October 26, 2012

Do You Really Trust These People To Fix The Debt?

Yesterday, the group Fix The Debt sent an email out to their list with a pretty telling picture inside. It shows a bunch of Wall Street CEOs standing in the New York Stock Exchange, ringing the bell to open trading for the day. Behind and all around them are signs for their organization, Fix The Debt. They claim to be a moderate organization trying to pair spending cuts with revenue increases, but when we took a closer look at who is actually behind Fix The Debt, we became concerned.

According to our research team:

  • Thirteen out of about 80 CEOs and companies that signed a letter urging Congress to Fix the Debt have milked the federal tax system out of tens of billions of dollars, according to an analysis by Americans for Tax Fairness. Another six companies that signed the letter are leading proponents of a tax amnesty for corporate profits shifted out of the United States, especially profits shifted to offshore tax havens.
  • Five of the corporations whose CEOs signed the Fix the Debt letter paid ZERO federal income taxes on $62 billion in total profits and received $27 billion in tax subsidies over the last four years according to Citizens for Tax Justice.
  • Eight of the CEOs who signed the Fix the Debt letter reaped a total of $11.8 million in tax breaks last year from the Bush tax cuts (see table below). They are among 57 CEOs who each received more than $1 million in such tax breaks, collectively securing more than $100 million in tax cuts according to the Institute for Policy Studies.
  • Six of the corporations whose CEOs signed the Fix the Debt letter were members of the WIN America Coalition, which lobbied Congress to pass legislation (S.1671) that would allow U.S. companies to dramatically reduce their tax rate on $1 trillion in foreign profits brought back (“repatriated”) to the United States. The measure would reduce the 35 percent corporate tax rate to an 8.75 percent effective tax rate on the repatriated profits. The six corporations are: CA Technologies, Cisco, Loews Corporation, Microsoft, NASDAQ OMX Group, Inc., and Qualcomm Inc. Many of the corporations pushing for repatriation also want to permanently exempt offshore profits from U.S. taxation, by adopting a so-called “territorial” tax system, which would only increase the incentives to shift jobs and profits offshore.

While Corporate America’s profits have soared in recent years, its contribution to federal revenue has plummeted by 60 percent in the last 50 years, according to the Office of Management and Budget. Corporate taxes have declined from 22.2 percent of federal revenue in 1961 to just 7.9 percent in 2011.

We appreciate that CEOs from some of America’s biggest corporations are recognizing the need for more revenues.  The key test is will they support doing away with their own lavish tax cuts by ending  Bush tax cuts for the richest 2% and will they support  corporate tax reform that raises substantial new revenues.  

Others have started noticing the discrepancies in Fix The Debt as well:

From Reuters:

[…]But when they try to get to the specifics of tax reform, they start falling into blather, asking that it be “pro-growth” (an utterly meaningless phrase), and asking too that it include lower rates and higher revenues.

Maybe they should have just asked for a pony for everybody instead: that would be easier. Youcan’t have lower rates and higher revenues — not without eviscerating pretty much all of the tax deductions which much of the middle class has learned to rely upon. Mortgage-interest tax relief, the charitable deduction, even the deduction for state and local taxes: pretty much all of them would have to go. That wouldn’t just get blocked by Democrats: it would get blocked by Republicans, too. And because most of these tax expenditures go to the middle class, broadly defined, the one group which would see most of the benefits while bearing very little of the costs would be the top 1%: the very CEOs who signed this letter.

In other words, the letter basically just says “please cut our taxes, raise taxes on everybody else, and cut the benefits they get from Medicare, Medicaid, and Social Security, which are programs we individually don’t rely upon”. It’s gross self-interest masquerading as public statesmanship.

It’s also the latest example of the absolutely enormous influence of Pete Peterson on the public debate. Peterson’s extremely well-funded and highly-focused concentration on fiscal issues has turned worrying about the national debt into a bipartisan pastime, to the point at which debate moderators can simply assume that the national debt in general, and entitlements in particular, are an enormous and urgent problem, and then ask the candidates how they’re going to fix this huge problem which we can all agree exists. The public just nods along.

Mother Jones wraps it up nicely:

To summarize: the economy is in bad shape, corporations are refusing to expand, the federal government is taking up some of the slack to keep the economy afloat, and 80 of our nation’s CEOs are outraged and insist that the solution is to eviscerate the middle class. Very nice. If it weren’t forbidden, I’d call this class wa — um, well, you know. Rich guys vs. the rest of us.

If you want to find out more about who’s behind Fix the Debt, we suggest you read this telling article written in Huffington Post earlier this month.