United States: Wall Street greed hits new lows
Wall Street has continued erecting monuments to its own greed. The British Guardian reported on April 12 that Goldman Sachs’ paid its top five directors almost US$70 million in 2010.
The latest United States Department of Labor’s Bureau of Labor Statistics report, released on 27 July 2010, said civilian workers’ median hourly wage was $16.55. Private industry workers received $15.70 and state and local government workers received $22.04.
The top Goldman Sachs directors, on the other hand, earned an average $38,356 each day for 2010.
The Guardian said Sister Nora Nash of the Sisters of Saint Francis in Philadelphia has described this latest payout as “sinful”.
Nash told the Guardian that “there is a culture of greed and this culture tells me there is a philosophical and ethical divide between these corporations and the ordinary person on the street.
“The middle class is disappearing … There is an awful lot of goodness in the American culture that is being swamped by greed, by selfishness.”
The Guardian that Nash will join an interfaith group to confront Goldman Sachs directors at the investment bank’s annual general meeting in May. Nash said: “My feeling is we are dealing with a corporate world that is almost at the brink of collapse. It can’t go on this way.”
The Goldman Sachs payments have been awarded barely three years after the greatest global financial crisis since the Great Depression.
The April 9 New York Times said: “The disparity is especially stark as companies are swimming in cash. In the fourth quarter, profits at American businesses were up an astounding 29.2 percent, the fastest growth in more than 60 years …
“So far, this recovery has not trickled down … C.E.O’s in finance, technology, energy and beyond are pulling down multimillion-dollar paychecks … The median pay for top executives at 200 major companies was $9.6 million last year.”
The United States government is mired in more than $14 trillion of debt and reeling from huge spending cuts contained in the latest federal budget.
The government also faces the near-term prospect of defaulting on its loan repayments unless Congress agrees to raise the debt ceiling by mid-May.
White House spokesperson Jay Carney predicted on April 12 that the US government defaulting on its loans would “throw the global economy into chaos”. He warned that “playing chicken” with the economy is “risky business”.
US workers face great uncertainty. Unemployment is close to double figures and public sector jobs and services are under siege from federal and state administrations.
Wealth continues to be transferred to the upper echelons of US society, facilitated by government polices at all levels.
University of Wisconsin student body president Michael Wilson said in an April 12 letter to Socialistworker.org: “In the last 30 years since Ronald Reagan — a global sweep of privatization, austerity and deregulation — the wealth of the world has been consolidated into fewer and fewer hands at the cost of human development and human security.”
On April 6, the Huffington Post said that despite the rate of corporate recovery from the financial crisis, “big business is gearing up to try to win yet another budget battle: overhauling the corporate tax code”.
In his State of the Union speech, President Barack Obama said he hoped to remove corporate tax loopholes.
But he said this action would be accompanied by a cut in the overall tax-rate, creating a joint policy intended to be “revenue neutral”.
The Post said this meant the policy “will neither increase of decrease overall corporate tax receipts”.
The article said: “Buoyed by the prospect of a business-friendly tax overhaul … the Business Roundtable and other high-powered corporate lobbyists are using tax reform negotiations to push for more offshore tax breaks and official federal forgiveness for tax avoidance schemes.”
In January, Obama appointed General Electric (GE) CEO Jeffery Immelt as the chair of the Council on Jobs and Competitiveness.
Obama said Immelt “understands what it takes for America to compete in the global economy”.
Proof of this understanding was revealed by the March 24 New York Times, which said GE paid zero tax on its US operations. These operations turned a $5.1 billion profit.
The NYT said that instead of paying tax on its profit, GE “claimed a tax benefit of $3.2 billion”.
“[GE’s] extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore …
“GE’s giant tax department, led by bow-tied former Treasury official John Samuels, is often referred to as the world’s best tax law firm.
“Indeed, the company’s slogan ‘Imagination at Work’ fits this department well.”
The NYT said that “a review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks”.
Citizens for Tax Justice.org (CTJ) said on April 12 that, like GE, US corporate giant Honeywell International avoided paying tax on its $1.2 billion profit for 2010.
Instead, like GE, Honeywell International “recorded a tax benefit of US$471 million, meaning Honeywell expects to receive that amount from the IRS”, CTJ said.
Honeywell International’s CEO Dave Cote has served as a member of the National Commission on Fiscal Responsibility and Reform.
Forbes.com said Cote was also “Senior Vice President of General Electric Company and President and Chief Executive Officer of GE Appliances from June 1996 to November 1999”.
British Prime Minister David Cameron, in a continuation of Britain’s paternalistic dealings with the subcontinent, singled out Pakistan’s rich for accusations they were not paying taxes on April 5.
Guardian.co.uk reporter Patrick Wintour quoted Cameron as saying the Pakistani fiscal position was serious because “too few people pay tax. Too many of your richest people are getting away without paying much tax at all – and that’s not fair.”
Given the US government’s facilitation of legal banditry for its corporate elite, perhaps Cameron’s admonishment could have been more fairly directed toward its more powerful ally.
In fact, Cameron could start at home. His government is implementing savage spending cuts worth £81 billion over four years, blaming the economic crisis.
But activist group UK Uncut said rather than making ordinary people pay for a crisis they did not cause, Cameron could start by cracking down on the tax-dodging by corporations and the rich that cost the British government an estimated £95 billion a year.