IPS Blog

Fight for $15 Reaches New Heights

This past Wednesday, tens of thousands of low-wage workers in more than 200 cities across the U.S. demonstrated for a $15 minimum wage and the right to form a union.

Protesters said they chose to demonstrate on 4/15 because the date sounds like “for $15.”

Who joined the protests this week? Everyone from fast food and full service restaurant workers to child and home care workers to Walmart employees, airport workers, and adjunct professors.

Known as the “Fight for 15″ campaign, the highly visible protests on Wednesday were one of the largest organized demonstrations of low-wage workers in U.S. history.

The campaign began in November of 2012 when a couple hundred fast food workers in New York City walked off the job and demanded $15 an hour, which is close to the average cost of living in America.

Since then, Fight for 15 has blossomed into a broad-based movement of low-wage workers from multiple industries alongside community organizations, faith groups, and other social justice advocates demanding social, economic, and racial justice.

In Wednesday’s protests in Manhattan, for example, activists from the Black Lives Matter movement joined the Fight for 15 chanting, “We can’t breathe on $7.25.” On college campuses, students concerned about rising student loan debt joined in solidarity with adjunct faculty and other low-wage workers. And this year,child care workers joined the Fight for 15 for the first time.

The solidarity expressed this week in the Fight for 15 has reached new heights and is well timed with a presidential race on the horizon.

Despite overwhelming support for raising the current federal minimum wage of $7.25, Congress has stalled on the issue. And the public is poised to continue pushing for an increase as several new widely publicized reports reveal that the ordinary taxpayers are subsidizing the low-wage model of employment.

For instance, a study issued by the UC Berkeley Center for Labor Research and Education found that 56 percent of all state and federal public assistance goes to working Americans. Another report issued this week by the Restaurant Opportunities Centers United found that nearly half of restaurant workers rely on public assistance to meet their family’s basic needs.

How much does all that add up to? According to the Berkeley study, ordinary American taxpayers are dishing out $152.8 billion each year in public support for working families.

In many ways the Fight for 15 is at the heart of the national debate about inequality. The movement has changed the conversation and prompted major corporations like Walmart, McDonald’s, and Target to announce wage increases. The Fight for 15 has also called attention to the concentration of wealth at the top of the economic ladder while ordinary workers struggle to get by.

As the 2016 presidential race heats up, candidates on both sides of the aisle should pay attention. If Wednesday’s protests are any indication, the Fight for 15 is a movement that no candidate can afford to ignore.

Estate Tax Wars: Pinocchio on Viagra

Businessman with Pinocchio maskThis week, the Washington Post published two pieces on the federal estate tax, each drawing very different conclusions about what’s driving the repeal effort. An estate tax vote is expected Thursday in the House of Representatives, a move that will only benefit the nation’s billionaires and multi-millionaires. Yet only one of the two Post writers is able to see the facts for what they are.

On one side is Dana Milbank, longtime syndicated columnist and meticulous centrist, who titles his new piece, “Republicans push for a permanent aristocracy.” He states in no uncertain terms what the impact of estate tax repeal would be: “Never in the history of plutocracy has so much been given away to so few who need it so little.”

Milbank supports his argument with cold hard facts, which he cites to debunk the misleading and often absurd claims made by estate tax opponents. Estate tax repeal will not help low and moderate-income families, just the 5,500 wealthiest families who pay it each year. The $5.4 million exemption ($10.8 for married couples) prevents 99.8 percent of Americans from ever paying any estate tax.

The estate tax is not about protecting farms or small business. Notes Milbank: “In the entire country, only 120 small businesses and farms (100 of them large farms) were hit by the estate tax in 2013.” Plenty of protections exist for those few small businesses and farms impacted and, it’s worth noting, no farm has ever been lost as a result of the estate tax.

Repealing the estate tax really is just about helping the rich at the expense of everyone else. Milbank cites the $269 billion hole created by estate tax repeal and points out that “the 318 wealthiest estates each year — those worth $50 million or more — would see an average windfall of $20 million each.”

On the other side is Glenn Kessler, head of the popular Fact Checker blog at the Washington Post, who titled his piece, “Is the estate tax killing small farms and businesses?”

The answer to Kessler’s question, clear to anyone who takes even a cursory look at the facts, is decidedly no. But despite citing the same facts as Milbank, Kessler is unable to draw that conclusion. He writes instead: “The raw facts may not entirely support the case against the estate tax, but increasingly this does not seem to matter.”

