THE REPUBLICAN PARTY IS NOT THE PRO-BUSINESS PARTY

I was in New York for the last few days and I actually read, as I always do when I'm there, the old fashioned version of the NY Times. The first one that came to my door was on Friday morning and I was struck by... well I'm still trying to figure out how to grasp what it was that struck me. I mean I know what the story was: Stephen Labaton's Investors' Suits Face Higher Bar, Justices Decide. And I know where it was: top right, front page, where I was always told to look first for the most important Times story. But I can't figure out how to process it, or something about it.

Why is it conventional wisdom that the GOP is the buisness-friendly party and the champion of capitalism. I know the history, thanks. But once the GOP was the African-American-friendly party and the champion of the slaves and their descendants that their party freed. That took nearly a century to do an about face. But when I was in high school, most of the most infamous bigots and racists in Congress-- and on TV-- were Southern Democrats and they prevented the dismantling of apartheid in this country right into the 1960s. I don't know how many of these names will ring a bell in your head, but I heard about them all through high school-- the forerunners of the modern southern-based GOP and the Blue Dog Democrats: Harry Byrd of Virginia, John Stennis and James Eastland of Mississippi, Lister Hill and John Sparkman of Alabama, Richard Russell and Herman Talmadge of Georgia. A worse bunch of racist slime you would never have uncovered, and thru dint of the inflexible seniority system, they held an iron, reactionary grip on Congress, especially on the U.S. Senate. Their political descendants are overwhelmingly Republicans now. Instead of Stennis and Eastland we have Trent Lott and Cochran and Jeff Sessions and Richard Shelby (first elected as a Democrat) have replaced Hill and Sparkman. But it's really the same loathsome, reactionary garbage.

Since Ed Brooke (R-MA) no one would make the mistake of calling the Republican Party friendly to Blacks. I mean, of course there are a handful who have sold out their race many of whom are psychologically twisted and even mentally deranged-- the Ken Blackwells, Vernon Robinsons, Clarence Thomases, Alan Keyeses... a couple of hate-talk radio whores-- but in terms of looking for a political party interested in equality and helping to lift up the downtrodden, the Republicans aren't the place to go.

And over time, the GOP hasn't just gone from the party of Abraham Lincoln to the party of Jeff Sessions. They have also abandoned first small business and then business itself in order to enshrine themselves as the party of management. The two Supreme Court decisions last week to limit the power of business owners of their managers is violently anti-business, yet neither the Republican Party, nor the NY Times, sees it that way.

The Supreme Court on Thursday dealt a blow to investors who want to sue companies and executives because of suspected fraud, setting a higher standard for class-action lawsuits to go forward.

The decision was the second one this week by the court that was a defeat for shareholders and a victory for the defendant companies. On Monday, the justices ruled that securities underwriters on Wall Street are generally immune from civil antitrust lawsuits.

It came as senior officials, led by Treasury Secretary Henry M. Paulson Jr., have been pushing for limits on shareholder lawsuits. Mr. Paulson, along with other administration officials and some senior lawmakers, have maintained that such lawsuits and regulations, written in the aftermath of corporate scandals like those involving Enron and WorldCom, may be discouraging investment and causing too many companies to look overseas to raise capital.

With only 18 months left until President Bush leaves the White House-- and even less time for contentious policy issues to make their way through a capital that is preparing for elections-- corporations and political supporters of the administration are pressing for a relaxation of some of those regulations and new restrictions on lawsuits.

OK, Republicans are anti-worker and anti-consumer; they always have been. But who exactly is "Business" if not the owners (shareholders)? As it turns out, I was one of the shareholders in the suit Labaton is writing about-- Tellabs. The management painted a grossly false picture to sucker investors and it worked-- to the benefit of the managers. It isn't uncommon in corporate business and the GOP is not the place to look for investors to seek protection anymore than it is the place for minorities to seek protection.

Where can they go to seek protection? On Friday Maxine Waters challenged Bush's current Treasury Secretary/ex-Goldman Sachs Chairman Henry Paulson to get the Regime to support shareholders in the Supreme Court case that will determine whether the Enron victims can recover from the banks that schemed with Enron to defraud them. Paulson admitted-- or even bragged-- that "he personally initiated his department's role in a Supreme Court case that could hurt shareholders' efforts to recover losses in securities fraud lawsuits."

