News Release Archive - The U.S. Economy

THOMAS FERGUSON [email]
PAUL JORGENSEN [email]
Ferguson is professor of political science at the University of Massachusetts, Boston, senior fellow of the Roosevelt Institute, and contributing editor at AlterNet. Jorgensen is assistant professor of political science at University of Texas, Pan American and non-resident fellow at the Edmond J. Safra Center at Harvard.

They are the authors, with Jie Chen, of “Revealed: Why the Pundits Are Wrong about Big Money and the 2012 Elections,” just out on AlterNet. Their piece is particularly timely as Congress debates whether and how to raise taxes and cut spending on the edge of the “fiscal cliff.” They write: “It is impossible to assess precisely the totality of money’s influence on the 2012 elections, but notions that it did not matter can be immediately dismissed. The evidence we have reviewed suggests exactly the opposite. … [A] virtual straight line relationship existed between Democratic candidates’ shares of total political money and their showing against their Republican opponents. …

“[We examined] spending differences between Democrats and Republicans in two types of races that should have had better than average chances of being winnable by both parties in 2012. The first involves districts in which a new Republican candidate won for the first time in the 2010 landslide; the other is the smaller subset of those races in which the GOP winner either ousted an incumbent Democrat or defeated a Democrat running in an “open seat” race. Both kinds of districts show heavy Republican advantages in average total spending compared to their Democratic opponents.”

Ferguson and Jorgensen observed today that a substantial portion of GOP funds came from groups like Americans for Prosperity, Freedom Works, or the Club for Growth that were critical of House Speaker Boehner’s “Plan B.” “The evidence is that these little piggies went to market,” Ferguson said. “The GOP problem is that they didn’t all go to the same market.” Jorgensen added that funds from such organizations “totaled many millions of dollars,” though he noted that reporting was not yet complete.

Several business organizations released a joint statement saying it’s “time for Plan C: big corporations now dodging billions in taxes should pay their fair share. Forget Plan B tax breaks for those making $999,999 a year [and] cuts to Social Security.” Instead, they call on Congress and the president to close corporate tax haven loopholes “costing the U.S. Treasury $100 billion a year and raise corporate tax revenues above today’s historically low levels. … In 1952, U.S corporate income taxes accounted for 32 percent of federal revenues; last year this number was less than 8 percent.”

JOSEPH MAGID, via Bob Keener [email]
Magid is president of Gryphon Systems, a management consulting company in Wynnewood, PA. He said today: “With corporate profits at a 50-year high and corporate taxes as a share of the economy at a 50-year low, now is not the time to lock in low corporate taxes. Our country can not afford to keep giving tax breaks and loopholes to giant corporations at the expense of smaller businesses. Highly profitable U.S. multinationals should pay their fair share.”

SCOTT KLINGER [email]
Klinger, tax policy director of Business for Shared Prosperity, said today: “Corporate tax dodging is undermining our economy. It’s time for Plan C: revenue-raising corporate tax reform that calls upon our largest corporations to pay their fair share and once again invest in America, which has invested so much in their success.”

LEW PRINCE [email]
Managing partner of Vintage Vinyl in St. Louis, the Midwest’s largest independent music store, Prince said today: “You can dress up your profits in Bermuda shorts. But that doesn’t mean they’re not earned in America. We can’t afford revenue neutral corporate tax reform. There’s nothing neutral about big business tax dodging — it’s unpatriotic, plain and simple.”

RESHONDA YOUNG, via Joshua Welter [email]

Young, operations manager of Alpha Express, Inc., a family business that provides local, regional and national delivery service, based in Waterloo, Iowa, said today: “We’re not afraid to compete with the biggest delivery companies out there, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab, and rob our nation of the resources we need for a healthy economy.”

ERIC HENRY, via Bob Keener [email]
President of TS Designs, a T-shirt manufacturer in Burlington, NC, Henry said today: “Small businesses like mine put our money back into our operations which keeps jobs, investment and tax dollars right here in our own communities. The corporate tax code should not give incentives to U.S. multinational corporations to hide their revenues offshore and avoid paying their fair share.”

Background: More than 600 business owners and executives, including those quoted above, signed a letter sent by the American Sustainable Business Council, Business for Shared Prosperity and the Main Street Alliance to Congress and the president, saying they “want a tax system that is fair and provides sufficient revenue for the public services and infrastructure that underpin our economy. When powerful, large U.S. corporations avoid their fair share of taxes, they undermine U.S. competitiveness, contribute to the national debt and shift more of the tax burden to domestic businesses, especially small businesses that create most of the new jobs.”

ANDY KROLL [email]
A reporter for Mother Jones magazine, Kroll recently wrote a piece on Bil Oil’s subsidies which states: “Lawmakers on both sides of the aisle have argued that ‘everything should be on the table’” in any budget deal. “Yet notably absent from the debate over what to cut and what to spare in a deal are the tens of billions of dollars in subsidies, tax breaks, and other perks for the hugely profitable oil industry. …

“In case you didn’t quite believe it, yes, the U.S. government subsidizes Big Oil — shorthand for ExxonMobil, Chevron, BP, Shell, and ConocoPhillips, five of the biggest oil companies. Many smaller drilling and refining companies up and down the supply chain receive subsidies, too. … The big-five corporations piled up profits of more than $1 trillion between 2001 and 2011. ExxonMobil alone raked in $16 billion in profits in April, May, and June of this year, the highest-ever quarterly profit for a U.S. corporation.

