Tuesday, April 01, 2014 - Murderers and Cheats

Murderers and Cheats
by Sinclair Noe

DOW + 74 = 16,532
SPX + 13 = 1885
NAS + 69 = 4268
10 YR YLD + .04 = 2.76%
OIL – 1.99 = 99.59
GOLD – 5. 00 = 1280.80
SILV un = 19,86

Congratulations Mary Barra, you’ve been named CEO of General Motors, one of the biggest companies in America; now head on over to Capitol Hill to take the blame for the people who used to run the company.

Barra’s appearance before a subcommittee of the House Energy and Commerce Committee represented a significant new phase in the company’s crisis since it issued recalls that began in February for 2.6 million Cobalts and other vehicles. The problems with the cars involve faulty ignition switches; GM repeatedly failed to fix faulty ignition switches, despite conducting multiple internal studies of the problem since 2001, and 13 people died in the defective vehicles.

Members of Congress and the families of people killed in GM cars are urging Barra to declare the cars unsafe to drive until new ignition switches are installed. So far, GM has said the vehicles are safe to operate as long as there are no objects attached to the ignition key.  GM conducted several internal investigations of the switch problems, dating back as far as 2001. Company engineers learned that the key in the ignition could be inadvertently bumped into the off or accessory position, causing the engine to lose power and disabling air bags.

Documents show that GM approved the switch for installation in its compact cars in 2002, despite data from its supplier, Delphi that the key turned too easily in the ignition. Meanwhile, the National Highway Traffic Safety Administration knew of problems but did not order earlier recalls. The automaker rejected changes to the switch in 2004 and 2005 despite becoming aware of consumer complaints. In July 2005, the company and the National Highway Traffic Safety Administration learned of a fatal accident in Maryland that killed a young woman. It was the first of what would become a series of incidents in which vehicles suddenly lost power and air bags failed to deploy in a crash.

GM and Delphi changed the switches in 2007, but the new switches were also defective. Federal safety regulators made an internal recommendation to open a formal defect investigation in 2007 after receiving information about four fatal crashes involving air bags that failed to deploy, but the agency declined to pursue a formal investigation because, it said, it “did not identify any discernible trend.”

Last night, Barra met privately with 22 family members of accident victims at GM's offices in Washington. There is nothing that would indicate that Barra was involved in the past problems; she will be very much involved in resolving those problems. There needs to be compensation for families of the victims. And they will have to find out what went wrong, and how it could continue to go wrong for so long. There are still cars on the road with faulty switches. They will have to deal with that and fast. At this point, any more deaths would be tantamount to murder. Maybe we’ve already hit that point.

The executives at GM knew for 13 years that their cars had a defective ignition switch that could and did kill people. They did a "cost-benefit analysis" and concluded that paying off the deceased's relatives was going to be cheaper than having to install a $10 part per car. They then covered up their findings and continued to let millions drive around with the defective part in their cars. There would be no recalls. People died; parents had to bury their children.

Also today in Washington, the Senate Permanent Subcommittee on Investigations released a report on Caterpillar, the company that makes heavy construction and mining equipment. According to the report, Caterpillar paid its tax consultant and auditor, PricewaterhouseCoopers to help set up the transfer of $8 billion in profits to a Swiss subsidiary between 1999 and 2012. The transfers had no economic substance and were made solely to take advantage of the lower tax rate Caterpillar negotiated with Switzerland, which ultimately resulted in about $2.4 billion in tax savings. And even though the tax scheme was just a way of shuffling paper to avoid taxes, the report did not draw any conclusions about whether this was illegal. It will likely result in the introduction of new legislation to make it tougher to skirt tax laws, but then that legislation would have to pass, and there will be armies of lobbyists on the case.

Over the past two years, GE has deployed more lobbyists than any other company to argue for a tax loophole that lets businesses deduct interest earned from overseas lending, according to a new report by Americans for Tax Fairness. This particular tax break will likely cost the US government $62 billion in revenue over the next decade.

GE lobbyists made contact with lawmakers or their staffs at least 863 times over a two-year period between 2011 and 2013 to argue for the loophole, known as the "active financing exemption." Congress is expected to extend the exemption again soon, with bipartisan support. The company paid its lobbyists $63 million to advocate for the exemption and other tax-related interests over that time. Citigroup, the next-busiest company, sent lobbyists half as often to push for the deduction and spent less than $15 million.

