Veil Of Politics
As Washington worries about the United States’ growing deficit problem, there’s mounting evidence the government is failing to collect taxes from wealthy individuals and corporations. A piece in today’s New York Times by David Kocieniewskioutlines how G.E. skirted paying any taxes on $5.1 billion in profits in 2010–in addition to claiming a $3.2 billion tax credit.
The main reason G.E. is so adept at avoiding paying taxes, Kocieniewski writes, is because it’s compiled an all-star team of in-house tax professionals plucked from the Internal Revenue Service, the Treasury Department, and “virtually all the tax-writing committees in Congress.”
G.E.– whose slogan is “Imagination at Work”– has in-house, Kocieniewski writes, what is considered by many to be the best tax law firm in the world. Their secret to success is a familiar one, though G.E. appears to have perfected it:
“fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”
In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.
Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.
In an interesting twist, President Obama recently asked G.E. CEO Jeffrey Immelt to be his chief outside economic adviser, and the company recently came under fire for being the manufacturer of the faulty reactors that sparked Japan‘s nuclear crisis in the wake of the devastating earthquake and tsunami.
Tell me again what a triple-A rating is good for? Not a whole lot, if one of the iconic triple-As in American industry, General Electric, has to go hat in hand to the federal government for a $182.5 billion bailout.
Or maybe G.E. isn’t the bulletproof financial juggernaut the rating agencies say. The company’s vaunted GE Capital unit has supposedly been a money machine for years, having generated solid returns come rain or shine. By now, the unit generates upwards of 40% of G.E. overall profits.
Except there’s one problem: G.E.’s financial services business may be the blackest box on Wall Street. The unit has little transparency, no regulatory oversight, and now, we are finding out, an unstable funding model.
In particular, G.E. has chosen to fund its finance business with short-term commercial paper rather than secure more stable long-term funding based on its triple-A rating–which, it appears, turns out to be fiction.
Odd, isn’t it, that even though it operates in the same economic environment as regulated financial behemoths, G.E. never seems to get hit by outsized credit losses or asset writedowns? Is that because a) the people at G.E. are just smarter than everybody else, or b) the company has wide latitude to paper over problems since it doesn’t have a regulator looking over its shoulder?
I vote for b. We know, for instance, that GE is not above skimping on non-cash discretionary items in order to plump up its near-term results. And not in a small way, either: one reason Jack Welch could show such sparkling earnings gains toward the end of his tenure as CEO is that in the late 1990s and early 2000s, G.E. systematically underreserved for losses at its reinsurance unit. When the company sold the business in 2005, it had to pump in an extra $10 billion to make up the shortfall.
Opaque assets and unstable funding. That’s some combination. In any event, yet another pillar of the “shadow banking system” founders.
We’ve been hearing over and over again about the astonishing $182.5 billion in bailout funds that the federal government has been pouring into AIG, but you might be surprised to learn that a close runner up to AIG in the bailout sweepstakes is General Electric, which got its own $139 billion bailout in November. So with Congress and the media in a frenzy over AIG bonuses, where’s the GE outrage?
In a wild rant on MSNBC—owned by General Electric–Keith Olbermann denounced Citigroup CEO Vikram Pandit’s salary, AIG, Northern Trust, and other bailouts recipients, which he called “vast engorged gluttonous multinational corporations whose sneezes can be fatal to our jobs, whose mistakes can turn us into the homeless, whose accounting errors can be so panoramic that they can make our economy tremble and force us to hand them billions after billions in a blackmail scheme that has come to be known as ‘bailout.’”
That’s great stuff, but somehow, in his righteous indignation, he forgot to mention his own employer’s massive bailout or his own hefty salary on the list of horribles that followed. That’s a heck of an oversight, because even though GE CEO Jeff Immelt decided to forego his 2008 bonus (which the board granted to him even though he missed every one of his performance measures) other GE executives are receiving their bonuses– in some cases millions of dollars.
Chief Financial Officer Keith Sherin and Vice Chairman Michael Neal were given 2008 bonuses of $5.2 million and $5.8 million, and chose to return only half. The average GE executive bonus only dropped 19 percent from 2007, even thought GE stock lost 53 percent of its value.
Kucinich: International Banking Cartel Lose Derivative Foreclosure Ruling By Massachusetts Supreme Court ~ If Congress is serious about lowering the debt ceiling, there is no better place to start than with the Glass Steagall Act.
Then there’s Olbermann himself. In November, with GE already in the depths of crisis and just two days before its $139 billion bailout deal was announced, Olbermann signed a lucrative new contractjust two years into his then four-year deal, with a hefty raise from $4 million a year up to $7.5 million a year. It’s unknown whether he also got a bonus, but either way that’s a heck of a raise to be paid using freshly given taxpayer bailout dollars.
MSNBC’s other leading light, Chris Matthews, who’s been bashing AIG bonuses nightly, just signed a new contract this week that reportedly pays him over $5 million per year. This is the same Chris Matthews who said his job at MSNBC is to do everything he can to “help” President Obama succeed.
