Action Gamessys: Making Money Cash

The Young Turks' Cenk Uygur filling in for Ed Schultz talked to former Labor Secretary under President Clinton Robert Reich about the recent request by U.S. companies for a tax holiday on the over $1 trillion in assets they have sitting offshore.

Dodging Repatriation Tax Lets U.S. Companies Bring Home Multinational Cash:

At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.

The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.

What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”

Read on...

Uygur asked Reich what solutions there are when we have one party that is a wholly owned subsidiary of big business as the Republicans are and too many Democrats willing to feed off of the same trough. Reich pointed to the obvious, which is campaign finance reform.

Transcript below the fold.

Cenk Uygur and Robert Reich on Corporate Tax Avoidance and the Need for Campaign Finance Reform

UYGUR: But we start tonight with the request by corporate America for a tax break for over $1 trillion they have sitting off shore. In a meeting with president, they asked for a tax holiday so that they can bring the money back into the country without paying their full share of taxes.

I love the terms they use. Wouldn’t you like to take a holiday from your taxes?

When big business does it, it’s not tax evasion, its tax avoidance. I’m sure we’d all like to avoid our taxes, but we don’t have the lobbying power of multinational corporations behind us. And we don’t have a whole political party devoted to making us richer. In case you’ve been living in a cave in the last 30 years, that would be the Republican Party.

Companies are playing a shell game, aided and abetted by the GOP, where they take money in and out country, depending on our tax laws, to make it appear as if they really didn’t make any money here. One common trick is to say that they made all their money in Bermuda, where they have to pay almost no taxes, but that all of their costs were here. Very convenient, of course.

So, in the end, we have a situation where ExxonMobil made $70 -- I’m sorry, $37.3 billion in profits in 2009 and paid zero dollars in U.S. taxes. Bank of America made $4.4 billion in profits, and not only did they pay nothing in taxes, the U.S. government owes them $1.9 billion.

I don’t know how they do that.

And GE, the parent company of MSNBC, in full disclosure, made pretax profits of $10.3 billion and somehow has a tax credit of $1.1 billion.

So I paid more taxes last year than the company that owns all of this? Now, does that mean the companies are unpatriotic and immoral? No.

You see, the most important thing to understand is that companies don’t have nationalities and they don’t have morals. They’re not immoral actors, they’re amoral machines. They’re profit-making robots.

They’re not allowed to have a soul or have feelings. If an executive paid the company’s full taxes out of his patriotic duty, he’d be removed from his post. That’s not how it works.

And remember, Google’s whole mantra is, "Don’t be evil." And they avoided $3.1 billion in taxes in the last three years by doing these same kinds of tax tricks.

Why? Because they’re legally bound to make as much money as possible for their shareholders.

When we had a ban on companies doing business with Iran, Halliburton set up an office in Tehran, Iran. They did it anyway. Their CEO at the time was this man. You might remember him. He’s Dick Cheney.

Later, Halliburton would move its official headquarters to Dubai to avoid U.S. taxes, while continuing to rake in huge contracts from the American government as a so-called American company.

So what’s the answer?

First, we have to recognize the problem. Politicians who talk about being "pro-business" are usually using it as an excuse to give corporations tax breaks. By the way, some of which gets funneled back to him in the form of campaign donations.

So let’s get this straight. No one’s anti-business. We want our big and small companies to do well so they hire more people. But at the same time, we don’t want people using the excuse of being pro-business to funnel our tax dollars to multinational corporations.

Most of those guys that are doing the hiring, these so-called American companies, are doing it abroad anyway. Look, the Economic Policy Institute says that American companies created less than a million jobs here in the U.S., but created 1.4 million jobs overseas last year. So you can see where their priorities are.

If we give a tax break to a company, it must be to specifically create jobs here, period. If they don’t, they can go get their tax break from Bermuda or Singapore.

No more American taxpayer money to finance multinational corporations. There has to be a separation of business and state.

This is not the United States of corporate America. Our representatives in this democracy are supposed to look out for us, their voters, not their corporate benefactors.

Secondly, we have to get much tougher on enforcing our tax laws.

In 2004, the Bush administration allowed, again, so-called American companies to repatriate $312 billion back into the U.S. at the comically low rate of 5.25 percent. The real corporate tax rate is supposed to be 35 percent.

