MORNING MESSAGE: Apple Pie is American, But Apple Computer Isn’t

OurFuture.org’s Richard Eskow: “We should treat Apple and other formerly American multinationals as neutral entities with whom we can cooperate at times for our mutual benefit. We should encourage them to invest in the United States and hire American workers, as we do with other non-American corporations. What we shouldn’t do is treat them as US corporations. The very concept is probably obsolete in the multinational arena.”

Apple Testimony Doesn’t Add Up

Apple lied, says NYT’s Joe Nocera: “[CEO Tim Cook] said that the low taxes Apple pays overseas is on the profits of its overseas sales. Not to put too fine a point on it, but this was a flat-out lie.”

Apple can’t square its position on immigrant visas with its tax avoidance, argues TNR’s Alec MacGillis: “If Apple really cares about a shortage of homegrown engineering talent, then it should pay taxes to fund the institutions that could address that problem.

Immigration Reform Pressured From Left and Right

Sen. Marco Rubio seeks further changes to win additional GOP support for immigration reform. NYT: “The current bill sets up a sequence of new border measures that must be in place before illegal immigrants can gain legal status and eventually citizenship. Under the current bill, the Department of Homeland Security is directed to produce and carry out the border security plan … [Rubio] would take the authority away from the department and move the responsibility to Congress.”

Rubio is not alone. Politico: “Many of the almost two dozen Republicans identified as possible supporters by the Gang of Eight are demanding changes that would make the bill significantly more conservative. They want stricter border security, tighter control on government benefits for newly-documented immigrants and tougher requirements along the pathway to citizenship. Go too far on any of those elements, and liberal Democrats — who aren’t thrilled with many aspects of the bill already — begin to pull away.”

Dems split over proposed health care language in House draft immigration bill. Politico: “The House Democratic Caucus chairman knew that he couldn’t endorse a proposal to deny citizenship to undocumented immigrants who took government health subsidies … [Rep. Xavier] Becerra is torn between two roles: his part in the bipartisan group and his position in Democratic leadership, where he is under pressure from a progressive caucus not to give too much ground to the Republicans.”

House Dem leaders unsure if backing bipartisan House bill helps or hurts. The Hill: “…some Democrats and outside advocates are arguing the party should rally behind the Senate bill and pressure House Republican leaders to bring it to the floor once it passes the upper chamber. Yet some members of the bipartisan House group are worried … that walking away from the bipartisan agreement could kill immigration reform altogether.”

More than 100 conservative economists back immigration reform. LAT: “The economists cited the nonpartisan Congressional Budget Office in noting that an immigration overhaul could increase average economic growth over the next decade by 0.1% and reduce the federal deficit by more than $300 billion.”

Trade Talks Threaten Wall St. Reform

“Wall Street Seeks Dodd-Frank Changes Through Trade Talks” reports Bloomberg: “‘The trade talks could easily become a Trojan Horse,’ said Marcus Stanley, the policy director for Americans for Financial Reform … In separate letters on the EU and Asia-Pacific pacts, the industry coalition said negotiators should draft rules limiting what regulators can do in the name of protecting financial stability. The letters also urged using the pacts to curb extra-territorial rules that can reach beyond U.S. borders, like ones currently being considered on financial derivatives.”

Justice Dept. hasn’t examined whether bank prosecutions would harm the economy, reports HuffPost: “Testimony by a top Justice official and fresh documents made public on Wednesday during a House financial services committee hearing revealed that financial regulators and the Treasury Department did not provide warnings to prosecutors weighing the economic consequences or fallout in the financial system of criminal indictments against large financial groups … The hearing comes as DOJ, Treasury and financial regulators battle perceptions that they consider some large financial institutions are either too big or too important to the economy to fail.”

Breakfast Sides

“Harry Reid mulling filibuster overhaul” reports Politico: “Publicly, Reid has been coy about whether he’ll try to alter the Senate’s hugely controversial rules to help confirm President Barack Obama’s nominees … But it’s clear the majority leader wants to get something done and find 51 Democrats to support … changing the rules so executive branch nominees can no longer be blocked by filibusters requiring 60 votes to break.”

Tesla Motors pays back government loan nine years early. NYT: “‘Tesla is repaying early and it’s a great vindication,’ said Greg Kats, president of Capital-E, a firm that invests in clean-energy companies. ‘Tesla has really helped push the Big Three automakers down the energy efficiency track.’ The Energy Department on Wednesday said that losses on its loans were equivalent to 2 percent of its $34 billion portfolio.”

CBO examines carbon tax. WSJ: “Instituting a carbon tax could help reduce the deficit and ‘produce incremental benefits’ for the environment, but could also raise the cost of many goods and services … the economy as a whole would benefit if the tax was used to reduce the deficit.”

Anyone who thinks education is the “civil rights issue of our time”  needs to look at what’s going on in Chicago.

In three days of protests over the weekend and lapping into Monday, people who look like they would be involved in a civil rights cause – mostly African-American and Latino/a teachers, parents, and students, many living in low-income communities – were protesting against the city’s decision to close their neighborhood schools.

City officials have claimed that the closures are for the sake of “reforming” the city’s schools, but people who the schools actually serve aren’t buying it.

Similar protests are happening in Philadelphia where communities of black and brown citizens are openly defying civic leaders’ decisions to cut education spending and close neighborhood schools, again, in the name of “reforming” them.

Also from the heartland last week, in Indiana, a parent-led rebellion against policies mandating that schools adopt new curriculum standards known as the Common Core resulted in government officials delaying implementation of the standards that have been cast as necessary “reforms” to the system.

Similar rebellions are occurring in Alabama, Georgia, and Pennsylvania.

Moving west to Seattle, teachers boycotting standardized tests that state leaders mandated in a “reform” effort got what they wanted last week when the school administration gave into the teachers’ demands that the tests not be made mandatory for high schools.

A similar resistance has been happening across the state of Texas where a coalition of educators, parents, and state policy leaders are calling for a “counterattack” against standardized testing. This time, instead of teachers leading the rebellion, the salient force are parents who have, according to a reporter for the Austin American-Statesman, “overwhelmed the powerful business and political forces that made Texas the capital of high-stakes testing.”

These events, and others, reveal an emerging American movement unifying diverse factions across the nation in efforts to reverse education policy mandates and bolster public schools instead of punishing them and closing them down.

There is little doubt now that a counterargument to the education policies championed by the likes of Michelle Rhee and Education Secretary Arne Duncan is now slipping into the mainstream of American opinion.

Even the editorial board of The New York Times is calling for a change in how that city has been administering its public schools. In an editorial this week, the newspaper, which had been a cheerleader for Mayor Michael Bloomberg’s education mandates, now states, “The school system has indeed gone overboard in relying on standardized testing. Tests need to be a means to the end of better instruction, not the pedagogical obsession they have become.”

What’s generally not understood is that these flashpoints of resistance around the country are driven by common core grievances – a grassroots “common core” if you will – that is shaping the rapidly evolving education debate.

Behind nearly every protest to the status quo policies meted out to the nation’s public education system are common grievances about resource depravation, inequity, public disempowerment and the widespread perception that governing policies are driven by corruption.

The situation in Chicago is a microcosm of how these four grievances are converging.

Resource Depravation

What’s not widely acknowledged is that there is a systemic and deliberate agenda across America to starve public schools of funding. This is especially true in Chicago and especially true for the schools that are scheduled for closing.

A recent report from the Chicago Teachers Union looked at schools that were closed and revealed the district’s intentional policy to starve the targeted schools of necessary funds. As local blogger and activist Kenzo Shibata recently observed at The Huffington Post, “The school closings wave is at the crescendo of years of slow and steady sabotage by the Chicago Board of Education.”

Shibata quoted a Chicago Public Schools Official who readily admitted that “If we think there’s a chance that a building is going to be closed in the next five to 10 years, if we think it’s unlikely it’s going to continue to be a school, we’re not going to invest in that building.”

