August, 2011

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Fund My Mutual Fund: Some Fascinating Stats About Our Corporate Oligarchy

Wednesday, August 31st, 2011

Highly respected  Trader Mark weighs in on Bloomberg’s report on the relationship between CEO pay, taxes paid and lobbying expenditures.

Fund My Mutual Fund

While I realize the Supreme Court has deemed corporations are people too, it is still fascinating to read some facts about said ‘people’  Bloomberg has a story on a study showing the relationship between lobbying dollars and federal taxes paid AND CEO pay versus federal taxes paid.  Remember, this from the ‘people’ who claim their tax burden is so overwhelming they can’t create jobs. 😉  It really shows the level of oligarchy and some would claim fascism (I have called it ‘corporate socialism’ the past few years) when companies spend more on lobbying then they have to pay in federal taxes.  Or when one person in the organization is paid more than the entire federal tax due.

  • Twenty-five of the best-paid chief executive officers in the U.S. earned more in salary and other compensation in 2010 than their companies’ federal income tax expenses as disclosed in public filings, according to a report by the Institute for Policy Studies.
  • The Washington-based nonprofit group’s report, released today, examined 100 publicly traded U.S. corporations with the highest-paid CEOs. It found that companies whose CEOs’ compensation exceeded reported tax expense in 2010 had average global profits of $1.9 billion.
  • Companies in this group, according to the report, included EBay Inc., General Electric Co., Verizon Communications Inc., Boeing Co. and Dow Chemical Co. The tax expense reported in annual financial statements can differ from actual tax payments, which are confidential, for a variety of reasons.
  • The group said its findings underscore the need for an overhaul of the U.S. tax code that would reduce the number of tax strategies available to companies, especially their ability to lower tax payments by parking profits overseas. “Tax reform has to close up some of these loopholes and the offshore system,” Chuck Collins, one of the report’s authors, said in an interview. “We might be able to lower the overall corporate rate by broadening the base.”
  • Eighteen of the 25 companies mentioned in the report operated subsidiaries in countries known as offshore tax havens, Collins said.  The firms, all combined, had 556 tax haven subsidiaries last year.
  • Twenty of the 25 companies on the institute’s list reported spending more on lobbying Congress than they did on federal taxes, the organization said. Data for the report was taken from annual reports and other public filings.  The 25 firms highlighted in this study spent a combined total of more than $150 million on lobbying and campaign contributions last year.
  • The report echoes some elements of a study released in May by Citizens for Tax Justice, a Washington-based nonprofit group backed by labor unions, which said 11 U.S. corporations reported $62 billion in domestic profits while paying a negative 3.6 percent tax rate in 2010.

Link to original report here.

  • In 2009, we calculate, major corporate CEOs took home 263 times the pay of America’s average workers. Last year, this gap leaped to 325-to-1

Some neat examples:

  • Verizon, which earned $11.9 billion in pretax United States profits, received a federal tax refund of $705 million. (damn that onerous 35% tax rate!) The company’s chief executive, Ivan Seidenberg, meanwhile, received $18.1 million in compensation
  • The online retailer eBay reported pretax profits of $848 million and received a $113 million federal refund. John Donahoe, eBay’s chief executive, collected a compensation package worth $12.4 million, the study said.

[Oct 7, 2009: Dylan Ratigan – America Being Subjected to “Corporate Communism”]
[Mar 25, 2011: NYT – GE’s Strategies Let it Avoid Taxes Altogether]
[Apr 14, 2011: U.S. Corporate Taxes – 1955 v 2010]

New York Times: Lines Blur Between Candidates and PACs With Unlimited Cash

Sunday, August 28th, 2011

Whatever faint lines existed between PACs and candidates are rapidly becoming meaningless.  Unlimited cash is flowing to the campaigns without accountability.

