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“A Sad Window Into Our Political Dysfunction”: 3 Peerless Republicans For President; Trump, Carson And Fiorina

The leading contenders for the Republican nomination for president tell us three interesting things about America.

First, many G.O.P. voters are so disenchanted they’re willing to entrust the country to candidates — Donald Trump, Ben Carson and Carly Fiorina — with zero experience in elective office or military command. Only two men without previous time in major elective office or the military have been president, Herbert Hoover and William Howard Taft, and both had held cabinet posts. No president has ever been as inexperienced as any of these three leading Republican candidates.

Second, the public feels an odd awe for C.E.O.s and presumes they know how to run things, even if their records suggest otherwise. This cultural reverence for C.E.O.s perhaps also explains why pay packages have increased — and why Fiorina was allowed to take home a $21 million severance package after she was fired as Hewlett-Packard’s chief executive for incompetence.

Third, the only kind of welfare that carries no stigma in America is corporate welfare. For all Trump’s criticisms of government, his family wealth came from feeding at the government trough. His father, Fred Trump, leveraged government housing programs into a construction business; the empire was founded on public money.

My bet is that Trump, Fiorina and Carson will fade, and that voters will eventually turn to a more conventional candidate, perhaps Senator Marco Rubio. From the Democrats’ point of view, the scariest Republican ticket might pair Rubio with John Kasich. Rubio has natural political skills, projects youth and change, and would signal that the Republican Party is ready to expand its demographic base. Rubio and Kasich would also have a decent chance of winning their home states, Florida and Ohio — and any ticket that could win Florida and Ohio would be a strong contender.

But instead, Republican primary voters for now are pursuing a bizarre flirtation with three candidates who are the least qualified since, well, maybe since Trump put his toe in the waters before the 2000 election.

In that sense, they offer a window into the American psyche — part of which is our adulation of the C.E.O.

There’s something to be said for C.E.O.s’ entering politics: In theory, they have management expertise and financial savvy. Then again, it didn’t work so well with Dick Cheney.

More broadly, the United States has overdone the cult of the C.E.O., partly explaining why at the largest companies the ratio of C.E.O. compensation to typical worker pay rose from 20 to one in 1965 to 303 to one in 2014, according to the Economic Policy Institute.

In any case, even if you were conducting a job search for a great C.E.O. to lead the free world, you wouldn’t turn to either Trump or Fiorina.

My sense is that Trump isn’t the idiot that critics often claim (the most common words voters used to describe him in a recent poll were “idiot,” “jerk,” “stupid” and “dumb”). This is a man who is near the top of diverse fields: real estate, book writing, television and now presidential politics. He’s a born showman, a master of branding and marketing. But he doesn’t seem a master of investing.

Back in 1976, Trump said he was worth “more than $200 million.” If he had simply put $200 million in an index fund and reinvested dividends, he would be worth $12 billion today, notes Max Ehrenfreund of The Washington Post. In fact, he’s worth $4.5 billion, according to Forbes.

In other words, Trump’s business acumen seems less than half as impressive as that of an ordinary Joe who parks his savings in an index fund.

An index fund might also have been less ethically problematic. In the 1970s, the Justice Department accused Trump of refusing to rent to blacks. And in 2013, New York State’s attorney general sued him, alleging “persistent fraudulent, illegal and deceptive conduct”; Trump denied the charges.

If Trump’s performance as a business executive was problematic, Fiorina’s was exceptional. Exceptionally bad.

Put aside the fact that she’s the C.E.O. who fired thousands of workers while raking in more than $100 million in compensation and pushing H.P. to acquire five corporate jets. Just looking at the bottom line, she earned her place on those “worst C.E.O.” lists she appeared on.

As Steven Rattner wrote in The Times, Hewlett-Packard’s share price fell 52 percent in the nearly six years she was at the helm. H.P. did worse than its peers: IBM fell 27.5 percent, and Dell, 3 percent.

Oh, and on the day she was fired, the stock market celebrated: H.P. shares soared 7 percent.

If I wanted a circus ringmaster, I’d hire Trump. If I wanted advice on brain surgery or hospital management, I’d turn to Carson. Fiorina would make an articulate television pundit. But for president?

The fact that these tyros are the three leading presidential contenders for a major political party is a sad window into our political dysfunction.