Shibata correctly observed, “The very schools that needed the most support – libraries, small class sizes, and wraparound services – were starved.”

Inequity

Not only is there a nationwide effort to disinvest from public schools, there is a systemic policy in America to ensure schools that need funding the most are targeted for deeper cuts or lower funding.

This is especially true in Chicago where the schools being closed are predominantly in parts of the city that are populated with lower-income African American and Latino families.

Writing at the website Alternet, Samantha Winslow reported, ” Almost all of the 54 schools targeted for closing serve primarily black and Latino students. All are in poor neighborhoods.”

Reporter James Patrick at Substance News observed,

“Since 2001, 98 of the 100 schools being closed or phased out in Chicago have been located in predominantly African-American and Latino communities. School closures directly correspond to the locations of troubled mortgages, foreclosures, and population loss.”

Public Disempowerment

Behind nearly every protest against the nation’s education metric-driven agenda is the complaint from teachers, parents, and school children that they are being disempowered.

Whether the voices of dissent are coming from teachers objecting to unfair evaluations, parents objecting to having no voice in creating and implementing new standards, or students complaining of unjust discipline measures, the prevailing narrative is that Americans of all persuasions increasingly believe they have diminishing control over their education destinies.

Policy decisions affecting education are increasingly promulgated from governing bodies that are not elected and serve at the whim of powerful mayors and governors who take power away from locally-elected bodies and hand it over to hand-picked “managers” and committees filled with their close associates and campaign funders.

Education policies are increasingly the product of Washington-based technocrats who have little or no contact with the schools and communities whose schools are being affected by their plans.

Even charter schools – often promoted as a authentic “choice” for parents who want to escape “government monopoly schools” – are increasingly operated by distant executives and appointed boards with little accountability to local constituents.

This sense of disempowerment is an especially prevalent force behind the Chicago protests. Bloggers and activists have recorded countless stories of parents who have done everything they can to provide their children access to good schools only to see their efforts undone by the city’s action.

One account, appearing in the local independent newspaper Catalyst, told how parents have seen these Chicago neighborhoods completely transformed by forces out of their ability to address. In one neighborhood, “Over the past decade, three of the schools that served the area’s children have been closed and reopened – one as a charter school, one as a selective enrollment school and the third as a lease by a private Catholic school that costs about $8,000 a year.”

In other words, the option to choose a school that accepts all children is no longer available.

This is not an isolated example, noted reporter Sarah Karp. “The end result of the school [administration's] actions is that traditional, district-run neighborhood schools will become scarcer. Schools to which students have to apply and those run by private organizations will continue to take over, casting an ever-bigger shadow over the district.”

Widespread Perceptions Of Corruption

Prominent news stories about charter school profiteering, massive cheating on standardized tests, and the heavy involvement of Wall Street investment firms and the publishing industry behind the scenes are creating widespread perceptions that education policy is driven by corruption.

People to the right of the political spectrum accuse efforts to align all state curricula to Common Core standards of being driven by a federal government intent on spreading “propaganda” and invading our privacy.

Those who tend to lean left see corporations as the primary benefactors of education policies like the Common Core and charter school proliferation.

Either way, the core grievance is that education policies are being sold to the American people with very deceptive language and with occasionally ulterior motives.

These perceptions are not confined to the extremes of the spectrum. Recently at The New Republic, Nicholas Lehmann wrote that education reform poster-person Michelle Rhee has “misled” education advocates who favor current policies.

“Rhee simply isn’t interested in reasoning forward from evidence to conclusions: conclusions are where she starts,” Lehmann observed. “She gives us little or no discussion of pedagogical technique, a hot research topic these days, or of curriculum, another hot topic owing to the advent of the Common Core standards, or of funding levels, or class size, or teacher training, or surrounding schools with social services.”

Lehmann concluded that Rhee’s leadership in “the education-reform movement” has had the damaging effect of making the whole enterprise take on “a narrow and melodramatic frame” that remains so influential mostly because “it depends so heavily on the largesse of people who are used to getting their way.”

Certainly the people of Chicago know what it’s like to be misled by influential and local officials threatening their schools. A local radio station, WBEZ, took the time to fact check what school district officials have been reporting and found lots of gaps in the truth.

For instance, Chicago Public Schools says “30,000 children will be impacted by school closings. But the district’s plan actually will touch more than 46,000 children.”

Although school and city officials have “claimed a loss of 145,000 students, between 2000 and 2013, actual enrollment in Chicago Public Schools has not decreased dramatically.” And, “since 2000, the proportion of Chicago kids attending public schools has actually increased.”

Also, “Mayor Rahm Emanuel has said the key reason to close schools is about getting children ‘trapped’ in low performing schools to a better place.” But the reporters found that in previous closings, “most students whose schools were closed by the district re-enrolled in schools that were academically weak.”

School and city officials have stated the school closures are scheduled to save $43 million and help close $1 billion shortfall in the district’s operating budget. But again, the facts show “all cost savings, plus tens of millions of additional dollars (for a total of $233 million), will be put into receiving schools.” And “the district is borrowing $329 million to pay for improvements to receiving schools,” which “will cost $25 million in debt service every year for 30 years.”

The New Bipartisanship On Education?

The common core grievances driving the backlash to education mandates are not going to go away any time soon. Despite how the particulars of the debate pivot to issues about content standards, to assessment results, to school choice, etc. widespread feelings of resource depravation, inequity, public disempowerment, and overwhelming corruption are not only going to remain – they are likely to grow. Any lurch from crisis to crisis – no matter how well orchestrated – will likely further intensify a popular sense of a system out of control.

The only remaining question is, now that it’s becoming more acceptable to say that education mandates have “gone too far,” how much longer will it take for those same opinion outlets to admit the mandates were mistaken to begin with?

Did you know that Apple Computer has become a foreign entity? Did you know that it’s more Irish than anything else, at least as far as taxes are concerned? Or that it pays very little in income tax, even though its products wouldn’t exist if it not for U.S. taxes?

Apple products were designed in the United States by U.S.-educated individuals and entrepreneurs. (Even Steve Jobs, who famously dropped out of college, said he came up with essential elements of Apple’s product design by auditing courses at Reed College.)

The company’s logo is an apple, which may or may not have been inspired by the Beatles-owned company of the same name. But since then the image has become synonymous with two iconic qualities of this country’s Silicon Valley: creativity and entrepreneurial drive. And what’s more American than apple pie?

Now that the world has seen its tax payments, maybe Apple should change its logo to a shamrock.

(You can tell Apple to pay its fair share of taxes by signing this petition we’re co-sponsoring with Americans for Tax Fairness.)

Who put the “Mac” in “MacBook”?

Even though only 4 percent of its workforce is based in Ireland, and only a small percentage of its profits are earned in that country, Apple recorded 65 percent of its worldwide profits there. Many other “American” companies are also taking advantage of Ireland’s lax tax laws, including Google, Facebook, Pfizer, Johnson & Johnson and Citigroup.

We now know that, as The Wall Street Journal reports, “Apple used technicalities in Irish and U.S. law to pay little or no corporate taxes on $74 billion over the past four years.”  Sen. Carl Levin described Apple’s bookkeeping as the product of “alchemy” and “ghost companies,” and that’s certainly true as far as the United States is concerned.

A Senate panel concluded that Apple negotiated a deal with the Republic of Ireland whereby it would declare earnings there and pay an ultra-low rate of 2 percent.  That arrangement sits atop a corporate tax filing in which, as The New York Times reports, Apple assigns more than $100 billion in profits to overseas subsidiaries.

As the Times also reports, Apple created an entity called Apple Operations International and incorporated it in Ireland. But despite the fact that this entity is purportedly based on the Emerald Isle, it “keeps its bank accounts and records in the United States and holds board meetings in California.”

Apple Operations International gets all the benefit of being an American company, and collects the lion’s share of profits for one of the most profitable companies in the world.  And yet it pays a tax rate of only 2 percent.

