Corporate Tax Cuts Only Make the Rich Richer

 

Sarah Anderson is the Director of the Global Economy Program at the Institute for Policy Studies, a multi-issue research and education center founded in Washington, DC, in 1963. She is a co-author of the books Field Guide to the Global Economy (New Press, 2005) and Alternatives to Economic Globalization (Berrett-Koehler, 2004) as well as dozens of studies and articles on the impact of trade and investment liberalization on communities, workers, the poor, and the environment. She is also the co-author of 12 annual studies on the growing gap between CEO and worker pay.

She had this to say in today’s New York Times to Randall Stephenson of AT&T about his advice to Congress and the promised tax cuts:

 Randall Stephenson of AT&T

By  SARAH ANDERSON for The New York Times

“The arithmetic for us is simple,” AT&T’s chief executive, Randall Stephenson, said on CNBC in May. If Congress were to cut the 35 percent tax on corporate profits to 20 percent, he declared, “I know exactly what AT&T would do — we’d invest more” in the United States.

Every $1 billion in tax savings would create 7,000 well-paying jobs, Mr. Stephenson went on to say. The correlation between lower corporate taxes and more jobs, he assured viewers, runs “very, very tight.”

As Congress prepares to take up tax legislation this fall, including an effort to reduce the corporate tax rate, this bold jobs claim merits examination. Notably, it comes from the chief executive of a company that’s already paying comparatively little in federal taxes.

According to the Institute on Taxation and Economic Policy, AT&T enjoyed an effective tax rate of just 8 percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes. (The company argues that it pays significant taxes, at a rate close to 34 percent in recent years, but that includes deferred taxes and state and local levies.)

Despite the enormous savings AT&T has realized, the company has been downsizing. Although it hires thousands of people a year, the company, by our analysis at the Institute for Policy Studies, reduced its total work force by nearly 80,000 jobs between 2008 and 2016, accounting for acquisitions and spinoffs each involving more than 2,000 workers.

The company has also spent $34 billion repurchasing its own stock since 2008, according to our institute report, a maneuver that artificially inflates the value of a company’s shares. This is money that could have gone toward research and development or hiring.

Companies buy back their stock for various reasons — to take advantage of undervaluation, to reward stockholders by increasing the value of their shares or to make the company look more attractive to investors. And there is another reason. Because most executive compensation these days is based on stock value, higher share prices can raise the compensation of chief executives and other top company officials.

Since 2008, Mr. Stephenson has cashed in $124 million in stock options and grants.

Many other large American corporations have also been playing the tax break and loophole game. Their huge tax savings have enriched executives but not created significant numbers of new jobs.

color-tax-cuts-rich

Our report analyzes the 92 publicly held American corporations that reported a profit in the United States every year from 2008 through 2015 and paid less than 20 percent of their earnings in federal income tax.

We chose this particular tax threshold because, as Mr. Stephenson mentioned, House Republicans are proposing to reduce the federal statutory corporate tax rate to 20 percent, down from the current 35 percent. President Trump wants an even deeper cut, down to 15 percent.

If claims about the job-creation benefits of lower tax rates had any validity, these 92 consistently profitable firms would be among the nation’s strongest job creators. Instead, we found just the opposite.

The companies we reviewed had a median job-growth rate over the past nine years of nearly negative 1 percent, compared with 6 percent for the private sector as a whole. Of those 92 companies, 48 got rid of a combined total of 483,000 jobs.

At the companies that cut jobs, chief executives’ pay last year averaged nearly $15 million, compared with the $13 million average for S&P 500 companies.

Instead of tax-rate cuts for these big corporations, the coming tax debate in Congress should focus on making wealthy individuals and big corporations pay their fair share.

American multinationals hold $2.6 trillion in profits “offshore,” on which they would owe $750 billion in federal taxes if the money was repatriated. In most cases, these foreign profit stashes are merely an accounting fiction. Companies retain full access to these funds for use in the United States and could, if their executives so chose, use them to create jobs here.

cantor blaming the victims

Ordinary Americans have to pay all the taxes they owe each and every year. Offshore corporations should be required to do the same.

Beyond closing loopholes, we need to explore new ways to raise revenue fairly, including a tax on Wall Street speculation.

