Eisinger: the madness of revolving door politics, American-style

Jesse Eisinger of ProPublica has a dealbook entry today, A Revolving Door in Washington With Spin, but Less Visibility, with insightful comments about governance. It would be a provocative and shocking article were it not for the utter familiarity of the story it tells about lobbying and lawmaking in America:

Obsess all you’d like about President Obama’s nomination of Mary Jo White to head the Securities and Exchange Commission. Who heads the agency is vital, but important fights in Washington are happening in quiet rooms, away from the media gaze. 

...For lobbyists, the real targets are regulators and staff members for lawmakers.

Eisinger correctly states that while White herself will be subject to public scrutiny, her staff will mostly work in "untroubled anonymity." Cue the revolving door: on Jan. 25, Senate majority leader Harry Reid hired Cathy Koch to be his chief adviser on tax and economic policy. Eisinger points out an oddity:

The news release lists Ms. Koch’s admirable and formidable experience in the public sector. “Prior to joining Senator Reid’s office,” the release says, “Koch served as tax chief at the Senate Finance Committee.”

...[but in fact] immediately before joining Mr. Reid’s office, Ms. Koch wasn’t in government. She was working for a large corporation.

Namely, GE--yes that one, that hugely profitable multinational that just doesn't seem pay tax anywhere, anytime. And the one that can't even get it's own story straight on the issue.  More from Eisinger:

Just as the tax reform debate is heating up, Mr. Reid has put in place a person who is extraordinarily positioned to torpedo any tax reform that might draw a dollar out of G.E. — and, by extension, any big corporation. 

...no rules prevent Ms. Koch from meeting with G.E. or working on issues that would affect the company. 

...In a statement, the senator’s spokesman said, “The impulse in some quarters to reflexively cast suspicion on private sector experience is part of what makes qualified individuals reluctant to enter public service.”

But that's a silly thing to say because of course Ms. Koch just did enter public service, so either the spokesman is saying we couldn't get anyone qualified so we had to go with her, or we must imagine that the reluctance has been overcome by some expected reward. We don't have to think too hard to come up with some ideas about what that reward must be.

Eisinger moves on to a particularly fluid relationship between the Office of the Comptroller of the Currency and the Promontory Financial Group, which Eisinger calls "a classic Washington creature that is a private sector mirror image of a regulatory body." Julie Williams, who was chief counsel for the OCC last year, is now at Promontory, while her replacement, Amy Friend, is coming to the OCC from Promontory. Eisinger suggests that maybe they can swap back next year; that would at least save the taxpayers all the moving expenses back and forth between these two offices. Hey, we've got money problems here and it's not looking like they are going to be fixed--every litte bit helps. Eisinger concludes:

Washington today resembles something like the end of “Animal Farm.” People move from one side of the table to the other and up and down the Acela corridor with ease. An outsider looking at a negotiating table would glance from lobbyist to staff member, from colleague to former colleague, from pig to man and from man to pig and find it impossible to say which is which.

What can we expect when this passes for democratic governance? Nothing but more of the same, I think.

Growth for the sake of growth, plus ignorance and expertise in complex situations: two depictions

Edward Abbey said “growth for growth’s sake is the ideology of the cancer cell":

From a series called Illuminating Quotes, Visualised by Maggie Appleton. I like this drawing because it shows that there is plenty of room in the concept of capitalism that isn't infected by this destructive ideology. That's where we ought to concentrate our energies.

Appleton also nicely visualized Edward R. Murrow's statement that "Anyone who isn't confused doesn't really understand the situation," which seems particularly apt when it comes to tax law, especially international:

Fix the Debt: bipartisans fooling some of the people all of the time (a primer on the solidarity of the 1%)

Gaius Publius is upset with bipartisan support for Fix the Debt, and points out the class-based solidarity of the rich (which of course aligns interests both within and beyond the nation state in ways that appear unprecedented to us today, but remind us of how things were during the last gilded age). He says:

Most left-side commenters paint "Fix the Debt" — the well-funded campaign to scare Americans into believing the debt is not only going to destroy us all, but that massive cuts to Medicare, Social Security and Medicaid are the only way to "fix" the "problem" — as a billionaire-led, CEO-led operation to kill (or at least seriously maim) the social programs by delivering one blow after another. But Fix the Debt is also a bipartisan operation.

This is about bipartisanship — real bipartisanship, bipartisanship in the bad way. 

...The real divide in this country is not Left versus Right — it's the Rich versus the Rest. It's the horizontal division between the people taking all the money they can, and those they're taking it from.
Among the rich, there's a widely-agreed center position — more for us, less for everyone else on the planet.

