ThinkProgress Logo

Climate Progress

Joe Barton Complains that ‘Big Oil’ Is ‘Pejorative’ For The Trillion-Dollar Industry

Joe BartonRep. Joe Barton (R-TX) — who famously apologized to BP after the disastrous spill in the Gulf — now thinks that the term “Big Oil” is mean to the oil industry. Yesterday, executives from the Big Five oil companies testified before the Senate Finance Committee to defend their taxpayer funded subsidies in an often contentious hearing. In defense of the Big Oil executives, Barton told a C-SPAN interviewer that the media shouldn’t use the phrase “Big Oil” because it’s “upsetting”:

First of all, I don’t think it should be a pejorative. We’ve got this mentality on the liberal side of our political debate: Big Oil, Big Insurance, big this, big that. We compete in a global economy, and the biggest company, Exxon Mobil, is only the fifth largest oil company overall, because the other four are run by governments. It should be something of a badge of honor that we still have companies that can compete internationally. It’s a little upsetting that we try at the beginning to make it a pejorative.

Watch it:

Contrary to Barton’s statement, “big” is an undeniably understated way to describe the industry – from its profits, to its campaign contributions and even its mistakes.  For eight years in a row, Exxon Mobil was listed by Fortune 500 as the most profitable company in America. Combined, the Big Five Oil companies raked in over $32 billion in profits in just the first three months in 2011. The Big Five oil companies make more than one trillion dollars in revenues every year. And over the past decade, those same Big Five oil companies made a combined $900 billion. Since 1990, the oil and gas industry has spent more $270 million in congressional campaign contributions, and in 2010 alone, spent $145 million on lobbying.

Perhaps the only thing that’s not big about Big Oil is its tax rate. A Center for American Progress analysis revealed that from 2008–2010, ExxonMobil’s effective federal tax rate came in at 17.6 percent, less than the average American’s federal rate in 2007. Yesterday, the Washington Post reported that an ExxonMobil spokesman“conceded that the company had a net federal income tax credit of $156 million in 2009.” Yet the American taxpayers subsidize these companies with $4 billion in tax breaks every year. Read more

Politics

Hedge Funder John Paulson Earns More Hourly Than Most Americans Do In A Lifetime And Pays A Lower Tax Rate

As ThinkProgress has previously noted, necessary services and public investments in Main Street America are being gutted as some of the wealthiest Americans are getting away with paying less in taxes than they have in a generation.

Progressive activist and former Texas agricultural commissioner Jim Hightower notes one particularly egregious exammple of this unfair economic arrangement: the case of hedge fund billionaire John Paulson. Hightower writes that an American who earned $50,000 a year for 47 years would earn $2.4 million, which would be a healthy sum. Yet Paulson earns that much in an hour:

If your job paid $50,000 a year and you stayed at it for 47 years, your tally for a lifetime of work would be $2.4 million. Not bad — but hedge fund hustler John Paulson pulled down that much last year.

Most of us would consider an annual income of $2.4 million to be a windfall, but it didn’t take Paulson a full 12 months of work to pocket his windfall — or one month, a week, or even a day. That’s how much he made an hour. Yes, Paulson could’ve worked one single hour in 2010 and hauled off a paycheck equal to what a typical household gets for a lifetime of work.

Hightower goes on to note that not only does Paulson earn such wild compensation, but that he actually pays a lower effective income tax rate — 15 percent — than the average American, whose effective rate in 2007 was 20.4 percent.

The reason Paulson is able to pay so little in taxes compared to the average American is because of what’s known as the “hedge fund loophole.” People who work for hedge funds are allowed to classify income that they’ve gained from investing other people’s money as capital gains rather than normal income. These capital gains are then taxed at an ultra-low rate of 15 percent, rather than the normal rate that such income would be taxed at — 35 percent. MoveOn demonstrates this tax disparity with the following graph:

Economist Robert Reich estimates that closing the hedge fund loophole could raise as much as $20 billion a year in revenue. The Senate last year made a brief attempt to narrow the loophole, but its efforts were beaten back by the industry. (HT: @matthewstoller)

Yglesias

Limits On The Federal Government’s Power To Regulate Commerce

As Scott Lemieux says, one of the odder arguments against the constitutionality of the Affordable Care Act is the argument that if the federal government has the authority to fine people for not buying health insurance as part of a comprehensive insurance regulation scheme, then there are no limits on federal power.