Now do you see why the corporate world loved Bush? That means all of the executives at those companies got much fatter bonuses that year.

We did the Republican strategy of just trusting big business to create jobs with all of those tax breaks that we gave them, and guess what happened? Since that huge 2004 tax break, we have lost nearly seven million jobs.

Would you trust your personal money with an amoral machine? No way, right? Then why do we all trust our collective money with these guys? It’s time we built a wall between business and state so that our government looks out for our interests and not multinational corporations` interests.

Now, get your cell phones out. I want to know what you think.

Tonight’s text survey is: Do you think tax breaks for corporations lead to more U.S. jobs? Text "A" for yes, text "B" for no to 622639. I’ll bring you the results later in the show.

Now joining me is former Clinton labor secretary Robert Reich. He’s a professor at the University of California at Berkeley, and he’s also the author of "Aftershock."

All right, Secretary Reich, I want to play you a clip by President Obama, because there was a bill introduced earlier in the year to actually stop the subsidies for off-shoring jobs, and it didn’t pass. The Republicans killed it.

And here’s what the president had to say about it.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The Republicans in Washington claimed to draw their ideas from a Web site called America Speaking Out. It turns out that one the ideas that’s drawn the most interest on their Web site is ending tax breaks for companies that ship overseas.

The funny thing is, when we recently closed one of the most egregious loopholes for companies creating jobs overseas, Republicans in Congress were almost unanimously opposed. The Republican Leader, John Boehner, attacked us for it and stood up for outsourcing instead of American workers.

(END VIDEO CLIP)

UYGUR: Secretary, is that right? I mean, that seems so unbelievably egregious.

ROBERT REICH, FMR. LABOR SECRETARY: Well, Cenk, when you said a moment ago that this is the United States of corporate America, or at least that’s what it seems, that’s egregious enough.

I mean, big corporations are arguing in terms of getting more tax breaks or getting a tax holiday that they need it in order to have an incentive to create jobs in the United States. But most big corporations now have plenty of money.

Corporate profits are higher than they’ve been in years. In fact, big corporations are now sitting on almost a trillion dollars worth of cash. They’re not creating jobs in the United States, they’re creating jobs abroad.

UYGUR: So the fact that they kill a bill that would have stopped, you know, the loophole that allows them to get a subsidy for off-shoring, I mean, I feel like that’s such a no-brainer for the Democrats, I almost want to pull a Jon Stewart and just do this whole show and the next show and the next show after that about that.

How did the Democrats blow that? Why don’t they take advantage of that and tell the American people what’s happening?

REICH: Well, there are a lot of no-brainers for the Democrats when it comes to corporate malfeasance or nonfeasance.

Cenk, one of the problems -- and I don’t want to tar all Democrats with this, but at least some Democrats with regard to campaign donations are drinking at the same trough as Republicans. They’re going to big corporations.

Now, earlier this year, the Supreme Court, you’ll remember, said in one of the worst Supreme Court decisions in history, in Citizens United against the Federal Election Commission, that corporations are people and they’re entitled to provide as much money to campaigns and to politicians as they want. Otherwise, their First Amendment rights would be breached.

Well, you can’t have it both ways. You said it earlier, and I agree with you, that corporations are not people. They’re just machines. They are just designed to maximize profits.

If we actually treat them as people and say they have First Amendment rights to undermine and corrupt our politicians and our political process, then we’re really in trouble, because they don’t really represent America and Americans.

UYGUR: Well, they keep calling them American companies, or even corporate America. But do these so-called American companies have any obligation to America?

REICH: Well, unfortunately, they don’t. I mean, these global corporations have a primary obligation under the law, and also in terms of economics to their shareholders, to maximize shareholder returns.

That’s what under American capitalism corporations are supposed to do. They’re not obligated to maximize jobs. And it turns out these days, the most rapidly growing markets are in China, India, Brazil, several other rapidly growing markets, and so American corporations are over there not only selling but also creating jobs. Not here.

UYGUR: You know, the thing is, I don’t want people to get me wrong. I actually don’t think that’s crazy or bad. I get why businesses want to start factories in China and why they’re using India for labor, et cetera. I understand that. But what drives me crazy is the idea that we should be subsidizing that.

REICH: Exactly. Cenk, I couldn’t agree with you more.