All told, the top 30 companies and trade organizations that lobbied for the exemption; major Wall Street banks and other big multinational companies with financing arms, such as GE and Ford; made more than 4,000 contacts with Congress to press for an extension of the exemption. They paid lobbyists $586 million over that time. The tax break essentially lets businesses indefinitely shield from US tax authorities interest they earn from lending money overseas.

It's not clear how much the loophole benefits each individual company, in terms of tax savings. It also can't be determined from lobbying records how much money GE or other companies spent specifically to push for the active financing exemption because companies often lump together spending totals for several issues together. But GE wrote in its 2012 annual report that if the provision were not renewed, "we expect our effective tax rate to increase significantly."

Congress technically did away with the active financing exemption as part of a tax-code overhaul in the 1980s. At the time, lawmakers said it was too easy for companies to cut their tax bill artificially by making it seem as if profits earned in the US were instead earned overseas. Yet Congress reintroduces the exemption every year, as part of a giant package of more than 50 tax breaks known as tax extenders, which the Congressional Budget Office calculates could cost the government $700 billion over the next decade.

Support for the extenders is typically bipartisan. The last round expired at the end of 2013, and Congress is now considering a package that would apply the tax breaks retroactively to the beginning of 2014.

The companies who have pushed hardest for the extension of the tax loophole are among those that are the most criticized for exploiting US tax laws in order to shelter huge amounts of revenue overseas. Though the US corporate tax rate is technically 35%, the companies that employ the active financing deduction and other tax-sheltering mechanisms pay a far lower effective rate.

General Electric, according to some calculations, pays an effective rate of less than zero in many years. GE claimed a tax benefit of $3.1 billion, meaning it claims it overpaid by that much, between 2008 and 2012 on $27.5 billion in profits

According to a new report from ISI Research, US S&P 500 companies now have $1.9 trillion parked outside the country. Some of that is just multinational corporations profits overseas; welcome to globalization; a big part of it is tax avoidance. Apple figured out a way to legally avoid paying corporate income tax on $30 billion of overseas profits. Apple set up a shell company, an Irish subsidiary that didn’t owe Irish taxes because it was managed and controlled from the US, but it didn’t owe US taxes because it was incorporated abroad. Brilliant.

Except, sometimes a big multinational like Apple might want to bring that money back to America, at which point the government taxes the difference between what companies pay in corporate income tax abroad and what they would have paid here. So, if they ever want to get the money out of international limbo, there shouldn’t be any advantage to this kind of tax avoidance scheme. Unless, the government does something stupid, like rewarding this bad behavior, with a tax repatriation holiday; a brief window of amnesty to bring capital back onshore at a fraction of the tax rate, pennies on the dollar. So, all Apple has to do is be patient and wait for the tax repatriation holiday.

And why would the government offer such a gift to tax dodgers? The thinking is that it brings in fresh money, which will be put to productive purpose, spurring economic growth. We tried it in 2004, and it doesn’t work. Growth and investment didn't increase. Even though corporations weren't supposed to use these funds for share buybacks or dividends, they did. That was good news for stock owners; bad the economy and even worse news for workers. Some of the companies that brought the most money back actually laid people off.

Tuesday, May 21, 2013 - Apple Gimmicks

Apple Gimmicks

by Sinclair Noe

DOW + 52 = 15,387
SPX + 2 = 1669
NAS + 5 = 3502
10 YR YLD - .02 = 1.94%
OIL - .98 = 95.95
GOLD – 18.10 = 1377.00
SILV - .49 = 22.53

It's Tuesday. The markets moved higher. It's almost inevitable. The Dow Industrials have closed higher every Tuesday this year, with the exception of January 8^th; 19 consecutive Tuesdays. No, I don't know why.

Well, today, part of the reason could be traced to the Federal Reserve. A couple of Fed heads were talking up easy money. New York Fed President William Dudley said he cannot be sure whether policymakers will next reduce or increase the amount of purchases, due to the "uncertain" economic outlook. The QE taper may end up being a QE expansion. Dudley worries about investor over-reaction to a "normalization" of policy and suggests the FOMC may need to update what it needs to see to move in that direction. Earlier, James Bullard, president of the Federal Reserve Bank of St. Louis, urged the European Central Bank to consider employing a US style quantitative easing program to counter slowing inflation and recession in the euro zone.

