Still I’m Sad
For myself my tears just fall into dust
Still I’m Sad
For myself my tears just fall into dust
President Obama is considering a delay of his most controversial proposals to revamp immigration laws through executive action until after the midterm elections in November, mindful of the electoral peril for Democratic Senate candidates, according to allies of the administration who have knowledge of White House deliberations.
Well there goes any hope of energizing “the base” to come out and vote in November. No wonder people don’t bother to vote anymore.
Why are they doing this?
“Such a move by the president, some senior officials worry, could set off a pitched fight with Republicans and dash hopes for Democratic Senate candidates running in Arkansas, Louisiana, North Carolina and potentially in Iowa.”
Right, because this will persuade all those right-wing anti-immigration voters to vote for Democrats.
This tells all the pro-Democrat voters in those states not to bother to vote.
If Obama does this he is going back on his promise in June to do something “by the end of summer” to help the millions of people trapped by Republican obstruction.
From the NY Times story: “Representative Luis V. Gutiérrez, Democrat of Illinois, who has at times been critical of the administration’s approach, said that delay “comes at a tremendous cost in terms of families split up and children placed in foster care.”
Doing the right thing is always the right thing politically.
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.
I was on Nicole Sandler’s Radio or Not show Monday. (You might know Nicole as the person who took over Randi Rhodes’ radio show when Randi wasn’t able to be there.)
Click here and then slide it to 1:38:12. It was a really good segment. We were talking about my recent post on Mitch McConnell’s threat to shut down the government if Obama won’t sign legislation to dismantle the government. Of course, you can also listen to the whole show.
Nicole does a 2 hour show, Mon-Fri, live from 10-noon ET. She is on youtube and 3 audio streams live… Plus a 24/7 tunein channel that carries the show live, and runs the most recent 5 shows back to back. Each morning’s show repeats at 3Pm ET.
The tunein url is http://tunein.com/radio/The-Nicole-Sandler-Show-247-Stream-s229127/, but it’s also accessible from the tunein app or directly from radioornot.com. The podcast is also on itunes (click here), Stitcher or any other podcasting service.
Nicole’s show is always free, but listener supported.
Burger King is the latest company announcing plans to renounce its U.S. citizenship in order to dodge taxes. It plans to buy Tim Hortons and then pretend Tim Hortons bought them so they can claim to be Canadian. (Tim Hortons renounced its own U.S. citizenship in 2009 and moved their headquarters from Ohio to Canada.)
The announcement is prompting calls like this petition you can sign by the Campaign for America’s Future that calls on Burger King’s CEO to keep the restaurant chain American or “I will dine elsewhere.”
Burger King Didn’t Build That By Themselves
Why is Burger King prosperous? Why do people feel safe eating food served at Burger King? Why do people recognize a Burger King when they see one? Why does something called “Burger King” with outlets across the country (and the world) even exist?
Tonite at 9ET, 6PT. I discuss topics with David Dayen on Virtually Speaking. You can listen live or later: http://www.blogtalkradio.com/virtuallyspeaking/2014/08/25/dave-dayen-dave-johnson-vs-sundays
We discuss BofA Settlement, Austerity as a failed policy and Ferguson. http://bit.ly/1t57Usg
Europe’s economic depression has now lasted longer than the Great Depression of the 1930s. Meanwhile, America’s “Great Recession” also drags on thanks to cutbacks in government spending since the stimulus.
Europe’s leaders somehow were convinced that austerity – “deficit reduction” through cutbacks in government – would somehow lead them out of their economic doldrums. They believed that taking money out of the economy would help the economy. The result has been terrible. The Washington Post’s Wonkblog calls Europe’s austerity-lengthened depression “one of the biggest catastrophes in economic history.”
To top it off, Europe’s governments are learning that cutting back on spending not only worsens the economic picture, causing terrible unemployment, poverty and human misery, but the worsened economic picture means less revenue coming in, thereby increasing deficits instead of lowering deficits. In other words, austerity cutbacks to fight deficits have instead made deficits worse and hurt people.
We have an enormous, humongous and ongoing trade deficit. This means we buy more from other countries than they buy from us and we do this every year.
Trade is supposed to be balanced. Instead we have been running continuing trade deficits since the late 1970s. A trade deficit drains our economy and forces consumers, businesses and government to borrow, just to keep going. This means that jobs, factories, entire industries and literal boatloads of money have been leaving the country – it really adds up because we do this every single year. We have to do something about this.
