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The great Greek philosopher, Plato, more than 2000 years ago argued that a democracy will eventually deteriorate into an oligarchy (or plutocracy) which, in time, will further degenerate into a dictatorship where society is ruled by a man exhibiting only the basest of emotions. Today, there is nothing stopping the American republic, which has already devolved into a plutocracy and is recognized as such by even some mainstream political science scholars, from disintegrating further. For certain, after first sparking a democratic revolt (which seems to be happening right now) but later descending into a chaotic political order, the American republic will eventually degenerate into a dictatorship – or “rule by the criminal” – where US society would be guided by those exhibiting only the basest of human emotions. The election of Donald Trump, unfortunately, seems to have proven the great-ancient philosopher correct. This and more is discussed by Jeremy Cloward, Ph.D. in his newest piece Dark Days and the Coming of Fascism in the New America.
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Over the past twenty years, WFF (Walton Family Foundation) has given more than $1.3 billion to K–12 education, according to its own calculations. The WFF boasts that one in four charter schools across the nation have received WFF startup funds. (For previous Censored coverage, see “Education ‘Reform’ a Trojan Horse for Privatization,” Censored story #13 in Censored 2013.)
In his AlterNet article, Bryant described how WFF’s commitment to charter schools is a product of the Walton family having been “fully inculcated” in the educational philosophy of libertarian economist Milton Friedman and by the “myth of school failure” spread by the Reagan administration.
In 1980, Ronald Reagan campaigned to abolish the Department of Education. One of the landmarks of his presidency was the 1983 report, “A Nation at Risk: The Imperative for Educational Reform,” which warned against a “rising tide of mediocrity.” Though critics have since rebutted many of the report’s claims and questioned the validity of its statistical analysis, “A Nation at Risk” was and remains influential. Indeed, John Walton read the report the year it was published and shared it with family members, leading his father, Sam Walton, to announce, “I’d like to see an all-out revolution in education.”
In 1995, Friedman argued that “our elementary and secondary educational system needs to be radically restructured,” and that only by “privatizing a major segment of it” could the restructuring succeed. As Bryant described, “Central to Friedman’s ideology was that schools should be thought of as businesses,” and their students understood as customers.
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The Department of Education and school districts throughout the US are working with billionaire families such as the Waltons and Netflix CEO Reed Hastings to undermine public education, Dustin Beilke reported for PR Watch in January 2016. Instead of defending public education in pursuit of equity for all students, the Department of Education (DoE) is working with organizations like the American Legislative Exchange Council (ALEC) — an alliance of corporate lobbyists and state legislators — as well as local chambers of commerce to encourage the conversion of public institutions into private charter schools.
A December 2015 DoE presentation showed that the federal government had spent over three billion dollars of tax-payer money to boost charter schools, supporting an uncritical assessment of how effective charter schools actually are. Beilke described the 25-slide overview of the DoE’s charter schools program as “an uncritical PR document embracing a magical idea of charter schools.”
According to the Center for Media and Democracy (CMD), although many charter schools have failed and closed in the last twenty years, the DoE continues to provide significant funding to promote them. An October 2015 CMD investigation, “Charter School Black Hole,” uncovered how much the federal government has invested in charter schools, as well as the DoE’s ties to ALEC.
As Beilke reported, a slide from the December 2015 DoE overview of its charter school program acknowledged that it had spent $3.3 billion to “fund the start-up, replication and expansion of public charter schools.” However, Beilke reported, “CMD was unable to extract this number from DOE despite inquiries and Freedom of Information Act (FOIA) requests since 2014.” The actual figure may be higher, because the list of charter schools receiving DoE funding appears to have been incomplete. Overall, the DoE overview suggested that it functions as a “propagandist” for charter schools, Beilke wrote.
According to the CMD report, “laws governing charters have been built by proponents, favoring ‘flexibility’ over rules,” permitting an “epidemic of fraud, waste, and mismanagement that would not be tolerated in public schools.” As Beilke concluded, “the Department of Education’s charter school agenda matches that of the anti-education, pro-privatization movement that funds and promotes so much of the misinformation about public education.”
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Sex trafficking in the US is pervasive. According to the US Department of Justice, human trafficking is the second-fastest-growing criminal enterprise after drug trafficking, with minors constituting roughly half the victims in the US. In 2015, over 4,100 of the 5,544 trafficking cases reported to the National Human Trafficking Resource Center’s hotline involved sex trafficking.
Sex trafficking is also a major component of the underground economy in many American cities. A 2014 study conducted by the Urban Institute found that the underground commercial sex economy in the US produced multimillion-dollar profits. Researchers at the Urban Institute studied eight major US cities — Atlanta, Dallas, Denver, Kansas City, Miami, Seattle, San Diego, and Washington, DC — to estimate that, in each city, the underground sex economy was worth between $39.9 and $290 million in 2007. “From high-end escort services to high school ‘sneaker pimps,’” the report’s authors wrote, “the sex trade leaves no demographic unrepresented and circuits almost every major US city.”
. . . . . . . According to Michael Osborn, chief of the FBI’s Violent Crimes Against Children Unit, the FBI focuses on “recovering” the victims of sex trafficking and capturing their pimps, who “represent a national threat” because they move among cities and across states to avoid capture. Buyers (or “johns”), by contrast, tend to remain in local jurisdictions, which the FBI leaves to local law enforcement. Because precincts, counties, and states keep track of john arrests in different ways, if at all, there are no comprehensive statistics for how many are arrested each year.
Enforcement tends to be stronger in cases where buyers are charged with soliciting minors. In one study of 134 cases involving prostitutes who were minors, 113 johns were convicted. On average they were sentenced to three years in prison, but served just 1.5 years. Twenty-six percent of those convicted served no time at all. Many pimps look for children who come from unstable family backgrounds or destitute neighborhoods. According to FAIR Girls, an anti-trafficking organization, 70–75 percent of the girls they assisted had histories with foster care systems. Special Agent Renea Green of the Georgia Bureau of Investigation told Al Jazeera America, “We had a trafficker tell us he looked for victims, for girls, walking from the local DFAC [Department of Family and Children Services] office.”
