Forum Post: Worse Than Watergate
Posted 10 years ago on Oct. 18, 2013, 10:13 p.m. EST by LeoYo
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Worse Than Watergate
Friday, 18 October 2013 09:46 By Sam Pizzigati, Other Words | Opinion
http://truth-out.org/opinion/item/19487-worse-than-watergate
The U.S. Supreme Court is mulling a case that could end up giving America’s wealthy a perpetual green light to contribute as much as they want directly to politicians and political parties.
Credit Shaun McCutcheon, an Alabama businessman who owns an electrical engineering company, for getting this ball rolling. In the 2012 election cycle, McCutcheon contributed heavily to conservative candidates and Republican Party committees. But the experience left the mega millionaire feeling terribly aggrieved.
Federal campaign finance reform legislation enacted four decades ago in the wake of the Watergate scandal limits how much individuals can give directly to candidates and political parties. In 2012, McCutcheon ran up against those limits, then sitting at about $46,000 for candidates and $70,000 for party committees. McCutcheon had wantedto give candidates and party panels much more. Under the law, he couldn’t then — and he can’t now either. The current, inflation-adjusted aggregate limit for the 2014 congressional elections: $123,000.
But wealthy individuals like McCutcheon, thanks to previous court decisions, can spend on their own, independently of candidate and party campaigns, as much as they want to influence a federal election’s impact.
In other words, a billionaire can’t currently give a particular congressional candidate a $1 million check. But the same billionaire can legally hand a TV station $1 million to run 30-second ads that extol that candidate’s virtues — or attack that candidate’s opponent. This sort of “independent expenditure” can make a major impact as campaigns play out. Independent expenditures can also complicate campaigns, especially when deep-pockets go “off-message” in the advertising they finance. In most situations, candidates and political parties would much rather have billionaires contribute directly to them and not go off and spend independently.
If the Supreme Court uses the McCutcheon case to erase our last remaining Watergate-era campaign funding limits, these political insiders will get their way. For the first time in years, they would be able to solicit unlimited contributions from America’s wealthy.
That turn of events, public interest groups point out, would leave political candidates and party officials even more eager to grant wealthy donors improper influence.
Fred Wertheimer, America’s elder statesman of campaign finance reform, is imparting a particularly dire warning. Repealing limits on direct contributions to candidates and parties, he contends, would take us right back to the same political corruption that led to the Watergate scandals.
But Wertheimer may actually be understating the danger. Repealing limits on direct contributions to candidates and parties would likely create a political environment far more toxic than anything we experienced before Watergate.
Back before Watergate, in the mid 20th century, America’s rich didn’t have nearly as much wealth.
Some numbers: In 1972, the year of the Watergate burglary, the nation’s top 0.1 percent averaged, in today’s dollars, the equivalent of $1.48 million in income. In 2012, America’s top 0.1 percent averaged $6.4 million. That’s more than a four-fold increase.
But the gap between rich then and rich now becomes even greater when you take taxes into effect. In 1972, taxpayers averaging $1.48 million in today’s dollars paid 40.7 percent of their total incomes in federal income tax. In 2012, note Tax Policy Center estimates, taxpayers in the top 0.1 percent paid federal income taxes at about half that rate.
The bottom line: America’s really rich in 2012 had over six times more after-tax dollars in their pockets, after inflation, than their counterparts in 1972.
We shouldn’t fear a wave of Watergate corruption. If the Supreme Court ends all limits on the campaign cash the super rich can throw at their candidates, American politics faces dangers far more troubling than anything Richard Nixon ever imposed upon us.
This piece was reprinted by Truthout with permission or license.
Thanks for posting. Important read. Important case.
Acting With Impunity: The Case of General Electric
Friday, 18 October 2013 11:55 By Lawrence S Wittner, History News Network | Report
http://truth-out.org/news/item/19491-acting-with-impunity-the-case-of-general-electric
Can the world’s biggest corporations act with impunity? When it comes to General Electric (GE) -- the eighth-largest U.S. corporation, with $146.9 billion in sales and $13.6 billion in profits in 2012 -- the answer appears to be “yes.”
Let us begin with a small-scale case in upstate New York, where in late September 2013 GE announced that it would close its electrical capacitor plant in the town of Fort Edward. Some two hundred workers will lose their jobs and, thereafter, will have little opportunity to obtain comparable wages, pensions, or even employment in this economically distressed region. Ironically, the plant has been highly profitable. Earlier in the year, the local management threw a party to celebrate a record-breaking quarter. But the high-level financial dealings of a vast multinational operation like GE are mysterious, and the company merely announced that the Fort Edward plant was “non-competitive.” The United Electrical Workers (UE), the union that has represented the workers there for the past seventy years, has already begun a vigorous campaign of resistance to the plant closing, but it is sure to be an uphill battle.
