Tag Archives: Democrats

Corporate Tax Dodgers Have Clout in Congress

Corporate tax payments have fallen from a rate of about 40% in the 1950s, to around 11% since 2008 – Congress creates tax loopholes and gets campaign donations in return.

The corporate tax system is on the verge of being organized crime. The Institute for Policy Studies found that 25 of the Fortune 500 U.S. companies paid their CEO more than they paid in federal income taxes.

There are many examples of companies taking advantage of legal ways to “launder” their profits to avoid federal and state taxes. For example, Apple is sitting on over $120 billion in cash reserves. A significant portion of that surplus is a result of the company paying just $3.3 billion in taxes on its reported profits of $34.2 billion in 2011 – a rate of 9.8%. A recent New York Times article explained how Apple sets up small offices in low-tax place like Nevada, Ireland, and the Netherlands. There is even a new accounting term the “Double Irish with a Dutch Sandwich” to describe the tax dodges employed by Apple and, as the word spreads, many other companies.

The list of companies that pay almost no taxes is longer than a Clint Eastwood monologue. For example, General Electric brought in $81 billion in profits during the last five years and received a $3 billion refund for “overpayments,” Verizon received a refund in spite of ringing up $48 billion in profits over the last five years. Boeing made a total of $21.5 billion in profits and got a small refund, and Kraft enjoyed a refund in spite of $13.5 billion in profits over five years. Just typing this paragraph makes me as cranky as John McCain.

The result is a laughably small corporate contribution to the common good. The Center for Tax Justice (which is a wonderful non-profit that I donate to) calculated that corporate taxes have fallen from 4% of the Gross National Product in 1965 to 1.3% in 2009. This amount is lower than the percentage in dozens of developed countries including Korea, Japan, England, Norway, Israel, Canada, and Turkey to pick a few off the list.

While the nominal federal tax rate on corporate profits is 35%, no major corporations pay at that level. Since the 1970s, when business lobbying activity became a major force, Congress has created a growing pile of tax breaks for every industry and business activity. The famous oil depletion allowance no longer makes headlines because it is now just one of hundreds of tax give-a-ways. Congressional leaders on key committees ensure a steady flow of campaign donations by making many of these tax breaks temporary – meaning they have to pass through committees and be voted on every two years.

The link to Congressional campaigns is filled with $$ signs. For example, Senator Max Baucus (D-Montana), Chair of the Senate Finance Committee, has raised $12 million over the last six years. $5,353,000 (43%) came from corporate Political Action Committees (PACs); $6,253,000 (50%) came from individual donations totaling more than $200 in any one year; $59,000 (1%) came from labor-related PACs; and $16,928 (0%) came from individual donations of less than $200 in any one year.

We can only imagine how many corporate tax cuts Senator Baucus has voted for in his 23 years on the Finance Committee. Have you give the Senator more than $200 this year? I don’t think you should be expecting a tax cut any time soon.

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Retreat on Filibuster Reform Helps Fundraising

Majority Leader Harry Reid and conservative Democratic Senators decided not to change the Senate’s filibuster rules when the new Senate met in January – the result is a disaster.

Tired of deadlock in the Senate? Blame the Democrats.

Sure, it is the Neanderthals running the Republican Party in the Senate who filibuster every possible improvement in American life, but the Democrats designed the rules that let them do it. Harry Reid may bluster and complain when a Republican filibuster blocks a nomination or stymies a bill, but every other January since 2007 he and a handful of Democratic conservatives prevent Senate liberals from changing the rules to break the power of the filibuster.

Unlike Roberts Rules of Order, which are based upon the principal of majority rule, the procedures adopted by the Senate in the 18th Century allow Senators to frustrate majority rule by talking without interruption – thus blocking any vote. Senate rules say that only a super majority – it was 66 Senators until the 1970s, now it is 60 Senators – can cut off debate and force a vote.

The filibuster is obnoxious in and of itself because, until the 1990s, the filibuster or the threat of a filibuster was used primarily by southern Senators to block civil rights legislation. As a result, none of the many civil rights bills approved by the House of Representatives between 1869 and 1957 – including voting rights acts, anti-lynching laws, and fair employment laws – passed the U.S. Senate. Only under the pressure of the Civil Rights movement in the 1960s were laws finally passed to outlaw discrimination and restrictions on voting rights.

