Obama helping lobbyists weaken offshore tax crackdown Dems passed in 2002 over GOP opposition

by: David Sirota

Wed Nov 11, 2009 at 09:15

One of the few - and I sincerely stress the word "few" - concrete legislative successes progressives notched in the Republican Congress under President George W. Bush came on the evening of July 26th, 2002, when they humiliated the House into passing a bill sponsored by Rep. Rosa DeLauro (D-CT) banning federal contracts from going to companies that engage in tax "inversions." These are the schemes whereby a corporation that is based in the United States buy a P.O. box in Bermuda and use it to legally avoid paying American taxes.

The bill, reported Congressional Quarterly at the time, "was expected to fail [but] when the 15-minute voting clock ran out, DeLauro's amendment was five votes ahead." Ultimately, industry-owned Republican legislators who had tried to vote down the measure realized they weren't going to be able to stop it, and "after a nod from Republican leadership, more than 100 Republicans recast their votes to give DeLauro an avalanche victory." Having witnessed this firsthand on the floor of the House, I can tell you it was indeed a sight to see.

And yet in the now-Democratic Congress seven years later, with deficits exploding and the government clearly needing to strengthen any and all incentives for corporations to pay their taxes, I was more than disheartened to read this story in the Hill newspaper this week:

Multinational corporations are fighting to preserve language in a spending bill that would weaken a ban on federal contracts.

The provision, inserted in the Senate version of the bill at the request of the Obama administration, would weaken a ban on federal contracts for inverted companies...

Before the ban began in 2002, four of the 100 largest federal contractors were inverted, according to a Government Accountability Office (GAO) report.

In 2001, those four companies received $2.7 billion in federal contracts, but they have unable to win the contracts since the ban was put into place.

The Obama administration is justifying its push on the grounds that the ban may - at some point in the undetermined future - conflict with our trade agreements. It's a charge North Dakota Sen. Byron Dorgan (D) rightly calls "absurd."

What this is all about is corporate lobbying against provisions that both use taxpayer money to reward domestic companies that pay their fair share of taxes and disincentivize companies from trying to rip off the public through offshore "inversions." And it's one of the first examples we've seen of the Obama administration and the Democratic Congress potentially doing something even worse than the Bush administration and the Republican Congress.

Here we have a commonsense progressive tax measure that Democrats managed to pass and then expand under Bush and the GOP, and here we are less than a year into an era of full Democratic control of Washington watching Democrats aiming to weaken that tax measure. When you look at this move and remember that candidate Barack Obama himself promised to strengthen - not weaken - laws cracking down on offshore tax rip-off schemes, you wonder why we even waged that tough progressive fight back in 2002.

You wonder, in short, whether you are getting sold down the river.

David Sirota :: Obama helping lobbyists weaken offshore tax crackdown Dems passed in 2002 over GOP opposition

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You wonder? (4.00 / 4)
I'm pretty sure.

Obama: A Republican in Democratic Clothing? (4.00 / 5)
With every passing day, more evidence is being brought forward showing that Obama is a Republican in Democratic clothing.

He is far more dangerous than George W. Bush because he is so skilled in using Democratic rhetoric to camouflage the real intent of the policies that he is implementing and bamboozle the American people. By obfuscating where he really stands, he has created far more conflict and gridlock than there would have been had he been absent from the process.

We now have him escalating the war in Afghanistan to the point that it is simply another Iraq in terms of blood being spent and taxpayers money being used to incite rather than attenuate terrorism. And yet he had the temerity to rush us into another war without even going to Congress to ask for authorization.  Another perpetual warmonger.

His support for a health care bill that forces all Americans to buy insurance from private insurers and weakens the public option into a fig leaf is a travesty. And he set the stage for the Stupak amendment in his speech for Congress where he went out of his way to declare that no federal funds would be used for abortion.

That he agreed with pharmaceuticals last summer that there would be no negotiation of drug prices and no importation of drugs from abroad showed Obama's true colors: he will support the private sector interests that financed his campaign at the expense of ordinary Americans no matter what.

That his administration has authorized $24 trillion to be put on the line to bail out insolvent banks that should have been forced into bankruptcy says it all. This act alone has not only widened the wealth gap between the rich and everybody else but crippled the federal government's capacity to fund the recovery of the real economy.

Obama has done more damage to future well-being of the American people, their livelihoods, health and welfare in 11 months than George W. Bush and Cheney were able to do in 8 years.