If anything, I think this is silly on a deeper level than Lemieux suggests. For example, suppose congress passed a law saying “selling books across state lines that criticize US policy in Afghanistan” is illegal. Well, they couldn’t do that notwithstanding the clearly interstate and commercial nature of the activity in question. That’s because there are sharp limits on congress’ authority to restrict freedom of expression and that authority is maximally limited when the expression at issue is political in nature. Similarly, an “individual mandate” for jurors to pay a fine if they rule against the prosecution in a criminal proceeding would be unconstitutional. It’s not difficult to think of limits to congress’ authority to regulate the national economy.

The real issue here is the longstanding dispute over whether or not congress has the authority to regulate the national economy. For the past 75 years or so that’s been the practice, and it was the practice in the Early Republic. It’s certainly true that at times in the 19th century the Supreme Court took a different view of the question, and then since the New Deal a dissident minority has criticized this practice. And it’s certainly true that the authority to regulate the national economy is a lot of authority. But it’s clearly not unlimited authority. Many ACA critics seem to want to hold the view that the law is unconstitutional without committing themselves to wholesale rollback of congressional authority to regulate the national economy. But it would be exceedingly strange to argue that Congress does have authority to regulate the national economy but is limited in the methods by which it can do this and that those limitations aren’t the ones written down in prior caselaw but instead are just ones ginned up ad hoc to rule a single law out of bounds.

Health

Heritage: The Only Way For Us To Be ‘Intellectually Honest’ Is To Opportunistically Flip-Flop

The conservative Heritage Foundation is very, very upset that the Obama Administration pointed out their many, many years of support for a requirement that all Americans carry health insurance in a brief defending the Affordable Care Act. So upset, it turns out, that they filed an amicus brief informing the court that they have completely flip-flopped on their longstanding support for such a requirement:

Yesterday, The Heritage Foundation filed a friend-of-the-court brief with the 11th Circuit U.S. Court of Appeals, reiterating Heritage’s opposition to the individual mandate that is a key piece of the Obamacare statute. This is the first time we have ever filed such a brief—as far anyone around here can remember. But we had no other choice. In its merits brief before the appeals court, the U.S. government quoted a 21-year-old statement by a Heritage Foundation policy expert supporting an individual mandate for health insurance, when Heritage’s view today is to the contrary. . . .

For a research organization such as ours to be intellectually honest, we cannot rigidly accept an idea presented decades ago, and ignore empirical evidence presented since. That is why we changed our position on individual mandates long before President Obama ever spoke of one.

Heritage was one of the earliest champions of a minimum coverage requirement like the one in the Affordable Care Act — endorsing this proposal as early as 1989. One of their vice presidents testified in support of this requirement as recently as 2003. The earliest example Heritage cites in its brief of them reversing their longstanding position on health reform is a 2008 article published after Democratic presidential candidate Hillary Clinton had prominently endorsed Heritage’s previous stance.

Moreover, Heritage’s claim that they flip-flopped because of “empirical evidence” is difficult to believe. Their brief lists five reasons why they suddenly stopped believing in an minimum coverage requirement after that position was endorsed by a leading Democrat, but many of them are nothing more than platitudes such as “[o]n philosophical grounds, policymakers should retain a bias for personal liberty.” The only empirical study they cite explaining their position is a mostly irrelevant study showing that more people will participate in 401k programs if they are automatically enrolled in them.

If Heritage actually believes that this study has implications for health insurance policy, however, then they have no business providing advice to federal judges. The reason why an insurance coverage requirement is necessary is to prevent something known as “adverse selection.” The ACA prohibits insurance companies from denying coverage to persons with preexisting conditions, but this ban cannot function if patients are free to enter and exit the insurance market at will. If patients can wait until they get sick to buy insurance, they will drain all the money out of an insurance plan that they have not previously paid into, leaving nothing left for the rest of the plan’s consumers.

In other words, people who wait until the last minute to buy health insurance force other people to pick up the costs of their care. People who wait until the last minute to plan for their retirement, by contrast, bear the cost of their own irresponsibility upon their own shoulders. Accordingly, Americans have far fewer incentives to delay planning for retirement than they do to delay buying health insurance, and thus are more likely to change their behavior because of a gentle “nudge” such as an automatic enrollment program.

