Progressive Breakfast for July 24

Morning Message

Chiding CEOs at Walgreens and Other Corporate Defectors

Walgreens is the pharmacy that, at least according to its website, can be found “at the corner of Happy & Healthy.” If its executives have their way, however, it may soon be found near the intersection of Ziegelackerstrasse and Untermattweg in Bern, Switzerland. By acquiring the much smaller Swiss company that is located near that corner, the American company can dodge millions in American taxes. ... Call it the “Inversion Evasion.” Walgreens would become a “Swiss company” for tax avoidance purposes only. The combined company would do a small percentage of its business there. In all other respects, however, the corporation would remain fully American – headquartered here, making most of its profits here, and continuing to use its lobbying dollars and campaign money to distort the American political process. All of which raises the question: How does it feel to be the CEO of a “defector corporation”?

“Factoryless” Manufacturers And Corporate Defectors

WSJ’s Timothy Aeppel covers furor over “factoryless” manufacturers: “Manufacturers, by definition, make things. But is that definition outdated? That’s the question behind a move among federal government agencies to reclassify as “manufacturers” companies like Apple, which controls every aspect of the iPhones and other products it sells–except their actual fabrication. Production is done by Chinese contractor Foxconn. There are many companies like Apple. And in a twist only a government bureaucrat could love, the formal term for them is ‘factoryless goods producers.’ But should they be counted as manufacturers in government statistics?”

Obama Administration Flooded with 26,000 Comments Opposing Proposal to Disguise Offshoring of U.S. Manufacturing by Rebranding Firms that Relocate Production as ‘Factoryless Goods’ Manufacturers. PR Newswire: “More than 26,000 people nationwide have submitted comments opposing Obama administration proposals that would severely distort U.S. job and trade data by reclassifying U.S. corporations that offshore American jobs as “factoryless goods” manufacturers. Under a broad data reclassification plan, much of the value of U.S. brand-name goods assembled by foreign workers and imported here for sale would no longer be counted as imported goods, but rather as manufacturing “services” imports. This would deceptively deflate the U.S. manufacturing trade deficit.”

The National Journal’s Ron Fournier covers his CEO daughter’s decision to move her company to the Netherlands put West Virginia Sen. Joe Manchin in an awkward spot: “You’re a United States senator from a state struggling to compete in the world economy. Your daughter runs a giant drug company with roots in your state, and the firm makes a fortune from taxpayers via Medicare and Medicaid. Everything’s cozy and connected and perfectly Washington—until your daughter renounces the firm’s U.S. citizenship to reduce its U.S. taxes. What do you do? If you’re Joe Manchin, you duck a reporter’s telephone call for six days, then emerge for an interview in which you vow to make your daughter’s actions, from this day forward, illegal. Sort of.”

Rebutting Ryan On Poverty

Robert Greenstein at The Center on Budget and Policy Priorities says Paul Ryan needs to “play it straight” on poverty: “House Budget Committee Chairman Paul Ryan will unveil a proposal tomorrow to address poverty and, in doing so, faces a choice: play it straight in making the case for his plan, or succumb to the temptation to mischaracterize key poverty data and research to paint the safety net as an abject failure. … Unfortunately, Mr. Ryan’s record isn’t promising.”

At the Center for American Progress, Melissa Boteach lays out the speech Paul Ryan should give: “If past is prologue, Rep. Ryan will couch proposals to consolidate and ultimately cut programs that help working-class families in language about empowering communities, streamlining access to services, and promoting work. But pull back the layers, and his proposals are an outgrowth of his radical budget blueprint, which would dramatically exacerbate poverty and inequality. What Rep. Ryan misses is that without this safety net, the poverty rate would be nearly twice as high. … Rather than proposing to slash the safety net, Rep. Ryan should take a look at our economy, which is not generating sufficient jobs and economic opportunity to lift people into the middle class. “

The New York Times’ Charles Blow takes aim at Paul Ryan’s “poverty prophet”: “Bob Woodson, president of the Center for Neighborhood Enterprise, and a Ryan mentor, told The Journal, ‘He’s coming up with a new construct, and I’ve encouraged him.’ Woodson continued: ‘We cannot and should not generalize about poor people. There are the deserving poor and the undeserving poor. It used to be that way, and it became politically incorrect. We are returning to some of the old values that served people very effectively until the welfare reforms of the 1960s.’ Woodson’s comments mine familiar conservative rhetoric, hinting at welfare failure and abuse, pinning further harm on liberal intentions to help, while sidestepping altogether conservative callousness and Republican Party platforms that have sought for decades to reward those at the top of the economic ladder while ignoring those at the bottom.”

Congress Dithers on Border Crisis

G.O.P. Plan on Migrants Calls for Less Cash Than Democrats and Obama Seek. New York Times: “House Republicans unveiled a $1.5 billion plan on Wednesday to address the crisis of thousands of young migrants along the southern border, proposing significantly less than President Obama and Senate Democrats say is necessary and setting up a standoff over pushing through the emergency funds before Congress begins its five-week break at the end of the month. Democrats and Republicans have only days to resolve the roughly $1 billion gap that separates their plans before Congress breaks for its August recess. Senate Democrats on Wednesday offered their own bill that would allocate $2.7 billion. Both measures were far less than the $3.7 billion that Mr. Obama had requested.”

Congress dithers on migrant agreement. Politico: “House Republicans and Senate Democrats don’t agree on much when it comes to addressing the massive influx of young migrants crossing the Texas border. But senior figures in both parties are privately in sync on one critical point: Legislation addressing the crisis won’t become law until September at best — if a bill ever makes it off Capitol Hill at all. The reasons President Barack Obama’s $3.7 billion request for assistance — or anything that looks like it — won’t pass Congress before the August recess range from the political to the practical. And they provide yet another example of how both parties in Congress aren’t shy about defying the president — or failing to address issues of national importance.”

Rulings Bolster Attacks on Obamacare

Bolstered by Ruling, Republicans Attack Health Law. New York Times: “Republicans in Congress resumed their campaign against the Affordable Care Act on Wednesday with new zeal, fired up by a ruling of a federal appeals court panel that said premium subsidies paid to millions of Americans in 36 states were illegal. Republicans pointed to the ruling as evidence of problems in the law that could not easily be solved. ‘Time and time again,’ said Representative Charles Boustany Jr., Republican of Louisiana, ‘the administration has chosen to ignore the law, and when it does implement the law, it does so incompetently.’”

Study: 10M Have Gained Coverage Through Health Law. ABC News: “A new study estimates that more than 10 million adults gained health insurance by midyear as the coverage expansion under President Barack Obama’s law took hold in much of the country. The study published Wednesday in the New England Journal of Medicine found that the share of Americans ages 18 to 64 without insurance dropped by a little more than 5 percentage points.”