The corporations that occupy Congress

By David Cay Johnston
December 20, 2011

By David Cay Johnston

The views expressed are his own.

Some of the biggest companies in the United States have been firing workers and in some cases lobbying for rules that depress wages at the very time that jobs are needed, pay is low, and the federal budget suffers from a lack of revenue.

Last month Citizens for Tax Justice and an affiliate issued “Corporate Taxpayers and Corporate Tax Dodgers 2008-10″. It showed that 30 brand-name companies paid a federal income tax rate of minus 6.7 percent on $160 billion of profit from 2008 through 2010 compared to a going corporate tax rate of 35 percent. All but one of those 30 companies reported lobbying expenses in Washington.

Another report, by Public Campaign, shows that 29 of those companies spent nearly half a billion dollars over those three years lobbying in Washington for laws and rules that favor their interests. Only Atmos Energy, the 30th company, reported no lobbying.

Public Campaign replaced Atmos with Federal Express, the package delivery company that paid a smidgen of tax — $37 million, or less than one percent of the $4.2 billion in profit it reported in 2008 through 2010.

For the amount spent lobbying, the companies could have hired 3,100 people at $50,000 for wages and benefits to do productive work.

The report – “For Hire: Lobbyists or the 99 percent” – says that while shedding jobs, the 30 companies are “spending millions of dollars on Washington lobbyists to stave off higher taxes or regulations.”

These and other companies have access to lawmakers and regulators that are unavailable to ordinary Americans.

CALL CONGRESS

Doubt that? Dial the Capitol switchboard at 1 (202) 224-3121, ask for your representative’s office and request a five-minute audience, in person, at the lawmaker’s convenience back in the home district.

In more than a decade of lectures recommending this, I have yet to have a single person email me (see address to the right) about having scored a private meeting with the representative called.

Corporations have vast resources to pour into ensuring access — resources that expand when little or no taxes are paid on profits thanks to rules they previously lobbied into law.

Companies form nonprofit trade associations, hire former lawmakers and agency staffers, and have jobs to dole out to lawmakers after they leave office and to friends and family while they’re in office. Thanks to the Supreme Court’s Citizens United decision, corporations can now pour unlimited sums into influencing elections. So can unions, but they are financial pipsqueaks compared to companies.

Then there are political action committees, or PACs, to finance campaigns as well as donations by executives and major shareholders.

Combine all this and you have a powerful formula for making rules that favor corporate interests over human interests, something that the framers of the U.S. Constitution understood more than two centuries ago.

James Madison wrote disapprovingly in 1792 of “a government operating by corrupt influence, substituting the motive of private interest in place of public duty” where eventually “the terror of the sword, may support a real domination of the few, under an apparent liberty of the many.”

FEARS COME TRUE

The late U.S. president’s fears have come to life. For swords, just substitute police with rubber bullets, batons and pepper spray at Occupy demonstrations, including perfectly peaceful ones.

Company reports to shareholders show that among the 30 companies in the Public Campaign report, the 10 firms that spent the most on lobbying during the same three-year period fired more than 93,000 American workers.

Those firings took place in an economy that had five million fewer people with any work in 2010 than in 2008.

All those firings mean higher costs to taxpayers to support those unable to find work, including the more than 4.2 million Americans who are now persevering by applying for jobs after more than a year. Millions more have given up and are no longer counted among the unemployed.

Federal Express spent $25 million lobbying to protect a rule that makes it virtually impossible for its express delivery workers to unionize. That’s 67 percent of what it paid in taxes.

FedEx says it was “educating lawmakers” about a proposal “that would cripple competition in the express delivery industry and hinder our nation’s future economic success.”

The Teamsters, who represent drivers at United Parcel Service, say FedEx was protecting a special interest rule that shorts workers. UPS pays its unionized drivers 53 percent to 104 percent more per hour than FedEx does.

The United States already ranks second among modern nations, just behind South Korea, in the share of its workers in low-wage jobs while too many companies lobby for ever lower taxes, ever smaller wages and ever fewer worker rights to protect the mighty torrents of greenbacks flowing into their coffers. A better balance would make America better off.

PHOTO: Occupy DC movement protesters rally outside the U.S.  Capitol in Washington December 8, 2011. REUTERS/Yuri Gripas

33 comments

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In my opinion, corporations are the lazy ones. It is easy to fire people and use lobbyist to ensure more profits at the expense of employees. It takes diligent work and skill to keep those same workers employed and streamline processes and create new products or services and find new markets to enlarge profits. CEO’s are too lazy to do the latter.