If we dig deeper into the record, a broader pattern of corporate misbehavior emerges. Indeed, the Fort Edward factory is one of two GE plants that polluted the communities at Fort Edward and nearby Hudson Falls, as well as a 197-mile stretch of the Hudson River, with 1.3 million pounds of cancer-causing PCBs for several decades. Worried about the dangers of PCBs, workers asked managers about them, and were told that these toxins were perfectly safe -- in fact, that the workers should rub the PCBs on their heads to combat baldness! When the extent of this environmental disaster began to be revealed in the 1970s, GE began a lengthy campaign to deny it and, later, a multimillion dollar public relations campaign to prevent remedial action by the Environmental Protection Administration. GE lost this battle, for the EPA insisted upon the dredging of the Hudson River and ordered GE to pay for it. Thus, the Hudson Valley became the largest Superfund cleanup site in the United States, with a project that will take decades to complete.
GE has produced other environmental disasters, as well. Three GE nuclear reactors at the Fukushima Daiichi nuclear power site in Japan melted down on March 31, 2011. This was the world’s worst nuclear accident in three decades, and quickly spread radioactive contamination nearly one hundred fifty miles. Indeed, the stricken reactors are still sending three hundred tons a day of radioactive water flooding into the Pacific Ocean. Dr. Helen Caldicott, who has studied nuclear power for decades, has estimated that up to 3.5 million people could eventually die from cancer thanks to the Fukushima radiation release. In the late 1960s and early 1970s, when these boiling water nuclear reactors were installed, GE’s engineers and management knew that their design was flawed. But the company kept selling them to unsuspecting utilities around the world, including many in the United States. As a result, there are still thirty-five GE boiling water reactors operating in this country, most of them located near population centers east of the Mississippi River. Currently, in fact, more than 58 million Americans live within fifty miles of a GE nuclear reactor.
Another important product produced by GE is the export of jobs. According to an extensive New York Times report on GE in March 2011: “Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.” By the end of 2010, another study found, 54 percent of GE’s 287,000 employees worked abroad. Not surprisingly, the company’s overseas operations in that year provided most of its total revenue. Responding to GE’s claim that it had created thousands of new jobs in the United States during the Obama administration, Chris Townsend, the political action director of the UE, produced a list of 40 U.S. plants the company closed in the country during the same period.
Townsend also noted that, even when GE kept its operations going in the United States, it slashed wages, sometimes by as much as 45 percent at a time. For example, the work of the Fort Edward plant will be moved to Clearwater, Florida, a non-union site where GE pays many workers $12 an hour and hires others through a temp agency at $8 an hour -- little more than the minimum wage.
Although technically a U.S. corporation, GE -- with operations in 130 nations -- apparently feels little loyalty to the United States. Jack Welch, a former GE CEO, once remarked: “Ideally, you’d have every plant you own on a barge to move with currencies and changes in the economy.” According to a Bloomberg analysis, to avoid paying U.S. taxes, GE keeps more of its profits overseas than any other U.S. company -- $108 billion by the end of 2012. Most of these profits, GE declared, would be invested in its foreign business enterprises. Thanks to this tax dodge and others, GE reportedly paid an average annual U.S. corporate income tax rate of only 1.8 percent between 2002 and 2011. In 2010, when GE reported worldwide profits of $14.2 billion, it paid no U.S. corporate income tax at all. Instead, it claimed a tax benefit of $3.2 billion. This is a sweet deal for that giant corporation, for the official corporate tax rate is 35 percent.
Despite this appalling record, the U.S. government has been very generous to GE. During the financial crisis of 2008-2009, the federal government’s Temporary Liquidity Guarantee Program loaned approximately $85 billion to GE Capital, the company’s huge finance arm that accounts for roughly half of GE’s profits. GE needed the bailout because, among other reasons, GE Capital was marketing subprime mortgages, making GE the tenth-largest subprime lender in the United States. The Federal Reserve also bought $16.1 billion worth of short-term corporate i.o.u.’s from GE in late 2008, when the public market for this kind of debt had nearly frozen, and GE became one of the largest beneficiaries of this federal program. In yet a further indication of GE’s influence, President Obama appointed Jeffrey Immelt, GE’s CEO, as chair of his Council on Jobs and Competitiveness, which strategizes about how to revive America’s manufacturing base. One of Immelt’s favorite panaceas is to end taxes on the overseas profits of corporations.
Thus, it might seem that those two hundred embattled workers at Fort Edward have no possibility at all of effectively challenging a corporation this wealthy and influential. But stranger things have happened in the United States -- especially when Americans have had their fill of corporate arrogance.
http://hnn.us/article/153575#sthash.H9nWhpuJ.wmS8tvQY.dpuf
This piece was reprinted by Truthout with permission or license.