The “Buffett Plan”
In May’s post, Balancing Trade – Remember The “Buffett Plan” I described the 2003 “Buffett Plan” proposed by Warren Buffett, who was very concerned about the damage done to our economy and unemployment caused by our ongoing trade deficit.
The government could issue “Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports.” The number of import certificates determines the level of trade imbalance or balance that we allow.
A few years later Congress tried to address the problem with legislation designed to balance exports and imports.
Senators Russ Feingold and Byron Dorgan proposed the The Balanced Trade Restoration Act of 2006, similar to Buffett’s plan. The bill warned, “The surging trade deficits could soon create a balance of payments crisis for the United States, which could wreak havoc with the economy of the United States.” The bill didn’t go anywhere.
And then (from the same post) someone else brought up the Buffett Plan:
In a 2011 article, “What Would Buffett Do? — A Plan to Balance Trade, Create Jobs and Restore American Manufacturing,” Bill Parks goes into detail on a similar plan, and suggests a mix of private and public sale of the import certificates. He also suggests that the government could adjust the ratio of exports to imports as needed.
A New Stab At This Simple Plan
At the site Economy In Crisis, Kenneth N. Davis, Jr., Former U.S. Assistant Secretary of Commerce writes about the Balanced Trade Restoration Act of 2014. Davis notes that “imports have been the single most damaging blow to our domestic industrial base that we rely on for national security and income as well as for a strong economy and good jobs.”
In the Balanced Trade Restoration Act, Davis has put together a proposal that, while inspired by the original Buffett plan, offers an updated and more specific legislative plan for making it work. Davis writes,
My group, Balanced Trade Associates, believes we have a bold, realistic plan to deal with the import problem. It could eliminate our 700+ billion dollar annual trade deficits within 3 years. Our law would also require 3 years of modest 10% annual reductions in our imports that now run at 2.1 trillion dollars. The answer is our proposed new legislation: “The Balanced Trade Restoration Act.”
With it, the U.S. would restore our practice of maintaining modest annual trade surpluses with the rest of the world. Unlike most competitor nations, we abandoned that sound policy to emphasize globalization in the late 1960’s.
The text of the Balanced Trade Restoration Act of 2014 is included in his post at Economy in Crisis, but put simply, import certificates are issued based on exports, you need a certificate to import:
It might sound like a lot of paperwork, but actually it’s just an IT/computer problem – setting up a data center with a database of exports, the resulting certificates and issuing certificates for incoming shipments by importers.
Does This Proposal Violate Trade Agreements?
While trade agreements contain measures against import restrictions they also call for balanced trade. This is not an import restriction, it is a balancing measure. The General Agreement on Tariffs and Trade (GATT) allows import restrictions in situations of balance-of-payments. Trade not only should be balanced, it must eventually be balanced because the damage done by unbalanced trade to the economies of countries and ultimately to the world’s economy.
A Cap-And-Trade System To Incentivize Exports?
Davis’ plan calls for issuing certificates to “qualified” importers on a fair basis to prevent giants like Walmart from cornering the market. From the proposal: “Certificates shall be issued by the United States Customs and Border Protection to any qualified importer, as determined by the Commissioner. Certificates are non-transferable. The Commissioner shall determine the fee for Certificates such that all costs of administering the Program are paid by the fees.”
My own thinking is that a regulated (to prevent cornering the market) cap-and-trade (transferable certificate) system that allows exporters to sell those certificates to importers for a market price would still be beneficial. Because we import more than we export the certificates would have an added value, creating an incentive to export. It would also subsidize those exports. Corporations respond to incentives and this would create an incentive to export, which would create jobs. Once trade is balanced, those incentives are reduced, so it is self-correcting.
But either way, this can be worked out as the system is set up. Hopefully experts would provide testimony and a consensus decision would be made based on the best way to proceed to help our economy and fight the enormous, humongous trade deficits.
And So, In Conclusion
I end this post as I ended the May post. The Buffett Plan was just one idea for balancing trade. But balance we must. As Buffett warns, these huge trade deficits cannot be sustained. They are draining our economy. There has to be a reckoning. We have not faced that reckoning yet, but it is inescapable. It has to happen. We have to tackle this as a country, with a national plan.
While we’re talking about balancing trade, the Coalition for a Prosperous America has petition to Congress: Congress should direct the President to pursue Balanced Trade now as the principal trade policy objective.
We, the undersigned individuals and organizations, request that Congress adopt balanced trade as the primary national trade goal by adding the following language to future trade-related bills:
“The principal national objective for trade in goods, services and agriculture is to achieve an overall balance of payments over a reasonable period of time, eliminate persistent trade deficits and reverse the accumulation of foreign debt.”