“Despite such staggering windfalls, the federal government continues to subsidize oil companies large and small. Taxpayers for Common Sense, a nonpartisan government watchdog that wants to cut all energy subsidies, estimates that oil companies will receive $78 billion in industry-specific and broader business subsidies from 2012 to 2017. President Obama’s budget plan for the 2012 fiscal year called for eliminating 13 subsidies or perks for oil companies, which will save taxpayers $4.6 billion a year over the next decade. …

“In Congress, lawmakers ranging from hardline conservatives like Rep. Paul Ryan (R-Wis.) to dyed-in-the-wool liberals like Sen. Bernie Sanders (I-Vt.), and plenty more in between, have called for eliminating oil subsidies. Even oil executives themselves have said in years past that they don’t need the subsidies. ConocoPhillips CEO Jim Mulva told Congress in 2010 that, ‘with respect to oil and gas exploration and production, we do not need incentives.’ …

“The American Petroleum Institute, the oil industry’s top trade group, has launched an advertising campaign pressuring seven senators in states with ties to oil and gas companies … to not cut subsidies.”

DEAN BAKER, ALAN BARBER, NICOLE WOO [email]
Baker is co-director of the Center for Economic and Policy Research. He is available for a limited number of interviews. Barber and Woo are communications director and director of domestic policy for CEPR.

Baker just wrote: “According to reliable sources, the Obama administration is seriously contemplating a deal under which the annual cost of living adjustment for Social Security benefits would be indexed to the chained consumer price index rather than the CPI for wage and clerical workers (CPI-W) to which it is now indexed. This will lead to a reduction in benefits of approximately 0.3 percentage points annually. This loss would be cumulative through time so that after 10 years the cut would be roughly 3 percent, after 20 years 6 percent, and after 30 years 9 percent. If a typical senior collects benefits for 20 years, then the average reduction in benefits will be roughly 3 percent.” Baker addresses three major questions:

* Is the Chained CPI More Accurate?

“While many policy types and pundits have claimed that the chained CPI would provide a more accurate measure of the cost of living for seniors, they have no basis for this claim. … It may not be reasonable to apply the consumption patterns and the substitution patterns among the population as a whole to the elderly. … The elderly devote a larger share of their income to health care, which has generally risen more rapidly in price than other items. …

* Are Social Security Benefits Adequate?

“While some people have tried to foster a myth of the elderly as a high living population, the facts don’t fit this story. The median income of people over age 65 is less than $20,000 a year. Nearly 70 percent of the elderly rely on Social Security benefits for more than half of their income and nearly 40 percent rely on Social Security for more than 90 percent of their income. These benefits average less than $15,000 a year. …

* Is the Chained CPI a Reasonable Way to Deal with the Budget?

“It is important to remember that under the law Social Security is supposed to be treated as a separate program that is financed by its own stream of designated revenue. This means that it cannot contribute to the budget deficit under the law, because it is only allowed to spend money from the Social Security trust fund. This is not just a rhetorical point. There is no commitment to finance Social Security out of general revenue. …”

Baker’s books include The End of Loser Liberalism: Making Markets Progressive and Social Security: The Phony Crisis. Barber and Woo just wrote the paper “The Chained CPI: A Painful Cut in Social Security Benefits and a Stealth Tax Hike.” [PDF]

ERIC LeCOMPTE, JENNIFER TONG, [email]
LeCompte is executive director and Tong is communications director of the Jubilee USA Network, an alliance of religious denominations, human rights groups and development agencies focusing on global poverty.

The Network says in a recently-released statement: “If corporations paid the $150 billion in taxes that they avoid per year through offshore tax loopholes it would more than cover the $109 billion in automatic spending cuts that are set to begin on January 1, 2013. … These loopholes allow many of America’s largest corporations and wealthiest individuals to avoid taxes by using accounting gimmicks to shift profits made in America to offshore tax havens, where they pay little to no taxes. At least 83 of the top 100 publicly traded corporations in the U.S. make use of tax havens, including Walmart, Coca Cola and Pfizer. When these corporations skip out on their taxes, U.S. citizens are left to pick up the tab. Reclaiming the $150 billion lost to offshore tax loopholes would more than cover the $109 billion in automatic spending cuts that will take effect in 2013 if Congress fails to avert the fiscal cliff. …

“More than half of all banking assets and a third of multinational company investments are routed through tax havens. It is estimated that for every $10 a country receives in development aid, $15 exits the country as a result of tax dodging. Corporations are operating in developing countries and robbing resources by using offshore tax havens to hide their money instead of paying their taxes — curbing this behavior at home sends a message that it should not be tolerated around the world.”

The New York Times reports this morning: “State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system. … While the settlement with HSBC is a major victory for the government, the case raises questions about whether certain financial institutions, having grown so large and interconnected, are too big to indict.”

RUSSELL MOKHIBER [email]
Editor of Corporate Crime Reporter, Mokhiber said today: “Twenty years ago, if major corporations engaged in criminal wrongdoing, they would be forced to plead guilty to a crime. Today, if major corporations engage in criminal wrongdoing, they get deferred or non-prosecution agreements. These agreements were intended for minor street crimes, not major corporate crimes. But the corporate crime bar has flipped the practice so that now these agreements are the way major corporate crime cases are settled. According to press reports, prosecutors working the HSBC case wanted to force the giant UK bank to at least plead guilty to Bank Secrecy charges. But higher ups in the Obama administration warned about the effects of a guilty plea ‘on the broader economy.‘ Obama has set in stone a double standard of justice — deferred prosecutions or no prosecution for corporate criminals, guilty pleas for living, breathing criminals.”