“No, Really, You Didn’t Build That”: How The Rich Became Dependent On Government Subsidies
Remember when President Obama was lambasted for saying “you didn’t build that”? Turns out he was right, at least when it comes to lots of stuff built by the world’s wealthiest corporations. That’s the takeaway from this week’s new study of 25,000 major taxpayer subsidy deals over the last two decades.
Titled “Subsidizing the Corporate One Percent,” the report from the taxpayer watchdog group Good Jobs First shows that the world’s largest companies aren’t models of self-sufficiency and unbridled capitalism. To the contrary, they’re propped up by billions of dollars in welfare payments from state and local governments.
Such subsidies might be a bit more defensible if they were being doled out in a way that promoted upstart entrepreneurialism. But as the study also shows, a full “three-quarters of all the economic development dollars awarded and disclosed by state and local governments have gone to just 965 large corporations” — not to the small businesses and start-ups that politicians so often pretend to care about.
In dollar figures, that’s a whopping $110 billion going to big companies. Fortune 500 firms alone receive more than 16,000 subsidies at a total cost of $63 billion.
These kinds of handouts, of course, are the definition of government intervention in the market. Nonetheless, those who receive the subsidies are still portrayed as free-market paragons.
Consider Charles and David Koch. Their company, Koch Industries, has relied on $88 million worth of government handouts. Yet, as the major financiers of the anti-government right, the Kochs are still billed as libertarian free-market activists.
Similarly, behold the big tech firms. They are often portrayed as self-made success stories. Yet, as Good Jobs First shows, they are among the biggest recipients of the subsidies.
Intel leads the tech pack with 58 subsidies worth $3.8 billion. Next up is IBM, which has received more than $1 billion in subsidies. Most of that is from New York – a state proudly promoting its corporate handouts in a new ad campaign.
Then there’s Google’s $632 million and Yahoo’s $260 million — both sets of subsidies primarily from data center deals. And not to be forgotten is 38 Studios, the now bankrupt software firm that received $75 million in Rhode Island taxpayer cash. The company received the handout at the very moment Rhode Island was pleading “poverty” to justify cuts to public workers’ retirement benefits.
Along with propping up companies that are supposedly free-market icons, the subsidies are also flowing to financial firms that have become synonymous with never-ending bailouts. Indeed, companies like Goldman Sachs, Bank of America and Citigroup – each of which was given massive taxpayer subsidies during the financial crisis —are the recipients of tens of millions of dollars in additional subsidies.
All of these handouts, of course, would be derided if they were going to poor people. But because they are going to extremely wealthy politically connected conglomerates, they are typically promoted with cheery euphemisms like “incentives” or “economic development.” Those euphemisms persist even though many subsidies do not end up actually creating jobs.
In light of that, the Good Jobs First report is a reality check on all the political rhetoric about dependency. Most of that rhetoric is punitively aimed at the poor. That’s because, unlike the huge corporations receiving all those subsidies, the poor don’t have armies of lobbyists and truckloads of campaign contributions that make sure programs like food stamps are shrouded in the anodyne argot of “incentives” and “development.”
But as the report proves, if we are going to have an honest conversation about dependency and free markets, then the billions of dollars flowing to politically connected companies need to be part of the discussion.
By: David Sirota, Salon, February 27, 2014
“Reverse Revolving Door”: Lobbyists Snag Top Staff Positions On Capitol Hill
In January shortly after being sworn into office, Congressman Rodney Davis, a freshman Republican who eked out a win with a margin of less than a thousand votes in Illinois last year, announced that he had received several plum committee assignments. His legislative portfolio includes subcommittees that oversee commodity regulations, nutritional programs, biotechnology, and, most importantly, the 2013 Farm Bill, which sets agriculture policy for the next five years.
One of his first steps in office? Davis hired Jen Daulby, the director of federal affairs for Land O’Lakes, one of the largest producers of milk and cheese in the country, to be his chief of staff. Disclosures show that just months ago, Daulby led a Land O’Lakes lobbying team that worked on the Farm Bill, genetically modified foods labeling, rules concerning pesticides and hazardous dust, and the new commodity regulations enacted by President Obama’s financial reform law, Dodd-Frank.
What a match.