Kessler declines to give a “Pinocchio rating” to the GOP’s claims because, in his words, “the issue of the estate tax has become so unmoored from the facts that it has moved into the realm of opinion.”

How can a column that calls itself “Fact Checker” claim the facts apparently don’t matter? Anti-tax zealots in the GOP have spent decades distorting the facts. Now a fact checker gives them a pass because their deception has reached new heights? As the kids say, SMDH (Shake My Damn Head for non-texters).

The lies from estate tax opponents, that Kessler himself quotes, are proven blatantly false in his article. But instead of giving them the ranking they deserve, “Pinocchio on Viagra,” as fact checkers at the Associated Press and Factcheck.org did (using slightly different language), Kessler gives them a pass. For that matter, he gives fact telling a pass.

 

Tribute to Human Rights Lawyer Sam Buffone

Sam Buffone

Sam Buffone, who passed away on April 3, 2015, pursued justice for the victims of Pinochet’s dictatorship throughout his career.

I am deeply saddened by the news that lawyer Sam Buffone, a pathbreaker in the field of international human rights, has died. IPS collaborated with Sam for several decades in the pursuit of justice for two IPS colleagues, Orlando Letelier and Ronni Karpen Moffitt, who were assassinated in 1976 by agents of Chilean dictator Augusto Pinochet.

In 1978, Buffone and law partner Michael Tigarfiled filed a historic civil suit on behalf of family members of Letelier and Moffitt against the assassins and the Republic of Chile. It was the first wrongful-death suit filed in the United States against a foreign nation. After the 1990 transition to democracy, the Chilean government settled the suit. In 1992, the Institute awarded our annual Letelier-Moffitt Human Rights Award to Buffone and Tigar for this pathbreaking work.

As this obituary notes, Sam continued to pursue justice for Pinochet’s victims throughout his career. In 1998, Pinochet was arrested on an order from the Spanish courts. The Spanish case had been filed by Spanish lawyer Juan Garcés, a former IPS Associate Fellow, on behalf of victims. Sam helped support the effort to extradite Pinochet to Spain to stand trial. That effort was ultimately unsuccessful, but in 2005, Sam and Garcés teamed up again to successfully sue Riggs Bank for concealing and spiriting Pinochet’s money out of Great Britain in 1999. The bank wound up paying $9 million to victims of Pinochet. And when Pinochet died in 2006, there were about 300 criminal charges pending against him in Chile for numerous human rights violations, tax evasion, and embezzlement.

In 2001, IPS and the Washington College of Law (WCL) at American University co-sponsored a conference entitled “The Pinochet Precedent: Individual Accountability for International Crimes.” The conference addressed various legal obstacles encountered in the struggle to bring former Chilean dictator General Augusto Pinochet to justice and suggested new approaches for lawyers and human rights defenders in ongoing and future proceedings against individuals accused of violations of international criminal law.

At the conference, Buffone explained how, 25 years previously, the prevalent belief was that Pinochet was beyond the reach of the law because — as a former head of state — he had sovereign immunity for acts committed during his regime.

The concept of universal jurisdiction — the legal principle by which any country can prosecute certain international crimes, regardless of the nationality of the parties or the locus of the crime — was neither sufficiently developed nor commonly understood. In the wake of Spain’s request to extradite Pinochet from Britain, universal jurisdiction had gained increased recognition.

In his typical humble style, Sam Buffone downplayed his own critical role in this historic development in international human rights law. We will deeply miss his quiet, yet forceful passion for justice. Below is the speech Sam gave at the 2001 conference on the impacts of the Letelier-Moffitt case:

Before I begin to address what I’d like to principally address in my remarks—the role of legal proceedings, court actions, and international cooperation among lawyers in human rights cases—I would like to focus on what I think we should be addressing in this conference. One of the unfortunate outgrowths of the kind of analysis that we’re doing today is it emphasizes the extraterritorial reach of the Pinochet regime in cases like Letelier-Moffitt, in cases like Prats, in cases like Leighton, and it deflects attention from the overwhelming vast majority of the terrible heinous crimes that occurred in Chile. The murders, the tortures, the systematic erosion of democratic government, the political genocide that were the hallmarks of the Pinochet regime are the crimes that he must be held responsible for. Cases like Letelier-Moffitt, as important as the quest for justice is, are but a vehicle. There cannot be a calculus that can compute which of the crimes is somehow worse than the others. I apologize for my remarks in advance to the extent that they attempt to emphasize this part of it.

