Article first published as Tax “Deal or No Deal” Ordeal on Technorati.

The details of President Obama’s tax “deal” were announced on Monday, and five days later Democrats are still strengthening their opposition. Viewed by many as a blackmail payment to Republicans who have held hostage any legislation to help hurting Americans until tax cuts for the top 2% were extended, Democrats from coast to coast are angry and active.

Opposition in the House is being led by Rep. Jay Inslee (D-WA) who, with Rep Nancy Pelosi’s (D-CA) help, has managed to coalesce the Democratic Caucus and intends to block the President’s proposal from reaching the floor. Meanwhile, the torch in the Senate is presently being carried by Senator Bernie Sanders of Vermont, who stood up today and independently filibustered against the bill for more than 8 hours. 

Analysis of the bill reveals that not only will huge income tax benefits be extended to the top 2%, but an even more expensive estate tax gift will be given to the top one-tenth of 1%. In exchange, unemployment benefits that have historically always been granted when unemployment is above 7.2% will be extended, the bottom 98% of Americans will get the tax cuts the Republicans have held hostage, certain income tax credits will be extended, and there will be a one-year 2% rate reduction for Social Security withholding.

Overall, Obama’s back-room deal is sweet indeed for the wealthy and sweeter still the more wealthy one is. It does also give tax relief for the middle class, but according to Rep. Jan Schakowsky (D-IL) it will actually increase taxes on individuals making less than $20,000 or household making less than $40,000.

But in spite of the dire state of the economy, the immensity of the deficit and the plight of the middle class, Democratic opposition is not unanimous. Such Democratic stalwarts as Governor Ed Rendell of Pennsylvania have come out supporting approval of the proposal. And today, former President, Bill Clinton signed on to the list. To the person, these respected Democratic leaders assert that this is the best deal the democrats can get.

Sadly, it seems that President Obama, Governor Rendell, President Clinton and other Democrats who share their position are all completely missing the point. The situation we have in America right now is the result of decades of precisely the type of thinking these leaders espouse. It’s essentially business as usual deal making, and it gets us exactly NOWHERE. It’s the type of thinking that continues to build the bow wave that will soon wash across America again and take with it all but the wealthy who can weather the storm.

The fact of the matter is that the wellbeing of the majority of Americans has become so marginalized in the past 35 years that a huge portion of the populace now feels completely disenfranchised. The problem is so significant that less than 60% of registered voters typically bother to show up at the polls. But rather than address the core problem of voter participation, the process that President Obama and others in his best-we-can-get camp are pushing is focused on trying to sway the 19% of independents who form the center of this bare majority.

Enter the pendulum: this is the electoral system that created our present problem; the independents vote first one way and then the other — kick out the bums, become unsatisfied with the results, bring back the other bums — it’s a perpetual misery machine that pulses but never changes. It’s a closed system, and as stated by Einstein, it is therefore incapable of effecting real change.

If real change is what we want, then we must look outside of this closed system. We can no longer tolerate practices that serve only to maintain equilibrium, yet this is exactly what concentration on the 19% independent vote does. What’s needed is the introduction of new factors, the most significant of which should be an expanded electorate — a focus on tapping into that HUGE 40% or more of registered voters who stay home.

The Tea Party is evidence of the power of this phenomenon, albeit in a counterproductive direction. Allowed to continue, their discontent and belief that government is the enemy will form a vicious spiral that will only gain momentum. The President’s tax deal does nothing to alter this path. It is sadly a reinforcing mechanism that will help to sustain the descent.

What’s remarkable is that President Obama’s campaign of 2008 was the antithesis of the Tea Party movement. It too proved the power of expanding the electorate (62% turnout) and could have formed the roots of a peaceful revolution — a virtuous spiral. But alas it was not reinforced and was instead allowed to wither on the vine. Once elected, the President surrounded himself with status quo insiders and instead of being a force for real change became just another instrument of the establishment. He dedicated himself to doing what he had learned in Chicago politics — make deals. And in so doing, he failed in the most critical aspect of leading change; he failed to keep his supporters excited.

