Saturday, September 24, 2011

It's Not 'Class Warfare' When the Rich Do It

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By Jamelle Bouie

Last night, the White House released details of President Obama’s plan for deficit reduction: in addition to a $250 billion reduction in Medicare spending on the provider side, and $330 billion in immediate spending cuts over the next decade, the president wants an end to the Bush tax cuts on the rich, and a millionaire’s tax called “the Buffett Rule,” after bilionaire investor Warren Buffett. The White House hasn’t released details on the exact mechanism of the Buffet Rule, but it would exist to ensure that high-income individuals pay a higher marginal rate than the middle class. Together, the tax increases would raise $1.5 trillion over the next ten years.

Not only is this good policy – it begins to correct tax imbalances that hugely benefit the wealthy – but it’s good politics. It provides a stark contrast to the Republican message of tax cuts for the rich, tax increases for the poor and spending cuts for everyone else, particularly those that rely on government programs: students, children, seniors and the unemployed.

In response, Republicans have brushed off their old rhetorical standby: “class warfare.” “Class warfare will simply divide this country more. It will attack job creators, divide people and it doesn’t grow the economy,” Rep. Paul Ryan said last night on FOX News Sunday. “Class warfare may make for really good politics, but it makes for rotten economics.”

Of course, Paul Ryan is the author of a plan that slashes discretionary spending and turns Medicare into an under-funded voucher scheme, so that the federal government can afford more and greater tax cuts on the wealthy. As a whole, the Republican Party has enthusiastically endorsed plans to slash social and anti-poverty spending to the bone, cut taxes on rich people and corporations, and crush organized workers. And this is to say nothing of right-wing attacks on the poor and working-class as “moochers” who don’t deserve the (paltry) benefits they receive. Given the extent to which they have monopolized attacks on the non-rich, Paul Ryan – and every other Republican – should be laughed off of the stage whenever they accuse Democrats of “class warfare”

As it stands, I look forward to media personalities demanding for the president to explain his hatred for rich people and the “producers” that shower us with their bountiful job creation. Or something.

A Tax Plan to Rally Around The Buffett Rule

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By Chuck Collins

If you care about the future of the republic, the health of our communities, and the prospects for a transition to a new green economy -- the fight over taxation and concentrated wealth is your fight.

If you care about children -- and the kind of society we are going to leave for the next generation -- in terms of ecological health, infrastructure, functioning government -- the fight to tax the wealthy and close corporate tax abuses is your fight.

President Obama has put forward a revenue proposal worthy of vocal support and organizing. Progressives need to engage the media and our neighbors -- and dramatize the reality that a majority of people support increasing taxes on millionaires and corporate tax dodgers.

Why We Should Increase Taxes on the Wealthy

There will be a vigorous debate over this proposal that will flow all the way into the 2012 election. There are four reasons for taxing the wealthy that we should repeat in any conversation we have:

1. Taxes on the Wealthy Have Declined Steadily for Decades. Over the last decade -- and really over the last fifty years -- the portion of income paid in taxes by our wealthiest citizens has steadily declined. In 1961, when Barack Obama was born, the effective rate paid by households with income over $1 million was 43 percent. Today it is 23 percent. The richer you are, as Warren Buffett has illustrated, the smaller the percentage of your income you pay.

2. The Wealthy Benefit Enormously from U.S. Society. The U.S. wealthy have disproportionately benefited from the public investments we have all made together over the last several generations in technology, scientific research, infrastructure and the system of property rights protections, education and stable market regulations that enable wealth creation to happen. If they have any doubts about the centrality of the U.S. system to their good fortunes, they should try somewhere else.

3. We All Have A Moral Obligation to Future Generations. Those with significant wealth at this time have a moral obligation to pay back the society that made their wealth possible. Progressive taxation is an "economic opportunity recycling" program, enabling present generations to ensure that future generations have the same opportunities they had. We all have a responsibility to future generations -- and the wealthy have an obligation to pay their fair share of taxes as their parents and grandparents did.

4. Progressive Taxation will Reduce Extreme Inequalities of Wealth and Power. Over the last thirty years, we've seen a dramatic increase in inequalities of income, wealth and opportunity. The wealthiest one percent of households own 35.6 percent of all private wealth, more than the bottom 95 percent of households combined. These extreme inequalities have undermined all that we care about -- our democracy, education, mobility, economic stability. This concentrated wealth and power is threatening the fundamental tenets of our democracy -- and progressive taxation is one of the few ways to reduce inequality.

President Obama's Tax Plan

The President's Tax Reform Plan has many components and covers eight pages of provisions in the summary released, "Living within Our Means and Investing in the Future." But they fall into three areas:

1. Allowing Bush Tax Cuts Expire and Reform the Estate Tax. President Obama has renewed his campaign pledge to allow the 2001 and 2003 Bush tax cuts for the wealthy expire on households with incomes over $250,000. Since 2001, we've effectively borrowed almost $1 trillion to give the highest income households in our nation these tax breaks. Reversing them is part of how we'll get our fiscal house in order.

The President also proposes restoring the estate tax to 2009 levels when the tax applied to individuals with wealth over $3.5 million and couples with wealth over $7 million. The estate tax is our nation's only levy on substantial inherited wealth. The combined revenue of these provisions would generate over $866 billion over 10 years, according to the Office of Budget and Management.

2. Millionaire Tax Rates and the Buffett Rule. The Obama proposal includes the "Buffett Rule" that no millionaire should pay an effective rate lower than a middle class taxpayer. It was inspired by the billionaire investor's disclosure of the ways our tax code gives preferential treatment to higher income taxpayers. Buffett revealed that in 2010 that he paid an effective tax rate of 17.4 percent while many middle class and higher income taxpayers pay over 25 percent of their income.

High wage earners pay at 35 percent rate while income from wealth -- capital gains and dividend tax rates -- are 15 percent. This preference creates all kinds of distortions, including hedge fund managers who claim their income should be taxed at the lower 15 rate. The President's tax proposal would eliminate this so-called "Carried Interest" loophole and require hedge fund managers to pay at higher rates.

3. Corporate Tax Reform. The Obama proposal includes a number of important tax reforms, including elimination of subsidies for the oil and gas industry and reform of huge loopholes the insurance industry uses. It closes down some of the accounting games that corporations play that contribute little to jobs or economic health.

A Few Missing Pieces

There are few major missing pieces in the President's revenue plan. There is no proposal for a financial transition tax, a modest levy on transfers of stocks, bonds and other financial instruments. European countries have been pressing the U.S. to join a global move to institute such taxes to slow unproductive currency and financial speculation. A penny tax on every four dollars of transactions could generate over $150 billion a year in revenue.

The president's proposal unfortunately does not fully address the huge corporate loopholes that encourage offshore tax havens and aggressive corporate tax avoidance by U.S. companies. He should fully embrace Sen. Carl Levin and Rep. Lloyd Doggett's "Stop Tax Haven Abuse Act," which would raise an estimated $100 billion a year.

The president's proposal still gives preferential tax treatment to income from capital over income from work. The tax rate gap between earned wage income and investment income is a glaring problem that creates huge abuses and distortions. We should tax all income under the same rate structure system, whether it comes from dividends or paychecks.

Organizing Time: Celebrate and Get to Work

The principles and policies behind President Obama's revenue proposals are worth lifting up and defending. They would restore progressivity and fairness to the tax code. They would raise $1.5 trillion over the next decade from those with the greatest capacity to pay.

The push back will be enormous. Hedge fund managers, corporate CEOs, the offshore tax dodgers -- together will spend hundreds of millions if not billions to attack these proposals. They believe income from their investments is more virtuous that income from wages. They believe they should get special treatment for everything they do. They would be comfortable living in an American with great disparities of income, wealth and opportunity.

They'll accuse Obama of class warfare. But as Warren Buffett himself observed, "There is a class war in a America, and my class is winning." Obama noted that his proposal is not based on class war, but math.

We must talk to our friends, families and neighbors -post articles on social media and send around information. Tell people you know why the fight for fair taxes matters to everything they care about.

Get the facts -and counter the mythology offensive. Check out Citizens for Tax Justice, the Center for Budget on Policy Priorities and the Tax Policy Center.

Join groups like U.S. UNCUT and The Other 98 Percent and other social networking and direct action groups that will be keeping the pressure on.

If you know a wealthy person who believes their taxes should be raised, tell them to join Wealth for the Common Good and speak out for the tax fairness. It does no good if they keep their position private. Warren Buffett made a difference by telling his story and exposing that there is one tax system for the wealthy and one for the other 98 percent.

If you are a small business owner, don't let the right wing perpetuate the myth that tax increases on the wealthy and closing corporate tax loopholes are bad for small business and destroy jobs. You have a unique voice in this debate. Join Business for Shared Prosperity along with thousands of other small business people who believe that taxes are the price we pay for an unparalleled business environment and infrastructure.

We should remember to celebrate. The fact that these tax proposals are on the agenda is testament to a decade of work by organizers, netroots activists, workers, researchers, and policy advocates who have made the case for progressive taxation.

It is the result of groups like Patriotic Millionaires and Wealth for the Common Good -that lift up the Warren Buffetts of the world, the thousands of other business leaders and wealthy individuals who believe they should pay more and are willing to face the cameras and say so.

It is a celebration of legislative champions like Sen. Bernie Sanders, Rep. Jan Schakowsky, Rep. Barbara Lee, Sen. Carl Levin, and Rep. Lloyd Doggett who introduced and incubated many of the policies that are in the President's proposal when they were considered "off the table."