Sadly, Heritage’s embarrassing defense of its politically expedient flip-flop is emblematic of their shoddy policy research. Last month, Rep. Paul Ryan (R-WI) relied on a Heritage Foundation analysis to claim that his Medicare-eliminating budget would produce shocking low unemployment and equally unbelievable economic growth. After the Center for American Progress pointed out that Heritage’s projections “are not just overly optimistic, they are impossibly optimistic,” Heritage was forced to print a correction indicating that they had made a basic math error that led to their impossible claim that Ryan’s draconian budget would cause unemployment to drop to 2.8 percent.

Yglesias

The More Nationalistic Party Will Always Be The More Nationalist Party

Michael Cohen has a piece in The Atlantic arguing that the death of Osama bin Laden will put paid to the notion that Democrats are somehow “weak” on national security issues.

I’m much closer to Ben Adler’s pre-rebuttal of this idea which argues that it’s really all about rhetoric and identity politics, but I’d sort of go even further than this. The basic asymmetry is that Republicans are the party of America’s white Christian ethno-cultural mainstream. Of course atheists, Jews, Muslims, and Buddhists complain when someone says “America is a Christian country” but the claim at least parses correctly. We all know what that means. And we know why it is that “minorities” is a word that also means “people substantially descended from non-Europeans. The definition of authentic mainstream Americanness has shifted over time in our history (it now clearly includes Catholics in a way that it didn’t 100 years ago) and will continue to shift in the future. But the party of the mainstream has a clear and obvious edge in seizing the mantle of American nationalism, and thereby “toughness.”

Security

Giuliani, Dean Paid To Advocate For Terrorist Group

An article in today’s Wall Street Journal looks at the considerable support that the exiled Iranian Islamist-Marxist cult Mujahideen-e Khalq — which is designated by the U.S. State Department as as foreign terrorist organization — has been able to cultivate, both in European capitals and in DC, getting people like Rudy Giuliani and Howard Dean to speak at their events.

The article notes that these speakers “wouldn’t disclose their speaking fees, but many of them charge between $25,000 and $40,000 per appearance.” Dean also said that “he has made both paid and unpaid speeches for MeK.”

As I noted back in December, such activities skirt very close to violating U.S. law in regard to “material support” for terrorism. Responding to this charge when it was raised by attorney David Cole, Giuliani and his colleagues quoted the relevant law: “Individuals who act entirely independently of the [FTO] to advance its goals or objectives shall not be considered to be working under the [FTO]’s direction and control.”

“As a result,” Giuliani et al concluded, “we felt quite secure, thank you, in relying on the protection Congress placed in the statute, backed up by the First Amendment.”

But can Giuliani and others really be said to be “acting entirely independently” of the MEK if they’re getting paid explicitly to advocate on their behalf?

That question aside, the MEK is clearly ramping up its lobbying effort here in DC. Yesterday, the Washington Post ran a full page ad calling on State Department ed-list the MEK. The ad claims that the MEK is “Iran’s principal opposition movement,” which would surely come as a surprise to Iran’s actual opposition movement.

Green movement spokesmen Mohsen Kadivar and Ahmad Sadri wrote in March that de-listing the MEK “promises to spell disaster for the pro-democracy movement in Iran, and will be a devastating setback in the country’s attempts to move forward.” As I noted at the time, members of the Green movement rarely comment on specific aspects of U.S. policy on Iran. The fact that Kadivar and Sadri chose to do so should indicate how serious an issue MEK is for Iran’s democratic opposition.

The Washington Post ad was paid for by the National Association of Iranian Scholars in Britain, which is listed as one of a number of MEK aliases by the Iran Interlink website, run by former MEK members.

Also yesterday, the Washington Times ran a pro-MEK ad of a different sort, in the form of a ridiculously misleading op-ed by Daniel Pipes. “The MeK issue reveals Iraqi subservience to Iran with special clarity,” wrote Pipes, suggesting that that the Iraqi army’s recent violent entry into Camp Ashraf north of Baghdad — where MEK members have lived since 1986, protected first by Saddam, then by the U.S. — was done on Iran’s orders.