Most of us already pay a sales tax on gasoline, clothes and other basics. Why should hedge fund investors and other Wall Street traders pay no tax at all when they engage in short-term buying and selling of millions of dollars’ worth of stocks and derivatives? A fee of just a small fraction of 1 percent on each Wall Street trade would encourage longer-term investment while generating huge revenue for real job creation.

At a town hall this month at AT&T headquarters in Dallas, Mr. Stephenson urged his employees to call Congress and demand a corporate tax cut.

The message policy makers really need to hear? Stop peddling the myth that “tax relief” for big companies will be good for the rest of us.

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The Radical Right’s Stealth Plan for America

This book review from The New York Times reveals how the Right has been working successfully undercover for a long time to undermine our democracy and who the people are at its helm.

James McGill Buchanan, shortly after notice of his Nobel Prize in Economics

Book review by HEATHER BOUCHEY for The New York Times

. . . In the United States, promising and then delivering services and protections for the majority of voters provides a path for politicians to be popularly elected. [The economist James McGill] Buchanan was concerned that this would lead to overinvestment in public services, as the majority would be all too willing to tax the wealthy minority to support these programs. So Buchanan came to a radical conclusion: Majority rule was an economic problem. “Despotism,” he declared in his 1975 book “The Limits of Liberty,” “may be the only organizational alternative to the political structure that we observe.”

Buchanan therefore argued for “curbing the appetites of majority coalitions” by establishing ironclad rules that would curb their power. As he was known for saying, “the problems of our times require attention to the rules rather than the rulers.” In 1986, he was awarded the Nobel Memorial Prize in Economic Science for “his development of the contractual and constitutional bases for the theory of economic and political decision making.”

Buchanan, however, also had what MacLean calls a “stealth” agenda. He knew that the majority would never agree to being constrained. He therefore helped lead a push to undermine their trust in public institutions. The idea was to get voters to direct their ire at these institutions and divert their attention away from increasing income and wealth inequality. . . .

Buchanan decided he needed to influence policy at a deeper level. In the ensuing years, he sought to lead an economic and political movement in which he stressed that “conspiratorial secrecy is at all times essential” to mask efforts to protect the wealthy elite from the will of the majority. In September 1973, Buchanan held the inaugural meeting of the International Atlantic Economic Society, arguing for the need to “create, support and activate an effective counterintelligentsia” to reshape the way people thought about government. He believed the center-left controlled academia and “effectively indoctrinated political actors in both parties,” MacLean writes. To fight back, conservatives needed to develop new surrogates who could be “indoctrinated” in turn with right-wing ideas, and then “mobilized, organized and directed” to disseminate them. . . .

Seeing the name of an unfamiliar economist eventually led her to rooms full of documents that made clear how “operatives” had been trained “to staff the far-flung and purportedly separate, yet intricately connected, institutions funded by the Koch brothers and their now large network of fellow wealthy donors.” Buchanan’s papers revealed how, from a series of faculty perches at several universities, he spent his life laying out a game plan for a right-wing social movement.

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David and Charles Koch

One part of his plan involved Social Security. The election of Ronald Reagan as president in 1980 was a watershed for conservatives, yet it quickly became clear that he, too, would succumb to political pressure. By 1982, Reagan’s fight to end Social Security — long a bugbear of Buchanan’s — was faltering. Amid that debate, the libertarian Cato Institute, funded by the brothers Charles and David Koch, made privatization of Social Security its top priority and turned to Buchanan for a master plan. Buchanan told them that “those who seek to undermine the existing structure” must do two things: Make people doubt the viability of Social Security, and divide the public by suggesting high earners be taxed at higher rates — which might sound progressive but would ultimately undo the universal foundation of the program itself. . . .

 American democracy was unprepared to defend itself against the agenda of Buchanan and conservative benefactors. Buchanan may not have been the only actor in this movement, and the role of conservative donors and economists has been documented elsewhere, but we are now living in a world he helped shepherd into reality. Public choice economists argue that those with the most to lose from change will pay the most attention, which has certainly been the case with Charles and David Koch. They and their friends have invested enormous sums in organizations that have changed the national debate about the proper role of government in the economy. Our politically polarized and increasingly paralyzed government institutions are the result . . . .

Power consolidation sometimes seems like a perpetual motion machine, continually widening the gap between those who have power and money and those who don’t. Still, “Democracy in Chains” leaves me with hope: Perhaps as books like MacLean’s continue to shine a light on important truths, Americans will begin to realize they need to pay more attention and not succumb to the cynical view that known liars make the best leaders.

