The Weekly Wonk

July 12, 2014

Corporate Inversion

Corporate Inversion: This is when U.S. companies reincorporate overseas or merge with an overseas corporation in order to avoid paying U.S. taxes. (Source Watch) According to the Washington Post, there are many corporate advantages to doing this, "including the likelihood of more fluid overseas acquisitions and lower borrowing rates due to increased cash piles. But when a company reincorporates, what it's really doing is shifting its corporate citizenship; and when a company shifts its corporate citizenship, what it's really doing is trying to pay less in taxes." Also, all that money that corporations have been hoarding (TWW, Corporate Hoarding, 1/25/14), much of which is stashed in overseas institutions, provides the perfect opportunity. But this also poses problems as all that stashed cash cannot be paid to U.S. shareholders. The Democrats of the House Ways and Means Committee released a list of corporate inversions since 1983 based on data from the Congressional Research Service (CRS). This is a good list of all the corporate tax evaders and it includes the likes of Fruit of the Loom, Ingersoll-Rand, Herbalife, and Sara Lee as well as some inversions that are in the works, like Walgreen's, Chiquita, Questcor Pharmaceuticals, and Merck consumer care. The Washington Post put the data into this interesting chart. Jim Hightower, writing at AlterNet, has a great piece on this. He writes: "How would you react if one of your neighbors announced that while he obviously benefits from having clean water, highways, Medicare, police protection, parks, schools, and other public services, he was no longer going to pay his part of the taxes that make them available? And what if this neighbor also said he was renouncing his American citizenship to become a citizen of Switzerland, because he could pay less taxes there? Not that he was actually moving to that cold country, mind you - no, no, he'd still be living right here in the good ol' USA, still benefitting from all those public services that taxpayers like you and I provide."

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Constitutional Issues

NSA Manipulation: I'm sure you've heard about Facebook's experiment into how to control emotions by manipulating news feeds. (Guardian) But now we find that research funded "directly or indirectly" by the Defense Department's (DoD) military research arm, DARPA, "has involved users of some of the Internet's largest destinations, including Facebook, Twitter, Pinterest, and Kickstarter, for studies of social connections and how messages spread." They even went so far as to send messages to "unwitting participants in order to track and study how they responded." (Guardian)

NSA Spying: Snowden files have revealed what we all feared. "Ordinary Internet users, American and non-American alike, far outnumber legally targeted foreigners in the communications intercepted by the National Security Agency from U.S. digital networks." 90% of the account holders found in the intercepted conversations, "were not the intended surveillance targets but were caught in a net the agency had cast for somebody else." Apparently the NSA attempted to mask these innocent U.S. citizens and residents but many were not masked. There appears to have been some success with the sweeping, though. "Months of tracking communications across more than 50 alias accounts, the files show, led directly to the 2011 capture in Abbottabad of Muhammad Tahir Shahzad, a Pakistan-based bomb builder, and Umar Patek, a suspect in a 2002 terrorist bombing on the Indonesian island of Bali. At the request of CIA officials, The Post is withholding other examples that officials said would compromise ongoing operations." But they also found files of the "daily lives of more than 10,000 account holders who were not targeted" but were catalogued and recorded. (Washington Post)

Hobby Lobby: It's starting already. In light of the Supreme Court's decision in the

Hobby Lobby case (TWW, Supremes on Contraception, 7/5/14), lawyers for 2 Guantanamo Bay detainees have filed motions asking a court to block officials from preventing them from "taking part in communal prayers during the Islamic holy month of Ramadan." They're arguing that the detainees rights are protected under the Religious Freedom Restoration Act (RFRA). (Al Jazeera)

First Amendment: While this is depressing, it certainly isn't surprising. The First Amendment Center conducts yearly studies asking people their opinions of certain freedoms and how far they extend. But before they get to that point, they ask people to name the freedoms enumerated in the First Amendment. The results aren't good. 68% could name freedom of speech but only 29% could name freedom of religion and only 14% could name freedom of the press. Only 7% could name the right to peaceably assemble and - get this - only 1% could name the right of redress of grievances. And, most depressing, the number who can't name any freedom is at a new low - 29%.

