“Show Your Invisible Hand”: The SEC Should Make Corporations Disclose Political Contributions
A core assumption of the Supreme Court’s opinion in 2010’s troubling Citizens United case, which broadened corporations’ abilities to use their money for political purposes, was that shareholders could decide for themselves whether they agreed with the ways that money was being spent.
According to Justice Anthony Kennedy, who delivered the opinion for the Court, “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”
The problem with this particular assumption, which economists call perfect information, is that corporations are — surprise surprise — not legally obligated to share information on political spending with their shareholders or the public. In August 2011, a group of high-profile law professors filed a petition with the Securities and Exchange Commission, calling on the agency to require public companies to disclose what corporate resources they spend on political activities because “most political spending remains opaque to investors in most publicly traded companies.”
Why do companies spend money on politics? The answer seems obvious: they want to generate profits. They are seeking advantages like reduced trade barriers, government contracts, easier regulatory inspections, and lower tax rates. For more on this point, see my colleague Tom Ferguson’s recent paper with Paul Jorgensen and Jie Chen, which reveals how “Too Big to Fail” Wall Street firms and telecom companies have captured the GOP and the Democrats, respectively. (As an aside, isn’t it odd that the same companies orchestrating the expansion of the surveillance state are so concerned about their own privacy?)
But there is sufficient research to suggest there is another, more covert reason that has serious consequences for shareholders. In my recently published Roosevelt Institute paper on the costs and benefits of this disclosure rule, I cite several studies that show corporate executives frequently spend on politics for their own personal advantage rather than the company’s bottom line. These personal benefits include things like prestige, a future political career, star power, or assistance for political allies.
With these kinds of distorted incentives, the lack of information available to the public about corporate political spending puts shareholders and potential investors at enormous risk. Why would they want to invest in a company that is undertaking activities that are more likely to benefit its executives than its investors? Requiring corporations to disclose their political spending, on the other hand, would do the following:
—Enable investors to make informed investment decisions. Good information is always key to helping potential shareholders calculate the risk they are taking by investing in a company or helping current shareholders decide if they want to hold on to a company’s stock.
—Create the motivation for corporate executives to focus less on their own personal benefit and more on the political spending that would increase shareholder wealth. By disclosing their political activities, corporate executives would have less of an opportunity to waste company resources for their own advantage.
—Benefit corporations that already share their political spending information. Research suggests companies that already disclose SEC-required information enjoy a bump in stock returns when the particular rule is put in place.
Two years after the lawyers submitted their petition, File No. 4-637 is finally on the SEC’s official agenda and support for the disclosure rule is overwhelming. Recent polling finds that 79 percent of surveyed Republicans and nearly 100 percent of Democrats support the rule, and more than 600,000 public comments supporting the rule have been submitted to the SEC. Major institutional investors are also in agreement. Former Vanguard mutual fund CEO John C. Bogle, six state treasurers, CalPERS and other pension funds, and many more are also in support. The rule also has the endorsement of small-business owners across the country, as large companies have a competitive advantage over smaller businesses because of their ability to influence lawmakers and agencies through campaign contributions and lobbying.
The pushback against disclosure is typically about the costs of disclosure. But companies already have to document their political spending for the IRS, so the additional cost would be, at most, the few hours it would require an employee to copy and paste data from an internal file into a public one. Furthermore, companies already submit annual forms to the SEC. The political spending information would simply be a few additional lines of text added to these forms.
A more valid concern about this rule is that, if companies are required to disclose this information to the SEC, the information could be exploited by their competitors and harm the companies’ bottom line. But corporate political activities are already well known among industry competitors. In fact, sometimes political spending is even coordinated among industry groups. The people who are actually excluded from this information are the ones who need it most: investors.
At a briefing held this past Wednesday organized by the Corporate Reform Coalition, Senators Elizabeth Warren (D-MA) and Robert Menendez (D-NJ) called for the SEC to finally adopt this important rule. “There is no excuse,” said Warren, “There is no reason […] for saying a corporation wants to be able to spend shareholders’ money and not tell shareholders how that money is being spent.”