Heads of Leading American Corporations Speak Out Against President: Part Four

Last installment of an article about American big business leaders’ response to a major social issue—White Supremacy. 

By DAVID GELLES, August 20, 2017 for The New York Times

Companies on the conservative end of the ideological spectrum are also increasingly willing to stand up for their principles, and just as likely to face criticism. After it was revealed that the family behind the fast-food chain Chick-fil-A supported groups that opposed same-sex marriage, gay rights protesters targeted the restaurants.

Hobby Lobby, the craft-supply chain run by a conservative Christian family, challenged a provision in the Affordable Care Act that required family-owned corporations to pay for insurance coverage for birth control. Despite drawing the ire of the left, Hobby Lobby took its case to the Supreme Court and won.

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Kevin Plank of Under Armour

Critics of Mr. Plank’s decision cast their net wide, going after all the chief executives who quit the president’s business advisory groups. “This is a remarkable moment in history,” said Lou Dobbs, a Fox Business Network host. “Every one of those C.E.O.s, mark my words, is a coward — and the president is exactly right — a grandstander in the service of the left. And no one should make any mistake: This is a coordinated, orchestrated attack against this president.”

John Carney, a business editor for Breitbart News, the conservative news site, wrote that “corporate America is part of the opposition.”

“The confederacy of the media institutions, the American left, and Corporate America has aligned itself against the populist uprising that brought Trump to the White House,” Mr. Carney wrote. “The battle lines are clear.”

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Howard Schultz of Starbucks

Those executives who go out on a limb know the risks. “We all recognize that with every decision we make, there is a group of people that are not going to agree with us,” Mr. Schultz said. “But you must define your core purpose for being. We stand in the interest of something greater than just making money.”

A Diversity Paradox

Diversity — of opinions, ideologies and religions — is what makes taking a stand on moral issues so treacherous for C.E.O.s. Yet paradoxically, it is also diversity — of races, genders and worldviews, among customers and the work force — that makes many of the executives, when forced to take a stand, come down on the side of inclusion, tolerance and acceptance.

Business leaders looking to the future are accepting that it is unwise to isolate swaths of the population by coming off as racist, sexist or intolerant. Instead, for the sake of the bottom line, it is imperative that they appeal to the widest possible audience. “Business leaders aren’t threatened by an America that is browner, an America that is more diverse; they welcome that,” Mr. Walker said. “Business leaders are bullish on diversity.”

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Darren Walker of Ford Foundation and Marc Benioff of Salesforce 

What’s more, some executives have concluded that speaking out on issues of morality can improve more than their reputations — it can benefit recruitment, morale and even sales. “Our employees come here knowing that this is something that is extremely important to us,” said Mr. Benioff of Salesforce. “Business is the greatest platform for affecting change.”

If the voices of business leaders seem amplified, that is perhaps because in such partisan times, few politicians can speak to both sides of the aisle, leaving a vacuum for business leaders to fill. This last week, the executives on Mr. Trump’s business advisory councils piped up, led by Mr. Frazier of Merck.

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Kenneth C. Frazier of Merck

The black chief executive of a $172 billion company — a multimillionaire who was born in a poor neighborhood, a former lawyer who fought for civil rights and had agreed to advise the president — Mr. Frazier offered remarks that set the tone for the business world at large.

“Our country’s strength stems from its diversity,” he wrote, adding, “America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal.”

The C.E.O.s had found their voice.

This concludes this four-part article

Heads of Leading American Corporations Speak Out Against President: Part Three

Part three of a four-part article on the response of top American business leaders to the president’s support of white supremacists.

By DAVID GELLES, August 20, 2017 for The New York Times

‘Many Sides,’ One Voice

Last weekend, as white nationalists protested the removal of a statue of the Confederate general Robert E. Lee in Charlottesville, chief executives were paying close attention to the president’s response. Among those watching was Kenneth C. Frazier, the chief executive of the drugmaker Merck and one of dozens of executives who had agreed to advise Mr. Trump on economic issues.

Kenneth C. Frazier of Merck

Mr. Frazier disagreed with the president’s stances on immigration and climate change, but he believed it was important to have a seat at the table. Yet for Mr. Frazier, the son of a janitor and the grandson of a man born into slavery, the president’s remarks — in which he blamed the violence on “many sides” — were too much to bear.

