FATCA reciprocity in Obama 2014 Budget?

One line in the budget itself:

Provide for reciprocal reporting of
information in connection with the
implementation of FATCA ................... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .

The blanks indicate that the measure is deemed to have no impact, positive or negative, on the deficit.

This explanation in the Analytical Perspectives:

Provide for reciprocal reporting of information in connection with the implementation of the Foreign Account Tax Compliance Act (FATCA).—In many cases, foreign law would prevent foreign financial institutions from complying with the FATCA provisions of the Hiring Incentives to Restore Employment Act of 2010 by reporting to the IRS information about U.S. accounts. Such legal impediments can be addressed through intergovernmental agreements under which the foreign government agrees to provide the information required by FATCA to the IRS.  Requiring U.S. financial institutions to report similar information to the IRS with respect to nonresident accounts would facilitate such intergovernmental cooperation by enabling the IRS to reciprocate in appropriate circumstances by exchanging similar information with cooperative foreign governments to support their efforts to address tax evasion by their residents.  The proposal would provide the Secretary of the Treasury with authority to prescribe regulations that would require reporting of information with respect to nonresident alien individuals, entities that are not U.S. persons, and certain U.S. entities held in substantial part by non-U.S. owners, including information regarding account balances and payments made with respect to accounts held by such persons and entities. 

But nothing further from the Treasury in its own explanation of the budget.

So we will just have to wait and see, some more. Note that even this brief move forward highlights the aspiration involved in referring to any currently configured IGA as "reciprocal."

Protesters Confront "Fix the Debt" Leader over Corporate Tax Breaks

And they do it with a big sign:

The protestors are calling themselves "Flip the Debt."  From truth-out:

While speaking at a Fix the Debt conference on Monday, Honeywell International Inc. CEO David Cote [he of "union busting for dummies" fame] was interrupted several times by Flip the Debt protesters over tax loopholes that allow companies like Honeywell and General Electric to pay far less taxes than ordinary Americans. 

Three minutes into Cote's keynote address, the first heckler trumpeted: 

...Fix the Debt is nothing more than a CEO lobby whose real objective is huge corporate tax breaks and drastic cuts in Social Security, Medicare and Medicaid. David Cote and his CEO friends receive a lot from government: In 2011, Honeywell received $725 million in government deals, making it the 35th largest federal contractor. However, Honeywell and other companies pay next to nothing in taxes. Honeywell's tax rate from 2008-2011 was 2 percent. Does anyone in this room pay 2 percent?"

 The crowd applauded, but Cote only laughed nervously.

So, he neither confirmed nor denied whether he paid 2%.  An interesting nod to the UK, similar to the spread of the "Uncut" movement across the atlantic:

Gan Golan, cofounder of Flip the Debt, laid out his group's goals. "We will disrupt Fix the Debt meetings across the country to elevate our message that the biggest corporations in the country aren't paying taxes, and now they want the rest of us to pay for it. Sustained public pressure against corporate tax dodgers in the UK has put the issue at the top of the agenda there, and we hope to do the same."

The article mentions the Sanders bill to end deferral, and ends on the connection between tax dodging by multinationals and the dismantling of the welfare state:

Charlie Balban, president of the Alliance for Retired Americans-New Hampshire, grilled Cote during a question-and-answer period. "We should do something about the debt, but we don't need to cut programs that people depend on. Instead of reducing the deficit on the backs of working Americans, corporations should pay taxes like the rest of us."

It can't be too much longer before someone draws up a menu of welfare state expenditures in the US and then ties each item to a specific company and what they might have paid in taxes had they incurred the statutory rate on their income for the year.  If you see such a thing, please send me a link.

Lobbying pays: the skewed impact of the fiscal cliff deal, in one striking chart

From Citizens for Tax Justice:

In 2013, the richest one percent of Americans will receive 18 percent of the tax cuts while ...[t]he bottom three-fifths ... will receive 18 percent of the tax cuts. In other words, the richest one percent of Americans will receive the same share of the tax cuts as the poorest 60 percent of Americans:

 

Note that it is hard to give tax breaks to the poorest, since they aren't much in the tax net to begin with. But what explains the middle? CTJ notes that the deal made permanent 85% of the Bush income tax cuts and 95% of the estate tax cuts, which we already know were skewed toward the wealthy and have presided over the largest widening of the income gap in US history since the gilded age. That is destroying the middle--there aren't so many people in that category any more.  And the ones still in the category have much less to work with:

Why did the fiscal cliff turn into welfare for the 1%? We know the answer, it's always the same. Incidentally Matt Stoller wrote a follow up piece arguing that if we understand how lobbying corrupts policymaking in the US, we can work against it.  But I am not optimistic.