You’ve already heard from two speakers about the terrible events here in Washington, D.C. in September of 1976. One of the outgrowths of the bombings in Sheridan Circle was that it framed for many in Washington, DC—policy makers, those in government, those in NGOs, students and everyday citizens—the fact that these types of terrorist acts could in fact be brought to visit on individuals much like themselves here in Washington, DC. And this explains why for over 25 years, there has been a well of strength here in the Capital: individuals who’ve been willing to come forward and speak out and act in ways to ensure justice here.

Fortunately, much of that action was channeled through legal proceedings that were successful. Because I must say the at the beginning of each and every one of these proceedings, culminating in the extraordinary work that Juan Garcés did in Spain and in London, both the legal community and most of the public said that they were doomed to failure. And the legacy of the Letelier-Moffitt case is that these vehicles which originally started out as a laughing stock of international lawyers have turned to accepted principles of international law in a relatively short period of time.

So let’s go back to what happened in 1976. When Michael Tigar first began representing the estates for Orlando Letelier and Ronni Moffitt, the thought was that there would not be a full and vigorous investigation by the United States government. And the only way to ensure that investigation would go forward was to have a vehicle by which the families could institute their own legal action.

And the then-newly passed Foreign Sovereign Immunities Act was utilized in the complaint that Michael and I drafted against the Republic of Chile and the responsible individuals to sue them for monetary damages for planning and carrying out the Letelier-Moffitt assassinations. This began the 25 year immunity wars. It’s important to recall that the litigation began with fights over soveriegn immunity. And those same battles over immunity would extend into the House of Lords and eventually the decision of the House of Lords stripping Augusto Pinochet of his immunity. But the first step was an act of the United States Congress and a Judge in the Federal District Court here in Washington, DC who was willing to recognize that the Chilean state, by engaging in acts of international terrorism in the United States, had stripped itself of sovereign immunity. The Chilean state refused to appear in that civil proceeding. They appeared through a Washington, DC law firm in diplomatic notes authored through the Chilean embassy.

An in-abstencia proceeding was conducted where the Federal District Court here entered a monetary judgement against the Republic of Chile. Once that award was entered, we were then left with the task of enforcing it. This was stage two of the immunity battle. We went to New York and attached all of the Lan Chile aircraft and ticketing accounts owned by Lan Chile using US Marshalls. And for approximately 48 hours, Michael Moffitt was the receiver of Lan Chile.

At that point, the Chilean Government chose to bond out of the proceedings so that the planes would be released. They posted a multi-million dollar bond. Eventually the US Courts held that while Chile was not immune from liability, they were immune from attachment of any of their assets. So we were left without a remedy.

We then began to lobby Congress to amend the Foreign Sovereign Immunities Act to provide a remedy. And that bill was passed through the United States House of Representatives, and it appeared that we had the political force to pass it through the United States Senate. At that point, the State Department negotiated a compromise with us. They were violently opposed to the legislation. If we would withdraw our legislative effort, they would invoke a 1914 treaty negotiated by William Jennings Bryan with the Chilean government—a bilateral arbitration treaty—that had only been used once since 1914. It had been invoked by then Interior Minister Orlando Letelier over the seizure of the copper mines in Chile.

The United States dusted off a procedure that hadn’t been used since the civil war and took over the claims of U.S. citizens—in this case, Orlando’s children who were born here, and the estate of Ronni Moffitt—and brought the claim sovereign to sovereign. A special international court was formed, and they litigated the civil liability of the Republic of Chile in front of that court. And about this time, the democratization in Chile was proceeding, and the election of the Alwyn government occurred. Through a series of then off the record meetings, we negotiated a second arrangement, this one with the Chilean government, where they agreed that they would publicly recognize the Chilean government’s responsibility for the assassinations. They would submit to the international tribunal and pay any judgment that resulted and would continue with their prosecutions of Contreras and Espinoza. They held true to all three of those.

The next major event was the effort of the US Government to support the Chilean government in its prosecution of Contreras in Espinoza and ultimately their imprisonment. A political event that maybe many of us forget how politically charged it was in Chile and what a significant event it was for the emergence of an independent judiciary, civilian control over the military and the redemocratization in Chile.

At about this point, I think most of the lawyers in the United States certainly myself were packing up the files and deciding that this matter was over because we believed that General Pinochet was beyond the reach of justice as it was available at that point. I was at that point visited by Dr. Garcés in my office in Washington who educated me about the reach of Spanish civil and criminal law, about the possibilities of universal jurisdiction.