On Monday morning, Mr. Frazier said he would step down from Mr. Trump’s manufacturing council. “As C.E.O. of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism,” he wrote.

The president took to Twitter, lacerating Mr. Frazier and attacking Merck, bluster that alienated more chief executives. By the end of the day, the chiefs of Under Armour and Intel had dropped off the same advisory group. The following morning, three nonprofit business leaders also quit.

As the manufacturing council fell apart, another presidential advisory group was also tottering. The Strategic and Policy Forum, a group with chief executives of some of the country’s biggest companies, held a conference call and agreed to disband.

The reaction from business leaders extended well beyond the confines of the presidential advisory councils.

James Murdoch of 21st Century Fox

James Murdoch, the chief executive of 21st Century Fox, pledged to donate $1 million to the Anti-Defamation League. The gesture was all the more remarkable because Mr. Murdoch is the son of Rupert Murdoch, a staunch supporter of Mr. Trump, and because his company operates Fox News, known for its favorable coverage of the president.

“What we watched this last week in Charlottesville and the reaction to it by the President of the United States concern all of us as Americans and free people,” the younger Mr. Murdoch wrote in an email to associates. “I can’t even believe I have to write this: standing up to Nazis is essential; there are no good Nazis. Or Klansmen, or terrorists.”

Technology companies severed ties with white supremacist groups. Google and GoDaddy dropped domain registrations for far right publications. Facebook deleted articles that celebrated hate crimes. Spotify took down music by white power rock bands.

Howard Schultz of Starbucks

And in Seattle, Mr. Schultz held a town-hall meeting for more than 1,000 employees where he condemned bigotry and called for unity. “I could sense the anxiety,” he said. “I felt a need to create a safe and loving environment.”

All week, the business world’s actions went beyond the donations to charity and pledges to plant trees that once defined corporate social responsibility.

“For a long time, corporate social responsibility was a buzzword marketing tool, walled off within an organization,” said Alan Fleischmann, president of Laurel Strategies, an executive advisory firm. “Now it has to be central for the C.E.O., part of their everyday responsibility and leadership.”

The Cost of Speaking Out

Kevin Plank of Under Armour

Kevin Plank, the founder and chief executive of Under Armour, the athletic apparel maker, built a brand that celebrates diversity, sponsoring athletes like the basketball player Stephen Curry and artists like the ballerina Misty Copeland. Yet when asked to serve on the president’s manufacturing council early this year, Mr. Plank agreed, voicing his optimism about Mr. Trump.

His star sponsors made their displeasure known. “I strongly disagree with Kevin Plank’s recent comments in support of Trump,” Ms. Copeland said. Mr. Curry also expressed his distaste for the president.

So on Monday night, when Mr. Plank stepped down from his advisory role, he might have thought his troubles were over. Instead, Mr. Trump’s supporters have risen up, calling for a boycott of Under Armour.

“The leaders of corporate America have demonstrated the courage to call out something that is unacceptable,” said Mr. Walker of the Ford Foundation. “But speaking truth to power can come with huge costs.”

Because companies have inherently diverse customers and employees, taking a stand can be a no-win situation for chief executives. For every employee, investor and customer they make happy, they may well make someone else unhappy.

When Pepsi this year released an ad featuring Kendall Jenner offering a police officer a soda in the midst of an apparent Black Lives Matter protest, the condemnation was swift. Two years earlier, Starbucks drew wide ridicule when, as part of an effort by Mr. Schultz to start a national conversation on race relations, baristas were encouraged to write “race together” on coffee cups.

This article will be concluded in one more installment.

Heads of Leading American Corporations Speak Out Against President: Part Two

We continue this list of American business leaders who recently defied the President on the White Supremacy issue.

By DAVID GELLES, August 20, 2017 for The New York Times

Looking for Controversy

Companies have reckoned with issues of race, class and gender for generations now.

On Feb. 1, 1960, four black college students sat down at the segregated lunch counter at a Woolworth’s store in Greensboro, N.C. The civil rights sit-in movement was born, and five months later, Woolworth’s desegregated.

Decades later, activists called on American companies to divest from apartheid South Africa. Under pressure, many big companies, including General Motors and Pepsi, pulled out of the country.