GP directs us to research done by watchdog group SourceWatch: a Fix the Debt portal, where they say:

The Campaign to Fix the Debt is the latest incarnation of a decades-long effort by former Nixon man turned Wall Street billionaire Pete Peterson to slash earned benefit programs such as Social Security and Medicare under the guise of fixing the nation's "debt problem." Through this special report -- and in partnership with The Nation magazine -- the Center for Media and Democracy exposes the funding, the leaders, the partner groups, and phony state "chapters" of this $60 million "astroturf supergroup," whose goal is to achieve a grand bargain on austerity by July 4, 2013.

SourceWatch lays out the various supporters and their bipartisan credentials, corporate ties and conflicts of interest; most have transitioned at least once from politician to lobbyist and/or vice versa, and big pharma, big oil, big finance, and the health insurance industry are all well-represented.  This is a delightful romp through the revolving door of democracy, American style.

GP says many (or most) of these individuals also have big-time conflicts of interest, as documented by Source Watch; they stand to benefit personally if what is now public becomes private and for-profit. They are all simple rent seekers, in other words, and the national debt is their trojan horse (or is it a rabbit).  This is not (or should not be) news, yet time and time again we see that you can fool some of the people all of the time...and, per George W. Bush,  "those are the ones you want to concentrate on.”

For an absolutely terrifying view of what that kind of concentrating looks like, GP ends with this video (which I can't even get all the way through so I can't tell you how it ends). The sheer number of rhetorical games played in the first 15 seconds alone is enough for me; when they get to the dancing I just want to weep.

Taxpayer morale--a case study in Detroit

Someone could write a PhD dissertation on the fiscal devolution of Detroit and the role of taxpayer morale. Between the below story and the continuing sage of the attempt to make a tax haven out of Belle Island, it would be a fascinating study.

Half of Detroit property owners don't pay taxes:

47 percent of the city's taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.

Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year, The News found. Many of those who don't pay question why they should in a city that struggles to light its streets or keep police on them.

"Why pay taxes?" asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. "Why should I send them taxes when they aren't supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came."

...Detroit's delinquencies are so pervasive that some owners have been allowed to keep their property even if they don't pay taxes. Wayne County treasury officials are so overwhelmed by foreclosures that they ignored about 40,000 delinquent Detroit properties that should have been seized last year and said they will look the other way on about 36,000 this year.

...Leola Wesley questions what services she gets for her taxes. ...She was the only resident on her 32-parcel block who paid.

"It makes me not want to pay," said Wesley, 85, who would move from her home of more than 20 years if she could afford it. "If nobody else is paying, why should I?"

...In the past five years, the city has lost out on $317 million in taxes, county records show.

"It makes me wonder why I pay my taxes and keep my property up," said Kisner, a North Rosedale Park resident and former top finance official for the city and Detroit Public Schools. "I keep asking myself, 'Am I the stupid one?'"

The billionaires looking to liberate Belle Island don't want any part of this problem, and if they are successful they most certainly won't be any part of its solution.

Supreme Court does algebra; hilarity ensues

Over at SCOTUSblog I've got a recap of the arguments in yesterday's hearing on the PPL Corp foreign tax credit case.  The justices seem to have had some fun with the formula and its many algebraic reformulations, but at the end of the day the discussion was not terribly enlightening.

I will note that by the end of oral argument I started thinking that maybe the government conceded too much in the case by stipulating that the windfall tax is a "tax" in the first place.  The government's answers to Justice Breyer's questions suggest that they now look at the windfall tax as in effect a purchase price adjustment, nothing more than an attempt for the UK to go back and claim a higher sale price in the privatization. Maybe you can call that a tax on value, but it's odd to say the least. Nothing to do now but wait for a decision, in which it will also be interesting to see what question the Court decides to answer.

Taxcast: opening the black box on who makes global tax policy and how they do it

I'm pleased to have been part of the February 2013 Taxcast from Naomi Fowler and the Tax Justice Network  In this edition of the taxcast Naomi looks at current trends in transparency and taxing the digital economy and then delves into the question of global tax reform, asking whether we should expect real progress from the OECD, a rich country thinktank/inter-governmental organization/lobbyists network.

Readers here will not be surprised that I am critical of norm-making from the OECD, given its essential character as a forum for back-room dealmaking between business interests and government. NGOs have been trying to gain greater access, but it is a slow and arduous process, as we saw recently with an informed citizen trying to gain access to something the OECD advertised as a "public" meeting. In the taxcast Richard Murphy is cautiously optimistic that the pressures being brought to bear on the OECD will bear fruit--that governments are starting to see that they have to be responsive to constituents beyond the business community, and they will have to make real changes at some point.

