New York Times columnist Tom Friedman is, for reasons that remain entirely unclear, considered a wise man in elite media circles. His columns
and books are read by others in the business, who then turn around and pretend they know something because they read it in a Tom Friedman column.
So on Sunday (2/17/13) Friedman wrote a column about how government policies are harming the recovery. What we need is some kind of grand bargain to, as the headline puts is, “unparalyze” the economy and spur new growth. What’s that mean? Cuts to Social Security and Medicare, along with “tax reform.”
And he kicks off his column with an example that he evidently believes supports his case:
Apple is currently sitting on $137 billion of cash in the bank. There are many reasons Apple has not spent its cash hoard, but I’ll bet anything that one of them is the uncertain economic and tax environment in this country. Think about how much better we’d all be if Apple, and the many other companies sitting on cash, felt confident enough in the future to spend it. These are the most dynamic companies in the world. They don’t need any government help to innovate.
So Apple is hoarding cash because “we do not have our political house in order.” Friedman doesn’t dismiss the idea that a massive recession may have curtailed demand for Apple products, but that’s not the main story. Economist and media critic Dean Baker does a thorough job of explaining the problems with Friedman’s argument.
While Friedman’s argument rests on his hunch about why Apple is sitting on cash, reporters at outlets like his own New York Times have done, well, actual journalism. And it offers a different view of Apple’s predicament. Charles Duhigg and David Kocieniewski (4/12/12) showed how Apple keeps an office in Nevada to avoid millions in California state taxes. And more importantly, Apple
was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean.
The Times reported that in the previous year, Apple “paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent.”
So when Friedman talks about tax policy and “uncertainty,” in reality we’re talking about the efforts by Apple and other tech giants to avoid paying taxes–which is why they lobbied for a “repatriation holiday,” which would permit them to bring that money back into the United States without paying the normal tax rate.
In other words, it’s not at all likely that Apple is waiting for Medicare cuts to act. It is looking to avoid paying taxes.
But Friedman’s “bet” serves to cover up the issue of corporate tax-dodging and frame the debate along the usual Beltway lines–i.e., whether political leaders will have the “bravery” to cut Medicare spending in order to make sure the wealthy don’t have to pay too much in taxes.
But Friedman’s explanation of reality appeals to others in the media, like NBC Meet the Press host David Gregory (2/17/13), who cited it favorably while interviewing White House chief of staff Denis McDonough:
He’s sitting on over $100 billion–in cash, $171 billion in cash at Apple. Why? Because there’s uncertainty in the marketplace. Tom Friedman, writing this morning–something that caught my eye. He said, “You can feel the economy wants to launch, but Washington is sitting on the national mood button. What we–the people feel like the children of permanently divorcing parents.”
So Friedman’s hunch about Apple now resembles an eye-catching fact. People like David Gregory like to call for more “sacrifice” in the form of benefit cuts for seniors. But now they’ve found a new way to do it, by endorsing tax cuts for mega-corporations like Apple. We wouldn’t want them to suffer, after all.
Doug Latimer
Corps hold us hostage
And the corpress arranges the ransom
Padremellyrn
And sadly we let them
and then pay the ransom.
What would happen if we just told them to take their business, which is in China Anyway, and make them pay the import taxes they actually owe. No new taxes, only the ones they already owe.
musea
Growth through jobs? Why not the grass roots idea of a National Hiring Day? There is a solution to the jobs problem and it could quickly put hundreds of thousands of people back to work. It is not pro left or right. It is not from any corporation, it’s outside the government control, it’s totally voluntary, works in about one week, and helps all with little sacrifice from anyone.
National Hiring Day – This is a day that corporations are encouraged to fill open positions and larger corporations to hire one or more new employees. Those corporations that cannot hire, are asked to stop firing for that month.
musea
1. If companies can send thousands of jobs overseas, they can hire one American on National Hiring Day.
2. If companies can get millions in tax breaks and subsidies from the government, they can help it in return by hiring one American on National Hiring Day.
3. With companies sitting on all time high profits, they can hire one person on National Hiring Day – which by the way, would help them in return.
4. McDonalds hired 60,000 last May in their own National Hiring Day, surely other companies can hire one person on a nationwide National Hiring Day.
5. If Google can make 40 million available for charity, they can hire one person on National Hiring Day.
6. If Nike can spend 8 billion to buy back it’s own stock, they can hire one person on National Hiring Day.
7. If Oracle CEO gets $21 Million pay raise as company stocks decline, they can hire one person on National Hiring Day.
8. If Walmart can hire 100,000 veterans, they can hire one person on National Hiring Day.
Mirza Borogovac
One of the problems with out tax code is that it is created by congress. Perhaps congress should delegate that authority to accountants and economists at IRS, like it delegated monetary policy to federal reserve. It makes no sense that congress should decide how much money to spend on one hand, and how much to raise in a totally separate and independent process. Congress should still set the budget and then IRS should be tasked with raising the revenue to pay for it.
No Difference
Friedman and others claim that Apple doesn’t need any gubbermin assistance determining how best to spend its $173B — er, I mean $177B — it is sitting on in cash, just a national mood swing?
