Code red for American democracy

Hedrick Smith

[Editor’s note: The following essay was written by former New York Times Washington, DC bureau chief, frequent NC Policy Watch contributor and all-around legendary journalist, Hedrick Smith. It originally appeared on Smith’s own website, Reclaim the American Dream.]

Veteran journalist sums up the current mess and how we got here

For all the uproar among Democrats over restrictive voting laws passed by Republican legislatures in 17 states, Democrats have only recently awakened to the more dangerous threat to American democracy posed by Republican moves to take partisan control of counting votes and even overturn the popular vote in future elections.

For months, Democrats in Congress and nonpartisan election reformers have railed against the obstacles to voter turnout from new Republican restrictions on absentee ballots, mail voting, voter registration, and early voting, which fall especially hard on minority and younger voters.

But the greater danger to American democracy and election security lies in the stealth GOP scheme to gain partisan control of the traditionally non-partisan process of counting and certifying the vote, by empowering Republican legislatures to disqualify the popular vote and by putting Trump loyalists in charge of running elections in swing states.

Act two of “The Big Lie”

Call it Act Two of “The Big Lie,” the Republican action plan to manipulate the rules, change the process and prepare to alter the vote count in 2022, 2024 and beyond, if Republicans are losing. But for months, the big Democratic election reform bills in Congress, the For the People Act and the John Lewis Voting Rights Act, ignored the GOP plot to subvert the popular vote. Only now are counter-moves surfacing in Congress.

What makes the GOP action plan so menacing is that it builds on the Trump plot to change the outcome of the 2020 election. In his final month as President, Donald Trump went to war against our constitutional democracy on multiple fronts. The mob attack on Congress was just the most visible ploy.

Behind the scenes, Trump was simultaneously putting intense pressure on his Acting Attorney General, Jeffrey Rosen, to declare vote fraud, and when Rosen refused, Trump prepared to fire Rosen and replace him with a loyalist primed to do Trump’s bidding. Only the threat of group resignations of Justice Department and White House lawyers stopped Trump.

In a second desperate gambit, Trump placed a secret phone call to Georgia Secretary of State Brad Raffensperger on January 2 and demanded that Raffensperger “find 11,780 votes” so that Trump could win Georgia.

The day after that, Trump summoned Vice President Mike Pence to the Oval Office and had conservative lawyer John Eastman lay out a step-by-step game-plan for Pence, on January 6, simply to reject Electoral votes from swing states like Georgia, Arizona, and Pennsylvania that had been won by Joe Biden, and then declare Trump had won re-election.

Election guardrails are now being targeted

Fortunately, constitutional Republicans like Pence, Rosen, Raffensperger, Republican supervisors in Arizona’s Maricopa County, (Phoenix area), and election board officials in Michigan refused to kowtow to Trump’s dictates. So the 2020 election withstood the Trump storm.

But this year, Trump loyalists are out to erode and override the election guardrails. They have targeted the procedures, institutions, and individuals who stood in Trump’s way after the last election. In multiple states, Republican legislatures have moved to take control of the machinery of elections and post-election vote counts.

“Election subversion ” is what election law attorneys politely call this. But in hardball politics, it amounts to “the real steal,” an aggressive stealth cabal that is underway in key states like Arizona, Georgia, Pennsylvania, Wisconsin, and Texas.

Massive 2020 turnout triggered GOP tactics

Ironically, what triggered the GOP plot for usurping the popular vote was the stunning success of the 2020 election. Contrary to Trump’s ”Big Lie,” the 2020 election was a blowout. Despite fears of COVID, the pandemic actually caused many states to open up voting and that generated the best voter turnout since 1908 – 68% of eligible voters cast ballots.

In all, 158 million Americans voted -101 million voted either by mail (65 million) or voted early in person (36 million), far more than the 57 million voting on Election Day. That big 2020 vote benefited from a decade of political reforms that expanded mail voting, early voting, and easier registration.

