DISPATCHES

CONGRESS PRETENDS TO BITE APPLE

Senators singled out Apple for taking advantage of generous tax breaks for multinational corporations, summoning Apple CEO Tim Cook to appear before an investigative subcommittee (5/21) to defend Apple’s ducking US taxes by keeping more than $100 bln in cash and securities overseas. Cook said the problem is that the tax code is outdated and has not kept up with the digital age, but he said his company pays taxes amounting to 30.5% of its profits from products it sells in the US.

Apple paid $6 bln in US corporate income taxes in 2012, while ExxonMobil, which reported similar earnings for the last quarter of 2012, paid $3.6 bln in US corporate income taxes. But Exxon paid no income taxes and got a $156 mln rebate from the IRS as recently as 2009. And Microsoft, which debuted its new version of X-Box, paid $3.1 bln in federal taxes in 2011 but reduced its tax bill by a $2.43 bln — or 44% — by using an international network of controlled foreign corporations and the exploitation of various loopholes in the US corporate tax code, Walter Hickey noted at BusinessInsider.com (5/21). Google uses tax shelters in Ireland and the Netherlands to avoid $2 bln in US taxes, while Cisco Systems has avoided paying billions of dollars by attributing half of its worldwide profits to a tiny unit at the foot of the Swiss Alps, Bloomberg News reported (5/22). A Senate subcommittee reported in September 2012 that US companies keep 60% of their cash — $1.7 tln — overseas and untaxed.

Apple’s Cook and other multinational corporate execs are proposing a “territorial” tax system – in which overseas profits of US corporations would be lightly taxed in the US or not taxed at all — to let companies bring those profits back to the US, but Eileen Appelbaum, a senior economist at the Center for Economic and Policy Research (cepr.net) noted at USnews.com (5/21) that the US tried such a tax break in 2004, declaring a temporary tax holiday for offshore profits. The Congressional Research Service found that one-third of offshore profits were repatriated in the following year, but academic studies found no evidence that companies used the repatriated profits to increase investment or employment and no evidence that they increased economic activity.

“Instead, they freed up other funds that these companies used for stock buybacks and to pay dividends to corporate shareholders. Indeed, many of the companies that benefited from the tax holiday on offshore profits actually reduced employment in the US,” Appelbaum wrote.

She added, “US companies are supposed to account for offshore profits by setting aside funds to cover future tax liabilities when these profits are repatriated. Few companies actually do this. Most simply declare that the funds have been permanently invested overseas, which frees them from this obligation. Google, Oracle, Microsoft and numerous other companies have taken this route. As a result, these highly profitable companies owe very little in corporate income taxes.

“Apple, which currently has $102.3 bln in offshore profits, has not taken advantage of this provision. Its accounts show that it has set aside billions of dollars to cover future tax liabilities on offshore profits. According to the Financial Times, Apple set aside $5.8 billion last year, 70% of its reported tax liability, for this purpose. This boosted Apple’s apparent corporate tax rate to 25.2% — far above Google, Microsoft and others – and spared the company the public outrage directed at highly profitable companies that pay little or no corporate income taxes. However, the $5.8 bln is an accounting entry that had no effect on the actual taxes Apple paid.”

A territorial tax system would further increase incentives to locate jobs in low-tax countries, she noted, as profits earned in these countries could more easily flow back to US shareholders. “A better solution is to eliminate deferral of taxes on profits stashed offshore and, instead, to allocate taxes on profits based on its activity in various jurisdictions.

“About half of US states that have a corporate income tax use such a method for US companies that operate in multiple states. Earlier this year, California adopted a sales-based corporate tax system that taxes companies that sell products or services in California, no matter where in the world they are located, based on the proportion of their total sales revenue generated in the state. This could serve as an example for tax reform that is both simple and fair.”

IMMIGRATION REFORM ADVANCING. The Senate Judiciary Committee advanced a comprehensive immigration reform bill that will provide a path to citizenship for the nation’s 11.1 mln undocumented immigrants. Three Republicans — Sens. Orrin Hatch (R-Utah), Jeff Flake (R-Ariz.), and Lindsey Graham (R-S.C.) — joined Democrats on the panel to support the legislation, which passed 13-5 (5/21), after 200 amendments were considered over five days.

The vote came following an emotional debate over a provision that would have recognized, for purposes of immigration, married same-sex couples. Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) withdrew the amendment after Republican senators, including members of the so-called Gang of 8, signaled that they would abandon the underlining bill if it was included. “If you redefine marriage for immigration purposes [by the amendment], the bill would fall apart because the coalition would fall apart,” Graham said. “It would be a bridge too far.”