While safe harbor laws, which criminalize adults who purchase sex with a minor, have been passed in thirty-four states, according to the Polaris Project these laws tend to vary widely from state to state, leaving many girls treated as criminals rather than as victims.
Sex trafficking in the US has been a focus of corporate news coverage, but reports tend to focus primarily on the prostitutes and their pimps, while neglecting other important issues raised in the Al Jazeera America report, such as the prosecution of buyers and the criminal penalties that girls and young women often face. Most news coverage is from local news outlets, which tend to report specific instances of sex trafficking, rather than discussing the topic in a broader social context._ _ _ _ _ _ _
With No Warning, House Republicans Vote to Gut Independent Ethics Office
New (Year) Ruminations: Lucky Among 95 Million Losers. Yep! That’s me.
Like the other four hotels we’ve stayed at these two years, two weeks, two days and counting, half the clientele is long term and homeless. Some families have been here for over two years. They’re all working families. Most either lost their homes or moved from counties in which work has dried up. They are white. They are African American. They are Latino. Yes, there are some who are Asian. They are mostly former professionals, though there are also many whose family businesses in the suburbs failed. What binds them all together is the final free fall into failure . . . .
The few families with whom I’ve had an open talk about why we’re all here shared the same emotions I’ve seen everywhere else: shame at their present diminished economic condition, fear of a future of uncertainty, loss of a way of life and social identity, and distress at not being recognized as the hapless victims of a recession that has yet to end; most of all, however, grief over having been written off as losers.
America Becomes a Stan
(Be careful, it's the NYT!)
Paul Krugman
I know that many people are still trying to convince themselves that the incoming administration will govern normally, despite the obviously undemocratic instincts of the new commander in chief and the questionable legitimacy of the process that brought him to power. Some Trump apologists have even taken to declaring that we needn’t worry about corruption from the incoming clique, because rich men don’t need more money. Seriously.
But let’s get real.
Everything we know suggests that we’re entering an era of epic corruption and contempt for the rule of law, with no restraint whatsoever.
How could this happen in a nation that has long prided itself as a role model for democracies everywhere? In a direct sense, Mr. Trump’s elevation was made possible by the F.B.I.’s blatant intervention in the election, Russian subversion, and the supine news media that obligingly played up fake scandals while burying real ones on the back pages.
But this debacle didn’t come out of nowhere. We’ve been on the road to stan-ism for a long time: an increasingly radical G.O.P., willing to do anything to gain and hold power, has been undermining our political culture for decades.
. . . People also tend to forget just how bad the administration of George W. Bush really was, and not just because it led America to war on false pretenses. There was also an upsurge in cronyism, with many key posts going to people with dubious qualifications but close political and/or business ties to top officials. Indeed, America botched the occupation of Iraq in part thanks to profiteering by politically connected businesses.
The only question now is whether the rot has gone so deep that nothing can stop America’s transformation into Trumpistan. One thing is for sure: It’s destructive as well as foolish to ignore the uncomfortable risk, and simply assume that it will all be O.K. It won’t.
Comments
usa999 Portland, OR 1 day ago
Dr. Krugman, thank you for the title of my next book ....."From Team of Rivals to Crowd of Cronies: the Decline of the American Political Executive." Here America seems to face two difficult even unpalatable, courses of action. First it needs to reinforce and motivate those elements in the Republican Party that, while unsavory in a moral sense, appreciate the dangers of a corrupt Presidency in the hands of a man incapable of separating his personal interests (including satisfying his vanity and greed) from the national interest. There is a real question as to whether Republicans like Flake and Graham can be induced to stand up for the country. McConnell's vision does not extend beyond Kentucky and Ryan lives in a fantasy world but others need to act even if the likely outcome is Michael Pence in the White House.In retrospect, Obama's election was fueled in '08 - from Rust Belt states that didn't support Hillary enough in 2016 - by voters trusting Dems to prosecute.
An error of monumental proportion was committed in not only failing to prosecute the banksters, but in also leaving whole organizations (and thereby individuals as well) deemed Too Big To Fail.
Danger occurs when media centers become captive to individual philanthropy and corporate leadership of Too Big to Fail entities.
The Great Himself is the next logical iteration of what we didn't deal with in 2008-9.
Concerned MD - Pennsylvania 1 day ago
Correct Professor K, the hen house has been guarded only by foxes for years now. How else might one explain the fact that nobody went to jail over the illegal shenanigans proximate to the 2008 financial melt down or the most recent Wells Fargo robbery of unarmed citizens. Anyone who believes the new orange-hair buffoon of a sheriff and his self-serving offpring and sycophants will rise to the occasion is delusional at best. Things will unfortunately have to get a lot worse before Americans wake up . . . let's hope it's not too late. 2018 and 2020 are just around the corner. Happy New Year!
HEP - Austin,TX 1 day ago
Call it for what it is: Fascism. We will have "uber" wealthy rent takers and the military running our Government in a matter of weeks. This Government will allegedly be run by a man who can be triggered by a tweet. This country is going back to the 1850s when there were no labor unions and you were in debt to the company store for your entire life, from cradle to grave. The GOP will sweep all protections and safety nets out, leaving people who have been short-changed by our system to fend for themselves; crime, prison populations, and for profit prisons will rise in number. We will be in a war before too long as that is how the destruction of our economic well being and civil rights will be accomplished. The costs of doing business will be socialized and the profits will be privatized; too bad if you are not evolved enough on the social darwin scale to be considered a survivor. Welcome to Amerika of the 21st century.
