Future reading on the U.S. Chamber

I had a long conversation with Hillary Brenhouse this morning.  She is doing research and interviews for a new book about the U.S. Chamber of Commerce, its history through current events.  The author of the book is Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us (Bloomsbury, 2009).  Ms. Katz is also editor of the New York World, an accountability journalism project at Columbia Journalism School.

Obviously, Hillary was looking for the small business perspective on the U.S. Chamber.  Anyone who has followed my writings and comments in the press knows how I feel about that organization. 

She was particularly interested in efforts to create alternative business organizations to the U.S. Chamber.  Having been a part of growing the American Sustainable Business Council and working with the Main Street Alliance and Small Business Majority, I assured Hillary that in spite of not having the big membership dues of giant corporations, alternative organizations are growing. 

If you want to share your thoughts with Hillary on this subject, email her at hbrenhouse@gmail.com.  But be careful what you say, you just might find yourself in print in about 10 months.

 

Poster child for the 1%

On this Day of Action for the Occupy movement fighting for the 99% of Americans outraged over corporate greed on Wall Street and in Congress that is destroying the middle-class, we now have a poster child for the 1%--Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

The U.S. Chamber is the leading advocacy organization for everything 1%.  From defending the practice of multinational corporations off-shoring jobs and profits to opposing every effort to protect the personal and financial health and safety of Americans and small businesses.

For Mr. Donohue’s largely successful efforts to lead this 1% organization, he was paid $4.6 million in 2010 according to U.S. Chamber Watch.   That is one million more than his compensation the year before. 

In a Huffington Post story yesterday, spokesperson for U.S. Chamber Watch Christy Setzer says: 

The U.S. Chamber is an organization that's made up of the one percent, to advocate for the one percent. That's reflected in every aspect of the Chamber's operations, from the nearly $5 million compensation package received by their president, Tom Donohue, to the policies for the wealthy that they've taken their biggest stances on -- including their support for extending the Bush tax cuts and a tax 'holiday' on overseas profits. That may be cool comfort to big corporate CEOs, but hardly helpful to struggling Mom and Pop shops across America.

If you’re a business person and want to support the Occupiers efforts to focus the nation’s attention on the growing wealth disparity in the country and the resulting plight of small businesses suffering from low customer demand, then sign on to the letter below from my friend Ben Cohen, co-founder of Ben & Jerry’s.  Simply send an email to Molly.Turner@BenJerry.com.  Molly will be in touch with you

 

Statement in Support of Occupy Wall Street

October 2011

We, the undersigned businesses and businesspeople, wish to express our deepest admiration to all of you who have initiated the non-violent Occupy Wall Street Movement and to those around the country who have joined in solidarity.  The issues raised are of fundamental importance to all of us.  These include:

·         The inequity that exists between classes in our country is simply immoral.

·         We are in an unemployment crisis.  Almost 14 million people are unemployed.  Nearly 20% of African American men are unemployed.  Over 25% of our nation’s youth are unemployed.

·         Many workers who have jobs have to work 2 or 3 of them just to scrape by.

·         Higher education is almost impossible to obtain without going deeply in debt.

·         Corporations are permitted to spend unlimited resources to influence elections while stockpiling a trillion dollars rather than hiring people.

We know the mainstream media will either ignore you or frame the issue as to who may be getting pepper sprayed rather than addressing the despair and hardships borne by so many, or accurately conveying what this movement is about.  All this goes on while corporate profits continue to soar and millionaires whine about paying a bit more in taxes. And we have not even mentioned the environment.

We know that words are relatively easy but we wanted to act quickly to demonstrate our support.  We realize that Occupy Wall Street is calling for systemic change.  We support this call to action and are honored to join you in this call to take back our nation and democracy.

Sincerely

Ben Cohen

Co-Founder

Ben & Jerry’s

Jerry Greenfield

Co-Founder

Ben & Jerry’s

Rejecting NFIB spin

I met Zach Carter, a young journalist with the Huffington Post, back in April.  We had lunch at a trendy deli in DC with David Levine (American Sustainable Business Council), Scott Klinger (Wealth for the Common Good) and Chuck Collins (Institute for Policy Studies).  While we couldn't get Zach interested in writing about tax haven abuse, he jumped on the idea that small businesss supported ending the Bush-era income tax cuts for the wealthiest Americans.  Below is Zach's story.
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Huffington Post
Zach Carter
May 4, 2011

Small Business Owners Demand Repeal Of Bush Tax Cuts For The Rich

WASHINGTON -- Michael Teahan, like his father, mother, and uncles before him, is a small business owner. The 52-year-old has spent most of his adult life running his own businesses: a restaurant, a coffee bar and various companies involved in the espresso machine business.

