INSIGHTS: OBAMA’S CLIMATE CHANGE BLITZ
Reprinted with permission
What President Obama lacks in sound public policy, he certainly makes up for with his effective use of propaganda. By using the power of the bully pulpit, coupled with actions by the executive branch, Mr. Obama has been generating news that will continue to force climate change into the public square in the coming weeks.
The release of the third National Climate Assessment earlier this month by the White House marks the launch of Mr. Obama’s spring political offensive. The second phase was the release of the Environmental Protection Agency’s (EPA) proposed regulations for existing power plants. By clinging to climate change, Mr. Obama hopes to rally his environmental base and liberal donors in an effort to blunt the anticipated sharp Republican gains that could force Sen. Harry Reid, Nevada Democrat, from the Senate majority leader’s post.
Mr. Obama’s media allies will support the climate-change blitzkrieg. The media, who have already bought into man-made global-warming alarmism, will gladly amplify the shocking claims of economic and environmental destruction. Sensationalized headlines of ecological devastation could also help Democrats with women and millennial voters.
The National Climate Assessment is a propagandist’s dream. In addition to describing the overarching damage to the United States from weather extremes, it breaks out the estimates of harm into eight different geographic regions, as well as to the coasts and oceans.
The localization of environmental destruction provides the media with an opportunity to dramatize the impact of climate change to specific communities and local politics.
Predictably, the release of the National Climate Assessment generated alarming stories in politically important states. For example, the Citizen-Times in Asheville, N.C., reported that the area could have fewer days for ski slopes to operate, and that the area runs the risk of an increase of insects that could “wipe out thousands of acres of hemlocks in the mountains.”
There were probably hundreds of similar stories written about climate change in local communities across the country.
Climate change will be the latest “gotcha” question for Republicans on the campaign trail, and the information from the National Climate Assessment will be used against candidates that disagree with the left-wing orthodoxy.
Following Florida Sen. Marco Rubio’s comments about climate change on ABC’s “This Week,” a Los Angeles Times story used the National Climate Assessment evaluation for Florida to criticize Mr. Rubio’s response that questions man’s role in climate change, noting, “A National Climate Assessment released by the White House last week found that Mr. Rubio’s home state of Florida is one of the most vulnerable to rising sea levels and changes in temperatures and storm patterns.”
Mr. Obama is taking a lead role in combating climate change by touting the EPA’s new standards for greenhouse gases for existing power plants. His most recent weekly radio address discussed his new climate-change regulations. By leading the assault, Mr. Obama is guaranteeing national news coverage on climate change, and these stories will echo the conclusions of the National Climate Assessment.
The president’s climate-change strategy is also consistent with liberal reliance on emotion over facts and reason. The National Climate Assessment is a gross exaggeration of U.S. weather patterns.
An Investor’s Business Daily editorial explained, “Severe weather events are no more likely now than they were 50 or 100 years ago, and the losses of lives and property are much less devastating.” Importantly, Mr. Obama’s attack on U.S.-based carbon-dioxide emissions will have no measurable impact on global emissions.
China is the world largest greenhouse-gas emitter, releasing about twice the amount of carbon dioxide as the United States. While our country’s emissions are dropping, China’s are rising. From 2011 to 2012, China’s emissions increased about 6 percent, while U.S. emissions dropped almost 4 percent.
Moreover, China’s use of coal is exploding. According to the U.S. Energy Information Administration, China’s consumption of coal is on the rise, and it uses about half the coal used globally.
Consequently, without reductions in China, U.S. actions to cut emissions will have no meaningful impact on global levels of carbon dioxide. That’s why as EPA administrator, Lisa P. Jackson told a Senate hearing, “U.S. action alone will not impact world CO2 levels.”
Since taking office, Mr. Obama has led the war against the coal industry through a series of EPA regulations attacking coal-based electricity generation. The new proposal to limit carbon-dioxide emissions will add to the regulatory pressure on utilities and accelerate the closings of coal-fired power plans.
It’s estimated that more than 300 coal power plants will be closing owing to the EPA, and the significant loss of power from the power grid significantly raises the possibility of brownouts and blackouts.
The president’s climate-change strategy is not about saving the world. It’s about trying to save Democrats from a political rout in November. With a scandal-ridden White House and low public approval, Mr. Obama desperately needs to change the debate from his lies and incompetence to climate change.
ON THE ECONOMY: LEAVING ON A JET PLANE
“Now the time has come to leave you, one more time let me kiss you, then close your eyes, I’ll be on my way. Dream about the days to come when I won’t have to leave alone, about the times I won’t have to say. Kiss me and smile for me, tell me that you’ll wait for me, hold me like you’ll never let me go.”