Click through to add you name, please.
A Politico story being promoted by the Drudge Report, “McConnell’s plan to shut down Obama,” makes it clear that if Republicans capture the Senate this fall they will, as the Drudge Report puts it, “play chicken” and shut down the government if President Obama vetoes their legislation to dismantle the government.
From the Politico interview, a threat,
“We’re going to pass spending bills, and they’re going to have a lot of restrictions on the activities of the bureaucracy,” McConnell said in an interview aboard his campaign bus traveling through Western Kentucky coal country. “That’s something he won’t like, but that will be done. I guarantee it.”
Who does McConnell say would be to blame if the President vetoes bills and Republicans then shut down the government rather than compromise? “McConnell said it would be up to the president to decide whether to veto spending bills that would keep the government open.” (In a related story this week, Islamic State in Iraq and Syria (ISIS) blamed the United States for making them behead an American journalist.)
Dismantle Or Shut Down
Republicans say that if they take the Senate they will pass legislation to dismantle the government. Jim Manley, former aide to Sen. Harry Reid explained in April at the WSJ, “It is very difficult to imagine that House Republicans’ takeaway from such an election would be to search again for moderation.”
Republicans can be expected to:
Corporate tax rates used to top out at 52.8 percent. Later rates were lowered to 48 percent and then 46 percent. Then in 1986 corporations complained that this (lowered) rate made them “uncompetitive” and demanded “corporate tax reform.” Because job creators. So the rate was lowered to 35 percent.
Now in 2014 corporations are complaining that this (lowered) rate makes them “uncompetitive” and are demanding “corporate tax reform.” Because job creators – or something. This time they threaten to – or do – renounce their U.S. citizenship, saying it is because of too-high tax rates.
So, here we are again. They want rates lowered even more. But are corporate tax rates really “uncompetitive?” And what does that even mean?
Tax Rates Are Plenty Competitive
At the New York Times’ Dealbook Andrew Ross Sorkin looks at this issue in “Tax Burden in U.S. Not as Heavy as It Looks, Report Says.” Sorkin looks at a paper, “‘Competitiveness’ Has Nothing To Do With it,” by Edward D. Kleinbard. Kleinbard is a professor at the University of Southern California and used to be chief of staff to the Congressional Joint Committee on Taxation. Sorkin quotes Kleinbard:
Problem: Your right-wing brother-in-law is plugged into the FOX-Limbaugh lie machine, and keeps sending you emails about “Obama spending” and “Obama deficits” and how the “stimulus” just made things worse.
Solution: Here are three “reality-based” charts to send to him. These charts show what actually happened.
Government spending increased dramatically under President Bush. It has not increased much under President Obama. This is just a fact.
Note that this chart starts with Clinton’s last budget year for comparison.
Several American corporations are using a tax loophole scheme called “inversion” to get out of being American corporations obligated to pay American corporate tax rates. They buy or merge with a non-U.S. corporation (usually located in a tax haven), pretend they are a subsidiary to that corporation and renounce their U.S. “citizenship.”
That’s almost the only thing that changes. Their U.S. executives, employees, facilities and customers remain where they are, along with the benefits and protections they get from our courts, education system, military, infrastructure and all the other things we pay for through taxes. They just stop paying various taxes to help pay for those things.
Walgreens announced today that they will not “invert” and become a non-U.S. corporation. (And their stock tumbled as the bailed-out “patriots” on Wall Street heard the news.) Walgreens’ decision follows the collection of more than 160,000 signatures on a “Tell Walgreens to stay in the USA!” petition organized by a coalition of progressive organizations demanding that Walgreens remain a U.S. corporation.
But that announcement is just one victory in what has to be a continuing campaign to make sure corporations honor their obligations to America and pay their share of the cost for the things that enable them to prosper in America.
At The Daily Beast Monday, Jonathan Alter wrote about this “corporate desertion.” In “The United States Needs Corporate ‘Loyalty Oaths’,” Alter writes that “…it’s time for red-blooded Americans to take matters into our own hands. My answer is to make every corporation sign something.” Alter suggests “… a “non-desertion agreement” with the John Hancock of every board member and CEO in the United States.”
If boards thought for even a second about the long-term interests of their companies, they would summon their lawyers and sign. It’s protection against the risks of resurgent nationalism that could strip them of the many advantages (indirect government subsidies, easy access to American markets) that they currently enjoy.