"I was the only person in my family to go to college, because that’s not what we did -- we all opened up businesses," Teahan says. "For some people, that’s a big hurdle ... for us, it was like having lunch."

Teahan currently operates Espresso Resource, a company that imports espresso machine parts from Europe to sell to U.S. restaurants and coffee shops. And he’s doing very well for himself: The two-man operation clears about $1 million a year in total sales, Teahan says -- enough to secure himself annual income in excess of $250,000.

That makes Teahan one of the few small business owners to actually benefit from the Bush administration's tax cuts for the wealthy. He says the cuts save him about $12,000 a year, compared to what he paid before they were enacted. But as debates over the federal budget deficit have intensified, Teahan has found the political discussion increasingly divorced from the reality of his experience as a small business owner.

Tax cuts for the wealthy, according to Teahan, will do nothing to bolster his firm. They won’t affect his hiring decisions, they won’t encourage him to buy new equipment or help him move into a bigger warehouse. He says all of those decisions -- the nuts and bolts of actually running a small company -- depend on the his customers' economic conditions, not his personal tax rate.

"What we do in business, how we spend our money, how we allocate our resources -- that has very little to do with tax policy," Teahan says. "I map my business based on my customers, and what my customers want to buy, and what they can afford to buy."

It’s a common complaint from small business owners. While congressional Republicans and entrenched corporate lobbying groups like the U.S. Chamber of Commerce -- which is holding a Wednesday meeting on small business priorities -- and the National Federation of Independent Business (NFIB) have been pushing hard to preserve the Bush tax cuts for the wealthy by touting the interests of small firms, much of the small business community is demanding that those very tax cuts be repealed. The tax breaks for the wealthy will add $700 billion to the debt over the next 10 years, according to the White House's Office of Management and Budget. And many small firms say that money would be better spent on direct aid to the middle class.

"We are fed by our consumers, not by our tax breaks," says Rick Poore, owner of Designwear, Inc., a screen-printing business based in Lincoln, Neb. "If you drive more people to my business, I will hire more people. It's as simple as that. If you give me a tax break, I'll just take the wife to the Bahamas."

Poore emphasizes, however, that -- like the vast majority of small business owners -- he isn't among the elite class of taxpayers making $250,000 a year or more. He and his wife take in a combined $80,000 a year from their business. Teahan is an outlier, because most small businesses don’t make nearly enough to benefit from the Bush tax cuts for the wealthy.

"Most small business owners make less than $250,000 and so the tax cuts don’t benefit most of us, and they’re really taking important valuable resources away from the federal budget," says ReShonda Young, corporate vice president and operations manager for Alpha Express, a Waterloo, Iowa-based company that specializes in transportation services and snow removal.

Young also serves on the executive board of Main Street Alliance, a coalition of small firms. Main Street Alliance notes that 98 percent of small businesses will not be affected by the Bush tax cuts in any way.

"The reality is that most businesses don’t pay the top marginal tax rate,” notes John Irons, an economist with the left-leaning Economic Policy Institute. "Most small businesses won’t be affected at all by a reversal of Bush tax cuts for the rich.”

For his part, Poore, the screen-printer, sees some dark humor in the entire notion of wealthy small business owners. He says that any accountant "that allows $250,000 in profit to get through to my bottom line would be fired."

Teahan emphasizes that even the few firms that do qualify for the Bush tax cuts don't boost their hiring in response to the Bush tax cuts. For decades, small companies have been able to secure tax breaks on the expenses that actually affect their bottom line -- labor, rent, equipment and other necessary costs. The Bush tax cuts for the wealthy, by contrast, only affect how much of a firm's total profit owners keep for themselves.

"The economic premise, that people won’t hire because they might have to pay more taxes if they make more money, is beyond laughable,” says Lew Prince, owner of the Vintage Vinyl record store in St. Louis, Mo. "You hire when you think there’s a way you can make more money with that hire. The percentage the government takes out of it has almost nothing to do with it.”

So what really affects small businesses? High health care costs, which will likely be ameliorated by President Barack Obama’s health care reform, and limited access to credit in the wake of the financial crisis. Just as important to Teahan, Poore, Prince and other small business owners are federal economic policies that directly benefit their middle class customers. If extending tax breaks to millionaires means denying aid to the middle class, their firms will suffer.

"My customers work for a living,” Teahan says. "They’re working on espresso machines and selling coffee. They’re not these uber-rich Wall Street bankers. [My customers] need the money. If they’ve got money, then I'm doing great."