Worse still, this Republican in Democratic clothing controls the Democratic Party lock stock and barrel through his control of its fund-raising potential from the same corproate fat cats that put him in office.

When Republican George W. Bush occupied the White House, we progressives could at least dream of using the Democratic Party to wrest control of government from the corporatocracy.

Now, there appears to be no where to go without encountering Obama and his minions barring the door.

Nancy Bordier is the author of Re-Inventing Democracy: How U.S. Voters Can Get Control of Government and Restore Popular Sovereignty in America. The book can be read free online by clicking here.

The difference between Democrats and Republicans (4.00 / 3)
is the Republicans stab you in the front.

[ Parent ]
What's ironic about that comment (0.00 / 0)
is that it's the exact mirror of one reason an avowed ex-Republican financial blogger said about why he left his party... he felt that at he at least knew how the Dems were going to try and screw him so at least he could see it coming... LOL...

Lots of folks are pissed off at the corruption and twisted ideology within the upper ranks of their respective parties. Consequently tribal loyalties are breaking down in both parties as the people are seeing how few politicians actually care about their needs and concerns. This is creating more independent voters as well as more fringe political groups.

Will 2012 bring in more 3rd party candidates? Will there be any movements to change all the petty laws in various states that inhibit 3rd parties?  Or will it take until 2016 for the anger at the establishment to get large enough to overwhelm the Imperial Media propaganda?

"Everyone believes in the atrocities of the enemy and disbelieves in those of his own side, without ever bothering to examine the evidence." --George Orwell

[ Parent ]
We are in Clinton Redux. But that became clear when Obama (4.00 / 3)
started naming his cabinet and advisors.

[ Parent ]
It became clear when corporations started shifting their campaign contributions to Democrats (4.00 / 7)
I remember being puzzled by the fact that corporate fat cats were shown to be shifting their support to Democrats at the outset of the 2008 election cycle.

It was not clear at that time who the Democratic or Republican candidates were going to be, or at least not to me.

Naively, I initially thought that they too were fed up with the Bush administration's mis-governance and ruinous wars and budget and trade deficits.

But in fact what was happening is that the fat cats were buying the votes of the Democrats in exchange for campaign contributions.

Obama's victory was set in motion during his meetings with fat cat contributors around the country when he apparently reassured them that he would favor their interests at all costs.

So the real significance of the 2008 election was that it proved that the corporate giants could actually buy the Democratic Party as well as the Republican party.

I was stunned to read Chris Bowers' earlier post today that four Democratic senators (Bayh, Conrad, Feinstein and Warner) plus turncoat Lieberman are trying to blackmail Pelosi into agreeing to slash and privatize Social Security and Medicare. After all we went through during the Bush administration, five Senate plutocrats are going to force through draconian funding cuts privatization through without even a debate or a vote.

What I fear is that what we are seeing in this Congress and well as the White House is the result of a private sector takeover of government through the legalized bribery of elected representatives that our campaign finance laws allow. This takeover, judging by Bowers' revelation, is looking more and more to be of the magnitude of a coup d'etat.

What concerns me is that even in a left-leaning blog like Open Left so few of us are willing to looking this reality straight in the face and call it like it is. What I keep hearing are gloved pleas to Obama to straighten up and fly right according to progressive tenets when the evidence is flying right into our face that he IS the face of the right wing corporate takeover of government.  

[ Parent ]
Very odd (4.00 / 1)
What we're talking about is §740(d) on page 155  of the Apps Committee mark of the Financial Services apps bill (get it here).

Bizarrely, the markup took place on July 9! And, I infer from the piece in  The Hill, floor action on the bill is not imminent.

So  why is The Hill talking about it now?

How did the provision get in the bill? Again, I infer from the Hill piece that it was not there before the full committee markup - if both the chairman and ranking member of the subcommittee were opposed.

Does Obama have any angle other than a payday from the inverted corporations and their friends? Surely he can tap deeper pockets with a more plausible cover story?

The provision says

The prohibition...shall not apply to the extent that it is inconsistent with United States obligations under an international agreement.

Who decides what is or is not inconsistent?

My thought: USG decides for itself. The inverts which get the contracts won't complain.

And - non-expert opinion - I don't think anyone else has the standing to take the issue to the courts. (Not Sixpack, certainly; would a rejected tenderer for the contract have standing?

Would cloture pass on an amendment to strike the provision? Sounds pretty unlikely. Can Obama be made to defend himself by resistance from a bunch of senators, though?

Interesting times...

