obamacare, Republicans | , , , , , , , | 2 Comments

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