The full Senate is expected to debate the bill on the floor in June. Earlier on 5/21, Senate Minority Leader Mitch McConnell (R-Ky.) pledged to “vote for the motion to proceed so we can get on the bill and see if it we’re able to pass a bill that actually moves the ball in the right direction.” However, Republicans reportedly still hope to amend the bill when it reaches the Senate floor. Sen. Hatch said he was only committed to vote the bill out of committee.

In the House, where the tea party caucus could stand in the way, hopes for passage were raised when bipartisan group in the House reportedly reached an “agreement in principle” on immigration reform that would create a 15-year path to citizenship, longer than the 13-year citizenship plan in the Senate version.

Nearly 300,000 children of undocumented immigrants have been granted “deferred action” that stops deportation and grants a two-year work authorization for immigrants between the ages of 16 and 31 under an executive order from President Obama through April, the US Citizenship and Immigration Services reported.

GOP HISPANIC OUTREACH DIRECTOR JOINS DEMS. Republican hopes to attract Hispanic voters took a hit when Pablo Pantoja, citing the “culture of intolerance” in the GOP, quit as state director of Florida Hispanic Outreach for the Republican National Committee announced (5/13) that he was leaving the party and registering as a Democrat.

In an email Pantoja said, “Yes, I have changed my political affiliation to the Democratic Party. It doesn’t take much to see the culture of intolerance surrounding the Republican Party today. I have wondered before about the seemingly harsh undertones about immigrants and others. Look no further; a well-known organization recently confirms the intolerance of that which seems different or strange to them.”

Pantoja specifically cited the revelation — that an author of the Heritage Foundation’s widely discredited report on the cost of the Gang of Eight’s immigration bill, which claimed immigration reform would cost $6.3 tln, wrote a dissertation in which he suggested that Hispanics are at a permanent disadvantage because they have lower IQs — as the final straw in his political evolution.

Prior to assuming the role of state director, Pantoja served in the National Guard, doing multiple tours abroad in Kuwait and Iraq before returning to the states and getting involved in Republican politics. In 2010 he served as a field director in Florida during the midterm elections.

Republicans for months have tried to find ways to make inroads with the country’s growing Hispanic population, especially in the swing state of Florida, where the state’s 4.3 mln Hispanic voters supported Barack Obama over Mitt Romney by a 20-point margin. Hispanics there turned out to vote at a rate of more than 62% in 2012, significantly higher than the national turnout rate of 48% and the highest rate of Hispanic turnout in the country.

CONGRESSMAN GETS MILLIONS IN FARM SUBSIDIES, DENOUNCES FOOD STAMP RECIPIENTS AS ‘STEALING’. Rep. Stephen Fincher (R-Tenn.) agitated against food assistance for poor Americans during the House Agriculture Committee debate, accusing the government of stealing “other people’s money.” The Senate Ag Committee already had agreed to cut $4.1 bln from the Supplemental Nutritional Assistance Program (SNAP, formerly food stamps). House Republicans are proposing to cut SNAP by $20 bln, which would push nearly 2 mln Americans off food assistance. Fincher invoked the Bible in defense of the devastating cuts, quoting, “The one who is unwilling to work shall not eat.”

Fincher later expanded on his version of the social gospel: “The role of citizens, of Christians, of humanity is to take care of each other, but not for Washington to steal from those in the country and give to others in the country.”

It’s bad enough that the cuts would mainly hit the working poor, but the Environmental Working Group (ewg.org) reported (5/21) that Fincher collected a staggering $3.48 mln in “our” money from 1995 to 2012, making him the second most heavily subsidized farmer in Congress. “Fincher’s $70,000 farm subsidy haul in 2012 dwarfs the average 2012 SNAP benefit in Tennessee of $1,586.40, and it is nearly double of Tennessee’s median household income,” EWG noted. “After voting to cut SNAP by more than $20 bln, Fincher joined his colleagues to support a proposal to expand crop insurance subsidies by $9 bln over the next 10 years.”

EWG noted that crop insurance subsidies have no limits on their recipients’ income levels. Therefore, the bulk of the crop insurance is paid out in million-dollar installments to a small group of large agribusinesses, while 80% of farmers receive roughly $5,000 a year. SNAP, on the other hand, limits aid to income below 130% of the federal poverty line, or $30,000 per year for a family of four. (ThinkProgress.org, 5/21)

OBAMACARE ALREADY HELPING HEALTH CARE. Republicans are hoping to make repeal of Obamacare an issue in the 2014 election, but there’s new evidence to suggest that the Affordable Care Act is impacting the health industry for the better by successfully encouraging a greater emphasis on primary care. Ensuring that Americans are receiving regular preventative care is an important tenant of the health law, since it can ultimately help lower costs by preventing people from delaying medical treatment until they’re already very sick.

