Crony Capitalism, Corporate Personhood and Our Decaying Democracy – Ryan Rhoades

Part 1 of 3 – A Brief Look at Executive Branch Corruption and Unethical Practices

Against the background of the plugging of the BP-Deepwater Horizon oil well and behind the recent Supreme Court ruling Citizens’ United V. Federal Election Commission looms a much larger issue – a problem that pervades throughout our society, permeating the branches of government and perverting the very Constitution that public servants have sworn to protect.

Big business and finance are running our government, and they are running selfishly amok.

This is not about Democrats versus Republicans or liberals versus conservatives.  This is about an ideology that has taken over the basic democratic functioning of our government, and it is deeply embedded in our current political culture.

It is about the largest corporations, run by the wealthiest individuals whose motives are to maximize profits for themselves and their shareholders.  And let me tell you, they are making record profits even as millions of Americans suffer from joblessness, foreclosures, stagnant wages, vanishing pensions, and a host of other challenges to labor rights.

Before we get to the Supreme Court ruling, let’s start with where our media has left off on the BP oil rig explosion, how it happened, what lies beneath the real cause of the disaster and how corporations get away with it.

The oil leak in the Gulf of Mexico has devastated an entire ecosystem – causing the death of workers, the loss of wildlife and the destruction of livelihoods.  How did this happen?  Well, according to the ongoing investigation, there were several problems with the equipment and safety concerns that were reported to BP prior to the blowout – yet these warnings were ignored.

So what’s at the root of this?

A breakdown in regulation caused by government officials, in this case the Minerals Management Service, being in bed with big business, in this case BP.

Mary Kendall, the inspector general of the Interior Department, gave the following testimony at a hearing by the House Natural Resources Committee:

While I neither condone nor excuse the behavior chronicled in this, our most recent report on MMS — gift-acceptance, fraternizing with industry, pornography and other inappropriate materials on government computers, and lax handling of inspection forms — I am more concerned about the environment in which these inspectors operate, and the ease with which they move between industry and government.

The hearing targeted the failures of BP, Transocean (rig operator) and Halliburton (designer of cap), and how proper procedures were not followed.  This clearly is a conflict of interests.  A conflict of interests that has been corrupting our system of government for decades, all in the name of greed at the expense of the many.

This is just one of countless instances in which federal agencies within the executive branch failed to effectively perform their regulatory duties and oversight responsibilities, obviously corrupted by the lucrative industries they were supposed to be monitoring.  The Center for Public Integrity recently investigated the effectiveness of federal agencies, uncovering at least 128 instances of government breakdown.

Part of this same report includes disturbing data on corporations successfully evading tax payments since 1960, as follows:

While corporate tax payments accounted for 23 percent of all federal tax revenue in 1960, by 2007 that figure had dropped to just 14 percent. In fact, as the Government Accountability Office reported in a controversial 2008 study, nearly 60 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

This is one of many examples of how the wealthiest few are cheating the system.  This trend is also accompanied by the even more upsetting income disparity between the top 1% and the middle class.  In 2007, the richest 1% of families pulled in at least 23.5% of the total national income, compared to thirty years ago, when the top 1% pulled in 8.9% of the national income in 1976.  During this same time period, the poor and middle class majority of America saw their total after-tax income drop nearly 10 percent, from 57.9% of the national income to 48.4 percent.  Although 80% of the entire U.S. population earned 10% less in national income, the richest 1% raked in 9.6% more in national income.  Since 1979, the wealthiest 1% has enjoyed a 281% increase in after-tax income.

But I digress.  I could go on and on about wealth and income disparities, but that is not the point.  The point is that as the democratic failures within our government are increasing, the wealthiest and most powerful Americans are not failing – they are profiting even after the worst economic collapse since the Depression.  Are we supposed to chalk this up to mere coincidence?

I think not.

The following statistics are a few of the examples of the government failures during the Bush presidency, as presented in The Center for Public Integrity’s investigation (listed below verbatim):

  1. $100 billion in federal tax revenues lost annually to corporations using offshore Tax shelters.
  2. 26% of corporations holding at least $250 million in assets audited in 2006; Percent audited in 1990: more than 70%.  IRS audit staff slashed by 30%.
  3. $9 billion in federal oil and gas royalties mismanaged by agency linked to drug and sex scandal.
  4. 275 largest U.S. corporations pay, on average, about 17% in taxes in 2007, half the standard corporate tax rate.
  5. $300 billion over budget for Department of Defense weapons acquisitions.
  6. $45 trillion in credit-default swaps, without federal oversight, in 2007.
  7. 60% of EPA scientists report political interference with their work.