 

By: Nicholas Kristof, Op-Ed Columnist, The New York Times, October 8, 2015

October 12, 2015 Posted by | Ben Carson, Carly Fiorina, Donald Trump, GOP Presidential Candidates | , , , , , , , , , | 2 Comments

“Getting The Sports Moguls Off Our Backs”: The Subsidy-Bloated Profits Generally End Up In The Pockets Of The Owners

It was not out of a sense of decency that the National Football League recently let go of its tax-exempt status. You see, as a tax-exempt organization, the NFL had to disclose Commissioner Roger Goodell’s compensation — $44.2 million in 2012. That seemed an excessive sum for the head of a “nonprofit” freed from having to pay any federal income tax. Now the NFL can keep it secret.

Tax exemption is a subsidy. The taxes the NFL money machine didn’t have to pay, everyone else had to pay. Thanks go to former Sen. Tom Coburn (R-OK), Rep. Jason Chaffetz (R-UT), and Rep. Elijah Cummings (D-MD), for railing against such unsightly deals.

But that’s not the only good news for citizens tired of being milked by billionaire sports moguls. Consider Verizon’s decision to let customers buy TV packages that do not include ESPN or other sports channels.

An explanation: Animal Planet and Food Network are not why TV bills are so ludicrously high. What drive them up are the enormous fees the sports channels extract for their programming.

ESPN alone tacks an estimated $7 on monthly bills. By comparison, USA Network adds less than $1.

An interesting calculation: If every month you put $7 into an investment with an annual return of 4 percent, you’d have $1,027 after 10 years. These things add up.

It was not charity that prompted Verizon to let its customers buy a smaller base package of channels, plus extra bundles containing the channels they actually watch, at lower cost. Every month, thousands of Americans — incensed by their monthly TV bills and now able to get most of what they watch from the Internet — have been “cutting the cord,” that is, dropping their cable, satellite, or fiber-optic TV service altogether.

Anyhow, ESPN has dragged Verizon Communications into court. The sports network, the Disney empire’s most lucrative business, claims that Verizon broke a contract requiring that ESPN channels be part of its basic offerings. Verizon says that any of its customers can obtain ESPN through a bonus bundle at no additional cost and that therefore it is included.

Never did I think I’d say this, but I am rooting for my pay-TV provider.

On to another reason to cheer. President Obama’s proposed budget would ban the financing of professional sports stadiums with tax-exempt bonds. Such bonds lower borrowing costs for the zillionaire team owners. Currently, 22 NFL teams play in stadiums financed by tax-exempt bonds, as do 64 professional baseball, basketball and hockey teams.

Why would tax-exempt bonds — created to help cities, towns, and states pay for needed infrastructure — go to benefit mega-businesses? Because the team owners have succeeded in conning locals to see sports arenas as economic magnets pumping money into their weary tax bases.

Lots of studies contradict this self-serving propaganda. First off, the economic activity generated by the teams often pales next to the concessions wrenched from the taxpayers. Secondly, many of the dollars spent at the games are dollars that would have otherwise been left at local businesses, such as restaurants.

Furthermore, the subsidy-bloated profits generally end up in the pockets of the owners and their magnificently paid players — who promptly take them out of town. With all due respect to Cleveland, one doubts that LeBron James spends many of his millions there.

Ending tax-exempt bonds for sports arenas might reduce our elected officials’ temptation to sacrifice their taxpayers in return for good tickets to the game. That would be the best outcome.

They who love professional sports should pay for them.

 

By: Froma Harrop, The National Memo, May 7, 2015

May 16, 2015 Posted by | Corporate Welfare, National Football League, Nonprofit Organizations | , , , , , | 1 Comment

“Keeping Their Eyes On The Prize”: Democrats’ No. 1 Job; Remind Voters That American Wages Have Flatlined

For the moment, the Democrats have resumed their time-honored posture of arguing about trade policy. It’s an important issue, and one on which I’m not sure where I come down. But as they prepare to rip each other’s flesh, they might bear in mind it isn’t the issue. The issue, as I wrote two weeks ago in urging Hillary Clinton to go big, is wage stagnation. I offer this up as a timely public-service reminder: Remember, folks, what you agree on.

As I noted in the go big column, wages have been in essence flat for earners—up 6 percent (adjusted for inflation)—in the middle of the income scale since 1979. For the top 1 percent, compensation has risen about 140 percent since the fateful year. This needs to be the issue of this campaign. If American voters don’t know these 6 percent and 140 percent figures November 8 next year, Hillary Clinton and the Democrats will have done something very wrong.

Economists choose 1979 as the cutoff year because, looking back over the numbers, that’s when the flattening started. It’s also about when compensation at the top started soaring (a little later, actually). Until the early to mid-1980s, Wall Streeters and corporate lawyers and actors and university presidents and star athletes made more than the rest of us, but they didn’t make gobs more.