Lobbying is policy in the US. That is how governance works. There are good aspects and bad aspects to the ability of the public to influence lawmakers in a democracy; the issue is what happens to democracy when you have to pay enormous sums to play. It seems that one thing that happens for sure is that elected officials become "utterly unresponsive to the policy preferences of millions of low-income citizens.” Major social imbalance is the result when, as Nancy Folbre says:

Our most affluent citizens now have less to gain from cooperation with the rest of us than they once had. They can effectively threaten to opt out and invest elsewhere. They can also invest vast resources in lobbying and electioneering.

I am still puzzled as to how on earth the NY Times managed to get their headline so wrong. Yves Smith calls it a big lie, and I would have to concur.

Lobbying pays: rewards for legislative favors edition

Sungmun Choi asks, “Do Interest Groups Reward Politicians for their Votes in the Legislature?” And answers: of course they do.  Choi examined monetary contributions paid by interest groups to members of the U.S. House of Representatives and found evidence that the politicians who voted for the 2008 bank bailout were rewarded in the form of "more monetary contributions from the interest groups in the financial sector after passage of the EESA."  Conclsion; "interest groups reward politicians for their favorable votes in the legislature, at least in the case of the EESA. Of the two hypotheses that I develop in the theoretical part of the paper, I find evidence for the hypothesis of the long-term relationship between interest groups and politicians." Paper at the link.

So let's recap.

• Politicans need money to get (re-)elected: lobbying pays for that.
• Politicians need jobs when they retire from public office: lobbying pays for that.
• Lobbyists need clients who benefit from legal reform: lobbying pays for that.
• And now we see that politicians need to be rewarded for their legislative votes: lobbying clearly pays for that, too.

Speaking of austerity: Surprise for Quebec's Universities

Just in time for the holidays: the Quebec government has announced it will cut another $140 million from University budgets this year; schools will have to come up with the cuts by April--yes, in 4 months. That's on top of the rolled-back tuition increases, which represented about another $40 million. This is not a good surprise. It's especially harsh when the PQ is raising taxes all over the place and we all know into whose pockets some outlandish proportion of our taxes go. From the Montreal Gazette:

the PQ repeatedly promised to maintain funding to universities for this year despite cancelling the strongly opposed tuition hike that was to have gone into effect this fall. Universities have been waiting for compensation for about $40 million in lost revenues from the aborted increase.

The student protesters see this as an unintended consequence of their success:

Even the Fédération étudiante universitaire du Québec (FEUQ), which has suggested that universities are more mismanaged than underfunded, was shocked with what president Martine Desjardins called a “hasty” decision. 

“We talked about a redistribution of money, but we never wanted to see university budgets cut,” said Desjardins. “We’re shocked. We fear it’s services to students that will be cut, that students will have to pay the price again.”

I doubt the students alone will pay the price, but the juxtaposition of widespread & rampant corruption, steadily increasing taxes, and steadily increasing cuts to education reads like a serious governance crisis.

CEOs: welfare is good, but only if it's corporate

From Naked Capitalism, 9 Greedy CEOs Trying to Shred the Safety Net While Pigging Out on Corporate Welfare:

A gang of brazen CEOs has joined forces to promote economically disastrous and socially irresponsible austerity policies. Many of those same CEOs were bailed out by the American taxpayer after a Wall Street-driven financial crash. Instead of a thank-you, they are showing their appreciation in the form of a coordinated effort to rob Americans of hard-earned retirements, decent medical care and relief for the poorest.

...they are gearing up to pull the wool over the public's eyes by cutting Social Security, Medicare and Medicaid. The CEOs are part of the Fix the Debt campaign ... which plans to unleash tens of millions pushing for a deficit reduction deal that favors the rich.

...these Scrooges are so bold as to publicly announce their desire to pick the pockets of fellow Americans while simultaneously pigging out at the corporate welfare trough. Multitasking!

NC provides a sample of what it calls the Fix the Debt CEO Council Hall of Shame (complete list at the Fix the Debt website here):

1. Lloyd Blankfein, chairman and CEO, Goldman, Sachs & Co. Blankfein, infamous for describing his financial activities as "God's work," shared his attitude toward society with CBS news recently. He explained his keen desire to see Americans lowering their sights for the future. ...he gives a pithy summary of what life is going to be like for the 99 percent:

You're going to have to do something, undoubtedly, to lower people's expectations of what they're going to get, the entitlements, and what people think they're going to get, because you're not going to get it.