Man, talk about the “Luck of the Irish”!

OSX-pats

It was a big deal when it looked as if a foreign company might take over Yahoo!  But Apple’s expatriation happened without a whisper.

Under the Foreign Agents Registration Act, a foreign “principal” is defined as “any entity organized under the laws of a foreign country or having its principal place of business in a foreign country.” And if Apple’s a foreign corporation, shouldn’t its lobbyists be forced to report their activities under the Foreign Agents Act?

As a U.S. government website explains

“The purpose of (the Act) is to insure that the U.S. Government and the people of the United States are informed of the source of information (propaganda) and the identity of persons attempting to influence U.S. public opinion, policy, and laws.”

That’s worth noting the next time President Obama calls somebody like Tim Cook – or speaks with the CEOs of other non-American companies – to discuss “deficit reduction” with them.

After all, our middle-class economic crisis isn’t Ireland’s problem.

The Evading of the Green

Deal or no deal, even the Irish Apple may be too slippery for that nation’s tax collector. Adds the Times: “Apple Operations International has not filed a tax return in Ireland, the United States or any other country over the last five years.” To invert the old Beatles song, when it comes to taxes Apple is “not here, not there, not anywhere.”

CEOs like Apple’s Tim Cook (complain that they can’t “repatriate” their earnings to the United States because our taxes are too high. And yet, remarkably, the Times reported today that much of that money is already here.

“Multinationals based in the United States,” writes the Times, “now hold more than $1.6 trillion in cash classified as ‘permanently invested overseas.’” Permanently overseas? Apple’s $100 billion in offshore profits is managed in Reno, tracked by accountants in Austin, and stored in New York banks.

That’s called having your apple and eating it, too.

unGrateful

U.S. tax dollars funded the creation of the Internet and the many of the design breakthroughs that drive Apple’s tax products. American taxpayers underwrite the agencies that protect Apple’s U.S. assets. They educated most of its workers in Reno, Austin, and New York. They’re paying for the police departments and other agencies that protect Apple’s offices and keep the people inside them safe and healthy.

Too bad Apple Inc. isn’t pulling its weight for all these expenses.  You are. Individual taxpayers paid more than $1 trillion in federal income tax in 2011, while corporations paid only $181 billion. Remember those figures the next time they tell you we can’t afford to provide the government services that have helped Americans for generations.

We’re footing the bill for their almost unimaginable success – and the imbalance is getting worse.

Lone Star State of Mind

After Apple made the politically-motivated decision to manufacture one of its product lines (only one) in the United States, it chose Texas as the location.  That tells us even more about Apple’s patriotism and loyalty, since Texas is an anti-union state (they call it “Right to Work,” when “Right to Be Underpaid” is more like it) with lax regulatory enforcement.

What’s more, at least one reliable report says there’s a decent chance that the Texas factory will be owned and operated by FoxConn.

That’s right: Apple’s Texas plant could be owned and operated by the Chinese company that was so lax in its safety procedures – with Steve Jobs’ knowledge and approval – that workers there died horribly in fires.

Will manufacturing one of its product lines in the U.S. make Apple an American company again? Hardly. Toyota manufactures nine models here: the Avalon, the Camry, the Camry Hybrid, the Corolla, the Sequoia, the Sienna, the Solara, the Tacoma and the Tundra.

That’s one down, eight to go, before Apple catches up with its inarguably Japanese counterpart.

An Apple Repair We Can Afford

Senators were eager to express their enthusiasm for Apple’s products yesterday, and why not? They’re beautifully designed. I use a couple myself. But Apple’s a for-profit entity. It’s no more generous to its customers than it is to the taxpaying public at large, without whom it couldn’t exist.

If you’ve ever tried to repair an iPhone you know exactly what I mean. The Wall Street Journal says that “Apple earns almost as much from its customers’ butterfingers as it does through corporate tax loopholes.”

Tim Cook is almost certainly telling the truth when he says that Apple complies with all appropriate tax laws. (We’re not so sure he’s right when he says that Apple complies with the “spirit” of those laws, but since that’s intangible and unquantifiable we won’t quibble.)

The law itself is the problem. That’s why we find ourselves in agreement with Sen. John McCain, who said, “We don’t have to wait and have a grand bargain. It’s a cop-out. We all know there are loopholes that are outrageous.”

Closing those loopholes is one Apple repair we can’t afford not to make.

Under Another Flag

We’re not trying to red-bait or vilify Apple or any other multinational company when we say they’re no longer American corporations. We don’t mean they’re “un-American” in the subversive, treacherous, Sen. Joe McCarthy sense. It’s just time to recognize reality: They fly under no flag but their own.

Don’t blame executives like Cook, either. Their fiduciary duty compels them to place profits over people – or patriotism. To paraphrase Jessica Rabbit: They’re not bad, their charters are just drawn that way.

We should treat Apple and other formerly American multinationals as neutral entities with whom we can cooperate at times for our mutual benefit. We should encourage them to invest in the United States and hire American workers, as we do with other non-American corporations.

What we shouldn’t do is treat them as U.S. corporations. The very concept is probably obsolete in the multinational arena.

iBorrow

In a final irony, Apple – which is hoarding $145 billion in cash – borrowed $17 billion last month. Why would a company with that much money on hand choose to go billions of dollars into debt?

One reason for the indebtedness is that it’s yet another legal way to avoid paying taxes. But here’s what really gets the Irony Meter trembling: As the New York Times Dealbook blog notes, Apple issued this debt because it was able to obtain “interest rates that hovered near the low-cost debt of the United States Treasury.”

Investors are essentially paying the United States government to borrow their money, because the U.S. Treasury is still one of the safest places to park your money on the planet. Apple’s rates, as you can see from the above, are nearly as good. When debt is this cheap, it’s fiscally irresponsible – literally – not to borrow.

And what was the President calling Tim Cook about? Ways to avoid borrowing more money. That’s how off-kilter our economic debate has become. At these rates the United States government should be smart enough to do what Apple is doing: Borrowing money to fortify its future.

Bringing Apple Back Home

Our government will have more of the money it deserves someday, too, if Apple becomes an American corporation again.

We can’t wait for Tim Cook to do that. In fact, it would be fiscally irresponsible for Cook or any other executive to voluntarily give up more of his company’s income than is legally required.  It’s up to our leaders, not corporate executives, to fix this problem.

Let’s hope that yesterday’s Senate hearing means that the process has finally begun.

President Obama has promised Oklahoma “everything that it needs right away” to begin the process of recovering and rebuilding, after the massive tornado touched down in the state on Monday, devastating the cities of Monroe and Newcastle. Already hundreds of Federal Emergency Management Association employees are the ground in Oklahoma, and millions of dollars in federal disaster relief will almost certainly follow. Oklahoma will recover.

But the debate in Washington is a reminder that we’re all threatened by a masssive, man-made disaster called sequestration, that could make the next natural disaster even worse.

Washington’s repsonse to the tornado in Oklahoma was twofold. President Obama expressed the nation’s sympathy and support for Oklahoman’s touched by the diaster and promised that the state would get “everything that it needs” to recover and rebuild. By Tuesday, more than 300 FEMA employees were on the ground in Olkahoma.

The winds had barely died down in Oklahoma when the hot air started flowing back in Washington. Even as rescuers began the delecate work picking throuh the rubble in search of survivors, Republicans in Congress were already talking cuts, and insisting that relief disaster relief for Oklahoma come at the cost of cuts elsewhere. And none other than Oklahoma Republican Sen. Tom Coburn kicked off the grousing.

But although political leaders of both parties expressed sympathy for the victims, it took only hours for Washington to face off over the possible cost of repairing the devastation and how it would be paid. For the moment, it was a strictly hypothetical debate, since the government already has $11.6 billion available in a disaster relief fund. But it underscored the fact that even national tragedy does not always bring the capital together.