Food Stamp Outage Highlights Problems With Privatization of Public Services
Friday, 18 October 2013 09:27 By Mike Ludwig, Truthout | Report
http://truth-out.org/news/item/19481-food-stamp-outage-highlights-problems-with-privatization-of-public-services
The government shutdown was not to blame for the crashing of the food stamp program for poor families in 17 states over the weekend, just the latest in a long line of snafus by private contractors hired by government.
Over the weekend, low-income shoppers in 17 states were unable to use their electronic food stamp debit cards. In this reporter's neighborhood in downtown New Orleans Saturday evening, rumors swirled around grocery store cash registers and street corners. Was the government shutdown to blame? Did the deadlock in Washington mean nutritional assistance was gone for good?
The public soon learned that government shutdown was not to blame. Xerox, a private company that state welfare agencies had contracted for computing services, admitted that a "routine test" caused a computer glitch that temporarily shut down the Electronic Benefit Transfer (EBT) system in Louisiana, Ohio, Michigan and 14 other states.
It turns out that the EBT incident is not the first screwup under Xerox's watch. Affiliated Computer Services (ACS), a subsidiary of Xerox since 2000 that specializes in privatizing government administrative services for the most economically vulnerable Americans, has taken heat in the past for siphoning excessive fees from welfare recipients, mismanaging Medicaid payment systems, and failing to complete multimillion dollar contracts for public agencies.
One of ACS's high-profile snafus occurred in Indiana after state politicians decided to outsource major public services as part of a failed privatization scheme, according to the Center for Media and Democracy (CMD):
Indiana's 2006 experiment involving a $1.16 billion contract awarded to a consortium of firms including Affiliated Computer Services, Inc. (ACS) went so badly that the governor cancelled the contract at an unknown cost to the state, and the state legislature even considered banning privatization altogether.
Before Indiana privatized these services, it had one of the lowest rates in the country for incorrectly denying or ending access to food stamps, but in 2008, under for-profit outsourcing, that error rate jumped 13 percent according to the LA Times, resulting in kids going hungry and grandmas losing their Medicaid coverage.
The human cost of these failures is all too real. WTHR News in Indiana, reported on the story of Ronald Alexander, who died in 2009, more than a year after being wrongly denied Medicaid benefits and despite his frequent and frustrated attempts to get the help he needed.
Many blamed ACS, the main subcontractor on the project, for the repeated problems. By 2009, the state cancelled its contract and attempted to institute a hybrid method, transferring some functions back to the state government.
ACS's rap sheet includes a failed Medicaid payment system in North Carolina and years-long delays in contracts to update Medicaid computing systems in New Hampshire and North Dakota, according to a recent investigation by the Center for Media and Democracy.
Between 2002 and 2005, several ACS employees incorrectly reported enrollment numbers in federally funded welfare programs in Texas that resulted in overpayments to ACS, the CMD reports. The company voluntarily reported the errors to government officials and reimbursed the government $2.6 million after a court settlement.
In 2012, Xerox reported $22 billion in revenues and $1.2 billion in profits, the CMD reports. In 2009, the last year before ACS was completely absorbed by Xerox, the company posted $6.5 billion in revenues and $3.5 million in profits.
Since 2010, ACS and Xerox have together spent more than $5 million lobbying the federal government, according to the Center for Responsive Politics.
Xerox and ACS are not the only outsourcing firms that have put profits before the public interest, according to the CMD. In 2010, the France-based food service giant Sodexo was caught choosing food suppliers for public schools in New York based not on the quality of food provided, but rather on who could give Sodexo the highest cash rebate for a contract. After a state investigation and lawsuit, Sodexo agreed to pay $20 million to New York public schools after failing to pass the savings from those rebates to public college campuses and 21 public schools across the state.
Furthermore, private prison companies such as the Corrections Corporation of America (CCA) have made huge profits in recent years from federal policies that have increased incarceration and detention rates up to 500 percent in the past 30 years, according to the CMD.
In its filings with the Securities and Exchange Commission, CCA has sited "leniency" in enforcement efforts and sentencing practices as factors that could hurt the company's profitability. The CCA charges state prison facilities by each bunk filled by an inmate, and the company has succeeded in securing occupancy quotas at prisons across the country to guarantee that taxpayers will foot the bill if prison beds are not filled, according to the Justice Policy Institute.
In 2012, 100 percent of CCA's $156 million in profits came directly from taxpayers, but in 2013, the company converted into a real estate investment trust to avoid millions in corporate taxes, according to the CMD.
Copyright, Truthout. May not be reprinted without permission.
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