New York Times (registration may be required)

Most of this year’s presidential candidates are now backed by one or more dedicated Super PACs. Unlike the broad-based independent groups backing multiple candidates that flooded last year’s Congressional elections with negative advertising — playing a role similar to that of traditional party committees — the new groups are each dedicated to the election of a single candidate.

The groups are typically founded by the candidates’ former aides, financed by the candidates’ top donors and implicitly blessed by the candidates themselves. And they are quickly beginning to rival the candidates’ own money operations in size and scope, setting off a fund-raising arms race that is changing the way presidential campaigns are financed and executed.

Restore Our Future is run by three veterans of Mr. Romney’s 2008 campaign team. They were recently joined by a fund-raiser who left Mr. Romney’s 2012 team, according to a report by the nonpartisan Center for Public Integrity. Restore Our Future raised more than $12 million during the first half of the year — more than any actual Republican candidate except Mr. Romney himself.

A pair of aides to President Obama started Priorities USA, the leading Democratic Super PAC, just two months after they left their jobs at the White House in February. And two weeks ago, a onetime consultant to Representative Michele Bachmann of Minnesota took over Citizens for a Working America, a previously existing Super PAC, with plans to focus solely on electing Ms. Bachmann president.

On Thursday, Thomas E. Muir, an executive at the Huntsman Corporation, filed papers to form Our Destiny PAC, a Super PAC devoted to electing Jon M. Huntsman Jr., a former Utah governor and the son of the corporation’s founder.

Make Us Great Again, a Super PAC founded late last month, is backed by Mike Toomey, a prominent lobbyist in Austin, Tex., who is a former chief of staff to Gov. Rick Perry of Texas. Mr. Toomey also owns a private New Hampshire island with Dave Carney, the top strategist for Mr. Perry’s nascent presidential campaign.

Federal Election Commission guidelines adopted in the wake of the Supreme Court decision prohibit independent groups from coordinating expenditures with their favored presidential candidates and limit how much candidates can directly help raise for the groups. And during Mr. Romney’s brief appearance before current and prospective donors to Restore Our Future, he made no appeal for money, according to participants.

Gail Gitcho, a Romney spokeswoman, declined to comment on the event, saying only that “any activity done by our campaign is done within the letter and the spirit of the law.”

In a statement, Jason Miller, a spokesman for Make Us Great Again, said the group would abide carefully by all federal restrictions.

“There is an absolute firewall between Make Us Great Again and the campaign, and there is no communication between the two regarding activities, plans or projects,” Mr. Miller said. “Everybody involved with our efforts, including Mike Toomey, is very careful about this.”

But some advocates for tighter campaign regulation say existing rules on independent groups did not anticipate the emergence of Super PACs so closely tied to a single candidate, leaving so much room to maneuver that the independent groups are able to act as surrogates for the candidates.

“There’s not a big difference between these candidate-specific Super PACs and candidate campaign committees,” said Paul S. Ryan, associate legal counsel at the Campaign Legal Center. “I think it’s a joke. What they are doing is abiding by the very meager restrictions on coordinations on expenditures and solicitations. But that leaves a wide swath of activities that can be fully coordinated under present law.”

Fox News: Dozens of Business Leaders Back Starbucks CEO’s Pledge to Halt Campaign Donations

Thursday, August 25th, 2011

Howard Schutz’s call for a halt to campaign contributions may actually being having an effect.

Fox News

Starbucks CEO Howard Schultz told Fox News he wants to send a “powerful message” to Washington about frustration in the business world, announcing that more than 100 business leaders have endorsed his pledge to suspend campaign contributions until a long-term debt deal is reached. 

Schultz first called for the cutoff about 10 days ago. Since then, a host of other CEOs have signed on, including AOL CEO Tim Armstrong; Zipcar CEO Scott Griffith; J. Crew CEO Millard Drexler; JC Penney CEO Myron Ullman; and Whole Foods Co-CEO Walter Robb. 

