Oil Cos. Trying To Use Trade Treaty To Bypass Congress And Raise Prices

You may have heard that there is an oil and gas “boom” happening in the US. You might not know that there is a ban on exporting our own oil. This ban is good for the country but bad for oil companies. And the oil industry is attempting an end run around Congress to do something about it.

There is an ongoing “boom” in oil and natural gas production. Production of natural gas is way up. Imports are down about half since 2007. Texas oil production alone has more than doubled since 2011. This increase in domestic oil production has various consequences. We use much of our rail capacity transporting oil to refineries. The increase in natural gas production is pushing coal use down, and lowering carbon emissions as we fight for a transition away from using fossil fuel at all.

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Reagan Set Up The Death Of The Middle Class, But China Was The Clincher

Campaign for America’s Future’s 2010 Reagan Revolution Home To Roost series, especially the post Reagan Revolution Home To Roost — In Charts described the beginning of the great decoupling of the American economy from the middle class.

The summary:

Conservative policies transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then.

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Who Gets Rich Harvesting Burger King and the American Economy?

As fast-food workers across the country strike for decent pay, Burger King is still preparing to abandon the U.S. as its home country. How does a burger company get flipped like this and who gets rich when it happens?

Burger King is a company whose products encourage obesity, heart disease and diabetes in its customers and pays its employees so little that they require food stamps and other government assistance just to be able to sustain themselves. Now Burger King is asking us to swallow something even unhealthier than their food and lower than their pay. They are asking us to let them off from paying many of the taxes that sustain the very infrastructure, courts, education system and food safety system that enables them to stay in business – even the trademark system that keeps others from using the name “Burger King” or calling their product a “Whopper®.”

The company has been stripped, financialized and any remaining value is ultimately being moved across the border. The story of what is happening with Burger King is the story of what American capitalism and its financial speculation has been and is doing to the American economy. It is being done to the company and to us by the financiers. In this case it is names like Goldman Sachs, TGP Capital, Bain Capital, 3G Capital – all playing games with Burger King, other companies the American economy and our lives. And the latest plunderer, Bill Ackman and his Pershing Square Capital Management, is a financial manipulator who when he sees a company’s carcass worth plundering, goes after it – even if it involves betting on a company’s stock going down and then working to drive the company into the ground.

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The Cost To Our Economy From Republican Obstruction And Sabotage

The Republican political strategy has been to obstruct efforts to help the economy for everyone but the wealthiest few, and then campaign on complaints that the economy isn’t helping anyone but the wealthiest few. It’s working.

In President Obama’s July 12 weekly address he said, “So far this year, Republicans in Congress have blocked every serious idea to strengthen the middle class.” He could have said, “Since 2009.” Since the 2009 “stimulus,” Republicans have obstructed pretty much every effort to help the economy. In the Senate they have filibustered hundreds of bills, and since the “stimulus” they have managed to keep anything from passing that might help the economy.

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Full Employment Is More Than Possible – It Is Essential

Progressives have not only been able to beat back the D.C.-elite effort to cut Social Security, we put the idea of expanding Social Security on the table instead. We pushed LGBT rights and gay marriage and have won significant victories. Sunday’s Climate March will force climate onto the map.

We got the discussion of income inequality going. We have achieved minimum wage increases and paid sick days in several cities and states. The National Labor Relations Board is functioning and we even saw labor-movement gains in the South this week. We have held back (so far) the drumbeat for big cuts in corporate taxes they’re calling “tax reform.”

Now it’s time to put our demand for full employment policies on the table. And guess what – it’s a great way to win elections!

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Corporate Courts — A Big Red Flag On “Trade” Agreements

Think about everything you understood about our system of government here in the United States. We’re  governed under a document that starts with the words, “We the People.” Right? When We the People agree that something should done to make our lives better, it’s supposed to get done. Right?