But for the most part, companies got political only under duress. Rarely have chief executives gone looking for a controversy. Instead, the prevailing view was one articulated by the economist Milton Friedman in The New York Times in 1970: “the social responsibility of business is to increase its profits.”

 Milton Friedman, the economist who rated the bottom line paramount over every other socio-political issue.

By the 1990s, some corporate actors began taking the initiative. Apple, Disney and Xerox extended health care benefits to partners of gay and lesbian employees, helping to pave the way for broader acceptance of gay rights. Still, promoting inclusion and advancing diversity were hardly part of the curriculum for emerging titans of industry.

“When I went to business school, you didn’t see anything like this,” said Marc Benioff, the founder and chief executive of Salesforce. “Nobody talked about taking a stand or adopting a cause.”

 

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Marc Benioff of Salesforce

Now, Mr. Benioff is at the vanguard of a group of executives who are more connected — to customers, employees, investors and other business leaders — than ever before, and who are unafraid to use their influence.

In 2015, after Indiana passed a law that would have made it easier for religious conservatives to refuse service to gay people, Mr. Benioff canceled all Salesforce events in the state and threatened to relocate employees away from Indianapolis.

The outcry from Mr. Benioff and other business leaders helped force politicians, including Vice President Mike Pence, then the governor of Indiana, to reverse course. Ultimately, lawmakers passed a watered-down version of the law.

“C.E.O.s wield economic influence,” Mr. Benioff said. “Nobody wanted to lose those jobs in Indiana. But we had to make a statement that we were going to withdraw if they were going to create laws that were going to discriminate against our employees.”

The business community’s triumph in Indiana emboldened progressive executives, and many have become more willing to confront controversial topics unprompted.

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Randall Stephenson of AT&T

Randall Stephenson, the chief executive of AT&T, recently reflected on racial tensions in America at a meeting of 2,000 employees. “Black lives matter,” Mr. Stephenson said, “we should not say, ‘All lives matter,’ to justify ignoring the real need for change.”

   

Hamdi Ulukaya of Chobani Yogurt and Timothy A. Cook of Apple

Hamdi Ulukaya, the founder and chief executive of the yogurt maker Chobani, has hired hundreds of refugees — drawing the ire of the far right, but making him a cause célèbre for progressives.

And even before the showdown in Indiana, Timothy D. Cook, the chief executive of the world’s largest company, Apple, came out as gay — the most prominent executive to make such an announcement. “I’m proud to be gay, and I consider being gay among the greatest gifts God has given me,” he wrote.

                

     Elon Musk of Tesla and Robert A. Iger of Disney

But faced with circumstances they cannot in good conscience accept, more and more chieftains appear unafraid to act. In June, after the president withdrew the United States from the Paris climate accord, Elon Musk, the chief executive of Tesla, and Robert A. Iger, the chief of Disney, resigned from presidential advisory councils, setting the stage for this past week’s revolt.

“The C.E.O.s of big public companies don’t walk out onto the plank of social and political leadership by default,” said Nancy Koehn, a historian at Harvard Business School. “But today, to keep silent is to jeopardize the reputation of the company.”

To be continued

 

Heads of Major American Corporations Speak Out Against President: Part One

We are reprinting this article from The New York Times in its entirety because of its importance. Because of its length it will appear in four parts. This is Part One.

The article seems significant to us because it allows our readers to see the heads of America’s major corporations as fallible human beings whose ethical choices we may sometimes support. The article is a veritable Who’s Who of today’s leading CEOs.

By DAVID GELLES, August 20, 2017 for The New York Times

The nation has split into political tribes. The culture wars are back, waged over transgender rights and immigration. White nationalists are on the march.

Amid this turbulence, a surprising group of Americans is testing its moral voice more forcefully than ever: C.E.O.s.

After Nazi-saluting white supremacists rioted in Charlottesville, Va., and President Trump dithered in his response, a chorus of business leaders rose up this past week to condemn hate groups and espouse tolerance and inclusion. And as lawmakers in Texas tried to restrict the rights of transgender people to use public bathrooms, corporate executives joined activists to kill the bill.

These and other actions are part of a broad recasting of the voice of business in the nation’s political and social dialogue, a transformation that has gained momentum in recent years as the country has engaged in fraught debates over everything from climate change to health care.