Apple is not happy making some of the biggest profits in history, along with its brethren corporations who continue to pay their CEOs and directors obscene sums for fattening their asses. So, the problem is that corporations, just like people — hey, they ARE people after all — get depressed at times and then need psychotherapy, nurturing, and tender loving.
Maybe I need some sensitivity training to learn how to better understand the delicate emotions of the business world, whose gentle captains and decision-makers would never hurt anyone, nor would the actions of their organizations ever harm the environment or leave people jobless, homeless, and impoverished. It appears to be the evil workers who are robbing us blind at $7.25 an hour and then turning around and making a killing off of social security and Medicare while no longer working to earn it. What scum! And then what are we going to do about the Soviets and Communism? (And what’s this about a Wall in Berlin falling?) If the rightwing doesn’t take action now and save our hides by slashing the rest of government to pieces, we are going to be very, very sorry.
(Why am I having a hard time swallowing my own post?)
musea
Decoded – Tricky Talk about what’s saving/ruining the country
Giving money to rich people will save the country.
Giving money to poor people will ruin it.
Sounds silly doesn’t it? But let’s put it in different language.
Giving money to rich people TAX BREAKS will save the country MAKE JOBS
Giving money to poor people ENTITLEMENTS will ruin the county DEFICITS.
Don’t let people fool you. Welfare for the rich is the same as welfare for the poor. Right now most of government welfare goes to the rich, not the poor.
Brux
When we decided to do business with all the criminal countries, we treat all the criminal countries like friends, they get the stimulus programs, and of course they steal the money and give it to the rich, who can then invest it and buy our country.
Until we detach money from our politics and take away the criminal influence we are going to get worse and worse until we cannot do anything about it … if we are not there already.
CCrown
Oh the poor babies at the top are afraid. Lets hold them a benefit.
Rafael
This is the same Tom Friedman that famously, endlessly,. predicted the corner would be turned “in six more months” in Iraq, right?
Elmer Stenger
Peter Hart has our best interest in mind when he writes, try to keep it in mind when you talk to your friends.
Elmer Stenger
You knpow that Apple is making money for themselves and stock holders, but where do they have their products made? Where labor is cheap, and taxes are low. That’s how you keep competition at bay, build profits and perhaps accumulate money to build a philanthropy, in your old age. We have lots of instances in our history to show how it has been done. And how the economy goes to pot as a result.
Corporations create jobs, for the lowest possible cost, Henry Ford, raised wages, and cut prices to become the nations largest manufacturer of Automobiles, He was an exception to the rule.
Donald Pruden, Jr., a/k/a The Enemy Combatant
To “Mirza Borogovac”,
This is Article 1, Section 8 of the Constitution of the United States: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”
This is the part of the Constitution that describes one of jobs of the United States Congress, which is, in fact, to tax and spend. What you recommend is nothing less than asking Congress to give up a power that it takes far more seriously than its power to declare war. Can anyone even imagine the Constitutional realpolitik that would need to happen to effectuate that outcome? Who in her right mind would dare campaign for it? The problem with the taxing/spending power is not that Congress has it; it is that Congress’s use of this power is subject to the anti-social/anti-democratic influence of corporations and wealthy individuals over and against the genuine interests of the citizens of the United States. That is really it.
Frank A. Walter
We need to start national companies, companies run by the government that hire Americans to do the work. We did it during World War II: the government was completely in charge of producing an atomic bomb. America did not turn to General Electric, DuPont, General Motors, and other giant corporations and order them to build a nuke. We did it. Our government also helped defeat three enemies allied against us. The government did not ask these corporations to wage war enemies because government is incompetent to do anything right, the Republican mantra constituting a fallacious argument. Look at Communist China where the government builds businesses in cooperation with Western companies holding patents and produces just about everything available in Walmart, Lowes, Costco, Home Depot, Office Depot, and most American stores. Just about all America’s retail businesses have become Chinese outlet stores. If you doubt me, go into any of the stores I have mentioned and check the labels or tags on their merchandise. Thom Hartman claims 50,000 businesses have gone overseas. He has probably under estimated the total. Businesses are not going to voluntarily return because they are making billions of dollars and engaging in laundering tactics to get these big bucks back with little or no tax. Didn’t America experience a candidate for the highest office in government who enjoys the off-shore tax havens? We citizens are forced to be partners in the elimination of American jobs. Honeywell pays no Social Security, Unemployment Insurance, Medicare, Medicaid, Welfare, Workingman’s Compensation, Property taxes, and Health Insurance in India and employs thousands of Indian workers. We fortunately still have nice printing presses that turn out dollars, and fortunately these are used all over the world. since the world is on the dollar standard. I am not satisfied with this present situation in America and want to see it changed to benefit my neighbors, my children, and this country’s children. The Chinese have more than a billion customers ready to buy all their products and do not need to dominate our markets.
I taught at the Mariners’ College in Qingdao, China, where I received three times the other professor’s salaries: $120.00 a month. I can still hear that sucking sound that Ross Perot predicted when he ran for president and the Global Economy was the major topic of politicians.