Tomorrow, Fed Chairman Ben Bernanke will speak before a congressional panel, the Joint Economic Committee. The minutes of the Fed's latest policy-setting meeting will be released on Wednesday afternoon. When the Fed showers liquidity, the money flows to the markets, but I can't give a good reason for the Tuesday winning streak.

There is a certain symmetry in life: fire and ice, winter and summer, darkness and light, yin and yang. And this brings us to the IRS scandal; last week we learned about the demand treatment afforded some groups by the IRS, this week we learn about the generous nature of the taxman. It's not so much that the taxman is benevolent; we all no better; but some entities demand preferential treatment; powerful, giant corporations are holding governments and citizens up for ransom; taking tax breaks and subsidies from countries in the name of competitiveness; sheltering profits in off-shore tax havens.

Google, Amazon, Starbucks, GE, Apple, and pretty much every other major corporation and the big Wall Street banks siphon off profits via off-shore entities that are sometimes no more than a mailbox on a tropical island, and they don't pay taxes like the rest of us, because if they did it would destroy their ability to be competitive.

And today, Tim Cook, the CEO of Apple, ran down the aisles of Congress and hurled his hammer at the totalitarian overlords, metaphorically speaking. Actually, Cook appeared before the Senate Permanent Subcommittee on Investigations. Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in California. By officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.

Apple Operations International, which has no employees but reported $30 billion in income over the four years, has not filed an income tax return in any country for the last five years, the subcommittee investigation found.

A second company, Apple Sales International, holds the economic rights to Apple's intellectual property in Europe, Asia and Africa. The subsidiary had $74 billion in sales income from 2009-2012 but paid less than 1% in taxes to Ireland.

The only taxes paid were on the interest earned by the cash pile and small sums in local markets. Senate investigators allege a total of $70bn has been sheltered this way in four years.

The tactic, which is legal, is possible through complex cost-sharing agreements that transfer the economic rights to the valuable intellectual property behind the iPhone, the iPad, and other products to subsidiaries outside the US.

Tim Cook told the senators: “We pay all the taxes we owe, every single dollar.” And that appears to be the case; Apple does pay a considerable amount of taxes in the US . Cook added: “We don't depend on tax gimmicks.” And that appears to be a slightly more dubious claim. Cook said he "personally doesn't understand the difference between a tax presence and a tax residence".

In a dramatic display of how threats from multinational corporations are driving down taxes across the world, Cook warned Congress that he would refuse to repatriate a total of $100 billion stashed offshore unless it acted to slash the 35% US rate. Cook said the tax rate for repatriated money should be set "in single digits" to persuade companies to bring it back. Standard tax for US profits should be, he said, in the "mid 20s". 

 Everyone "knows" that the corporate income tax is a mess. Ask any company. They pay too much in corporate income tax, face rates higher than in any other OECD country, and are just following the law when they use tax havens to keep profits eternally deferred from taxation and to perform general sleight-of-hand. There is a big difference between the headline rate of 35%, which is indeed tops in the OECD, and the effective rate of 12.1%, one of the lowest in the OECD.

Apple is not an outlier in its efforts to produce 'stateless income'; income that is taxed neither in the US nor in the countries where its foreign customers are located, but it is audacious in its tax avoidance strategies. Apple shifted tens of billions of dollars of income without even breaking a sweat. Google followed the Apple playbook by using a low-tax Irish subsidiary to avoid taxes; Google is now under investigation in the UK. Starbucks' tax dodge was so blatant British consumers began boycotting the firm until it reversed course. In the US, we aren't indignant. Today, senators talked about how they considered Apple to be a great company, even if they did have concerns about the tax thing.

We have lots of great American companies that operate in a more or less free-market system that has allowed them to thrive on publicly-funded research, infrastructure, defense, and in the case of Apple – patent and intellectual property protections. And they show their gratitude by choosing to cut their taxes in half – or actually closer to one-third despite doubling their profits, so they may hold more than $1 trillion dollars of cash off-shore, and eliminate workers rather than create jobs. Or, as one Apple executive explained: “We don't have an obligation to solve America's problems.”