Mary T. Barra of General Motors

In recent days, after the Charlottesville bloodshed, the chief executive of General Motors, Mary T. Barra, called on people to “come together as a country and reinforce values and ideals that unite us — tolerance, inclusion and diversity.”

Jamie Dimon of JPMorgan 

Jamie Dimon of JPMorgan said, “The equal treatment of all people is one of our nation’s bedrock principles.”

 Doug McMillon of Walmart

Walmart’s chief executive, Doug McMillon, criticized Mr. Trump by name for his handling of the violence in Charlottesville, and called for healing.

And in a rebuke to the president, who suggested that both the racist groups and the counterprotesters marching in Charlottesville were to blame for the violence there, a wave of chief executives who had agreed to advise Mr. Trump quit his business advisory councils, leading to the dissolution of two groups.

The forthright engagement of these and other executives with one of the most charged political issues in years — the swelling confidence of a torch-bearing, swastika-saluting, whites-first movement — is “a seminal moment in the history of business in America,” said Darren Walker, the president of the Ford Foundation and a board member at PepsiCo.

Darren Walker of the Ford Foundation

“In this maelstrom, the most clarifying voice has been the voice of business,” he said. “These C.E.O.s have taken the risk to speak truth to power.”

This transformation didn’t happen overnight. Chief executives face a constellation of pressures, and speaking up can create considerable uncertainty. Customers can be offended, colleagues can feel isolated and relations with lawmakers can suffer. Words and actions can backfire, resulting in public relations disasters. All this as a chief executive is expected to constantly grow sales.

Even this past week, it was easy to discern careful calculations made by executives who chose to speak out against Mr. Trump. Many faced calls to resign from the presidential advisory councils, and the prospect of boycotts if they did not.

But they also faced notable and new kinds of pressure from within — from employees who expect or encourage their company to stake out positions on numerous controversial social or economic causes, and from board members concerned with reputational issues. In the past week, business leaders have responded with all-staff memos and town-hall meetings.

In short, while companies are naturally designed to be moneymaking enterprises, they are adapting to meet new social and political expectations in sometimes startling ways.

Howard Schultz of Starbucks

“Not every business decision is an economic one,” said Howard Schultz, the chairman of Starbucks, who was one of the country’s first company leaders to proactively address social issues. “The reason people are speaking up is that we are fighting for what we love and believe in, and that is the idealism and the aspiration of America, the promise of America, the America that we all know and hold so true.”

To be continued

The Wells Fargo Story

Wells Fargo said that it discontinued the insurance practices last September after it had found “inadequacies in vendor processes and internal controls that negatively impacted some customers.” [“Inadequacies,” indeed—pure gobbledygook for underhanded double-dealing . . . “some customers”—274,000, to be exact.] The bank has contended that 570,000 people may be owed refunds.

[Allan] Dunlap, 55, is one of those affected by the bank’s insurance activities. His experience with Wells Fargo highlights the harm done to actual people and points to the challenges Wells faces in remedying it. More than a year after he started battling with Wells Fargo, Mr. Dunlap said, he is still awaiting confirmation that his credit report has been corrected.

“I never missed a payment and I always had insurance,” Mr. Dunlap said in a phone interview. “But they forced additional coverage on my vehicle and it showed up on my credit report that I was 60 to 90 days late on my payments.” Repeated calls to Wells Fargo to get them to fix the error were unsuccessful, he said. [Not answering the phone or misdirecting the call are favorite techniques of bureaucracies when they would rather ignore the injured party.]

Jennifer A. Temple, a Wells Fargo spokeswoman, acknowledged in a statement “that our customer service and our processes did not measure up and we are working with Mr. Dunlap to make things right.”[Translation: “We robbed him but got caught. Perhaps we’ll return the money.” 

Mr. Dunlap’s story began in March 2016 in Jamestown, N.D., where he worked transporting recreational vehicles.

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He found his dream car at a local dealership — a low-mileage, mint-condition Chrysler 300, vintage 2008, selling for around $25,000. Together with a friend who co-signed for the loan, Mr. Dunlap financed the purchase through Wells Fargo Dealer Services. The amount of the loan was almost $21,000.

Before he could take possession of the car, he was asked to provide the dealership with proof of existing car insurance. Wells Fargo loan documents prepared by the dealership show that his coverage was with State Farm.