Cathy - Hopewell Junction NY 1 day ago
Trumpistan is a cool coinage. But really, Trump is just going back and reviving Warren Harding, if you can imagine what it would be like to re-incarnate Harding in the image of PT Barnum.
Crony capitalism, corruption, appointing people who have personal stakes in policy outcomes, and having a vice President, capable, if required to assume the Presidency, of accelerating the misery quotient of the Great Depression: sound familiar?
What has changed, is the speed at which the giant excuse-churning apologist media can disguise the failure of policy and the smell of corruption for long enough for it to cause real damage. Too many are just plain willing to drink the Kool-Aid, as long as they can feel sure that no Liberals are taking their hard earned money. That they may not have any hard earned money to take because monopolized business interests destroyed jobs with good wages and increased cost of necessities is a secondary consideration.
How do you stop people from sticking out a foot, aiming, closing their eyes and pulling the trigger, when they have convinced themselves that is the right thing to do, and the subsequent pain is to be blamed on big government?
I've long thought that many of those who vote Republican (the "little-people" Republicans you might say to differentiate them from the real Republicans who understand so well how to use the little ones) are just confused about exactly how lucky - er, "chosen" - they are to count themselves as Republicans - and why. The anti-corruption, also thought of as "liberal," Republicans we used to call the (Nelson) Rockefeller Republicans completely disappeared from view in the paroxysm of financial machinations under the spell of his brother David (not to mention the revelations following the death of Nelson himself).
Also we have to consider the fundamentalists/evangelicals who believe themselves to be "saved" by being narrow-minded Republicans. Always awaiting the angels coming to fly them away to the promised land of milk and honey.
Speaking of angels . . . .
Top-Secret Snowden Document Reveals What the NSA Knew About Previous Russian Hacking
To date, the only public evidence that the Russian government was responsible for hacks of the DNC and key Democratic figures has been circumstantial and far short of conclusive, courtesy of private research firms with a financial stake in such claims. Multiple federal agencies now claim certainty about the Kremlin connection, but they have yet to make public the basis for their beliefs.
Now, a never-before-published top-secret document provided by whistleblower Edward Snowden suggests the NSA has a way of collecting evidence of Russian hacks, because the agency tracked a similar hack before in the case of a prominent Russian journalist, who was also a U.S. citizen.
In 2006, longtime Kremlin critic Anna Politkovskaya was gunned down in her apartment, the victim of an apparent contract killing. Although five individuals, including the gunman, were convicted for the crime, whoever ordered the murder remains unknown. Information about Politkovskaya’s journalism career, murder, and the investigation of that crime was compiled by the NSA in the form of an internal wiki entry. Most of the wiki’s information is biographical, public, and unclassified, save for a brief passage marked top secret:
Russian Federal Intelligence Services (probably FSB) are known to have targeted the webmail account of the murdered Russian journalist Anna Politkovskaya. On 5 December 2005, RFIS initiated an attack against the account "annapolitkovskaia@US Provider1," deploying malicious software which is not available in the public domain. It is not known whether this attack is in any way associated with the death of the journalist.
Although the NSA document does not specify the account, Anna Politkovskaya was known to use the email address annapolitkovskaia@yahoo.com.
In response to a query from "The Intercept" about the hacking of Politkovskaya’s account, Yahoo replied in a statement: “We can only disclose information about a specific user account pursuant to our terms of service, privacy policy and law enforcement guidelines.”
The year after her email was hacked, Politkovskaya was murdered, a crime that was widely suspected, though never proven, to be a Kremlin reprisal for her reporting on Chechnya and criticism of Vladimir Putin.
This hack sounds more or less like a very rough sketch of what private firms like CrowdStrike allege the FSB perpetrated against the DNC this year, and presumably what entities like the Federal Bureau of Investigation, the Central Intelligence Agency, and the Office of the Director of National Intelligence have, behind closed doors, told President Obama took place.
What’s particularly interesting here is the provenance of NSA’s claims: The section is classified TS/SI, meaning Top Secret Signals Intelligence, the interception of signals (broadly construed) as they pass from one point to another, including anything from tapped phone calls to monitored internet traffic. That is to say, the NSA knew Russia hacked Politkovskaya because the NSA was spying. Thanks to the Snowden revelations, we know there are many powerful, overlapping government spy programs that could allow the NSA to observe communications as they unfold.
Unfortunately, in the case of this wiki there’s no indication of exactly what sort of SIGINT was collected with regard to Politkovskaya, or how it incriminated Russian intelligence — all we have is the allusion to the evidence, not the evidence. The NSA declined to comment.
But that this evidence existed at all is important, and more so today than ever. Simply, the public evidence that the Russian government hacked the Democrats isn’t convincing. Too much of what’s been passed off to the public as proof of Kremlin involvement is based on vague clues and educated guesses of what took place. Signals intelligence could bridge the empirical gap.
Adm. Mike Rogers, the current NSA chief, has already publicly claimed that Russia was behind the attack. “This was a conscious effort by a nation state to attempt to achieve a specific effect,” Rogers said in November, without specifically mentioning Russia.
NSA whistleblowers have so far given the best idea of what the NSA’s signals intelligence on Russia, today or in 2005, could look like. Earlier this year, Snowden tweeted that if the Russian government was indeed behind the hacking of the Democrats, the NSA most likely has the goods, noting that XKEYSCORE, a sort of global SIGINT search engine, “makes following exfiltrated data easy. I did this personally against Chinese ops.” Snowden went so far as to say that nailing down this sort of SIGINT hacker attribution “is the only case in which mass surveillance has actually proven effective.”
The ex-U.S. intelligence personnel who comprise the group Veteran Intelligence Professionals for Sanity, including fellow high-profile NSA whistleblower William Binney, echoed Snowden’s assessment earlier this month:
The bottom line is that the NSA would know where and how any “hacked” emails from the DNC, HRC or any other servers were routed through the network. This process can sometimes require a closer look into the routing to sort out intermediate clients, but in the end sender and recipient can be traced across the network.
