Sunday, 7 June 2009

History Repeating Itself

During the Clinton era...there was talk of "fixing" tax programs at the corporate level....where they would pay more. Most people have forgotten this episode. After the plan was laid out...several companies...but in particular...Microsoft...came out and suggested that they really didn't need to operate from the shores of America. So they actually started a half-ass attempt to find a better place to relocate some of their operations. It was a joke, but a few months later...you could see that the government's original idea was dead and no one in the media would dare discuss how or why.

Over the past couple of weeks....we have the President discussing and laying out a plan to outlaw or restrict about $190 billion in tax breaks for offshore companies. It's kinda designed for companies that are Amercian, and run major operations out of various other countries.

Naturally....Microsoft fell into this group. You can kinda guess what what they said this week.

Microsoft CEO Steven Ballmer commented that perhaps the time had come to move some of the bigboy employees offshore and just adios to US taxes on them period.

As Steve says: "It makes U.S. jobs more expensive ... We're better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S."

The two scenarios? First....well....six months will pass and someone will ask the administration if they are ever going stop the $190 billion in tax breaks for offshore companies....and be told "no", with no reasons for the decision not being announced nationally.

The second? President Obama may decide that he's got public appeal and just continue on. Then one day, Microsoft announces that one entire division has been moved to Australia or Ireland. That was a mere 60 people and just a drop in the bucket, but they actually carried out a threat. Then another company will announce that they've moved 300 positions permanently to an island in the Caribbean. Over a year, four thousand corporate jobs are moved out of America. The administration downplays this and says that its just a drop in the bucket. Over six years....almost 100,000 corporate positions move out of the US. If the president has issues or wants people to appear in front of a court....it'll be practically impossible to force them to appear.

My guess is that the threat by the administration made good headlines for the weekend it was announced, and in six months...they've forgotten the whole thing.

Czar-Time

Quietly, and without much mention in real media circles....the President last week....appointed a Great Lakes Czar. Naturally, you'd ask what a Great Lakes Czar does. He oversees the administration's plan to restore the Lakes' environment.

The pickee? Mr. Cameron Davis, who happens to be the president of a Chicago-based environmental group.

$20 billion is in the pot for this "clean-up". And if we spend it all....and it's still not clean....we'll just allocate another $20 billion.

My amusement over this...is that we maintain and run something called the EPA. They tend to have one boss, two or three junior bosses, twenty-odd divisions of various importance, and 17,000 actual people make EPA function. The EPA would normally be the one in charge of such a fund. So we've basically bypassed the EPA and just created another direct line to the President.

How Czars and special ambassadors exist? I'm betting well over twenty. This means that they have to communicate directly with the president or his chief of staff....to get anything really important decided. The odds of getting a 15-minute appointment in the next month? Pretty dismal. The cabinet guys get a chance each week, with their normal cabinet meeting. There isn't a Czar or special ambassador meeting.

The other curious thing is that most cabinet offices maintain a audit agency and a ethics board. A Czar typically is outside of that channel. So the odds of a Czar spending money in a fraudulent way...is pretty much guaranteed. This Mr Davis? Well....in about five years...you will see him again...in front of a congressional committee...and explaining how he allocated $5 million to some non-existent company, to deliver a logo for his organization or to video-tape great scenes of him and some folks on the Great Lakes.