This fall will be decisive -and the debate over taxes will go to heart of what kind of country we become. All hands on deck!

Debt deal: anger and deceit has led the US into a billionaires' coup

Original Link:

By George Monbiot

The debt deal will hurt the poorest Americans, convinced by Fox and the Tea Party to act against their own welfare.

There are two ways of cutting a deficit: raising taxes or reducing spending. Raising taxes means taking money from the rich. Cutting spending means taking money from the poor. Not in all cases of course: some taxation is regressive; some state spending takes money from ordinary citizens and gives it to banks, arms companies, oil barons and farmers. But in most cases the state transfers wealth from rich to poor, while tax cuts shift it from poor to rich.

So the rich, in a nominal democracy, have a struggle on their hands. Somehow they must persuade the other 99% to vote against their own interests: to shrink the state, supporting spending cuts rather than tax rises. In the US they appear to be succeeding.

Partly as a result of the Bush tax cuts of 2001, 2003 and 2005 (shamefully extended by Barack Obama), taxation of the wealthy, in Obama's words, "is at its lowest level in half a century". The consequence of such regressive policies is a level of inequality unknown in other developed nations. As the Nobel laureate Joseph Stiglitz points out, in the past 10 years the income of the top 1% has risen by 18%, while that of blue-collar male workers has fallen by 12%.

The deal being thrashed out in Congress as this article goes to press seeks only to cut state spending. As the former Republican senator Alan Simpson says: "The little guy is going to be cremated." That means more economic decline, which means a bigger deficit. It's insane. But how did it happen?

The immediate reason is that Republican members of Congress supported by the Tea Party movement won't budge. But this explains nothing. The Tea Party movement mostly consists of people who have been harmed by tax cuts for the rich and spending cuts for the poor and middle. Why would they mobilise against their own welfare? You can understand what is happening in Washington only if you remember what everyone seems to have forgotten: how this movement began.

On Sunday the Observer claimed that "the Tea Party rose out of anger over the scale of federal spending, and in particular in bailing out the banks". This is what its members claim. It's nonsense.

The movement started with Rick Santelli's call on CNBC for a tea party of city traders to dump securities in Lake Michigan, in protest at Obama's plan to "subsidise the losers". In other words, it was a demand for a financiers' mobilisation against the bailout of their victims: people losing their homes. On the same day, a group called Americans for Prosperity (AFP) set up a Tea Party Facebook page and started organising Tea Party events. The movement, whose programme is still lavishly supported by AFP, took off from there.

So who or what is Americans for Prosperity? It was founded and is funded by Charles and David Koch. They run what they call "the biggest company you've never heard of", and between them they are worth $43bn. Koch Industries is a massive oil, gas, minerals, timber and chemicals company. In the past 15 years the brothers have poured at least $85m into lobby groups arguing for lower taxes for the rich and weaker regulations for industry. The groups and politicians the Kochs fund also lobby to destroy collective bargaining, to stop laws reducing carbon emissions, to stymie healthcare reform and to hobble attempts to control the banks. During the 2010 election cycle, AFP spent $45m supporting its favoured candidates.

But the Kochs' greatest political triumph is the creation of the Tea Party movement. Taki Oldham's film (Astro)Turf Wars shows Tea Party organisers reporting back to David Koch at their 2009 Defending the Dream summit, explaining the events and protests they've started with AFP help. "Five years ago," he tells them, "my brother Charles and I provided the funds to start Americans for Prosperity. It's beyond my wildest dreams how AFP has grown into this enormous organisation."

AFP mobilised the anger of people who found their conditions of life declining, and channelled it into a campaign to make them worse. Tea Party campaigners take to the streets to demand less tax for billionaires and worse health, education and social insurance for themselves.

Are they stupid? No. They have been misled by another instrument of corporate power: the media. The movement has been relentlessly promoted by Fox News, which belongs to a more familiar billionaire. Like the Kochs, Rupert Murdoch aims to misrepresent the democratic choices we face, in order to persuade us to vote against our own interests and in favour of his.

What's taking place in Congress right now is a kind of political coup. A handful of billionaires have shoved a spanner into the legislative process. Through the candidates they have bought and the movement that supports them, they are now breaking and reshaping the system to serve their interests. We knew this once, but now we've forgotten. What hope do we have of resisting a force we won't even see?

Groups look to rein in corporate power after Citizens United

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By Eartha Jane Melzer

Last year’s U.S. Supreme Court decision in Citizens United v. Federal Election Commission granted corporations (and unions) the right to directly and expressly back political candidates, and triggered an enormous new wave of political spending. Now watchdog groups are trying to find ways to make sure voters can see who is funding which candidates.

In a web seminar sponsored by the Business Ethics Network last week, groups concerned about the role of money in politics gathered to review strategies for increased disclosure.

Norm Ornstein, a scholar with the American Enterprise Institute, who once helped craft the McCain-Feingold campaign finance act, said that he was struck and “even a little bit heartened” by the fact that Sarah Palin railed against crony capitalism during her Labor Day speech in Iowa saying, in effect, “what do we suppose those fat cats want for their money?”

“It suggests to me,” Ornstein said, “that there is at least a glimmer of a possibility that we might be able to build a very unusual type of coalition against what has become an utterly appalling landscape of influence peddling by enormous monied interests and more and more overt, almost shakedown schemes by political figures to get the money they want from corporations and individuals.”

The Citizens United decision did not strike down any rules that require disclosure of political spending, but loopholes in the tax system and lax campaign finance rules allow corporations to give money in ways that are very hard to track, disclosure advocates say.

According to an analysis by the Center for Responsive Politics in the 2010 election 67 percent of all outside (non political party) spending came from groups that had been freed to contribute by the Citizens United decision with non-profit 501(c) groups dominating spending on election ads.

IRS rules state that 501(c)(4) groups don’t have to name their contributors as long as electioneering is not their primary purpose, but this can be difficult to enforce in a meaningful way. Groups can form and carry out campaign work and then later switch to other activities so that political projects don’t appear to dominate their activities.

With Congress deadlocked over most issues, campaign finance reform advocates say it’s more prudent to focus on promoting regulatory measures that could increase disclosure.

One possibility would be to get the IRS to enforce its requirements for 501(c)(4)s. Another would be to get the Securities and Exchange Commission to require publicly traded companies to report their political spending to shareholders.

Aside from the way it could corrupt the political process, experts point out, unregulated corporate spending on politics poses risks for company shareholders.

Ten corporate law academics recently petitioned the SEC to adopt rules to require that corporations communicate with shareholders about political use of corporate funds.

The idea has support from major institutional investors including the International Corporate Governance Network, which represents $18 trillion in assets.

Any rule change at SEC will be a time consuming process. In the meantime some groups are trying to get corporations to voluntarily release information about their political spending.

Since 2003 the Center for Political Accountability has been working to get companies to establish rules for disclosure of political spending and shareholder oversight.

Valentina Judge of CPA said that such resolutions are good business practices that can protect companies from embarassing contributions that can cause reputational damage.

The Target corporation learned the pitfalls of political donations last year, she pointed out.

The company endured bad press and boycott threats after it made a $150,000 donation to a group that supported a candidate opposed to gay rights.

CPA is preparing to release an index of corporations that have adopted policies on corporate spending.

It’s urgent that groups focus on disclosure strategies that could work fast, said Craig Holman of Public Citizen.

“We just was a 427 percent increase in outside spending in the 2010 election,” he said, “This is a phenomenal increase … and this was just a test run, a trial. Corporations and CEOs were just starting to get involved and were pretty cautious.”

In the 2012 elections, he said, “I believe we are going to see numbers that are off the charts.”

The only thing that could force more disclosure right away would be an executive order from President Obama, he said.

“We need President Obama to step up to the plate and sign an order requiring enhanced political disclosure for contractors to show that contracts are being based on merit and not contributions.”

Another short term effort could involve getting the president to appoint Federal Elections Commissioner who would work to require funding disclosure on television ads, said Meredith McGehee of the Campaign Legal Center.

The most pressing need, however, she said, is is a public education campaign to translate the current situation around corporate funded politics into terms that meet average Americans.

“You have to build a public base before you can get into specific answers,”
she said. “The pot is not yet boiling.”

“The reality is that the other side that is supporting this outcome is outgunning the reform community and those that see the problem by a million to one,” she said. “It doesn’t mean give up. It means you’ve got to start thinking about 21 century solutions and approaches.”

The Hidden Hands in Redistricting: Corporations and Other Powerful Interests

Original Link:

by Olga Pierce, Jeff Larson and Lois Beckett

Their names suggest selfless dedication to democracy. Fair Districts Mass. Protect Your Vote. The Center for a Better New Jersey. And their stated goals are unarguable: In the partisan fight to redraw congressional districts, states should stick to the principle of one person, one vote.

But a ProPublica investigation has found that these groups and others are being quietly bankrolled by corporations, unions and other special interests. Their main interest in the once-a-decade political fight over redistricting is not to help voters in the communities they claim to represent but mainly to improve the prospects of their political allies or to harm their enemies.

The number of these purportedly independent redistricting groups is rising, but their ties remain murky. Contributions to such groups are not limited by campaign finance laws, and most states allow them to take unlimited amounts of money without disclosing the source.

Today’s story is the first chapter in an in-depth examination of how powerful players are turning to increasingly sophisticated tools and techniques to game the redistricting process, with voters ultimately losing.