I began working with Dr. Garcés at that point. Our first effort was to obtain documents from the United States government through letters rogatory that would be of assistance in the Spanish proceeding. That eventually led to an agreement with the United States government to declassify, a systematic declassification, of Chilean human rights documents. Much of what you’ve seen processed by the National Security Archives. The documents that have been released have proven so valuable in any number of cases, that was all motivated and brought to pass because of the Spanish proceeding in an effort to mesh the legal proceedings in the US with those that were going on in Spain.

At the point where the arrest of General Pinochet occurred in London, I think that attempt to marry those two efforts came to full fruition and the lawyers in this country began working closely with their colleagues in London and Spain to make sure that now that there actually was a real proceeding against General Pinochet where there was a court with physical jurisdiction over him, that everything possible was done.

I won’t dwell on the lengthy legal proceedings in London other than to say that the precedents that were established there on immunity from prosecution by former heads of state I think are perhaps the greatest victory and the most lasting legacy, I would hope, of the entire Pinochet matter.

A word about current status and lessons that I hope we can all draw from what has occurred so far. First, I remain optimistic that the United States Government will continue with its efforts to domestically prosecute General Pinochet. The United States has jurisdiction over General Pinochet for an act of murder that occurred here, the Chilean government has recognized the territorial jurisdiction of the United States over the assassination in the Letelier-Moffitt cases. The Justice Department, as you heard from Dr. Garcés, sent investigators to Chile, has been involved in an active investigation of Gen. Pinochet’s responsibility for quite some time. And we’re very hopeful that the new administration, once the head of the Criminal Division takes office, will reinvigorate that investigation and bring it to a quick indictment.

The release of documents by the National Security Agencies in this country, by the State Department and to a lesser extent by the Justice Department, was a watershed event in the Letelier-Moffitt case, although not inconsistent with a growing trend of the United States government to both request that foreign governments declassify and publicly produce their documents related to human rights abuses and at least a modest willingness on behalf of the United States to do the same. I think we need to recognize that whatever strength there are to judicial proceedings to prosecute human rights cases, they are no greater than the political willingness of the governments to stand behind those prosecutions, to support an independent judiciary, and to come clean with their involvement in these very acts. I would hope that the release of documents in the Letelier-Moffitt case and the Chile Declassification Project will become a first step in an evolving model, not only for release of documents here, but for the release of documents on an international basis. That every government that was involved in Cold War excesses, that every government that has documentary or physical evidence about those excesses, should come forward and provide an archive and a basis for ongoing proceedings so that everyone will understand exactly what happened and who was responsible.

I support a much broader effort by the United States government to adopt the proceedings of the Rettig Commission in Chile, its own truth and reconciliation model, which the South Africans so brilliantly built upon and for us to undertake in the United States a truth and reconciliation process where we look in depth and objectively at not only our involvement in the destabilization and terrible events that occurred in Chile but elsewhere in the world during the cold war. With that kind of an informational basis, with that kind of a political commitment that can only come from full disclosure and the kind of introspective process that truth and reconciliation brings can judicial proceedings be possible or appropriate.

Reflections from India

This March, I was granted the opportunity to exchange ideas with civil society organizations in India who are working on the issue of human trafficking and forced labor. I shared my work as a social worker, organizer, and advocate here in the U.S., and learned about the challenges and innovations these groups were exploring in India.

I started in Mumbai, where I met with gender rights advocates and staff of a drop-in program for children of sex workers, offering meals, tutoring, and safety. In Hyderabad, I met with a group of domestic worker leaders who shared their struggles for inclusion, which profoundly mirror the struggles domestic workers are facing here at home.

TiffanyIndiaMy next stop, Bhubaneshwar, put me in the room with an energetic cohort of gender studies students who asked key questions about wage disparities, political advocacy by survivors, and how we could unpack the divide between sex and labor in the anti-trafficking movement. In Chennai, the highlight was Isabel Richardson, who runs a shelter home and invited me to help inaugurate a brand new retail outlet that would provide training and income to young survivors.

I presented at a conference of academics and activists in Ranchi which was focused largely on the in-country migration for household work of young girls, and visited the soul-warming open space of Kolkata Sanved, a unique program that uses dance movement therapy to help unlock the potential of survivors of gender-based violence.

In total I visited six cities, all different from each other, yet all coming up against the same challenges: good ideas and not enough resources. Many of them have moved beyond rescue mentality and toward the idea that governments should be responsible for the safety, health, and well-being of the people. Activists there are turning to the prevention side of human trafficking and forced labor, asking for policies and programs from government that address safety nets, unemployment, global inequality, and even climate change. As is true in the U.S., we need organizing and activism to demand such accountability.