In other words, Daulby’s past lobbying portfolio perfectly reflects the new responsibilities for Davis’ committee assignments, where he will have wide sway over policy. A former Monsanto lobbyist with previous experience on Capitol Hill for several other lawmakers, Daulby is one of many staffers who rotate back and forth between public service and influence peddling.
On Monday, The Nation posted an investigation of the “reverse revolving door” in Congress, by which lobbyists hired as senior-level congressional staffers receive substantial exit bonuses or other financial rewards from their employers shortly before they assume their new Congressional positions.
In Daulby’s case, Land O’Lakes provided a parting gift of a $35,772 bonus (in addition to her 2012 bonus) in the first few weeks of January. The Davis-Daulby story isn’t all that unusual.
The members of Congress who hire former lobbyists are often outspoken supporters of legislation also heartily endorsed by their new staffers’ previous employers.
Representative Michael McCaul (R-TX), chair of the Homeland Security Committee, hired IBM lobbyist Alex Manning as his cybersecurity subcommittee staff director this year. On behalf of IBM last year, Manning worked to pass the Cybersecurity and Information Sharing Effectiveness Act (CISPA), legislation that provides broad powers to the government and to private corporations to gather private Internet user data. The ACLU—which has rallied against CISPA along with EFF, and many other civil liberties groups—called the bill a “flagrant violation of every American’s right to privacy.”
IBM, which sent nearly 200 executives to Washington to advocate on behalf of stronger cyber security laws like CISPA, has been one of the bill’s strongest supporters. CISPA passed the House in April. Representative Randy Hultgren (R-IL) recently hired Katherine McGuire, a CISPA-supporting lobbyist for the Business Software Alliance, as his chief of staff. Hultgren voted for the bill that passed last month.
Representative Fred Upton (R-MI), who is in his second term as chair of the Energy and Commerce Committee, has a long history of employing lobbyists to staff his committee. When he gained the gavel after the midterm elections, Upton hired Gary Andres, a lobbyist for UnitedHealth Group and other corporate interests, as his staff director. In 2012, Upton announced that America’s Natural Gas Alliance lobbyist Tom Hassenboehler would be his new chief counsel to a subcommittee that oversees environmental regulations. As DeSmogBlog’s Steve Horn noted, Hassenboehler is a climate change denier who worked in previous years to block cap and trade legislation. Disclosures show Hassenboehler was paid by his former employer, a trade group for fracking and natural gas companies, to lobby on a number of environmental regulations, including EPA rules concerning fracking.
This phenomenon isn’t new. In the beginning of the last Congress, at least thirteen freshman lawmakers hired lobbyists as their chiefs of staff. The chiefs of staff for Senators Ron Johnson and Marco Rubio even came from the same lobbying firm.
How, exactly, are these lobbyists-turned-staffers influencing policy? While it is difficult to discern what goes on behind closed doors on Capitol Hill, it is part of the job description of lobbyists-turned-staffers to help lawmakers draft legislation, and the bills they produce reliably include big giveaways to corporate interests. Representative Davis’ office did not respond to a request for comment about his new chief, former Land O’Lakes lobbyist Jen Daulby. But in March, Davis signed onto a bill currently pushed by Land O’Lakes to roll back federal oversight of pesticide use.
By: Lee Fang, The Nation, May 9, 2013
Why The GOP’s ‘Job Creators’ Are Hard to Find
If you’re a “job creator,” raise your hand. It would be nice to know who you are, exactly.
Republicans negotiating with President Obama over a fix for the nation’s debt problems have been rolling out the heavy buzzwords lately, and there must have been a fresh memo about the sonorous ring of “job creators.” House Speaker John Boehner repeatedly decries tax hikes on job creators, with congressional colleagues such as Paul Ryan and Jeb Hensarling forming a job-creators chorus behind him. House Republicans recently published a “Plan for America’s Job Creators” (but not for everybody else, presumably) and if you’re an aggrieved job creator, you can let House Majority Leader Eric Cantor know what’s bugging you by filling out a brief form at http://jobs.majorityleader.gov/.
The trouble is, job creators are an endangered species these days. The biggest problem in the U.S. economy, in fact, is a shortage of job creators to reward and protect. Companies are barely hiring, and there are about 7 million fewer jobs now than there were at the end of 2007, when the Great Recession began. Part of the Republicans’ plan is to lower taxes, streamline regulation, open more trade and take other steps that will stimulate job creation. But we’ve already tried some of that, including several rounds of tax cuts since 2008. Most job creators are still hiding.