Posted by JLWR | Report as abusive

I think our government and many Corporations have lost their way in seeking profits rather than being a service to people and to the country. This is an unsustainable prosition and can only end in failure of the corporations and of the form or government that we have now. Anyone who cannot see this has but to step back for a larger view. Wall Streets part in this is the quarterly profit thing. Corporations and good citizens are not built in 3 months.

Posted by fred5407 | Report as abusive

How about GE, who needs Congress just go to the White House direct….. No Money Needed… OH thats right put money into reelection a lot cheaper.

Posted by sunskr | Report as abusive

Those “police with rubber bullets, batons and pepper spray at Occupy demonstrations…” were there on behalf of “we, the people” who OBJECT to the seizure of public facilities from the GENERAL public by “petitioners” who, over months, come up with NO “petitions” yet create additional and ongoing government costs that Taxpayers must pay. In history a siege is NOT considered a “peaceful act”.

Do you really believe that those “… 93,000 American workers…” fired by those 10 firms were employees doing a job that could not be done for less? They might not have been fired had they had union representation, but when a union forces an employer to retain workers not required by the work load and/or at a rate in excess of their economic contribution to the employer’s “bottom line” there is a term applicable. It’s “featherbedding”, it’s expensive, and customers pay more for whatever such companies make.

You could also have said, with equal accuracy, that Federal Express spent $25 million lobbying to keep union interests from changing a rule to make it easier for its express delivery workers to unionize. There is no relevance of that $25 million to Fed Ex’s tax owed or paid. You compare apples and oranges.

It’s obvious that if FedEx paid unionized drivers 53% to 104% more that citizens would see a significant increase in the already high costs of shipping things under a rule that benefits consumers.

I take personal exception to socialists who would have special interest rules to unionize more and more services of skill levels anyone can learn quickly. That raises the cost of living to many more than individually benefit, and it WOULD “…hinder our nation’s future economic success.”

Union interests that exist solely through a labor surcharge on every American should be routinely and resoundingly rejected at the polls every time possible by free Americans. The alternative is to be less free. Yes, there are two sides of every coin; but you sure called this one wrong.

Posted by OneOfTheSheep | Report as abusive

it is very clear what is taking place in the u.s. and abroad. however every since monarchy’s and such became the business, human trafficing and slavery have always been the normal practice.
the angel speaking to moses, told moses to take off his sandals,for he was standing on holy ground. try to find that holy ground today, you will find governments and other entities safe gaurding it from the average indiviual.
herod was searching for the baby jesus to take his life.
when herod could not find the baby jesus, he ordered a proclamation, to take the lives of all babies up to a certain age.
if the government stifles a baby,:academically,economically,mentally  ,spritually,emotionally,and pyschically.
the baby does not need to suffer a physically mortal wound. as it has already been rendered ineffective in and of their own means. yet not destroyed enough not to serve the king/government.in england the first lady is the queen.in the u.s., if the presidents wife is titled as the first lady,and she is. then it stands to reason the president must have an equivalent title, the first man, hence the king. which would in and of itself make the government an accounting firm or majordomo of the one percent around the world.

Posted by fiigtree1 | Report as abusive

@fiigtree1,

You claim “it is very clear what is taking place in the u.s…human trafficing (sic) and slavery have always been the normal practice.” You can’t be serious.

“holy ground”? Find Moses and any angel and just ask.

“…governments and other entities safe gaurding (sic)…” public property and private property from trespassers and squatters is government’s JOB! Since you obviously don’t know, trespassers and squatters are NOT the American “average indiviual (sic)”).

You say: “if the government stifles a baby,:academically, economically,mentally,spritually,emotion ally,and pyschically (sic).
the baby does (fawns?) not need to suffer a physically (?) mortal wound. as it has already been rendered ineffective in and of their own means.”

You didn’t get much of that spelling and punctuation stuff in school, did you? Take it from me if you hack up paragraphs into coherent sentences and quit sprinkling periods everywhere it may be possible for others to figure out what you’re trying to say.

So you think the President and the First Lady should be accountable only to that mythical “one percent”? I guess that makes you wrong on just about everything, but you earn points for consistency.

Posted by OneOfTheSheep | Report as abusive

Beautiful !

Now I know why ordinary Americans get a 2% raise, while CEO’s make 40% year over year making the transition where in the 70′s CEO pay was 30 times entry level and now it is more than 300 times entry level.

Posted by American213 | Report as abusive

Please read what the chief investment of J.P. Morgan said in July 2011 at
http://www.investorvillage.com/uploads/4 4821/files/07-11-11_-_EOTM_-_Twilight_of _the_Gods__PWM_.pdf

“from……2001 to 2007…reductions in wages and benefits explain the majority of the net improvement in (profit) margins.