The issue arose because of a shareholder suit before the Supreme Court that seeks to recover money in a securities fraud case against two suppliers to a cable TV company. The outcome probably will determine whether a similar lawsuit by Enron investors against investment banks is allowed to proceed.

The Securities and Exchange Commission urged the solicitor general to file a brief in support of investors. But President Bush, Treasury, the Federal Reserve Board and the Office of the Comptroller of the Currency weighed in on the opposite side of the issue, which is referred to as third-party liability.

UPDATE: AND THEY DON'T PAY THEIR DAMN TAXES

Corporate management has gamed the system and the underpinnings of American democracy are being corroded as a result. The Republicans are contemptible beyond redemption. And the Democrats, as a party... well, the congressional caucus elected Rahm Emanuel and Steny Hoyer and if you think either of those guys is one iota less corrupt than the worst Republican, I have a nice bridge in Brooklyn I want to show you in a very up-and-coming neighborhood.

Lucy Komisar did a story last week that Steven Porter passed along to me, Corporate Profits Take an Offshore Vacation. It succinctly describes why our political system is in big trouble and why it doesn't seem to be righting itself. Last week Merck agreed to a $2.3 billion back taxes settlement based on tricks that the requested and received from the Bush Regime and its congressional allies rubber stamps. They owe almost as much to Canada.

Merck had cooked its tax books by moving ownership of its drug patents to its own Bermuda shell company-- an entity that has no real employees and does no real work-- and then deducting from U.S. taxes the huge royalties it paid itself. While setting up a shell company is not inherently illegal, it is if tax authorities determine that its only purpose is to evade taxes. Bermuda is a tax haven that has no levy on royalties.

...What Merck did isn't unusual but in fact is becoming common for multinationals in the era of globalisation. It's one of the ploys in a corporate bag of tricks called profit laundering. A company figures out how to move its book profits offshore so it can evade millions and even billions in taxes to the country where it really operates. In an era where much of a company's assets may be intangible intellectual property -- patents, logos, manufacturing processes -- this strategy can make reported profits and taxes disappear.

People understand that nations' economies are hurt when jobs move overseas. But what happens when intellectual capital, on which the increasingly knowledge-based economy depends, is also moved out?

IRS Commissioner Mark Everson said last June, "Tax issues associated with the transfer of intangibles outside the United States have been a high risk compliance concern for us and have seen a significant increase in recent years. Taxpayers, especially in the high technology and pharmaceutical industries, are shifting profits offshore."

...Although almost 60 percent of U.S. pharmaceutical companies' sales take place in the U.S., where the government's refusal to control drug prices makes profits higher than elsewhere, the companies report to the IRS that their profits come largely from international sales. The world's biggest drug firm, Pfizer, with most of its sales in the U.S., said that in 2004 it had 4.4 billion dollars in pretax profits in the United States and 9.6 billion dollars internationally.

And it isn't only Pfizer and Merck. Google and IBM, for examples, pulled similar stunts. Just before the advent of the Bush Regime $88 billion in tax revenues were lost to this kind of fraud. Under CEO-President Bush's enthusiastic stewardship the amount had already risen to $149 billion by 2002. There are a growing number of fake subsidiaries of U.S. corporations now generating "profits" mainly in tax havens rather than in locations in which they conduct most of their actual business. As many as two-thirds of companies doing business in the U.S. report they owe no taxes whatsoever.

Jack Blum, an expert on tax evasion and former counsel for the Senate Foreign Relations Committee, said, "Since the 1960s the percentage of tax revenue at the federal level that comes from corporations has declined from around 30 percent to around 8 percent. A substantial portion of this decline is the consequence of the ability of companies with global operations to shift income to jurisdictions where tax collectors cannot find it."

The U.S. Treasury and IRS say they are reviewing accounting rules on transactions involving intellectual property, but the U.S. government has failed to adopt tough measures to end royalty-shifting.

Most of the 2.3 billion dollars Merck has to pay is back taxes and interest; only 100 million dollars is penalty. No Merck official has been charged with a crime. That signals that companies have little to lose by continuing their tax scams.