Another Campaign Promise Honored
While politicians and statesmen have long suffered under the deserved reputation of abandoning their populist campaign promises, President Barack Obama is the opposite. With relatively minor exceptions, then-Senator Obama had vowed a responsible pullout from Iraq beginning with the end of combat operations in 16 months. He had promised to give tax breaks to 95% of Americans, targeting the wealthiest 5% of individuals and corporations. He had proposed a massive stimulus spending program to get America back on its feet.
We have seen all this and much more within the first 100 days of his administration and some of the setbacks and even failures cannot be blamed on the new, largely untested President. Now, we're seeing Mr. Obama attempting to fulfill yet another campaign promise, one that many of us had forgotten since the election. I had not and I was glad to read this in the New York Times this morning:
Yesterday, the president proposed curbing tax breaks to offshore corporations that ship jobs overseas. Yet, this would come at a price and is surely going to be up against stiff opposition. Writes Jackie Calmes and Edmund Andrews,
They have some of the mightiest lobbying armies in Washington, as well as influential patrons in Congress. That combination will test Mr. Obama’s ability to stand up to powerful interests and marshal support among lawmakers at the same time that he is trying to win passage of major health and energy measures.
The response from business leaders is predictable. It'll reduce our effectiveness in the marketplace, jobs will be lost, we'll all die, AGH! Yet the NY Times's reporters go on to say,
The top corporate tax rate is 35 percent, but the Treasury Department estimated that in 2004, the most recent year for which data is available, American multinationals paid $16 billion in taxes on $700 billion in foreign income — an effective rate of 2.3 percent.
With the average American paying an average tax rate of 20% or so, why is Joe Sixpack and John Q. Public supposed to feel sorry for corporations who ship jobs overseas and reduce our workforce so they can get around the minimum wage and occupational safety laws when their own average tax rate is 32.7% lower than the maximum?
And why are we supposed to care if higher taxes (read: their fair share) result in lost jobs overseas (And while you're at it, ask a Reebok executive why we're still paying $125-$150 for a pair of sneakers when they're obviously made by sweatshop laborers who make pennies an hour?). And when 83 of the US's 100 largest corporations have overseas subsidiaries enjoying tax breaks, there's obviously some serious abuse afoot, a corporate abuse that's been all but institutionalized.
I don't expect the President to have many friends on either side of the aisle in Congress who will have the balls to follow this initiative to lift tax breaks on the very same corporations that have been quite generous to said lawmakers.
Since the '06 midterms, Proctor & Gamble had given almost nothing to candidates of either party but the pharmaceutical giant is the exception rather than the rule. Other corporations mentioned just in the article include Goldman Sachs, Microsoft and Pfizer. Goldman Sachs, don't forget, received a substantial bailout check from their old boss Hank Paulson just the year after they'd enjoyed record profits that featured lavish bonuses at the end of 2007.
What makes the president's populist call to end tax abuses so ballsy is that PACs representing Goldman Sachs and Microsoft, two of the corporations mentioned, were President Obama's second and third largest bundlers of campaign contributions in the last election cycle. Goldman Sachs had kicked in through its political action committees $980,945 while Microsoft added another cool $806,299. Add to that Citigroup (427 subsidiaries in tax havens alone) at #6 who tossed in $657,268, Morgan Stanley at $490,873 (273 subsidiaries) and GE, one of the most egregious offenders of creating offshore subsidiaries that enjoy virtual tax-free status, contributed another $479,454 to Mr. Obama's campaign.
Obviously, there are a lot of other corporations just on that short Top 20 list who are already battening down the hatches and screaming at their lobbyists in bunkers even as we speak.
Even if the President's initiative to put $210 billion into the economy over the next decade by more fairly taxing corporations falls flat on its face, you have to give the man some credit in grabbing all those millions from these well-heeled corporations and their PAC bundlers and giving them the finger in return.
Any other politician I can think of would do the opposite. And that's why President Obama looks like a crusader and a firebrand liberal at best, a Socialist and a Communist at worst. Of course, he's none of those things. Our Man in the Oval Office is just someone who's trying to do the right thing at the right time, something that's rarely seen on the Beltway any more.