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CEO Council Demands Cuts To Poor, Elderly While Reaping Billions In Government Contracts, Tax Breaks

Huffington Post – by Christina Wilkie and Ryan Grim

WASHINGTON — The corporate CEOs who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.

The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills.

The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to spend at least $30 million pushing for a deficit reduction deal in the lame-duck session and beyond.

During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most visibly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs — Medicare, Medicaid, and Social Security — which would disproportionately impact the poor and the elderly.

As part of their push, they are advocating a “territorial tax system” that would exempt their companies’ foreign profits from taxation, netting them about $134 billion in tax savings, according to a new report from the Institute for Policy Studies titled “The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks” — money that could help pay off the federal budget deficit.

Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.”

Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.

Just three of the companies — GE, Boeing and Honeywell — were handed nearly $28 billion last year in federal contracts alone. A spokesman for Campaign To Fix The Debt did not respond to an email from The Huffington Post over the weekend.

The CEO council recommends two major avenues that it claims will produce “at least $4 trillion of deficit reduction.” The first is to “replace mindless, abrupt deficit reduction with thoughtful changes that reform the tax code and cut low-priority spending.” The second is to “keep debt under control over the long-term by focusing on the long-term growth of entitlement programs.”

CEOs are encouraged to present a Fix-The-Debt PowerPoint presentation to their “employee town hall [meetings and] company meetings.” To further help get the word out, the campaign borrowed a page from the CEOs this fall who wrote letters encouraging their employees to vote for Mitt Romney, or face job cuts. This time, the CFD has created two templates for bosses to use at their companies.

But in the past week, in order to make their case to the millions of Americans who don’t work for them, CEOs fanned out into television, to convince the rest of the country that slashing the social safety net is the only way to reduce the deficit.

In an interview aired Monday, Goldman Sachs chairman and CEO Lloyd Blankfein said Social Security “wasn’t devised to be a system that supported you for a 30 year retirement after a 25-year career.” The key to cutting Social Security, he said, was simply a matter of teaching people to expect less.

“You’re going to have to do something, undoubtedly, to lower people’s expectations of what they’re going to get,” Blankfein told CBS, “the entitlements, and what people think they’re going to get, because you’re not going to get it.”

Blankfein and Goldman Sachs don’t have to worry about lowering expectations. After receiving a $10 billion federal bailout in 2008, and paying it back a few years later, Goldman Sachs recently exceeded Wall Street analysts’ expectations by announcing$8.4 billion in third quarter revenues for 2012. On the heels of a great year, Blankfein is expected to take home an even larger salary than he did in 2011, when he made$16.1 million.

To understand the importance of banking profits to the members of the deficit council, one need look no further than the two top-ranking members of the Campaign To Fix The Debt’s steering committee, former New Hampshire Sen. Judd Gregg (R) and former Pennsylvania Gov. Ed Rendell, a Democrat. Gregg is currently employed as an international adviser to Goldman Sachs, while Rendell collects his paycheck from the boutique investment bank Greenhill & Co.

Following Blankfein’s evening news appearance on Monday, Cote, the Honeywell CEO, sat down with the same network on Tuesday, and said essentially the same thing that Blankfein did.

Cote ranked 11th on a list compiled in a recent study conducted by the Institute for Policy Studies of executives who have saved the most from the Bush tax cuts. According to the IPS, Cote’s taxable compensation for 2011 was a bit more than $55 million, and he did not pay about $2.5 million thanks to the Bush tax cuts.

After mentioning a few scary-sounding deficit statistics, he suggested the government raise revenue by ending individual tax credits and deductions, which he said amounted to a $1 trillion “giveaway” in 2011. It was clear, however, that Cote hadn’t come on the show to talk about taxes.

“The big nut is going to have to be [cuts to] Medicare/Medicaid … especially with the baby boomer generation retiring. It’s going to literally crush the system.”

But while Cote strongly recommends cutting those benefits, when it comes to the tax obligations of corporations, he’s clear about what he wants: a corporate tax rate of zero.

