Corporate Cash Hoarding Is Killing the Middle Class

By Alan Grayson, In These Times

13 April 14

Warren Buffett's secretary pays within a higher tax bracket than Buffett himself. Something's wrong with this picture.

read a number of finance-industry newsletters. I want to share with you a recent excerpt from one of them. Here it is:

$1,265,836,000,000.

This is the amount of cash that S&P 500 companies (excluding banks and other financial institutions) are currently sitting on. As of the beginning of the third quarter, the largest U.S. companies collectively held $1.27 trillion. That’s about 13.5 percent more than this time last year. …

Where is this cash coming from? Well, borrowing accounts for some of it. But mostly, it’s that companies are simply generating cash faster than they are spending it.

Companies sitting on cash — the financial newsletter thinks that this is great news! Spectacular news! How nice — for them.

Here is more great news for Big Business: Corporations have been largely excused from paying taxes. The Government Accountability Office found earlier this year that the average effective tax rate on U.S. corporations is only 12.6 percent of their income . That’s low enough to make Mitt Romney jealous. Hooray, say the financial newsletters! More spectacular news!

In fact, the corporate income tax has been performing a magical disappearing act for decades. In 1952, corporate income tax revenues totaled 6 percent of GDP . The average during our enormous post-war economic expansion, between 1945 and 1970, was more than four percent of GDP . Since then, in every year, it has been less than three percent . In 1983, Reagan’s tax breaks knocked corporate income tax revenue as a percentage of GDP all the way down to 1 percent. It returned to that pitifully low level in the first year of the Obama administration, and it has remained below 2 percent. No wonder the corporate cash pile keeps growing and growing and growing.

But what about the non-corporate entities in America? How are those bags of flesh and bones known as “human beings” faring?

Well, 11 million of us are unemployed and more than seven million of us have part- time jobs, but can’t find full-time work. And in the past 10 years, the U.S. labor force participation rate has shrunk by three percent. Among those who are fortunate enough to find work, the average pay is a whopping $24 an hour. According to a University of Michigan report, around 1 in 5 households in America has a negative net worth — they owe more than they own. In addition 48 million Americans have no health coverage , and 48 million rely on food stamps to stave off hunger.

Don’t expect the next generation of red, white and blue meat-bags to do much better. One fifth of all American children live in households trying to survive on less than $2,000 a month. Many of these children go to bed hungry; is it any wonder that our schools are producing students whose math scores, by one measure, are among the worst in the world?

"A Tale of Two Cities," the novel by Charles Dickens, begins with the famous words, “It was the best of times, it was the worst of times.” In America today, it is the best of times for multinational corporations and their CEOs. But for ordinary people, it’s pretty bad, and getting worse.

For non-corporeal entities, times are good. For flesh and bone, bad.

Legal fictions, good. Mothers, fathers, sons, daughters — all bad.

I submit to you that there is a connection between those two things, a connection generally known as “cause and effect.” There are several such connections, in fact.

First, inequality causes poverty through simple arithmetic. If the richest 1 percent is taking half of everything , then that just doesn’t leave very much for the other 99 percent. And inequality in America is not onlythe highest in our history, but alsothe highest in any industrialized country. According to the CIA World Factbook, our Gini coefficient — a statistical measure of income inequality — places us between Venezuela and Uruguay, with far more inequality than every major European or East Asian nation. Our inequality is surpassed largely by a bunch of African countries.

Second, inequality causes poverty through economic mismanagement. As that finance newsletter proudly states, huge corporations don’t spend their money; they just sock it away. And the same thing is true of rich people, and banks, and multi-national corporations. The 400 individuals onthe Forbes 400 list alone have accumulated more than $2 trillion in wealth , the great majority of which remains in their pockets year after year. We are ending up with enormous pools of cash that have been drained from the real economy, and are not reinvested in it. We have a national economy with a maximum possible economic output of $16 trillion each year, but much of it ends up in deep pockets with no holes, just sitting there. This creates a massive and chronic shortage in “aggregate demand,” a problem that John Maynard Keynes accurately described 75 years ago. If we allow demand to fall short, then unemployment explodes. Hence we paper over the evaporation of all that money from aggregate demand with federal deficits, “quantitative easing” and enormous personal debt.

But it doesn’t matter, because the existence of all those people without jobs — what Marx called a “reserve army of the unemployed” — still fuels poverty by decimating wages. Desperate people bid down the price of labor simply to survive. Average wages, adjusted for inflation, haven’t increased since the 1970s. America is becoming a nation of cheap labor. And the notion that in such circumstances, burgeoning business profits somehow will magically increase wages and create jobs is delusional. They haven’t, and they won’t.