In other words, corporations should be, according to the way we organize capitalism, maximizing shareholder returns, maximizing profits. So they should be going all over the world. But there is no reason for us, taxpayers, to be subsidizing those corporations, and then those corporations taking those subsidies, or those tax breaks, and using them for creating jobs all over the world. It makes no sense at all.

UYGUR: Unfortunately, I’m going to have to ask you the question that we always run into here. What can we do about it? Because the seems like the politicians, honestly, a lot in both parties -- certainly the Republicans are a wholly-owned subsidiary of multinational corporations, but the Democrats are partly owned, as you explained.

How do we get beyond it when they have already bought the politicians?

REICH: Well, what we have to, I think all of us, get serious about campaign finance reform. I mean, eyes glaze over. It’s not an exciting topic. We’d much rather talk about holding on to health care and everything else. But unless we actually stem the flow of corporate money into American politics, everything we want to do, everything we believe in is jeopardized.

UYGUR: Secretary Reich, thank you so much for joining us.

REICH: Thanks, Cenk. Happy New Year.

UYGUR: Happy New Year to you, too.

Top Stories

Obama's budget has been delayed a week, reports Jonathan Weisman: "President Barack Obama's budget proposal for fiscal 2012 will be released in mid-February, a little more than a week after its planned release date. The administration is scrambling to assemble what could be a pivotal document following a six-week delay in the confirmation of the White House's new budget director, a senior administration official said Monday. The budget's release date will be pushed back from Monday, Feb. 7, to some time the following week, the official said. The White House's new budget director, Jacob Lew, saw his confirmation put on hold by Louisiana Democratic Sen. Mary Landrieu, who was protesting the administration's moratorium on offshore oil drilling. Mr. Lew was confirmed Nov. 19."

Members of Congress are finding ways besides earmarks to fund pork projects, reports Ron Nixon: "Lettermarking, which takes place outside the Congressional appropriations process, is one of the many ways that legislators who support a ban on earmarks try to direct money back home. In phonemarking, a lawmaker calls an agency to request financing for a project. More indirectly, members of Congress make use of what are known as soft earmarks, which involve making suggestions about where money should be directed, instead of explicitly instructing agencies to finance a project. Members also push for increases in financing of certain accounts in a federal agency’s budget and then forcefully request that the agency spend the money on the members’ pet project. Because all these methods sidestep the regular legislative process, the number of times they are used and the money involved are even harder to track than with regular earmarks.

Real talk: The move from earmarking to lettermarking, phonemarking, hearingmarking, etc, wasn't just predictable. It was inevitable. And make no mistake: Within three-to-five years, we're likely to be back to earmarking as well.

Corporations are using their cash supplies to fuel mergers, not job growth, reports Jia Lynn Yang: "The volume of global mergers this year rose 19 percent, according to Dealogic, ticking up for the first time since 2007 as firms looked for ways to deploy the record amount of cash sitting on their balance sheets...Conditions are ripe for a comeback in mergers and acquisitions because U.S. companies are holding a record nearly $2 trillion in cash. They have been hesitant to use these massive piles of funds to hire as they wait to see whether the economic recovery picks up more speed. Instead, this year they've been making safer bets: buying back stocks to help boost their share prices and spending money on modestly sized mergers."

Fuzz-pop interlude: Wavves plays "King of the Beach".

Got tips, additions, or comments? E-mail me.

Want Wonkbook delivered to your inbox or mobile device? Subscribe!

Still to come: Foreign banks benefited from a Federal Reserve program; being unemployed is bad for your health; Obama's federal pay freeze is being extended to more civil service workers; the incoming House Energy and Commerce chair outlines his plan to derail the EPA's climate regulations; and a genetically engineered singing mouse.

Economy

The Obama administration is cracking down on banks that are delinquent on their TARP payments, reports Zachary Goldfarb: "The Obama administration has begun monitoring the high-level board meetings of nearly 20 banks that received emergency taxpayer assistance but repeatedly failed to pay the required dividends, according to Treasury Department officials and documents. And it may soon install new directors on some of their boards. The moves come as the number of banks that failed to make at least one dividend payment to the government rose to 132 in the last quarter. These 'deadbeats,' as they are sometimes called, are virtually all community lenders and collectively received billions of dollars in taxpayer assistance. In addition to those firms, seven others have failed, resulting in the total loss of the government's investment."