The Starbucks chief told Fox News their message is simple: “Do your job and give us the America we deserve.” He said uncertainty over the country’s finances has spooked the private sector, and they want Washington to show “real leadership” by striking a significant deficit-reduction deal. 

“We need a long-term debt-ceiling deal that … doesn’t put a Band-Aid on this, but removes the level of uncertainty and the fracturing of confidence,” he said Wednesday. “This is a crisis in America. It’s a crisis of leadership, and it’s a crisis in the economy. And we must send a powerful message to Washington that we’re not satisfied.” 

Schultz said the recent decision by Standard & Poor’s to downgrade U.S. credit was the result of a lack of confidence in politicians’ ability to get things done. 

Schultz is also calling on businesses to inspire “confidence” in the economy by hiring more people “now” — as opposed to waiting for another government stimulus program. He has launched a website and Facebook page describing the dual pledges and enlisting supporters.

If Schultz’s donation-boycott appeal strikes a chord with enough business leaders, the pledge could make a dent. 

According to the Center for Responsive Politics, contributions from business political action committees totaled $334 million in the 2009-2010 cycle. 

Individual donations from the business community approached $1 billion, split about evenly between the two parties. 

Schultz said the contributions are “obscene” considering “there’s 9 percent unemployment in America.” 

The Starbucks CEO wants a halt to donations for all members of Congress and the president. He describes the effort as non-partisan. Over the years, Schultz has been a prolific contributor mostly to Democratic candidates. In 2007, he donated to then-Sen. Barack Obama, as well as Hillary Clinton and John Edwards, in the presidential race.

MapLight: Contribution Profile of Members of the Deficit “Super Committee”

Monday, August 15th, 2011

Our friends at MapLight have quantified the campaign contributions to the Congressional super committee members by industry.

MapLight

The members of the so-called “Super Committee” are Sens. Pat Toomey (R-Pa.), Jon Kyl (R-Ariz.), Rob Portman (R-Ohio), Patty Murray (D-Wash.), John Kerry (D-Mass.), and Max Baucus (D-Mont.) and Reps. Jeb Hensarling (R-Texas), Fred Upton (R-Mich.), Dave Camp (R-Mich.), Chris Van Hollen (D-Md.), Xavier Becerra (D-Calif.), and Jim Clyburn(D-S.C.).

  • To download a spreadsheet featuring an analysis of contributions from PACs to Super Committee members (not including employee contributions) click here.

Top 10 Industry Contributors to Super Committee Members

Industry Totals
Lawyers/Law Firms $31,529,149
Securities & Investment $11,221,416
Democratic/Liberal $9,647,264
Health Professionals $9,321,588
Real Estate $8,793,350
Education $8,568,460
Misc. Business $7,902,021
Business Services $6,563,524
Women’s Issues $6,396,728
Insurance $5,693,595

Top 10 Organization Contributors (PACs and Employees) to Super Committee Members

Organizations Totals
Club for Growth $990,066
Microsoft Corp. $810,100
University of California $629,495
Goldman Sachs $592,684
EMILY’s List $586,835
Citigroup Inc. $561,081
JPMorgan Chase & Co. $494,316
Bank of America $349,566
Skadden, Arps, et al. $347,356
General Electric $340,935

Methodology: MapLight analysis of campaign contributions from Jan. 1, 2001 – Dec. 31, 2010 to the 12 members of the Joint Select Committee on Deficit Reduction. Campaign contributions and industry classifications established by the Center for Responsive Politics (OpenSecrets.org).

Bloomberg: Debt-Panel Outcome Clouded by Pressure From Lawmakers’ Backers

Sunday, August 14th, 2011

House and Senate leaders named lawmakers who probably won’t face a stiff re-election fight soon. The six House members were all re-elected with at least 62 percent of the vote, and none of the six senators are facing voters in 2012.

Bloomberg

The 12-member congressional panel charged with finding $1.5 trillion in budget savings may be unable to overcome resistance from the lobbyists, donors and interest groups that sustain them in office.