International Issues

China: "Over the past 5 years, there has been a surge in Chinese corporations acquiring or creating U.S.-based subsidiaries, with such deals growing at an annual rate of 80%." Yeah. They're taking over. "Since 2000, Chinese corporations have acquired or installed about 820 U.S.-based firms in deals totaling more than $37 billion. Nearly 90% of these deals, by value, were Chinese takeovers of existing U.S. companies. Not included in these numbers are many instances of Chinese firms purchasing controlling shares of U.S. companies' stock." If this isn't bad enough, look at this agreement the Chinese want - and the U.S. is ready to give them. The U.S.-China Bilateral Investment Treaty (BIT) would settle "investor-state disputes." It would "empower Chinese corporations invested here to directly challenge U.S. public interest safeguards before extra-judicial tribunals that could order payment of U.S. Treasury dollars to compensate the firms for U.S. laws that they claim violate their new treaty rights." The treaty would also provide special protections and rights for U.S. firms that relocate in China - incentivizing "another wave of American job offshoring to China." (Public Citizen) Just like NAFTA, CAFTA, and the proposed TPP and TTIP tribunals. (TWW, WikiLeaks and TPP, 11/16/13; TTIP, 11/9/13; Investor-State System, 6/1/13)

State Issues

Arizona: The U.S. Circuit Court of Appeals for the 9th Circuit ruled that Arizona must grant drivers' licenses to young, undocumented immigrants granted work permits under Obama's Dreamer program. (AZ Central)

Colorado: The Colorado Family Planning Initiative, a state program that provided more than 30,000 contraceptive devices at low or no cost to teens, has led to a 40% drop in pregnancy rates over the last 5 years. 68 family planning clinics were opened across the state since 2009. "The clinics are in local health departments, hospitals, and private nonprofit facilities. The program also provided training and technical assistance to family planning clinics statewide." (Denver Post)

Florida: Circuit Court Judge Terry Lewis "blasted the Republican establishment that created Florida's congressional map, saying they 'made a mockery' of transparency, allowed for 'improper partisan intent,' and he ordered that 2 of the state's 27 districts drawn in 2012 violate the Fair District standards." The ruling will be appealed. (Tampa Bay Times)

New York: The New York Court of Appeals upheld a lower court ruling that local governments have the authority to decide how land is used and, thus, can ban fracking.

Fiscal Issues

Benghazi: Rep. Trey Gowdy (R, SC) is launching a new special committee to "wrangle a probe that's sprawled across the jurisdictions of multiple headline-hungry committee chairmen" on the Benghazi attack. According to Politico, Gowdy's "methodical approach could help the GOP savor a scandal that has at times looked more like a political sideshow." A very expensive sideshow, but they don't have to pay for it. We do. It's taxpayers paying for the political campaign. The budget for this year is $3.3 million - $2.2 for Republicans; $1.1 for Democrats.

Other Issues

Immigrant Surge: Obama has asked Congress for another $3.7 billion to handle "influx of unaccompanied minors from Central America." (Washington Post) What is the problem? Well one of the final laws that Dubya signed was the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 and it's this Act that's at the root of the incredible surge of unaccompanied minors across our southern border. The Act gives protection to children entering the country alone who are not from Mexico or Canada by prohibiting them from being deported quickly. Instead, the Act requires that the children be given a guardian ad litem with whom to consult, an immigration hearing, and be turned over to the Department of Health and Human Services. They are to be treated "in the least restrictive setting that is in the best interest of the child" and they must explore reuniting the children with family members. What's behind the surge? Well, besides the gang wars and mass killings in Central America (Brookings Institute), there's the rumor that the U.S. will allow children and teens to stay. Maybe so. While the Obama administration denies this, the data show that the deportation of minors hit a peak in 2008 and has dropped every year since then. (LA Times) I'm guessing this is due to the Wilberforce Trafficking Act.

Suing the President: House Speaker John Boehner (R, OH) is finally talking about why he's going to sue the president - other than his general reason of overuse of executive authority. (TWW, Suing the President, 6/28/14) Now he's saying he's challenging Obama's delay of imposing penalties on employers who do not offer health insurance to employees in compliance with the Affordable Care Act (ACA). (TWW, Obamacare, 2/15/14) (NY Times)

Environmental Issues

Blistering Summers: According to a new report by Climate Central, by the end of the century the summer temperatures will be considerably hotter than we now experience. Go to the map, type in your city, and it'll tell you what you can expect.

Fracking: A new study published in the journal Science, determined that the surge in earthquake activity in Oklahoma is a direct result of hydrofracturing (fracking) and waste-water injection.

Are the dogs days of summer here? Woof.

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