For example, the average baseball salary doubled, up to around $370,000, from 1981 to 1985. The average wage in that same time frame went from $13,773 in 1981 to $16,822 in 1985, an 18 percent increase. Not bad, better than average; but not double by a long shot. I’m not saying the juxtaposition of these numbers proves anything more than it proves. But it is certainly representative of what was happening to American wages then and has been happening since.

Another way of looking at it: The average ballplayer went from making about 12 times the average American to 22 times. Today, incidentally, it’s 108 times, $4.25 million to around $39,000.

So what we’re gonna do right here is go back, way back, as an old song had it, to the year of Apocalypse Now and Get the Knack and those hideous Pittsburgh Pirates uniforms  that so offended my aesthetic sensibilities that I had no choice but to cheer against the team I’d grown up worshipping. Let’s ask: What if the wage structure in the United States today were the same as it was in 1979?

Larry Summers asked the question in the Financial Times back in January. The bottom 80 percent of earners, he wrote, would have $11,000 more per family, and the top 1 percent would have $750,000 less. In the wake of Summers’s column, the folks at NPR’s Planet Money took it one step further and calculated the increased (or decreased) income for households at several points along the wage structure. It’ll pop your little eyes.

The poorest wage-earners, at $12,000, would be making $3,282 more. That’s a 27 percent increase. Those at $30,000 would be making $6,928 more (23 percent). Those at $52,000 would be getting $8,752 more (16.8 percent). For those at $84,000, the increase drops off, to $5,834 more (7 percent). But it kicks back up for those at $122,000, to $17,311 (14.2 percent). And finally, those in the top 1 percent, at $1.41 million, would see a decrease in earnings of $824,844, or a whopping 58 percent.

Now before we go any further—no, no one today is talking about anything as confiscatory as wiping out 58 percent of the top 1 percent’s earnings. That isn’t how it’s going to work anymore, with top marginal tax rates of 76 percent (which does not mean that the government took three-quarters of someone’s money; go look up the concept of “marginal” if you don’t get this).

But the wage structure is a function of a whole host of other policies and practices that have nothing to do with marginal tax rates. It has to do, yes, with the minimum wage. It was $2.90 in 1979. Adjusted for inflation, that would be $9.38 today instead of the actual $7.25, which is a 23 percent decline for those workers, and minimum wage is generally thought to have knock-on effects at least a third of the way up the wage chain. It has a lot to do with corporate culture: In 1979, CEOs at the top few hundred corporations made about 28 times the average worker’s salary; now they make more than 200 times. There were 15.1 million private-sector union workers  in the United States in 1979; last year, there were 7.35 million. And in 1979, Washington oversaw a lot more in public investment than it does today, and those dollars by and large went into real things, from bridges to scientific research, instead of swaps and derivatives.

Now, 1979 was a bad year in some important ways—inflation, hostage crisis—so I’m not saying I think it would be the world’s greatest idea for the Democrats to campaign on bringing back 1979. It’s not about the year per se. That just happens to be the year the thing started happening. And the thing is flat wages for most people who work for a living.

The trade fight has to be played out, and it seems that the unions and the Warren wing are probably going to lose, because the president will get enough votes from Republicans and moderate Democrats. And of course it’ll be interesting to see how Clinton plays it. Whichever position she takes, we can be sure she’ll do it cautiously.

So dust will be kicked up over that. It has to be. The differences are real. But comparatively, the differences are small. Democrats must keep their eyes on the prize. “Who cares more about increasing the wages of working Americans?” is a debate question the Republicans can never win. The Democrats have to make sure the election is about that question.

 

By: Michael Tomasky, The Daily Beast, April 24, 2015

April 29, 2015 Posted by | Democrats, Minimum Wage, Wage Stagnation | , , , , , , , | Leave a comment

“American Society’s Real Moochers; CEOs”: It’s Not The Working Poor Who Deserve Public Scorn For Dependence On Government Handouts

Holiday bells are silent in the homes of America’s struggling working poor, even with gasoline prices at their lowest levels in years. These are people derided as moochers because their starvation wages force them to accept food stamps to feed their children.

On the other side of town, inside gated communities where guards demand photo ID even from Santa, CEOs’ Christmas plums are super-sugared with record-breaking corporate profits.

These are people somehow not derided as moochers, even though their million-dollar pay packages are propped up by tax breaks.