For three months, he made his $410 loan payments without a hitch. But in early May, Wells Fargo sent both borrowers a letter saying it had not received the necessary documentation showing that the car was insured. A second notice saying the same thing followed a month later.

When the first notice came in, Mr. Dunlap was recovering from a stroke, he said. Still, he began calling Wells Fargo to tell them he already had insurance. He was unsuccessful, he said, because he’d be kept on hold for long periods and often got disconnected. [See what we mean about those phone calls.]

Ms. Temple of Wells Fargo said: “We recognize there were a number of customers who experienced difficulty verifying with Wells Fargo and our vendor if they had insurance and we are sorry that Mr. Dunlap experienced this challenge.”

On July 1, Mr. Dunlap’s loan statement showed, Wells Fargo charged $1,079 for insurance on the car — the first time such a charge had appeared. The insurance, a year’s premium, took effect in March when he bought the car.

Mr. Dunlap said he didn’t know about the charge and records show he made his regular loan payment in July. But because he owed the additional $1,079 for insurance, he fell behind. Late fees began accruing, and his problems on the loan were reported to credit bureaus.

He made more calls to Wells Fargo. “I’d talk to one person in one state, another person in another state; I’d send them papers,” he said. “There were so many different people involved, the information doesn’t get to the right sources.”

Some Wells Fargo letters came from Phoenix, Ariz., while others were postmarked Irvine, Calif., and Irving, Tex.

Sometimes Mr. Dunlap’s calls reached the office of the president at Wells Fargo Dealer Services. “Those people would say, ‘We’ll get back to you,’” Mr. Dunlap said, “but nothing would happen.”

He even tried reaching the bank’s board, Mr. Dunlap said.

In the old days it was the stagecoach that got robbed by the bad guys. But today it’s reversed: the stagecoach robs its passengers with impunity—the law is on their side.

Finally in mid-September, Wells Fargo canceled the insurance it had placed on Mr. Dunlap’s car. But the bank credited his loan account with only $846. That meant he was still behind on the loan.

Trying to get another loan to pay off the existing one was impossible, he said. “They would say, ‘No, you’re late with Wells Fargo,’” Mr. Dunlap said.

Exasperated, Mr. Dunlap decided to sell the Chrysler last November so he could close out the Wells Fargo loan. He sold it for around $19,000, he said, $6,000 less than he had paid eight months earlier. The amount he needed to pay off the loan was $20,250, Wells Fargo records show.

But Mr. Dunlap’s battle wasn’t over. Now he had to correct his credit report, an effort that he said was still going on.

Earlier this year, he asked the bank for $1,000 in compensation for its mistakes. In a letter dated June 1, the bank declined to provide it. [They make their own rules, whatever suits them best.] 

“At this time we are unable to comply with your request for compensation,” the letter said. Wells also said it was submitting requests to credit bureaus to remove the late payments recorded on Mr. Dunlap’s history. “We sincerely apologize for any inconvenience this matter may have caused,” the letter added.

Late last month, Mr. Dunlap said he was amazed when he saw an article in The New York Times disclosing Wells Fargo’s dubious insurance practices. “I thought I was the only one going through this,” he said.

Trying to get assurances that his credit report had been corrected, Mr. Dunlap called Wells Fargo again. He said he told the bank that he planned to contact the Times reporter about his experience. “They said, ‘Don’t talk to the reporter, we’ll try to fix this,’” he said. [Finally the bank begins to see that someone may be catching on to their skullduggery.]

The promise from Wells Fargo came more than a year after his problems with the bank began. It was too little, too late, he said.

The Wells Fargo Story

Some 800,000 people were affected by the Wells Fargo auto insurance dealings, according to an in-depth analysis commissioned by the bank. The expense of the unneeded insurance, which covered collision damage, propelled 274,000 bank customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions.

Wells Fargo said that it discontinued the insurance practices last September after it had found “inadequacies in vendor processes and internal controls that negatively impacted some customers.” [“Inadequacies,” indeed—pure gobbledygook for underhanded double-dealing . . . “some customers”—274,000, to be exact.] The bank has contended that 570,000 people may be owed refunds.

[Allan] Dunlap, 55, is one of those affected by the bank’s insurance activities. His experience with Wells Fargo highlights the harm done to actual people and points to the challenges Wells faces in remedying it. More than a year after he started battling with Wells Fargo, Mr. Dunlap said, he is still awaiting confirmation that his credit report has been corrected.