...Since the financial crash, Blankfein's company, Goldman Sachs, has received tens of billions of dollars in ..."direct and indirect succor from the Fed."...

2. Jeffrey Immelt, chairman and CEO, General Electric Company. ...supporting disastrous financial deregulation, dodging taxes and helping to destroy American manufacturing has not satisfied Immelt. He'd like to add insult to injury by making sure that people who have been screwed by the reckless activities of short-sighted corporate titans like himself are left to starve in their golden years and go without medical care. And as for the poor, well, couldn't they be just a little bit poorer? Immelt thinks that would be swell.

After the 2008 crash, the government gave a giant boost to hard-pressed GE Capital, the company's financing arm, through the Temporary Liquidity Guarantee Program. GE has also helped itself to enormous taxpayer-funded subsidies, especially in green energy. And guess how much GE paid in taxes in 2010? Nothing. ...

3. Jamie Dimon, chairman and CEO, JPMorgan Chase & Co. ... Dimon is deploying a familiar scare tactic on the topic of the so-called fiscal cliff. He's claiming that his company will be forced to cut down on hiring and so on if a budget plan is not tailored to enrich the wealthy. ...Maybe Dimon's company would be better served figuring out what happened to the $6 billion that recently went up in smoke in the "London Whale" derivatives fiasco.

NC covers several more including the CEO of Honeywell (of powerpoint "union busting for dummies" fame), all at the link.

Corporate welfare alive and well and surviving austerity budgets across the US

This is fascinating, and isn't it a bit amazing that it isn't a common measurement undertaken by the government?

The New York Times spent 10 months investigating business incentives awarded by hundreds of cities, counties and states. Since there is no nationwide accounting of these incentives, The Times put together a database and found that local governments give up:

• $80.4 billion

  in incentives each year
• 1,874No. of programs

An interactive map follows, which shows which states give what amount and for what projects.  Big bubbles over Texas, the most generous state when it comes to corporate welfare.

Considering how much budget trouble most of the states are in--most have significantly cut social spending--the $80B figure seems astounding, especially if the incentives don't pay off. For example, here's a paper that shows tax incentives aren't typically worth their high cost even if they play a role in securing an investment (itself a dubious proposition).

Here's a fun part of the Times story:

The Times identified 48 companies that have received more than $100 million in state grants since 2007. Some 5,000 other companies have received more than $1 million in recent years.

And they provide this handy visual guide:

1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
10. 
11. 
12. 
13. 
14. 
15. 
16. 
17. 
18. 
19. 
20. 
21. 
22. 
23. 
24. 
25. 
26. 
27. 
28. 
29. 
30. 
31. 
32. 
33. 
34. 
35. 
36. 
37. 
38. 
39. 
40. 
41. 
42. 
43. 
44. 
45. 
46. 
47. 
48. 

No one shoud be surprised to see this list (does anyone NOT own or use any of the products or services of these companies?), and yet it ought to be universally shocking just how much welfare the world's most fierce proponent of the free market gives to its top companies, and this is only on the state, county and city level. Consider some of the top welfare recipients:

•  General Motors: Awarded at least $1.77 billion ($1.76 billion since 2007) from 208 grants in 16 states. 

• Amazon: Awarded at least $348 million ($304 million since 2007) from 22 grants in 9 states. The online retailer has been building more distribution centers across the nation, which have created thousands of jobs. In several states, Amazon.com has used those jobs as a tool to negotiate delays in online sales tax collection. 

• Microsoft: Awarded at least $312 million ($232 million since 2007) from 20 grants in 4 states. The Fortune 500 corporation benefits from a state program in Washington that allows high-tech companies to waive sales tax on many purchases. It has also benefited from local incentives aimed at data centers, which do not tend to hire many people. 

• Dow Chemical:Awarded at least $217 million from 187 grants in 7 states. When the longtime Michigan-based company decided to build a solar factory, the state kicked in $140 million and the federal government $20 million. The total aid is around the same amount Dow is spending on the project.

This draws a pretty clear picture about the shifting of state resources: because of declining tax revenues, states have moved away from health care (cut by 31 states), services to the elderly and disabled (cut by 29 states and DC), K-12 education (cut by 34 states and DC), higher education (cut by 43 states), etc (all discussed here).  The Times report shows clearly that corporate welfare has emerged on top in terms of state budgetary priority.

Oh, so much more at the links.