The trip was a perfect transition point for my work; this month I step back from more than a decade of work on labor rights and trafficking and begin my tenure as the new Associate Director here at IPS.

At IPS, our analysis about global justice is that the world’s wealth derives in large part from resources that belong to all of us, and we are working to reverse global and national policies that accelerate inequality, and, for example, accelerate forced labor and trafficking.

It’s an honor to step into a role at IPS that will allow me to create a supportive and generative space for our staff, fellows, and interns to bring these kinds of ideas into action.

McDonald’s Workers Aren’t Lovin’ It

In a press release this week, McDonald’s announced it would raise workers’ wages to at least $1 above the local minimum and will aim for an average pay of $10 by the end of 2016.

Unfortunately, the wage hike applies only to restaurants owned and operated by McDonald’s itself but not franchised restaurants, which make up nearly 90 percent of McDonald’s stores (although some are speculating that franchisees will likely feel pressure to follow suit).

McDonald’s also announced that it will start letting workers accrue paid vacation time once they have been with the company for at least a year.

Alongside similar decisions by Walmart, Target, and others, McDonald’s announcement reflects just how much the public conversation about income inequality has shifted. These companies are feeling the pressure from worker protests which are fueling wider public discontent over income inequality.

And make no mistake: this is about income inequality, not just poverty-level wages. Nearly two-thirds of low-wage employers in America are large, wealthy corporations like Walmart, Target, and McDonald’s.

With soaring profits and extravagantly-paid executives, it’s no wonder these companies are the ones feeling the most pressure to raise workers’ wages. According to the National Employment Law Project, the 50 largest employers of low-wage workers are highly profitable, large corporations with executive compensation averaging $9.4 million.

That’s one of the reasons McDonald’s workers aren’t lovin’ this wage hike. As one worker affiliated with the Fight for $15 put it, this is a “weak move for a company that made $5.6 billion in profits last year.”

A weak move, indeed. This decision raises wages by just a fraction for a very small portion of McDonald’s workers. Mostly it allowed the fast food giant – which has been under increasing scrutiny for labor practices – to grab some positive headlines. It will boost wages for a few, but not significantly.

The Fight for $15 group has made clear that McDonald’s announcement won’t slow them down. “Hey McDonald’s: we said $15 and a union for everybody. See you on April 15,” they tweeted in response. Another worker tweeted, “We are not a value menu. We’re worth more than a $1 raise.”

If McDonald’s thought this move would cause worker protests to get quieter, they miscalculated. Those demands are about to get super-sized.

Iran Deal: A Game-Changer for the Middle East

Rainbow over Iran

(Image: marsmet545 / Flickr)

Negotiators in Lausanne, Switzerland just won a huge victory for diplomacy over war.

The hard-fought first-stage negotiations resulted in the outlines of an agreement that will significantly limit Iran’s nuclear program in return for significant relief from crippling economic sanctions imposed by the United States, the European Union, and the United Nations.

Both sides made major concessions, though it appears Iran’s are far greater.

Tehran accepted that U.S. and EU sanctions will not be lifted until after the UN’s watchdog agency verifies that Iran has fully implemented its new nuclear obligations — which could be years down the line. It agreed to severe cuts in its nuclear infrastructure, including the reduction of its current 19,000 centrifuges for enriching uranium to just over 6,000.

Tehran also consented to rebuild its heavy water reactor at Arak so that it will have no reprocessing capacity and thus cannot produce plutonium. Its spent fuel will be exported. The Fordow nuclear plant, moreover, will be turned into a technology research center without fissile material. And crucially, the UN’s International Atomic Energy Agency will be allowed to conduct unannounced inspections.

In return, the United States and its partners — the UK, France, Germany, Russia, and China — agreed that the UN resolution imposing international sanctions on Iran would be replaced by a new resolution that would end those sanctions but maintain some restrictions.

The framework didn’t specify whether the new resolution would be enforceable by military force, but it did reject an earlier demand by the United States and some of the Europeans for a “snap-back” trigger that would automatically re-impose sanctions if they claimed Iran wasn’t keeping its part of the bargain. Without that, a new Security Council decision — one subject to potential vetoes by at least Russia or China — will have to be voted on.

Additionally, while it didn’t explicitly reaffirm Iran’s rights under the Non-Proliferation Treaty, which include the right to pursue “nuclear energy for peaceful purposes without discrimination,” the agreement did acknowledge Iran’s “peaceful nuclear program” and sought to limit, not to end, Iran’s enrichment capacity.