By: Susan Holmberg, The National Memo, November 1, 2013
“Obamacare Horror Stories Aren’t So Horrible”: Republicans Struggling To Find Real-World Victims Of The Health Care Law
There are real and substantial problems with the Affordable Care Act’s website, serious enough to warrant remarks this morning from President Obama and “tech surge” at HHS. But for the law’s critics, there’s still an underlying problem: websites can be fixed. The merits of “Obamacare” are unaffected by online snafus, however meaningful they may be.
And with this in mind, the right realizes it can’t just jump up and down about a website that will get better; conservatives still need to go after the health care system itself.
That’s proving to be difficult. We talked last week about a recent Fox News segment, hosted by Sean Hannity, featuring three real-world couples who presented themselves as victims of the Affordable Care Act. As Eric Stern reported in Salon, the problem with the segment was that none of the claims made by the couples stood up to any scrutiny. One of the horror stories was apparently entirely fictitious.
As it happens, this larger public-relations scheme is quickly shaping up to be an unsettling pattern. Robin Abcarian reported on a similar problem in the L.A. Times.
Maybe you’ve heard about the beloved local ice cream company that’s been forced to close its doors because of Obamacare?
Earlier this week, Newt Gingrich shared the dreadful news with Sean Hannity on Hannity’s radio show. It’s awful, just awful, the two men agreed, that small businesses are being driven under by the “job-killing” Affordable Care Act.
It didn’t take me long to identify the company: Bonnie Doon Ice Cream Corp., an Indiana ice cream maker that also operated a chain of drive-in diners in Mishawaka, South Bend and Elkhart. Or to figure out that the Affordable Care Act probably has nothing to do with the business’s failure.
Now, it is true that Bonnie Doon Ice Cream Corp. is permanently closing its doors. The problem is, Republicans want to blame this on the Affordable Care Act. Indeed, the local Indiana congresswoman representing the business’s headquarters specifically connected the law and the business’ demise on her Facebook page.
Reality, I’m afraid, is pointing in a different direction. For one thing, Bonnie Doon only had around 30 employees, so the law’s mandates didn’t affect it anyway. The employee total increased after it was bought by BD Acquisition, but even then health care mandates wouldn’t kick in until 2015 at the earliest.
“It seems highly, highly implausible that someone would be closing a business now in anticipation of projections around health costs 15 months from now,” Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education, told Abcarian. “Any business that says it’s shutting down because of Obamacare is likely going out of business anyway.”
The point isn’t just to poke holes in poor anecdotal arguments. Rather, the key takeaway from stories like these is that Republicans are struggling mightily to find any real-world victims of the health care law.
For the right, these victims should be **everywhere**, eager to tell their stories, because that darned “Obamacare” is such a public menace. If so, why do these stories keep falling apart, replaced with nothing?
“The Corporate Predator State”: This Isn’t The Free Market, It’s A Rigged Market
Bipartisan agreement in Washington usually means citizens should hold on to their wallets or get ready for another threat to peace. In today’s politics, the bipartisan center usually applauds when entrenched interests and big money speak. Beneath all the partisan bickering, bipartisan majorities are solid for a trade policy run by and for multinationals, a health-care system serving insurance and drug companies, an energy policy for Big Oil and King Coal, and finance favoring banks that are too big to fail.
Economist James Galbraith calls this the “predator state,” one in which large corporate interests rig the rules to protect their subsidies, tax dodges and monopolies. This isn’t the free market; it’s a rigged market.
Wall Street is a classic example. The attorney general announces that some banks are too big to prosecute. Despite what the FBI called an “epidemic of fraud,” not one head of a big bank has gone to jail or paid a major personal fine. Bloomberg News estimated that the subsidy they are provided by being too big to fail adds up to an estimated $83 billion a year.
Corporate welfare is, of course, offensive to progressives. The Nation and other media expose the endless outrages — drug companies getting Congress to ban Medicare negotiating bulk discounts on prices, Big Oil protecting billions in subsidies, multinationals hoarding a couple of trillion dollars abroad to avoid paying taxes, and much more.
But true conservatives are — or should be — offended by corporate welfare as well. Conservative economists Raghuram Rajan and Luigi Zingales argue that it is time to “save capitalism from the capitalists,” urging conservatives to support strong measures to break up monopolies, cartels and the predatory use of political power to distort competition.
Here is where left and right meet, not in a bipartisan big-money fix, but in an odd bedfellows campaign to clean out Washington.