Looking for a rigorous overview of the various methodological difficulties involved in assessing stimulus proposals? Alan Auerbach, William Gale, and Benjamin Harris have you covered (pdf).

Non-US banks have benefited from Federal Reserve credit, report Robin Harding, Bernard Simon, and Christian Oliver: "Some of the world’s strongest banks have profited from an emergency credit facility set up by the US Federal Reserve to shore up confidence in the global financial system, according to a Financial Times analysis of data released by the Fed. More than half of lending under the Fed’s term auction facility - the largest of its crisis programmes - went to foreign banks. Details of the varied uses to which they put it may add to political criticism of the Fed. The Taf was set up in December 2007 to provide one-month loans to creditworthy banks as markets dried up for lending longer than overnight. In August 2008, it began offering three-month loans as well."

A new study suggests startups are central to job growth: http://on.wsj.com/fDs2eV

There's much Obama could do for the economy that wouldn't require congressional approval, write Paul Krugman and Robin Wells: "Democrats could pressure the administration to fix the inexcusable mess at the HAMP (mortgage modification) program--a program whose Kafkaesque complexity has in many cases made matters so bad for home owners that it has triggered the foreclosures it was supposed to avoid. In addition, mortgage relief would benefit the wider economy. Furthermore, the scope of mortgage relief could be made much wider if Fannie Mae and Freddie Mac were used to guarantee mortgage refinancing. Other proposals go even further: for example, that Fannie and Freddie engineer reductions in mortgage principals. All of this could be done, conceivably, by executive order."

Prizes for spurring innovation work, writes Annie Lowrey: http://slate.me/dFXZgh

A survey of jobless workers shows the extent of their suffering, writes Bob Herbert: "More than 15 million Americans are officially classified as jobless. The professors, at the John J. Heldrich Center for Workforce Development at Rutgers, have been following their representative sample of workers since the summer of 2009. The report on their latest survey, just out this month, is titled: 'The Shattered American Dream: Unemployed Workers Lose Ground, Hope, and Faith in Their Futures.' Over the 15 months that the surveys have been conducted, just one-quarter of the workers have found full-time jobs, nearly all of them for less pay and with fewer or no benefits. 'For those who remain unemployed,' the report says, 'the cupboard has long been bare.'

The American political system is corrupted in favor of the upper classes, writes Jeffrey Sachs: http://bit.ly/icPQdh

Extreme sports interlude: Russian-style bungee jumping.

Health Care

Enrollment is lower and costs higher than expected in health care reform's high-risk pools, reports Amy Goldstein: "An early feature of the new health-care law that allows people who are already sick to get insurance to cover their medical costs isn't attracting as many customers as expected. In the meantime, in at least a few states, claims for medical care covered by the 'high-risk pools' are proving very costly, and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient... According to some health-policy researchers, the success or failure of the pools also could foreshadow the complexities of making broader changes in health insurance by 2014, when states are to open new marketplaces - or exchanges - for Americans to buy coverage individually or in small groups."

Real talk: High-risk health-care pools never work very well. The Democrats knew that when they rejected Republican plans that would've put them at the center of the health-care system for sick individuals. Then, of course, they turned around and made them one of health-care reform's early deliverables. I'm skeptical of arguments that say they "foreshadow" larger market reforms, which work very differently than segregating a tiny fraction of sick patients in state-run insurance programs.

Unemployment could cause serious health damage, reports David Wessel: "A new National Bureau of Economic Research paper suggests that increases in unemployment lead to a decrease in fruit and vegetable consumption, with potentially long-lived effects on workers’ health. 'Among those who are predicted to be at the highest risk of unemployment, a one percentage point increase in the resident’s state unemployment rate is associated with a 2% to 4% reduction in the frequency of fruits and vegetable consumption, and an 8% reduction in the consumption of salad,' economists Dhaval Dave of Bentley University in Waltham, Mass., and Inas Rashad Kelly of Queens College in Flushing, N.Y, said...Research by Daniel Sullivan and Till von Wachter finds that mortality rates in the year following a layoff among high-seniority male workers increases sharply."