The President’s tax deal is a perpetuation of the system that’s responsible for the mess we’re in today. It offers temporary relief for structural problems and serves to exacerbate the issue of massive concentration of wealth — the very dynamic that brought us to economic collapse and a jobless recovery. The President’s deal does nothing to actually change the system, while potentially opening the door to further chipping away of our social safety net. It is at best a short term bandage that splits the proceeds evenly between the two sides, but where one side consists of 98% of all Americans and the other side is a minuscule elite minority.

Those on the left who advocate this deal are supporting the continued demise of the American middle class. Giving them the benefit of the doubt with regard to motive, they’re doing this because they believe that this is the best deal we can get. That belief is bred in the acceptance of 55% voter turnout and born of the notion that change must be sought by swinging that 19% independent vote. This is simple and utter defeatist nonsense.

The last thing we need moving forward are any more “deals.” What America needs is to excite the sleeping masses. Those who want to maintain the status quo fight diligently to break voter’s spirits and have them believe they can’t make any difference. Those who desire a better America need to break the trend. They need to motivate and inform the disenfranchised mass of voters who no longer participate. They need to give people a reason to get involved — and that will never result from making more back-room deals — it will only happen when the forces for change stand and differentiate themselves from the powers of resistance. 

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Article first published as American Corporations are all About Profits – Not People on Technorati.

Have you heard the news that corporate profits hit an all-time high this past quarter? That’s right, with unemployment stuck near double digits and the wages of American workers continuing to fall, American businesses racked up profits at an annualized rate of $1.66 trillion.

So, even though they themselves may be hurting, shouldn’t patriotic Americans cheer these profits? After all, we have a huge federal budget deficit, and at least the tax revenues from these huge profits will improve the shortfall, right?

Wrong. The sad truth is that American corporations aren’t all that American, and they’re certainly not patriotic. General Electric, fourth on the Fortune 500, had an excellent year in 2009, making profits of $10.3 billion. Their U.S. tax bill? Uncle Sam owed them $1.1 billion. How does that happen?

Well, somewhere in their 24,000 page tax return are the details of how they consistently manage to make serious profits overseas but lose money in the U.S..

A similar story applies to Exxon Mobile, our nation’s most profitable company. Their profits for tax year 2008 climbed to a record high of $42.5 billion — the most ever for an American company. They did wind up having to pay $15 billion in income taxes, but unfortunately for Americans, none of that money was paid to the IRS. Exxon’s U.S. tax bill was a whopping zero dollars.

Sadly, these companies are anything but alone in their ability to exploit tax loopholes and dodge paying U.S. taxes. In fact, a 2008 study prepared by the Government Accountability Office (GAO) reported that two out of three American corporations paid ZERO, zip, nada in federal income taxes from 1998 through 2005.

Unlike average Americans, corporations enjoy considerable flexibility in both operations and the resulting tax treatment. Exxon, for example, has several wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that allow them to legally shelter cash flow. Other corporations, like Google, who was recently able to reduce its effective tax rate to just 2.4%, accomplish their magic by shuffling income through foreign countries using well-known tax strategies like the “Double Irish” or “Dutch Sandwich.”

Google’s use of the “Double Irish” maneuver depends on shifting non-U.S. sales to its Dublin office — 88% of its $12.5 billion in 2009. This technique is also used by others, like Microsoft, and requires that they have two Irish companies (hence the “double”) where one pays royalties to the other which collects the proceeds in a tax haven, like Bermuda.

Make no mistake about it, the use of tax havens is commonplace in corporate America. Another GAO study reported that 83 of the 100 largest American companies have subsidiaries in tax havens. It’s estimated that through the use of such havens, corporations and wealthy individuals are able to evade more than $100 billion in U.S. taxes every year. ATT, GE, IBM, Chevron, they all participate in the dodge.

Even those companies with government contracts, like Boeing, and those who took government bailout money, like AIG, GM, Goldman Sachs and Citicorp play the game. The truth is that the evasion occurs on such a grand scale that 18,000 companies share a single address in the Cayman Islands, a popular haven because of its lack of any corporate or capital gains tax.

