I was watching Meet the Press on Sunday as a panel of Washington insiders offered a variety of views from across the political spectrum ranging from A to B. Halfway through the program an authoritative-sounding voice interjected itself into the proceedings to announce, "Meet the Press is Sponsored by GE: Imagination at Work" while a GE "Imagination at Work" logo filled the screen.
And I thought, there you have it: The perfect embodiment of the emerging corporate state in which discussion of our economics and politics is dominated by a handful of multinational conglomerates; the middle class is hollowed out; wealth is concentrated in the top 1% who pay a lower and lower percentage of their personal and corporate income in taxes as the government is increasingly unable to afford basic services like public schools; political leaders blame teachers and unions for our financial plight and undermine collective bargaining; corporate functionaries rotate between business and government; corporations can make unlimited donations to political candidates who advance their interests; and the Washington pundit class calls on politicians to have the "courage" to cut Social Security and Medicare because "America is broke and we can no longer afford it".
GE: You may think they're the guys who "bring good things to life" by manufacturing refrigerators and washing machines in American factories, paying living union wages and benefits, and selling affordable appliances to American consumers. But that was yesterday; this is today. Today, less than 6% of GE's revenues come from its consumer appliance division. GE's main businesses are global finance, media, energy, defense contracting, and lobbying the government for tax breaks and subsidies.
GE is incorporated in New York and its worldwide headquarters are at 30 Rockefeller Plaza ("30 Rock") where every Christmas they're kind enough to display quite a lovely tree for the public to enjoy. But its wealthy top executives, like those of many American-based global corporations, are increasingly untethered from any interest in the economic and social well being of America as a whole. Here's a snapshot of some of GE's global businesses:
•GE Media: Not only does GE sponsor Meet the Press, which is highly influential in setting the policy agenda in Washington. It owns 49% of NBC Universal whose media assets include not only the NBC TV network (including NBC News) and local stations in America's largest cities, but Universal Studios (one of the 5 major US film studios), Telemundo, which is the second largest Spanish language TV network in the US, and such cable networks as Bravo, CNBC, MSNBC, SyFy, USA Network, the Weather Channel, and (in partnership with Hearst and Disney/ABC) A&E, the Biography Channel, the History Channel, and Lifetime, along with television networks in other countries around the world. There's hardly an area of the motion picture, television, and TV news business where GE doesn't own a substantial stake.
•GE Financial Services: GE's financial arm, GE Capital, is responsible for 30% of GE's revenues and more than half its profits. If it were classified as a bank, GE would be the 7th largest bank in America. As the New York Times put it, "many Wall Street analysts view G.E. not as a manufacturer but as an unregulated lender that also makes dishwashers and M.R. I. machines."
Since GE is not classified as a bank, it manages to avoid most of the regulation that applies to banks. Nevertheless, during the 2008 financial crisis, GE deployed a team of top lobbyists (GE spent nearly $40 million in lobbying last year) to convince the federal government to allow it to exploit a loophole (it owns two small Utah savings and loans) to become one of the largest recipients of Federal bank bailout funds. Unlike other banks like Bank of America, JP Morgan Chase, and Citigroup, it didn't take the bailout funds through TARP and thus wasn't subject to TARP restrictions, such as limits on executive compensation -- in 2010, GE CEO and Obama economic advisor Jeffrey Immelt made $15.2 million.
Rather it took the bailout funds in the form of $139 billion in Federal guarantees of GE Capital debt under the Temporary Liquidity Guarantee Program (TLGP), nearly 25% of the total federal funds provided under the program. The Federal guarantees expires in 2012, a date known in banking circles as "the cliff", since at that time the Federal government will have to make good on the debt if GE and other borrowers don't honor their obligations. But despite the fact that a large part of GE's profits are due to financial support from the Federal government, and the Feds are liable for a big part of GE's debts, GE pays not a single dollar in Federal taxes.
•GE Energy: The GE Energy Infrastructure unit of GE is made up of 3 GE companies, GE Energy, GE Oil & Gas and GE Water Process Technologies. While GE is developing a large solar energy business in the hopes of taking advantage of government-subsidized financing, and has launched its "Ecomagination" ad campaign in the hope of marketing itself as a green company, it has a record as one of the largest corporate polluters. Using EPA data, the Political Economy Research Institute found that GE is the 4th biggest producer of air pollution in the US. According to the EPA, only the US government, Honeywell and Chevron produce more Superfund toxic waste sites.
But most striking, GE designed and built one of the six nuclear reactors at the Fukushima Daiichi power plant in Japan that is now spewing radiaton, and built two of the others in partnership with Toshiba. These Japanese nuclear plants are based on GE's Mark 1 boiling-water reactor designs that were marketed by GE as cheaper and easier to build than other designs. But according to the New York Times, "it has long been thought to be more susceptible to failure in an emergency than competing designs." GE, it brings good things to life.
