Submitted by Elaine Magliaro, Guest Blogger
Have you heard about the Campaign to Fix the Debt? It sounds like an initiative that our country needs at this time. Mark MacKenzie, president of the New Hampshire AFL-CIO, said the campaign “presents itself as a grassroots, bipartisan organization that is committed to lowering our debt. It sounds good, especially in today’s environment of extreme partisanship and political maneuvering.” Mackenzie warns, however, that Fix the Debt’s “major contribution to the conversation over the fiscal cliff is that while the George W. Bush tax cuts for the wealthy and corporations should be off the table, Americans’ retirement security and health care most definitely should [not] be.”
The Institute for Policy Studies claims that the Fix the Debt initiative is driven by business and is actually using the fear of going over the fiscal cliff “as a cover for tax-code changes that would damage our economy.” The institute found that Fix the Debt “has raised $60 million and recruited more than 80 CEOs of America’s most powerful corporations to lobby for a debt deal that would reduce corporate taxes and shift costs onto the poor and elderly.”
Scott Klinger, co-author of a report produced by the institute titled The CEO Campaign to “Fix” the Debt said, “The ‘Fix the Debt’ CEOs are trying to pass themselves off as noble leaders who are willing to compromise in order to save America from financial ruin. In reality, the campaign is a Trojan horse concealing massive corporate tax breaks that would make our debt situation much worse.”
Here are some of the findings of the institute’s report:
- The 63 Fix the Debt companies that are publicly held stand to gain as much as $134 billion in windfalls if Congress approves one of their main proposals — a “territorial tax system.” Under this system, companies would not have to pay U.S. federal income taxes on foreign earnings when they bring the profits back to the United States.
- The CEOs backing Fix the Debt personally received a combined total of $41 million in savings last year thanks to the Bush-era tax cuts. The top CEO beneficiary of the Bush tax cuts in 2011, Leon Black of Apollo Global Management, saved $9.9 million on the Bush tax cuts. The private equity fund leader reaped $215 million in taxable income last year just from vested stock.
- Of the 63 Fix the Debt CEOs at publicly held firms, 24 received more in compensation last year than their corporations paid in federal corporate income taxes. All but six of these firms reported U.S. profits last year.
The Institute for Policy Studies says that “corporations leading this campaign are contributing to Americans’ retirement insecurity by funneling enormous sums into their CEO retirement accounts while underfunding their employee pension funds.” It released another report titled A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts. That report analyzed the retirement policies of US corporations leading the campaign to Fix the Debt. Here are some of the reports key findings:
- The 71 Fix the Debt CEOs who lead publicly held companies have amassed an average of $9 million in their company retirement funds. A dozen have more than $20 million in their accounts. If each of them converted their assets to an annuity when they turned 65, they would receive a monthly check for at least $110,000 for life.
- The Fix the Debt CEO with the largest pension fund is Honeywell’s David Cote, a long-time advocate of Social Security cuts. His $78 million nest egg is enough to provide a $428,000 check every month after he turns 65.
- Forty-one of the 71 companies offer employee pension funds. Of these, only two have sufficient assets in their funds to meet expected obligations. The rest have combined deficits of $103 billion, or about $2.5 billion on average. General Electric has the largest deficit in its worker pension fund, with $22 billion.
Christina Wilkie and Ryan Grim (Huffington Post) wrote that the CEOs “who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.” They also wrote that the companies represented by executives working on the debt campaign “have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills.”
They added that recently “CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most visibly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs — Medicare, Medicaid, and Social Security — which would disproportionately impact the poor and the elderly.”
Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies and co-author of the report, The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks, talked with Amy Goodman on Democracy Now! about the debt campaign and the CEOs involved in the deficit talks. Anderson told Goodman that they were “doing a massive media and lobbying blitz, portraying themselves as the reasonable ones, because they’re calling for both raising revenues and cutting spending. But if you look at the details of their tax plan, you see that they are really just a Trojan horse. They’re pushing for the same old tax breaks for corporations that they’ve been pushing for for about a decade.”
She continued, “And we looked at one of them, which is they want a permanent exemption from U.S. taxes for all of their foreign earnings. And we calculated that the companies in this campaign stand to gain a windfall of as much as $134 billion, if they get this corporate tax break through. And so, people should be very wary of this big ad campaign that they’re about to see in their newspapers across the country. This is just one more corporate attack on our fair taxation system.”