What should be done about all of this? Some people advocate the closing of loopholes to prevent such activities. Others suggest that completely eliminating corporate taxes and treating corporate profits as the individual income of its shareholders would be a superior remedy. But whatever the solution, the core truth of the situation remains evident — 21st  Century corporations have no nationality.

Like it or not, we now live in a global economy. Billions of dollars in U.S. tax revenue is being hidden in foreign banks, and millions of American jobs have been offshored to foreign workers. American corporate profits are at an all-time high even while huge numbers of Americans are suffering. The sad truth is that American corporations have but one loyalty, and it’s not to our nation, nor is it to the American people; they are singularly focused on profits, and their only loyalty is to their shareholders.

There’s nothing really wrong with this specific truth. Corporations are legal fictions created for the purpose of making money. They are rightfully focused solely on profits. But there is something seriously wrong with assigning to these artificial entities the rights associated with being a person.

This is exactly what the Supreme Court of the United States (SCOTUS) did in its decision on Citizens United versus the Federal Election Commission. In conferring personhood upon corporations and assigning full First Amendment protections for free speech, the SCOTUS not only made it perfectly legal for companies to lie but also opened a Pandora’s Box of election campaign abuse.

At a time when deep-pocketed corporations already control both political parties, and the cost of Campaign 2010 would hit nearly $4 billion — with Americans fighting to take their country back from the special interests, the Citizens United decision unleashed another $180 million in campaign ads, with $120 million coming from undisclosed sources.

Because of the SCOTUS decision, corporations, even those with significant foreign ownership, now have the power to directly influence American elections. How this can be a positive for our nation is a mystery. The Founding Fathers were certainly not advocates of such corporate power. They fully understood the truth expressed by Justice John Paul Stevens, in his dissenting opinion: “the corporation must engage the electoral process with the aim to enhance the profitability of the company, no matter how persuasive the argument for a broader or conflicting set of priorities.”

Corporations are not people, and what’s good for one is not necessarily good for the other. The Citizens United decision is an abomination upon the American system of government that runs counter to the ideal of one-person-one-vote. It virtually ensures that American corporations will continue to evade paying U.S. income tax while stoking profits with cheap foreign labor. It corrupts the very core of our founding and ensures that a “government of the people, by the people, for the people” will indeed perish from the Earth.

If you are a patriot, if you love your country and care about democracy, you’ll agree that, left or right, our government belongs to The People. Please raise your voice and say NO to the sale of our democracy — join your fellow Americans in ending corporate rule and Move to Amend.

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Article first published as GOP vs. Dems; No Compromise Equals No Solutions on Technorati.

Politics can be very complicated, or at the very least confusing. Case in point: what is it about the Republican pronouncement of “NO COMPROMISE” that President Obama and the congressional Democrats don’t understand?

Did they miss it when John Boehner, the presumptive Speaker of the new Republican controlled House, announced that, “This is not a time for compromise?”  Perhaps they misunderstood high-ranking Republican House member, Mike Pense of Indiana, when he said, “Look, the time to go along and get along is over,” even though he reemphasized, stating, “If I haven’t been clear enough yet, let me say again: No compromise.”

Is it possible that the President took Senate Minority Leader Mitch McConnell’s statement that, “The single most important thing we want to achieve is for President Obama to be a one-term president” as some sort of conservative jest?

It’s hard to tell what the President hears when congressional Republicans throw down the gauntlet and demand that he move in their direction. But, in response to the wave of emboldened Republicans taking intransigent positions against any sort of compromise, President Obama told the nation, “I believe there’s room for us to compromise and get it done together.”

The saying goes, “Fool me once, shame on you; fool me twice, shame on me.” Fool me over and over again, and maybe the people who believe I’m actually being fooled are the ones being hoodwinked. Is President Obama really so foolish as to believe that the Republicans will engage in open, good-faith negotiations, or is he merely a performer in a stage show written and produced to convince the American people that somebody in Washington wants the status quo to change?

When the President spoke in Cleveland in September, he came out swinging. He artfully painted the Republicans as the champions of the very wealthy and articulated a plan for the extension of the Bush tax cuts that drew a line in the sand, defining $250,000 of taxable income as the divide between the middle-class and upper-crust. It was the perfect issue for the closing weeks of campaign 2010, but cowardly Democrats backed away in fear that the Republicans would paint them as tax-and-spend liberals.