Signal interception can take many different forms, and again, there’s no way to know exactly what the NSA had intercepted surrounding Anna Politkovskaya. But we know intelligence is being gathered on a fine enough level to pin the breach of a single inbox on the Russian government. If the NSA could use signals intelligence to track a specific hack of an American email account in 2005, it’s not too much to assume that, 10 years later, the agency possesses the same or better capability. And signals intelligence is the type of evidence that the American people are owed from the federal government today, as we contemplate a possible confrontation with Russia for interfering in our most important of democratic processes.
I've thought several times (please pardon me for thinking politically incorrect thoughts, but current economic/political events are forcing some thoughts along the line of national betrayals) that when the sexual equality act was passed (not really, just exaggerating to make a point) that it provided a sort of get-out-of-jail-free pass for all the bad (unethical/immoral/illegal) behavior otherwise. "Not that there's anything wrong with that." (h/t "Seinfeld")
Yay, Tim! Good going!
CEO Tim Cook Decides Apple Doesn’t Have to Pay Corporate Tax Rate Because It’s “Unfair”
The Intercept
Wouldn’t it be great if you could refuse to pay your taxes until you decided your tax rate was “fair”?
That is, of course, not the way it works. Unless you’re Apple.
Apple is currently holding $181 billion overseas, largely thanks to arbitrarily deciding that its most valuable intellectual property seems to live exclusively in low tax countries. For instance, at one time Apple’s subsidiaries in Ireland — a country with 4.6 million people — “earned” over one-third of all Apple’s worldwide revenue.
And due to a very business-friendly quirk in U.S. tax law, Apple doesn’t have to pay any U.S. taxes on its overseas profits until it “brings them back” to America.
Here’s what Apple CEO Tim Cook had to say about it in a long interview published this weekend in the Washington Post:
We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law. It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.
Cook simultaneously wants us to know he is not a bad “traditional CEO” who just cares about money. No, to the contrary, he feels an “incredible responsibility” to “the communities and the countries that the company operates in” and “the whole ecosystem of the company.”
Therefore, because Cook cares so little about money and so much about communities, Apple won’t be paying its taxes. That’s just fair.
And more fairness is just around the corner, Cook thinks. “I’m optimistic that, in 2017, there will be some sort of corporate tax reform,” he said. “The U.S. needs to invest more in infrastructure — so what would be great is if they take the tax proceeds of a corporate tax reform and invest it in infrastructure and roads and bridges and airports.”
Translated into plainer English, this means Cook believes that Corporate America’s long-term plan to hold the U.S. for ransom will in fact come to fruition next year.
U.S. corporations have by now stashed over $2.1 trillion in profits overseas (including Apple’s $181 billion), thereby starving the U.S. of revenue we could use to repair our collapsing infrastructure. What they want is for Americans to get so desperate that Congress is willing to deeply slash the corporate tax rate for “repatriated” money.
This will deliver a one-time jolt of tax revenue, at the cost of sending the message that everyone who possibly can should use tax avoidance schemes like Apple’s in the future.
. . . So get ready for a tsunami of fairness, headed your way next year.
(“It doesn’t go that the more you pay, the more patriotic you are” has a nice ring to it. You should definitely tell that to the IRS.)
A "business-friendly quirk?"
Nice way to ignore that all these friendly laws were passed by Congresspeople responding to quite well-paid lobbyists working for businesses that profited in the billions by them.
And cheated the taxpayers who had to pay extra taxes to make up for these very friendly businesses' lack-of-tax-paying policies.
But don't think badly of Apple.
They have lots of very friendly company.
Apple, Google and Others at Trump Tech Summit Have Stashed $560 Billion in Profits Overseas
U.S.-based multinationals are currently holding $2.4 trillion in profits overseas to avoid paying taxes on them. Remarkably enough, the 11 technology companies represented at Wednesday’s summit with President-elect Donald Trump at Trump Tower in New York account for about one-quarter of that total — a staggering $560 billion — all by themselves.
So while some among the technology industry made muted sounds about refusing to attend a summit with someone who so flagrantly violates tech’s supposed values, they were never going to follow through: Trump is worth far much too much money to them.
U.S.-based multinationals are, in theory, supposed to be taxed at a rate of 35 percent on any profits they earn anywhere on earth. But because tax law also allows multinationals to postpone paying taxes on overseas profits until the money’s brought back to America, corporations have a huge incentive to use financial shenanigans to appear to “earn” as much as possible in other countries — something which is easier for tech companies than most others because their value is largely found in their immaterial intellectual property rather than immovable factories. Companies then refuse to bring the cash back until they get a special sweetheart deal slashing their rates.
Trump has promised to deliver such a huge gift to multinationals by allowing them to bring back overseas profits at a one-time rate of 10 percent. As he put it during the campaign’s final debate, “We’re going to cut business taxes massively.”
This reduction in the tax rate from 35 percent to 10 percent could potentially be worth as much as $140 billion to the corporations meeting with Trump. (In practice it would be somewhat less, since they likely would not bring all the money back to America, and may have already paid foreign taxes that they can deduct from their U.S. tax bill.)
Trump has claimed that such a gigantic tax cut will lead to increased hiring in the U.S., but there’s no reason to believe this. When lobbying for a similar tax holiday in 2004, U.S.-based multinationals corporations also claimed they’d use their bonanza to create jobs in the U.S. In reality they actually cut jobs, as well as spending on research and development. The gusher of money was instead used for stock buybacks and to increase executive salaries.
Compensation for the top officials at the biggest affected companies increased about 60 percent after the tax holiday.