Lloyd Blankfein is the Face of Class Warfare
Goldman Sachs CEO Lloyd Blankfein Proposes Cutting Medicare, Medicaid & Social Security
Wealthy CEOs Want Tax Breaks, Cuts to Poor and Elderly
SOURCES & FURTHER READING
Fix the Debt sounds promising, but the authors- the CEOs- broke it (Nolan Chart)
Fix The Debt CEOs Shorting Their Employees’ Retirement Funds (Crooks and Liars)
The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks (Institute for Policy Studies)
A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts (Institute for Policy Studies)
Executive Excess 2012: The CEO Hands in Uncle Sam’s Pocket (Institute for Policy Studies)
CEO Council Demands Cuts To Poor, Elderly While Reaping Billions In Government Contracts, Tax Breaks (Huffington Post)
‘Fix The Debt’ CEOs Underfund Employee Retirement, Demand Cuts For Elderly (Huffington Post)
As Talks Begin on “Fiscal Cliff,” Report Warns “Fix the Debt” a Front for More Corporate Bailouts (Democracy Now!)
MacKenzie: Fix the Debt would do so on backs of the middle class (Nashua Telegraph)
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“Fix the Debt” CEOs Enjoy Taxpayer-Subsidized Pay
By Sarah Anderson, Scott Klinger, Javier Rojo
http://www.ips-dc.org/reports/ceo-tax-subsidized-pay
A new report by IPS and Campaign for America’s Future shows that America’s top CEOs are pocketing massive taxpayer subsidies at the same time they’re pushing austerity cutbacks in government programs that benefit ordinary citizens.
Executives Pushing Budget Cuts Rake In Millions From Tax Loophole
By Bryce Covert
May 2, 2013
http://thinkprogress.org/economy/2013/05/02/1953261/fix-the-debt-millions-tax-loophole/
Fix the Debt, a group of CEOs at some of the country’s largest corporations, has been pushing an anti-debt agenda with stern warnings about the urgent need for deficit reduction. But many of its members have benefitted from a loophole in the tax code that has allowed them to deduct “performance pay” from their executive salaries and thus avoid paying millions in taxes.
A new report from the Institute for Policy Studies and Campaign for America’s Future finds that 90 member firms took in somewhere between $953 million and $1.6 billion through the ability to deduct performance pay from corporate taxes between 2009 and 2011. The report includes the biggest winners of this loophole:
– UnitedHealth Group: This company was at the top of the list, deducting at least $194 million of its total $199 million compensation for CEO Stephen Hemsley during that time period. The report calculates that this works out to a $68 million taxpayer subsidy to UnitedHealth, plus another $10 million tax break for Hemsley’s $28 million performance pay in 2012.
– Discovery Communications: This company came in second, deducting $105 million of a total compensation package of $114 million for CEO David Zaslav from 2009 to 2011. That comes to a $37 million taxpayer subsidy. It got another $9 million tax break for his performance pay in 2012.
– Caesars Entertainment: Even though this company has been losing money in recent years, CEO Gary Loveman made $9.6 million in cash bonuses during that time.
During that three-year period, CEOs and the next three top executives at each of the 90 Fix the Debt corporations were paid a total of $6.3 billion, 75 percent of which was in fully deductible performance pay, equaling $2.7 billion. Depending on how everything was calculated (which is hard to know with current disclosure rules), that comes to about $1.5 million in taxpayer subsidy per executive or $18 million per company.
The group has previously pushed for tax reform that would result in even bigger windfalls for the corporations they represent, potentially netting them $134 billion. Members have also been vocal in calling for cuts to Social Security while themselves enjoying millions of dollars saved in their personal retirement accounts.
JPMorgan CEO Pushes Fiscal Cliff Compromise As The Bank Lobbies For Tax Breaks
The Huffington Post
By Catherine New
Posted: 12/13/2012
http://www.huffingtonpost.com/2012/12/13/jpmorgan-fiscal-cliff_n_2287747.html?utm_hp_ref=business
Excerpt:
Jamie Dimon, JPMorgan Chase’s chief executive, has been out front among Wall Street chiefs in supporting higher tax rates on individual taxpayers as a way to avert the fiscal cliff.
In fact, Dimon has even said that he’d be willing to pay higher taxes on his own income, which was around $23 million last year alone. Add to that, the CEO is a member of Fix the Debt, a nonprofit group with the mission to promote ways to reduce the national debt.
Yet JPMorgan, the biggest bank in the country by assets, appears to be unwilling to sacrifice its own tax benefits to help bring down the national debt. Instead, it has spent millions this year alone lobbying Congress to extend a key loophole that allows the bank to avoid paying a tax bill on its foreign income.
The corporate tax break is known as the “active finance exception,” and it allows multinational companies to earn interest on overseas lending and defer paying taxes to the U.S. government indefinitely.
When contacted by The Huffington Post, the bank did not comment directly on whether it is currently lobbying for this tax break. “We paid over $8 billion in taxes last year and operate as efficiently as we can for shareholders,” said Mark Kornblau, a spokesman for the bank.