Working people are being squeezed dry by corporations.

Posted by ahfurman | Report as abusive

Some years ago, communism collapsed. My extremely simplified view on this is that in theory Communist ideals are great, but in practice its almost impossible, as there is no such thing as absolute equality…and decision making (translating to power) is in the hands of the few…and absolute power corrupts absolutely.

Fast forward to the present….is the market economy working well? In theory, its great that the market decides, and resource application is optimised, and the wellbeing of the individual is aligned with the wellbeing of the shareholders and the masses. But again power(key decisions)oscillates back towards the few who work the system and maximise their own positions. Absolute power corrupts absolutely!!

Posted by Keltmpoh | Report as abusive

This stuff — very well described by the author — has had an enormous, negative impact on employment in the U.S. Many so-called American corporations were behind the push to grant favorable trading status to China while turning a blind eye to its flagrant protectionism, for the reason that they wished to send materials and goods freely between the countries in order to globalize their operations. China’s trade barriers were erected carefully so as to permit this kind of transfer of goods and payments without incurring tariffs or other protections on the Chinese side, while their market as a whole — to completed products made in the U.S. — is protected in so many ways that it’s hard even to list them all. This — of course — has had a terrible draining effect on employment and leakage of IP from the U.S. to China, at a terrible cost to to the U.S. economy. But since it has a positive effect on the profitability of an international company, which is largely indifferent to where its expenses and revenues occur so long as they add up to a healthy net profit — it has become U.S. trade policy thanks to intensive lobbying. Cudos to the author for calling it out. It would be wonderful (but maybe hoping for too much) for more Americans in the business community to recognize and speak out about the fact that our national interest and the particular interest of individual corporations are, at least in this instance, at odds with one another. We need a sensible and active trade policy that has the national interest at heart.

Posted by luddy | Report as abusive

I applaud the author for encapsulating a complex moral dilemma which deserves more scrutiny. Perhaps by such exposure change can start to occur. It is clear the system is broken, our representatives scream this fact on the senate floor, yet apathy reigns amongst the people. I find it amazing that commenters can actually defend such behavior, but sadly realize that here like in Washington, lobbists exist to further their agenda and enrich themselves personally.

Posted by billsfriend | Report as abusive

Capitalism used to be such a good thing.

In our new era of American crony capitalism, money is the new religion. It is ALWAYS right. You cannot question it, and if you do, you are a heathen and to be scorned and beaten.

Corporations were just fine things; But now, they corrupt our government, with full license and reckless abandon.

I mourn our once vibrant democracy, created by founders whose papers indicate that they would not approve of our current corrupt system.

I mourn the free capitalist society we lost, that served all of the people and encouraged the best to come out in all of us.

But I say that the American people are all wrapped up in their own petty lives; Most of us won’t discuss politics, because “it is not polite.”

Well, we all got what we deserve, which is not what we had.

Freedom truly isn’t free. You have to hang on to it for dear life every minute of every day. We have not done that. We have squandered a great nation and now those powers that can subjugate us have been entrenched and legitimized by the so called Supreme Court.

I mourn for the America I used to know. I wish that my fellow citizens by and large would be interested in who runs their lives, who controls them.

Posted by ThreadDotRun | Report as abusive

Good article. Shows exactly where the priorities of the big corporations are: screw the US and head over to their darlings in Asia. I think we should show them the door.

Posted by lhathaway | Report as abusive

Good read David, thank you. It always amazes me that ground level employees of large corporations are so often treated as an expendable element. No security, no acknowledgement of value, and no respect.

It’s a horrible business model, ethically and economically. Management by terror generates fear and loathing from the front line troops representing the company to the public. It also invites marginal performance, absenteeism, hidden retaliation, and theft.

In my world of small business, which by the way although rarely mentioned represents half the jobs in this country, employees are valuable tools to be loved and respected because through them all profits come.

To pay a living wage, to provide healthcare, to give sick and vacation pay benefits, and to acknowledge employee value is not just ethics, it’s good business. A happy employee is a productive employee and a good representative for the company.

Employees in a well run company are a profit center, not a cost and to savage them for short term dividends is to me the height of foolishness. Such a simple concept, to share the rewards with those who help harvest them, yet it totally escapes what otherwise might be considered brilliant minds.

Posted by CaptnCrunch | Report as abusive

This is nothing new; our two corporate-funded parties have represented the .05% (not 1%) for decades.

It’s been accelerated lately from the Citizens’ United decision, but the Democratic Party came under control of the .05% circa the Clinton Administration. This “Democratic” administration eliminated Welfare, and saddled us with NAFTA and the WTO.