For special interests, there’s a huge potential payoff from investing in such efforts.

“Reshaping a map is very powerful” for donors, said Spencer Kimball, a political consultant who is executive director of Boston-based Fair Districts Mass. “It’s a big opportunity to have influence at the state level and the congressional level not one race at a time but for 10 years.”

Skillful redistricting can, of course, help create Republican or Democratic districts, but it can also grace incumbents with virtually guaranteed re-election or leave them with nearly no chance at all. In the process, it can also create seats almost certain to be held by minorities or break those same groups apart, ensuring that they have almost no voice.

But it’s not cheap, and that’s where corporations and other outside interests come in. They can provide the cash for voter data, mapping consultants and lobbyists to influence state legislators, who are in charge of redistricting in most states. Outside interests can also fund the inevitable lawsuits that contest nearly every state's redistricting plan after it is unveiled.

In Minnesota, for instance, the Republicans’ legal efforts to influence redistricting are being financed through a group called Minnesotans for a Fair Redistricting.

Fair Redistricting describes itself as independent, but it has much of its leadership in common with the Freedom Foundation of Minnesota, a group with ties to the political empire of the Koch brothers, industrialists from Kansas who’ve spent millions funding conservative causes. The head of the Freedom Foundation, Annette Meeks, told ProPublica she has “no involvement” with Fair Redistricting. But both organizations’ tax filings list the same address: Meeks’ home address.

Fair Redistricting is registered under the name of her husband, Jack Meeks, who is also on the board of the Freedom Foundation. He did not respond to requests for comment.

Who is actually paying for Fair Redistricting’s lawsuit and lawyers? And what district lines are they pushing for? The group doesn’t have to say and has so far kept its finances and plans under wraps. Annette Meeks did not respond to questions about the group’s donors or its ties to the Koch brothers, but she said the group complies with all legal filing requirements. But the group’s public tax filings contain no information on its contributors.

Fair Districts Mass, which says it’s advocating better representation of minorities in and around Boston, is another window into how money can move through the system. The group describes itself as "citizen-funded." But it also sought permission from state election officials for unlimited corporate funding. Donations “can include corporate contributions,” the group’s website announces. “Better yet,” the site notes, “we are not required to file reports regarding donations or expenditures.”

The group says its proposed maps would lead to better representation of Latinos and African-Americans.

“Minorities are very underrepresented in Massachusetts politics,” said Kimball, the group’s executive director. “We’re here to change that.”

But minority groups say Fair Districts' proposed maps would not likely help them. (See our interactive feature showing the group’s maps and our analysis.)

“I don’t see a person of color getting elected in this district, if that’s the goal,” said Alejandra St. Guillen, executive director of Oiste, looking at one of the maps Fair Districts has touted as helping Latinos and African-Americans. Oiste has been fighting for increased Latino representation and civic participation in the state for more than a decade.

“Even though the numbers might look as if that might be favorable to communities of color,” St. Guillen said, “if you look at voting patterns, it actually wouldn’t be.”

Others from Massachusetts have said the proposals made by Fair Districts Mass wouldn’t help them at all. At a town hall meeting in Lynn, which would be cut out of its historic district along Boston’s North Shore by the proposal, labor unions, the city's chamber of commerce and politicians from both parties converged on the town hall, urging that the board not adopt a plan that would carve out Lynn.

Lynn's Latino business owners are "very proud to be a part of the North Shore," said Frances Martinez, executive director of the North Shore Latino Business Association. "Our business owners decided to come here because they know this is a place to stay and grow for their families. Please keep the district together."

What Fair Districts’ proposals would do is hurt the traditional pro-labor and Democratic incumbents in the area. For instance, Lynn’s notably pro-union congressman, John Tierney, would effectively be drawn out of a seat—a finding included in the group’s own research.

Fair Districts can raise unlimited, undisclosed cash for its efforts, thanks to an innovative argument it made to state election officials.

This strategy had its roots in a lesson learned 20 years ago by a Republican redistricting guru named Dan Winslow. During the 1990 redistricting cycle, Winslow twice sought permission from state election officials for a group called the Republican Redistricting Committee to accept unlimited corporate donations without having to disclose them.

At the time, Winslow argued that the group didn’t have specific political aims and would also provide redistricting resources to minority groups.

Each time, the board refused to exempt the organization from campaign finance laws on the grounds that a group with "Republican" in its name and Republican politicians as leaders could not credibly claim to be independent.

Last year, a lawyer in Winslow’s firm filed an almost identical request to accept unlimited corporate donations, but this time for a group that left "Republican" out of its name. The state agreed to his request. The group he was filing for? Fair Districts Mass.

Winslow, now a Republican state representative and legal adviser to Fair Districts, said the group has no partisan agenda.

“It’s not about shifting Massachusetts from Democrat to Republican,” Winslow said. “It creates an opportunity for challenges, for challengers to challenge the status quo.”

Fair Districts Mass Chairman Jack Robinson has run unsuccessfully for Congress three times as a Republican. Last year, when he announced the formation of Fair Districts, he said he was changing his registration to Independent.

Robinson said that change was important to Fair Districts’ “unique” ability to accept undisclosed corporate donations.

“In order to show that we are really nonpartisan, I decided to become an independent,” Robinson said.

Robinson also said the lack of disclosure has benefits.

“This is a very political process,” he said. “If you’re running a company in Newton, Mass., where Barney Frank is, and you want to donate to us, and our plan says Barney Frank has to run against another congressman, I could understand why people would not want to disclose their donations.” Frank is, of course, a powerful Democratic congressman.

The national Democratic and Republican parties are also working to limit disclosures about fundraising for redistricting. Both parties have raised and spent tens of millions of dollars on redistricting through their traditional conduits of money into state politics, the Republican State Leadership Committee and the Democratic Legislative Campaign Committee. And both have been pushing to keep increasing parts of those efforts exempt from disclosure requirements.

Last year, the National Democratic Redistricting Trust sought and was granted permission by the Federal Election Commission to allow members of Congress to solicit unlimited, undisclosed donations for the trust. The group, set up to fund lawsuits that inevitably spring up during redistricting fights, argued that redistricting is not a primarily political activity. Legislators doing the same fundraising, but directly for their parties, would be violating McCain-Feingold campaign finance laws. The trust is currently funding the Democratic legal response to Minnesotans for a Fair Redistricting.

The GOP formed its own opaque group dedicated to redistricting. Making America’s Promise Secure, which was headed by prominent Republicans Newt Gingrich and Trent Lott, was able to secure 501(c)4 status from the IRS as a "social welfare"organization—the same status granted Disabled American Veterans and the Lumberjack World Championships Foundation. Groups with that status do not have to disclose donors or how they spend money. And there is no limit on how much individual donors can contribute.

Florida, railroads and friends

As old hands at redistricting like to say, it’s personal. Working at the state level, you can give lasting help, or demonstrate your loyalty, to not just one party or the other but to specific candidates, who may one day return the favor.

Congresswoman Corrine Brown, an African-American Democrat from Florida, appears to be a case in point. Brown represents one of the most irregularly shaped districts in the nation. It is 150 miles long but only the width of a highway bridge at its narrowest point and scoops heavily African-American neighborhoods out of Orlando, Gainesville and Jacksonville. (See our interactive map of Brown’s district and our analysis.)

The result of a deal between Republicans and minority representatives in the state legislature, the district and ones like it helped elect a more diverse congressional delegation but also ensured that the remaining districts would be whiter—and more Republican—because minority voters, who tend to vote for Democrats, had been carved out. Redistricting professionals call that “bleaching.”

Republicans gained control of the state legislature in 1996 after decades of Democratic control and have held it ever since.

Brown, then a state assemblywoman, had worked with Republicans to create the district. She subsequently ran for Congress in it and won. She has been unbeatable ever since. (Even though 2010 was a tough year for Democrats in Florida, she still won by a landslide.)

Her seat finally was threatened last year when a coalition of unions, civic groups and Democrats got a pair of anti-gerrymandering amendments on Florida’s ballot. The amendments banned legislative districts drawn to help or hurt particular incumbents or parties. To make it clear that the amendments were not an attempt to pre-empt the Voting Rights Act of 1965, they also explicitly ban the drawing of districts to deny representation to minority groups.

Florida’s black legislative caucus and the state chapter of the NAACP endorsed the amendments, as did Democracia, a Latino political group.

But Brown opposed the effort, becoming the “African-American Chairwoman” of a group called Protect Your Vote. The group, Brown said at news conferences and in public statements, would be a bulwark against the harm the amendments would do to minority voting rights.

The NAACP strongly condemned Brown’s position and issued a statement criticizing “the blatant use of scare tactics with African-Americans and Hispanics to justify the continued gerrymandering of districts that benefit only politicians.”

Though Protect Your Vote had little support from representatives of the minority groups whose rights it was supposedly trying to protect, it had a lot of support from corporate donors, who gave nearly $800,000. (The contributions were reported because they related to a ballot measure. Normally, donations to Florida redistricting efforts don’t have to be disclosed.)

Among Protect Your Vote’s supporters were two of Brown’s own corporate donors.

Last year, Honeywell International PAC gave Protect Your Vote $25,000. The same year, the PAC gave Corrine Brown’s campaign $10,000. Also in 2010, Honeywell hired a former Brown aide as a lobbyist, according to federal lobbying disclosures. And many of the company’s government contracts fall under the purview of Brown’s membership on the Transportation and Infrastructure and Veterans’ Affairs committees.

