Corporate Welfare and the Case for Taxes and Regulation

Most everyone knows the most common use of welfare as helping those in danger of being left behind by society. Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP although often still referred to as Food Stamps, and Medicaid are the most well known programs available to people. And no, Social Security and Medicare are not welfare programs.

But just as there are welfare programs for individuals and families, there are also welfare programs for corporations and the rich and powerful. These are just not given names to make them easily identifiable as welfare programs yet the end result is governments at all levels wind up subsidizing for profit industries at the expense of the taxpayer. Privatizing the profits, socializing the losses in other words.

Let me offer a few examples. WalMart is one of the easiest examples. They are a profitable business yet far too frequently, WalMart employees are forced to use public assistance, i.e., the pretty much textbook definition of the working poor (see here, here, here, here, here, and here). If you check der Google for "WalMart employees public assistance" there are over 900K hits in .34 seconds.

Privatizing the profits, socializing the losses.

Next up are oil and gas companies. Just for last year (2012) the Big Five oil companies (ExxonMobil, Shell, Chevron, BP, and ConocoPhillips) had combined profits of $117B (high of $45B for Exxon down to 'only' $8B for ConocoPhillips). These are just the biggest oil companies and does not cover the Koch Brothers Amerada Hess, T Boone Pickens, and many other "smaller" oil companies (smaller being a relative term). While the amount of subsidies varies depending on how they are defined, contrary to Forbes magazine's contention, they do exist. As even an earlier Forbes article concedes (although they paint it as "everybody loves them.") Christian Science Monitor places the subsidies at $41B a couple of years ago. The Atlantic in March discussed over $38B in Big Oil and gas subsidies identified by the Obama administration for deletion over the next 10 years. This chart shows the annual subsidies for Oil and gas at $10B to $52B per year. You will notice that all of these guesstimates on the amount of annual subsidies are well below the annual profits.

Just these past few weeks we have seen a few more examples of privatizing the profits and socializing the losses. Exxon's oil spill/pipeline break in Mayflower, AR. Due to a loophole in the law, Exxon will not have to pay into a federal cleanup fund after this disaster. The West, TX fertilizer plant explosion:

"This explosion, I think, surprised a lot of people," said Senator John Cornyn. "It is no surprise that ammonium nitrate is explosive under the right conditions."

No one could have anticipated - unless they did.

Tax breaks. Lack of regulations. No inspections. Ka-boom!

I wish I had the answers or the magic wand but I do not have the magic wand and elected officials at all levels do not have the will to find and implement the answers. It might hurt the (un)free market and cost a few cents of profit.

Privatize the profits. Socialize the losses. Avoid the taxes and regulations and let the tax payer pick up the pieces. John Galt would be so very proud.

And because I can:

Banker Pay Is Pretty Good - The Price of Destroying the Economy

A few months ago, I (only half facetiously) offered my services to BP as CEO after I had read about and watched bits of Tony Hawyard's testimony before Congress on how he was like Sgt Schultz (I know nothing, nothing!), figuring I could do at least as good a job as Hayward for a lot less money. Win-win all the way around for everyone!

The Sgt Schultz defense seems to be fairly common among CEOs and upper management for many companies, even though they are paid to be aware of what is going on. I would imagine that there are many of us among the millions of long term un and underemployed who could do the jobs of CEOs and so-called Masters of the Universe and be not only more honest in our dealings with others but also more empathetic for those who are struggling.

Instead, we get to see Lloyd Blankfein's salary and other compensation jump again in 2010:

The firm’s board granted restricted stock valued at $12.6 million to Mr. Blankfein and other senior executives, including Gary D. Cohn, the firm’s president. The board also approved a new annual base salary of $2 million for its chief executive, up from $600,000. Mr. Cohn and others will see their base salaries increase to $1.85 million, according to the filing on Friday.

With his previous salary of $600,000, Mr. Blankfein’s 2010 compensation comes to $13.2 million. Senior executives often receive part of their compensation in cash, but Goldman did not release details on this component of Mr. Blankfein’s compensation.

A Modest Proposal for BP Shareholders

I am here today to offer a modest proposal to the shareholders of British Petroleum.

I'm sure you are aware of the "performance" yesterday of your current Executive Director/CEO Tony Hayward, as he testified before Congress on BP's actions before and since the start of the Oil Gusher in the Gulf of Mexico now 59 days ago.

For the record, I did not watch his performance directly as I tend to avoid watching things that are pretty much guaranteed to make me want to throw a shoe through the telly. I did, however, follow along with the live-blogging at FireDogLake.com (here, here, and here.)

That being said, after following the live-blogging and reading news stories today such as this from the New York Times, I would like to present myself as a candidate for your new ED/CEO.

As One of the "Small People," I Can Use a Job

Is it a pre-requisite for senior executives at BP to be so gaffe prone? First we have Tony Hayward and his foot chewing now followed by the linguistic stylings of Chairman Carl-Henric Svanberg:

I hear comments sometimes that large oil companies are greedy companies or don’t care,” he said. “But that is not the case with BP. We care about the small people.

The apologists have been out in force, attempting to find ways to explain this as anything other than arrogance and a true reflection of Svanberg's (and BP's) feelings for those who are not them. The most common excuse I've seen is that it's purely due to language difficulties, since English is not Svanberg's native tongue.

I will grant that English is a difficult language to learn and master and I applaud all those people around the world who have elected to learn the language, exceptions included. They've mastered something I've spent my life trying to master while I've not been able to master my few attempts at learning another language (Spanish was the one I attempted and though my instructors were not the greatest, it's still my own damn fault for not learning.) I have a reasonable knowledge of grammar and a fairly good vocabulary and for the life of me, I can not really come up with a phrasing or way that Svanberg could have said this without insulting others. Rather like Leona Helmsley's "Only the little people pay taxes" quip.

Too Numb to Cry So I'll Try Laughter

Have I mentioned today that I NEED a FREAKIN' JOB?

Well I do and as I search for employment sometimes it's all I can do to stop myself from just curling up in a fetal position, cursing the fates and furies/Gods and Goddesses or any other entities or "supreme beings" that I can blame.

But now that I've gotten the obligatory whine out of the way, I'm going to talk about some of the folks who are in far worse straits than I am, as difficult to believe as that may be.

If you want to have your heart torn out, watch the video with this Seminal Diary from Michael Whitney. Or read this diary where Michael talks with some of the fishermen effected by BP's environmental catastrophe (it seems Tony Hayward decided to upgrade it from the moderate environmental impact he first called it).

I'm only without a job. The folks in the Gulf of Mexico that are dealing with this disaster are out of a life style. As Michael reports in the second linked diary above:

Now he has nothing but oil. Raleigh estimates that, since the oil sinks into the soil where the oysters grow, it will be at least 10 years before Grand Isle fishermen can harvest oysters again.

Ten years can flash by in an instant it seems, but not when you are waiting for the return of your livelihood. I'm six years into my unemployment/underemployment life now and can't imagine facing another four years of this. I never anticipated I could go this long; yet as I say, I'm blessed compared to what these folks are looking at. And there are thousands more who lived and worked along the Gulf who are looking at years and years of lost wages, lost lives.