So rang out the last verse of the John Denver song made famous by Peter, Paul and Mary in 1967.
When John Denver (who by the way was from Roswell, New Mexico, but lived most of his life in Aspen) wrote this song in 1966, America’s corporate income tax provided 23 percent of total Federal revenues. Today, this is down to just 9.9 percent. It’s easy to understand why some may think that corporate tax rates in America are too low.
Furthermore, Federal revenues as a percentage of overall GDP are lower now than at any time during the Johnson presidency. If corporate taxes are significantly lower than they were in 1966, why are so many companies refusing to remit profits to the United States, and moreover, why are companies looking to move abroad simply as a means to cut taxes?
Just this week, The Wall Street Journal ran a story about Walgreen Co.’s plan to purchase the remainder of Alliance Boots GmbH, a Swiss based pharmacy (Walgreens already owns 45 percent of the company), in an attempt to see what can be done to lower the effective tax rate. When Eaton, a Cleveland-based electrical equipment company acquired an Ireland-based firm, the company moved its incorporation to Dublin. The company’s chief executive said that the reason was that the U.S. had too-high a domestic rate and a thoroughly uncompetitive international tax regime. More recently, New York City based Pfizer flirted with acquiring British based AstraZeneca, in part, to help lower the combined companies’ corporate taxes.
Corporations have one basic purpose – to make money. By making money, companies stay in business, produce goods and services for their customers, wages for their employees and returns for their investors. Those companies that survive do so by producing better widgets for less cost than their competitors. The taxes that a company pays – while necessary – are simply an expense, no different than the expense for any input into the production process.
Countries, states and localities understand this, and have used their tax code as a competitive tool to lure businesses to their jurisdictions. The Republic of Ireland, for example, began to lower its corporate income tax rate in the late 1990s from about 38 percent to just 12.5 percent. Other jurisdictions, including so-called tax havens like Belize, charge international companies no corporate tax. The baseline corporate tax rate in the United States is 39 percent. This compares to just 23 percent in the UK, 21 percent in Switzerland and 26 percent in Canada.
In addition to having relatively high marginal tax rates, the United States taxes a company’s worldwide corporate profits even when they are not earned on US-based activities. Once profits are remitted to a US-based entity, they are subject to this high tax rate. This is why most US-based international companies that make money overseas stash it away in foreign accounts. This creates a disincentive to bring the money back home to use for investment in U.S. operations, for higher wages or to return to shareholders in the form of dividends. If a company moves its domicile out of the United States, it can transfer these funds back to its home accounts subject to the lower tax rates in countries like Ireland.
Therefore, the U.S. corporate tax code not only reduces corporate tax revenues, but acts as a disincentive to grow international businesses on US soil.
Since corporations like Walgreens, or Pfizer or Eaton all compete in a worldwide market, they need to find a way to produce their widgets more efficiently than foreign based competitors. This makes the U.S. tax code even more important. A dollar made by Walgreens operations based in Illinois is subject to the 39 percent marginal U.S. tax rate, while a dollar transferred to its sister company Bern is taxed at just 21 percent. This is a 46 percent difference in taxes that would be owed on the same dollar and represents a substantial savings from basically moving a post office box. Even more importantly, when a U.S. firm merges with a foreign company it can keep most of its operations in the United States, bring money back into the United States and at the same time pay lower taxes on it.
Add to this the fact that only certain types of corporations (so called C corporations) are subject to the federal corporate income tax. Other corporate entities like Limited Liability Companies, S Corporations, and partnerships pass earnings through to their owners who then pay individual income taxes on these earnings. Most new companies incorporate under one of these types of tax-advantaged structures even though it limits their ability to gather a large number of investors or go public by selling stock on the exchanges.
So although US tax rates may seem low to some, when compared to other jurisdictions, the reverse is true. In reality, American based corporations are at a serious tax disadvantage when compared to their international competitors. This leads to less investment in the U.S., lower overall wages, lower dividends for shareholders, and in spite of the high rates, lower revenues for the Federal government.
This is likely also a major reason why so many bosses are leaving on a jet plane.
The Monthly Manifesto is published by John Dunham and Associates, 32 Court Street, Brooklyn, NY 11201 as a service to our clients and friends. For more information relating to the content or for a free consultation on how we can assist your company or organization with your issues please contact us at 212-239-2105, or at firstname.lastname@example.org.