“The last thing we should be doing is rewarding these bad actors with special tax breaks that are unavailable to the rest of us,” said Matt Garner, a senior fellow at the Institute on Taxation and Economic Policy. “The critical question to ask about corporate tax reform going forward is how it can stop companies like Apple and Microsoft from fleecing American taxpayers by shifting their profits into tax havens. And this doesn’t seem like a question that the business leaders attending the tech summit will be interested in helping the next administration to answer.”
Here are all the corporate attendees at the Trump meeting and the amount of profits their companies are holding overseas, based on a recent study by Citizens for Tax Justice. Because of limited financial disclosure by corporations, some of the numbers are estimates._ _ _ _ _ _ _
Tim Cook, Apple CEO
$200.1 billion
Satya Nadella, Microsoft CEO; Brad Smith, Microsoft president and chief legal officer
$108.3 billion
Ginni Rometty, IBM CEO
$68.1 billion
Larry Page, Google founder
$58.3 billion
Chuck Robbins, Cisco CEO
$58.0 billion
Safra Catz, Oracle CEO
$38.0 billion
Brian Krzanich, Intel CEO
$26.9 billion
Jeff Bezos, Amazon founder and CEO
$1.5 billion
Sheryl Sandberg, Facebook COO
N/A
Elon Musk, Tesla CEO
N/A
Alex Karp, Palantir CEO
N/A
Gary Cohn, current COO of Goldman Sachs and soon to be chairman of Trump’s National Economic Council, was also present at the meeting. Goldman Sachs is holding an additional $28.6 billion overseas.
Apple CEO Tim Cook Met With Trump to “Engage” on Gigantic Corporate Tax Cut
The Intercept
Why did executives from 11 of America’s biggest technology companies obediently show up when they were summoned by the president-elect to meet at Trump Tower?
Some might suspect it has something to do with the $560 billion in profits those companies have stashed overseas — and refuse to bring back until the U.S. government gives them an enormous tax break.
Apple CEO Tim Cook has now confirmed that that was indeed part of his motivation to attend the tech summit with Donald Trump.
On Tuesday, "TechCrunch" obtained Cook’s response on Apple’s internal network to a question from an employee about the Trump meeting.
Cook first described how it was critical for Apple to “engage” with governments on what he called “our key areas of focus.” According to Cook, these include “privacy and security, education,” “advocating for human rights for everyone,” “the environment and really combating climate change” and “creating jobs” — i.e., nothing as mundane as money.
But in the third paragraph, Cook acknowledged, “We have other things that are more business-centric — like tax reform.”
Here’s what Cook’s vague description meant: Apple wants a huge tax cut, and Trump has promised to deliver one that would save the company about $40 billion to $50 billion.
The U.S. has a peculiar system of corporate taxation. On the one hand, it taxes U.S.-based multinationals on profits earned anywhere on earth at a statutory rate of 35 percent. On the other hand, corporations can defer paying taxes on overseas profits until they bring the money back to the U.S.
This creates two incentives for multinationals. First, it encourages them to use ludicrous accounting shenanigans, many pioneered by Apple, to pretend as much of its profits as possible were “earned” in foreign countries, like Ireland, with super-low tax rates.
Second, they’ll hold the money hostage overseas until the U.S. government becomes so desperate for revenue that it offers them a sweetheart deal to bring it back.
This already happened in 2004, when the George W. Bush administration offered companies a special one-time offer: If they brought back their profits to hire more U.S. workers or engage in research and development, their tax rate would be cut from the statutory 35 percent to 5 percent.
Companies happily repatriated $312 billion, and then went about firing workers and using the money for stock buybacks and huge hikes in executive pay.
Since then multinationals’ overseas profits have built up to an even greater level: a stunning $2.4 trillion, over four times the size of the current federal budget deficit.
The 11 technology companies whose representatives met with Trump account for about one-fourth of that $2.4 trillion — in other words, they’re holding untaxed overseas profits equal to the federal deficit.
Apple is responsible for over $200 billion of that, more than any other company. Earlier this year Cook announced that “we’re not going to bring it back until there’s a fair rate. There’s no debate about it. … It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.”
The good news for Apple is Trump’s campaign tax plan would deliver them everything they’ve ever dreamed of, allowing them to bring back their overseas profits at a one-time rate of 10 percent. (The permanent statutory 35 percent tax rate for corporations would be slashed to 15 percent.)
As pointed out by a study by Citizens for Tax Justice, Apple has reported that if it were to repatriate its $200 billion in overseas profits, it would owe the U.S. government about $60 billion in taxes. (Multinationals are permitted to deduct taxes already paid to foreign governments from their tax due to the U.S., and so rarely face a full 35 percent assessment when bringing money home.)
If Apple brought back all of its profits at Trump’s 10 percent tax rate, it likely would owe $10-20 billion — meaning Apple would save $40-50 billion.
During the 2016 campaign Cook was bipartisan. He hosted a fundraiser for Hillary Clinton and, as email from her campaign chairman John Podesta shows, when Apple contacted them with concerns that Clinton would use patents as leverage to force Apple to bring profits back to the U.S., the Clinton team jumped to reassure them they’d never do that. Cook also hosted a fundraiser for Republican Speaker of the House Paul Ryan.
So it’s understandable that before the election Cook said he was “optimistic that, in 2017, there will be some sort of corporate tax reform” no matter who was elected.
And on the other hand . . . Professor Paul (another Prof. Paul) Craig Roberts has a more than slightly different take. (Another professor, Paul Samuelson, is also quoted in the essay below!)
Can Trump Fix The Economy In 2017?