It’s been slow sinking into the heads of American workers, who generally have no class consciousness, so were only dimly aware the deck was being relentlessly stacked against them.

The Democrats threaten Americans with the Republicans to get their votes, then pass Republican policies that cut the throats of these dupes that voted for them. Economic violence is just as deadly as physical violence.

American workers now have no excuse; the Democrats just helped the Republicans pass THREE NEW NAFTAS, and police-state laws that let the government arrest, detain, torture, and kill Americans without due process. American is a new “third-world” country.

Voting for these corporate parties makes you a DUPE, contributing to your own destruction.

Q: What’s the alternative? A: The Green Party!

The Green Party doesn’t accept corporate money and represents CITIZENS’ interests. It’s taken them 10 years to get on the ballot in virtually every state due to obstruction from the duopoly, but they did it.

The Green Party has over 100 members in office that have won their elections at the local level. The next steps are the state and Federal levels.

Even before the Green Party starts winning Congressional elections, they can influence the outcome. Democrats, on the corporate payroll, will think twice before selling out the people when they see “their” votes going to the non-corporate alternative.

Voting Green sends a message to the corporate politicians that favoring corporate interests will lose them votes. And this message is sent EVEN IF THE GREEN YOU VOTED FOR LOSES!

VOTE GREEN!

Posted by Alan8 | Report as abusive

Here’s one solution: make every member of Congress wear sponsors’ logos on his or her clothing much as do NASCAR drivers. Then we’ll know who is sponsoring them when they vote.

Posted by thirddan | Report as abusive

At least four of these corporations had CEOs named by the President Obama to high-level advisory positions. Honeywell’s CEO was on the Simpson-Bowles commission whose plan to reduce the deficit included cutting Social Security benefits and, rather counter-intuitively for a deficit reduction plan, cutting corporate tax rates.

“General Electric CEO Jeff Immelt and Honeywell CEO David Cote have served in the highest-profile public positions associated with the administration. Immelt has been pilloried with criticism ever since Obama named him head of his Council on Jobs and Competitiveness… Obama named Cote to a previous super-committee on economic policy, the National Commission on Fiscal Responsibility and Reform, known as the Simpson-Bowles panel….Boeing CEO James McNerny Jr. and Verizon [then] CEO Ivan Seidenberg… served on Obama’s Export Council…”
http://www.huffingtonpost.com/2011/09/01  /obama-tax-loopholes_n_943786.html

Posted by beowu1f | Report as abusive

@CaptnCrunch

Thank you. It is good to know that there are business owners out there that aren’t cruel, heartless, money-grubbing bastards.

Cheers!

Posted by seadub | Report as abusive

@beowu1f

“At least four of these corporations had CEOs named by the President Obama to high-level advisory positions.”

How is your comment relevant to the article? Your comment is as useful as the nut rambling on about the bible. Actually, it is less relevant.

Posted by perra | Report as abusive

The rule Fedex lobbied to retain doesn’t “benefit consumers”–it benefits the management and shareholders of Fedex. If this weren’t the case, try and explain how it’s possible for unionized UPS to compete with them.

Posted by Art_In_Seattle | Report as abusive

We mutated from a Democracy into a Corpocracy. When the Supreme Court decided that corporations were people the transition was complete. There are some provocative paintings on the subject on the ArtandResponse website.

Posted by WallStreetWally | Report as abusive

They don’t “compete”.

The difference in volume of deliveries is directly due to the difference in retail cost of equivalent services and the quality of the service provided.

Posted by OneOfTheSheep | Report as abusive

Protect yourself and the future,
do not reelect incumbents.

Posted by ravenchris | Report as abusive

So the argument is that corporations own congress, run the White House, and that the Supreme Court has ruled that the ultimate voice in elections goes to corporations. Isn’t that by definition, fascism?

Posted by SanPa | Report as abusive

David, thank you for this great article on a very important topic! As far as the role of NGOs’ in politics, lobbying, PAC’s, and the general symbiosis of corporate interests in the affairs of the nation: corporations are false corpus, they are not living persons of the same sort as Human Beings are ‘persons.’ To call corporations persons, and bequest upon them rights of the same sort as Humans, which effectively amounts to precedence over regard for Human dignity in many cases, is problematic in principle and practice to say the least.

Corporations do have one thing in common with humans however, and that is that they are trying to compete in a vicious enterprise of survival themselves. As such corporations have interests as well as people do, and because corporations are comprised of people, and because it is a ‘free-market’ so to speak, it is understandable that the individuals representing these corporations may find it necessary to seek representation at the level of Government in the same manner that citizens seek representation. This creates a conflict of interest to say the least.