An Oklahoma senator, Tom Coburn, a Republican who is one of the most relentless budget hawks in Congress, kicked off the touchy dispute by saying that any additional disaster relief appropriated by Congress would have to be paid for by cutting other areas of the federal budget.

Some Republicans rushed to his defense, with Senator Ron Johnson of Wisconsin saying Mr. Coburn’s actions demonstrated “real leadership.”

At least Coburn is consistent. Earlier this year, Coburn and several other Oklahoma Republicans opposed disaster relief for Hurricane Sandy victims, insisting that the aid be “paid for” with cuts in other areas of the federal budget.

But where can cuts be made that, in the context of the sequester’s massive across-the-board cuts to non-defense discretionary spending, won’t be equally disastrous?

As it stands now, the sequester has cut deeply enough into disaster relief and preparedness, to put the government’s ability to predict, prepare for, and respond to natural disasters and emergencies at risk.

Due to the sequester, FEMA will lose $1 billion from its budget this year alone. Disaster relief takes the biggest hit, with $560 million cut. Another $100 million is slashed from state and local grants. Smaller programs are not spared. Funding to help state and local communities prepare for disaster is cut by $3 million under sequestration, and another $1.9 million is cut from funding for transportation and infrastructure repair.

Meanwhile, FEMA will pay out $10.8 billion in relief to storm victims this year, leaving it with just $2.5 billion in relief funding for the rest of the year. The government has $11.6 billion in a disaster relief fund. So Oklahoma will get what it needs. But if more disasters tax available funds, Congress may have to vote on additional disaster relief. And in this Congress that means more Republican hostage-taking, and relief bills loaded with all kinds of amendments.

Meanwhile, FEMA may have to respond to sequester by making life and work harder or employees like the 300 or so now helping Oklahoma’s tornado victims. Reducing hiring, hiring freezes, and the elimination of comp. time and overtime could leave FEMA with an over-stretched, underpaid workforce responding in an increasing number of natural disasters.

Things aren’t much better on the preparation side of the equation. The National Oceanic and Atmospheric Administration, which runs the National Weather Service and other weather detection programs has been targeted for cuts. Just like the GOP has tried to gut FEMA ever since Hurricane Katrina, Republicans targeted the National Weather Service for  cuts after the 2010 elections. (Right after the agency played a crucial role in warning the West coast about the tsunami in Japan.) The sequester cuts the NOAA budget by 8.2 percent, including $266 million in cuts to crucial programs that fund the agencies satellite programs. 

Strapped for cash, the NOAA has implemented hiring freezes. As a result, the agencies vacancy rate has tripled in the past two years. There are now more than 200 unfilled positions, including nine major forecaster positions in major cities, and general forecaster vacancies across the country. As National Weather Service Employees Organization president David Sobein pointed out last month, vacancies put a strain on the agencies remaining employees, and could impact the quality of forecasting. 

Sobien gave the example of recent poor forecasting of the early March snowstorm predicted to hit Washington, D.C., as an example of what happens when forecasters are stretched thin. But that’s not the worst that can happen, he warned.

“People are going to be overworked, they’re going to be tired, they’re going to miss warnings. We’re going to miss a tornado warning or some other thing.”

That’s before the sequester’s impact. Sequestration further threatens the nation’s weather forecasting.

The Department of Commerce warned that not only will the loss of satellite data and imagery diminish the quality of forecasts, but so will other important weather data surrendered by spending cuts.

“Sequestration will also reduce the number of flight hours for NOAA aircraft, which serve important missions such as hurricane reconnaissance and coastal surveying,” said a DOC spokesperson. “NOAA will also need to curtail maintenance and operations of weather systems such as NEXRAD (the national radar network) and the Advanced Weather Interactive Processing System (used by local weather forecast offices to process and monitor weather data), which could lead to longer service outages or reduced data availability for forecasters.”

In addition to program spending cuts, NOAA faces the possibility of staff furloughs and unfilled positions. While not specifying the number of NWS cuts, the DOC states up to 2,600 NOAA employees will have to be furloughed, 2,700 positions left vacant, and 1,400 contractor positions reduced if the sequester materializes.

“NOAA will face the loss of highly trained technical staff and partners,” a DOC spokesperson said. “As a result, the government runs the risk of significantly increasing forecast error and, the government’s ability to warn Americans across the country about high impact weather events, such as hurricanes and tornadoes, will be compromised”.

The National Weather Service saved lives in Oklahoma this week, by issuing early warnings that gave people time to seek shelter before the tornado hit. The agency issued a tornado warning 16 minutes before the tornado touched down outside of Newcastle, and 19 minutes before it reached Monroe. That may not sound like enough time, but in these situations every minute counts, and any early warning increases the likelihood of getting to safety before a twister strikes. 

Advances in forecasting technology and tornado prediction could mean earlier warnings in the future. New, experimental methods could increase warning times from 15-30 minutes to as much as six hours before a tornado. But it won’t happen if agencies like the NOAA and NWS don’t have the money to maintain and upgrade their satellites and forecasting technology. The best technology available won’t make a difference if no one’s there to operate and monitor it, because the NOAA and NWS don’t have the money hire new forecasters, or even keep their remaining employees on the job. 

Tornado season is upon us, and that means we could see more than 1,000 tornados.   Most will touch down in the Midwest, but the area traditionally known as “Tornado Alley” no longer has a monopoly on tornados. 

Literally and figuratively, Tornado Alley now could be almost anywhere; the “alley” is more like a field that seems to spread by the year.

That funnel cloud in The Wizard of Oz (actually a 35-foot tapered stocking) was remote and exotic to audiences for much of the last century. But the Oklahoma disaster is a reminder that Tornado Alley is less a geographic description than a state of mind, as twisters seem to range farther afield and extreme weather in general turns up in unexpected places — a deadly tornado in western Massachusetts (June 2011), an earthquake in central Virginia (August 2011), storm surge on Wall Street (October 2012).

The number of recorded tornadoes has shot up over the years, but Tom Jeffrey, a hazard scientist with CoreLogic, a Santa Ana, Calif., analytics firm, says it’s not clear if that’s because there are more tornadoes or more people reporting them.

He gives several explanations for our increased concern about tornadoes and all kinds of very bad weather. Climate change seems to portend meteorological extremes; cable TV news and social media focus national attention; meteorologists are much better able to detect, track and measure tornadoes; and the population is larger and more dispersed — a fatter target.

Disasters happen. But the man-made disaster known as “the sequester” didn’t have to happen, and it doesn’t have continue. It’s possible that Congress will approve yet another “exception” to the sequester, for agencies like FEMA, the NOAA and NWS. But Congress can simply repeal the sequester.

We don’t have to sequester the next disaster, but every day that the sequester stands makes it more likely that we will. The only questions are: When and where will it happen? And who will suffer the consequences?

Yes, they’re already on it:

On top of the troubles the administration is facing over its handling of the attack on the Benghazi mission, the Internal Revenue Service’s targeting of conservative groups, and the Justice Department’s seizure of Associated Press phone records, Republicans hope to target Health and Human Services Secretary Kathleen Sebelius.

They are questioning her soliciting of funds on behalf of a non-profit group, called Enroll America, from two private entities, a practice which if not unprecedented is at the very least unusual. Federal law bars officials from soliciting any organization or individual with whom they do business or regulate.

Enroll America is run by the president’s former campaign backers to do something Congress refused to fund: sell “Obamacare” to the public.

An HHS statement last week said that since March Sebelius solicited financial donations for Enroll America from H&R Block Inc, the tax preparation company, and the Robert Wood Johnson Foundation, a philanthropic entity devoted to public health issues. Asked Monday for a list of all solicitations before or after March, an HHS spokesman referred Reuters to the department’s original statement.

Neither H&R Block nor the Robert Wood Johnson Foundation are regulated by HHS, the department’s spokesman said, so there was nothing improper or illegal about soliciting them.
[...]

