Category Archives: Corporations

A Look Into The Future of Teapublican Budget Cuts.

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Despite the fact that our $14 trillion debt was largely created by Teapublican presidents, now that we have a Democratic president, the Teapublican-controlled Congress is dead set on forcing enormous budget cuts at any cost.

Set aside for a moment that their primary agenda is to end regulations for their corporate masters and to starve only those departments that are contrary to their ideology (primarily the EPA and the Dept. of Education). The real concern is what such draconian cuts will do to our economy.

If you want to see a preview of the consequences, you need only to look to Greece.

As you likely know, the Greek government is in danger of default. To “cure” its ills, Germany along with the other nations that are part of the European Union, agreed to bail out Greece. But only if Greece would enact drastic spending cuts and large tax hikes.

The result? It would seem that the “cure” is in danger of killing the patient. Indeed, the cuts have put the entire European Union in recession. And the symptoms have spread to the US. Every time the European Union sneezes, our markets react.

The problem is that the new austerity measures have resulted in more Greeks losing their jobs. And without jobs, the Greeks are unable to pay the increased taxes. Many have been forced to pay taxes out of their savings (if they have savings). Many can’t pay their taxes at all. That only results in more deficits, more spending cuts, more tax increases, and so on.

Although Greece is the most extreme example of an economy in trouble, it’s not alone.

Ireland’s economy is also particularly weak. You may remember that before the global recession, Ireland was called the “Celtic Tiger” having built its reputation by luring foreign corporations (many from the US) through some of the lowest corporate taxes in the world. Indeed, Teapublicans have repeatedly cited Ireland as a model for reforming our own corporate tax structure.

One would hope that our nation could learn from these examples of what not to do. But, since Teapublicans mostly ignore anything beyond our borders (except for oil deposits), I’m not hopeful.

Teapublican Lie #19.

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“Solyndra is an example of the Obama administration’s runaway spending.”

Yes, the Obama administration provided a federally-backed loan of $535 million to help Solyndra create thin film solar cells. Yes, the company went bankrupt. But before you join the Teapublican-led lynch mob to hold the administration accountable, ask yourself: How much more money has been wasted on government loans and subsidies for oil companies? Have you ever heard Teapublicans complain about wasting taxpayer money on a dry well? Have you ever seen a House panel investigate loans or subsidies to carbon-based fuel companies?

But that’s different you say. There’s no certainty in finding oil.

Well, there’s no certainty that a new product will succeed, either. Fact is, the Energy Department took a chance on a company that wanted to build state-of-the-art solar cells in the US, instead of China. The Energy Department took a chance that a government-backed loan would result in more US-based jobs, less dependence on foreign oil and lower carbon emissions. Unfortunately, Solyndra failed as the result of increased competition from foreign manufacturers which are heavily subsidized by their governments. And because Congress failed to pass a comprehensive energy bill that includes alternative energy sources.

Oil production is heavily subsidized through tax breaks at virtually every stage of the exploration and extraction process. So, if the US is willing to risk hundreds of billions in exploration for gas and oil with great risk to our environment, why is it a problem for the federal government to risk taxpayer money to develop clean energy alternatives?

Could it be that the solar and wind industries don’t have lobbyists which heavily contribute to Teapublican election campaigns?

Teapublican Lie #14.

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“Immigrants steal our jobs.”

That’s been a common accusation since the very beginnings of our nation. Previous generations despised the Irish, Italians, Germans, Scandinavians, Eastern Europeans, etc. for simply trying to eke out a living. Nothing has changed in the present day, except that now the charge is leveled against Latinos.

In discussing her book, They Take Our Jobs! and 20 other myths about immigrants, Avi Chomsky, historian, teacher, and coordinator of Latin American studies at Salem State College says, “When people claim that immigrants take our jobs, underlying the statement are some flawed ideas of how our economy works. They don’t understand that the world economy is extremely integrated.”

“In the US, there is a dual labor market,” she says. “One category consists of good jobs that offer security, benefits, decent pay and safe working conditions. The second category consists of jobs that are dangerous and unpleasant with no security and low wages. The jobs in the second category have always been done by those who are politically excluded, such as undocumented workers. By politically excluding workers, employers are able to exploit them. And others in our society rely on people doing these jobs.”

In reality, the number of jobs taken by immigrants is a very small percentage of the jobs shipped overseas by our corporations. Moreover, immigrants actually create jobs because they purchase food and automobiles, and they rent or buy homes. They also pay sales taxes, property taxes, income taxes, even Social Security and Medicare payroll taxes. (In 2010, it’s estimated that illegals paid $12 billion into Social Security. Yet they are not eligible for any of the government services provided by those taxes.)

As Chomsky states, “The debate on immigration is a way of creating a scapegoat for very real problems, like the economy, even the environment.”

Teapublican Lie #11.

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“Obama is anti-business.”

Since Obama was elected president, the stock markets are up more than 31 percent and profits for large corporations are at all time highs.

That’s anti-business?