Tara Culp-Ressler noted at Think-Progress.org (5/20) that for the first time ever, Americans are spending more money on primary care physicians than they are on specialists, according to a new survey by the physician recruiting firm Merritt Hawkins. In what Merrit Hawkins’ president referred to as a “seismic shift” in medicine, primary care doctors are now the greatest source of revenue for the hospitals where they work:

As more than 25 mln previously uninsured Americans gain coverage under Obamacare, the trend toward primary care is expected to continue. Those people likely avoided expensive medical treatment while they didn’t have insurance, but they’ll have the opportunity to seek regular check-ups once they become covered in 2014. In order to tackle the influx of Americans who will require primary care services, there will be opportunities for nurse practitioners to expand their role as health care providers.

As state and federal officials work toward the full implementation of Obamacare, politicians on both sides of the aisle have blasted the ongoing effort as a “train wreck.” But there’s mounting evidence to suggest those concerns are overblown. Although there’s still more work to be done to prepare for the state-level insurance marketplaces that will open to the public in 2014, much of the health reform law is already in effect — and it’s already having a demonstrable impact on the United States’ health industry. In addition to the shift to primary care, Obamacare has also already ensured that health care will be cheaper for many Americans by forcing private insurers to lower their premiums.

‘CITIZENS UNITED’ SAVING PROGRESSIVE POLITICS? The Supreme Court’s Citizens United decision was supposed to be bad for democracy but it is good for progressive fundraisers.

Markos Moulitsas noted at Daily-Kos.com (5/22) that Emily’s List raised $7.3 mln in the first four months of 2013, a record for the group that promotes progressive female candidates for office, with more donors than ever in the same period. The Democratic Congressional Campaign Committee (DCCC) also had a record -breaking haul in the first quarter, bringing in $22.6 mln, with strong support from members and online donors.

“Once upon a time, these organizations and others like them received heavy support from wealthy individuals. Citizens United shifted those big-donor dollars into unregulated 527s, seemingly starving the party committees and other non-527 political organizations of a huge chunk of their budgets,” Moulitsas wrote.

“Instead, smart organizations have transitioned toward building their grassroots base, building out email action lists and integrating deeper into social networks. The results speak for themselves — they aren’t just holding steady, they’re breaking fundraising records. And not only are they bringing in more money, but an organization beholden to its grassroots will be far more responsive and less corruptible than one that depends on a few handful individuals.”

But Moulitsas added, “Just because liberals are benefitting better from this fundraising regime doesn’t mean it’s ideal, and a Constitutional Amendment repealing Citizens United would still be the desired outcome. But liberal wishes alone won’t make it happen. We need conservatives as well, and their inability to take advantage of this post-CU world might finally make that happen. Indeed, at this pace, they may need it just to keep pace.”

SCANDAL SHARKS DON’T DRAW BLOOD. Republicans clearly hoped that their attacks on the Obama administration’s handling of Benghazi, the IRS and the AP would diminish the President’s popularity, but Charles Cook, a respected nonpartisan political observer, noted in National Journal (5/20) that while the Republican sharks were circling, there was no blood in the water. A CNN/ORC survey of 923 Americans (5/17-18) pegged Obama’s job-approval rating at 53%, up a statistically insignificant 2 points since their last poll (4/5-7) which was taken before the Benghazi, IRS and AP-wiretap stories came to dominate the news and congressional hearing rooms. Obama’s disapproval rating was down 2 points since that last survey. In Gallup’s tracking poll, Obama’s job approval rating so far this year has averaged 50% and for that week his average was 49%, the same as the week before.

“Maybe that will change. Maybe these allegations will start getting traction with voters. But it might just be that Americans are more focused on an economy that is gradually coming out of the longest and deepest economic downturn since the Great Depression,” wrote Cook.

Greg Sargent noted at WashingtonPost.com (5/21) that a new Washington Post poll confirms Cook’s diagnosis. “The Post poll finds a majority believes the Obama administration is trying to ‘cover up’ facts about the IRS scandal and that a plurality thinks it is trying to cover up Benghazi facts. These numbers are at odds with yesterday’s CNN poll, which found more Americans think Obama is being truthful. But that aside, in spite of these negative findings about the scandals, the Post poll also finds that Obama’s approval rating is holding steady, at 51%, and the economy may be the reason why: Majorities believe the economy is beginning to recover and are optimistic about where the economy will go in the next year.