The misconception that the so-called job creators will deploy corporate profits to take risks, to reinvest, to expand and, ultimately, to employ more people is a right-wing pipe dream. They might be doing that in China; they sure aren’t doing that in America. Businesses see labor simply as a cost. Business tries to reduce that cost as much as possible, in order to boost profits as much as possible. Business is not in the business of creating jobs. Business is in the business of maximizing profit. Business hires labor only when it can make a profit from that labor. If any business could eliminate its labor force entirely, it would. And many actually do just that, through subcontracting, outsourcing, offshoring and other measures that reduce compensation or eradicate the labor force.

So please forgive me if, when I read in a financial newsletter that giant corporations are “sitting on” $1,265,836,000,000 “in cash,” I don’t feel like breaking out the champagne. I see it as a funeral pyre for the American Middle Class.

A system that taxes Warren Buffett’s secretary at a higher rate than Warren Buffett stokes the flames of that funeral pyre. A system that provides for corporate tax loopholes that are as large as corporate tax revenue stokes the flames of that funeral pyre. We create that system, and it’s breaking us, from within.

Those are the facts. The Sturm und Drang that you see on the evening news is a desperate effort to avoid those facts. And the deep, deep question in our political system today is this: Are we going to do anything about it?

Benghazi Mystery Explained by CIA Covert Op With Turkey, Syria?

By William Boardman, Reader Supported News

13 April 14

Answer offered by Seymour Hersh gets little public attention

enghazi” is one of those kneejerk labels that right-wing folks slap on a story they don’t actually understand but have determined the “right” answer to anyway. It’s a hot button, not an argument, like the “ IRS scandal,” which the right is finally beginning to admit it got wrong because it ignored the law as written. “Fast and Furious” is another of some two dozen, mostly less known right-wing thought substitutes that aren’t supported by persuasive evidence. (Meanwhile, the scripted herd of Obama-haters pretty much remains silent about real Obama administration scandals, like civilian murder by drone or massive global surveillance, the sorts of things that throw the left into denial).

The latest explanation of “Benghazi” comes from a non-partisan reporter, so that’s a start, and it provides a credible framework for most of the anomalies associated with Benghazi. Even better, official spokes-people universally either refused to comment on the story or denied it flatly. So there’s hope.

“Benghazi” as a political story began with the Obama administration’s strangely dishonest early responses to the killing of four Americans in Libya on September 11, 2012. The story got legs when Republican presidential candidate Mitt Romney immediately falsified what the administration was saying, and was followed by just about every Republican who’s talked about it since, perpetuating one lie or another. Nobody has seemed interested in the truth, which especially makes sense from a Republican perspective, since “Benghazi” provided a handy rhetorical cudgel with which to pound the table and the president in order to appear “tough.” But why has the Obama administration remained so opaque, tossing out one red herring after another for Republicans to gleefully chase, but still not offering a persuasive narative?

Even when Fox News commentator Charles Krauthammer told Republicans recently to give up on Benghazi – “the public is now tired of it” – he was still clinging to the party line that there was a real scandal to be found somewhere, even though neither he nor anyone else seemed to know what it could be, even though they were sure it was “ worse than Watergate.”

If some truth about Benghazi is available, does anyone want to know?

So far, every report – from Congress and the executive branch and most of the media – has come to conclusions with serious critiques that fall short of scandal. Despite a variety of shortcomings and contradictions in the administration’s responses since September 2012, none of the investigations has produced a credible, fact-based explanation for the administration’s obviously misleading response at the time or its apparent stonewalling since. This changed on April 6, 2014, when the London Review of Books published “The Red Line and the Rat Line,” a long article by Seymour Hersh, focusing on evidence that the sarin nerve gas used in Damascus in August 2013 was likely a false flag gassing by rebel forces made to look like it was done by the Syrian government, in order to fool the United States into attacking Syria.

Hersh’s analysis of how Turkish and Syrian agents almost managed to dupe the United States into going to war based on a lie (they’d seen that work before, right?) is the focus of his article, in which Benghazi is only a tangential element. The “Libyan spring” began in Benghazi, and anyone who wanted to know could easily learn that the region was hot with jihadists among anti-government rebels.