The Enroll America issue is complicated by the fact that Republicans in Congress have succeeded in blocking proposed government spending that otherwise could have been used to achieve the ends pursued by the independent group.

That has given lawmakers, such as Republican U.S. Senator Lamar Alexander, an opening to allege a violation of the federal “anti-deficiency” act, which bars agencies from accepting “voluntary” services except when authorized by law.

In defense of the help the department is getting from Enroll America, an HHS spokesman said it is permitted by a section of the Public Health Service Act that allows the secretary to encourage support for new and innovative health programs.

Some conservative legal experts say finding a clear-cut violation of the law is a long shot. “I would be skeptical of the claim that it’s illegal, unless someone made a really compelling case. However, the appearance is such that it at least raises questions,” said Jonathan Adler, a law professor at Case Western University who opposes healthcare reform.

But legal issues may be the least of the concerns for supporters of the healthcare law.

They worry that a political storm over Obamacare, with congressional hearings likely, could discourage private donors to Enroll America and jeopardize the administration’s ability to find the funds needed to reach a public that is already largely unaware of the healthcare reforms.

I wrote about this building pseudo-scandal the other day, and it appears it’s gaining steam. I noticed that on Fox yesterday it came up several times as “yet another case of the Obama administration shaking down private industry.” When I first read about it, the suggestion was that Sebelius was appealing to insurance companies rather than trying to find corporate sponsors for the purpose of educating the public about Obamacare, which is slightly different, but still not particularly scandalous.

After all, if the congress would agree to fund the outreach as any sane government would do for a big new government program, this wouldn’t be necessary.  But naturally, they are trying to make it fail so they don’t want the public to be informed of what the new benefits are and what they need to do to get enrolled in insurance and obtain the subsidies.

But this administration rationale doesn’t make sense to me to be honest:

“The danger” to the health program, said former Obama healthcare adviser Nancy-Ann DeParle, “is that people don’t come and enroll and get insured. That leaves the health plans in the exchanges trying to cover people without any young, healthy people, and it drives the price up.”

I think we can probably count on the insurance companies to handle that, don’t you? After all, these young healthy people who are mandated to buy insurance are the new money machine for the insurance companies. The reason they agreed to offer coverage for pre-existing conditions and preventive care was so they could get all these young healthy people paying for their product. I have a feeling they’ll be more than willing to “reach-out” to this population and help them navigate the new system.

As for using an outside group, sponsored by the private sector, to help educate the public about the new IRS rule well, Houston, we’ve got a problem, and it’s not the one the Republicans cite in that article. (Indeed, one would have thought the GOP would be thrilled to have the private sector step up instead of Big Gummint, right?)

No, the article talks about Sebelius going to H&R Block and there’s a reason for that — somebody has to educate millions of people about how these subsidies are going to work. If it can’t be the government, then logically you’d think that the tax preparation industry might want to step up and do it. It’s advertising for their services, after all. Unfortunately the IRS “Tea party” hysteria is flowing directly into this one with the right wing already screeching incoherently about how the IRS is going to kill conservatives in their sleep by denying them access to health care or some such nonsense. I’m going to guess that these companies are not going to be too anxious to step into that quick sand unless there’s a huge financial incentive to do so — and I don’t think there is.

So Sebelius is in a tough position with this one. However, I would bet anything that there will be plenty of information available via this here internet to guide most people through. Certainly the government web-sites and offices will be able to provide information. I’m just not sure that it’s entirely necessary to have a huge TV/radio/newspaper campaign. Yes, it would be nice for the administration to be able to tout all the improvements in the system and make it as easy as possible. But I don’t think the lack of that will actually inhibit people from finding out what they need to find out. Between the insurance companies, the internet and the usual tax forms, I’d guess we’ll muddle by.

I sure hope so because from the looks of things the Republicans are going to have a field day shutting down this Sebelius plan and keeping the IRS on its heels. Implementation was never going to be easy, but they’re going to do everything they have at making sure it’s as difficult as possible. (And they call themselves patriots…)

As for whether the administration gets credit for the health care improvements in the public’s mind — well, if it all works out, the smartest thing they ever did was stop resisting the term “Obamacare.” That will last a very long time.

If it doesn’t they were screwed anyway, so no harm no foul.

At yesterday’s Senate hearing the CEO of Apple said they follow the law when they “defer” billions and billions of dollars in taxes they owe by keeping profits “out of the country.” He’s talking about the “Subpart F” corporate tax loophole that practically forces companies to move jobs and factories and profit centers out of the country. (“Double Irish” to those in the know. “Double Irish With A Dutch Sandwich” to those who know too much.) So let’s change that law and make these companies pay the taxes they already owe.

Tell CEO Tim Cook that it’s time that Apple pays its fair share of taxes. Stop dodging paying your taxes on more than $100 billion in profits parked in offshore tax havens. Add your name to our petition now!

Apple “follows the law.” Other giant companies also “follow the law” when they pay little or no taxes. The thing is, they also do what they need to do to keep the laws from being changed to benefit We the People instead of a few ultra-wealthy plutocrats.

Apple has transferred what Senator Levin called its “crown jewels” and its “golden goose” to a non-US subsidiary company. Apple transferred its “intellectual property” to an Irish “company” that Apple owns and runs. The company doesn’t really do anything except it “owns” the patents, etc. Irish law says a company that isn’t actually doing anything in Ireland doesn’t have to pay taxes, and US law says that Apple doesn’t have to pay taxes on profits of a foreign subsidiary company until the company passes its profits to the parent US company. As a result Apple is keeping more than $100 billion in the accounts of that Irish company. (The accounts happen to be in the US.)

Google also follows the law. Its Bermuda-based subsidiary made more than $10 billion in 2011, about 80% of its pre-tax profit that year.

So does Microsoft. Business Insider explains, in IT’S NOT JUST APPLE: The Ultra-Complicated Tax Measures That Microsoft Uses To Avoid $2.4 Billion In U.S. Taxes,

Microsoft Corp does 85 percent of its research and development in the United States. Of its 94,000 employees, 36,000 are in product R&D. The company had reported income of $23.2 billion, but with a federal tax liability of $3.11 billion only paid an effective federal tax rate of 13.4 percent. That’s much lower than the top statutory rate of 35 percent for corporations.

The way the group accomplished this is through a wide variety of foreign groups in tax havens like Ireland, Puerto Rico and Singapore, and by exploiting a recently updated tax loophole.

In fairness to Microsoft, they’re doing what nearly every other major technology company does.

And HP, Cisco, Coca-Cola, Johnson & Johnson, Oracle, Pfizer, Amgen, Dell, eBay and many others. They are all “following the law.” And they pay big bucks to help keep that law the way it is.

Apple keeps more than $100 billion out of the country to avoid taxes. All together the giant US multinationals are keeping somewhere between $1.7-$2 trillion “out of the country” and this amount is growing by hundreds of billions. If they ever do “bring the money home” by transferring the money to the US-based parent corporation they have to pay taxes on it, minus any taxes already paid to other countries. We the People should just get rid of the “till they bring the money home” loophole.

How They Do It

Here is how it works: You develop intellectual property (IP) in the US — software, patents, etc. — using US-educated employees who drive on US-built roads, based on US-funded scientific research, and you use the US legal system and the US financial system to become big and powerful. Then you “transfer” that IP to a foreign subsidiary that is a company in a post-office box somewhere that doesn’t make you pay taxes… You completely control that company but it is a “foreign” company. You pay a “license” fee to that company for everything you sell, so that company winds up with all the profits.

Watch this video describing how Google does it.

From then on, the profits made accumulate with the “foreign” company that “owns” the IP even though it is entirely controlled by the US company, set up as a “foreign” entity solely to keep the profits from being made by the US company.

This sort of scheme also pushes jobs and manufacturing out of the country. If you manufacture out of the country and buy the product from a foreign subsidiary the same deferral applies. So companies are “encouraged” — some would say forced — to follow these schemes. If one company is boosting its numbers with these schemes, this pretty much forces other companies to follow or fall behind, and maybe eventually fall dead.