Alter points out that the president can just do this today with an executive order for corporations that receive federal contracts:
“The president should issue an executive order that says any company that wants to keep its federal contracts must sign a new-fangled NDA. It’s reasonable to expect most federal contractors to be American companies. Obama has already used that leverage to raise the minimum wage for companies doing business with the government and, in a little-noticed move, to force government contractors to pay their suppliers on time.
This executive order would get the attention of major corporations, most of which receive federal contracts.”
The Benefits And Protections Corporations Get
Corporations themselves are not the problem. There is nothing inherently wrong with them, as long as we understand what they are and are not. A corporation is just a tool – a way to get something done. A corporation really is just a legal contract – entirely a creation of government (We the People) – a legal form of business organization that allows multiple investors to aggregate funds in order to accomplish projects that would otherwise be difficult to get done, except by governments. (It takes a huge investment to build a factory, buy the equipment and supplies, and hire the people required to make automobiles, trains, or other goods. The corporate form of a business enables this aggregation of funds from multiple investors.)
Where our relationship with corporations goes wrong is in our understanding of what they are and what they are for. They are neither good nor bad, they can’t be; they are not sentient entities that have morals or “decide to do things.” A corporation is just a contract between investors. A chair or hammer can’t decide things, and neither can a corporation. It is the people who manage the corporations that decide to do things, not the corporation.
Alter writes of the advantages that corporations currently enjoy. They are granted these advantages and benefits because we – through our government – have decided to let groups of investors have them. We did this in order to better accomplish those things that we want to get done. So corporations get many benefits and protections, including (but not limited to):
For The Benefit Of We The People?
We the People allow the corporate form to exist and grant these benefits and advantages to corporations because it enables the aggregation of funds from multiple investors to help accomplish those things we believe these corporations can do for us. We the People grant them special benefits, such as tax breaks, and in exchange we are supposed to get certain things back from this deal, beginning with well-made goods and high-quality services, good-paying jobs with benefits, and most importantly a share of the proceeds – taxes – to use to run our society, maintain and improve our infrastructure, educate ourselves, and all the other things We the People established our government for. In other words, this is supposed to be about making our lives better.
Why else would We the People make laws that allow this business form and grant these advantages and benefits to these corporations, unless it was for the benefit of We the People?
We the People create the fertile ground – education, infrastructure, courts, police and military protection, customers, etc. – for these corporations to thrive and We the People are supposed to reap the harvest.
We Get In Trouble When We Misunderstand What Corporations Are For
These advantages and benefits are supposedly granted in order to advance our – We the People’s – interests in getting certain things done and providing us with certain benefits, period. It is when we misunderstand what a corporation is that trouble begins.
One example of this trouble is that many people mistakenly believe that shareholders “own” a corporation. In fact, shareholders only have a contractual agreement related to the value of the stock. A corporation has no “owners.” It is just a contract, an understanding, a piece of paper.
Another example of the trouble that can occur from misunderstanding what a corporation is comes from the mistaken belief that the purpose of a corporation is to make money – and that there is a corresponding rule that they are required to “maximize shareholder value.” In fact, a corporation exists to allow investors to pool funds to accomplish certain tasks that benefit us. Their purpose is to better enable the accomplishment of those tasks.
Just Who Are We Talking About?
Unfortunately, public understanding of corporations has migrated from the original purpose of this form of business organization. Why is this? The answer might come from understanding who benefits from owning shares in corporations. This chart from the 2011 post “Nine Pictures Of The Extreme Income/Wealth Gap” explains who we are really talking about when we talk about corporations today:
The top 1 percent own 50.9 percent of all stocks, bonds, and mutual fund assets. The top 10 percent own 90.3 percent. The bottom 50 percent of us own 0.5 percent. That’s one half of one percent.
So Here We Are
We have drifted very far from our understanding of the relationship that is supposed to exist between We the People, our government, and the businesses that our government allow to exist. Why would we pass laws that set up corporations and grant them special benefits, except to make our lives better? How have we allowed these legal constructs called corporations (and the people behind them) to gain so much power that they can tell us what to do, and tell us they are going to just leave the country if we don’t let them have their way?
If We the People are not benefiting from the existence of these things called corporations, maybe it is time for We the People to put a stop to the special advantages and benefits they get. Why should the 1 percent enjoy limited liability, special tax breaks, use of courts, and police and military protection if We the People are not getting well-made goods and high-quality services, well-paying jobs with good benefits, good schools and the rest of the things called for in the original bargain that created corporations in the first place?