For that to happen, small businesses and community banks will have to develop an independent voice in our politics. Today, they are too often abused as cover for multinational corporations and banks. The Chamber of Commerce exemplifies the scam. It pretends to represent the interests of millions of small businesses, but its issue and electoral campaigns are defined and paid for by big-money interests working to keep the game rigged.
An authentic small-business lobby has finally started to emerge, as William Greider reports in the most recent issue of the Nation. The American Sustainable Business Council, along with the Main Street Alliance and the Small Business Majority, are enlisting small business owners to speak for themselves — and challenging the corporate financed propaganda groups such as the Chamber and the National Federation of Independent Business. Their positions often align with those of progressives. They loathe the big banks and multinationals that work to undermine competition.
Greider reports on the antipathy these small business owners have for the big guys. Camille Moran, president and chief executive of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, La., rails against the “Wall Street wheelers and dealers.” They knew, she argues, that they “ would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it. . . . That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.”
ReShonda Young, operations manager of Alpha Express, a family-owned delivery service in Waterloo, Iowa: “We’re not afraid to compete with the biggest delivery companies out here, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab.”
Polls show these aren’t isolated views. The ASBC, the Main Street Alliance and the Small Business Majority sponsored a poll by Lake Research of small business owners. Ninety percent believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it.
The ASBC and its allies have the potential to become what Jamie Raskin, a Maryland state senator, dubbed a “Chamber of Progress,” a small-business voice that is willing to take on the big guys that tilt the playing field.
The possibilities are endless. Wall Street argues for rolling back financial regulation on the grounds that it hurts community and small banks. What if community and small bankers joined the call of conservative Dallas Federal Reserve President Richard Fisher to break up the big banks?
Multinational executives have just launched the “LIFT America” Coalition to push for a territorial tax system that would exempt from U.S. taxes all profits reported abroad. ASBC and its allies could rally small businesses to demand closing down overseas tax havens and imposing a minimum tax on profits sitting abroad, so that they didn’t face a higher tax burden that their global competitors.
In today’s Washington, powerful corporate interests stymie progress on areas vital to our future. Can a right/left, small-business/worker odd bedfellows alliance emerge to counter the predatory interests? We can only hope so.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 26, 2013
“A Nonpartisan No-Brainer”: Raising The Minimum Wage Is Beneficial For Individuals And Businesses
In Tuesday’s State of the Union speech, President Obama called on members of Congress to raise the federal minimum wage from $7.25 to $9.00 an hour, something Governor Mitt Romney (R-MA) supported during the 2012 election. The president said, “This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.”
Who could argue with that?
Two Republican leaders have voiced their opposition to the president’s proposal. House Speaker John Boehner (R-OH) and Senator Marco Rubio (R-FL) agree that raising the minimum wage hurts businesses, claiming that increasing the cost of employment makes it difficult for businesses to sustain themselves and deters them from hiring employees.
A study released yesterday by the Center for Economic and Policy Research suggests otherwise. John Schmitt, who authored Why Does The Minimum Wage Have No Discernible Effect on Employment?, argues that raising wages actually has little to no effect on employment. Schmitt offers 11 “channels of adjustment,” ways in which businesses could respond to a raise in minimum wage. These include raising prices on goods and services (offset by higher demand), increase in worker efficiency and effort, and less difficulty in recruiting and retaining employees which “may compensate some or all of the increased wage costs, allowing employers to maintain employment levels.”
Based on the results of this study, small businesses have everything to gain in paying their employees a wage they can live on. Economist and New York Times columnist Paul Krugman addressed the myth behind cutting minimum wage during a time of recession back in 2009. “In reality, reducing wages would at best do nothing for employment; more likely it would actually be contractionary,” Krugman said. “Proposing wage cuts as a solution to unemployment is a totally counterproductive idea.”
Larger corporations such as Walmart and McDonald’s that employ 66% of low-wage workers are rewarding their top executives in profitable years with raises, while their low-wage employees are still making minimum wage — a pay level that is not sustainable for many American families. In fact, if minimum wage matched inflation, it would be $10.58 per hour.
As stated in a Huffington Post article, “This would guarantee that workers on the lowest rung of the economic ladder don’t lose purchasing power, but it would also mean fast-food companies and other low-wage employers would have to pay higher wages just about every year, except in rare cases of deflation.”