In a statement, Honeywell said its PAC contributed money to defeat the anti-gerrymandering amendments because it supports “redistricting that is consistent with the historical practices that have served the State’s many diverse constituents well for decades.”

Another $25,000 donation to Protect Your Vote came from CSX Transportation Corp., a Jacksonville-based railroad and trucking company.

CSX has a long, friendly history with Brown, the ranking Democratic member of the House subcommittee on railroads.

Brown championed the controversial SunRail commuter rail project, using her position on the subcommittee to help secure federal funding that made the $1.2 billion project possible. The SunRail deal is worth more than $600 million to CSX. (Here's a video of Brown on the House floor extolling the virtues of the plan.)

Federal officials raised questions about just how many commuters the project would serve, and the Federal Transit Administration ranked the SunRail project last in terms of cost effectiveness on a recent list of national projects in the “final design” phase.

“The Protect Your Vote campaign had strong, bipartisan support, and was intended to maintain the integrity of reapportionment,” said CSX spokesman Gary Sease. “As a Florida-based corporation, we supported this bipartisan initiative.”

In November 2010, the Florida amendments passed despite Protect Your Vote’s efforts. The group filed an appeal in federal court shortly thereafter, alleging, among other things, that the new redistricting methodology outlined in the amendments did not do enough to protect incumbents. The suit was thrown out Sept. 9.

Brown and Protect Your Vote filed an appeal, vowing to take the case as far as the Supreme Court.

Brown declined to comment, saying it was a legal matter.

Unions and others play the game in California

Corporations, of course, are not the only special interests that have intervened in the redistricting process in less-than-transparent ways.

Last year, unions and others spent millions in an ultimately unsuccessful effort to kill a proposition making redistricting fairer and more transparent in California. The proposition put redistricting in the hands of a nonpartisan commission, a move opposed by Democratic politicians in the state legislature and Congress who stood to lose comfortable districts that in many cases were drawn personally for them.

The group called itself Yes on Fair, Yes on 27, No on 20—A Coalition of Entrepreneurs, Working People, Businesses, Community Leaders Such as Karen Bass, & Other Concerned Citizens Devoted to Eliminating Bureaucratic Waste. But most of the more than $7 million the group raised came from unions, large individual donations from prominent Democratic donors like George Soros—and no fewer than 35 Democratic politicians. (Disclosure: A Soros foundation has also provided a small portion of ProPublica’s funding.)

Among the group’s donors were Nancy Pelosi; above-mentioned "community leader" Karen Bass, who was speaker of the state assembly at the time and has since been elected to Congress; and Congresswoman Lois Capps, whose coast-hugging district was so long and narrow it was nicknamed the “ribbon of shame.”

Bass now says she supported the idea of an independent redistricting commission. However, based on how the commission was designed, “I was concerned about the impact on representation from communities of color.”

Capps did not respond to requests for comment.

The group immediately spent its cash to deploy some of the most questionable tactics endemic to California’s ballot-measure system. Nearly $3 million was spent on professional signature gatherers and another $1.8 million on California’s notoriously misleading voter guides. The mailers come from legitimate-sounding groups that are actually fictions cooked up by political consultants to mislead voters.

Though Yes on Fair was funded exclusively by Democratic interests, it spent $64,000 on the “Continuing the Republican Revolution” voter guide, which featured a bald eagle and a quote honoring Ronald Reagan at the top but urged voters to reject the citizens’ redistricting commission on the grounds that it represented bureaucratic waste. Similar voter guides were sent out representing fictitious religious, feminist, environmentalist and law-enforcement groups. Perhaps the most insidious was the “Our Voice Latino Voter Guide,” which urged a vote against establishing the citizens' commission even though Latinos stood to greatly benefit from it.

Despite Yes on Fair’s efforts, the measure for the commission passed anyway.

Once the commission was created, it offered another, limited glimpse into business interests’ attempts to influence redistricting.

An early participant in the state’s redistricting process was the California Institute for Jobs, Economy and Education, which submitted proposed district maps and testified before the redistricting commission.

But there is little evidence of the institute’s existence. It has no website and has published no scholarly research. The institute first shows up in public records, registered as a corporation in California in May 2011, just after the redistricting process had begun. It is registered with the same street address and suite number as Bell, McAndrews & Hiltachk, a law firm that specializes in campaign finance and lobbying law.

The entity’s true purpose, according to someone close to it, was to represent “business interests” across California. Top-level individuals involved with the so-called institute also have ties to JOBS PAC, a pro-business committee in California that lists Philip Morris, AT&T and Chevron as donors.

Tom Hiltachk, managing partner at the firm that shares its address with the institute, didn’t respond to requests for comment.
Original Link:

By Paul Krugman

This week President Obama said the obvious: that wealthy Americans, many of whom pay remarkably little in taxes, should bear part of the cost of reducing the long-run budget deficit. And Republicans like Representative Paul Ryan responded with shrieks of “class warfare.”

It was, of course, nothing of the sort. On the contrary, it’s people like Mr. Ryan, who want to exempt the very rich from bearing any of the burden of making our finances sustainable, who are waging class war.

As background, it helps to know what has been happening to incomes over the past three decades. Detailed estimates from the Congressional Budget Office — which only go up to 2005, but the basic picture surely hasn’t changed — show that between 1979 and 2005 the inflation-adjusted income of families in the middle of the income distribution rose 21 percent. That’s growth, but it’s slow, especially compared with the 100 percent rise in median income over a generation after World War II.

Meanwhile, over the same period, the income of the very rich, the top 100th of 1 percent of the income distribution, rose by 480 percent. No, that isn’t a misprint. In 2005 dollars, the average annual income of that group rose from $4.2 million to $24.3 million.

So do the wealthy look to you like the victims of class warfare?

To be fair, there is argument about the extent to which government policy was responsible for the spectacular disparity in income growth. What we know for sure, however, is that policy has consistently tilted to the advantage of the wealthy as opposed to the middle class.

Some of the most important aspects of that tilt involved such things as the sustained attack on organized labor and financial deregulation, which created huge fortunes even as it paved the way for economic disaster. For today, however, let’s focus just on taxes.

The budget office’s numbers show that the federal tax burden has fallen for all income classes, which itself runs counter to the rhetoric you hear from the usual suspects. But that burden has fallen much more, as a percentage of income, for the wealthy. Partly this reflects big cuts in top income tax rates, but, beyond that, there has been a major shift of taxation away from wealth and toward work: tax rates on corporate profits, capital gains and dividends have all fallen, while the payroll tax — the main tax paid by most workers — has gone up.

And one consequence of the shift of taxation away from wealth and toward work is the creation of many situations in which — just as Warren Buffett and Mr. Obama say — people with multimillion-dollar incomes, who typically derive much of that income from capital gains and other sources that face low taxes, end up paying a lower overall tax rate than middle-class workers. And we’re not talking about a few exceptional cases.

According to new estimates by the nonpartisan Tax Policy Center, one-fourth of those with incomes of more than $1 million a year pay income and payroll tax of 12.6 percent of their income or less, putting their tax burden below that of many in the middle class.

Now, I know how the right will respond to these facts: with misleading statistics and dubious moral claims.

On one side, we have the claim that the rising share of taxes paid by the rich shows that their burden is rising, not falling. To point out the obvious, the rich are paying more taxes because they’re much richer than they used to be. When middle-class incomes barely grow while the incomes of the wealthiest rise by a factor of six, how could the tax share of the rich not go up, even if their tax rate is falling?

On the other side, we have the claim that the rich have the right to keep their money — which misses the point that all of us live in and benefit from being part of a larger society.

Elizabeth Warren, the financial reformer who is now running for the United States Senate in Massachusetts, recently made some eloquent remarks to this effect that are, rightly, getting a lot of attention. “There is nobody in this country who got rich on his own. Nobody,” she declared, pointing out that the rich can only get rich thanks to the “social contract” that provides a decent, functioning society in which they can prosper.

Which brings us back to those cries of “class warfare.”

Republicans claim to be deeply worried by budget deficits. Indeed, Mr. Ryan has called the deficit an “existential threat” to America. Yet they are insisting that the wealthy — who presumably have as much of a stake as everyone else in the nation’s future — should not be called upon to play any role in warding off that existential threat.

Well, that amounts to a demand that a small number of very lucky people be exempted from the social contract that applies to everyone else. And that, in case you’re wondering, is what real class warfare looks like.

The Truth about Class War in America

Original Link:

By Richard Wolff

Republicans claim, in Orwellian fashion, that Obama's millionaire tax is 'class war'. The reality is that the super-rich won the war

Republicans and conservatives always fight back against proposals to raise taxes on corporations and rich individuals by making two basic claims. First, such proposals amount to un-American "class warfare", pitting the working class against corporations and the rich. Second, such proposals would take money for the government that would otherwise have been invested in production and thus created jobs.

Neither logic nor evidence supports either claim. The charge of class war is particularly obtuse. Consider simply these two facts. First, at the end of the second world war, for every dollar Washington raised in taxes on individuals, it raised $1.50 in taxes on business profits. Today, that ratio is very different: for every dollar Washington gets in taxes on individuals, it takes 25 cents in taxes on business. In short, the last half century has seen a massive shift of the burden of federal taxation off business and onto individuals.