Where Is The Money Really?

So where is the money that is being “kept out of the country?” Well, largely in the country but kept away from shareholders. The NY Times explained Monday, in Apple’s Web of Tax Shelters Saved It Billions, Panel Finds,

Atop Apple’s offshore network is a subsidiary named Apple Operations International, which is incorporated in Ireland — where Apple had negotiated a special corporate tax rate of 2 percent or less in recent years — but keeps its bank accounts and records in the United States and holds board meetings in California.

So the money is in US bank accounts (and investments), the corporate records are here, the board meetings are here, but it is an Irish corporation. Right.

Again, not just Apple. Yesterday, For U.S. Companies, Money ‘Offshore’ Means Manhattan,

During the last several years, major companies like Microsoft, Hewlett-Packard, Google and Abbott Labs have lowered their tax bills by arranging for their billions in profits to flow to subsidiaries that are technically offshore — even though some of the money is placed in United States Treasury bonds and other government securities.

When some companies can gain advantages from schemes like this other companies have to do the same or face extinction. It doesn’t matter if they hurt the country — the executives in these companies really have little choice but to “follow the law” if they want to stay in business. It is up to We the People to make the congress change these laws.

They Follow The Law But They Write The Law

It’s one thing when companies just “follow the law.” It is another thing entirely when they pay lobbyists and put big money into secret campaign funds and the rest of what they do to write these laws and keep these laws the way they are, hurting the country and us. And now these companies are actually arguing for a special tax break on this money they are holding “outside the country,” called a “tax repatriation holiday.” They want a break letting them pay much lower taxes than they already owe to reward then for keeping the money out of the country away from their own sharehodlers! On top of that they want something called a “Territorial Tax” that lets them do this from now on with no taxes at all!

I mean, you can’t blame them for trying, but, seriously?

What does it mean to be an American corporation? These giant American companies got where they are because they had the advantages of American-educated employees who got to work on American taxpayer-built roads, using American-funded basic R&D and American-funded courts and an American-backed financial system (remember the bailouts) backed up by a very expensive American military, etc. on their way up.

Now that they are successful it’s time for them to pay back to America for making them the giant, wealthy companies they are. But now they say, as one Apple executive famously said, they “don’t have an obligation to solve America’s problems.”

Wealthy corporate executives argue that these giant companies have no obligation except to make profits. But ask yourself this: “In a democracy why would We the People pass laws that set up entities that don’t benefit US?” It is time for We the People to remember that we are the boss of them, not the other way around, and make them pay their taxes.

Again: Tell CEO Tim Cook that it’s time that Apple pays its fair share of taxes. Stop dodging paying your taxes on more than $100 billion in profits parked in offshore tax havens. Add your name to our petition now!

—–

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Republicans have been eager to blame the sequester on President Obama, and complain when certain cuts affect their districts. But beyond proposing robbing-Peter-to-pay-Paul solutions for things like protecting air traffic controllers, what do Republican want to do about the sequester cuts?

Cut more.

The AP reports:

Republicans controlling the House pressed ahead Tuesday with slashing cuts to domestic programs far deeper than the cuts departments like Education, Interior and State are facing under an already painful round of automatic austerity.

Veterans Affairs, Homeland Security and the Pentagon would be spared under the plan approved by the House Appropriations Committee on a party-line vote, but legislation responsible for federal firefighting efforts and Indian health care would absorb a cut of 18 percent below [sequester] legislation adopted in March…

…The foreign aid budget would be sharply cut as well, while a bill funding the IRS budget and implementation of new financial regulations would absorb a 20 percent cut from levels approved just two months ago

And yet, in the very same article, the House Appropriations chair says, “The guillotine of sequestration has fallen, and I think we all agree that its consequences have been, and will continue to be, very harmful.”

In other words, the sequester is bad. So let’s make it worse.

On Monday afternoon 27 people were arrested in front of the Department of Justice and put behind bars. Their crime: Being sick and tired of Washington bailing out banks while there is no bailout for those among the other 99 percent of the country who are drowning in underwater mortgages.

Almost 500 activists from the faith, progressive and labor community traveled to Washington this week to protest the ongoing mortgage foreclosure crisis and our government’s failure to act. Several volunteered to be arrested (although they did not volunteer to have police use stun guns on them as they were being arrested) to make the point that the police have arrested the wrong people.

While these innocent citizens sit behind bars, those who robbed the middle class and committed the crime have yet to be brought to justice. “Banks got bailed out, we got sold out” and “arrest the bankers, not the people” were a few chants heard at Monday’s protest.

A news conference outside the Justice Department on Tuesday featured leaders of major organizations that supported the protest, including Larry Cohen of the Communications Workers of America and Laura MacCleery of National Nurses United. “The citizens that came to the Justice Department to ask for justice are now in jail” and the Justice Department “needs to remember what its name stands for,” said Robert Borosage of the Campaign for America’s Future. But he added that “it’s not too late for justice to be done.”

For one thing, the Justice Department could reverse its policy of asserting that the leaders of the banks responsible for the financial crisis are too big to jail and begin to aggressively prosecute instances of wrongdoing. The administration could require financial institutions to pay financial restitution commensurate with the cost of the damage of their reckless behavior. And it could push the banks to offer underwater homeowners – those who did all they could to save their homes but were thwarted by the banks themselves – real relief, mortgages reset based on current home values and opportunities to refinance at today’s below-3-percent interest rates.

These demands were included in a letter to Attorney General Eric Holder. “Americans lost 40 percent of their household wealth, while communities of color were hit even harder – Latinos losing 66 percent of their household wealth and African Americans 53 percent,” the letter said. “Over a quarter of homeowners with mortgages are underwater, owing more on their mortgages than their homes are worth. As a growing chorus of experts and leaders called for a widespread program to reduce mortgage principal, we became hopeful that this would happen. It hasn’t.”

When some banks, as part of a settlement with the Obama administration, received $300 checks that were intended to compensate homeowners for tens of thousands of dollars in lost equity in their homes, “our patience ran out. We’ve had enough.”

Five of the demonstrators who were arrested Monday chose to symbolize the people who actually should be jailed by identifying themselves as Lloyd Blankfein, CEO of Goldman Sachs; Brian Moynihan, CEO of Bank of America; and John Stumpf, CEO of Wells Fargo.

Banks are neither too big to fail or too big to jail. The Justice Department needs to remember who it serves and prosecute those responsible instead of innocent homeowners.

MORNING MESSAGE: What’s Wrong With Jamie Dimon is What’s Wrong With America

OurFuture.org’s Richard Eskow: “After today’s shareholder votes at JPMorgan Chase, Mark Gongloff is right to describe Dimon as a ‘cult leader.’ … But that’s not the end of the story. It’s too easy to externalize responsibility by pinning the blame on villains. … The Jamie Dimon story shows that something more fundamental needs repair – in our economy, in our society, in us.”

Immigration Reform Clears Committee, Stings Labor

Bipartisan immigration reform bill clears committee. Time: “The Senate committee debating a landmark immigration bill approved the bipartisan measure on Tuesday night, voting 13 to 5 to send the amended package to the floor. Ten Democrats on the Senate Judiciary Committee joined with three Republicans, including two of the four GOP authors of the bill, in support of a sweeping deal that would open a path to citizenship for some 11 million undocumented immigrants, beef up border security and refashion the clunky U.S. immigration system.”

Sen. Orrin Hatch secures amendment helping tech firms win visa battle over unions. W. Post: “The compromise amendment lifts the requirement that companies first offer tech jobs to Americans for all firms except those that depend on foreigners for more than 15 percent of their workforce and relaxes the formula for determining the annual number of foreign high-tech workers.”

