Progressive Breakfast for August 19

Morning Message

Polling Shows Democrats Should Campaign On Corporate Patriotism

You may have heard about corporations renouncing their US “citizenship” in order to avoid paying taxes for the infrastructure, courts, police and military protection on which they rely, the schools which their employees send their kids — even the food stamps and other government assistance which some of their extremely-low-wage employees receive. Polling shows that the public is outraged. The President and Democrats should use this as a top campaign issue this fall.

Corporations Not Hurting From Tax Code

Corporate tax code hampers global competitiveness? Opposite is true. NYT: “…Professor [Edward] Kleinbard contends that most United States multinational companies don’t pay anywhere near 35 percent. Companies paid, on average, 12.6 percent, according to the Government Accountability Office, which last measured it in 2010, by deliberately stashing piles of cash abroad. Professor Kleinbard argues that lower tax rates are not driving companies to inversions; instead, he contends it is all the money that companies have overseas — some $2 trillion — and don’t want to bring back to the United States … companies have become so clever with ‘aggressive tax planning technologies’ that many of them are able to take advantage of the current tax system so well that they are more competitive than their foreign rivals… Professor Kleinbard makes a tantalizing argument that all that cash ‘trapped’ overseas isn’t really trapped. In fact, he says that some American companies have found a way to use it — in the United States.”

“Only Rich Know Wage Gains With No Raises for U.S Workers” finds Bloomberg: “Meager improvements since 2009 have barely kept up with a similarly tepid pace of inflation, raising the real value of compensation per hour by only 0.5 percent. That marks the weakest growth since World War II, with increases averaging 9.2 percent at a similar point in past expansions … ‘The bottom line is, we’re a million miles from full employment,’ said [Prof. David] Blanchflower … Households in the top 20 percent of U.S. socioeconomic groups saw their incomes grow by an average of $8,358 a year from 2008 to 2012, compared with a $275 annual decline for the lowest 20 percent … Nominal average hourly pay, which increased about 2 percent in June from a year earlier, is still about half the 3 percent to 4 percent pace [Fed chair Janet Yellen] has said she considers ‘normal.’”

Obama may not have leeway to curtail inversions without Congress. Bloomberg BNA: “…the argument goes, this law–if applied to inverted companies–could be used as a way to convert debt, which creates a tax-deductible interest payment, into equity, which does not. The tax benefits therefore would be greatly reduced. However, the law has never been used to combat tax avoidance or base erosion … Complicating matters even further is that Congress in fact passed an anti-earnings stripping law in 1989 … would the courts buy the argument that the older, more general law allows the administration to enact limits stricter than those already enshrined into the law?”

Paul Ryan Releases Book Today

Rep. Paul Ryan “sounds like a presidential candidate” in new book “The Way Forward” out today. Politico: “His prescription: a path that ‘puts society, not government, at the center of American life … expands freedom and fosters risk-taking, ingenuity, and creativity … Along this path, government provides the necessary support rather than taking on the commanding role.”

Ryan counsels Republicans to change rhetoric and appeal to non-whites. Milwaukee Journal-Sentinel: “Ryan says his party needs to be more inclusive, spend far more time talking to black and Latino voters, and avoid playing into what he calls a caricature of the ‘cold-hearted Republican.’ … Ryan repudiates his use of the phrase ‘makers and takers’ … after a constituent approached him at the Rock County 4-H Fair in July 2012 and asked, ‘Who are the takers? Is it the person who lost their job and is on unemployment benefits? Is it the person who served in Iraq and gets their medical care through the VA?’ Ryan said he eventually stopped using the term when he realized that ‘it sounds like we’re saying people who are struggling are deadbeats. … The phrase gave insult where none was intended.’”

But no changes in policies, notes NY Mag’s Jonathan Chait: “… Ryan immediately proceeds to explain that it sounded like a personal disparagement. He was merely attempting to disparage the system that turns people into takers, not the takers themselves … The Ryan budgets and the philosophy that produced them have become a barrier to Ryan’s political viability. The question is whether Ryan has ditched the philosophy or just the way he sells it.”

Cost of Raising a Child: $250K

Cost of raising kids has “skyrocketed … over the course of the last half-century,” reports Salon: “It costs approximately $249,930 on average for a two-parent, middle-income family to raise an American child from birth until age 18, according to a Department of Agriculture reportreleased on Monday … The cost of childcare and education made up about 2 percent of the average overall cost of child rearing in 1960 (in 2013 dollars), whereas that same cost made up nearly a fifth of the average budget in 2013 … For lower-income parents, costs like food ranked higher than the cost of childcare, which came in second for middle-income families — because they’re the families that can better afford childcare.”

But pace is slowing. Bloomberg: “The cost for a middle-income family to raise a child born last year to age 18 is $245,340, a 1.8 percent increase from the previous year and the smallest jump since the financial crisis … The advance was the smallest since 2009, with inflation in check as health-care costs rise more slowly, jobs are created and the Federal Reserve winds down record economic stimulus.”