Which raises an interesting question; why should America have an obligation to solve Apple's problems? Apple enjoys the protections of US laws against patent and intellectual property infringement. Apple enjoys the ability to ship its products around the world, in part because the US has the largest, most powerful military making sure the avenues of commerce aren't crowded out by pirates on the high seas or in the skies. If Apple doesn't want to pay for those protections, they shouldn't be forced to. They could just stop using those services. You don't pay; you don't get – no gimmicks in that equation.

The scandals in Washington remind us to be ever vigilant about the dangers of government overreaching its authority, whether by the long arm of the IRS or the Justice Department, but that doesn't mean that we accept anarchy. We need to remember that government does provide important services and protections, and somehow we have to pay for that. Tim Cook and Apple don't want to pay. Nobody wants to pay. I understand. And so, not much changes

By the way, the World Bank estimates the total cost for a successful attack on malnutrition would be approximately $10.3 to $11.8 billion annually. Apple alone underpaid its 2012 taxes by $11 billion, based on a 35% rate. So, we could literally put an end to hunger in this world, if Apple paid it's taxes, but you know, it's not Apple's obligation to solve the problems of the world. 

Friday, December 7, 2012 - A Date Which Will Live in Infamy, Plus the Jobs Report

A Date Which Will Live in Infamy, Plus the Jobs Report

by Sinclair Noe

DOW + 81 = 13,155
SPX + 4 = 1418
NAS – 11 = 2978
10 YR YLD +.05 = 1.63%
OIL - .27 = 85.99

GOLD + 4.50 = 1704.50
SILV + .08 = 33.11

Today marks the 71^st anniversary of the attack on Pearl Harbor. There were of course, memorials in Hawaii and around the country. I've seen a few of the pictures. Each year the number of Pearl Harbor survivors that attend these memorials, their number grows smaller and their ranks thin. If you know a veteran of World War II, be sure to take time to recognize their stories, be sure to say thanks.

Today's major economic data was the monthly jobs report; widely expected to be weak due to the effects of Hurricane Sandy. Instead, it came in relatively strong. The headline numbers: the economy added 146,000 jobs in November, and the unemployment rate dropped to 7.7%, a four year low. The Labor Department claimed that the effect of Sandy on the report was minimal, saying in a statement, “Our analysis suggests that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November.”

In other words, we should not look at this report as surprisingly good given the effect of the hurricane. Rather, the Labor Department claims that the jobs numbers should be analyzed without taking the storm into account at all. And by that standard, not only were the job numbers weak, there were some underlying problems. To be counted, a person would needed to have been out of work for three weeks or so on Nov. 12. The storm hit Oct. 29. Only a few workers met the length criteria. So, some of the storm's negative effects will likely show up next month.

This month's number beat expectations of 75-80,000 jobs, but that was considering the hurricane. Taking out the effects of the hurricane the number was below the average job growth per month of about 150,000 over the past two years. It is growth but it is sluggish and not enough.

First, this is the initial report; there will be revisions. Each month, the Labor Department issues its estimate for the previous month’s job growth, but it also issues revisions for the two months prior to that as well. And this report showed a net downward revision of 49,000 jobs. So really this report gave us a net job gain of 97,000 — a much less impressive figure than the headline 146,000; and there will be revisions.

The report also showed a decrease in construction employment of 20,000 jobs. If Sandy did in fact have a minimal effect on the report then this is strange, because recent housing start data has been positive; just this week the Commerce Department announced that construction spending increased in October, showing the continuance of a positive trend. So, if construction spending is increasing it should show up as jobs, unless construction spending isn't really increasing or perhaps because Hurricane Sandy had a bigger impact on these numbers than the Labor Department’s statement suggests.

After showing a solid 0.3% gain last month, the participation rate — or the percentage of adult workers in the workforce — declined once again by 0.2%. That drop in the participation rate appears to be the primary reason the unemployment rate dropped to 7.7%, as the household survey actually showed a net decline in jobs. While some of the overall decline in the participation rate has been driven by demographic reasons — an older country is going to have fewer people able to work — that only tells part of the story. Some of the decline in participation is undoubtedly a product of a depressed economy, and a true jobs recovery would have this number moving upwards, rather than the other way around.