This type of proposal was already favored in 2010, when the Public Religion Research Institute conducted a poll and found that 67 percent of respondents were in favor of increasing the minimum wage to $10.00 an hour—that includes a majority of respondents who identified as Republicans.
In 2007, President Bush signed the Fair Minimum Wage Act, which easily passed in the House 315-116, including bipartisan support from 82 Republicans. It passed the Senate — with the help of Mitch McConnell (R-KY) — by a 94-3 vote before making it to the president’s desk.
Studies clearly point to the profitable effects on individuals and businesses if earnings per hour are raised to a level where low-wage workers are actually able to support themselves and their families. If Republicans like Boehner and Rubio are truly advocating for their middle-class constituents, then supporting the president in ensuring that workers earn what they deserve — and can live on — ought to be a nonpartisan no-brainer.
By: Allison Brito, The National Memo, February 14, 2013
“Warmed Over Pablum”: Marco Rubio’s Lies About Healthcare Reform
Marco Rubio’s rebuttal to the State of the Union address was remarkable for being unremarkable—it contained much of the same warmed-over pablum we heard from the stage in Tampa Bay at the Republican National Convention six months ago. President Obama “believes [the government] the cause of our problems” and that “More government isn’t going to help you get ahead. It’s going to hold you back.” There was even a Solyndra reference.
But the most interesting and substantive part of Rubio’s speech was the attack he leveled against healthcare reform. The Affordable Care Act will be implemented over the next—wait, sorry. I’m incredibly thirsty. I need some water before I finish this post.
Okay, back. In any case, as the ACA is implemented over the next few years, Republicans must continue to launch rhetorical bombs at it, because a negative public perception of the law would create cover for Republican governors to deny Medicaid expansion in their state, and might also blunt “Obamacare” as a powerful Democratic talking point in 2014 and 2016.
So here’s what Rubio said about the ACA:
[M]any government programs that claim to help the middle class, often end up hurting them instead.
For example, Obamacare was supposed to help middle-class Americans afford health insurance. But now, some people are losing the health insurance they were happy with. And because Obamacare created expensive requirements for companies with more than fifty employees, now many of these businesses aren’t hiring. Not only that; they’re being forced to lay people off and switch from full-time employees to part-time workers.
Rubio is explicitly trying to scare people into thinking they’re about to either lose their health insurance or get fired because of Obamacare. But none of this is true.
Let’s start with the first claim: that “some people are losing the health insurance they were happy with.” Rubio is eliding the fact that in the final telling, ACA is projected to insure 30 million Americans who otherwise don’t have health insurance. It’s not immediately clear who Rubio thinks is losing their policies, because after all, insurance companies can no longer just drop people from coverage because of pre-existing conditions.
Rubio goes on to say that “because Obamacare created expensive requirements for companies with more than 50 employees, now many of these businesses aren’t hiring” and others are switching from full-time to part-time workers because of the ACA. But that’s just not the case.
A study this summer from the Midwest Business Group on Health found that “there is little indication that employers plan to drop healthcare coverage.” The “expensive requirements” Rubio alludes to will be about 2.3 percent, according to one international consulting firm, and other studies show that healthcare reform might ultimately help small businesses because of the subsidies they receive and the fact they are offering a more attractive compensation package for employees. That’s what happened in Massachussets under Romneycare.
Sure, some right-wing business titans who run places like Applebee’s and Denny’s may say they’re going to cut back hours because of the dread of Obamacare, but they are the exceptions to the rule. Moreover, their actions are just one small part of a disturbing trend of large companies shifting healthcare costs onto low-wage workers—as would be any employer who cuts his full-time employees to part-time so he is not responsible for increased coverage requirements under the ACA.
And this gets to the real problem with Rubio’s speech. His case here is that Obamacare is hurting middle-class Americans—but then he specifically describes companies who would cut workers’ hours so they aren’t entitled to health insurance. It’s these vicissitudes of the free market that the ACA was trying to address, like when insurance companies drop people from coverage because they once took heartburn pills. Rubio’s larger case—his whole case in this speech—is that the government is hurtful, not harmful. But he was simply unable to prove it.
By: George Zornick, The Nation, February 13, 2013
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