While I appreciate the fact that neocons like Pipes have awakened to the fact of Iranian influence in Iraq (enabled, of course, by the U.S. intervention), the idea that Iraqis should need special Iranian encouragement against the MEK is amusing. The MEK fought alongside Hussein’s forces after the 1991 Gulf War to put down the Shia uprising in Iraq’s south and the Kurdish uprising in the north, driven by MEK leader Maryam Rajavi’s infamous command to “Take the Kurds under your tanks, and save your bullets for the Iranian Revolutionary Guards.” Given the significant Shia and Kurdish presence in the new Iraqi government, it should come as no surprise that that government is not positively disposed toward the MEK.

The question of what to do with the residents of Camp Ashraf — which includes a number of children — is a tough one, but it should be separated out from whether they should be taken off the terrorism list. Barbara Slavin had a very good piece in March, looking at the delusion of some high-profile MEK supporters that the U.S. could support them as a credible Iranian political opposition force. It’s clear that some would like to treat the MEK as an Iranian version of Ahmad Chalabi’s Iraqi National Congress. Responding to that comparison yesterday, Kombiz Lavasany wrote via Twitter, “In Chalabi’s defense, not sure Iraqis knew or cared about him. Everyone in Iran just hates the MEK.”

Yglesias

The Politics Of Not Addressing Greek Insolvency

(cc photo by simon_music)

Ryan Avent and Kevin Drum say it’s not the economics that making can-kicking the Greece problem impossible, it’s the politics. I agree that the politics is what’s important here, but I think this is exactly what makes can-kicking so attractive.

Henry Farrell outlines the state of play:

So my worry is straightforward. Greece is not so big a problem that it cannot be kicked down the road by the Europeans indefinitely. So too, Ireland and Portugal, and perhaps even (with more straining) Spain. But the specific manner in which the can is being kicked down the road has consequences for European legitimacy. Greeks, Portuguese and Irish people don’t like being at the sharp end of imposed austerity. They have obvious villains to blame for it – the EU (in particular the ECB and the Commission) and the ‘Germans.’ But Germans, Dutch people etc don’t have much reason to like the EU these days either. For them, it is associated with a giant sucking noise pulling frugal German taxpayers’ savings into the gaping maw of Greek pensioners. Neither those on the receiving or those on the giving end of current policies is very happy. And both have good reason to associate their unhappiness with the EU. And the EU does not have much legitimacy to spare in any event.

This, however, is precisely the genius of the status quo. Greeks are unhappy with what’s happening, but Greeks would be unhappy with the results of a default too. Kicking the can lets Greek politicians try to put blame on the shoulders of the (vicious and cruel) German government and “the EU.” Meanwhile, Germans are unhappy with what’s happening, but Germans would be unhappy with the results of a default too. Kicking the can lets German politicians try to put the blame on the shoulders of the (indolent and corrupt) Greek government and “the EU.” This is the dominant strategy for everyone involved except for “the EU” but “the EU” turns out to not really be anything that’s accountable to anyone.

So I say: The can will be kicked, people will try to muddle through, and the ECB should (but won’t) try to help (a little) with higher inflation.

Politics

VIDEO: Tea Party Voters Don’t See Threat from Sharia Law

One of the ripple effects of the recent upsurge in anti-Islamic sentiment has been the attempt by various states to pass laws banning the consideration of Islamic Sharia law in U.S. courts. (For the sake of appearances, these bills have often avoided singling out Sharia specifically, leading to at least one particularly odd result when Arizona attempted to ban karma.) The notion that Sharia law is threatening to take over the U.S. judicial system has been gaining traction in conservative circles and amongst major conservative political figures, despite numerous debunkings of the conspiracy theory.

As of now, both Tennessee and Louisiana have tried to deal with the phantom Sharia threat by passing versions of the “American Law for American Courts” bill devised by the American Public Policy Alliance. At least a dozen other states are considering similar bills including South Carolina, which will play a significant role in the 2012 presidential primaries. South Carolina’s possible anti-Sharia legislation has already been debated in the state senate, and Gov. Nikki Haley (R-SC) may soon have to decide whether or not to sign it.

South Carolina recently hosted the first debate between GOP presidential hopefuls, and the local Tea Party groups held a pre-rally which ThinkProgress attended. We took the opportunity to ask attendees what affect Sharia law has had on their lives, with some interesting (and encouraging) results. Watch it:

Happily, it seems at least some of the voters the GOP will be relying upon are willing to pushback against this latest concocted threat, and recognize it as nothing more than a stunt to undermine civil liberties and score some political points by beating up on an unpopular minority.

