We've said it before, and we'll say it again: There is no reason to care what corporate CEOs think about the budget deficit, because they are hypocrites with terrible ideas.
Or, as FT Alphaville's Cardiff Garcia put it yesterday, only funnier and more succinctly:
Presenting a comprehensive list of reasons that people should care what CEOs say about the fiscal cliff: 1. ___ 2. ___ 3. ___ 4. ___. Done.
— Cardiff Garcia (@CardiffGarcia) November 28, 2012
Case in point: Lloyd Blankfein. The Cephalopod-In-Chief of Goldman Sachs, sounded off on the fiscal cliff in an entirely reasonable-seeming way, after a meeting with President Obama on Wednesday. Sure, he said, OK, he could accept higher marginal tax rates for wealthy people like himself.
“I would prefer as low of a marginal rate as possible because it’s the marginal rate that provides the incentive to do incremental work by people," he told CNBC, cable TV's go-to channel for fiscal-cliff panic, "but I’m not dogmatic — I wouldn’t go to the end for that."
Unlike some other Wall Street CEOs we could mention, Blankfein seems like a relatively humble and reasonable guy, considering. Which makes it more painful to point out that he, too, is a hypocrite with terrible ideas.
First, the hypocrisy: While nobly calling for shared sacrifice, Blankfein is also a member, with a bunch of other CEOS, of a traveling grifter circus known as "Fix The Debt." This is a group of CEOs, partially bankrolled by eternal deficit scold Pete Peterson, who say the only way to address our grave fiscal crisis is to slash corporate tax rates and encourage poors and olds to get over their irrational aversion to dumpster-diving.
Like most large companies in the U.S., Goldman Sachs already pays far less than the current 35 percent corporate tax rate that it nevertheless wants to lower. Between 2008 and 2010, Goldman received nearly $3.2 billion in tax breaks, making it the ninth-largest recipient of such breaks among 280 companies studied recently by the nonprofit group Citizens for Tax Justice. During that time, Goldman paid an effective tax rate of just 20.8 percent. That is less than the average tax rate paid by individual millionaires in 2010, according to the Internal Revenue Service.
Altogether, the 280 companies surveyed by the CTJ paid an average tax rate of 18.5 percent between 2008 and 2010, for a total tax savings of nearly $223 billion over what they would have paid if they had really been taxed at 35 percent.
Blankfein and other "Fix the Debt" CEOs are also asking for another tax break on their foreign profits held offshore. A recent study by the Institute for Policy Studies found the 63 "Fix the Debt" companies stood to save another $134 billion in taxes this way, notes George Zornick at The Nation.
So you can kind of see why Blankfein might be at peace with the idea of his own personal income tax rate going up a little bit. As long as his company's tax rate stays low, or gets lower, it will be more profitable, and he'll get paid more.
As for Blankfein's terrible ideas, he said this to CNBC:
“Look, at the end of the day, the most important value is to get the economy moving forward," Blankfein said. "That’s not going to happen if our budget deficit keeps widening.”
Wrong answer. In fact, the very "fiscal cliff" panic Blankfein, CNBC, etc., have been fomenting lo these many weeks centers around the idea that a sudden narrowing of our budget deficit is going to slam the brakes on the economy.
If Blankfein really cared about the economy, which is still staggering along in the wake of the financial crisis that Goldman Sachs helped create, he would call for us to widen the deficit immediately with more stimulus and worry about narrowing it when things got better. There has almost literally never been a better time for the U.S. government to borrow money, and stronger economic growth will help raise more revenue and close the deficit.
Goldman, or at least its economics department, does get some credit for being one of the few players in this suicidal psychodrama to point out that we desperately need to renew the payroll-tax cuts expiring next year. Too bad the C-suite's not on the same page.