When CNBC’s Jim Cramer was interviewed on Hardball with Chris Matthews, he said he couldn’t understand why big corporations hate Obama. He said he asked corporations what they dislike. They mentioned taxes and regulations, but taxes under Obama are the same as they were when Bush was in office. And they couldn’t name a single regulation they want changed.

“There’s never been a better guy in Treasury than Tim Geithner,” Cramer said. “I really don’t understand why they don’t like Obama. They just don’t.”

Cramer may not know. But I think I can tell you why big corporations don’t like Obama. He hasn’t sold out to them like Teapublicans have. And like most Democrats, he still represents working people and the middle class.

Teapublican Lie #10.

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“President Obama’s Jobs Plan is Class Warfare.”

Teapublicans haul this one out every time a Democrat talks about raising taxes on the wealthy. It sounds terrible, doesn’t it? How could anyone be for dividing America into classes based on privilege and wealth?

Oh, wait! Teapublicans have been pursuing policies of class warfare for decades!

Thanks to Teapublican policies, 400 people now control 50 percent of the nation’s wealth, a combined $1.5 trillion. Their average net worth is $3.8 billion – a 12 percent increase from last year! Meanwhile, the bottom 90 percent have an average annual income of just $31,244 per household.

While the wealthy pay a federal tax rate of 15 percent on profits from their investments, middle class families pay a federal income tax rate of 25-33 percent on their salaries. While the corporations’ share of federal tax revenues has dropped from more than 30 percent in the 1950s to less than 10 percent now, individuals’ share has remained at more than 40 percent. At the same time, payroll taxes (for Social Security and Medicare) have gone from 10 percent to more than 40 percent!

But there has been even more bad news for the poor and middle class. In the past 10 years, incomes for the top 20 percent of Americans have increased dramatically while incomes for the bottom 80 percent of Americans have dropped! And while the Great Recession forced millions of American workers into unemployment lines, corporate CEOs and bankers have paid themselves multi-million dollar bonuses.

No, John Boehner, Mitch McConnell, Mitt Romney, Rick Perry and Michelle Bachmann, making those who have benefited the most from our country pay their fair share is not class warfare. Continuing the Teapublican policies from the past 30 years is.

Teapublican Lie #7.

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“Raising taxes on millionaires will hurt small business.”

After all, most small businesses are owned by millionaires, right? Rrrrright!

This whopper seems to stem from the Teapublican definition of small business. You see, they define small business by ownership rather than brands, offices, employees or income. In other words, since Cargill is a closely held, privately-owned company, Teapublicans define it as a “small” business. Similarly, they define Koch Industries as a “small” business. In case you don’t already know, these are the two largest privately-held corporations in the world! Both measure their profits by the billions. Yet Teapublicans lump them into the same category as the owners of the small clothing store on Main Street or the corner café!

In the interest of full disclosure, I’ve been a small business owner since 1987. Moreover, I’ve served hundreds of small businesses as clients. As it happens, I have also completed projects for Cargill and Koch Industries. I can tell you beyond the shadow of a doubt that those companies have absolutely nothing in common with small businesses. And I can tell you that 99 percent of the other clients are not owned by millionaires, let alone billionaires.

So, President Obama and Congress, go ahead, raise taxes on millionaires and billionaires. Most small business owners will thank you for it.

Teapublican Lie #5.

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“Regulations are bad for business.”

Teapublicans have been slinging this bovine excrement around for years. “Businesses face mountains of government red tape that make it impossible for them to operate,” they say. I admit it sounds plausible, but it’s just not true.

Certainly, every industry faces government regulations. But those regulations are not necessarily bad. For example, food growers must meet food safety regulations. They must maintain sanitary conditions and monitor the use of pesticides and chemicals. Not exactly onerous regulations, unless you don’t mind getting food borne illnesses. Similarly, restaurants must pass inspections for cleanliness and food preparation. Hotels must meet standards for safety and cleanliness…the list of such examples is long.

Contrary to the Teapublican talking point, a recent study by McClatchy Newspapers found that small business owners don’t feel that regulations and taxes are strangling their businesses at all. As a matter of fact, many of the business owners surveyed felt that the regulations actually create consumer confidence which is good for business.

So, if small business owners don’t oppose government regulations, who does?

One can conclude that the businesses most harmed by government regulation are those that don’t care about consumer safety. Companies that want to trash our environment without repercussions. Companies that want to cut corners to save money. Companies like BP, which apparently cut corners on a blowout preventer resulting in the worst environmental tragedy in history. Companies that buy toys painted with lead because they’re cheaper. Companies that purchase ingredients for pet food without testing them.

These aren’t small businesses. They’re huge, multi-national conglomerates that are more concerned about their bottom lines than their customers. If they don’t care about us, why on Earth should we care about them?

Teapublican Lie #2.

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“US corporate taxes are the highest in the world.”

You’ve heard it over and over during the past 2-1/2 years. Not only from Teapublicans. But from supposedly authoritative sources such as the US Chamber of Commerce. So let’s examine this myth more closely.