As recently as five months ago, JPMorgan Chase was funding lobbyists to push Congress to extend this key tax loophole. According to lobbying reports on OpenSecrets.org, JPMorgan Chase paid more than $3 million between April 1 and June 30 alone to lobbyists to specifically discuss “proposals to extend the active finance exception.”
Last month, Morgan Stanley CEO James Gorman also came out in support of a “balanced solution” to the fiscal cliff, including support of tax hikes on individual taxpayers, even as his bank has also lobbied to extend the same tax break, HuffPost’s Ben Hallman reported.
Emerging Fiscal Cliff Deal Spares Corporations, but Not the Safety Net
George Zornick
December 12, 2012
http://www.thenation.com/blog/171728/emerging-fiscal-cliff-deal-spares-corporations-not-safety-net
Excerpt:
The Wall Street Journal has news of some actual developments in the ongoing fiscal cliff negotiations: this morning, it reported that President Obama will add corporate tax reform to his offer to House Republicans, in an effort to bring them along and invite a buy-in from the pesky CEOs crowding up the airwaves during most of this saga.
The Journal says “The White House’s corporate-tax suggestion wasn’t specific” but that “White House officials, in making the suggestion, cited a corporate-tax plan the administration unveiled in February.” The plan the White House outlined earlier this year, if you don’t recall, was to lower the corporate tax rate from 35 percent to 28 percent while closing corporate tax loopholes to a degree that enough revenue is raised to offset the rate reduction.
So you can immediately see the first problem with Obama’s proposal—since it’s revenue-neutral, it asks corporate America to contribute nothing to a final deficit reduction passage.
Citizens for Tax Justice immediately flagged Obama’s revenue-neutral plan as problematic when the White House released it earlier this year. CEOs like to whine that the statutory corporate tax rate in America of 35 percent is the highest in the world, but CTJ studied the Fortune 500 companies that had profits in each of the past three years and found that their average effective tax rate was actually just 18.5 percent, thanks to a variety of loopholes, exemptions, and offshoring. Thirty of those corporations had negative tax rates, meaning they actually got money from the Treasury over that three-year period.
CTJ thus concluded “The first goal of corporate tax reform should be to increase the overall amount of tax revenue collected from U.S. corporations.” But Obama’s plan doesn’t do that.
Worse, his plan would quite likely give the corporations an even lower final tax bill once it’s implemented—or rather, not implemented. Obama’s corporate tax plan suffers from the same problems as Romney’s income tax plan: it lowers rates, which is immediate and likely permanent, but doesn’t actually specify enough loopholes to make up the revenue. CTJ studied Obama’s February proposal and found that is specified only about a fourth of the loopholes that needed to be closed in order to offset the rate reductions and “only gives vague suggestions” about where the other 75 percent of the revenue would come from
It’s quite likely that corporate America and its allies in Congress would fight mightily and successfully to preserve their special tax benefits, and this same Journal story notes that when Obama released his earlier corporate tax plan, “Many [business groups] were supportive of the proposal to lower rates but worried about which industries might get hurt by an accompanying elimination of tax breaks.”
Note also that Obama’s corporate tax plan proposes some sort of “territorial tax system” in which corporations could bring profits earned overseas back home at some rate lower than the current law requires, which is 35 percent. This is something the CEOs now lobbying Washington on the fiscal cliff badly want—as we outlined earlier this month, it will reap them tens of millions in benefits. Obama’s plan, CTJ notes, says corporations won’t be able to bring the profits back at a zero percent rate—though no country allows that—but notably does not specify what the rate should be. Given that Republicans have been pushing for an essentially insignificant 1.25 percent rate on repatriated profits, Obama’s lack of specificity is troubling.
The “Yes, Minister” Theory of the Medicare Age
By Paul Krugman
12/12/12
http://krugman.blogs.nytimes.com/2012/12/12/the-yes-minister-theory-of-the-medicare-age/
Aaron Carroll can’t believe that we’re still talking about raising the age for Medicare eligibility; his disbelief is easy to understand. It is, after all, a truly terrible idea, for reasons he details in the linked post; it would inflict vast hardship on the most vulnerable, while saving the federal government remarkably little money, and would actually raise overall health spending, basically because private insurers have much higher administrative costs and much less bargaining power than Medicare, so shifting seniors out of the program ends up costing a lot of money.
Yet the idea just won’t go away. It’s almost surreal. What’s going on here?
One answer is that conservatives badly want a rise in the Medicare age, never mind the policy virtues or lack thereof. Why? Partly because liberals hate the idea: pay any attention to right-wing rhetoric and you learn that spite against liberals, even if there’s no gain for their side, is a major motivator. Beyond that, there is some actual strategic thinking here: by reducing the number of people receiving Medicare, they hope to undermine support for the whole program. No, really:
The most important likely effect is political. Reforming Medicare is difficult in part because of resistance by beneficiaries, who hold a lot of political influence … Diminishing the size of the beneficiary class is likely to diminish resistance to further change, and while it’s not enough, it might ultimately make reform easier.