Yglesias

SNAP: Too Much Of A Crappy Thing

There’s really not much out there that’s more annoying than the burgeoning genre of articles about food stamp recipients living high on the SNAP lifestyle or condescendingly informing people that they could be doing a better job of allocating their scarce SNAP dollars. So absolutely give Latoya Peterson’s righteous indignation a good read before coming back here for some technocratic musings.

The basic problem with SNAP, as with much of American public policy, is that we’re simultaneously trying to do public service delivery and income redistribution.

Food is really cheap in the United States of America. A family looking to sustain itself in a healthy manner can do so at extremely low cost through bulk purchases of dried beans, rolled oats, frozen vegetables, rice, and fruit juice. A program that was really narrowly aimed at preventing malnutrition among low-income Americans could be both extremely low cost and extremely prescriptive.

A separate issue is that being poor is a sucky experience as witnessed by, say, my proposed diet of bulk purchases of dried beans, rolled oats, frozen vegetables, rice, and fruit juice. By taking money away from people who have lots of money and giving it to people who have very little money, it is possible to effectuate large increases in the quality of life of poor people while doing extremely little to reduce the quality of life of the rich people. But when the point is to improve quality of life, a prescriptive attitude is pointless. Fun is often “bad for you” and different people’s tastes differ. The correct thing to give people in order to make their loves more fun is money. People with more money in their pocket might want to spend it on Fritos or Perrier or a cell phone or beer or an Egg McMuffin or shoes or video games or movie tickets or whatever.

But American political culture is generally hostile to the idea of improving poor people’s lives by giving them more money. So you wind up with a lot of things like SNAP. Viewed very narrowly as a nutrition program, it’s not that well targeted and it costs more than it needs to. But viewed from the point of view of the overall quality of life of low-income Americans it’s incredibly stingy.

Health

Romney: My Health Plan Wouldn’t Cover An Uninsured American Who Just Had A Heart Attack

Mitt Romney may have have had a tight rope to walk when it came to his support for the individual health insurance mandate, but he pulled no punches with his 2010 campaign health care plan. The proposal is almost identical to the initiative he had offered just two years earlier — it’s boilerplate of GOP health policy.

And like most Republican schemes — which seek to lower health care costs by deregulating the insurance market and opening it up to greater competition — Romney’s plan wouldn’t provide adequate coverage to people with pre-existing conditions or anyone else with a chronic disease who would likely be denied insurance in a true free market structure. He addresses that concern by establishing state-based high risk pools that would provide coverage for anyone denied insurance in the individual market and takes some very small steps to prohibit companies from discriminating against people with pre-existing conditions. Romney would repeal the broad prohibition against denying coverage to individuals with pre-existing conditions that’s already in law (thanks to the Affordable Care Act) and replace it with a limited protection that would not, as Romney put it, necessarily cover an uninsured American who just had a heart attack:

ROMNEY: Couple of common failures I’d go after. Ensure that individuals with pre-existing conditions who are continuously covered for some specified period may not be denied coverage. So you’re not going to say to somebody if you’ve never had insurance and you’re age 55 and you suddenly had a heart attack and now you want to buy insurance, you don’t say to them ‘oh fine you get it.’ That doesn’t work very well. You say instead ‘if you’ve been insured for 10 years and you have a heart attack and you’ve changed jobs because of that continuous period of insurance of course you will continue to be covered.

Watch it:

As Romney himself recognized in Massachusetts, insurance reforms don’t work very well unless you can encourage everyone to participate in the health insurance market and eliminate “free riders” who would only purchase coverage when they need it. Insurance protections and the individual mandate go hand-in-hand, as establishing one without the other leads to a very substantial spike in premiums. Romney tries to prevent that from happening by setting “some specified period” during which individuals “may not be denied coverage.” But a better way ensure that people have access to insurance before that “sudden heart attack” (and maybe even to prevent it) is to do what Romney has already done in Massachusetts — pair a pre-existing conditions exclusion with an individual mandate.

Older

Newer

Switch to Mobile
ThinkProgress Signup Overlay Skip and Continue to ThinkProgress Skip and Continue to ThinkProgress

Sign Up