How Apple Stops the IRS from Biting

From “Here Comes the Sun,” Joe Nocera, NYT:

“Among the many things Tim Cook apparently learned at the knee of Steve Jobs, during his long tenure as Apple’s No. 2, was how to create a ‘reality distortion field.’ Or so it would appear after watching Cook, now Apple’s chief executive, testify on Tuesday at a Senate hearing on the company’s tax avoidance schemes.

“Jobs was so persuasive that he could claim the sun was setting when it was actually rising, and everyone would nod in agreement. On Tuesday, despite the overwhelming evidence presented by the Senate Permanent Subcommittee on Investigations that Apple engaged in dubious tax avoidance gimmicks, Cook claimed that Apple never resorted to tax gimmickry. Even though the company appears to pay about ten percent of its pretax income in taxes — when the federal corporate tax rate is 35 percent — Cook said, ‘We pay all the taxes we owe — every single dollar.’ He added that Apple had never shifted any of its American profits to an offshore tax haven when, in fact, that is basically what it has done, routing tens of billions in pretax profits to a shell corporation in Ireland that exists solely to avoid taxes in the United States. He even said that the low taxes Apple pays overseas is on the profits of its overseas sales. Not to put too fine a point on it, but this was a flat-out lie.

“In other words, Cook spent Tuesday claiming that the sun was setting when it was actually rising, and, predictably, by the time the hearing had ended, most of the senators were agreeing with him.

“Yet as documented both by The Times and the Senate subcommittee, Apple is as much an innovator in tax avoidance as it is in technology. Take, for instance, a scheme known as The Double Irish, which it largely invented and which many American companies have since replicated. This strategy, which was the primary focus of Tuesday’s hearing, involves setting up a shell subsidiary in an offshore tax haven — a k a Ireland — and transferring most of Apple’s intellectual property rights to the dummy subsidiary. The subsidiary, in turn, charges ‘royalties’ that allows it to capture billions of dollars in what otherwise would be taxable profits in the United States. In Ireland, according to Apple, it pays an astonishing 2 percent in taxes….”

Emphasis added.

Rush Reassures

Rush Limbaugh says we don’t have to worry that President Obama will be impeached.

Not because he doesn’t deserve to be, but because “the American people are not going to tolerate the first black president being removed from office.”

Yes, Rush, we loves us those Kenyan Muslim Socialists.

FBI Joins Bachmann Investigation

Rep. Michele Bachmann (R-Minnesota) is already under investigation by the Federal Elections Commission, the Office of Congressional Ethics, and the Iowa State Senate ethics committee for possible campaign finance violations in her 2012 presidential campaign.

Now the FBI is joining the party, which means possible criminal charges and penalties.

I want to see her gone from the House as much as, well, as much as she wants to see the Kenyan Muslim Communist gone from the White House.

I don’t care if she goes to jail, I just want her out of politics forever, replaced by someone a little brighter and a lot less crazy.  That would be just about anyone who lives in her district.

 

The GOP Will Save the Prez

From “Why the GOP thinks it could blow it,” Mike Allen and Jim VandeHei, Politico:

“Republicans are worried one thing could screw up the political gift of three Obama administration controversies at once:  fellow Republicans.

“Top GOP leaders are privately warning members to put a sock in it when it comes to silly calls for impeachment or over-the-top comparisons to Watergate.  They want members to focus on months of fact-finding investigations — not rhetorical fury.”

Asking this group to put a sock in it?  Fuhgeddaboudit.  They don’t know from fact finding, they only know rhetorical fury. 

They Can’t Just Take the Gift

You’d think the Tea Party folks would just take the gift-wrapped IRS bias scandal and exploit it for all it’s worth, which is a lot actually.

But noooooooo, because they’re crazy, they have to over-reach.

Michele Bachmann is running around saying that because the IRS is involved in Obamacare (they will administer the monetary penalties for those who choose not to buy health insurance), the IRS is going to delay or deny health care itself to conservatives.  So they’re not just giving your group a hard time about getting a tax exemption, they’re going to kill you!

And so the tide turns back against them because they can’t resist one-upping the IRS on being outrageous.

Buried Under the “Scandal” Avalanche

There is some really good news out of Washington, if you look under the rocks of Benghazi, the IRS, and the AP.

The budget deficit is projected to drop to $642 billion for FY 2012, which ends on September 30.  That’s a whopping $200 billion less than the CBO estimated in February, when it adjusted the deficit downward to account for sequester spending cuts and 2012 tax increases.  This new projection comes strictly from higher-than-expected tax revenue.  This will be the first time the deficit has been under a trillion since 2009.

Things are so rosy that the deficit might be only a smidge over 2% of GDP by 2015, compared to more than 10% of GDP back in 2009.

In fact some economists, like Jared Bernstein, think the deficit may be coming down too quickly, keeping unemployment high.