Now the Republican Party has used the filibuster 380 times since Democrats re-took control of the Senate after the 2006 Congressional elections. Here are examples of legislation passed by the House during the 111th Congress (2009 and 2010) that received more than 50 votes in the Senate, but were blocked by a Republican filibuster – The DREAM Act, which would have provided a path to citizenship for children of undocumented immigrants; the Employee Free Choice Act, which would allow employees to create a legal union by collecting signatures rather than participating in a company-dominated election; a Public Option provision in the ObamaCare Act; and the Buffet Rule, which would have created a 30% minimum tax for individuals with incomes over $1 million.

There was a strong movement among newer Democratic Senators to change the filibuster rule when the 113th Congress started, but in the end Harry Reid, Diane Feinstein, Carl Levin and other conservative Democrats, apparently without any complaint from the White House, settled for a few minor reforms. The impact has been painful. Under the threat of a filibuster, the Democratic leadership has dropped provisions banning assault weapons and large magazine clips from the Senate gun control bill. In March, the President had to withdraw his nomination of Caitlin Halligan, a liberal lawyer who pursued law suits against gun manufacturers, to the U.S. Court of Appeals for the District of Columbia Circuit – a training ground for future Supreme Court justices because of the prominence of the cases brought in Washington.

This frustrating state of affairs allows the Democratic Party leadership to have it both ways – trumpeting its progressive positions during elections – but collecting campaign cash from rich donors who understand that results are what count.  You have to think about how their main constituents are the people that donate millions of dollars for their campaigns – people who are not excited about economic change.

Not Really a Progressive

I went to hear George Packer, of The New Yorker fame, speak this week and was struck by his references to the Progressives; the real ones in 1905, not the vague term that people use today.  Mr. Packer said President Obama is like the Progressives in his passion for clean, open government; he deeply values a political system where issues are discussed in a spirit of good faith, where leaders struggle to work out what actions are in the best interest of the country.  This progressive, good government impulse is deeply embedded in the president’s “come, let us reason together” personality and is the source of his persistent attempts at bi-partisanship.

Mr. Packer also said that Obama, like the Progressives, believes in expertise and group discussion in order to reach the right policy prescriptions.  Once he reached the White House, Obama moved away from his campaign “man of the people” persona and adopted a more deliberative, expert-oriented, decision-making process.  While this was most evident during the three month process that preceded his decision to drastically increase military activity in Afghanistan, the same process was also used for major issues like saving the financial system, pushing for health care reform, and addressing climate change.

Unfortunately, the mere listing of those last three issues, banks-health care-climate change, highlights the dramatic way in which President Obama is not at all like the Progressives of the early 20th century.  Those reformers were passionately opposed to the abuses of large corporations and banks.  The “Robber Barons” were not loved by most Americans and numerous movements rose up to challenge their ability to exploit workers and consumers.  In fact, by the 1912 presidential campaign between Teddy Roosevelt, Woodrow Wilson, and Howard Taft, there was a fierce debate over whether big companies should be dismantled through anti-trust court action (Taft), closely managed through a system of powerful federal regulatory agencies (TR), or some combination of the two (Wilson).

Needless to say, Mr. Obama has never considered any of those alternatives.  Instead, following the advice of his experts, he, and the Democratic leadership in Congress, have attempted to purchase good behavior through open-ended bail-outs of financial firms, concessions that preserve the profits of drug and insurance companies, and subsidies and exemptions for dirty energy providers and users in the cap-and-trade bill that passed the House last summer.

Obviously, President Obama has been confronted by over-the-top belligerence from the Republican Party, but the policy choices he has made in an attempt to moderate their opposition and get cooperation from our modern day Robber Barons have added up to a demoralizing failure to promote the national interest.  Millions of his strongest supporters have been reduced to stunned disbelief.  Perhaps what we are seeing is the exhaustion of modern liberalism; a philosophy that was once guided by the principle of using government resources to improve the well-being of the great majority of the population.  Now the party of liberalism seems to have no political strategy other than using tax money to bribe rogue corporations and banks in the vague hope of moderating their behavior.