You didn’t know it, but that whole system thing changed several years ago. Our government, in our name, signed a document that placed corporate profits above our own democracy. The “investor-state dispute settlements” chapter in NAFTA (and similar agreements) places corporate rights on above the rights of people and their governments.

As a result of “NAFTA-style” investor protections that are part of so-called “trade” agreements,  giant corporations can and do sue governments for trying to pass laws that protect their citizens from harmful chemicals, ban harmful products, and protect the rights of working people, among  other things. Corporations even sue governments for passing laws that might cause the investors in the corporations to make a bit less money — like raising the minimum wage.

But wait, there’s more.

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Hundreds Of Organizations Ask For Change In Trade Policies

Approximately 600 organizations have sent a formal, public letter to Senate Finance Committee Chairman Ron Wyden (D-Ore.) opposing “fast-track” trade promotion authority and calling for a new system for negotiating and implementing trade agreements. The letter asks for trade pacts that “deliver benefits for most Americans, promote broadly shared prosperity, and safeguard the environment and public health.” Read the letter here.

Campaign for America’s Future is one of the organizations that signed this letter. The letter was led by the Sierra Club, AFL-CIO, the Communications Workers of America, the Citizens Trade Campaign, and Public Citizen. The letter was written because new fast-track trade promotion authority is being drafted by Wyden’s committee. An earlier bill introduced by then-Senator Max Baucus and Rep. Dave Camp (R-Mich.) would keep Congress from debating or altering trade pacts like the Trans-Pacific Partnership (TPP) and other upcoming agreements, even though they are considered one-sided in favor of giant multinational corporations over working people and the environment.

The letter asks for a new process for reaching trade agreements in which Congress has a role in selecting trade partners and in which Congress sets up a set of negotiating objectives that must be achieved. The new process would include more transparency and a way for Congress to certify that negotiating objectives have been met before trade negotiations are wrapped up.

Larry Cohen, President of the Communications Workers of America, said this new process can help us decide what kind of economy we want to have, saying, “A new model of trade authority is the only way to ensure that workers and communities have a voice in these trade decisions. We want to determine what kind of economy we have, not simply accept super-power status for multinational corporations and a snails’ pace for the enforcement issues raised by the rest of us.”

The Hill reports on this letter, in “Hundreds of groups call for new framework to negotiate trade deals,” quoting AFL-CIO President Richard Trumka:

“Only with new trade negotiating authority can we secure new trade rules that can help hard working Americans build a sustainable economy and promote broadly shared prosperity,” said President Richard Trumka of the AFL-CIO.

“Chairman Wyden has a chance to make history by being the architect of a new and democratic trade policy, and we commit to doing all we can to help achieve that goal,” he said.

On fast track,

“There is no ‘acceptable’ version of fast track,” said Robert Weissman, president of Public Citizen. “Fast-track must be replaced so Congress can steer international trade in a new direction and create agreements that actually work for most Americans.”

Our Current Trade Deals Are Rigged Against Citizens By Choice

Our current trade deals are rigged – designed to benefit a few already-wealthy owners of giant multinational corporations. They were set up in order to transfer good-paying jobs out of the U.S. to take away the bargaining power of organized labor. This has forced down American workers’ bargaining power, resulting in stagnant wages, a shrinking middle class and widespread poverty. Meanwhile the rich get vastly richer.

These rigged trade agreements have also massively increased our country’s trade deficits. We currently run an enormous, humongous trade deficit of more than $40 billion a month.

Germany followed a different trade model. Germany worked with its companies and its labor unions to forge trade agreements that benefit businesses, workers and Germany’s economy. CAF’s Robert Borosage did a great job of laying out what happened in a recent interview on Richard Eskow’s The Zero Hour radio program. (Scroll to 5:15.)

Globalization isn’t an act of nature; it’s a set of policies, tax, trade, financial, monetary policies where you make choices and those choices benefit parts of the economy and injure others.