The White House denies its new regulation on end-of-life care represents a policy change: http://politi.co/gkMbRZ

Domestic Policy

The federal pay freeze is being extended to more civil servants, reports Lisa Rein: "The two-year pay freeze that is now law for federal employees on the pay scale known as the General Schedule will also apply to hundreds of thousands of civil servants whose wages are set under a separate salary system, according to an executive order signed last week by President Obama. Employees covered by the so-called Administratively Determined pay scale - not legislated by Congress but set by federal agencies - make up about 30 percent of the workforce of 2 million. They include public health doctors and nurses, medical personnel in the Veterans Affairs system, administrative law judges and attorneys, auditors and other staff at financial agencies such as the Securities and Exchange Commission."

Nobelist James Heckman is urging early childhood education as a path toward economic growth, reports James Warren: " James J. Heckman, who has won the Nobel in economic science, offered a provocative idea for reducing spiraling budget deficits and strengthening the economy: investing in early childhood development. Mr. Heckman marshals ample data to suggest that better teaching, higher standards, smaller classrooms and more Internet access 'have less impact than we think,' as he put it at the Spertus Institute. To focus as intently as we do on the kindergarten to high school years misses how 'the accident of birth is the greatest source of inequality,' he said. He urges more effectively educating children before they step into a classroom where, as Chicago teachers tell me, they often are clueless about letters, numbers and colors -- and lack the attentiveness and persistence to ever catch up."

Public universities are getting creative about tuition fees: http://on.wsj.com/ifgrV1

Obama should push for Social Security reform, writes Michael Gerson: "Obama's liberal base contends that the Social Security trust fund is not in immediate trouble. But this argument depends on an elaborate accounting trick. The trust fund is not filled with assets - gold bullion and Apple stock. It is filled with debt issued by the government to itself. The surpluses of the trust fund are in fact liabilities for the government as a whole. And these illusory surpluses are regularly used to subsidize the rest of the budget. The scheme begins to collapse in 2037, when promised benefits for Social Security recipients will suddenly drop by about 25 percent - unless the system is reformed...Obama's urgent political need is to polish his image among Independents on spending and debt."

Fun with genetic alterations interlude: Scientists create a singing mouse.

Energy

Congress should stop the EPA from regulating carbon emissions, write House Energy and Commerce chair Fred Upton and Todd Phillips: "The best solution is for Congress to overturn the EPA's proposed greenhouse gas regulations outright. If Democrats refuse to join Republicans in doing so, then they should at least join a sensible bipartisan compromise to mandate that the EPA delay its regulations until the courts complete their examination of the agency's endangerment finding and proposed rules. Like the plaintiffs, we have significant doubt that EPA regulations can survive judicial scrutiny. And the worst of all possible outcomes would be the EPA initiating a regulatory regime that is then struck down by the courts."

The EPA is well within its rights to regulate carbon emissions, writes Brad Plumer: "Over at The Atlantic, Conor Friedersdorf thinks the EPA is 'disregarding [the] separation of powers.' But why? How? The Clean Air Act is a law that was passed by Congress and amended several times. The law originally focused on specific toxins like lead and sulfur-dioxide, but it was intended to be updated periodically, as new science on pollution and human health came in. The Supreme Court ruled that greenhouse gases fit within this framework--and, so, the Obama administration has begun enforcing the relevant laws. Set aside whether you agree with the policy outcome. What about this is constitutionally troubling?"

The Department of Energy is circulating a "list of accomplishments" from the past year: http://bit.ly/gbQFTh

Sen. Jay Rockefeller is challenging the administration on mine safety, reports Andrew Restuccia: "Sen. Jay Rockefeller (D-W.Va.) is raising questions about whether the federal agency charged with mining safety is adequately funded. In a letter to Labor Secretary Hilda Solis, Rockefeller said he is concerned that the Senate’s inability to pass an omnibus spending bill that would have increased funding for mine safety could 'undermine the progress that is being made and further limit MSHA's [Mine Safety and Health Administration] ability to fulfill its mission.' Instead of the broad omnibus spending bill, the Senate passed a narrow continuing resolution that largely funds the government at current levels until March."

John Tierney makes the case for optimism about the world's energy supply: http://nyti.ms/fKyVGN

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: White House.

bench craft company reviews bench craft company reviews

Monday, January 10, 2011

Making Money Cash

No comments:

Post a Comment

Followers

Blog Archive

About Me