Most importantly for skeptics of the talks, there’s no question that the broad parameters announced in Lausanne would qualitatively prevent any future Iranian decision — which all U.S. intelligence agencies still agree Iran hasn’t ever made — to try to build a nuclear bomb.

The restrictions impose a year-long “break-out” period, meaning it would take at least that long for Iran to even theoretically enrich enough uranium to build a bomb. And, as my colleague Stephen Myles at Win Without War reminds us, “The Iranians would still have to, ya know, build a bomb, figure out a way to hide it all from the inspectors all over their country, and convince the international community to sit idly by without responding while they broke the terms of a deal for one whole year.”

Reshaping the Middle East

Hardliners in both the United States and Iran opposed the agreement, but so far it appears that the pro-war faction in the U.S. Congress (mainly though not only Republicans) poses a far greater threat to the survival of the accord than the hawkish factions in Iran — especially since Ayatollah Ali Khameini, Iran’s Supreme Leader, has continued to support the nuclear negotiators.

For some of the U.S. opponents, the issue is purely partisan. They want President Obama to fail, and they’ll oppose anything he supports.

For many others, military intervention and regime change remain the first choice towards Iran — Senator John McCain already urged Israel to “go rogue” and attack Iran. Republicans in the Senate, following their 47-strong letter to Iran threatening to undermine any agreement signed by Obama, continue to lead efforts to impose new sanctions and to demand a congressional vote to accept or reject the agreement.

But the global potential for this agreement is far more important than the partisan posturing of right-wing militarists and neoconservative ideologues. If it holds — and if the final agreement, with all its technical annexes, can be completed as scheduled in three months — Lausanne can set the stage for an entirely new set of diplomatic relationships and alliances in the Middle East.

Indeed, the region could be significantly transformed by an end to the decades of U.S.-Iran hostility. With Washington and Tehran maintaining normal if not chummy diplomatic relations, joint efforts to end the fighting in Iraq, stop the catastrophic escalation underway in Yemen, and create a real international diplomatic campaign to end the Syrian civil war all become possible. A U.S. diplomatic posture that recognizes Iran as a major regional power would make a whole set of current challenges much easier to resolve.

Defending Progress

Regardless of whether that kind of grand bargain in the Middle East becomes possible, the current diplomatic initiative must be defended.

Efforts to undermine the Lausanne agreement are already underway.

Senate Republicans are hoping to win over enough Democrats to override Obama’s certain veto of a bill that would let Congress vote to reject the agreement. Fortunately, Democratic opposition to Israeli Prime Minister Benjamin Netanyahu’s blatant campaign to undermine the Iran negotiations has made that Republican effort more difficult. Defense of President Obama’s diplomacy by the Black Caucus and Progressive Caucus of Congress has pulled more Democrats away from the anti-negotiations, pro-war position.

But at the end of the day it will be public opinion that matters. A Washington Post poll in the last days before the agreement found 59-percent support for a negotiated settlement — with 70 percent of liberals, two-thirds of Democrats, and at least 60 percent of independents and self-described “moderates” all supporting a deal. Even Republicans — divided more or less evenly — are far more supportive than their party’s war-boostering representatives in Congress.

What’s required now is mobilizing that public support. That means strengthening the backbone of uncertain or wavering members of Congress, challenging extremist anti-diplomacy positions in the media, and most of all reminding everyone of the consequences of failure.

In Lausanne we saw a crucial victory of diplomacy over war. Now we’ve got to protect it.

Will Congress Be Duped Again on Offshore Taxes?

Cracked paved road

(Image: Shutterstock)

Like a savvy bargainer on a used car lot, big multinational corporations have mastered the art of feigning indifference and walking away.

What they walk away with is their profits, stockpiling them abroad where they legally remain untaxed until returned to the United States. Then these corporations threaten to keep the cash offshore permanently unless Uncle Sam gives them a deep discount on their tax rates.

It’s a timeworn, but effective trick. While the rest of us are stuck paying the sticker price, Congress is considering a special deluxe tax rate for these giant corporations.

Congress last fell for the old “walk away” in 2004. And the American people got burned.

That year, legislators gave 843 giant firms an 85-percent discount on offshore profits they “repatriated.” This reduced their long-term tax bills by nearly $100 billion.

Legislators opted for this one-off revenue bump in part because they believed, naively, that the companies would create U.S. jobs with the repatriated funds. They even called the tax break legislation the “American Job Creation Act.”