While it is true that the corporate income tax rate for the US is 34.2% (which includes a state tax rate of 6%), that is not significantly higher than the corporate tax rate for many other developed nations, and it’s less than Japan’s. Brazil has a rate of 32.5%; France and Germany have tax rates of more than 31%; Australia 30.8%; Canada 28% and the UK has a rate of 25.4%.

More to the point, this is not the rate that most large US corporations actually pay. In fact, the effective tax rate for large US corporations (after deductions and subsidies) is less than 18%!

For example, 12 major corporations made $171 billion in profits from 2008 to 2010, yet had a negative income tax rate of 1.5 percent! And the most egregious example is GE. Last year the global conglomerate generated $10.3 billion in pretax income, but ended up owing nothing in US federal income taxes. In fact, it recorded a tax benefit of $1.1 billion!

Moreover, employer payroll taxes in the US are just 7.7% – less than Korea, India, Mexico, Poland and most of the developed world. And since the 1940s, the corporate share of all federal income taxes has dropped dramatically. In 1940, corporations paid 43 percent of all the federal income taxes collected in the US. But, in 2010, that percentage was only 8.9 percent! Indeed, the US raises less corporate tax revenue than most developed countries.

So though the US has the world’s 2nd highest corporate income tax rate, the rate actually paid by US corporations is much lower. In fact, our effective tax rate is less than that of even Mexico, India, Vietnam, Korea, China and Russia. And that’s the truth!

The “I’ve Got Mine, You Don’t Deserve Yours” Crowd.

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According to a recent MSNBC.com article by Brian Alexander, lower class people are more likely to have empathy and compassion while the rich are more likely to think of themselves.  

The article confirmed my own observations. 

As an advertising executive, I’ve often listened to wealthy and powerful clients talk about how their success is the result of their own hard work, determination and risk-taking. They rarely give credit to the many other factors that have played a role in their success. 

They tend to forget that their educations were subsidized by local, state and federal governments. They forget the scholarships and low interest government loans that helped them pay for college. They forget about the Small Business Administration loans that provided the seed money for their companies.  They forget about the Tax Increment Financing that resulted in a no-interest, no-property tax loan for their company headquarters.  They forget about the contributions of their employees and suppliers. And they tend to forget about the contributions of their family, teachers, coaches and mentors who helped shape their lives.

One of my former clients, who received more than $50 million/year in compensation, once demanded that his managers fire 10 percent of their workforce after a year of record profits and then hire new replacements.  His reasoning?  He wanted to make certain that his employees would not “rest on their laurels” so he could make even more money the next year.

Fortunately, he was an exception. But an uncomfortable number of people are similarly driven. And because they are so firm in their belief that they “made it on their own,” they are often unwilling to help others reach for success.

It is this mindset that is at the very heart of the Tea Party movement. Their anti-tax, anti-deficit, anti-government, anti-Obama rants are driven by a philosophy best expressed by a quote from their hero, Ayn Rand, “It is the morality of altruism that men have to reject.”

That philosophy clearly explains their opposition to social safety nets such as Social Security, Medicare and Medicaid. It explains their opposition to the extension of unemployment benefits and any government spending to stimulate our moribund economy.  It explains why are they so opposed to the very government institutions that made their success possible.

But according to the MSNBC.com article, “Rich people may not be selfish as much as willfully clueless.  Research at Duke and Harvard universities showed that regardless of political affiliation or income, Americans tended to think wealth distribution ought to be more equal. The problem? Rich people wrongly believed it already was.”

World’s Greatest Nation? Really?

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Although many Americans are fond of calling the US the greatest nation on Earth, that hasn’t been true for many years. Certainly we have the world’s most powerful military, but that’s no criteria for greatness. Neither is the fact that we are still the world’s richest nation, despite the downgrade in our credit rating by Standard & Poors.

But greatest?

Does a great nation tolerate an ever-widening gap between billionaires and the working poor? Does a great nation leave tens of millions of its citizens without access to health care? Does a great nation allow millions of its children to be homeless? Does a great nation allow its education system to become third-rate? Does a great nation allow its infrastructure to decay and collapse merely to give another tax cut to large corporations and the wealthy?

Does a great nation use its financial and military power to prop up brutal dictatorships around the world? Does a great nation bankrupt the small farmers of neighboring countries by subsidizing corporate farms then demonize those farmers when they cross the border looking for jobs? Does a great nation demean those who labor to build things with their hands, to put out fires, or to teach its youth? Does a great nation begrudge a comfortable retirement to its elderly? Does a great nation allow large corporations and the wealthy to elect its politicians?

How can a nation be called great when it rewards greed and corruption? When its judicial system rules that corporations have rights superior to those of its citizens? When its financial institutions are allowed to grow so large they are immune to failure from their own mistakes? When its corporate lawyers are tasked with seeking out financial and legal loopholes that allow their clients to game the system? When its politicians are more concerned with scoring political points than the welfare of its voters? When its citizens are more interested in the antics of its celebrities than those of its government? When it allows its previous leader to run up a huge debt, and then blames the leader who inherited it?

We didn’t need Standard & Poors to tell us that our nation is on the verge of bankruptcy. When it comes to fairness, ideas and ethics, the US has been on the verge of bankruptcy for many years.