Reversal of Fortune

The last post on this blog was in November of 2008.  In it, I compared Obama to Quinn the Eskimo in the famous Bob Dylan song.  At that time a giddy euphoria swept much of the country and there were pundits calling for President Bush to resign so that Obama could take office immediately.

At the time, I felt there was no longer a pressing need for a blog about the American empire; a systematic, historically-based criticism of the wars and hardships that accompany the country’s restless urge to control the earth’s resources and destiny.  Deep down, I had been rooting hard for Obama and, like many others, projected my hopes and dreams of reform onto his candidacy.  I also thought that he understood the urgent need for change and would be eager to seize the moment.

Most ironically, about the time of my last post it was becoming clear that Al Franken was going to eventually win the Senate seat in Minnesota, giving the Democrats 57 seats along with two Independents – even if one of them was that miserable tool Joe Lieberman.  With the help of the remaining moderate Republicans like Snow and Collins from Maine and the political weathervan Arlen Spector of Pennsylvania, a series of reforms would wash away eight years of awful rule by Dick Cheney and his amiable sidekick.

How misguided that whole mood seems today!  The 60-40 split in the Senate morphed with President Obama’s odd desire for bi-partisan legislation, giving enormous power to the most conservative Democrats in the Senate.  Combined with the “filibuster everything” strategy followed by all of the Republicans, the Senate has become a bastion of reaction.  Just as Cato and his faction in the Senate of the Roman Republic were willing to risk civil war in order to crush reform politicians, the hard-line conservatives who control the Republican Party and much of the media are will to bring Obama’s government to a halt.

Disheartening as these events were, the real shock was President Obama’s willingness to pump up the defense budget and expand the war in Afghanistan.  These actions confirm the thesis presented in my book – that the American empire is a deeply bi-partisan effort to dominate political and economic affairs in every part of the globe.  Thus, the blog is back and I hope that people of good-will all over the U.S. turn their efforts toward restoring the vitality of the American Republic before it is too late.

Obama’s Afghan Promise

While we often complain about candidates not keeping their campaign promises, when it comes to difficult, complex issues, a campaign promise can become a ball and chain around a new President’s neck.  This happened to Bill Clinton when he promised to immediately ban persecution of gays in the military during his 1992 campaign.  Instead of working with the Joint Chiefs of Staff to introduce a suitable shift in military policy, Clinton issued an Executive Order on his first day in office, abolishing rules against gays serving in the military.  This placed him in a high-profile conflict with war hero and Chairman of the Joint Chiefs of Staff, Colin Powell.  Clinton took an enormous amount of flack from right-wing and Congressional critics, Powell refused to buckle under Presidential pressure, and the public perceived Clinton as imposing an extreme “liberal” position on the highly praised military that had just won Gulf War I.  The new President was forced to accept a humiliating defeat, agreeing to the ridiculous “Don’t ask, Don’t tell” policy that actually made things worse for gay individuals in the service.

I bring up this sorry episode as a warning when we consider Obama’s repeated promises during the fall debates to hunt down Osama bin Ladin and kill him, with or without the help of the Pakistani government.  It is unclear to me how he can carry out this promise without continuing the new American policy of unannounced cruise missle strikes in the mountainous areas of western Pakistan, a policy cooked up by the Bush administration this summer.  Not surprisingly, these attacks on a sovereign country are destabilizing our relationship with the new Pakistani President and the country’s largest political party.  To frost the cake, Obama also explicitly and repeatedly said he would send more U.S. combat troops to Afghanistan in order to defeat the Taliban.  He has created very high expectations and will have a difficult time backing out of these commitments – commitments that could lead to the collapse of civilian rule in Pakistan and the creation of a new quagmire in the remote hills of Afghanistan.