Big companies employ a lot of Americans, but over the last few years they’ve been better at job destruction than job creation. Between 2007 and 2010, companies with more than 1,000 employees shed about 2.6 million jobs, according to the latest data from the Labor Department. Many big companies have rebounded sharply from the recession, with impressive profits and a lot of cash on hand. But even some of the most successful big companies aren’t doing much job creation–not in the United States, anyway. Here are a few examples:
General Electric, which is run by the same Jeffrey Immelt who chairs President Obama’s Council on Jobs and Competitiveness, axed 32,000 jobs worldwide between 2007 and 2010, according to information from GE’s annual reports. About 22,000 of those lost jobs were in the United States. No job creation there, even though GE earned about $12 billion in profits in 2010.
Exxon Mobil has added about 2,800 jobs worldwide since 2007, but the giant oil firm doesn’t break out how many of those new hires work in the United States. Since Exxon earns nearly 70 percent of its revenue from overseas, it’s a good bet that’s where most of the new jobs are, too.
Wal-Mart has added about 40,000 jobs in the United States since 2007, largely because the discount retailer has been a beneficiary of pinched consumers desperate to save money. But it has added about 150,000 jobs overseas during the same time–nearly four times the U.S. tally. Still, Wal-Mart seems to be one company that can legitimately call itself a job creator.
IBM has added about 40,000 employees since 2007, but like Exxon, it doesn’t say where. About 65 percent of IBM’s revenue comes from abroad, and that’s where almost all of its revenue growth has come from since 2007. IBM’s U.S. business is actually down from 2007 levels, so it’s possible that most or all of IBM’s new hires have been overseas.
Big companies, in fact, aren’t considered a big source of new jobs. While they generate a lot of profits, they also tend to be mature enterprises more likely to swallow other companies and consolidate market share, which tends to eliminate jobs, not create them. “It’s the job of big firms to shed jobs,” says Carl Schramm, CEO of the Kauffmann Foundation, which promotes entrepreneurship. “Big firms want to lower costs, which means lowering labor costs.”
Young firms, Schramm says, account for virtually all net job creation in the U.S. economy over the last 30 years. That’s because startups that survive their first couple of years tend to be vibrant, fast-growing companies that create new industries and hire a lot of new workers. Think Microsoft and Oracle in the 1980s, and Amazon, eBay, and Google in the 1990s. Today, new technology-based firms like Facebook, Twitter, Groupon, Zynga, and LinkedIn represent one of the fastest-growing sectors of the U.S. economy. However, they’re the last companies that need any kind of tax relief–and they’re not about to ask for special treatment from Washington, either. They became transformative companies without Washington’s help, and they’d like to keep it that way.
Politicians routinely extol the virtues of “small business,” but that’s not really where the job creators are, either. Conventional small businesses–dry cleaners, nail salons, delicatessens, independent professionals like lawyers and doctors–tend to be important pillars of their communities, but they also come and go without generating a lot of new jobs, on balance. During the third quarter of 2010 (the most recent quarter for which there’s data), firms with fewer than 20 employees eliminated 34,000 jobs, according to the Labor Department. The biggest gains were among firms with 500 to 999 employees, which created 37,000 jobs.
So if Republicans want to modify the tax code to reward and encourage job creators, they need to come up with a scheme that offers the lowest tax rates to fast-growing startups, some medium-sized firms, and a few select multinationals. Of course, they might prefer to lower taxes on everybody who could be a job creator–because that includes almost everybody. If you ever spend money, that makes you a job creator, in the most expansive sense of the phrase, since somebody gets paid to provide whatever you buy. But then we’d have to figure out whether to reward American consumers for helping create jobs in China, Japan, Sri Lanka, or wherever the imported goods they purchase come from, or to reward people who spend money that helps create American jobs. So if you buy a Lexus made in Japan or Gucci loafers made in Italy, you’re not really a creator of American jobs and you shouldn’t be eligible for favorable tax treatement. But if you have your kitchen remodeled by a local contractor or go to a chiropractor for back pain, you qualify. It’s not so easy being a job creator. Or locating one.
By: Rick Newman, U. S. News and World Report, July 13, 2011
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