Paul Craig Roberts
January 3, 2017
In the West Junk Information And Junk Judgment Prevail
The Western world and that part of the world that partakes of Western explanations live in a fictional world. We see this everywhere we look — in the alleged machinations of Russia to elect Donald Trump president of the US, in claims that Saddam Hussein and his (nonexistent) weapons of mass destruction were a threat to the United States (a mushroom cloud over American cities), that Assad of Syria used chemical weapons against his own people, that Iran has a nuclear weapons program, that a few Saudi Arabians outwitted the entirety of the US, EU, and Israeli intelligence services and delivered the greatest humiliation to the “world’s only superpower” in the history of mankind, that Russia invaded Ukraine and could at any moment invade the Baltics and Poland, that the US rate of unemployment is 4.6%, that China’s trade surplus with the US is due to Chinese currency manipulation, and so on and on.
Allegedly we live in a scientific era of information, but what good can come from faulty orchestrated information? As long as fake news delivered by presstitutes serves powerful private and governmental interests, how can we know the truth about anything?
For example, consider the claim found everywhere in US government and US media statements that the massive US trade deficit with China is the result of Chinese currency manipulation, keeping the yuan underpriced relative to the US dollar.
This false claim, which is widely accepted as truth even by Russian writers on Russian websites (http://www.strategic-culture.org/news/2016/12/12/only-one-step-away-from-global-trade-war.html), is nonsense. China’s currency is pegged to the US dollar. It moves with the dollar. China pegged its currency to the US dollar in order to create confidence in the Chinese currency. Over the past decade China has adjusted the peg of its currency to the dollar and permitted a rise in the value of the Chinese currency from 8.1 yuan to 6.9 yuan to the US dollar. (The yuan reached a strength of 6 to the dollar, but a rising dollar was pulling up the yuan, causing China to widen the float in order to avoid undue appreciation because of the US dollar’s rise to other Asian and European currencies.) How is a rising yuan “currency manipulation”? Don’t expect an answer from the presstitute financial media or the junk economists who comprise the neoliberal economics profession.
The function of the myth of Chinese currency manipulation is to hide from view the fact that the massive US trade deficit with China is due to US corporations offshoring their production for US markets to China. When US corporations bring goods and services produced offshore back to the US for sale, they enter as imports, thus swelling the trade deficit. The myth about currency manipulation shifts the blame from US corporations to China, while in fact it is the return of offshored production, such as Apple computers, for sale to Americans that swells the US trade deficit.
US corporations produce offshore because the much lower labor costs result in higher profits, higher stock prices for shareholders, and in performance bonuses for executives. One of the main causes for the high Dow Jones averages and the worsened income and wealth distribution in the US is the offshoring of jobs. In 2016 the richest people added $237 billion to their wealth, while the rise in student loan, auto loan, and credit card debt combined with stagnant or declining income left ordinary Americans poorer. During the 21st century, household indebtedness has risen from about 70% of GDP to about 80%. Personal income has not risen in keeping with personal debt.
The offshoring of jobs benefits only a small number of shareholders and executives, and it imposes massive external costs on American society. Former prosperous manufacturing states are in long term depression. Median real family incomes have fallen. Real estate values in abandoned manufacturing areas have fallen. The tax base has eroded. State and local government pension systems cannot meet their obligations. The social safety net is unraveling.
To get an idea of the external costs that offshoring imposes on the American population, go online and look at the pictures of decrepit Detroit, formerly an industrial powerhouse. Schools and libraries are abandoned. Public buildings are abandoned. Factories are abandoned. Homes are abandoned. Churches are abandoned. Here is one 4 minute video: https://www.youtube.com/watch?v=pcTYqnL2Bgw
And it is not only Detroit. In my book, The Failure of Laissez Faire Capitalism (Clarity Press, 2013), I report the 2010 US Census data. The population of Detroit, formerly America’s fourth largest city, declined by 25 percent in the first decade of the 21st century. Gary, Indiana, lost 22 percent of its population. Flint, Michigan, lost 18 percent. Cleveland, Ohio lost 17 percent. Pittsburg, Pennsylvania lost 7 percent. South Bend lost 6 percent. Rochester, New York, lost 4 percent. St. Louis, Missouri, lost 20 percent. these cities were once the home of American manufacturing and industrial might.
Instead of telling the truth, the presstitute financial media and the corrupt US economics profession have hidden the massive social and external costs of jobs offshoring under the totally false claim that offshoring is good for the economy. In my book, I take to task corporate shills such as Dartmouth’s Matthew Slaughter and Harvard’s Michael Porter, who produced through incompetence or complicity erroneous reports of the great benefits to Americans of having their jobs given to Chinese and American cities left in ruins.
Throughout its history the US has suffered from public lies, but not until the Clinton, George W. Bush, and Obama regimes did lies become so ubiquitous that truth disappeared.
Consider the November jobs report. We were told that the unemployment rate has fallen to 4.6% and that 178,000 new US jobs were created in November. The recovery is on course, etc. But what are the real facts?
The unemployment rate does not include discouraged workers who have been unable to find employment and have ceased job hunting, which is expensive, exhausting and demoralizing. In other words, unemployed people are being pushed into the discouraged category faster than they can find jobs. That is the explanation for the low official unemployment rate. Moreover, this reported low rate of unemployment is inconsistent with the declining labor force participation rate. When jobs are available, people enter the work force in order to take advantage of the employment opportunities, and the labor force participation rate rises.
The reporting by the financial presstitutes adds to the deception. We are given the number of 178,000 new jobs in November. And that is it. However, the data released by the Bureau of Labor Statistics shows many problematic aspects of the data. For example, only 9,000 of the claimed 178,000 jobs are full time jobs (defined as 35 hours or more per week). October saw a loss of 103,000 full time jobs from September, and September had 5,000 fewer full time jobs than August. No one explains how an economy losing full time jobs is in recovery.
The age distribution of the November new jobs is disturbing. 77,000 of the jobs went to those 55 and over. Only 4,000 jobs went to the household forming ages of 25-34.
The marital status distribution of the jobs is also troubling. In November there were 95,000 fewer employed married men with spouse present and 74,000 fewer employed married women with spouse present than in October. In October there were 331,000 fewer married men and 87,000 fewer married women employed than in September.