•GE Defense Contracting: GE is a key member of the military/industrial complex which, according to its own reports, in 2009 sold over $5 billion in military products both to the United States and foreign governments, including engines for naval vessels and military aircraft such as fighters, tankers, helicopters, surveillance aircraft and bombers. Among other things, GE provides alternative engines for the F-15 Fighter jets, one of which, costing $30 million, was shot down over Libya last week. Naturally, the nearly $40 million dollars a year GE spends on lobbying seeks to protect Federal spending on GE-manufactured armaments and doesn't suggest lowering the deficit by cutting America's defense spending which nearly equals the aggregate total defense spending of every other country in the world combined.
•GE Lobbying and Tax Avoidance Divisions: While not officially operating divisions, GE's tax avoidance, lobbying, and political contribution operations may effectively be among the most profitable areas of the GE empire.
According to an investigative report in last week's New York Times, in 2010 GE reported $14.2 billion in worldwide profits, including $5.1 billion from US operations, but GE owed exactly $0 dollars in Federal taxes. In fact it claimed a tax benefit from Uncle Sam of $3.2 billion. Over the past 5 years, GE has accumulated $26 billion in American profits, yet received $4.1 billion in net Federal tax benefits. Yet contradicting Republican political claims that cutting tax on corporations and the wealthy creates American jobs, since 2002, GE has eliminated 20% of its US work force while expanding job creation overseas.
According to the Times:
It's extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.'s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world's best tax laws firm. Indeed, the company's slogan 'Imagination at Work' fits this department well. The team includes officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress...Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law.
It's a classic example of how the modern corporate state operates. Moderately paid employees at government regulatory agencies and key congressional committees aspire to lucrative jobs at GE and other major corporations when they retire from government if they write regulations and laws which enhance corporate profits. Corporations then rotate some of their employees back for new stints in government service where they insure rules and laws favorable to the corporations.
According to the Center for Responsive Politics, GE spent nearly $40 million in lobbying in 2010 (over $200 million in the past decade) and contributed $2,230,270 to Republican and Democratic House and Senate candidates in 2010. This doesn't count things like an $11 million donation from GE's foundation to schools in the district of Democratic Congressman Charles Rangel, then Chairman of the House Ways and Means Committee, which "coincidentally" came a month after Rangel reversed his position to support continuation of a tax break which, according to a regulatory filing, had saved GE more than $1 billion on US taxes in the 3 years after it was enacted.
And it doesn't include perhaps GE's biggest political coup of all, President Obama appointing GE CEO Jeffrey Immelt -- the man who presided over GE's success in avoiding taxes and eliminating American jobs -- to replace Paul Volcker as head of Obama's panel of economic advisers, the newly renamed President's Council on Jobs and Competitiveness. It's the ultimate case of regulatory capture in which the industries being regulated by the government come to dominate the agencies charged with regulating them. This time it's the White House itself. The man who presided over GE's success in avoiding American taxes on its $14.2 billion in profits and in eliminating 20% of its American workforce gets to advise the president on how to rebuild the economy and create American jobs. (Hint: I don't think it will include raising taxes on the rich, reducing military spending, strengthening regulation of business, or increasing worker rights.)
So there you have GE's "imagination at work". A bank that's not a bank but gets over $100 billion in Federal bank bailout loan guarantees. An energy company that builds the nuclear reactors that are radiating people in Japan. A major defense contractor that profits from America's wars. A media company that owns TV networks, movie studios and major news operations. A political lobbyist and campaign donor whose executives rotate between business and government and back again and create loopholes that allows the largest corporation in the world to pay no taxes. A corporation whose $15 million a year CEO is appointed by President Obama to be his chief advisor on creating jobs. It's the very definition of the corporate state at work.
Fighting back to protect democratic rights and the income and economic security of the middle class is in some ways a more complicated in an ostensibly democratic, but increasingly corporate-run, country like the United States than it is more directly authoritarian societies like those in the Middle East. But we have no choice but to fight back if America is to continue as a broadly middle class nation where most people can realistically hope that their children will live a better life than they do. The protests sparked by Republican overreaching on behalf of corporations in states like Wisconsin, Ohio and Michigan may be the beginning of a movement to reclaim America's middle class dream.
This past weekend, 250,000-400,000 people marched in London to protest the conservative government's draconian cuts in social services and the failure of some of Britain's largest corporation to pay a fair share of taxes. It's vital that the movement they began cross the Atlantic Perhaps a good next step in America would be a well-organized boycott of GE, accompanied by mass demonstrations at GE headquarters and sales outlets, to make GE the poster child for corporate greed in response to its failure to pay US taxes on its billions in profits while exporting jobs overseas. It wouldn't, by itself, stop GE. But it might focus the country on the manifest injustices wrought by companies like GE and encourage the emergence of a progressive Tea Party-type movement against the power of the growing corporate state.