 

The South Carolina Race

From “Behind Mark Sanford’s turnaround,” Alex Isenstadt, Politico*:

“In Colbert Busch, Sanford was running against a rookie opponent who made some rookie mistakes. While the former governor barnstormed the district, Colbert Busch seemed to be in hiding. She rarely held public events — and when she did, she was sometimes in a hurry to leave.

“At a Chamber of Commerce forum last week, the Democrat delivered four minutes of remarks and was then hustled out of the room by a team of handlers. As baffled reporters trailed, Colbert Busch made a beeline for the parking lot.

“For a still largely unknown candidate who needed to introduce herself to voters, it was a head-scratcher of a moment.

“’I’ve never seen a candidate sprint like that,’ one reporter said at the time.

“Though she turned in a strong performance in the sole debate she agreed to, at other times Colbert Busch had difficulty articulating her positions. Any Democrat running in a conservative district has to thread the needle when it comes to talking about issues, but Colbert Busch had particular trouble. Asked in a CNN interview on Tuesday whether she would support the Manchin-Toomey gun control bill, she struggled to come up with an answer.”

Although Colbert Busch ultimately lost by about nine points, a couple of weeks ago, she seemed to have a nine-point lead.  So she decided to coast and not take any risks.  But as a newcomer and a Dem in a GOP district, she had to reassure voters that she would respect and represent their views and she had to do it with policy specifics.  Certainly House Dem leadership would have given her a pass to vote against them more often than other Dems.  She needed to make that abundantly clear, and to specify precisely where she would differ from her party.  Her vagueness really cost her and allowed Sanford to portray her as way too liberal for the district, as Nancy Pelosi’s twin.  She had to run against both Sanford and Pelosi. 

You don’t win by hiding and ducking.  If she’d presented herself aggressively and consistently as a conservative Dem who would sometimes subordinate both her own and her party’s positions to honor the wishes of her district, she would have had a better shot.  I’m thinking here of Rudy Giuliani’s second run for mayor, after he lost the first time.  He was told he couldn’t win without Upper West Side women, and he couldn’t win Upper West Side women without supporting abortion rights.  So he told them that while he personally opposed abortion, as mayor, he wouldn’t do anything to change or restrict abortion rights in the city. 

Congressmen are known as “Representative.”  Colbert Busch needed to convince South Carolina’s First District that she could be their representative, and she failed.  Maybe it was just a bridge too far for both her and the voters of her district.  

*Read more: http://www.politico.com/story/2013/05/mark-sanford-win-91049_Page2.html#ixzz2Sj8JThCr

Mark Sanford Won

Yuck!  I don’t know how women could vote for him.

But it’s been a GOP seat since 1980.

Setting Him Up to Fail

“Republicans have held the administration to about one-third of the money [to implement the Affordable Care Act] that the Bush administration received from a Republican-led Congress for the lesser challenge of starting up the Medicare drug program.”

From “G.O.P Is Readying a New Offensive Over Health Law,” Jackie Calmes, NYT

 

OK, The Deficit Problem Is Solved

Well, that was easy.  From “Health Care Spending Growth May Have Slowed Permanently,” Brian Beutler, Talking Points Memo:

“Health care spending growth has famously slowed over the past five years, significantly enough that the Congressional Budget Office recently revised its projections of Medicare and Medicaid spending over the coming decade downward by hundreds of billions of dollars.

“Now, research papers suggests the recent slowdown doesn’t just reflect temporary economic weakness, but also structural shifts in how health care is delivered and financed — possibly attributable to the Affordable Care Act — and thus might be a harbinger of a longer-term trend.

If they’re right, and the trend continues, it means workers can expect higher wages and the country’s projected medium term deficits are significantly overstated, which in turn suggests lawmakers’ continuing obsession with the current budget deficit, and deficits over the coming decade, are misguided.

“The study by Harvard researchers, featured in the latest edition of Health Affairs, finds, like all studies of this nature, that the recession and weak economy contributed significantly to the spending growth slowdown. Less generous benefits, resulting in higher out-of-pocket costs, accounted for 20 percent of it. Faced with less generous coverage and less disposable income, people consumed fewer health services.

“But the good news is that spending growth also slowed among those whose health benefits haven’t changed, including Medicare patients. And that suggests a more enduring trend.

“’Our findings suggest cautious optimism that the slowdown in the growth of health spending may persist — a change that, if borne out, could have a major impact on US health spending projections and fiscal challenges facing the country,’ the authors write.

“In a related article, health care economist David Cutler attributes the majority of the slowdown to fundamental changes — including perhaps slowing technological and pharmaceutical innovation, and increased efficiency among providers. If current trends continue, he concludes, then over the next 10 years ‘public-sector health care spending will be as much as $770 billion less than predicted. Such lower levels of spending would have an enormous impact on the US economy and on government and household finances.’”

Stick that in your pipe and smoke it, Paul Ryan!

Of course, that money will probably be spent on more war(s).