We made choices. Multinationals basically wrote our globalization strategy and they chose to benefit investors, made it easy to ship jobs abroad, made it even easier to threaten to move jobs abroad and dramatically weakened the ability of workers here at home.

But that was a choice.

In Germany they made a very different choice where unions were stronger, and the companies and the unions together navigated a globalization strategy that has made Germany one of the great export powers of the world and allows German workers to sustain middle class incomes and benefits.

Public Citizen has an action you can join: Write your representative to demand a real replacement to Fast Track and put an end to unfair trade deals.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Why Is SEC Sitting On Corporate Transparency Rules?

Are We the People the boss of the corporations, or are the corporations the boss of We the People? The Securities and Exchange Commission (SEC) needs to be reminded which way that question is supposed to be answered.

The SEC is the agency set up by We the People to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” The SEC states that “all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. … Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.”

One would think those basic corporate facts and timely, comprehensive, and accurate information needed by investors would include access to a company’s tax returns. One would think they would include information about where the executives of the company are spending millions and millions of the company’s dollars. And one would think they would include disclosure of the ratio of CEO “pay ratio” of compensation to worker compensation, as required by the 2010 Dodd-Frank law.

But so far the SEC is not asking corporations to provide investors and the public with this information. Don’t shareholders — and We the People — deserve to know what these companies are really doing and how much they are really making?

What Are These Companies Really Earning?

Companies tell their investors that they are making tons of money. But to get out of paying taxes the same companies tell the IRS something entirely different. Don’t investors have a right to know what the companies they invest in are telling the tax office?

Last month Catherine Rampell wrote in the Washington Post, in “Shareholders, public deserve tax transparency,” that:

“[There is an] array of eye-glazingly complicated tax avoidance strategies adopted by America’s biggest companies … The basic rationale behind tax transparency is that shareholders (and creditors and the general public) deserve to know what publicly traded companies are doing, particularly if complicated tax acrobatics are distorting their operational and investment decisions.”

She points out that we started out requiring this.

This is not a new idea. In fact, when the modern federal corporate income tax was introduced in 1909, it came with a requirement to disclose the returns. Such transparency mandates were fought over bitterly for the next couple of decades, and U.S. returns have been confidential since 1935.

What About Company “Donations”?

If a company’s executives are literally giving the company’s money away to politicians, “charities” (maybe run by a relative), “think tanks” (that employ relatives, etc.) or other worthy recipients,  shouldn’t investors be provided with information about who is getting the company’s money, and how much they are getting? (Milton Friedman notably claimed that such donations are “theft” from the company.)

(Note: If a company gives money to a politician, and is not simply “giving the money away” for nothing — with absolutely no expectation of getting anything in return — that would be bribery,  under the law.)

Last week in The Nation Zoë Carpenter wrote about this in, “SEC Faces Renewed Pressure to Consider a Corporate Disclosure Rule”:

The campaign to lift the veil on secret corporate campaign donations hit a milestone on Thursday. More than 1 million comments have been submitted to the US Securities and Exchange Commission calling for a requirement that corporations disclose political spending to their shareholders—ten times more than for any other rule-making petition to the SEC, according to the Corporate Reform Coalition.

“Investors want to know how their money is being spent,” Tim Smith, director of shareholder engagement at the firm Walden Asset Management, said at a press conference outside the SEC in Washington. A sign over his right shoulder read, “Your money is being invested in secret. Why is the SEC doing nothing?”

Why Is SEC Sitting On These Rules?

So why is the SEC just sitting on these proposals to disclose basic information to shareholders? In the case of the CEO pay ratio, this is even required by a law passed almost 5 years ago.

Could it be that the people working at the SEC really do know who is the boss now? (“Boss” as in the writer of the big paycheck and future employer.) Maybe, and maybe not. Who’s to say?