It actually gets worse. My friend Tim Carney has brilliantly described how General Electric (with its MSNBC unit cheering every step of the way, I’ll add) has been one of the prime movers behind the push for the cap-and-trade energy tax, one of the major pieces of President Obama’s budget and economic agenda. In 2008, while GE stock was losing more than half its value, the company spent upwards of $18 million on federal lobbying — the majority of it pushing for cap-and-trade. GE is positioned to make a fortune on a cap-and-trade scheme, rebooting its failed financial derivatives business for every aspect of carbon trading that the Wall Street wizards can dream up.
None of this is to say that Congress should step in and block GE bonuses or tax them away as they’re considering doing to AIG. The rule of law matters, and contracts should be honored (even though Olbermann himself said contracts should be torn up — and overpaid employees of bailout companies should be fired — an idea MSNBC should consider taking him up on). The real problem is the bailouts themselves, which create impossible choices. We’ forced to decide between tax dollars being spent on unpopular things and Congress micromanaging businesses after bailing them out — in essence substituting political decisions for market decisions and greatly damaging our economy and capitalist system.
Is MSNBC taking a hard left-stance to keep the federal bailout dollars flowing from an appreciative Obama administration? It’s impossible to say, but that there could even be the appearance of such a thing is un-American. I’ll be consistent–if GE can’t survive without taxpayer bailouts, it belongs the same place AIG does: bankruptcy court.
Mr. Kerpen is director of policy for Americans for Prosperity.
From the evidence below, one can easily understand why MSM (Main Stream Media) Distorts History, Panders Obama’s Agenda, Censors Real Time News, and Distorts Real Time News.
In toto, Less Morality increases commercial exploitation, thus Distortion By The History Channels. Biased reporting is congruous and supportive of The History Channels and the American citizen becomes mesmerized ( synchronizing the brain alpha wave) with this data as being authoritative. One must be educated, to prevent media indoctrination driven by the ulterior motives of greed. Thus, one can recognize the advantages taken by MSM/G.E./ Democratic Party/ Obama/George Soros/India Trading Co. in collusion, to make the future generations subsidize the Democrats bilking of Fannie Mae/Freddie Mac via the dilution of the USD being printed by Obambi.
George Soros is now 78 and also a billionaire, I still have some doubts about his desire to be richer although greed is a powerful vice. I’m also thinking that it is due to hate, being a child who suffered from Nazi fascism, he may have grown up despising government manipulation of people. The most powerful nation on Earth, The United States, destabilized many a government via the CIA. Maybe this is Soros’s way of providing CIA Blowback, via collusion with the Democratic Party, of which both are very much in general anti-Christian and anti-conservative. Either way, the effects are the same.
This contrived weakening of the social/economic fabrics of The Constitution, is by their design, to usher in socialism/communism thus bilking further the treasures of America by appropriations. This is how ole George Soros continues to make Billions by buying SEIZED INDUSTRIES, which Bernanke and Geithner are trying to get passed in Congress as we speak. Its called the Pump/Dump scheme in the stock market and here it is called TREASON!
Pump = Democrats took President Bush’s surplus tenure from 2001-2005 and converted it into a Pump cycle. This began when Gore lost to Bush, Democrats felt they were going to win and when they could not muscle a victory by attempting to usurp the election results in Florida, Democrats began to bilk. They began a steeped up frenzy of abusing President Clinton’s bill to make it easier for low income citizen’s to obtain mortgages, by practicing predatory lending schemes to create a financial black hole. Everything looked rosy and everyone and I mean everyone was getting home mortgages. One incident worth mentioning was a McDonald Hamburger employee who obtained a $500,000.00 home mortgage of which there was no way that person could afford the monthly payments. To the predatory lenders it mattered not..they knew that Uncle Sam would probably bail them out sooner or later anyways. (The Housing Bubble/PUMP)
In 2003 President Bush recognized these surreptitious acts and wrote a Bill to create an Oversight Agency to REGULATE Fannie Mae and Freddie Mac, the Democrats blocked this bill from being voted on. This predatory scheme continued and once again the Republicans wrote S.190 which would have effectively REGULATED Fannie Mae and Freddie Mac in 2005, the Democrats again blocked this Bill from being vote on. Please click the link for S.190 and read all the questions and answers. After 2006, when the Democrats took control of both houses due to the Media Blitz Krieg Propaganda and clueless Americans, President Bush’s surplus was now a fomenting pile of Democratic Treasonous Debt. From 2006 to 2008 Gas hit $4.75/gallon, The Pump was beginning to falter and the propaganda blame game began in earnest. How dare those Oil Companies make so much money off the poor American people (who just got bilked by the Democrats to the tune of a $Trillion). I think the Democrats took the Florida loss rather hard.