AFL-CIO’s Richard Trumka vows to fight tech visa change on Senate floor. The Hill quotes: “Hatch’s amendments change the bill so that high tech companies could functionally bring in H-1B visa holders without first making the jobs available to American workers. Hatch’s amendments would mean that American corporations could fire American workers in order to bring in H-1B visa holders at lower wages.”

No Republican filibuster planned. The Hill: “Senate Republican Leader Mitch McConnell (Ky.) on Tuesday said he would not try to block immigration reform from reaching the floor despite the opposition of some conservative leaders … While McConnell stopped short of pledging his support for the legislation, he praised the Gang of Eight’s work and said he is ‘hopeful’ of passing a comprehensive immigration fix through the Senate.”

But more Republican concessions eyed. Roll Call: “…though the deal worked to secure Hatch’s backing for the immigration framework in committee, he and other Republicans are demanding more concessions before they back a final bill on the Senate floor. ‘I am going to vote this bill out of committee because I’ve committed to do that once this amendment passes,’ Hatch told his colleagues … ‘But make no mistake about it, those other four amendments that are Finance Committee amendments, we are going to reserve them for the floor, but I’ve got to get those or we’ll never pass those bills.’”

Apple Faces Senate

Senate hearing goes light on Apple CEO Tim Cook. TNR: “His interrogators seemed eager to prove how much they use Apple products … The problem, for [subcommittee Chair Sen. Carl] Levin, was that he made no determination that the company did anything illegal. He berated Cook for doing exactly what Congress has allowed it to do, by failing to update its tax code for a world where capital is mobile and intellectual property is more valuable than physical property.”

ThinkProgress offers “How To Close The Loopholes That Made Apple’s Tax-Dodging Completely Legal”: “[Economist Alan] Auerbach suggests that multinational companies pay their taxes only in the countries that use their products, so that moving money across borders doesn’t alter the taxes they owe in any given country. Tim Fernholz of Quartz explains that Auerbach’s idea strips ‘the ability to move US profits overseas’ artificially, as present law has encouraged Apple to do. With a few other tweaks, this could make it more attractive to invest in the U.S.”

Some corporate cash, parked offshore to avoid taxes, actually in US banks. NYT: “Apple’s $102 billion in offshore profits is actually managed by one of its wholly owned subsidiaries in Reno, Nev., according to the Senate report on the company’s tax avoidance. The money is tracked by Apple company bookkeepers in Austin, Tex. What’s more, the funds are held in bank accounts in New York. Because the $102 billion is technically assigned to two Irish subsidiaries, however, the United States tax code considers the money to be under foreign control, and Apple is legally entitled to avoid paying taxes on it. Tax experts say that such an arrangement is not uncommon among American multinationals.”

Fed Presses Europe To Quit Austerity

Fed Reserve member presses European central bank to adopt monetary stimulus. NYT: “The public comments were highly unusual. While central bankers from different countries frequently confer in private and offer advice and criticism to their peers behind closed doors, it is rare for any official to go public with even the mildest criticism of another central bank … The European Central Bank has given no signals that it is seriously considering quantitative easing.”

Keynesians winning the argument, to no avail, notes NYT’s Eduardo Porter: “For despite all this intellectual firepower, governments across the industrial world are zealously tightening their belts. The Italian government has cut its annual budget deficit to 3 percent of G.D.P. last year from 5.5 percent in 2009, and the Irish government has slashed it to 7.6 percent from 13.9 percent. In Britain … the government of Prime Minister David Cameron reduced the deficit to 6.3 percent of G.D.P. last year, down from 11.5 percent in 2009 … The German government is running a budget surplus. And despite the public’s belief that Washington is engaged in a spending spree, the deficit in the United States narrowed to 7 percent of G.D.P. in 2012 from 10.1 percent in 2009.”

“Sequester Part 2″ coming in January. The Hill: “Unless President Obama and congressional leaders reach a deficit grand bargain, experts say Congress is on track to put most spending on autopilot with another continuing resolution.

Amendment to protect food stamps from cuts fails on Senate Floor reports HuffPost.

Sens. Paul and McCain have floor flight over debt limit. Roll Call: “Republican Sens. John McCain of Arizona and Susan Collins of Maine joined Budget Chairwoman Patty Murray, D-Wash., on the floor in support of going to conference without imposing special mandates on conferees. McCain objected to a bid by Sen. Rand Paul, R-Ky., to require that Senate budget negotiators not provide for an increase in the debt limit … Allowing a debt limit increase through budget reconciliation would require agreement from House GOP budget conferees, which would be led by Rep. Paul D. Ryan, R-Wis. McCain highlighted that point during a floor exchange with Collins. ‘Isn’t that a little bit bizarre?’ McCain asked Collins.”

A lot of people have attacked JPMorgan Chase CEO Jamie Dimon over the years, including this author. After today’s shareholder votes at JPM, Mark Gongloff is right to describe Dimon as a “cult leader.” Gongloff quotes critics, like Public Citizen’s Bart Naylor who offer pointed and very valid criticism of Dimon and his board.

But that’s not the end of the story. It’s too easy to externalize responsibility by pinning the blame on villains. Every people has used the symbolism of demons in an attempt to extirpate something within themselves. The Jamie Dimon story shows that something more fundamental needs repair – in our economy, in our society, in us.

Don’t get me wrong. That isn’t meant to suggest that we’re guilty of fraud, or greed or fiscal mismanagement. But we definitely have some work to do.

Men at Work

Chuck Prince. Robert Rubin. Lloyd Blankfein. Jeff Immelt. Brian Moynihan. Jamie Dimon. The bank CEO names roll off the tongue almost as rapidly as the billions pass algorithmically through cyberspace. What happens if one falls, as Prince did? Another takes his place before his predecessor’s shadow has left the ground he was standing on.

And we use the male pronoun advisedly, since so far they’ve all been male. Male, and ambitious, and aggressive. To a man, in fact, they’ve embodied the aggression we profess to idolize as a society, in our leaders and in our athletes, until it gets us where we live.

If Jamie Dimon and his peers have any legitimate complaint about the condemnation that’s heaped upon them today, it’s this: A few years ago you praised us for doing exactly what you condemn us for today.  You’re the ones who made Gordon Gekko a culture hero, these bankers might say, not us.

Can’t you people at least be consistent?

Heroes

There are still those who come to praise Jamie Dimon, however, not to bury him. They’re all over the media, as in the story entitled “Dimon Is Forever” (which we found via Reuters columnist Felix Salmon.) A self-described friend of Dimon’s, Michael Burns of Lionsgate, even wrote a piece about him called – without irony – “Too Great to Fail.”

Before you condemn them both too harshly, remember: People in great fear sometimes overcompensate. And, as economist Robert Johnson notes in this compelling video discussion with Cornel West, our most powerful financial executives live in fear today. They feel, not without reason, that their way of life is being threatened.

A change in their way of life might be good for the rest of us, but those kinds of insecurities don’t bring out the best in people. Given the power bankers possess, that should worry us.

Fears notwithstanding, by any objective measure it was a good day for Dimon. A certain kind of person might consider that, plus a glass of brandy and a good cigar, a perfect day. But we have the feeling that Dimon’s looking over his shoulder a lot these days. The public and its leaders may be turning against him.  There are real allegations of criminality in the works again, and he may be worried that he won’t be as lucky this time.

And Dimon’s an intelligent person. Somewhere he has to realize that what he’s doing isn’t right. That has to nag at a person, too. “We can be heroes,” says the Bowie song, “if just for one night …”

Jamie Dimon may be wondering if his lone night of heroism is coming to an end. And everybody faces another night at one point or another in their lives – a long dark night of the soul.

We Are Jamie Dimon

Those critical pieces about Dimon haven’t lacked for material: the epidemic of recurrent fraud and criminality during his tenure in the “buck stops here” chair. The trail of potentially lawbreaking mismanagement over the multibillion-dollar “London Whale” fiasco which seems to lead directly to Dimon’s door.  The arrogance which led Dimon, as head of a bailed-out bank (yes, Chase was bailed out, denials withstanding), to demand sacrifice from America’s elderly and disabled in order to foot the bill for the financial crisis he and his peers created.