The upper-end Bush tax cuts are not corporate taxes -- they’re taxes on wealthy individuals. Many small firms are not corporations, and owners report their profits as the individual income of their owners. Some firms, like Teahan’s, choose to incorporate, though they never officially report a profit because all excess earnings are paid out to the owners.

The U.S. Chamber and the NFIB say that, because these business profits are reported as individual income, allowing tax hikes for wealthy individuals will hurt small business. The U.S. Chamber declined to comment for this story but NFIB spokesman Kevan Chapman says his organization has repeatedly polled its members and found that they favor the Bush tax cuts.

"We have over 300,000 members who would disagree with the notion that we don’t represent small business. The last time we balloted this measure was in November, and 89 percent said the federal government should extend those tax breaks," Chapman said.

There were 26.9 million small businesses in the United States in 2008, according to the Small Business Administration, though that figure includes millions of people who work on contract for employers but have no business, in the traditional sense, of their own. There were 6 million small firms with at least one employee.

Another small business groups beg to differ with the NFIB. The American Sustainable Business Council, which represents 70,000 small firms and social groups, maintains that "there is a strong business case for letting the tax relief for the wealthiest expire,” noting that doing so would "reduce the federal budget deficit and lessen the crisis with state and local budgets around the country.”

Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce has written on the Bush tax cuts issue for The Huffington Post. He emphasizes that many of the people who report business income on their personal income tax returns are bond traders, partners in corporate law firms, lobbyists and hedge fund managers -- not the kind of activity that most people think of as "small business.”

These alternative small business groups say that the debate over the Bush tax cuts has been heavily skewed by talking points from the NFIB and the Chamber. The Chamber has a long track-record of backing the economic priorities of corporate elites, while the NFIB has increasingly become a partisan wing of the Republican Party, as HuffPost detailed in January.

While the NFIB continues to support the indefinite extension of the Bush tax cuts for the rich, it opted last year not to fight for a bill that would expand lending to small firms.

"Any small businessman who is in the NFIB is paying his enemies to stab him in the back,” says Prince, the record store owner.

Alpha Express VP Young agrees. "It's the corporate interests and the wealthy stealing our name to further their agenda," she argues.

While the upper-end Bush tax cuts would increase the federal debt by $700 billion over the next 10 years, the broader class of Bush tax cuts, which affect many middle-class taxpayers, would cost $3.1 trillion over the next decade, according to the Congressional Budget Office.

"We should have learned from the last decade that slashing taxes for the richest Americans is a great way to grow the national debt –- not jobs," says Holly Sklar, the executive director of Business for Shared Prosperity, a non-partisan small-business group funded predominantly by the Ford Foundation. "Few small businesses benefit from the top rate tax cuts, but many lose from a shrinking middle class and deepening budget cuts in everything from the Small Business Administration and education to vital infrastructure repair and modernization. The tax cuts are like termites, eating away at our economy and our nation’s future.”

http://www.huffingtonpost.com/2011/05/04/small-business-owners-bush-tax-cuts-rich-repeal_n_857204.html

Wake up, America, or lose the trade war

Below are some excerpts from an opinion editorial by former South Carolina U.S. Senator Ernest F. Hollings (1966-2005) that ran in today's Charleston Post and Courier. 

Never one to mince words, Mr. Hollings lays the blame for our economic condition on the "free traders".  In his opinion, resurrecting our country's manufacturing is the key to our future.

In his original piece, Mr. Hollings unfortunately and incorrectly dismisses small businesses as an economic engine.  The reality is that manufacturing is dominated by small businesses. 

In 2009 South Carolina had 5047 manufacturers of some kind with 90% having fewer than 100 employees and 84% having less than 50 employees.  What's good for manufacturing in this country is good for small business.

Excerpts from

Wake up, America, or lose the trade war
BY ERNEST F. HOLLINGS
Monday, December 27, 2010
Charleston Post and Courier

In the last 10 years we've lost a third of the nation's manufacture in the trade war to offshoring. Long before the recession, Princeton economist Alan Blinder estimated that in 10 years the country would lose 30 million to 40 million jobs to offshoring. President Obama didn't inherit just a recession. He inherited a financial collapse together with a job collapse from offshoring.

Stimulation won't do. President Bush increased the debt and stimulated the economy $5 trillion in eight years. In the same period, household debt increased or stimulated the economy another $7 trillion. The Federal Reserve stimulated the economy a trillion dollars in the remainder of 2008. By January 2009, when Obama was sworn in as President, the economy had been stimulated $13 trillion in eight years, and we were losing exactly 799,000 jobs a month. President Obama in two years has now stimulated the economy another $3 trillion and last month unemployment increased. Stimulation is spent. We're losing jobs not only from the recession but because we are not competing in the trade war.