The parable of Charles Dickens’ A Christmas Carol springs to mind as Wall Street banks and law firms hand out six- and seven-figure year-end bonuses while Wal-Mart and fast food workers protest wages so low that their holiday meals are food pantry dregs. It is CEOs, not the working poor, who deserve public scorn for their dependence on government handouts.

The Institute for Policy Studies issued a report last month that details the mooching of the nation’s top corporations and CEOs. It’s called “Fleecing Uncle Sam.” The findings are pretty galling.

Of America’s 100 top-paid CEOs, 29 worked schemes that enabled them to collect more in compensation than their corporations paid in income taxes. The average pay for these 29: $32 million. For one year. And corporations mangle tax the code to deduct that too.

Though their corporations reported combined pre-tax profits of $24 billion, they wrangled $238 million in tax refunds out of the federal government. That’s refunds — the government gave money to highly profitable corporations.

That’s an effective tax rate of negative 1 percent.

That means middle class taxpayers helped cover the cost of million-dollar pay packages for CEOs. Middle class taxpayers, whose median family income is $51,324 and whose federal income taxes are withdrawn directly from their checks before they see a cent of pay, support CEOs who pull down $32 million a year.

That qualifies CEOs as first-class fleecers!

Their corporations pay nothing for essential government services that middle class taxpayers provide. That includes patent protection, the Commerce Department’s sanctions against foreign trade rule violations and federal court dispute resolution.

Some corporations haven’t developed schemes enabling them to tax the federal government. Instead, they pay, but not at that 35 percent rate they’re always whining about. Between 2008 and 2012, the average large corporation, according to Fleecing Uncle Sam, paid just 19.4 percent. Individuals earning $50,000 a year pay 25 percent. Clearly, corporations are not paying a fair share at 19 percent.

There’s this wacky theory that if governments excuse corporations from paying their share, then they’ll expand and create jobs. It’s wacky because it’s fiction. Highly profitable corporations aren’t expanding and creating jobs; they’re buying back their own stock.

A study by University of Massachusetts professor William Lazonick, president of the Academic-Industry Research Network, showed that between 2003 and 2012, S&P 500 corporations used 54 percent of their earnings – $2.4 trillion – to buy their own stock.

This isn’t creating jobs. This isn’t investing in a corporation’s future. This is adding to CEO wealth. It works like this: Stock buybacks push up stock prices. Forty-two percent of compensation for S&P 500 CEOs comes from stock options. Thus, as Lazonick points out, stock increases equal CEO pay raises.

Corporations don’t expand just because untaxed profits are sitting around anyway. They expand to meet demand. And corporate practices have deflated demand.

Part of the problem is that CEOs and top executives are taking an increasing portion while doling out less to workers. As the New York Times reported in January, wages have fallen to a record low as a share of gross domestic product, dropping to 43.5 percent last year. It was 50 percent in 1975. The decline means less demand.

But there’s more. Just last week, The New York Times noted two other trends that contribute to weak demand. One is wage theft. The U.S. Department of Labor found that more than 300,000 workers in New York and California are victims of minimum wage violations each month, costing them between $20 million and $29 million each week. If corporations didn’t cheat them out of those earnings, their spending would generate greater demand.

The other trend is insecure income. Millions of Americans are unsure week to week how much money will be coming into their households. This occurs for many reasons, but among the most prominent is the refusal of employers to provide workers with steady weekly hours and practices like sending workers home when retail or restaurant traffic is light. A survey by the Federal Reserve suggests the problem of unreliable income may have worsened as Wall Street has strengthened. Families that can’t pay their bills reduce demand.

Instead of giving workers raises and steady hours, corporations have rewarded only those at the top. The Fleecing Uncle Sam study found that companies that paid their CEOs more than they paid in federal income taxes gave those CEOs fat raises. The average pay of these CEOs rose from $16.7 million in 2010 to $32 million in 2013.

They’ve got trillions for CEOs and stock buy-backs, but nothing for workers or the federal government. This isn’t an accident. It’s not some invisible hand of the market. It’s CEOs freeloading.

No ghosts are going to show up to convert these Scrooges into humans. Instead, the first step in that process is recognizing that the moochers are the CEOs, not the hapless food stamp recipients who desperately want steady, full-time, decently-paid work. The second step is to demand that corporations pay their fair share of taxes and provide steady, full-time, decently-paid work.

 

By: Leo Gerard, President of the United Steelworkers International Union; In These Times, January 1, 2015

January 3, 2015 Posted by | Corporate Welfare, Wall Street, Workers | , , , , , , , , | Leave a 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

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