So today, the U.S. has a more accessible voting system than two or three decades ago. Forty-five states and the District of Columbia now permit early voting. Thirty-four states and DC permit absentee mail voting, no excuse required. Seven states vote entirely by mail. All this has helped boost voter turnout, especially among Blacks, Latinos, and younger voters.

Supreme Court judges embolden the GOP

In a fearful backlash, Republican strategists have responded with a two-pronged strategy to turn back the clock: (1) by making it harder for some democratic-leaning voters to cast their ballots; and (2) by engineering ways for Republican-controlled legislatures or election officials to disqualify and/or change the popular vote. Read more

Some simple truths about the taxes corporations pay and Biden’s proposal blow the whistle on them

Hedrick Smith

[Editor’s note: The following essay was written by former New York Times Washington, DC bureau chief, frequent NC Policy Watch contributor and all-around legendary journalist, Hedrick Smith. It originally appeared on Smith’s own website, Reclaim the American Dream.]

WASHINGTON – Okay, let’s talk turkey about taxes and their implication for U.S. economic growth and inequality. But let’s get real. Let’s get beyond the political kabuki dance in Washington, with politicians echoing well-rehearsed lines. That means focusing on real-world economics.

Discovery No. 1 one is that almost no major U.S. corporation, certainly not those that do business overseas, actually pays the 21% corporate tax rate, set by law. In fact, on average, Fortune 500 companies pay about half that much – 11.3% according to the non-profit Institute for Taxation and Economic Policy and Taxation, working from corporate reports.

Federal Tax Data from the Center on Budget and Policy Priorities

The second big discovery is that despite endless whining from Corporate America about its unfair and impossibly heavy tax burden, corporate taxes and the corporate share of overall U.S. tax revenues has been shrinking over the past six decades, down sharply from 32% of the total in the 1950s to 7% in 2019. And the rest of us have to make up that difference.

Bragging to Wall Street, playing poor to IRS

Finally, to get how corporate tax games are played, you have to understand that U.S. corporations keep two sets of financial books – one for the public and the other for the taxman – and that’s legal under U.S. tax law.

The first set of books, shared with investors and the financial press, reports so-called “book income,” which is where companies cast their earnings in rosy terms and brag to Wall Street about how much money they made. The second set of books does the opposite. It’s filed in private to the I.R.S. and it seeks to shrink company profits to the bare minimum, to zero if possible, by using every conceivable tax loophole and deduction.

Last year, for example, 55 large US corporations, including FedEx, Nike, Duke Energy, Nucor, SalesForce, Archer-Daniels-Midland, Booz-Hamilton, and four dozen more paid zero federal corporate income taxes despite publicly reporting more than $40 billion in pre-tax profits, according to data mined by the Institute of Taxation and Economic Policy.

If these 55 U.S. corporations had paid the official 21% tax rate, they would have owed Uncle Sam $8.5 billion, but instead, they got $3.5 billion in tax rebates because they were awarded tax credits. And that’s just the tip of the iceberg.

Over the past decade or two, all the corporate giants have worked this game – Apple, Google, Coca-Cola, Pepsi, Caterpillar, General Electric, Goldman Sachs, Merck, Pfizer, you name it. Collectively Corporate America has avoided an estimated $100 billion a year in taxes, – potentially several hundred billion over several years according to one academic study cited by the Biden administration.

Apple tax dodge – “The double Irish with a Dutch sandwich”

“How do they do that?” you ask. “How do they get away with that?”

The answer lies in wonky accounting concepts like profit shifting and GILTI – spelled with an I not a Y. In the arcane idiom of tax law, GILTI literally stands for Global Intangible Low-Taxed Income, which is a fancy label for US corporate profits stashed away in overseas tax havens. Read more

People power scores an important win vs. inequality

WASHINGTON – Unless you tuned out Donald Trump on his final frenetic campaign blitz, you remember seeing him barnstorming across Florida, stoking the fears of Latino voters with his nightmare threat that Joe Biden & Company would “turn America into Communist Cuba or Socialist Venezuela.”

Fearmongering pure and simple, but it worked with a big slice of south Florida’s Latino voters, enough for Trump to shrink the normal Democratic majority in heavily Latino Miami and go on to carry Florida, the one big swing state that Trump actually won.