Second, across those 50 years, the actual shift that occurred was the opposite of the much more modest reversal proposed this week by President Obama; over the same period, the federal income tax rate on the richest individuals fell from 91% to the current 35%. Yet, Republicans and conservatives use the term "class war" for what Obama proposes – and never for what the last five decades have accomplished in shifting the tax burden from the rich and corporations to the working class.

The tax structure imposed by Washington on the US over the last half-century has seen a massive double shift of the burden of taxation: from corporations to individuals and from the richest individuals to everyone else. If the national debate wants seriously to use a term like "class war" to describe Washington's tax policies, then the reality is that the class war's winners have been corporations and the rich. Its losers – the rest of us – now want to reduce our losses modestly by small increases in taxes on the super-rich (but not, or not yet, on corporations).

To refer to this effort as if it had suddenly introduced class war into US politics is either dishonest or based on ignorance of what federal tax policies have actually been. Or perhaps, for conservatives, it is a convenient mixture of both.

Much the same sort of analysis applies to the Republican claims that taxing corporations and rich people takes money that would otherwise be invested in business growth and thus create jobs. Last Friday, the US Federal Reserve reported a record quantity of cash on the books of US businesses (over $2tn). Even with the currently low taxes on businesses and the rich, that money is not being invested and is not creating jobs. It is not being distributed to anyone else and so is not being spent on consumer goods either. Taxing a portion of that money to finance Washington's stimulation of the economy by spending that money – or even better, by using it to hire and pay the unemployed – would be a much more effective way to provide jobs than leaving it as cash hoards in corporations' coffers.

Last month, Warren Buffett upset many of his "mega-rich friends" by what he stated categorically in a New York Times op-ed. He made it clear that he had never encountered any serious investor who decided whether or not to invest based on tax rates. It was always the prospects of profit that made the difference. He then urged Americans to raise taxes on the rich like himself. He also hinted – none too subtly – that it was becoming politically dangerous for the whole economic system's survival to keep having the minority of extremely rich people paying federal tax at lower rates than the middle- and low-income majority.

The final irony of loose talk about class war is this: the Republican and conservative voices opposing all tax increases for corporations and the rich thereby provoke, as Buffett intimated and New York Mayor Michael Bloomberg more explicitly warned last week, a renewal of class consciousness in the US. Then, Washington might learn what class war really is.

Sunday, September 18, 2011

The Election of 2012: Why the Most Important Issues May Be Off the Table

Original Link:

By Robert Reich

We’re on the cusp of the 2012 election. What will it be about? It seems reasonably certain President Obama will be confronted by a putative Republican candidate who:

Believes corporations are people, wants to cut the top corporate rate to 25% (from the current 35%) and no longer require they pay tax on foreign income, who will eliminate capital gains and dividend taxes on anyone earning less than $250,000 a year, raise the retirement age for Social Security and turn Medicaid into block grants to states, seek a balanced-budged amendment to the Constitution, require any regulatory agency issuing a new regulation repeal another regulation of equal cost (regardless of the benefits), and seek repeal of Obama’s healthcare plan.

Or one who:

Believes the Federal Reserve is treasonous when it expands the money supply, doubts human beings evolved from more primitive forms of life, seeks to abolish the Internal Revenue Service and shift most public services to the states, thinks Social Security is a Ponzi scheme, while governor took a meat axe to public education and presided over an economy that generated large numbers of near-minimum-wage jobs, and who will shut down most federal regulatory agencies, cut corporate taxes, and seek repeal of Obama’s healthcare plan.

Whether it’s Romney or Perry, he’s sure to attack everything Obama has done or proposed. And Obama, for his part, will have to defend his positions and look for ways to counterpunch.

Hence, the parameters of public debate for the next fourteen months.

Within these narrow confines progressive ideas won’t get an airing. Even though poverty and unemployment will almost surely stay sky-high, wages will stagnate or continue to fall, inequality will widen, and deficit hawks will create an indelible (and false) impression that the nation can’t afford to do much about any of it – proposals to reverse these trends are unlikely to be heard.

Neither party’s presidential candidate will propose to tame CEO pay, create more tax brackets at the top and raise the highest marginal rates back to their levels in the 1950s and 1960s (that is, 70 to 90 percent), and match the capital-gains rate with ordinary income.

You won’t hear a call to strengthen labor unions and increase the bargaining power of ordinary workers.

Don’t expect an argument for resurrecting the Glass-Steagall Act, thereby separating commercial from investment banking and stopping Wall Street’s most lucrative and dangerous practices.

You won’t hear there’s no reason to cut Medicare and Medicaid – that a better means of taming health-care costs is to use these programs’ bargaining clout with drug companies and hospitals to obtain better deals and to shift from fee-for-services to fee for healthy outcomes.

Nor will you hear why we must move toward Medicare for all.

Nor why the best approach to assuring Social Security’s long-term solvency is to lift the ceiling on income subject to Social Security payroll taxes.

Don’t expect any reference to the absurdity of spending more on the military than do all other countries put together, and the waste and futility of an unending and undeclared war against Islamic extremism – especially when we have so much to do at home.

Nor are you likely to hear proposals for ending the corruption of our democracy by big money.

Although proposals like these are more important and relevant than ever, they won’t be part of the upcoming presidential election.

But they should be part of the public debate nonetheless.

That’s why I urge you to speak out about them – at town halls, candidate forums, and public events. Continue to mobilize and organize around them. Talk with your local media about them. Use social media to get the truth out.

Don’t be silenced by Democrats who say by doing so we’ll jeopardize the President’s re-election. If anything we’ll be painting him as more of a centrist than Republicans want the public to believe. And we’ll be preserving the possibility (however faint) of a progressive agenda if he’s reelected.

Remember, too, the presidential race isn’t the only one occurring in 2012. More than a third of Senate seats and every House seat will be decided on, as well as numerous governorships and state races. Making a ruckus about these issues could push some candidates in this direction — particularly since, as polls show, much of the public agrees.

Most importantly, by continuing to push and prod we give hope to countless Americans on the verge of giving up. We give back to them the courage of their own convictions, and thereby lay the groundwork for a future progressive agenda — to take back America from the privileged and powerful, and restore broad-based prosperity.

Free to Die

Original Link:

By Paul Krugman

Back in 1980, just as America was making its political turn to the right, Milton Friedman lent his voice to the change with the famous TV series “Free to Choose.” In episode after episode, the genial economist identified laissez-faire economics with personal choice and empowerment, an upbeat vision that would be echoed and amplified by Ronald Reagan.

But that was then. Today, “free to choose” has become “free to die.”

I’m referring, as you might guess, to what happened during Monday’s G.O.P. presidential debate. CNN’s Wolf Blitzer asked Representative Ron Paul what we should do if a 30-year-old man who chose not to purchase health insurance suddenly found himself in need of six months of intensive care. Mr. Paul replied, “That’s what freedom is all about — taking your own risks.” Mr. Blitzer pressed him again, asking whether “society should just let him die.”

And the crowd erupted with cheers and shouts of “Yeah!”

The incident highlighted something that I don’t think most political commentators have fully absorbed: at this point, American politics is fundamentally about different moral visions.

Now, there are two things you should know about the Blitzer-Paul exchange. The first is that after the crowd weighed in, Mr. Paul basically tried to evade the question, asserting that warm-hearted doctors and charitable individuals would always make sure that people received the care they needed — or at least they would if they hadn’t been corrupted by the welfare state. Sorry, but that’s a fantasy. People who can’t afford essential medical care often fail to get it, and always have — and sometimes they die as a result.

The second is that very few of those who die from lack of medical care look like Mr. Blitzer’s hypothetical individual who could and should have bought insurance. In reality, most uninsured Americans either have low incomes and cannot afford insurance, or are rejected by insurers because they have chronic conditions.

So would people on the right be willing to let those who are uninsured through no fault of their own die from lack of care? The answer, based on recent history, is a resounding “Yeah!”

Think, in particular, of the children.

The day after the debate, the Census Bureau released its latest estimates on income, poverty and health insurance. The overall picture was terrible: the weak economy continues to wreak havoc on American lives. One relatively bright spot, however, was health care for children: the percentage of children without health coverage was lower in 2010 than before the recession, largely thanks to the 2009 expansion of the State Children’s Health Insurance Program, or S-chip.

And the reason S-chip was expanded in 2009 but not earlier was, of course, that former President George W. Bush blocked earlier attempts to cover more children — to the cheers of many on the right. Did I mention that one in six children in Texas lacks health insurance, the second-highest rate in the nation?

So the freedom to die extends, in practice, to children and the unlucky as well as the improvident. And the right’s embrace of that notion signals an important shift in the nature of American politics.

In the past, conservatives accepted the need for a government-provided safety net on humanitarian grounds. Don’t take it from me, take it from Friedrich Hayek, the conservative intellectual hero, who specifically declared in “The Road to Serfdom” his support for “a comprehensive system of social insurance” to protect citizens against “the common hazards of life,” and singled out health in particular.

Given the agreed-upon desirability of protecting citizens against the worst, the question then became one of costs and benefits — and health care was one of those areas where even conservatives used to be willing to accept government intervention in the name of compassion, given the clear evidence that covering the uninsured would not, in fact, cost very much money. As many observers have pointed out, the Obama health care plan was largely based on past Republican plans, and is virtually identical to Mitt Romney’s health reform in Massachusetts.

Now, however, compassion is out of fashion — indeed, lack of compassion has become a matter of principle, at least among the G.O.P.’s base.