The Media Blitz Krieg To Bastardize Their Opponent
Contemporaneously with the above, even though nearly all Democrats voted to unseat Saddam Hussein at the close of President Clinton’s term, they did an about face and then publicly attacked President Bush w/o mercy on Iraq. Just prior to that however, Congress’s INDEPENDENT REPORT on Iraq, contained the SAME foreboding data as The President’s Report and President Bush went ahead WITH Congress’s Approval, to ENFORCE THE FIRST GULF WAR TREATY!!!!! It was NEVER an act of war as the Democrats/MSM had Media Blitz Kriegd it, nor was it an invasion, as the United States Jets (protecting the no fly zone) were already occupying Iraq. MSM of course called it an Invading War Power.
During the 2008 campaign season, MSM completely ignored Michael Huckabee, Ron Paul and focused upon (politically hamstrung) John McCain who was previously asked to be John Kerry’s Vice Presidential running mate by crossing over party lines in 2004. Both Michael Huckabee and Ron Paul are both Republicans (whom in my opinion could have carried the day) and MSM knew this and denigrated their positions. Hillary clearly won the Democratic nomination, save by treason, the usurper was floated in and thus we are now where we’re at. Thus begins the cover up! Who will inherit this massive Black Hole Of Debt created by the Democrats?
Usher in the Usurper, Barry Soetoro. Barry says, he inherited President Bush’s debt, from the Party who does not like to REGULATE. Well now we see, that the Democrats were the one’s who did not want to REGULATE and were the ones who bilked Fannie Mae and Freddie Mac. Barry Soetoro inherited his own debt, but the liberal believes HE’S THE ONE!
General Electric is a true behemoth: the conglomerate is the world’s third largest company with market capitalization of nearly $370 billion and annual revenue of $173 billion (2007). The company produces practically everything – from aircraft engine to locomotives to medical devices.
GE’s media holding includes television networks NBC and Telemundo, 27 television stations in the United States and many cable TV networks, including the History Channel, A&E, and Sci Fi Channel. It also owns the popular web-based TV website Hulu.
G.E.’s TV Stations In Particular:
The “MS” in MSNBC means microsoft
Immelt has basically bankrupt G.E. and was the last to leave Iran by American pressure.
From Chron.com Houston, Texas:
Not only has General Electric lost stockholders money for years, aids and abets our enemies by dealing under the table with known terrorist countries, Syria and Iran, but also owns Obama-supported MSNBC and NBC with their own liberal propaganda machine. The force behind GE, NBC, and PMSNBC is none other than BDS sufferer and anti-American Jeffrey Immelt.
Obama is showing the full breadth of his economic ignorance by appointing Jeffrey Immelt to his Recovery Advisory Board. Is Obama out of his frikkin’ mind?
What about a corporate CEO having to sell it’s company stock and take bail-out money makes anyone, even stupid liberals, think that they have enough intelligence to help the rest of the country become solvent?
Obama has already tapped Paul Volcker, a former Federal Reserve chairman and a top Obama adviser, as the leader of the Economic Recovery Advisory Board. Members will include former Securities and Exchange Commission Chairman William Donaldson, TIAA-CREF President-CEO Roger Ferguson and Harvard University professor Martin Feldstein, who wrote a Wall Street Journal op-ed piece last year titled “John McCain Has a Tax Plan To Create Jobs.”Obama friend and campaign finance chairwoman Penny Pritzker also is on the board, as is Caterpillar Inc. Chairman-CEO Jim Owens and General Electric Co. CEO Jeffrey R. Immelt. Two labor officials — Anna Burger of Service Employees International Union and Richard Trumka of the AFL-CIO — also were named to the 15-member board designed to offer Obama advice as he seeks a way to weather the crisis and rebuild the economy.
I am stunned to see how low Obama can go. If Obama thinks that this is wise counsel, he is obviously floundering in his own egotistical delusions of grandeur. This does not bode well and should further reinforce Republican AND Democrat Senators not to pass this SHAMULUS bill.
The hurting middle class of this country do not deserve this idiocy. God help us all.
Don’t Forget G.E. Was Awarded The Contract To Produce The F-35 Engine Which They Shut Down.G.E. Is Obama Socialist Thug Partner, Who Also Controls Main Stream Media MSNBC Etc.
Common Sense Dictates To Maintain the current 95,000 Jobs Producing The F-22 During Stimulus Money Printing And NotTo Shut Production Of The F-22 Down.
This Ultimately Make U.S. Inferior To Russia/China.We produced 183 F-22s And Needed A Minimum Of 300, As Russia Is Producing 300 T50s.
The F-22 Stealth Fighter Engine was made by Pratt And Whitney! At First, U.S. Was To Produce 700 F-22s For Israel Who Was Willing To Buy Them And Thus Keep Our People Employed.
But With Socialist Jeffrey Immelt (CEO Of G.E.) On Obama’s ‘Recovery Panel, Well Its Easy To See Where the money got funneled to and displaced 95,000 jobs as G.E. shut down the F-35 Engine ~ Its A Flying Turd.
National Security Failure: F-35 Stealth Fighter Spy Cover-Up