“Reform”, in this case, means killing the program.
But that’s the right. What about centrists and deficit scolds; why are they for this?
One answer is that many “centrists” are actually right-wingers, at least in the sense that they are basically hostile to the welfare state and view shrinking it as a key goal; the same is true of most deficit scolds, who seem far more interested in cutting social spending than in shrinking the deficit per se.
But there is, I believe, another factor: raising the Medicare age sounds serious, even though it isn’t, and it’s something you can do, then congratulate yourself on your seriousness.
When I look at this whole discussion I keep thinking of a line from “Yes, Minister”: “We must do something. This is something. Therefore we must do it.”
And there’s a real possibility that this kind of logic will lead to huge suffering for hundreds of thousands of older Americans.
The Continuing Uselessless of the Deficit Hawk Campaigners
By David Weigel
Wednesday, Dec. 12, 2012
http://www.slate.com/blogs/weigel/2012/12/12/the_continuing_uselessless_of_the_deficit_hawk_campaigners.html
Mike Bloomberg joins the Fix the Debt coalition with a Washington Post editorial. Seems like overkill, given how he has a perfectly nice media organization through which he can broadcast opinions, but at least it gives us a fresh view of the nothingness that defines the debt campaign. “There have been signs that Congress and the White House are beginning to move toward an agreement that would include modest tax increases and spending cuts, as well as a commitment to enact broader-based tax and entitlement reforms in 2013,” he writes. “While the tax revenue and entitlement cuts being discussed are both less than what I and many others believe are necessary to maximize long-term growth, the specifics of the deal are to some extent less important than the act of getting one.” That’s not any kind of advice!
And this is joined by a statement from the group.
“The Campaign to Fix the Debt is delighted to have Mayor Bloomberg join as a National Co-Chair. His breadth of experience and pragmatic vision will provide an invaluable resource to the Campaign,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt. “Mayor Bloomberg has been a longtime advocate of fiscal responsibility, and his voice will send a strong message to Washington that we have to rein in spending, raise revenue, and reform entitlements in order to get the national debt under control.”
To do what? One thing a billionaire with political power might do is speak out on the sort of tax dodging revealed in this Bloomberg.com story. Or, I guess, he could spoon out more mush.
*****
Millionaires Seek Trust Shelter as Bush Tax Cuts May End
By Sophia Pearson & Ellen Rosen
Dec 12, 2012
http://www.bloomberg.com/news/2012-12-12/millionaires-seek-trust-shelter-as-bush-tax-cuts-may-end.html
Things In Politico That Make Me Want To Guzzle Antifreeze, Point Of No Return Edition
By Charles P. Pierce
12/11/12
http://www.esquire.com/blogs/politics/worst-politico-piece-on-corporate-tax-rates-121112
Excerpt:
One of my primary criticisms of Tiger Beat On The Potomac has been that the entire enterprise has been dedicated totally to gossip, triviality, and Drudge-baiting to the exclusion of what’s actually going on in the country to the people these politics are supposed to serve. Alas, today, the two presiding intellects of the publication put their watery heads together to discuss “bold” policy choices. I hereby take back everything I wrote in the former vein. If this is their idea of discussing policy, I wish to the god that gave me breath that they’d go back to who’s zooming whom at some lobbying shop.
In short, Messrs. VandeHei and Allen have decided that the way to a “rocket-propelled” economy is to cut corporate tax rates to almost nothing, close a bunch of loopholes that will reopen under new rubric in approximately 11 seconds, and essentially do away with the American middle class, or at least impoverish its dwindling membership to the point at which nobody can afford to buy anything anyway.
“The current tax-and-spending debate only flirts with what these insiders say needs to be done. Instead, top White House and congressional leaders talk privately of the need for tax reform that goes way beyond individuals and rates; much deeper Social Security and Medicare changes than currently envisioned; quick movement on trade agreements, including a proposed one with Europe; an energy policy that exploits the oil and gas boom; and allowing foreign-born students with science expertise to stay here and start businesses.”
And to whom do these two brainiacs turn to for these bold policy ideas?
“This is the clear takeaway from conversations we have had over the past three months with top lawmakers, officials, their senior aides and the CEOs who advise and lobby all of them. Many of the conversations were private but many were not.”
Of course, it’s your “clear takeaway,” you twits. You might as well troll meth labs to learn table manners. Ask dogs for recreational tips and they’ll tell you to lick your balls. Ask monkeys about hobbies, and they’ll teach you to fling poo. Ask the plutocrats, and the politicians who serve them, and the aides who serve them about what we should do about the economy, and the answer is always going to be “make sure we stay rich.”