And what this means is that modern conservatism is actually a deeply radical movement, one that is hostile to the kind of society we’ve had for the past three generations — that is, a society that, acting through the government, tries to mitigate some of the “common hazards of life” through such programs as Social Security, unemployment insurance, Medicare and Medicaid.

Are voters ready to embrace such a radical rejection of the kind of America we’ve all grown up in? I guess we’ll find out next year.

The decline and fall of the American middle class

Original Link:

By Paul Harris

The heart of our political malaise is that the middle class, so long a powerhouse of US prosperity, is being crushed as never before

No one can accuse the candidates on stage at Monday's Republican debate of not discussing a broad range of topics. They talked about big issues like social security, the wars in Iraq and Afghanistan, energy independence, repealing healthcare reform and the need for job creation. And they talked about small issues for political point-scoring: like HPV vaccines for girls.

But missing from the debate – and, in fact, much current discussion of America's politics – is the single biggest issue facing the country: the destruction of the American middle class. For stories on how America is bifurcating into haves and have-nots, with precious little in between, you have to dive behind the headlines of the latest Washington political bun-fight and find the devil in the details.

Take a story that appeared in the Wall Street Journal Monday. The tale is nominally one about marketing strategy and it looks at how giant firm Procter & Gamble sells its household goods to its customers. But the picture that emerges is terrifying. P&G, it transpires, is cutting back on marketing to the disappearing middle classes, instead selling more and more to either high-income or low-income customers and abandoning the middle. Other big firms, like Heinz, are following suit. The piece reveals there is even a word for this strategy, helpfully coined by Citibank: the Consumer Hourglass Theory – because it denotes a society that bulges at the top and bottom and is squeezed in the middle.

The story contains some scary figures, such as the fact that the net worth of the middle fifth of American households has plunged by 26% in the last two years. Or that the income of the median American family, adjusted for inflation, is lower now than in 1998.

Or look at a story in the New York Times Tuesday. It starkly shows how the plight of the American working person has worsened. Solid jobs that once provided a secure grasp on middle class aims (a house, college for the kids, a retirement) have changed to become low-wage ones. It looks at the situation of some Detroit auto-workers, pointing out that new hires can find themselves working opposite long-term colleagues who do similar jobs yet earn twice as much. The system is called a "two tier" wage structure.

Perhaps that system can be justified as an emergency measure to keep Detroit's auto-industry alive and help it survive the current tough times. But, like the Consumer Hourglass Theory, it actually looks far more like the permanent shape of things to come. American society is bifurcating, squeezing the middle class out of existence. The ranks of the poor and low-income earners are growing and the rich are doing just fine – and no one is talking about it, much less doing anything about it.

The black-and-white facts of the case should stun Americans on both sides of the political divide. At the start of this week, Vermont Senator Bernie Sanders published a report on poverty called "Is Poverty a Death Sentence?" It showed that in 313 counties in America, life expectancy for women has actually declined over the last 20 years. It showed six million more people have fallen into poverty since 2004.

Indeed, this week the US Census Bureau has released a survey showing that one in six Americans now live in poverty: the highest number ever reported by the organisation. It also showed that real median household incomes dropped 2.3% in 2010 from the year before, reflecting the decline of the middle class. At the same time, the richest 20% of the US population now controls 84% of the wealth. In fact, so staggeringly unbalanced has America become that the richest 400 American families have the same net worth as the bottom 50% of the nation.

I do not care if you are a Tea Party activist or a Socialist party USA organiser, you should be able to agree on one thing, at least: this is unsustainable. Something has to give. But no one in the current political system looks they have an answer.

At Strategy Seminar, Koch Refers To Obama As ‘Saddam Hussein’ To Be Defeated In ‘Mother Of All Wars’

Original Link:

By Zaid Jilani

Today, Bradblog’s Brad Friedman reports for Mother Jones about a secret meeting that the right-wing oil billionaire Koch brothers held at a Colorado resort in June with hundreds of wealthy donors who plotted to finance right-wing causes and elect conservative politicians.

Friedman reports that audio he obtained from the conference reveals that Charles Koch alarmingly referred to President Obama as “Saddam Hussein,” saying that the right had to fight the “mother of all wars.” He rallied his guests to donate millions of dollars to help defeat Obama and boost other right-wing causes. Listen to audio of these remarks obtained by Friedman:

Koch also read off a list of 32 donors who gave a million dollars or more to his efforts to build up far-right infrastructure. Mother Jones’s Gavin Aronsen notes that this list was largely corroborated by ThinkProgress research published in 2010. The list includes financiers such as Charles Schwab of the Charles Schwab Corporation and John Templeton, Jr. of the powerful John Templeton Foundation.

Fallout From Chris Christie-Koch Brothers Exposé

Original Link:

By Gavin Aronsen

Unless you've been living in a hole, you've probably heard at least something about a secret confab near Vail, Colorado, where the billionaire industrialist Charles Koch referred to the 2012 elections as "the mother of all wars." (He may or may not have been referring to President Obama when he evoked Saddam Hussein—more on that below—but he certainly used Saddam's battle slogan to characterize efforts by him and his brother to evict Obama from the White House.)

In the week since we ran Brad Friedman's two-part series, which publicized audio from inside the big event and broke the news that New Jersey Gov. Chris Christie had delivered the keynote speech (a fact Christie had kept hidden from New Jersey voters), dozens of news outlets have picked up the story, and even taken it further. Here are a few highlights.

Christie "mentally deranged," says New Jersey Democratic Assembly leader: In the audio from his June 26 keynote speech, Christie boasts about backroom dealings with two state Democratic leaders—Senate President Steve Sweeney and Assembly Speaker Sheila Oliver—to pass a bill forcing public employees to pay more for their pensions. (Christie has called the pension overhaul his "biggest governmental victory.") "I want to post the bill, but I think when I go on the floor, my own party's going to take a run at me to remove me as speaker. So I can't post the bill," Christie says Oliver told him. "I think the only way I survive is if the 33 Republicans in the chamber will agree to vote for me for speaker. Can you work it out?"

After the audio broke, Oliver told the Newark Star-Ledger that Christie was "more mentally deranged than some of us thought. Never happened." True or false, Christie's story led to speculation that Oliver could be ousted from her leadership role. But two state Democrats speaking on the condition of anonymity told the Cherry Hill Courier Post that reports of party infighting are overblown, and Oliver's position is safe. Her standing with Christie, whom she also called a "rattlesnake," could prove more icy.

In early July, Sweeney went ballistic on Christie, claiming the governor had double-crossed him on the pension deal by unilaterally using his line-item veto to slash services to the poor. Back then, the former union leader called the governor a "rotten bastard" and "rotten prick" and said he "wanted to punch him in his head." He responded more coolly to the Koch seminar revelations, but speaking to the Asbury Park Press through a spokesman, he did manage another jab:

The Senate President has no comment on remarks Governor Christie made while he was wining and dining with ridiculously wealthy people just days before he cut funding for visually impaired people, our most vulnerable seniors, and programs for sexually abused children, while coming to the aid, yet again, of his rich friends.

Chris Christie's climate "smoking gun": In his introduction of the governor, David Koch revealed how he and Christie had gotten acquainted: "Five months ago we met in my New York City office and spoke, just the two of us, for about two hours on his objectives and successes in correcting many of the most serious problems of the New Jersey state government," Koch said.

New Jersey's Sierra Club director Jeff Tittel told the AP that this was "the smoking gun that shows [Christie has] been working with the Koch brothers from the beginning." The AP story suggests that the meeting may have influenced Christie's decision to withdraw from the Regional Greenhouse Gas Initiative (RGGI), a 10-state cap-and-trade program. In late May, after Christie announced his plan to exit RGGI by year's end, Tittel told Mother Jones that the governor was "trying to have it both ways" by supporting some environmental programs in New Jersey while appealing nationally to groups like the Kochs' Americans for Prosperity, a political advocacy group that stridently opposes efforts to regulate greenhouse gas emissions. A Christie spokesman told the AP that the winter meeting with David Koch was "wholly unconnected" to Christie's decision on RGGI.

Saddam Hussein and Barack Obama: Part 1 of Friedman's exclusive opens like this:

"We have Saddam Hussein," declared billionaire industrialist Charles Koch, apparently referring to President Barack Obama as he welcomed hundreds of wealthy guests to the latest of the secret fundraising and strategy seminars he and his brother host twice a year. The 2012 elections, he warned, will be "the mother of all wars."

Reporters nationwide quickly picked up this quote, and broadcast hosts replayed the audio clip (which was included in the piece) on their shows. Friedman appeared on a number of radio, podcast, and TV programs, including CNN's Situation Room and MSNBC's The Ed Show, to discuss it:

But some listeners, including our own Kevin Drum, suggested that Koch may have simply been quoting Hussein's well-worn slogan from the outset of the first Gulf War. Politico's Ben Smith wrote: "As I hear the (ambiguous) line, Koch is quoting Saddam here, not comparing Obama to him. In that version, the quote reads: 'We have, as Saddam Hussein [said] this is the Mother of All Wars.'" A Koch Industry spokesman echoed that sentiment. But there's little doubt that the war in question is the war to retake the White House. The quote was all that Obama campaign manager Jim Messina needed to blast out a fundraising email, suggesting that it "absolutely should" offend Democrats. "But it should also motivate you, because you are the only thing that can stop…[t]he Koch brothers and the front groups they fund."

(The complete audio and transcript are available at The BRAD BLOG.)