The United States was founded in a trade war. The Mother Country forbade manufacture in the colony and required exports from the colony to be carried in the bottom of English ships. The Boston Tea Party that triggered the Revolution framed a Constitution calling for Congress to regulate trade -- not freeing trade. In fact, the forefathers agreed to regulate trade four years before they could agree on First Amendment rights. The first bill to pass the United States Congress on July 4, 1789, was a protectionist tariff. We didn't pass the income tax until 1913. We financed and built the United States into an industrial power with protectionism for the first hundred years, causing Teddy Roosevelt to exclaim in a letter: "Thank God I'm not a Free Trader."

After World War II, Japan started the present trade war by closing its domestic market, subsidizing its manufacture, selling its export at cost, and making up the profit in the closed market. Japan's thrust for market share put General Motors into bankruptcy with Toyota No. 1. I worked with business in this trade war to protect its domestic production, passing numerous trade bills, only to be vetoed by presidents of both parties because of the Cold War. But when President Clinton passed NAFTA with Mexico, offshoring began in earnest. And 10 years ago, when China entered the World Trade Organization, offshoring hemorrhaged. Now, Corporate America, instead of fighting free trade, cries "free trade," "protectionism," "don't start a trade war." Globalization is nothing more than a trade war with manufacture looking for a cheaper country to produce goods.

Wall Street, the big banks, the financial houses, the Business Roundtable, and the U.S. Chamber of Commerce are a fifth column in this trade war. They're not interested in creating jobs in the United States. They're interested in investment offshore to keep their profits up in the market. The CEOs are not interested in taking on labor worries with domestic production. They want to keep China profits flowing for their golden parachute. Consequently, they oppose getting into the trade war.

If the president enforces trade laws or Congress introduces a trade measure, coming down on their heads will be Tom Donahue of the U.S. Chamber of Commerce and the Wall Street crowd, contributing to their defeat. So business leadership, the President, the Congress, all join in a charade of "free trade," "don't start a trade war."

The best example of a president sleep-walking through the trade war is his hectoring CEOs to invest in production and jobs in-country. If you were a CEO, would you invest in-country? The first thing the banker asks is: "Can you meet the China price?" If not, even though your investment succeeds, cheaper imports from China of the same article will soon put you out of business and the loan goes bad. The harsh truth is that in globalization it is difficult to produce goods for a profit in the U.S. In globalization only the government can make it profitable to manufacture and protect Corporate America's investment.

In globalization, the task is for the president and Congress to make it profitable to produce in the U.S.

Challenging the U.S. Chamber

The nonprofit, membership-driven South Carolina Small Business Chamber will officially be supporting an IRS complaint against the U.S. Chamber of Commerce.

We, along with other business organizations, are questioning potential violations of exemptions under the federal tax law in the U.S. Chamber’s conduct of lobbying and campaign funding. More on this later.

Below is a must-read New York Times story about the U.S. Chamber. If you have not been paying attention to the U.S. Chamber’s heavily financed legislative agenda and how it often is at odds with our agenda, this story should help bring you up to speed.
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The New York Times
October 22, 2010

Top Corporations Aid U.S. Chamber of Commerce Campaign

By ERIC LIPTON, MIKE McINTIRE and DON VAN NATTA Jr.

Prudential Financial sent in a $2 million donation last year as the U.S. Chamber of Commerce kicked off a national advertising campaign to weaken the historic rewrite of the nation’s financial regulations.

Dow Chemical delivered $1.7 million to the chamber last year as the group took a leading role in aggressively fighting proposed rules that would impose tighter security requirements on chemical facilities.

And Goldman Sachs, Chevron Texaco, and Aegon, a multinational insurance company based in the Netherlands, donated more than $8 million in recent years to a chamber foundation that has been critical of growing federal regulation and spending. These large donations — none of which were publicly disclosed by the chamber, a tax-exempt group that keeps its donors secret, as it is allowed by law — offer a glimpse of the chamber’s money-raising efforts, which it has ramped up recently in an orchestrated campaign to become one of the most well-financed critics of the Obama administration and an influential player in this fall’s Congressional elections.

They suggest that the recent allegations from President Obama and others that foreign money has ended up in the chamber’s coffers miss a larger point: The chamber has had little trouble finding American companies eager to enlist it, anonymously, to fight their political battles and pay handsomely for its help. . . . Keep reading

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Join the SC Small Business Chamber in supporting our independent, locally owned hardware stores next month:

Buy SC's Happy Hardware Day!!
Saturday, Nov. 20, 2010
Shop at independent, locally owned hardware stores to show your support for SC small business!