Interesting times, indeed! (4.00 / 1)
First, I want to say kudos to Sirota for this nice catch, and of course The Hill for picking up the story.

I want to reply to skeptic06 post though because I like the way you seize upon the specifics:

Can Obama be made to defend himself by resistance from a bunch of senators, though?

Yes, lets hope they do! Maybe we should ask them.

It seems to me they could craft language to ban specifically U.S. companies that use a tax inversion status. This would avoid any conflict with foreign trade treaties. Surely there must be some way to tell the difference between a U.S. company with a storefront in Panama, or wherever, and a legitimate foreign business.

We might already be being screwed out of tax revenue, compliments of Obama. At the bottom of The Hill story:

The dispute between lawmakers and the administration over the language mirrors a clash earlier this year over "Buy American" provisions in the $787 billion stimulus. Lawmakers had sought to steer money toward domestic firms by including "Buy American" clauses in the stimulus, but the White House insisted on watering the provisions down to allay the concerns of trade partners, partly because of its commitments in the WTO and other trade deals.

I don't think there's much intrigue into the timing of The Hill story, or how the language got in the bill in the first place.

According to the paper, the issue only just surfaced:

Sen. Byron Dorgan (D-N.D.) said last week in a floor speech that the proposed limit to the ban would allow an inverted company in Panama to get federal contracts it can't acquire now. Dorgan was specifically referring to McDermott, his office said.

Though [Sen. Dick the bankers own the Senate] Durbin helped draft the bill with the proposed change to the ban included in it, he took a closer look at the language after hearing from the ban's supporters and the administration, the aide said. The aide noted that Durbin has long backed efforts to force offshore companies to pay their taxes.

And European concerns, as well, only just talked about it. From the story:

The European Union in a report on trade-restrictive measures released on Monday listed the language in the Financial Services spending bill, and said it would be monitoring the situation.

Under the government procurement agreement in the World Trade Organization (WTO), the U.S. is supposed to give foreign companies the ability to bid for federal contracts. Those that have signed the agreement agree not to discriminate against foreign companies bidding for contracts.

[ Parent ]
Wonder? Not really that became pretty clear pretty early (0.00 / 0)
This is just the latest in a growing list.

This is why I love Open Left! (0.00 / 0)
I haven't seen this in any other liberal outlet, only in the usual center 'news' outlets...I see a trend I don't like and it may cause weakened policy or lack of it altogether if we don't see a spade being called a spade in this administration. Great work, and I'm passing on the word AGAIN since other liberal outlets can't seem to sigh

When a Dim-ocrat admires Reagan (4.00 / 1)
that's a sure sign that something is rotten in Mudville.


After his signature legislation on healthcare, chances are he won't be the 2012 nominee.

Yes he will (4.00 / 1)
And nobody will dare run against him. See how hard it's been for Greenwald's Accountability Now to find Democratic primary challengers. Also, the caucus-griefing infrastructure they have isn't going away -- there are still enough true believers to make sure by hook or by crook that the caucuses come out the "right" way.

Finally, he's likely to win in 2012, but mostly because the GOP is still passed out on the couch from their orgy of blood and corruption and won't have anything competitive to offer.

[ Parent ]
Why not? (0.00 / 0)
Corporatism is a necessary (and apparently sufficient) qualification for nomination for a Presidential candidacy.  If you're not sold out you'll get covered like Nader or McKinney -- negatively or not at all.

[ Parent ]
Please, please, please can we have a 2012 Primary opponent? (4.00 / 3)
In a country of millions, will liberals truly be unable to find a single person willing to run to the left of Obama?  I'm not even talking about running as an independent in the general and playing spoiler.  Just someone willing to stand up for basic liberal principles in a primary.

Wouldn't do a damn thing (0.00 / 0)
The Obama White House would move in a better direction if members of Congress were putting pressure on it.  A primary would not have any power unless there was already a movement among the rest of the party to challenge the White House.

There is a way to impact Obama from the left, but a primary isn't the way to do it.  

Politics is the art of the possible, but that means you have to think about changing what is possible, not that you have to accept it in perpetuity.

[ Parent ]
So what's the way to impact Obama from the left? Inquiring minds want to know. (0.00 / 0)

[ Parent ]
Why are you still wondering? (0.00 / 0)
Why isn't it a foregone conclusion that we've been sold down the river again by what Ms. Nancy Bordier rightly calls a Republican in Democrat's clothing?

Single-Payer is the ONLY viable public option.


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