The committee, already split by internal divisions over taxes and entitlements, will examine defense and health care for possible cuts, and both industries have influence with its members. Health professionals are the biggest donors to three of the House members. Three senators have dozens of military installations to protect, and employees of defense contractor Boeing Co. (BA) are top donors to the panel’s co-chairwoman, Patty Murray.

Retirees are among the largest givers to almost all the lawmakers, and members considering scaling back Social Security or the Medicare insurance program for the elderly will confront a barrage of lobbying by the seniors’ group AARP.

“Nobody wants to promise their cohorts any kind of pain and suffering or divergence from the current theology,” said Bill Frenzel, a former congressman who served as the ranking Republican on the House Budget Committee. Republican distaste for tax increases and Democrats’ insistence on protecting entitlement programs is a “doomsday formula,” he said.

The panel, whose work has taken on greater urgency since Standard & Poor’s downgraded the U.S. credit rating, is already facing doubts about whether it can meet a Nov. 23 deadline for a plan and head off a round of automatic, across-the-board spending cuts. It includes six Democrats who back tax increases and six Republicans who signed a pledge to oppose that. Few have engaged in bipartisan efforts on major issues; 11 of the 12 have voted with their party at least 90 percent of the time.

Pelosi Names Allies

House Democratic Leader Nancy Pelosi yesterday completed the panel’s membership by appointing three of her closest allies: fellow House leaders Chris Van Hollen of Maryland, James Clyburn of South Carolina and Xavier Becerra of California. A day earlier, House Speaker John Boehner tapped Republican Conference Chairman Jeb Hensarling of Texas, and Ways and Means Committee Chairman Dave Camp and Energy and Commerce Committee Chairman Fred Upton, both of Michigan.

The Democratic senators serving on the panel are Finance Committee Chairman Max Baucus of Montana, John Kerry of Massachusetts and Murray of Washington, who runs her party’s fundraising efforts for senators. Their Republican counterparts are Senators Jon Kyl of Arizona, Pat Toomey of Pennsylvania and Rob Portman of Ohio, who served as President George W. Bush’s budget director. Hensarling will join Murray as co-leader of the panel.

AP: Special interests gave millions to budget panel

Friday, August 12th, 2011

The AP’s analysis shows the extent to which special interests have directly supported the 12 members during their tenures in Congress, including support from agriculture businesses ($600,000) and labor unions ($580,000). Big checks also came in from the banking and insurance industry.

AP via Yahoo

The 12 lawmakers appointed to a new congressional supercommittee charged with tackling the nation’s fiscal problems have received millions in contributions from special interests with a direct stake in potential cuts to federal programs, an Associated Press analysis of federal campaign data has found.

The newly appointed members — six Democrats and six Republicans — have received more than $3 million total during the past five years in donations from political committees with ties to defense contractors, health care providers and labor unions. That money went to their re-election campaigns, according to AP’s review.


The congressional committee, created as part of the debt limit and deficit reduction agreement enacted last week, is charged with cutting more than $1 trillion from the budget during the coming decade. If the committee doesn’t decide on cuts by late November — or if Congress votes down the committee’s recommendations — spending triggers would automatically cut billions of dollars from politically delicate areas like Medicare and the Pentagon.

The lawmakers represent a large swath of political ideology and geography, but they have some things in common: They received more than $1 million overall in contributions from the health care industry and at least $700,000 from defense companies, the AP found. Those two industries, especially, are sensitive to the outcome of the committee’s negotiations because the automatic spending cuts could affect them most directly.

The committee’s co-chairs — Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Texas — each received support from lobbyists and political committees, including those with ties to defense contractors and health care lobbyists. Hensarling’s re-election committee, for instance, received about $11,000 from Lockheed Martin and $8,500 from Northrop Grumman.