One can conclude from these large differences month to month that the official statistics are not good, which might well be the case. For example, as I have stressed in my reports on the monthly payroll employment releases, there is always a large number of new jobs for waitresses and bartenders. Yet restaurant traffic has declined for 9 consecutive months. Why do restaurants hire more employees as traffic declines?
As John Williams (www.shadowstats.com) has informed us, the monthly payroll jobs claims might consist entirely of add-ons from estimates from a flawed birth/death model and manipulations of seasonal adjustments. In other words, the reported new jobs might only be statistical illusions.
John Williams also emphasizes that the claimed real GDP growth numbers might be entirely the products of the under-measurement of inflation. Some years ago the inflation measures were “reformed” in order to cheat those on Social Security out of cost-of-living adjustments. In place of a weighted index that calculated the cost of a constant standard of living, substitution was introduced. In the reformed index, if the price of an item in the index rises, a lower-priced item is substituted in its place, thus negating the inflationary impact of the price rise. Also, price rises are defined away as “quality improvements.” Clearly, this is an index designed to under report rising prices.
The bottom line is that the recovery allegedly underway since June 2009 might be a statistical illusion produced by a flawed measure of inflation.
What can Americans expect from the economy in 2017? First, some perspective. The defeat of stagflation by President Reagans supply-side policy gave the Clinton regime a good economy. The improved US economy was not entirely a good thing, because it masked the adverse consequences of jobs offshoring that began in earnest after the Soviet collapse in 1991.
The Soviet collapse encouraged the change in attitude of the Indian and Chinese governments toward foreign capital. Wall Street and big box retailers such as Walmart forced the relocation of much of US manufacturing to China, to be followed after the rise of the high speed Internet by offshoring professional skill jobs such as software engineering to India. These relocations of US economic activity to foreign locations hollowed out the US economy and reduced the job opportunities for Americans.
The growth of real median family income ceased. Without increases in consumer spending to drive the economy, the Federal Reserve substituted a growth in consumer debt for the missing growth in real median family income. But the growth of consumer debt is limited by the lack of growth in consumer income. Thus, an economy dependent on debt expansion is limited in its ability to expand. Unlike the federal government, the American people cannot print money with which to pay their bills.
Alone among those contending for political office, president-elect Trump has fingered jobs offshoring as a blow to the American people and the US economy. It remains to be seen what he can do about it, as jobs offshoring serves the interests of the global corporations and their shareholders.
For many years now the monthly payroll jobs reports show the US descending into Third World status, with the vast bulk of the claimed new jobs in lowly paid, non-tradeable domestic services. The BLS 10-year job projections show few new jobs that require a university degree. If high value-added, high productivity middle class jobs cannot be brought back to the US, the American economic future is one of continuing decline into Third World status.
Considering the constraints on the consumer, a large share of corporate profits has come from labor cost savings from jobs offshoring. For corporations such as Apple, whose products are almost entirely produced in Chinese factories, there are no more profits to be secured from jobs offshoring. To keep the profits flowing, Apple plans to replace the inexpensive Chinese labor with robots, which do not have to be paid any wage. What better shows the disconnect between capital and labor than to robotize Chinese factories in the face of an excess supply of labor?
Paul Samuelson’s economic textbook taught the fallacy of composition, what is good for the individual might not be good for the group. The Keynesian economists applied this to savings. Saving is good for the individual, but if aggregate saving exceeds investment, aggregate demand falls, pulling down income, employment, and saving.
This is the case with jobs offshoring. It can increase profits for the firm, but in the aggregate it decreases aggregate income of the population and limits sales growth. What jobs offshoring does in this respect will be done in spades by robotics.
When I read economists and financial presstitutes glorifying the cost savings of robotics, I wonder where their mind is or if they have one. Robots don’t purchase housing, home furnishings and appliances, cars, food, clothing, vacations, entertainment. When robots have the jobs, where do humans get the incomes with which to purchase the products produced by robots?
This unexamined question has extraordinary implications for property rights and the social organization of society. Ralph Gomory told me a few years ago that a handful of people hold the robotic patents. Therefore, in a robotized world, the distribution of income and wealth would be concentrated in the hands of a few dozen people. Indeed, would there be any income or wealth of any magnitude? The only way humans could survive would be to again become self-sufficient farmers with no monetary income to purchase products made by robots. As few would be able to purchase products made by robots, there would be no source for income and wealth for the patent holders.
I am convinced that if robotics is going to supplant human labor, the patents will have to be socialized, and income distributed on a relatively equal basis throughout society.
So, can Trump fix the economy in 2017?
There can be no fix unless the ladders of upward mobility that made the US an opportunity society can be put back in place. This will require bringing home the offshored middle class jobs or, assuming that new high value-added jobs could somehow be created, preventing the new jobs from being moved offshore.
There is a way to do this: Base the corporate tax rate on the geographical location where corporations add value to their product. If corporations add value domestically with US labor, the tax rate would be low. If the value is added abroad, the tax rate would be high. The tax rate can be adjusted to offset the benefits of lower costs abroad.
Despite the progaganda about globalism and free trade, the US economy was built on protection, and its strength was the domestic market. US prosperity was never dependent on exports. And as the US dollar is the world reserve currency, the US doesn’t need exports in order to pay for its imports. This is why the US can tolerate the trade deficits caused by jobs offshoring.
Globalism is a concoction by the neoliberal junk economists in complicity with the big banks, Wall Street, and multinational corporations. Globalism is a disguise for the exploitation of the many in behalf of the few. The alleged benefits of globalism were used to justify the offshoring of jobs and to enrich corporate executives and shareholders.
It is the domestic economy that is important, not the global economy. The suffering population in flyover America finally learned this lesson and elected Trump.