Roughly 350,000 Americans left the labor force in November, lowering the rate, partly due to bad weather keeping Americans from working. The ranks of the long-term unemployed—those without a job for 27 weeks or more—fell only slightly to 4.8 million from 5 million.

One thing not indicated in the report is a negative effect of the fiscal cliff. But November's figures also show that jobs are growing too slowly to significantly lower unemployment or boost the economy's overall growth, which faces headwinds. To keep up with population growth, the economy needs to add about 120,000 new jobs every month just to keep the unemployment rate from rising. While any slowdown could prove temporary, even a brief stall will hurt job creation—one of the main things keeping consumers confident.


A survey by the University of Michigan, also released Friday, suggests consumers this month are already feeling markedly less optimistic about the economic outlook, after being more confident than they have been in five years. The Thomson-Reuters/University of Michigan consumer sentiment index's preliminary reading for December slumped to 74.5 compared with 82.7 at the end of last month.

The jobs report revealed a bifurcated economy. Service-related businesses, a broad category including retail, health care and other areas, are fueling much of the nation's job growth. Retail employment alone added more than 50,000 jobs last month. However, the goods-making part of the economy, manufacturing and the housing market, didn't contribute to job growth in November. Construction employment fell by 20,000 and manufacturing lost 7,000 jobs. Government hiring was roughly flat, but declined by about 50,000 in October.

An unusually high number of workers—more than 1 million—worked part-time instead of full-time because of bad weather, the government said. That suggests that some of the 350,000 decline in the labor force, and the drop in the unemployment rate, could be linked to Sandy.

In February, 2011, President Obama went to Silicon Valley and participated in a breakfast meeting of high tech bigwigs. Obama interrupted Steve Jobs to ask what it would take to make iPhones in the USA. Jobs answered: “Those jobs are gone and they're not coming back.”

Well, time change, and a few of those jobs are coming back. Apple will resume manufacturing in the US next year, not much but a few Mac computers will be made here, about $100 million in manufacturing.

Meanwhile, GE is spending some $800 million to re-establish manufacturing in its giant, and almost abandoned facility at Appliance Park, in Kentucky. In February 2012, GE opened an all-new assembly line to make water heaters. In March 2012, GE started a second assembly line to make refrigerators. Another assembly line is under construction make a new stainless-steel dishwasher starting in early 2013. Whirlpool is bringing mixer-making back from China to Ohio. Otis is bringing elevator production back from Mexico to South Carolina. And Wham-O is bringing Frisbee-molding back from China to California.

Chinese wages are five times what they were in 2000 and are expected to keep rising rapidly. And labor is a steadily decreasing percentage of the cost of manufacturing.  Oil prices are three times what they were in 2000. Natural gas in the US is a quarter of what it is in Asia. By moving manufacturing back to the US, time to market also improves dramatically. As a result, that water heater that GE makes, they can now sell it for 20% less.

We have seen a very short-term and I think very poor decision by companies to outsource labor in pursuit of maximizing shareholder gain; and in the short-term it worked, but there was a cost. These executives also outsourced innovation and design and quality, and they decimated the core of their domestic customer base, and they debased their good name and reputation in exchange for a quick pop to the spreadsheet and a boon for bonuses. Most of these firms that outsourced didn't consider the externalities, the hidden costs.

They missed the fact that management needs to have a close working relationship with workers to insure quality and innovation. They also missed the costs and risks of an international supply chain, which is increasingly out of step with the shorter, faster product cycles; and as labor becomes an ever smaller part of the overall process, labor savings become less and less relevant. As products become more high-tech, production is more complicated, and the quality, rather than the cost of labor, becomes a priority.

As it turns out, maximizing shareholder value in the short-term leads businesses to do things that detract from maximizing long-term shareholder value, such as outsourcing, favoring cost-cutting over innovation, the destruction of brand equity, and excessive executive compensation. Outsourcing isn't an isolated event. It's the result of the underlying philosophy of shareholder value.

Fiscal cliff negotiations have devolved into direct talks between President Obama and John Boehner, cutting other congressional players out in effort to streamline the talks. House Speaker John Boehner and House Minority Leader Nancy Pelosi sparred in dueling press conferences today.