But Dimon isn’t the cause of our economic problems. He’s merely a symptom. He’s no more responsible for the wreckage he leaves behind than a surfer is responsible for the undertow of the wave he’s riding. Dimon may lack moral sensitivity, but then, that’s the character that got him where he is today.

Jamie Dimon’s publicity-seeking and arrogance has made him a target for people like me. But those among his peers who prefer to move under the radar are no different. The question we should be asking ourselves is: Why do we continue to tolerate this, or at the very least to tolerate it?

Welcome, Ladies and Gentlemen, to the Show That Never Ends

Dimon isn’t a CEO or financier in the usual sense – or, to put it more accurately, in the traditional sense. He’s a salesman, a showman, a master manipulator of political power. He’s a surfer on the waves of economic illusion. And he’s very good at his job.

He’s certainly displayed no more mastery over finance than any of his peers, despite his highly publicized claims otherwise. Nor has he distinguished himself as an ethical leader, a competent manager, or a high-minded public citizen, despite his equally arduous attempts to publicize himself as all of those things as well.

What Jamie Dimon seems to be, to all appearances, is a creature of our financial system. Nothing more, nothing less.

Human beings react to incentives, especially in the absence of a higher moral order. Dimon seems extremely sensitive to incentives – both in responding to them, and in creating them for other people such as his board, his shareholders, politicians, and the press. And those incentives aren’t always financial. They can manifest themselves as power, or glory, or ego gratification.

If you want a full list, here’s a very ancient cheat sheet.

JPMorgan Chase is a perfect example of modern corporate leadership in its native habitat: at the center of a complicated matrix of human desires which it manipulates to suit its own ends.  And you and I are allowing it to continue.

Board Stiffs

At today’s annual shareholders’ meeting, JPM’s Board at did none of the things that a responsible and competent board would do in a sane society or a rational economy.

It did not rebuke Mr. Dimon for seemingly deceiving shareholders – whom the board purportedly represents – when he told participants on an investor call that the “Whale” case was “a tempest in a teapot,” despite knowing that billions of dollars have been lost.

It did not suggest that the bank’s as-yet unbroken string of repeated fraudulent behavior has brought dishonor on the institution, and therefore upon Mr. Dimon and themselves.

Free Rein

It did not demand that Mr. Dimon step down from his dual role as CEO and board chair, an unusual relationship which has contributed to the London Whale and other spectacular bank failures. That measure was defeated by more than three to one in shareholder voting.

It did not direct Mr. Dimon to refrain from investments that profit from human rights violations. That measure was defeated by more than twelve to one.

It did not direct the bank to disclose its lobbying efforts, which measures it was lobbying for or against, or the recipients of its lobbying largesse – even though those efforts are very likely hardly some of the bank’s largest institutional investors (and many of its smaller private investors as well). That measure was also defeated by more than twelve to one.

Beautiful Dreamers

Not did the board require Dimon and other senior executives to retain a significant portion of their stock until they reach retirement age, a measure which would have given them an incentive to behave in a responsible manner that protects the corporation’s long-term interests (along with the stability of the overall economy, the safety of its customers’ money, and the job security of its employees).

That measure was defeated by an equally overwhelming margin.

But then, why wouldn’t it be? Most of the bank’s investors don’t want Dimon and the rest of senior management to be thinking responsibly or for the long term. They want exactly what Dimon and the other senior executives want: numbers, and a story that looks good enough to pump up the stock price artificially and make them all money in the short term.

Use Your Illusion

That’s the dark secret at the heart of our broken economy: Companies don’t need strong fundamentals anymore.  That’s especially true of too-big-to-fail banks, but it applies to most publicly traded corporations. They don’t have to be stable, or genuinely profitable. They can be rickety contraptions propped up by government indulgence. They can be subject to a myriad of risks – financial, political, structural – and still make a fortune for their managers and their shareholders.

You don’t have to believe in a company to make money from it in the stock market. You just have to make some other poor bastard believe in it enough to buy the stock.

That’s why Jamie Dimon got everything he wanted today. Many of the people supporting him may now his deficiencies and those of his institution inside and out. As long as the stock does well, it doesn’t matter.  Bank stocks may not do particularly well compared to other stocks, but the entire market is an illusion propped up by mass delusion and mutual deception.

That’s why they love Jamie Dimon. His bank may be a mirage, a hallucination, an institutional sting meant to deceive sucker investors and delude the public into thinking they live in a sound economy. But those illusions are making them all a lot of money. Why on Earth would they want to face reality at a time like that?

Reality’s a drag. Reality’s for suckers, for losers, for regulators. Reality’s where banks go when they need taxpayers to pick up the tab. Then they return to the world of illusion, where they can make money at other people’s expense.

Free Jamie Dimon!

We come, not to bury Jamie Dimon, but to praise him. We assume, at least for the moment, that underneath his defects he is as human as the rest of us.  We all want to believe we’re doing great things with our lives. Dimon may even have believed it when he spoke these words today:

“(As) an insight of our financial performance, to the better part of this decade, our company has been doing great things. And during this period of economic volatility and social and political change around world, our work matters more than ever. As much as any other company, JPMorgan Chase is positioned to help individuals, businesses of all sizes, governments, not-for-profits and other partners see the opportunities and respond to the challenges of our times.”

The past decade which Mr. Dimon alludes to also saw repeated fraud against homeowners, a nearly one-billion-dollar bribery scandal in Jefferson County, Alabama, the LIBOR scandal, and the “Whale.”

But the human capacity for self-deception is powerful, especially when we seek to give our own lives meaning.  Dimon is probably like most of us: a little bit of altruism alongside a lot of self-interest.

Isn’t it partially our fault that Dimon manages to satiate his altruistic impulse –  or at least to inoculate himself against guilt – with half-measures like these? If society gave him different incentives – not just financially, but for his ego and his moral sense – would he use his abilities a little differently?

Sympathy for the Devil

I was in high school when the Rolling Stones released Beggars’ Banquet, the album with Sympathy for the Devil on it. We were listening to the record for the first time at a party when it came to this line: “I shouted out ‘Who killed the Kennedys,’ when after all it was you and me.”

I didn’t buy the Stones’ version of collective guilt then, and I haven’t changed that much since. Unethical or lawbreaking bankers are morally responsible for their actions.  We didn’t break the law or throw people out of their homes. They did.

But even if we don’t share in the guilt, we share the responsibility. Did we do everything we could to stop them? They’re too powerful, people will say, and that’s true. But we have a responsibility to try, and to keep on trying, no matter what. We have a responsibility to engage in the great effort, which is a struggle for better regulation and a more humane economy. It’s also a struggle for hearts and minds – Dimon’s, the media’s, and our own. We should be demanding more – of the banks that serve us, of the media that entertain (if not inform) us, of the government agencies that work for us.

And we should be demanding more of us. These union pension funds, institutional investors at JPMorgan Chase, took action today to change the way business is done there. So did Father Seamus Finn of the Interfaith Center on Corporate Responsibility, who introduced one of the resolutions on behalf of a family trust with JPM shares.

More of us need to join them in concerted, constructive economic activism. We can also work to reduce our dependence on the kinds of loans that lead to financial servitude, to the extent that’s possible in this harsh economic climate.

Felix Salmon says Dimon “needs a boss.” But he has one, in our culture’s simple-minded, pseudo-populist greed. That greed is made manifest in the form of Jim Cramer, the fast-talking TV huckster who serves as the clownish and loutish Id of the American economy. Gongloff quotes Cramer as saying, “If you voted for Dimon to lose the chairmanship, you voted for a lower stock. Who in heck would every [sic] do that?”

Who in heck, indeed – except people who are determined to build a better society and a better future?  Jamie Dimon had a very good day today. But we can have the future, if we want it.