In early 2013 the Project On Government Oversight (POGO) released it report, “Dangerous Liaisons: Revolving Door at SEC Creates Risk of Regulatory Capture”:

A revolving door blurs the lines between one of the nation’s most important regulatory agencies and the interests it regulates. Former employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals, and win exemptions from federal law. POGO’s report examines many manifestations of the revolving door, analyzes how the revolving door can influence the SEC, and explores how to mitigate the most harmful effects.

At the time of the report’s release Bloomberg reported,

From 2001 to 2010, POGO says, more than 400 SEC alumni filed about 2,000 disclosure forms (which POGO obtained using the Freedom of Information Act) saying they planned to represent an employer before the SEC. That may vastly understate the problem because, as POGO points out, former SEC employees must file such statements for only two years after departing.

The SEC has exempted some senior employees (even sometimes blacking out their names on SEC documents) from a one-year cooling-off period during which they are barred from representing clients before the agency, POGO found.

Soon after the report was released: April, 2013, Ex-SEC chief Schapiro takes revolving door back to private sector,

With her seat barely cold at the chairmanship of the Securities and Exchange Commission, Schapiro will become a managing director at a financial consulting and lobbying firm that has hired a slew of former financial regulators over the last several years and that represents for many a nexus of the cozy relations between banks and their regulators.

Are We the People the boss of the corporations, or are the corporations the boss of We the People? Who’s to say? Not the SEC, apparently.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Six Corporate Tax Myths In One Letter to Editor

How MANY mistruths can you count in a letter in today’s San Jose Mercury News?

Lower corporate taxes would boost economy

When the government wants to raise taxes, the counter argument is always that people and corporations will work harder if they can keep their earnings. It is either that, or pass the costs to the consumers. Either way, high taxes are a no-win situation for everybody. Now that we have the highest taxes of any industrialized nation, corporations are “voting with their feet” and using legal tax-inversion strategies to stay competitive. The administration that pushed for high taxes is crying foul and saying this is not patriotic. Now they don’t like the consequences of their greedy tax policies. Drop the corporate tax rate to 15 percent and watch the economy soar.

  1. Myth: People will work harder if they can keep their earnings. Actually, wouldn’t people work harder to make up for the money that goes to taxes?
  2. Myth: Corporations pass the “cost” of taxes onto consumers. Actually corporations can’t pass taxes to consumers. (And taxes are not a “cost.”) Summary: taxes are on profits and prices are already as high as the company can charge. If corporations could just increase prices to cover taxes then the profits would go up, which raises the taxes, so they wold have to increase prices again, which would increase profits, which raises taxes, so they have to increase prices again, etc.
  3. Myth: Taxes are no-win. Actually they pay for the reads, schools, courts, police, military and the rest of the things that enable corporations to prosper.
  4. Myth: We have the highest taxes. Actually we don’t. Corporations are shifting profits out of the country to avoid ever paying taxes. The solution is to make them pay their taxes, not lower tax rates to let them get away with this.
  5. Myth: The administration raised taxes on corporations. Actually the administration didn’t raise corporate taxes. Corporate taxes have been lowered from 46% to 35% since the 80’s.
  6. Myth: If the corporate tax rate was lowered to 15% the economy would soar. Actually there is no relationship between lower tax rates and higher economic growth. In fact, there is a correlation between lower rates and lower growth, possibly because lower taxes cause government to cut back on the things that help the economy prosper, like education, investing in infrastructure, basic research, etc.

The letter-writer probably actually believes the stuff he wrote. Many people do. This shows the effect of decades of corporate/conservative propaganda on the public. Unfortunately these beliefs are leading to policies that are killing our economy and our democracy.

Eric Cantor Goes To His Reward

Eric Cantor was a congressman from Virginia and was House majority leader. He was known for being particularly friendly to Wall Street and the giant, multinational corporations.

In the June Republican primary, his Virginia constituents got fed up with this and booted him, choosing to nominate Cantor’s challenger, David Brat, instead. Conservative Erik Erikson explained at FOX, that Cantor’s Virginia constituents did this because, “K Street, the den of Washington lobbyists, became his chief constituency.”