Boehner declared there was no progress in the talks. He accused the White House of enacting a deliberate strategy of”slow-walking” the economy toward the fiscal cliff. Pelosi took umbrage at that term. She said Republicans are the ones who have not acted on a bill that’s cleared the Senate, which would extend the Bush-era tax cuts for 98% of the population. Mitch McConnell was apparently too befuddled and so he just filibustered himself.

Today’s jobs report shows an economy that’s still moving in the right direction but way too slowly, which is why Washington’s continuing obsession with the federal budget deficit is insane. Jobs and growth must come first. The fact is some 350,000 more people stopped looking for jobs in November, and the percent of the working-age population currently employed continues to drop — now at 63.6%, almost the lowest in 30 years. Meanwhile, the average workweek is stuck at 34.4 hours.

The slowness of the jobs recovery isn’t because of Hurricane Sandy, and it’s not because of any uncertainty over the looming “fiscal cliff.” Businesses won’t create more jobs without enough customers. But consumers can’t and won’t spend because they don’t have the money. Until the private sector is able to boost the economy we need to invest in the economy. Now is the time to invest. The cost of borrowing is low; the yield on the ten-year Treasury is near historic lows, and the need for more jobs and better wages so high, and our infrastructure needs repair. We need to invest in infrastructure to improve productivity, and that means an investment in jobs.

Tuesday, December 4, 2012 - The Clock is Ticking

The Clock is Ticking

by Sinclair Noe

DOW – 13 = 12,951
SPX – 2 = 1407

NAS – 5 = 2996
10 YR YLD - .02 = 1.61%
OIL - .71 = 88.38
GOLD – 19.20 = 1697.80
SILV - .75 = 33.01

So, President Obama presented an opening offer in the fiscal cliff talks; Speaker Bohener said it wasn't serious and the financial and political reporters passed along the complaint that it was a recycled version of an old plan; before the election those same reporters spent the year passing along the complaint that Obama had no plan. Then Obama complained that the Republicans didn't have a counter offer, and they finally came up with a counter but it didn't have any specifics, but one area is that they want cuts to Medicare, even though before the election they were outraged that Obama was cutting Medicare. The current Republican position seems to be that the fiscal cliff’s instant austerity would destroy the economy, which is odd after four years of Republican clamoring for austerity, and that the cliff’s military spending cuts in particular would kill jobs, which is even odder after four years of Republican insistence that government spending can’t create jobs. And remember, this is all about the debt ceiling and tax cuts and spending cuts.

And the political and financial reporters pass all this stuff on, with a countdown clock ticking in the lower right screen. It’s irresponsible reporting. Mainstream media outlets don’t want to look partisan, so they ignore the BS hidden in plain sight, the hypocrisy and dishonesty. It's a big cliff, taxmageddon scam. This year the Big Apple ball will slowly drop down on Time Square to ring in the destruction of the economy. The Big Pine Cone will drop in Flagstaff and it will fall over the cliff. Malarkey.

Let all this serve as a reminder that the news in this country most of the time doesn't have the sensibility to know when they are being lied to and so they pass along the lies as news. And the whole game is a big masquerade, a three card monte scam. Does anyone recall how the Bush tax cuts were passed? The 2001 cut was passed based on the claim that the government was running an excessive surplus; the 2003 cut on the claim that it would provide an economic boost. Then the surplus went away, and the economy did not perform very well. The worst example was the Campaign to Fix the Debt. You remember the 71 CEOs that went to the White House and said it was imperative to cut Social Security and Medicare. If you have no defense, you have to go on offense.

The 71 Fix the Debt CEOs who lead publicly held companies have amassed an average of $9 million in their company retirement funds. A dozen have more than $20 million in their accounts. If each of them converted their assets to an annuity when they turned 65, they would receive a monthly check for at least $110,000 for life. The Fix the Debt CEO with the largest pension fund is Honeywell's David Cote, a long-time advocate of Social Security cuts. His $78 million nest egg is enough to provide a $428,000 check every month after he turns 65. Forty-one of the 71 companies offer employee pension funds. Of these, only two have sufficient assets in their funds to meet expected obligations. The rest have combined deficits of $103 billion, or about $2.5 billion on average. General Electric has the largest deficit in its worker pension fund, with $22 billion.