Companies like Lockheed rely heavily on government contracts: More than 80 percent of Lockheed’s net sales during the first six months of 2011 came from the U.S. government, according to Securities and Exchange Commission records. And in SEC filings two weeks ago, Northrop expressed concern of a “material adverse effect” on its finances had the debt ceiling not been raised.

The other panel members are Sens. Max Baucus, D-Mont.; John Kerry, D-Mass.; Jon Kyl, R-Ariz.; Pat Toomey, R-Pa.; and Rob Portman, R-Ohio; and Reps. Jim Clyburn, D-S.C.; Xavier Becerra, D-Calif.; Chris Van Hollen, D-Md.; and Michigan Republicans Dave Camp and Fred Upton.

The AP’s analysis shows the extent to which special interests have directly supported the 12 members during their tenures in Congress, including support from agriculture businesses ($600,000) and labor unions ($580,000). Big checks also came in from the banking and insurance industry.

The extent of potential conflicts could be even greater than the AP’s analysis shows. The AP measured contributions from industry PACs to lawmakers’ election committees. But it didn’t capture amounts from independent expenditures, such as donations, from defense executives and their families or money given to leadership political committees.

Even still, influence can extend beyond direct campaign contributions. Senate records show that Murray, also the chairwoman of the Democratic Senatorial Campaign Committee, was named in so-called honoree payments of more than $1 million from lobbyists since 2008. Such honoree contributions are sent to groups associated with members of Congress or for events held in their honor.

Murray spokesman Matt McAlvanah said Thursday that the senator “has made a career out of standing up for working families and against special interests. And that’s reflected in her personal story, her votes and the policies she has championed.”

Already, even as the final appointments to the committee were announced Thursday, watchdog groups said the panel members will be under remarkable pressure from outside interests. Public Campaign, one such group in Washington, said establishing the committee “will make it cheaper for Wall Street, tax-dodging corporations and special-interest lobbyists to influence the spending cuts and revenue debate in Washington as the focus shifts to just 12 members of Congress.”

Politico: Mystery Mitt Romney donor comes forward

Monday, August 8th, 2011

Conard came forward because despite ‘prominent legal counsel”, the Federal Elections Commission might not have agreed.

Politico

The anonymous donor behind the headline-making $1 million contribution to a pro-Mitt Romney super PAC is a former Bain Capital official with long ties to the candidate, who’s asking the outside group to amend its filings, POLITICO has learned.

The check-writer is Ed Conard, who was a top official at Bain, the private-equity firm Romney helped create, and who has been a strong supporter of his over the years.

The donation, made to the super PAC “Restore Our Future” – which was founded by former Romney advisers and is able to take in unlimited contributions, but must report them to the FEC – showed up in the group’s first round of filings. It was listed as coming from a W Spann LLC.

In a statement to POLITICO, Conard said, “I am the individual who formed and funded W Spann LLC. I authorized W Spann LLC’s contribution to Restore Our Future PAC.

“I did so after consulting prominent legal counsel regarding the transaction, and based on my understanding that the contribution would comply with applicable laws,” he said. “To address questions raised by the media concerning the contribution, I will request that Restore Our Future PAC amend its public reports to disclose me as the donor associated with this contribution.”

The LLC had been registered to a Madison Avenue address in Manhattan that was the same building occupied by Bain, sparking more of the mystery surrounding Spann. Sources familiar with the situation said Conard retired from Bain in 2007, but still maintains an office of his own at that Madison Avenue address.

Conard came forward as criticism from campaign watchdogs and Democrats were gathering steam, and there was an official complaint with the FEC, as well as with the Justice Department, filed by a nonpartisan group.

The contribution was first reported by POLITICO’s Jonathan Martin and Ken Vogel on Sunday. NBC’s Michael Isikoff reported earlier this week that Spann was formed in March and dissolved less than four months later, raising questions about the purpose of the company.

It wasn’t immediately clear why Conard chose to go the anonymous donation route.