By early 2012, Libyan president Muammar al-Gaddafi had been overthrown and killed. The U.S. had established a foothold in the Libyan turmoil. The U.S. also had access to Gaddafi’s significant weapons cache, which was largely unneeded in a Libya already awash in arms. But those weapons had other uses, one of which was to support the rebels in Syria trying to overthrow Syrian president Bashar al-Assad. Reportedly, Turkey was already operating the Benghazi airport, primarily to fly humanitarian aid to Syria, but also to smuggle arms to the rebels. Since the U.S. and Turkey both wanted Assad gone, the CIA helped set up a more extensive, covert supply line to those rebels. As Hersh reports:

The full extent of US co-operation with Turkey, Saudi Arabia and Qatar in assisting the rebel opposition in Syria has yet to come to light. The Obama administration has never publicly admitted to its role in creating what the CIA calls a “rat line,” a back channel highway into Syria. The rat line, authorised in early 2012, was used to funnel weapons and ammunition from Libya via southern Turkey and across the Syrian border to the opposition. Many of those in Syria who ultimately received the weapons were jihadists, some of them affiliated with al-Qaida. (The DNI [Director of National Intelligence] spokesperson said: “The idea that the United States was providing weapons from Libya to anyone is false.”)

Libyans attacked both the consulate and the CIA safe house in 2012

The Turkish report noted that CIA director David Petraeus had apparently run the rat line operation (his spokesperson denies there was such an operation) at the same time the FBI was investigating his extra-marital operations. (The CIA secretly coordinated its activities with Britain’s MI6.) Coincidentally or not, Turkish media reported an unscheduled meeting in Ankara between Petraeus and “his Turkish counterpart on September 2 in Istanbul, during which the spy chiefs discussed the Syrian crisis and the Arab republic’s possible transition process,” without providing further detail other than noting that this was the CIA director’s second visit to Ankara in six months. The report noted that a month earlier, U.S. and Turkish delegations met to discuss how to “coordinate ongoing efforts to extend humanitarian aid to Syrians and to produce a common road map to shape a possible post-Baathist era. The meetings also raised the issue of the need for a smooth transition in Syria to avoid chaos in the country in the event that President Bashar al-Assad’s government collapses.”

Equally circumstantial, and despite earlier security warnings, the U.S. ambassador to Libya, Christopher Stevens, had come to Benghazi for a dinner meeting with the Turkish consul general Ali Sait Akin on September 11, 2012, reportedly for a discussion of furthering weapons exchanges. The attacks started later, after 10 p.m., leaving the ambassador and three other Americans dead. Soon after that, the CIA role in the rat line operation was severed, but the operation continued with the shell companies that had been established (staffed with American mercenaries), and with British, Turkish, Saudi, and Qatari backing. Whether another covert American agency replaced the CIA is uncertain.

Running for re-election in 2012, President Obama is unlikely to have wanted to disclose an ongoing covert operation, especially one which was politically dangerous, since it was arming Syrian rebels of all stripes, including jihadists, who were supported by Turkey, Saudi Arabia, and Qatar. Worse for the Obama administration, the operation was arguably illegal, and at best controversial. According to Hersh:

The operation had not been disclosed at the time it was set up to the congressional intelligence committees and the congressional leadership, as required by law since the 1970s. The involvement of MI6 enabled the CIA to evade the law by classifying the mission as a liaison operation…. for years there has been a recognised exception in the law that permits the CIA not to report liaison activity to Congress, which would otherwise be owed a finding. (All proposed CIA covert operations must be described in a written document, known as a ‘finding’, submitted to the senior leadership of Congress for approval.)

What’s better than watching Republicans chase imaginary wild hares?

Even today, disclosure is limited by official secrecy. Much of Hersh’s information comes from a “highly classified annex” to the January 2014 Senate Intelligence Committee report on Benghazi. Distribution of the annex was limited to eight ranking Congresspersons and the staff who wrote it. Hersh says he has not seen the annex but has talked to one or more people who have. According to them, the only purpose of the Benghazi consulate was to provide cover for the nearby CIA station and its gun-running operation.

Given all that, what better tactic could the Obama campaign find in 2012 than letting Republicans make up and chase down imaginary conspiracy theories, only to come up empty time and again? Yes, the Obama administration ended up looking suspicious: incompetent, disingenuous, or dishonest. But that’s a political hit that seems far easier to take than what might have resulted from telling the truth in all its detail.