Can Trump script “The Escape From Globalism?” He could lose the fight. Globalism has been institutionalized. The large corporations that have offshored their production for US markets would oppose moves against jobs offshoring. So would all their shills in the economics profession and financial media. I don’t know the extent to which globalism has taken root in people’s minds in Asia, Africa, and South America, but in Europe - even some in Putin’s Russia — people are brainwashed in the belief that they can’t exit globalism without paying a large economic price.
Consider, for example, the Greeks. For the sake of the balance sheets of a handful of northern European (and perhaps US) banks, the Greek and Portuguese peoples have been forced into extreme austerity, resulting in such high unemployment and plummeting living standards that women have been forced into prostitution in order to survive. This totally unnecessary outcome has occurred because the Greek and Portuguese peoples and governments are so brainwashed that they believe they cannot survive as independent countries without globalism and the entry to globalism provided by EU membership. In the UK 45% of the population suffers from the same misconception.
Globalism is the latest technique by which capitalism loots and destroys. In the Western world it is the working and middle classes that are looted of their jobs and careers. In Asia, Africa, and Latin America self-sufficient farming communities are looted of their land and forced into monoculture as laborers who produce an export crop. Countries formerly self-sufficient in food become dependent on food imports, and their currency, which carries that burden, is subject to endless speculation and manipulation.
Was it universal ignorance or bribes that compelled governments everywhere to ransome their populations to globalism?
Frontline journalists, such as Chris Hedges, who have seen and reported a lot, have concluded that the fate of the world is in such few hands that act only in their narrow self-interests that only revolution can correct the imbalance between the interest of a handful of oligarchs and the mass of humanity. Hedges’ position is not an easy one with which to argue.
Trump descending into the snakepit that is Washington, D.C., needs to remember what happened to President Jimmy Carter. In fact, the best thing Trump can do for his presidency is to go spend some time with Carter prior to taking office.
Carter was an outsider, a principled person, and the Washington establishment did not want him. They reduced his effectiveness by framing up his budget director and chief of staff. The same thing can happen to Trump, assuming he is able to get his appointees confirmed by the Senate, members of which are allied with the CIA against Trump.
Reaganites had a similar experience in the Reagan adminisration. Reagan had political experience as governor of California, the largest state, but he was an outsider to the Republican establishment, whose candidate for the presidential nomination was George H.W. Bush.
Reagan defeated Bush for the nomination, but was advised by Republicans, who remembered the Goldwater wipeout when the Rockefeller forces turned on Goldwater for not choosing the defeated Rockefeller as his VP running mate, costing Goldwater the election, to select Bush as VP. Otherwise, Reagan would find himself, like Goldwater, running against both the Democratic and Republican establishments.
Reagan’s first term took place with George H.W. Bush’s main operative as chief of staff of the White House. This confronted me with problems as Assistant Secretary of the Treasury for Economic Policy where I was the point man for Reagan’s supply-side economic policy.
Both political party establishments are more interested in controlling the party than in doing well for the country. During President Carter’s four years, the main concern of the Democratic establishment was in regaining control of the party from the forces that had sent an outsider to the White House. During Reagan’s eight years, the main concern of the Republican establishment was in regaining control of the Republican party from Reaganites.
It is likely that Trump will now experience in spades what presidents Carter and Reagan experienced. The effort will be made to force him into compromises and to neuter his agenda. Ironically, this determined attack on Trump is being aided by the leftwing, progressive forces that stand to gain by Trump’s standing up for the working and middle classes and for peace with Russia. Many of the liberal, progressive, leftwing websites are already soliciting donations in order to fight against Trump.
So, even when we get a president who might try to represent the interests of the American people, those who claim to speak in behalf of the people join in the oligarchs’ attack on Trump. The left side of the spectrum seems always, like the extreme rightwing side, to defer to their hatreds: Trump is a billionaire = hatred. Trump appointed an energy magnate = hatred. Trump appointed two 3-star generals = warmonger and more hatred.
The liberal, progressive, leftwing cannot get beyond their bogeymen. Of course, they might be correct. However, as I have emphasized, Trump has chosen mavericks who have gone against the establishment. Moreover, these are strong men, like Trump, which is what it takes to bring change from above. The Exxon CEO wants energy deals, not war, with Russia. Gen. Flynn is the one who exposed on TV Obama’s use of ISIS to overthrow Syria against the recommendation of the Defense Intelligence Agency. Gen. Mattis is the one who challenged the effectiveness of torture.
Trump’s main appointments are people who have challenged the Establishment. The usual assortment of establishment-approved appointees cannot bring change to Washington.
The liberal, progressive, left-wing should be happy at the prospect of a government on the outs with the Establishment. Instead, the liberal, progressive, left has aligned with the Establishment in opposition to Trump.
Every day I receive a half dozen requests for donations to “help us fight Donald Trump.” What are these people thinking? Why do they want to fight someone that the entire US political establishment opposes? What they should first try is to gain Trump’s confidence and win him to their agenda, as General Mattis did.
I cannot assure you that Trump is not another fake like Obama. But it is a mistake to begin with this assumption. Why write off in advance the only person with the courage to put his life on the line and take on the corrupt and evil Washington establishment?
Why help the Establshment defeat Trump? If Trump sells out Americans, we can turn on him then, or we can decide whether Chris Hedges is correct that only revolution can rectify the situation.
Keiser Report: Outlook for 2017
January 1, 2017 by Stacy Herbert
We discuss the outlook for 2017: from Trump’s first 100 hours, not days to fake news and a market crash following the biggest rally since Hoover. In the second half Max is joined by Gerald Celente of trendsresearch.com to discuss the big trends of 2017: Rustbelt 2.0, economic disorder and ‘Sell, Buy China’.
Ha! Max and Stacy mix it up at year's end concerning the financialization guys . . . and beginning the new year with news from the Trumpists. And Gerald Celente is worth the entire price of admission.
Stay tuned.
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