Corporate Welfare Queens (Update)

Corporate Welfare Queen, GE CEO Jeffrey Immelt

During his 1976 presidential campaign, Ronald Reagan captured the public’s imagination by creating a cultural icon: a rich, Cadillac driving Welfare Queen (code for “Black”) to symbolize all welfare recipients as manipulative fraudsters out to game the system at taxpayers’ expense.

His pogrom against the poor came to fruition when President Bill Clinton ended “welfare as we know it”, signing into law The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, a key component of Newt Gingrich and the Rethugs’ Contract On America.

Clinton’s successor, George W. Bush, promised a reverse transfer of wealth, from the poor and middle class to the richest Americans, whom he affectionately referred to as “the elite” and “my base.”

This he did by letting corporate lobbyists re-write the tax laws, making a joke out of the nominal tax bracket of 35% by shooting it full of loopholes to the point where companies like General Electric, which had worldwide profits of $14.2 billion last year alone, $5.1 billion which came from its operations in the United States, paid less income tax than the amount of change in your pocket. Not only that, but it effectively pocketed another $3.2 billion by claiming a tax credit against future income.

GE, of course, is not the only multi-billion corporation to escape paying any income tax, while at the same time paying their CEOs and chief execs tens of millions of dollars in salary and bonuses. From Think Progess :

– BANK OF AMERICA: In 2009, Bank of America didn’t pay a single penny in federal income taxes, exploiting the tax code so as to avoid paying its fair share. “Oh, yeah, this happens all the time,” said Robert Willens, a tax accounting expert interviewed by McClatchy. “If you go out and try to make money and you don’t do it, why should the government pay you for your losses?” asked Bob McIntyre of Citizens for Tax Justice. The same year, the mega-bank’s top executives received pay “ranging from $6 million to nearly $30 million.”

– BOEING: Despite receiving billions of dollars from the federal government every single year in taxpayer subsidies from the U.S. government, Boeing didn’t “pay a dime of U.S. federal corporate income taxes” between 2008 and 2010.

– CITIGROUP: Citigroup’s deferred income taxes for the third quarter of 2010 amounted to a grand total of $0.00. At the same time, Citigroup has continued to pay its staff lavishly. “John Havens, the head of Citigroup’s investment bank, is expected to be the bank’s highest paid executive for the second year in a row, with a compensation package worth $9.5 million.”

– EXXON-MOBIL: The oil giant uses offshore subsidiaries in the Caribbean to avoid paying taxes in the United States. Although Exxon-Mobil paid $15 billion in taxes in 2009, not a penny of those taxes went to the American Treasury. This was the same year that the company overtook Wal-Mart in the Fortune 500. Meanwhile the total compensation of Exxon-Mobil’s CEO the same year was over $29,000,000.

– GENERAL ELECTRIC: In 2009, General Electric — the world’s largest corporation — filed more than 7,000 tax returns and still paid nothing to U.S. government. They managed to do this by a tax code that essentially subsidizes companies for losing profits and allows them to set up tax havens overseas. That same year GE CEO Jeffery Immelt — who recently scored a spot on a White House economic advisory board — “earned total compensation of $9.89 million.” In 2002, Immelt displayed his lack of economic patriotism, saying, “When I am talking to GE managers, I talk China, China, China, China, China….I am a nut on China. Outsourcing from China is going to grow to 5 billion.”

– WELLS FARGO: Despite being the fourth largest bank in the country, Wells Fargo was able to escape paying federal taxes by writing all of its losses off after its acquisition of Wachovia. Yet in 2009 the chief executive of Wells Fargo also saw his compensation “more than double” as he earned “a salary of $5.6 million paid in cash and stock and stock awards of more than $13 million.”

Note that GE CEO Jeffrey Immelt, the 10 Million Dollar Man, was appointed by President Obama to head up his new Council on Jobs and Competitiveness (which replaced the Economic Recovery Advisory Board). Mr. Immelt really does know how to create jobs– overseas.  According to Alljobs.com

The majority of its 304,000 employees are based overseas. Between 2005 and 2009, the U.S. employee share of GE’s total workforce dropped from 51% to 44%. In 2009 and 2010, GE shuttered 28 manufacturing plants in the U.S.

Immelt is thus an odd choice to head up such a council. It would be like Obama appointing Wall Street insiders like Larry Summers and Timmy Geithner to head up his economic advisory team, or guys from Goldman Sachs to head up the financial regulatory agencies. Oh, wait…

Naturally, the loss of tens of billions of corporate income tax revenues has to be made up somehow. The Rethugs have an answer for that: Shred the safety social net. Take it out of the hides of working women and children, NPR, Medicaid,  the states.

At all costs, we have to keep the corporate welfare queens living in the style to which they have become accustomed.

UPDATE: Someone named Jon Stewart covered this in his show last night.