Like new owners of a bargain basement Beemer, though, the companies basically squealed their tires and sped away. Rather than hiring more workers, many simply used the money to boost shareholder dividends and executive pay.

Meanwhile, the profit-shifting revved up again, as firms maneuvered to create leverage for further discounts.

Big pharmaceutical companies, which are particularly good at tax-dodging tactics like registering their patents in tax haven countries, were some of the biggest abusers of the 2004 tax break.

Pfizer, for example, repatriated $40 billion to take advantage of the discount. Instead of boosting jobs, the drug company laid off more than 51,000 employees over the next six years.

Legislators appear to have learned little from the 2004 boondoggle. Pending bills in both the House and Senate would once again offer deeply discounted rates on offshore profits.

President Barack Obama has a slightly stronger proposal: All overseas stockpilers would pay a mandatory 14 percent rate on offshore profits they currently hold, and then 19 percent thereafter. But that’s still a huge reduction over the ordinary 35 percent corporate tax rate, giving companies a powerful incentive to continue to shift profits overseas.

A handful of corporate giants stand to reap the vast majority of benefits from this trick.

According to a new report I co-authored for the Institute for Policy Studies and the Center for Effective Government, just 26 companies account for more than half of the $2.1 trillion in untaxed profits U.S. corporations currently hold offshore. Since 2004, these 26 firms’ overseas stashes have grown more than five-fold.

Lawmakers claim that short-term revenue from a discount tax on offshore profits is needed to pay for urgent investments in public infrastructure. But if we’re serious about fixing our crumbling bridges, roads, and dams, we should start by fixing our broken corporate tax system.

The taxes Pfizer and six other drug companies currently owe on their offshore profits, for example, would be enough to fix the 1 out of every 9 U.S. bridges in disrepair. We need to insist that all U.S. businesses pay their fair share of infrastructure and other public services.

Otherwise, we’ll just be taken for a ride.

From Gold Country to the Golden Triangle

El Salvador rally in front of the World Bank in Washington, DCThree environmental and human rights heroes came to Washington from gold country in El Salvador this week to protest in front of the oversized World Bank headquarters, at the southern corner of what is known as the “Golden Triangle” in Washington, DC.  One hundred-plus people from a range of organizations from the AFL-CIO to Casa denounced a secret tribunal housed in the Bank that is getting ready to rule on a case that could determine the future of El Salvador’s water supply.

The International Centre for Settlement of Investment Disputes (ICSID), housed at the World Bank, is hearing the case, which was filed by a Canadian company, Pacific Rim. That company (which was recently purchased by Australian-based Oceana Gold) is suing El Salvador for hundreds of millions of dollars because the government has not granted the company a permit for a gold mining project. Because of concerns that cyanide-based gold mining could pollute the country’s major river system, the government has placed a de facto moratorium on all mining projects.

At a rally in front of the World Bank, Vidalina Morales, a member of the Salvadoran Roundtable against Metallic Mining, said “We are not willing to let the Salvadoran government pay one single dollar. It is the mining company who should pay El Salvador for the violation of environmental and human rights. These courts only defend the interests of large corporations, not the people of El Salvador. Imagine what you could do with that money in El Salvador for social programs to alleviate poverty.”

Elvis Zavala and Cristina Starr, two journalists with the independent radio station Radio Victoria, also attended the rally.  Zavala noted that he has received death threats for his reporting on the Pacific Rim dispute.

A diversity of faith, labor, and environmental leaders, as well as representatives of the Salvadoran community in the Washington region, joined the rally in solidarity with the people of El Salvador who are fighting the Pacific Rim case. They also used the opportunity to draw attention to the investment rules in trade agreements that allow private corporations to sue governments.

The Obama administration is trying to expand these corporate rights in new agreements with Asia (the Trans-Pacific Partnership) and Europe (the Transatlantic Trade and Investment Partnership), and is pushing to “Fast Track” these controversial deals through Congress. As Bill Waren, from Friends of the Earth US, said “this is a perfect example of what can happen when we prioritize free trade over the rights of people and the planet.”

Cathy Feingold, the AFL-CIO’s Director of International Affairs, said that U.S. workers stand in solidarity with the people of El Salvador and against free trade agreements that allow these abuses.

A climactic moment during the rally took place when the World Bank’s Civil Society Adviser came out to receive 174,000 signatures, collected from all over the world, urging Pacific Rim/Oceana Gold to drop the suit against El Salvador and asking the World Bank to examine whether ICSID and such “investor-state” cases are consistent with the Bank’s official mission of combating poverty.