Leaving aside the folly of adopting any policy created by the Bush Administration, I believe these Osama-Afghanistan promises are a classic example of how the Democrats have historically been drawn into defending the American empire.  In the heat of an election campaign, Obama felt he had to show how tough he is, how he would be a vigorous Commander-in-Chief.  Just like Kennedy and Johnson had to show how tough they were by keeping the commies out of Vietnam.  These military promises are powerful because they fit right into the imperial job description that so many military, journalistic, academic, and political leaders attach to the Presidency.  It is a job description that many Democratic and Republican voters believe in as well.  As such, they are the policy equivalent of painting yourself into a corner and then claiming you are free to go anywhere you want.  The appropriate response is – Yes, within your little box.

Of course, Obama is not as trigger-happy as McCain, but the criticism from Hillary Clinton this spring and then McCain and the media about his “credentials” to be Commander-in-Chief (see my posting in September) have forced him to become much more militaristic than he was when he started the campaign.  We are actually watching, in real time, how the dynamics and pressures of empire shape individuals who become leaders.  No matter what their pre-presidential ideas about foreign policy, the pressures of the political system puts them in a position where, in order to advance to the presidency, they must commit to defending the empire.  In Perils of Empire, I explain in detail how the dynamics of the Roman political system consistently generated leaders who sought war and expansion of territory – and the American political system has been doing a similar thing since at least the end of WWII.  Without a powerful peace movement that opposes wars and treaties the promote the empire, Democrats get pushed into the imperial system, even those who begin with good intentions.

Inside Obama’s Election Strategy

In spite of media stories about a tightening race, Barack Obama has all but locked up an Electoral College majority.  He has held solid leads in New Mexico, Colorado, Iowa, and Virginia since the beginning of October and the website ‘Real Clear Politics,’ which has the best electoral college map on the internet, shows him pulling into a commanding lead in Nevada.  This means that the attention being paid to Ohio, Florida, North Carolina, Indiana, and Missouri are beside the point.  Obama can claim 291 electoral votes without winning any of these “swing” states.  Essentially, the campaign is now being waged around the size of Obama’s mandate.

Obama has assembled this commanding lead by combining the strategies advocated in two “big picture” books by Democratic political strategists.  The first, The Emerging Democratic Majority, written in 2001 by John Judis and Ruy Teixeira, said the Democrats could become the dominant party in the 21st century by appealing to people who live in urban areas with predominantly information/high tech economies – areas that are generally multi-cultural, socially liberal, and internationalist.  Their research showed that urban areas with these characteristics are growing in electoral importance in many states that traditionally have leaned Republican.  For example, the metro-Denver area in Colorado; the fast-growing suburban areas of northern Virginia; the Las Vegas-Reno area in Nevada, and the sprawling metro areas of Phoenix, Arizona and Santa Fe, New Mexico now have more voters than the conservative rural areas that have previously defined politics in those states.  They pointed out that several states considered swing states in the 1960s and 70s, for example Washington and California, had already become Democratic strongholds by 2001 because of the rising importance of metro-Seattle and the cultural transformation of the metro-Los Angeles area.

The second book, Whistling Past Dixie, written in 2006 by Thomas Schaller, says that the Democrats should focus on capturing western and northern states with culturally diverse populations rather than becoming more conservative on racial or cultural issues in a vain attempt to best the GOP in the south.  He specifically pointed to the southwestern states of Nevada, Arizona, New Mexico, and Colorado, but included states with tight presidential races in 2004 like Iowa, Wisconsin, New Hampshire, and Oregon.  His strategy is to confine the GOP to the conservative, religious, non-urban states of the deep South, Texas, and the lightly populated Great Plains.

Note that in both of these portraits of the American electorate, Ohio is a swing state outlier in the North because it doesn’t have a high tech urban area and southern Ohio is culturally similar to Kentucky and Tennessee.  In addition, Florida is a swing state outlier in the South because it has some high tech areas and a diverse mix of people due to immigration and retirement communities.

The attention and false claims of a McCain surge directed toward Pennsylvania reveal the nature of Obama’s success.  Unless McCain can somehow come from behind to win in Pennsylvania, victories in Ohio, Florida or other “swing states” of the past will make no difference.  We will know quickly on Tuesday night whether the Obama strategy of winning in the west and in multi-cultural urban areas has succeeded.  If he captures the eastern time zone states of Pennsylvania and Virginia then it will be time to discuss color patterns for the Obama White House drapes.