The CIA/gun-running aspect of Benghazi has been part of the story pretty much from the start, reinforced by the September 14 London Times report of the arrival in a Turkish port of a 400-ton arms shipment on a Libyan ship, “ The Victory,” with a captain from Benghazi. The story was picked up by Business Insider, which proceeded to run with it – in the wrong direction, if you assume that the most important question was whether Ambassador Stevens knew there were Libyan arms going to Syria. At the same time, Paula Broadwell, by then known as the CIA director’s mistress, publicly suggested that the attack on the CIA annex in Benghazi was meant to free Libyan prisoners there, a story plant that has the feel of a deliberate wild goose chase (which of course the CIA “ adamantly denied”). By May 2013, Business Insider was again focusing on the Libyan weapons freighter and quoting Kentucky Republican senator Rand Paul, on the same day that he announced he was “considering” a run for the presidency in 2016, telling CNN:

I’ve actually always suspected that, although I have no evidence, that maybe we were facilitating arms leaving Libya going through Turkey into Syria…. I never have quite understood the cover-up – if it was intentional or incompetence – but something went on. I mean, they had talking points that they were trying to make it out to be a movie when everybody seemed to be on the ground telling them it had nothing to do with a movie…. Were they trying to obscure that there was an arms operation going on at the CIA annex? I’m not sure exactly what was going on, but I think questions ought to be asked and answered.

Perhaps the clearest, and most vitriolic, expression of the Benghazi gun-running plot came from rising right-wing celebrity blogger Katie Kieffer of Minnesota, whose post on April 29, 2013, began: “Liberals don’t want honest Americans like you to have guns. Liberals just want to arm foreign rebels in crapshoot attempts to ‘end global violence.’ But liberals feign ignorance when the rebels they arm end up being criminals who kill innocent Americans like the late U.S. ambassador to Libya, Christopher Stevens.” In other words, the new right-wing Benghazi meme came down to this: Obama gave weapons to some jihadists – some jihadists killed Americans in Benghazi ­– therefore Obama is a murderer – and, no, we don’t have any evidence for that.

“Benghazi” outbursts continue, but most media ignore Hersh’s claims

A year later, as some 70 demonstrators prepared to protest Hillary Clinton’s satellite appearance at a San Diego healthcare event, the current right-wing version of Benghazi goes like this:

Is it not inconceivable to you that a Muslim terror attack, on the 11th anniversary of 9/11, that resulted in the death of four Americans, would not only go uninvestigated but also unpunished as well? That is exactly what the Obama White House is doing. President Obama and then-Secretary Of State Hillary Clinton allowed a Muslim terror attackagainst the US Consulate in Libya to occur unchallenged, while they watched it in real-time on White House satellite feeds. Then Obama started firing staff to perpetuate the coverup.

The assertion that they “ allowed a Muslim terror attack” derives from an anonymous claim that unnamed sources gave unspecified warnings that the consulate was in danger. The “ satellite feeds” refer to an anonymous report that two drones, one replacing the first, observed the attacks and had the capability to send signals the White House could receive. The “staff firing” reference is about the Petraeus resignation after his extra-marital affair became public.

Hersh’s story has had little or no coverage in mainstream media, who were pretty much of one mind that the sarin attacks of 2013 were the work of the Assad regime, because they bought the official story that no one else had the capability to do that. Hersh’s article casts credible doubt on that assumption of certainty, and provides a more plausible motivation than whatever self-destructive impulse was assigned to Assad. Much of the Twitter backlash against Hersh is merely /ad hominem/ sputtering, and their debunkings of Hersh’s debunking of the official version of events were inconclusive, as Interventions Watch wrote: “The article has caused much consternation among those people in the corporate media and the NGO community who are 100% certain that the Assad regime was responsible for the attacks.”

So now there are new Benghazi questions coming from new directions:

• Is it possible that the Benghazi attack was orchestrated by the Islamist president of Turkey for the sake of freer rein in helping Syrian Islamist rebels?

• How much credence should be given to the YouTube recording of Turkish officials discussing a false flag operation designed to provoke a war between Turkey and Syria? ( Turkish officials have not denied the authenticity of the recording, but they claim it was manipulated and have shut down the YouTube site in Turkey.)

• Have the arms shipments from Libya to Syrian rebels included any chemical weapons? Or biological weapons?

• What did the White House know, and when did the White House know it?

William M. Boardman has over 40 years experience in theatre, radio, TV, print journalism, and non-fiction, including 20 years in the Vermont judiciary. He has received honors from Writers Guild of America, Corporation for Public Broadcasting, Vermont Life magazine, and an Emmy Award nomination from the Academy of Television Arts and Sciences.

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.