Some of America’s most powerful CEOs have banded together to push for solutions to America’s “debt problem.” Generally speaking, when these guys decide to put big money into a political and PR campaign, we should all be sure to look under the hood and see what’s really going on.
When it comes to “Fix the Debt,” the corporate-funded campaign pushing for “pro-growth” tax reform favoring even more giveaways to large corporations, there is good reason to be worried. A Salon.com expose, posted on December 8th, 2012, takes a close look at some of the people and companies behind Fix the Debt. Given that the premise behind the organization’s message is that if you throw tax breaks at big corporations, they’ll create jobs and grow the economy, it’s worth looking at their records of… well, doing exactly that. Since they also argue that debt reduction should come from spending cuts – particularly on programs that support seniors and the indigent, such as Social Security and Medicare – it’s also worthwhile to see what kind of sacrifices the top executives at these firms have been willing to make in their own right on behalf of the debt-reduction cause.
It should surprise no one to discover that each of the five top sponsors of Fix the Debt have taken the extremely generous tax breaks they’ve been awarded by Uncle Sam in the past and – yes, you guessed it – eliminated tens of thousands of American jobs. Nor will it likely shock you to find that as their companies were slashing payrolls for their workers, the executives in charge were rewarding themselves with generous pay packages. Still, even the most jaded among us might get a sour taste in our mouths to learn that these CEOs have the chutzpah to push for cuts to Social Security and Medicare (out of sincere concern for America’s growing national debt, no doubt), even as they award themselves retirement packages that would pay them many multiples of what the average senior gets per year… every month.
My personal favorite? David Cote, at Honeywell, which has cut 4,000 U.S. jobs while creating more than 10,000 overseas, all while enjoying an average effective U.S. tax rate of negative 14.8% between 2009-2011. According to Salon,
Cote has $78 million in his Honeywell retirement accounts, enough to qualify for monthly retirement checks of $428,000 starting at age 65. In contrast the average retiree receives just $1,237 a month from Social Security.
Even more galling, Honeywell, under Cote’s leadership, is lobbying hard for still more corporate tax cuts. Salon goes on to note:
One of his [Cote's] favorite proposals is a shift to a territorial tax system, which would permanently exempt all foreign earnings of U.S. corporations from U.S. income taxes. Cote was one of 12 big company CEOs who met with President Obama on November 14 to plead for this tax break. Honeywell has more than $8 billion stashed offshore and could receive an immediate tax windfall of more than $2 billion if Congress approved this shift to a “territorial” tax system. According to an Institute for Policy Studies report, Fix the Debt corporations as a whole would stand to gain $134 billion.
Rather than awarding still greater tax breaks to corporations that already pay some of the lowest tax bills in the world – indeed, in some cases, actually make money on their tax returns – here are a few alternatives. If the goal of Fix the Debt is truly to create jobs, improve the American economy, and reduce the Federal deficit, they might look at lobbying for:
- Increasing the top individual tax brackets. According to the Center on Budget and Policy Priorities, this will raise $700 billion in extra revenue over the next decade. It also might help discourage corporate CEOs making multi-million-dollar salaries and sitting on retirement packages worth tens, or even hundreds, of millions of dollars from advocating that we slash benefits for the poor and elderly, instead of reducing these plutocrats’ own generous subsidies. Or at least, it might help fund those benefits, whatever these guys push for. (After all, even the wealthy deserve the right of free speech.)
- Reform the corporate tax code. One obvious idea, which President Obama among others has repeatedly advocated, is to reward companies that create jobs in the United States, instead of shipping them overseas. If these guys are really serious about using their tax cuts to create American jobs, let’s put their money where their mouths are. Another idea would be to eliminate the loopholes that allow them to keep overseas profits offshore, without every paying U.S. taxes on them.
- Reform executive pay structures. This is quite a bit harder, but long overdue. If these CEOs were rewarded not for short-term stock performance but for improving the long-term health of the companies they lead, America would be a very different place today. If they were paid based on, say, increasing market share; improving employees’ satisfaction and economic stability, as well as their productivity (following the Henry Ford model, that your employees should be paid well enough to buy your products); re-investing in the company’s infrastructure and product lines, instead of cashing out… Well, they might actually have some incentive to do what they claim to be advocating. Namely, creating jobs and improving the American economy. As it is, every incentive working upon them is to shove as much of whatever breaks and profits they get into their own pockets while they can.
- Increase and extend unemployment benefits, food stamps, infrastructure spending, and other “stimulus” measures. After all, the economic payback of direct government support to lower- and middle-income people who will actually spend that money on goods and services is considerably higher than that of giving further tax breaks to people who are already rich, as I’ve written here. Among other things, helping the poor and middle class achieve greater stability will help these companies find more customers to buy their products. Isn’t that what business is supposed to be about?
- Reduce the deficit by, well, reducing the deficit. This whole “cut our tax rates, and we promise, the government will make more money” approach to deficits hasn’t worked. Ever. Republicans have been pushing it for decades, and there is absolutely no real-world evidence that it does anything but what intuition says it must do: increase deficits by widening the gap between revenues and spending. If you cut revenues, you do indeed increase the deficit, people. Stop selling us the same old snake oil.
Personally, I’m skeptical that “Fix the Debt” will listen to these fairly obvious ideas. After all, behind the smoke screen of “concerned citizens” the organization throws forward, there are some extremely well-heeled individuals and their corporate boards paying large chunks of money to push a message for their own immediate benefit. Still, if we can’t honestly expect them to consider better solutions for the problems they claim to be concerned about, we can at least expose their real agenda to public view.
Which brings us to the best possible way to fix the debt, and our political system with it: reform our system for funding political campaigns. As long as America continues to operate on the “one dollar one vote” basis that Citizens United reinforced, and turns our back on the Founding Fathers’ (and Mothers’) idea of “one person one vote,” we’ll continue to get the best government that money can buy.