Progressive Breakfast for September 23

Morning Message

The Cost To Our Economy From Republican Obstruction And Sabotage

The Republican political strategy has been to obstruct efforts to help the economy for everyone but the wealthiest few, and then campaign on complaints that the economy isn’t helping anyone but the wealthiest few. It’s working ... the voting public is largely unaware of this record of obstruction and sabotage and the effect on the recovery. Seriously, go out and ask around. If you are reading this you are likely a highly-informed person. So you might be aware that there have been filibusters, but maybe not that there have been up to 500 or more Republicans filibusters.

Treasury Begins Inversion Crackdown

Treasury issues new rules to curtail inversions. Time: “[Secretary] Lew announced a new set of measures meant to make inversions less appealing to U.S. companies, including by eliminating some of the ways those companies gain access to deferred earnings of foreign subsidiaries without incurring associated taxes. The Treasury will also require that owners of U.S. companies own less than 80% of a newly combined entity, thus making it more difficult for them to invert in the first place … The Treasury’s new regulations will go into effect immediately, but will not be retroactive, meaning that they will affect any transactions that are completed after Monday…”

Could scuttle several pending deals. Bloomberg: “Treasury Secretary Jacob J. Lew’s crackdown on inversions will get an immediate test … The changes will have the biggest effect on the eight U.S. companies with pending inversions, includingMedtronic and AbbVie, which plan the two largest such deals in U.S. history. In its purchase of Covidien Plc, Medtronic plans to loan some of its untaxed profits outside the U.S. to its new Irish parent company.”

Gala 2014 banner PB/PMU-EB

Congress still needs to act. NYT: “…some Democrats, including those who have been the harshest critics of corporate inversions, said the actions were far too limited to substantially reduce the practice. Senator Charles E. Schumer of New York said the Obama administration had been hemmed in by the limits to its legal authority, yielding a set of rules that most likely will hold up in court but have little substantive effect … he said Congress must pass legislation that stops a practice known as ‘earnings stripping.’ That is when a parent company loads up a United States subsidiary with debt, which can be deducted for tax purposes, rather than treating it as equity, which is not eligible for deductions — and that defines an inversion more tightly.”

Obama To Address Climate Summit Today

President to address U.N. climate summit at 12:50 PM ET. Politico: “…Obama will stress that the United States is committed to helping poorer countries deal with the effects of climate change, and he will announce an executive order that requires federal agencies to take climate change into account when developing international development programs and investments …”

Treasury’s Lew warns inaction more costly than action. The Hill: “‘The economic cost of climate change is not limited to one sector of our economy. It threatens our agricultural productivity, our transportation infrastructure and power grids, and drives up the incidence of costly healthcare problems,’ Lew added. The area which inflicts one of the heaviest climate change burdens on the economy, Lew said, is infrastructure.”

Student activism led to Rockefeller divestment. Time: “The divestment movement began at Swarthmore College, a small Pennsylvania liberal arts school, in 2011. Students there, who could visibly see the impact that coal mining was having on the nearby Appalachian Mountains, began advocating that their school divest its billion-dollar endowment out of the largest companies that profit from drilling for and distributing fossil fuels … 400 college campuses now have active divestment movements … A total of 15 colleges have divested from fossil fuels … “

Google drops ALEC over climate. ThinkProgress: “Google’s controversial decision to fund the American Legislative Exchange Council (ALEC) was a ‘mistake,’ company chairman Eric Schmidt admitted on Monday, saying the group is spreading lies about global warming and ‘making the world a much worse place.'”

Breakfast Sides

Austerity squeezes White House security. W. Post’s Dana Milbank: “…To plug the holes, the Secret Service has been flying in agents from other locations who don’t know the White House as well. The Secret Service has been one of many victims of budget cutting in recent years. Its funding for the current year is $2.56 billion, down $5 million from 2012 …”

Two Fed inflation hawks to step down. NYT: “The two men, and a handful of like-minded officials, have been marginalized in recent years as their warnings that inflation would accelerate have failed to materialize … the turnover is part of a gradual generational shift at the Fed as policy makers trained in the 1970s, who tend to fear inflation above all else, are gradually replaced by younger officials more comfortable with pursuing broader policy goals … Successors for Mr. Fisher and Mr. Plosser will be selected by the boards of their reserve banks, made up of local business and community leaders, subject to the approval of the Federal Reserve’s board of governors in Washington. Their eventual successors will not vote on policy until 2017.”