On March 21, the three Salvadoran heroes received an award from the Washington Ethical Society, the Institute for Policy Studies and others, for their courage, commitment and service in bringing international attention to the issue of precious metal mining in developing countries worldwide.

Keeping Up With the Waltons

Dollar General storefront

(Photo: Judy Baxter / Flickr)

Walmart’s news-making decision to raise wages put pressure on other discount retailers to make similar announcements. Less than a week later, T.J. Maxx and Marshall’s discount chains announced they would do the same. Target is the latest retailer to say it will also match Walmart’s new wage of $9 an hour.

In the retail world, keeping up with the Walton’s is nothing new. For better or for worse, Walmart has long set standards in the industry that competitors emulate.

But one retailer’s announcement in the wake of Walmart’s decision was a bit unusual. Rather than raise workers’ wages, Dollar General announced it would increase hours and make schedules smoother.

Top executives at Dollar General acknowledged a tightening labor market and the need to stay competitive when it comes to attracting and retaining employees.

So why did they stop short of raising their own workers’ wages?

As Fortune.com recently pointed out, dollar stores exploded during the Great Recession as more Americans suffered financially and depended on extreme bargains to buy anything, including food.

These stores (Dollar General, Dollar Tree, Family Dollar) are smaller-scale than Walmart but have more stores overall. Their business model is to focus on items that cost between $1 and $5. They only have a few employees per store, but they keep labor costs to a minimum to support their low prices.

They also target the lowest-income shoppers. Dollar General CEO Richard Dreiling explained to analysts on a recent conference call that his company was still doing well because his “core customers are still far from being out of the woods” despite other indicators that Americans are doing much better financially.

Did Dollar General’s CEO just admit that a core group of financially distressed Americans is built into the success of his company?

Um, yeah.

Maybe Dollar General decided not to raise wages because that would support a trend that is against the company’s self-interest?

Regardless, at least Dollar General is doing something about erratic schedules, which has been elevated in recent campaigns as an issue that many workers care about deeply.

But it’s still odd that Dollar General, the giant of the extreme discount retailers, would refuse to raise wages while acknowledging the tightening labor market that Walmart’s decision helped exacerbate.

One thing is clear: discount retailers are finally feeling the pressure from workers’ demands. And as those demands become greater and greater, extreme discount retailers like Dollar General are going to get squeezed.

And that isn’t going to feel good. Just ask the middle class.

‘House of Cards’ Makes a Wonk’s Day

House of Cards Season 3

(Image: Netflix)

I’m embarrassed to admit I’m one of the few people in Washington who has never watched House of Cards. But this sorry state of affairs is soon about to change.

That’s because this hot Netflix show has just delivered me a pleasant surprise. A new episode uses figures from a report I co-authored last year on one of the wonkiest of all issues: the tax deductibility of executive “performance pay.”

As explained in this Yahoo Finance article and video, Season 3, Episode 8 features a scene where — mild spoilers — a presidential candidate fires up a crowd by bashing Walmart over its low wages. The candidate then goes on to add: “Walmart’s top executives have reaped almost $300 million in tax-deductible performance pay over the last six years. That needs to stop!”

Huh? That was the reaction of Yahoo Finance reporter (and House of Cards fan) Aaron Task. He called me after his curiosity prompted him to trace that line to a report we co-published last year with Americans for Tax Fairness.

Indeed, my IPS colleagues and I have been going after this “performance pay” loophole for about 15 years now.

Here’s how the loophole works: A 1993 amendment to the tax code capped the total executive pay corporations can deduct off their taxes at no more than $1 million. But so-called “performance” pay is exempted. So corporations can simply declare stock-based rewards they lavish on executives “performance-based” and deduct them as a basic business expense.

The more corporations pay their CEO, the less they pay in taxes. And the rest of us get stuck making up the difference.

Several legislative efforts are now pending to fix this perverse incentive for overpaying executives. Rep. Chris Van Hollen (D-Md.) recently introduced the “CEO/Employee Pay Fairness Act,” a bill that would deny corporate tax deductions for any executive compensation over $1 million — unless the firm raises salaries for lower-level workers.

Rep. Barbara Lee (D-Calif.) has championed the Income Equity Act. This bill sets a deductibility cap of $500,000 or 25 times a company’s median worker compensation.

Are your eyes glazed over now? Well, that’s why we need popular media like House of Cards to make this issue sexy.

Or better yet, maybe one of our real-life 2016 presidential candidates would like to take this on? 

 

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