But what is fascinating and telling – especially given Trump’s scary rap against big government – is that close to a million of those same Florida voters rejected Trump’s pro-business economics and voted to amend the Florida constitution to establish a $15 state minimum wage.

Not surprisingly, Trump’s political allies in the Florida Chamber of Commerce fought bitterly against this measure. Chamber President Mark Wilson warned that mandating steady increases in the state’s minimum wage over the next six years would cause “job loss, hurt local businesses, increase the cost of living for seniors, and drive good jobs elsewhere.”

One of many demonstrations for $15 minimum wage in Florida
Source: Fight for $15 Florida Facebook

But a 61% supermajority rejected the self-pleading by restaurant owners and other businesses. In the end, nearly 6.4 million Florida voters — a far bigger majority than Trump’s own majority – supported taking a bold step against income inequality by voting to boost Florida’s current wage floor of $8.56 an hour to $10 next Sept 30, and then add a dollar per year to the hourly minimum until it hits $15 in 2026. After that, the plan calls for an automatic annual cost of living increase.

Pushing for greater economic fairness

One interesting wrinkle is that while the Florida pay hike was of course promoted by organized labor, its chief backer and instigator was an Orlando businessman and attorney named John Morgan, who bankrolled the campaign with more than $5 million of his own money. Why? Because Morgan is convinced that states must take action now to reduce america’s lopsided income inequality and to promote greater economic fairness, for the modern capitalist system to survive.

“What I personally believe the unrest in America is really all about, whether you’re a Bernie bro or a Trump supporter in the Midwest — it’s about income inequality,” says Morgan. “Every great society can crumble because the haves have too much and the have-nots don’t have enough.”

The Florida mandate will in fact reduce the inequality gulf, according to a progressive Florida think tank, the Florida Institute. Its experts calculate that the newly mandated minimum wage increases will bring a rise in pay and living standards for about one-quarter of Florida’s workforce, about 2.5 million people, and it will also help reduce racial and gender pay disparities.

Rallying cry – “The fight for $15” Read more

Veteran journalist: It’s time to make billionaires pay their fair share

Veteran journalist Hedrick Smith says the rapidly expanding economic divide cries out for action.

WASHINGTON – While you and I have focused on the economic havoc of job losses and small businesses shutting down because of the pandemic, we missed noticing that the tiny sliver of super-super-rich at the apex of our economy was simultaneously amassing astronomical fortunes, thanks to the pandemic.

A surprise perhaps because that scenario runs contrary to most downturns. But the sad fact is that the corona pandemic has deepened and exacerbated America’s economic divide – the already gaping inequalities of our 21st-century economy. It’s as if the super-rich and everyone else live on two different planets.

As the Census Bureau reports that more than 118 million Americans lost jobs or suffered cutbacks in income or work-time during the pandemic, America’s 650 Billionaires added more than $1 trillion to their already massive personal wealth, according to Forbes magazine and the nonpartisan Institute for Policy Studies in Washington.

The huge financial winnings of the billionaire elite dwarf even the urgently needed flood of $2,000-per-person checks sent out by the federal government last spring to 150 million Americans. The financial bonanza enjoyed by billionaires was triple the size of that nationwide federal bailout.

What’s more, the fact that the ultra-rich were reaping explosive windfall profits on the soaring stock market while 81 million Americans reported having trouble covering costs like paying the rent or putting enough food on the table underscores the chasm between Wall Street and Main Street, the disconnect between the financial markets and the real economy.

Pandemic Isolation Is Rocket Fuel for FAANG

The numbers that define the billionaire boom are truly mind-numbing, out of whack with past experience. During the economic collapse of the Great Recession in 2008, America’s financial super-elite saw its fortunes fall right along with the economic crunch suffered by middle-class American households.

But not this time. According to Forbes, updated by the Institute for Policy Studies, the soaring gains of the billionaire elite defied the economic laws of gravity. Despite the plunge in the nation’s economy, their wealth shot up.