That's right, 2 out of 71 major corporations have actually funded their pension plan promises to the people who make the companies run. Only 2 out of 71 intend to fulfill their contractual obligations to their workers. So, what is their big concern? Well David Cote, the CEO of Honeywell says: “We have a significant problem with entitlements. Medicare, Medicaid in - in particular. Those things need to get resolved together. If we could actually develop a four trillion dollar credible market plan that would cause everyone out there to say, wow, we can govern again.”

Got it? If you've underfunded your pension plan, don't focus on that, instead attack the government health care plan. Here's an even better idea; let's broaden the debate on entitlements, by bringing in the fact that state and local governments give away about $80 billion per year to companies as enticements to create jobs that often later vanish. And the federal entitlement programs to big corporations? Five of the corporations whose CEOs signed the Fix the Debt letter paid ZERO federal income taxes on $62 billion in total profits and received $27 billion in tax subsidies over the last four years. Six of the corporations whose CEOs signed the Fix the Debt letter were members of the WIN America Coalition, which lobbied Congress to pass legislation (S.1671) that would allow U.S. companies to dramatically reduce their tax rate on $1 trillion in foreign profits brought back (“repatriated”) to the United States. The measure would reduce the 35 percent corporate tax rate to an 8.75 percent effective tax rate on the repatriated profits. How about we end the corporate welfare to the CEOs in limosines?

The companies are glad to take government money in the name of job creation. But then they talk about the "free market" when shuttering factories and firing workers. If we're going to be talking about "makers" and "takers," we should broaden that discussion, too.

For all of the noise they make about the federal budget deficit, US companies are not exactly doing much to help. In fact, many of them have been making the problem worse in recent weeks by quickly shoveling cash to investors to take advantage of low tax rates before they rise, potentially costing the government billions of dollars in much-needed tax revenue. All told, companies so far have given shareholders roughly $24.2 billion in special or early dividend payments, potentially saving those shareholders -- and costing the government -- $6 billion or more in taxes. So far, 144 publicly traded U.S. companies have announced special one-time dividends to give cash to shareholders before an expected increase in the dividend tax rate next year, amounting to $21.4 billion. Oracle just made an announcement today; Oracle CEO, Larry Ellison stands to pocket about $200 million. Maybe he can go buy another island.

These are just some of the reasons why these corporate leaders have no credibility when they blather on about "fixing the debt." They bankrolled the politicians that created the debt through a tax system that gave them myriad ways to avoid paying their fair share to support the country. Then they shipped good-paying jobs overseas and depressed the wages of the jobs left behind so that workers had less that they could afford to pay in taxes as well. All in the name of shareholder value.

There is a way to fix the debt, but it is not their way.

Meanwhile, there are some problems with the economy that have been moved to the back burner, or even off the stove. Don't forget; people got no jobs, or they have part-time work, and people got no money, or not enough money, or they're buried in debt, mortgage debt, student loan debt. Of course, if we actually did worry about growth and did something about it, that would go much further toward reducing the deficit than cuts to social programs. "The boom, not the slump, is the right time for austerity.” 

 Maybe we should invest in the country. Maybe we could invest in infrastructure, maybe we could invest in education. Maybe we don't have as big a financial crisis as a crisis of innovation. There is a serious innovation crisis, the consequences of which will be with us long past the financial crisis. In 1950 we got the transistor, in 1960 we got the integrated circuit and in 1970 we got the microprocessor. Not much lately, (and those were all minor compared with Bessemer, internal combustion and electrification). Nobody's footing the bill for the big breakthroughs, we're not getting the big breakthroughs. Looks like we starved that beast!

Maybe we should all tune out the fiscal cliff nonsense for a while, and stop believing the insanity that the deficit will eat us whole and swallow our little children. The fiscal cliff is an artificial demon. Even though we've known the deadline was approaching, it wasn't until after the election that the fiscal cliff narrative took over the media discourse. One all-consuming narrative ended, and another instantly took its place.

Each day we move closer to "the cliff," the media will breathlessly report on how the White House and Republicans are defiantly squared off against each other. The debate the country should be locked in right now isn't about the fiscal cliff and the deficit but about how to grow the economy; how to employ people in productive jobs; and the only way to grow the economy is to grow the debate beyond the artificial playground the politicians and the corporate welfare queens would have us believe the game is being played.