“From a fairness perspective, nobody would be able to stand [a zero tax rate on corporate profits],” but if the U.S. really wanted to create jobs, he said this spring, “we would have the lowest rate possible.”

At Honeywell, Cote practices what he preaches. Between 2008-2010, the company avoided paying any taxes at all. Instead, the company got taxpayer-funded rebates of$34 million off of profits totaling nearly $5 billion.

Part of what makes the lobbying blitz around the fiscal cliff so complex for CEOs on the Fiscal Leadership Council is that many of them need more than just low tax rates. They also need Congress and the White House to maintain current defense spending levels so they can continue winning enormous contracts.

In 2011, $40 billion of taxpayer money was divided among just nine CFD member companies, led by defense giant Boeing, which raked in $22 billion in federal contracts alone, more than the other eight companies combined. For his efforts as CEO, Boeing’s Jim McNerney took home nearly $23 million in compensation last year.

But even as McNerney lends his name to the deficit commission, his company has quietly begun laying off U.S. workers ahead of defense cuts that are expected to be part of a deficit reduction deal. The company denies that federal spending has anything to do with the job cuts, but defense industry analysts aren’t convinced.

At least one faction of Boeing’s workforce is thriving: Boeing lobbyists in Washington have made $12 million since January fighting proposed cuts to defense and aerospace projects.

http://www.huffingtonpost.com/2012/11/25/deficit-reduction-council-fiscal-cliff_n_2185585.html

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3 Responses to CEO Council Demands Cuts To Poor, Elderly While Reaping Billions In Government Contracts, Tax Breaks

  1. Greg Burton says:

    By way of response, I’d like to do an a short primer on toxic mortgage scam that impoverished the world: the bankers–Greenspan, Paulsen, Geithner, Summers, and Bernanke, many still employed under Obama, allowed “risk” to be removed from sub-standard loans by bundling these loans into CDOs (Collateralized Debt Obligations), mortgage back securities; then falsely rated “AAA” by corrupted rating agencies like Fitch, S&P, and Moodys. These “AAA” securities were then sold to unsuspecting pension funds, government agencies, and investors both in the US and Europe.

    These “AAA”, “risk-free” CDOs, having higher margins and brokerage commissions (sales incentives), created an environment ripe with predatory lending practices. These CDOs were then “insured” using credit default swaps derivatives, unregulated due to the interference within the CFTC by Larry Summers. This allowed multiple speculators, even the creators of these CDOs to bet against them; ensuring that both the insurers, like AIG, and the investors would be destroyed once this massive ponzi scheme collapsed.

    Additionally, under duress from the bankers and their lobbyists the public, both in Europe and the US, were forced to pay for these losses with public bail-outs, leading to austerity cuts to the social safety net, millions of lost jobs and homes, the destruction of the middle-class, with Republicans in the US forcing government shut-downs, blaming the unions. And now Blankfein is saying we should work longer and receive fewer benefits!? I say he can go to hell.

  2. Mark Schumacher - NV says:

    Blankfien is banking connected scum bag who loves to eat his cake while eating billions in bail out money. He also liked to wash it all down with zero taxes making him billions.

    This piece of shit can forfeit his social security and a couple of his mansions while he’s at it. He and his girlfriend Jamie Dimon can both go straight to hell.

    I can’t believe this zionist pig has the balls to talk this way. He talks this way around my friends he gets bitch slapped all the way back to Netanyahu’s praying wall.

    • Mark Schumacher - NV says:

      This article is stuffed with propaganda lies. The bail out money has not been all paid back by the bankers. see below: The author of the above article has their lazy head up their ass.

      “Blankfein and Goldman Sachs don’t have to worry about lowering expectations. After receiving a $10 billion federal bailout in 2008, and paying it back a few years later, Goldman Sachs recently exceeded Wall Street analysts’ expectations by announcing$8.4 billion in third quarter revenues for 2012. On the heels of a great year, Blankfein is expected to take home an even larger salary than he did in 2011, when he made$16.1 million.”

      This author should read his own publishers words.

      http://www.huffingtonpost.com/2012/03/09/bank-tarp_n_1335006.html

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