An idea: what if corporations had their own representatives, and the number of representatives was increased to sufficiently satisfy statistically critical sample sizes? 535 people run the country-these civil servants are elected officials. Last I checked there were 265+ million adults in the USA. Is this a representative sample? Unfortunately this is only one such short coming to be discovered when critically considering the current state of political affairs.

There is much that corporations do that can be said to be of utility, and beneficial, to society, and the individuals which participate in it. This should never come at the expense of sound and accepted principle or practice-especially in regard to human dignity.

Allegedly we believe, as a nation, in inalienable rights which are considered to be fundamental in principle. Yet at the same time many corporations believe in profit as a first principle, as if it is an ends in and of itself, and even at the expense of regard for Human dignity and these very ‘rights’ which are called fundamental-this is an absurdity! All this is done in the name of the share holders, and for ‘increasing returns,’ or profit in other words.

It seems that when people are suffering for a cause it is either sacrifice or exploitation. To sacrifice human dignity at the altar of profits, is the love of money, and as 1 Timothy 6 reads “9Those who want to be rich are falling into temptation and into a trap and into many foolish and harmful desires, which plunge them into ruin and destruction. 10For the love of money is the root of all evils…”

Posted by mrphilosophias | Report as abusive

SanPa,
Fascism is Corporations working for the state but you are correct in the sense that America is heading toward a totalitarian government except it is/will ruled by corporations.
Sheep- You must be a lobbyist

Posted by Mazer | Report as abusive

the united states needs a third political party, one that does not accept corporate donations….winning just one elected seat could be the beginning of politcal reform in that country that i would say is …long long overdue.

Posted by bellhop | Report as abusive

The way I see this is we have two classes of people, one group spend everything they have in spite of an adequate, opportunistic education, access to financial data, & hundreds of 501(c3) organizations with big spending budgets willing to help with educated personal attention & another group who shepherded their income to get the most out of educational opportunities, intelligent associations, aesthetic lifestyle, & respect for the unforeseen. Now big government come in and says we are going to raise taxes on your annual income because of lack of money due to poor government management. However, those who have inherited, tax exclusion, deferred wealth will not be asked to give up anything because our tax code does not recognize what they have as income to be taxed… I say that is inequitable ? What do you say ?

Posted by buckaroo5 | Report as abusive

It is all about “The Almighty Buck.”

Posted by 2cartalkers | Report as abusive

History tells us that extreme greed, need of power and material possession will eventually destroy every society. These are man’s most powerful and self-destructive desires. Yet we never seem to learn, and Homo sapiens have proven to be far less intelligent than all the other animal species. Worse yet compared to the past, today it is a global reality and a global disaster. Unless there is the very unlikely event of a worldwide revolution, there isn’t much to hope for in the foreseeable future.

Posted by GMavros | Report as abusive

Missing from this article is any recognition that $0.67 of every $1.00 of all Federal Tax revenue comes from the the top paying 20% of taxpayers. The remaining 80% of the population generates the other $0.33 of Federal Tax each revenue dollar. If lobbying was effective in eliminating taxes; then the top ⅕ of the population would not be carrying 2/3 of the tax burden. http://www.taxpolicycenter.org/taxtopics  /currentdistribution.cfm

Posted by walstir | Report as abusive

@walstir:

And if the top 20% should be able to reduce the wages of the bottom 80% to zero, who would do the real work?

Regards taxes, would you find it surprising that the only people left making money, also are the only ones paying taxes?

You seem to miss the point that the upper 20%, or 1%, mostly make their money on the backs of the 80%, or 99%. I say “mostly”, because, since globalization, they also make a lot of money on the backs of the poor throughout the world (after having recently thrown the rest of us under the train).

Posted by xcanada2 | Report as abusive

It is all about the system that the political parties have morphed our democracy into. Of course, if you make it legal to avoid taxes and lobby – the corporations will play by that rigged game. Hmmmm – who makes these laws. This has been so in your face and defended by the most corrupt legal minds that bend our freedoms to corrupt our system of government and democracy. The corporations aren’t the real problem – a government and political system on crack is the problem. It is disgusting and in your face – on both sides of the aisle. I would be considered a conservative/independent – and government has become a swirling pot incompetence and corruption. So why do people want to pump more money into it – it only breeds more corruption. Take the money out of the lobbying and congress – and the rats will leave or vote them out. If it is the tax code – strip it out. Any power you put in their hands will be used to suck money from the system. It may be too late….how can we return to accountability and free markets with this broken system. Anyone who doesn’t see this – is insane or hooked on crack ‘$’.

Posted by xit007 | Report as abusive