Cantor didn’t bother to finish his current term supposedly representing his Virginia constituents. He resigned from office effective August 18.

Just two weeks later Cantor has gone to his reward. Cantor will receive a huge, fat, lucrative, awe-inspiring, 1-percent-making, mansion-jet-and-yacht-buying, zillion-figure paycheck from his Wall Street/corporate constituents. He will become board member, vice chairman and managing director of investment bank Moelis & Co. (It typically takes longer than two weeks to negotiate a senior position like this one, if you know what I mean.)

Cantor earned this senior investment banking position with his vast experience in investment banking, if you know what I mean. (Cantor has a law degree, and a Masters in real estate, and worked in real estate development for his father before entering the clearly more lucrative field of representing certain constituencies, if you know what I mean.)

“Eric has proven himself to be a pro-business advocate and one who will enhance our boardroom discussions with CEOs and senior management as we help them navigate their most important strategic decisions,” Moelis CEO Ken Moelis said in a statement.

Wink, wink, nudge, nudge, say no more, if you know what I mean.

Take The Gold Or Take The Lead

Our system has become corrupted and everyone knows what I mean. Everyone understands that government officials who “play ball” can get a huge paycheck after leaving government if they help certain big businesses while serving in government. The Nation explains, in When a Congressman Becomes a Lobbyist, He Gets a 1,452 Percent Raise (On Average), Secret deals, bribery and “buying” members of Congress are commonplace in today’s government. (See also: Tauzin, Billy.) (And: Public Interest Groups Call For Corruption Investigation Into Prescription Drug Law.)

Neil Barofsky was Special United States Treasury Department Inspector General overseeing the Troubled Assets Relief Program (TARP). In the preface to his book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, Barofsky explained that people in government are given two choices, “the gold or the lead.” From the NY Times review, (emphasis added, for emphasis)

Mr. Barofsky, wearing an unseasonal wool suit at odds with a “Washington-appropriate wardrobe,” is poised to let the hostess seat them at a front table of her choosing, but Mr. Allison insists on a private table in the rear. Then he gets down to business.

“Have you thought at all about what you’ll be doing next?” Mr. Allison asks Mr. Barofsky, soon adding, “Out there in the market, there are consequences for some of the things that you’re saying and the way that you’re saying them.”

“Allison was essentially threatening me with lifelong unemployment,” Mr. Barofsky concludes, and alternatively suggesting a plum government appointment some day if Mr. Barofsky would simply “change your tone.”

When Mr. Barofsky tells his deputy of the exchange, the deputy says, “It was the gold or the lead,” resorting to the lingo of their joint experience prosecuting Latin American drug kingpins in New York: Cooperate and share the riches, or don’t and get plugged.

There are “consequences” if you don’t play ball. But if you do play ball, there are rewards. And everyone knows it.

Cantor represented Wall Street instead of Virginia in the Congress. His Virginia constituents didn’t like it, and booted him. Cantor has gone to his reward: a big pot of Wall Street gold. And everyone knows it.

Solution? Make it a law: No person employed by the government in any capacity may receive compensation in any form that is significantly greater than the compensation they received for their public service, for a period of five years.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Why Fight For Unions? So We Can Fight An Economy Rigged Against Us

The other day I wrote about how FedEx has been pretending that their employees are not employees, which gets around labor standards for things like overtime, family leave and the rest.

This misclassification game is just one way that big companies have been rigging the rules to give themselves an edge, getting around what We the People set down for our democracy.

The result, of course, is even more people paid even less with even worse working conditions. And the bad players get an advantage that drives out the good ones.

Like misclassification, this game-rigging, cheating, edge-seeking, rule-bypassing stuff is everywhere you look. (Rigged trade deals, corporate tax “deferral” and inversions, corporate campaign donations, too-big-to-fail banks, Congressional obstruction, etc. and etc…) This rigging of the game in favor of the ultra-wealthy gets worse and worse.

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