Well, not only did the Democratic retreat fail to impress any independents, but it also ensured that there would be no resurgence of enthusiasm within progressive ranks. In fact, the real story of Election 2010 wasn’t the great turnout of Republican supporters, but rather that blacks and young voters stayed home. If even half of those who poured out to the polls in 2008 had been moved to vote, the election results would have been much different.

But whatever the case, the 2010 election is over, the Democrats got their collective butts kicked, and the Republicans have already started Campaign 2012. Republican leaders now insist that the election was a refutation of President Obama’s policies and promise a Republican led Congress that will focus on jobs and the deficit.

Americans rightfully rejoice that the promised focus is exactly where it should be, but in what has become the united chorus of one-trick-pony conservatives, the legislative remedy being offered is the extension of the Bush tax cuts for the wealthy. In fact, fed by their new found sense of power, Republicans have become more intractable regarding any compromise on the wealthfare benefits and now insist that the extensions for the rich be made permanent.

Prior to the election, Republicans seemed amenable to a potential decoupling of the cuts along the lines suggested by President Obama. The notion was that cuts for the top 2% might be extended for a limited time period while those for the bottom 98% were made permanent. But according to House Minority Whip Eric Cantor, there will be no such compromise. In a recent interview, Cantor told Greta Van Susteren of Fox News that the election gave the GOP a mandate to hold fast and accept only an extension of all cuts.

Just how the Republican leadership can reconcile their position on the tax cuts with their promise to focus on either jobs or the deficit is the subject of some serious snake oil peddling.

According to Cantor, it’s all about clearing up that “uncertainty“ the Republicans keep talking about: “We’ve got to put certainty back into the game and get these tax rates to stay the same.” But of course this is complete nonsense, since whichever way the cuts are decided, once the decision is made, the uncertainty is removed.

To the man, each of the Republican leaders has also associated the cuts for the top 2% with small business, claiming that 50% of small business revenue will be affected. Sadly, the small businesses they’re referring to are large hedge funds, law offices, and billion dollar companies like Bechtel and Koch Industries. These are the clients of the Republican Party, not the 98% of all small businesses that make less than $250K.

The sad truth is that no respectable economist believes that cutting taxes for the rich will do anything to create jobs. That horse just doesn’t run anymore — not since the results of 8 years of the Bush presidency where such cuts were a mainstay were tabulated and found to be severely lacking. The worst job creation record since the 1940s and the first decline of median household income of any cycle since 1967 are not sound arguments for repeating the policy.

And where the tax-cuts-create-jobs argument is no more than a con-job, even that bar is too high when discussing the impact on the deficit. Virtually all reputable economists agree that tax cuts are the worst form of economic stimulus, and cuts for the rich the worst of all. The Republicans are essentially without even a distorted con to explain away the $700 billion cost of the tax cuts for the top 2% over the next 10 years.

The cuts the Republicans are fighting for won’t create jobs but will add significantly to the deficit. These “fiscal conservatives” espouse fiscal responsibility and feign help for small business and middle-class America but willingly sacrifice both for the wellbeing of their corporate overlords. And the Democrats respond by offering compromise.

Just what part of slam dunk, hanging curve, lob-ball pitch do the Democrats not understand?

The Democrats need to go back on November 15 and work to pass the extension of the Bush tax cuts for those making under $250K during the lame duck session. It’ll be interesting to watch the Republicans argue why the very rich need the cuts and explain to the American people why increasing the deficit for those who don’t need the money makes sense. Their argument promises to be a mind-numbing spectacle of double-talk and diversion.

This is a win-win for the Democrats — any compromise is just once again playing into Republican hands and allowing them to set the agenda and color the conversation. The Democrats need to accept the fact that the Republicans who would not negotiate in good faith while in the minority are certainly not going to do so now. They need to figure out that the Republican campaign for 2012 has already begun and launch their counteroffensive. If they’re not willing to do so, they might as well just start packing their bags now.

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