Koch ally Art Pope denies attending the seminar: No one on our list of likely million-dollar Koch donors has contacted us to protest their inclusion. But Raleigh, North Carolina, retail magnate Art Pope—whom previously called a regular seminar attendee—told the News & Observer that he neither attended the seminar nor donated any of his own money. He did admit that his family's foundation donated "several hundred thousand dollars," presumably in the past year, to Americans for Prosperity, where he serves as a national director. A Facing South investigation discovered that the foundation has given a total of more than $1.9 million to Americans for Prosperity.

Here's a sampling of additional coverage:

Newark Star-Ledger, "NJ Gov. Chris Christie hurt himself by discrediting Assembly Speaker Sheila Oliver"

Philadelphia Inquirer, "Editorial: Christie Should Disclose Secret Political Trips"

Milwaukee Journal-Sentinal, "Menard, Hendricks on Koch donor list"

Colorado Independent, "Why are the Kochs so afraid of Obama?"

Wonkette, "War on Everyone Else Round One Million: Charles Koch Defeats Jimmy Hoffa"

Slate, "The Koch Brother-Anna Nicole Smith Connection", "Mother Jones Secret Koch Brothers Tapes"

Sunday, September 11, 2011

Remembering the Moment Our CEOs Dug In

Original Link:

By Sam Pizzigati

Forty years ago, U.S. corporate honchos saw their power ebbing away - to a ragtag mob of long-hairs and loony social reformers. So they did what corporate honchos always do. They asked for a memo.

A landmark historical anniversary passed by almost totally unnoticed last week. No front-page retrospective in a major daily newspaper. No ceremony in the White House Rose Garden. Not even a new postage stamp.

A postage stamp, to be sure, might have been a bit of a stretch. You can’t, after all, put a memo on a postage stamp. Not even a memo that helped change, 40 years ago this month, the course of modern U.S. history.

The writer of this memorable memo, Richmond attorney Lewis Powell, would later go on to national prominence as a U.S. Supreme Court justice. But Lewis Powell, back in August 1971, had no national general public presence.

Powell did have widespread respect within elite corporate circles. A former American Bar Association president, he served on top corporate boards — and had friends in pivotal places, like Eugene Sydnor, a mover and shaker at the U.S. Chamber of Commerce.

Powell and Sydnor, notes corporate watchdog Charlie Cray, shared a sense of impending doom. The American “free enterprise system,” they feared, faced an existential crisis. The enemies of that system would surely triumph — unless business mobilized, as never before, to meet the threat.

The Chamber’s Sydnor asked Powell for a memo that outlined what the Chamber could do to jumpstart a crusade to save free enterprise. Powell's confidential August 23, 1971 response did just that.

Powell’s memo, reread today, can come across as wildly overheated and even, at times, laugh-out-loud paranoid.

Business confronts, Powell contends in the memo, critics “seeking insidiously” to “sabotage” free enterprise. “Extremists on the left,” he declares, have become “far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before in our history.”

With “extremists” and “social reformers” working ever more closely in concert, Powell's memo laments, “individual freedom” itself may stand at risk.

In truth, “free enterprise” in America had faced significantly more threatening — and better organized — challenges before World War I and then again during the Great Depression. In 1971, those Powell labeled “extremists” had no significant political parties, as they had in earlier eras. And the social reformers of 1971, unlike their predecessors, rarely questioned any “free enterprise” basics.

But corporate leaders, Powell correctly understood, did face a hostile political environment in 1971. Progressives were making headway against tax breaks that benefit “only the rich, the owners of big companies,” as one Washington Post columnist put it. “Populist” tracts in mainstream magazines like New York were arguing that “the root need in our country is ‘to redistribute wealth.’”

“This setting of the ‘rich’ against the ‘poor,’ of business against the people,” Powell’s memo seethes, “is the cheapest and most dangerous kind of politics.”

Corporate America, Powell goes on to exhort, must respond with more than “appeasement, ineptitude, and ignoring the problem.” Business leaders must show more “stomach for hard-nose contest with their critics.” CEOs need to consider counterattacking “a primary responsibility of corporate management.”

Yet individual corporate leaders, Powell would acknowledge, can only do so much. An individual corporation, he understood, might be reluctant “to get too far out in front and to make itself too visible a target.” The answer?

“Strength lies in organization,” Powell's would explain, “in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”

The rest of Powell’s memo would detail the sorts of steps Corporate America could take — on campuses, with the media, in politics — to sweep away what Powell considered “inequitable” taxes on men of means and tame regulatory agencies “with large authority over the business system they do not believe in.”

The memo would remain confidential until syndicated national columnist Jack Anderson did an exposé in 1973. That publicity only served to whet corporate interest in Powell’s exhortations. By year’s end, a Chamber of Commerce task force — with executives from corporate giants ranging from G.E. to General Motors — had translated the Powell memo into action plan specifics.

Powell’s 1971 musings,historian Kim Phillips-Fein reflects, “crystallized a set of concerns shared by business conservatives in the early 1970s” — and gave “inspiration” to corporate leaders who would later become familiar names and powerful forces, men like arch Colorado right-winger Joseph Coors.

Together, these newly energized corporate leaders would unleash upon America what political scientists Jacob Hacker and Paul Pierson have called “a domestic version of Shock and Awe.”

The number of corporate public affairs offices in Washington, D.C. would quintuple between 1968 and 1978, from 100 to over 500. In 1971, Hacker and Pierson relate, only 175 U.S. corporations had registered lobbyists in Washington. The 1982 total: almost 2,500.

Corporate leaders also joined together in new national organizations, most notably with the 1972 founding of the Business Roundtable, and bankrolled a series of new militantly “free market” think tanks and action centers: the Heritage Foundation and American Legislative Exchange Council in 1973, the Cato Institute in 1977, the Manhattan Institute in 1978, among many others.

Between the late 1970s and late 1980s, add analysts Hacker and Pierson, corporate PACs increased their outlays for congressional races “nearly fivefold.” The U.S. Chamber of Commerce, for its part, would double its membership between 1974 and 1980 and triple its budget.

The end result of this all this political activity? Four decades of corporate pressure have transformed America. Tax rates on corporations and the wealthy have nosedived. Lawmakers have “deregulated” corporations in one sector after another. Unions, across wide swatches of the private sector, have disappeared.

The United States has become, with all these changes, a far more unequal place. In 1971, the year Powell penned his influential memo, America’s most affluent 0.1 percent reported average incomes — in 2008 dollars — of $1,263,485, and America’s bottom 90 percent averaged, again in 2008 dollars, $31,324.

By 2008, America's top tenth of 1 percent was averaging over four times as much, $5,648,768, and the average income of America’s bottom 90 percent had actually dropped, to $31,244.

The irony here? These numbers would likely trouble Lewis Powell, who died in 1998. Powell saw business as a champion for prosperity for all. He considered unions and collective bargaining “essential” to the freedom Americans enjoy.

Today’s U.S. Chamber of Commerce, by contrast, acts as the lobbying ringleader against any and all legislation that seeks to help workers organize and bargain.

Who knows? Lewis Powell might have come to feel, if he had lived a little longer, that his memo really needed a rewrite.

CEOs Rewarded for Tax Dodging Gymnastics

Original Link:

By Chuck Collins

As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here's a stunning fact to contemplate: Twenty-five hugely profitable U.S. companies paid their CEOs last year more than they paid Uncle Sam in taxes.

In other words, the more CEOs dodge their civic responsibilities, the more lavishly they're paid. That's the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored.

These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Qwest Communications, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year's average of $10.8 million for the CEOs of S&P 500 companies.

Instead of paying their fair share, these companies spend millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year.

Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions -- and then feign losses from their U.S. operations at tax time.

Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment.

Here are a few examples of these champion tax-dodgers:

• Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract -- while lobbying to preserve antiquated tax breaks for oil and gas industry.

• Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay' 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy.

• Insurance giant Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda -- a favorite locale for insurance companies seeking to avoid both taxes and regulation.

These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets.

They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam's investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars.

These CEOs profess to love America. But when it comes time to pay the bills, they'd rather outsource that job over to you or the small business down the road.

Congress should pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans. In the face of growing fiscal austerity, these companies should contribute to the solution and pay their fair share of U.S. taxes.

Top 25 Corporate Tax Dodgers

Original Link:

By Kathy Kristof

Twenty-five of the nation’s highest-paid chief executive officers took home more pay than their companies shelled out in corporate income taxes last year even though their companies earned an average of $1.9 billion, according to a new study by the Institute for Policy Studies.

Methods of stiffing Uncle Sam vary, but IPS notes that 18 of these “hyperactive tax-dodging” corporations operate subsidiaries in offshore tax havens, such as Bermuda, Singapore and Luxembourg. They’ve also hired aggressive lobbyists to argue for special tax breaks that can cause these companies to essentially reap tax subsidy payments from Uncle Sam.

“Instead of sharing responsibility for addressing our nation’s fiscal challenges, these companies are rewarding CEOs for aggressive tax avoidance,” said Chuck Collins, co-author of the Institute’s “Executive Excess 2011″ report.

Far from struggling, most of the companies on the list justified paying their CEOs some 60% more than average big-company CEO by citing “exceptional corporate performance,” the study’s authors said. Where the average U.S. CEO earned a tidy $10.8 million (that’s roughly $5,400 an hour), the CEOs of the biggest tax-dodging companies took home an average of $16.7 million. That translates to roughly $8,350 per hour, or about $66,800 per day.