I am less optimistic given the institutional structure in place but I am hopeful because at least the right questions are being asked: good policy is a product of good process, and the converse is also true.  That means that who is in the room is of vital importance when it comes to developing norms. If NGOs, watchdog groups and citizens are paying attention they will pester the OECD if it tries to develop global transparency standards on tax from inside its own black box.

US tax reform: 11 working groups to watch, but don't get your hopes up

US tax reform is so big and so bad it needs 11 working groups to handle it all!  From the Camp/Levin press release:

Each of the 11 groups will review current law in its designated issue area and then identify, research and compile feedback related to the topic of the working group.  The working groups will be responsible for compiling feedback on its designated topic from: (1) stakeholders, (2) academics and think tanks, (3) practitioners, (4) the general public and (5) colleagues in the House of Representatives.  Once the work of those groups has been completed, the Joint Committee on Taxation will prepare a report for the full Committee, due by April 15, 2013, that describes current law in each issue area and summarizes the other information gathered by the Committee Members.

And the 11 working groups and their chairs (R) and vice-chairs (D) are:

• Charitable/Exempt Organizations--David Reichert (R-WA), John Lewis (D-GA)
• Debt, Equity and Capital--Kenny Marchant (R-TX), Jim McDermott (D-WA)
• Education and Family Benefits--Diane Black (R-TN), Danny Davis (D-IL)
• Energy--Kevin Brady (R-TX), Mike Thompson (D-CA)
• Financial Services--Adrian Smith (R-NE), John Larson (D-CT)
• Income and Tax Distribution--Lynn Jenkins (R-KS), Joseph Crowley (D-NY)
• International--Devin Nunes (R-CA), Earl Blumenauer (D-OR)
• Manufacturing--Jim Gerlach (R-PA), Linda Sanchez (D-CA)
• Pensions/Retirement--Pat Tiberi (R-OH), Ron Kind (D-WI)
• Real Estate--Sam Johnson (R-TX), Bill Pascrell, Jr. (D-NJ)
• Small Business/Pass Throughs--Vern Buchanan (R-FL), Allyson Schwartz (D-PA)

I will try to keep tabs on International, but Financial Services will inevitably veer toward international as will many of the other groups. Income and Tax Distribution really ought to be international in scope too but probably won't be. I don't know either Devin Nunes or Earl Blumenauer but a quick look at both gives no reason to be optimistic that anything like comprehensive reform will come out of this working group. Let's take a quick look:

Devin Nunes is a Tea Party darling, new to Ways & Means, looks like an energy and national security guy all the way, but background and education in agriculture. As to tax, pretty quiet until he signed on as co-sponsor to Paul Ryan's H.R. 4529, "A Roadmap for America's Future", which is all about cutting medicare and social security, and now he's promoting his "American Business Competitiveness (ABC) Act", which apparently would abolish corporate tax all together and maybe advocate for a consumption tax instead.  I think we can see which way he's going to go in this working group. Let's look for him to use the words "competition" and "freedom" and maybe "fair" or "level playing field" a lot and therefore to push for less taxation on multinationals in general (if he can't get rid of it all together) and to be against anything like unitary taxation (formulary apportionment) or corporate tax transparency, the two pillars that would be central to any comprehensive tax reform in the US or really anywhere.  On the other hand, he does seem to favor transparency sometimes [don't miss the impressive list of supporters].  So surprise me, Devin! I do love surprises.

How about his vice chair? Earl Blumenauer has been in Congress since 1996, has a law degree (Lewis & Clark 1976), and is certainly from Portland: he's into mass transit, bicycle commuting, various conservation/environmental causes, PBS, and weed. But he's also a free trade guy, supportive of all the FTAs you can throw at him, that's earned him some protests from the left. He seems pretty quiet on tax, though in 2012 he started getting vocal about big oil subsidies, the AMT and the Bush tax cuts. It looks to me like the tax issues on his radar are domestic ones, mostly involving saving entitlement programs and increasing progressivity--both are safe, vague ground for democrats. I expect he'll use the word 'fair' a lot, but it won't mean what Nunes means when he says it, and Blumenauer will focus on the distributional impact of any proposed reforms, looking for signs it violates progressivity. But I don't expect him to offer all that much, overall. International tax doesn't seem to be anywhere at all on his list of priorities.

So the working group charged with major overhaul of international tax law in the US will be chaired by one anti-tax tea party young gun, and one seasoned and mild-mannered Portlandia character with his mind on other things.

Should be fun to watch this.