“More to the point, majorities believe Obama is focused on their problems, and Republicans aren’t — again confirming Cook’s diagnosis. Only 33% say Republicans are focused on things that are important to them, versus 60% who say they aren’t. By contrast, 51% say Obama is concentrating on things that are important to them.”

A poll released by the Pew Research Center (5/21) showed the public was less interested in the AP story, as just 16% said they had followed the AP controversy, while 25% had followed the hearings on the Benghazi attack and 26% said they were following the IRS controversy closely. A plurality of 44% of respondents said they disapproved of the Justice Department obtaining AP phone records as part of its investigation into the disclosure of classified information, while 36% approved and 20% didn’t know.

DEEP SOUTH SUPPORTS MEDICAID EXPANSION DESPITE GOVERNORS. Over 60% of Americans living in the Deep South support Obamacare’s Medicaid expansion, according to a new poll that surveyed a broad sample of people in Alabama, Georgia, Louisiana, Mississippi, and South Carolina. The poll, conducted between March and April by the Joint Center for Political and Economic Studies, found that support for Medicaid expansion is somewhat divided along partisan lines. Nevertheless, a solid majority of residents in each of the five Deep South states favor expanding the public insurance program to extend coverage to additional uninsured Americans:

That public support stands in sharp contrast to the five states’ political leaders, who have resisted cooperating with health care reform at any cost. The GOP governors in each of those Southern states — Govs. Robert Bentley (R-Ala.), Nathan Deal (R-Ga.), Bobby Jindal (R-La.), Phil Bryant (R-Miss.), and Nikki Haley (R-S.C.) — have refused to expand their Medicaid programs.

“This survey clearly shows that governors and state legislators in the South who are resisting the Medicaid expansion are out-of-step with their constituents,” Brian D. Smedley, the director of the Joint Center’s Health Policy Institute, pointed out.

The broad public support for Medicaid expansion in this region makes sense. Low-income Americans in the South who don’t currently qualify for their state’s Medicaid program are being forced to simply skip out on medical care, and expanding Medicaid’s eligibility levels would ensure that they can access the health treatment they need. Deeply red Southern states also tend to have worse health outcomes compared to Democratic-controlled states on the coasts, and expanding Medicaid could help lessen some of those disparities. (ThinkProgress.org, 5/22)

REID READIES FOR FILIBUSTER FIGHT. Senate Majority Leader Harry Reid (D-Nev.) appears to be readying for a showdown over the filibuster this summer as he pulled back a vote on the confirmation of Richard Cordray to lead the Consumer Financial Protection Bureau. With 43 Republicans demanding changes to the structure of the bureau before they will approve any nominee to run it, Democrats lack the 60 votes they need under the current filibuster rules.

Democrats are frustrated with Republican obstruction of judicial appointees as well as key agencies, including a majority of the National Labor Relations Board, which has left it unable to conduct business. Republicans have blocked one of President Obama’s nominees to the D.C. Circuit Court of Appeals, forcing Caitlin Halligan to withdraw after delaying the former New York state solicitor general’s confirmation for almost two and a half years, and they have delayed another nominee, Srikanth Srinivasan, the deputy US solicitor general, for nearly a year. [Srinivasan was confirmed 5/23 on a 97-0 vote, leaving three vacancies on the court.]

A Senate aide told HuffingtonPost.com the “plan is to wait until immigration is complete before engaging in total all-out nom[ination] fight,” the aide said.

The Washington Post’s Greg Sargent reported (5/17) that Reid was eyeing July for renewed battle over the matter and has President Obama’s support if he chooses to move ahead with it. Democrats could change the rules of the Senate however they like with a majority vote and support of the Vice President, as president of the Senate, though doing so would be highly controversial.

The idea of rules reform itself, however, is broadly popular. A HuffPost/YouGov poll conducted last November found that 65% of Americans believe senators should have to participate in debate for the duration of a filibuster, while only 9% of those polled said senators should be able to filibuster without being physically present.

HuffingtonPost.com counts 51 Democrats and independents supporting a rules change that would require a “talking filibuster” to stop a bill. (Opponents include Sens. Max Baucus, Mont., Joe Donnelly, Ind., Carl Levin, Mich., and Mark Pryor, Ark.)

“July is the best time to have this debate over rules and nominees,” another Democratic aide told HuffingtonPost.com. “After immigration, and before the budget battles.”

From The Progressive Populist, June 15, 2013