What companies ranked as the nation’s top tax dodgers? According to IPS, the tax-dodging gold medal goes to General Electric, which had a effective federal tax rate of negative 64.1%. The company’s pre-tax earnings from U.S. operations were $5.1 billion but it got a stunning $3.2 billion tax refund, according to the report.

Remarkably, that’s NOT the lowest tax rate in the survey. International Paper, which earned $198 million in pre-tax profits from U.S. operations and got a $249 million refund, wins that distinction with a negative 125.8% effective federal rate.

But GE beat out the competition by also spending a tidy $41.8 million on lobbying and campaign contributions, while awarding CEO Jeff Immelt a 172% raise. Immelt’s total compensation package was worth $15.2 million in 2010, according to the survey. A New York Times expose that ran earlier this year attributed GE’s extraordinary ability to cut its corporate taxes to “an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”

General Electric operates 14 subsidiaries in offshore tax-haven countries, where it has built up some $94 billion in unrepatriated profits that will not be subject to U.S. taxation unless those profits are returned to the U.S. (Not surprisingly, many companies are now lobbying to exempt “repatriated” profits from U.S. taxation.)

It’s worth noting that some of the companies on the IPS list dispute the study’s figures arguing that they do not account for tax reserves that have been “accrued” to pay deferred taxes. However, report author Scott Klinger notes that deferred taxes are not taxes paid — and they may never be paid, given the Byzantine way U.S. corporate income taxes are assessed. These figures reflect the taxes paid in 2010, according to corporate financial reports.

In addition, some companies maintain that they paid no taxes because they reported no taxable income in the U.S. Klinger acknowledges that this is sometimes true. But he says the lack of U.S. profitability is often due to accounting gimmickry that could make movie studios (notorious for making profits disappear) envious. For example, what many of these companies do is have their subsidiaries in foreign countries either own their patents or facilities, allowing that foreign subsidiary to drain the U.S. company of profits by charging exorbitant “royalty” or “lease” fees.

Corporate tax avoidance schemes are estimated to cost the federal government some $100 billion annually, Klinger adds. They also create huge disparities in effective tax rates between big businesses and small. Small businesses pay an average of 27% in federal taxes, he notes, while big businesses pay just 11% on average.

“In effect, small businesses are subsidizing big businesses,” Klinger says.

Here’s the IPS ranking of Top 25 Corporate Tax Dodgers. The companies are ranked by their CEOs pay, highest-paid first.

1. John Lundgren, Stanley Black & Decker; CEO Pay: $32.6 million; Federal income tax: negative $75 million; Subsidiaries in tax havens: 50.

2. Alan Mulally, Ford; CEO Pay: $26.5 million; Federal income tax: negative $69 million; Subsidiaries in tax havens: 3.

3. Aubrey McClendon, Chesapeake Energy; CEO Pay: $21 million; Federal income tax: $0; Subsidiaries in tax havens: 0

4. Gregory Chase, Aon: CEO Pay; $20.8 million; Federal income tax: $16 million; Subsidiaries in corporate tax havens: 128.

5. Robert Kelly, Bank of New York Mellon; CEO Pay: $19.4 million; Federal income tax: negative $670 million; Subsidiaries in tax havens: 10

6. John F. Brock, Coca-Cola Enterprises; CEO Pay: $19.1 million; Federal income tax: $8 million; Subsidiaries in tax havens: 4

7. Ivan Seidenberg, Verizon; CEO Pay: $18.1 million; Federal income tax: negative $705 million; Subsidiaries in tax havens: 0

8. Andrew Liveris, Dow Chemical; CEO Pay: $17.7 million; Federal income tax: negative $576 million; Subsidiaries in tax havens: 64

9. John Strangfeld, Prudential Financial; CEO Pay: 16.2 million; Federal income tax: negative $722 million; Subsidiaries in tax havens: 36

10. James Cracchiolo, Ameriprise; CEO Pay: $16.2 million; Federal income tax: negative $224 million; Subsidiaries in tax havens: 7

11. David Cote, Honeywell; CEO Pay: $15.2 million; Federal income tax: negative $471 million; Subsidiaries in tax havens: 5

12. Jeff Immelt, General Electric; CEO Pay: $15.2 million; Federal income tax: negative $3.25 billion; Subsidiaries in tax havens: 14

13. Patrick Hassey, Allegheny Technologies; CEO Pay: $15 million; Federal income tax: negative $47 million; Subsidiaries in tax havens: 0

14. Robert Coury, Mylan Laboratories; CEO Pay: $15 million; Federal income tax: negative 73 million; Subsidiaries in tax havens: 32

15. Richard Fairbank, Capital One Financial; CEO Pay: $14.8 million; Federal income tax: negative $152 million; Subsidiaries in tax havens: 0

16. Steve Wynn, Wynn Resorts Ltd.; CEO Pay: $14.6 million; Federal income tax: 0; Subsidiaries in tax havens: 16

17. Brian Duperreault, Marsh & McLennan; CEO Pay: $14 million; Federal income tax: negative $90 million; Subsidiaries in tax havens: 105

18. Jim McNerney, Boeing; CEO Pay: $13.8 million; Federal income tax: 13 million; Subsidiaries in tax havens: 42

19. Gregory Q. Brown, Motorola Solutions; CEO Pay: $13.7 million; Federal income tax: $7 million; Subsidiaries in tax havens: 6

20. Eugene Isenberg, Nabors Industries; CEO Pay: $13.5 million; Federal income tax: negative $138 million; Subsidiaries in tax havens: 1

21. Edward Mueller, Qwest Communications; CEO Pay: $13.4 million; Federal income tax: negative $14 million; Subsidiaries in tax havens: 0

22. James Dolan, Cablevision Systems; CEO Pay: $13.3 million; Federal income tax: negative $3 million; Subsidiaries in tax havens: 0

23. Sanjay Jha, Motorola Mobility; CEO Pay: $13 million; Federal income tax: $12 million; Subsidiaries in tax havens: 0

24. John J. Donahoe, eBay; CEO Pay: $12.4 million; Federal income tax: negative $131 million; Subsidiaries in tax havens: 31

25. John Faraci, International Paper; CEO Pay: $12.3 million; Federal income tax: negative $249 million; Subsidiaries in tax havens: 2

Saturday, September 10, 2011

Some U.S. firms paid more to CEOs than taxes: study

Original Link:

Reporting by Nanette Byrnes; Editing by Howard Goller, Todd Eastham and Jackie Frank

Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study by a Washington think tank said on Wednesday.

At a time when lawmakers are facing tough choices in a quest to slash the national debt, the Institute for Policy Studies, a left-leaning group, said it also found many of the companies spent more on lobbying than they did on taxes.

The senior Democrat on the House of Representatives oversight committee, Elijah Cummings, called for hearings on executive compensation "to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today."

Several companies mentioned in the report took issue with its methodology and said they paid all taxes owed.

General Electric spokesman Andrew Williams called the study "inaccurate" and noted it did not include significant income taxes paid in 2010 for previous years, or state taxes paid. "GE pays what it owes," he wrote in an e-mail response to questions.

Boeing spokesman Chaz Bickers said the study is "simply wrong".

Instead of Boeing's reported "U.S. federal current tax expense" of $13 million which the IPS used, he said a better approximation of the company's taxes paid would be the $360 million it reported as its net income tax payments, most of which, he says, was federal.

"On federal cash tax payments last year we paid in the hundreds of millions," Bickers told Reuters. The company also received a $371 million credit from the government last year for overpayment of taxes in the past, and has added 5,000 U.S. jobs this year Bickers says, in part because of Federal tax breaks.

The institute compared CEO pay to current U.S. taxes paid, excluding foreign and state and local taxes that may have been paid, as well as deferred taxes which can often be far larger than current taxes paid.

The group's rationale was that U.S. taxes paid are the closest approximation in public documents to what companies may have actually written a check for last year. It said deferred taxes may or may not be paid.

The accounting used in SEC filings differs from the accounting used to tally what's owed on a corporate tax return. Neither the IPS number nor the figure cited by Boeing exactly equals the check written to the IRS, says Scott Dyreng, an assistant professor at Duke's Fuqua School of Business who studies corporate taxes, and though companies could disclose that figure, don't have to and don't do so.


Compensation for the 25 CEOs with pay surpassing corporate taxes averaged $16.7 million, according to the study, compared to a $10.8 million average for S&P 500 CEOs. Among the companies topping the IPS list:

* eBay whose CEO John Donahoe made $12.4 million, but which reported a $131 million refund on its 2010 current U.S. taxes.

* Boeing, which paid CEO Jim McNerney $13.8 million, sent in $13 million in federal income taxes, and spent $20.8 million on lobbying and campaign spending

* General Electric where CEO Jeff Immelt earned $15.2 million in 2010, while the company got a $3.3 billion federal refund and invested $41.8 million in its own lobbying and political campaigns.

Though the companies come from different industries, their tax breaks fall into two primary areas.

Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.

Shareholders have responded favorably when companies in which they invest keep a tax bill low through legal methods, thereby benefiting earnings. But Chuck Collins, an IPS senior scholar and co-author of the report, said that is a mistake.

"I think it's an exposure of weakness in a company if their profitability is dependent on their accounting department and not on making better widgets," he said.

In prior reports, Collins said, out-sized CEO pay was often a red flag of bigger problems to come. The IPS has been putting a pay report together for 18 years. Among those whose leaders have made the high pay list in years past, only to have their businesses falter: Tyco, Enron and WorldCom.