These are just a few of the facts uncovered by this investigation.  There are many other troubling statistics on issues ranging from consumer protection violations to military-accounting incompetence (Iraq and Afghanistan) to industrial pollution responsible for tens of thousands of human health issues – all due to the failure of the regulatory agencies within our government.

As these same corporations are using loopholes to escape paying taxes to our budget-constricted nation, they have also been enjoying record-breaking profits.

While the price per barrel of oil has skyrocketed in the past decade, from about $23 to $80, the corporate profits also followed.  Exxon has recorded record-breaking profits, collecting over $180 billion in profits since 2005, followed by Shell ($116.9 billion), BP ($98.4 billion) and Chevron ($84.3 billion).

When former executives of corporations like Halliburton and large investment banks like Goldman Sachs become importantly policy makers for this country after serving as decision-makers for profit-driven and unpatriotic businesses.    The two individuals I’m talking about are Dick Cheney and Henry Paulson.

Dick Cheney epitomizes the image of a revolving-door government con-artist.  In 1992, while serving as President George H.W. Bush’s Secretary of Defense, Cheney’s Pentagon gave $8.9 million to the Brown & Root Services company (now KBR Inc.) to work on a report that detailed how private companies could provide logistics to military personnel.  Later that same year, in 1992, Brown & Root Services received a five year contract to perform work alongside the U.S. military.  Then, in 1995, Cheney became the CEO of Halliburton, a company that owns Brown & Root Services (KBR Inc).  While serving as CEO, the Pentagon paid KBR Inc. nearly $2 billion to continue working in U.S. areas of interest.

Prior to the 9/11 attacks, it was reported that about $2.3 trillion in transactions were completely unaccounted for in the Pentagon’s budget.   Secretary of Defense Rumsfeld was reported stating this the day before the terrorist attacks, so the reporting went largely unnoticed.  According to CBS Evening News, if taken another way this amount of money evens out to, “$8,000 for every man, woman and child in America.”

Fast forward to today.  The U.S. government is fighting two major wars in Iraq and Afghanistan.  The premise of both wars was to find and destroy the terrorists responsible for the 9/11 terrorist attacks.  Our forces first went into Afghanistan to find Osama bin Laden, who is most likely in Pakistan.  Pakistan also has nuclear weapons and is an “ally”, despite the fact that its spy agency, the ISI, has been supplying, training and funding Al Qaeda and other terrorists since 2004.

Our military went into Iraq on the false claims that Saddam possessed weapons of mass destruction.  In fact, Bush and seven administrative officials lied to the American public about this approximately 935 times.

During Bush’s presidency, KBR Inc., the company Cheney helped while Secretary of Defense received over $16 billion in government contracts for their work in Afghanistan and Iraq.

In other words, Cheney went from running the military for Bush Sr. to working as CEO of a corporation that benefitted from his prior work in government back to Vice President of the United States, serving as Bush Jr.’s top aide during a tumultuous eight years that resulted in two wars, a broken economy and $16 billion worth of work for the corporation he used to run.  It has also been said that Cheney exercised more power and influence as vice president than any other VP in recent history.

He also created a lot more work and profits for his previous employer.

Can you say war profiteering?

And that’s only one branch of government.  The ties between Congress, banks and businesses bear just as much blame for our failing democracy.  In a report by the Center for Responsive Politics, there have been nearly 1,500 “revolving-door” lobbyists for the financial services industry dispatched since 2009.

The overall problem is that moneyed interests, particularly large corporations, have used their resources to rig the game against everyday Americans.

Part two will focus on how money has corrupted our lawmaking body, the Congress, and our court systems – and how systemic this really is.  Part three will focus on the sources of these contributions and the flow of money to politicians and organizations that support these loyalties.

**Note: While much of this focus has dealt with Republicans and the executive administration during Bush’s eight years in office, a later post will cover Obama’s record in his first two years in office, and question his loyalties based on following the money trail (President Obama broke records for raising the most contributions during a presidential campaign and his second largest contributor was none other than Goldman Sachs.  This may be sheer coincidence and does not necessarily reflect Goldman Sach’s influence over governmental policy, but it is worth noting that Goldman Sachs was a contributor and major cause of the financial crisis in 2008.  They also got off the hook after benefitting from the TARP bailout – paying a small fee to the government following an SEC ruling; the fee is chump change compared to the profits and revenue of this company)**

Recommended Link: Why a Progressive Presidency is Impossible, for Now


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