Their colossal gains were powered by the through-the-roof profits rolled up by high tech companies like the so-called FAANG – Facebook, Amazon, Apple, Netflix, and Google, plus retail giant Walmart. High tech was ideally positioned to reap astonishing returns from our almost total dependence on the web, the tube, social media, and online shopping during the physical confinement and isolation under the sway of corona.

Bezos and ex-Wife Now Worth More than $250 Billion

So Forbes, which has long tracked the rise and fall of the ultra-rich, compiled a boxscore so we can all witness the phenomenal payoffs pocketed by the titans of high tech: Read more

Veteran journalist explains how 2020 campaign spending went through the roof

WASHINGTON– The flood tide is still rising, but already the Mega-Money tsunami of Election 2020 is going into the record books as the most expensive election in American history with the biggest flow of dark money ever funneled anonymously to candidates – $750 million, up from a minuscule $5 million a decade ago.

With final spending reports yet to be filed and another $200-$300 million pouring into Senate runoff elections in Georgia, the overall price tag for the 2020 election has already hit $14 billion, according to the Center for Responsive Politics which tracks political money. That stunning total is more than twice as much as four years ago.

We were warned a decade ago to expect this Niagara of campaign cash by Supreme Court Justice John Paul Stevens who bluntly told his brethren on the high court that their decision in the Citizens United case “unleashes the floodgates” by legalizing unlimited campaign spending by corporations and other independent groups.

Joe Biden: A $500 million funding edge pays off

Since that fateful decision a decade ago, the numbers have soared exponentially. “Ten years ago, a billion-dollar presidential candidate would have been difficult to imagine,” commented Sheila Krumholz, executive director of the Center for Responsive Politics. This year, it happened.

Donald Trump, with his billionaire connections, looked like a sure bet to become the first to hit $1 billion, especially when he began fund-raising for re-election almost immediately after taking his oath of office in January 2017.

But ironically scrappy Scranton Joe Biden, who was the late-starting, slow-moving turtle in the money race, was actually the one who broke the billion-dollar barrier, amassing a total of $1,380,583,483 for his run for the White House. For a candidate like Biden, who deliberately masked himself and self-isolated because of Covid and ran a thin stump campaign, having a half-a-billion-dollar campaign spending advantage over Trump was crucial.

Biden made his funding leverage pay off handsomely. Time and again, he was able to make up for his lack of vote-pumping, in-person  campaign rallies by a steady flow of television, social media, and digital ads to penetrate deep into political battlegrounds and come away with hard-earned victories in pivotal states like Arizona, Georgia, Michigan, Pennsylvania, and Wisconsin.

For Senate Democrats: Spending does not equal winning

But as other Democrats down-ballot learned to their dismay, Mega Money does not always translate into victory. Overall, the Democrats out-raised and outspent Republicans by $5.8 billion to 3.8 billion  (not counting the $1.4 billion that billionaires Mike Bloomberg and Tom Steyer spent on their failed presidential primary campaigns).

Top Row: North Carolina – Cal Cunningham (D) v. Thom Tillis (R)
Bottom Row: Iowa – Theresa Greenfield (D) v. Joni Ernst (R)

But bigger bankrolls did not pay off for the Democrats in their desperate attempt to win a majority in the Senate and fatten their House majority. In states like Maine, Iowa, North Carolina,  and South Carolina, where Democrats were hungering for victories, they and their SuperPAC allies had bigger campaign war chests than the Republican Senators they were trying to unseat, but all that money did not spare Democrats from disappointing defeats.

In North Carolina, which saw the most expensive Senate race in the history of American campaigns ($285 million), Democratic challenger Cal Cunningham outspent incumbent Republican Thom Tillis by $166 million to $119 million – and still lost. Same thing happened in Iowa, where Democratic challenger Theresa Greenfield outspent incumbent Republican Senator Joni Ernst $111 million to $87 million and then lost by more than 100,000 votes. In South Carolina, incumbent Republican Lindsey Graham also fended off a much better funded Democratic challenger, Jaime Harrison.

How Mitch’s superPAC blocked the Democrats Read more