“I never missed a payment and I always had insurance,” Mr. Dunlap said in a phone interview. “But they forced additional coverage on my vehicle and it showed up on my credit report that I was 60 to 90 days late on my payments.” Repeated calls to Wells Fargo to get them to fix the error were unsuccessful, he said. [Not answering the phone or misdirecting the call are favorite techniques of bureaucracies when they would rather ignore the injured customer.]

Jennifer A. Temple, a Wells Fargo spokeswoman, acknowledged in a statement “that our customer service and our processes did not measure up and we are working with Mr. Dunlap to make things right.”[Translation: “We robbed him but got caught. Perhaps we’ll return the money.” 

Mr. Dunlap’s story began in March 2016 in Jamestown, N.D., where he worked transporting recreational vehicles.

He found his dream car at a local dealership — a low-mileage, mint-condition Chrysler 300, vintage 2008, selling for around $25,000. Together with a friend who co-signed for the loan, Mr. Dunlap financed the purchase through Wells Fargo Dealer Services. The amount of the loan was almost $21,000.

Before he could take possession of the car, he was asked to provide the dealership with proof of existing car insurance. Wells Fargo loan documents prepared by the dealership show that his coverage was with State Farm.

For three months, he made his $410 loan payments without a hitch. But in early May, Wells Fargo sent both borrowers a letter saying it had not received the necessary documentation showing that the car was insured. A second notice saying the same thing followed a month later.

When the first notice came in, Mr. Dunlap was recovering from a stroke, he said. Still, he began calling Wells Fargo to tell them he already had insurance. He was unsuccessful, he said, because he’d be kept on hold for long periods and often got disconnected.

Ms. Temple of Wells Fargo said: “We recognize there were a number of customers who experienced difficulty verifying with Wells Fargo and our vendor if they had insurance and we are sorry that Mr. Dunlap experienced this challenge.”

On July 1, Mr. Dunlap’s loan statement showed, Wells Fargo charged $1,079 for insurance on the car — the first time such a charge had appeared. The insurance, a year’s premium, took effect in March when he bought the car.

Mr. Dunlap said he didn’t know about the charge and records show he made his regular loan payment in July. But because he owed the additional $1,079 for insurance, he fell behind. Late fees began accruing, and his problems on the loan were reported to credit bureaus.

He made more calls to Wells Fargo. “I’d talk to one person in one state, another person in another state; I’d send them papers,” he said. “There were so many different people involved, the information doesn’t get to the right sources.”

Some Wells Fargo letters came from Phoenix, Ariz., while others were postmarked Irvine, Calif., and Irving, Tex.

Sometimes Mr. Dunlap’s calls reached the office of the president at Wells Fargo Dealer Services. “Those people would say, ‘We’ll get back to you,’” Mr. Dunlap said, “but nothing would happen.”

He even tried reaching the bank’s board, Mr. Dunlap said.

Bailed_UpIn the old days it was the stagecoach that got robbed by the bad guys. But today it’s reversed: the stagecoach robs its passengers with impunity—the law is on their side.

Finally in mid-September, Wells Fargo canceled the insurance it had placed on Mr. Dunlap’s car. But the bank credited his loan account with only $846. That meant he was still behind on the loan.

Trying to get another loan to pay off the existing one was impossible, he said. “They would say, ‘No, you’re late with Wells Fargo,’” Mr. Dunlap said.

Exasperated, Mr. Dunlap decided to sell the Chrysler last November so he could close out the Wells Fargo loan. He sold it for around $19,000, he said, $6,000 less than he had paid eight months earlier. The amount he needed to pay off the loan was $20,250, Wells Fargo records show.

But Mr. Dunlap’s battle wasn’t over. Now he had to correct his credit report, an effort that he said was still going on.

Earlier this year, he asked the bank for $1,000 in compensation for its mistakes. In a letter dated June 1, the bank declined to provide it. [They make their own rules, whatever suits them best.] 

“At this time we are unable to comply with your request for compensation,” the letter said. Wells also said it was submitting requests to credit bureaus to remove the late payments recorded on Mr. Dunlap’s history. “We sincerely apologize for any inconvenience this matter may have caused,” the letter added.

Late last month, Mr. Dunlap said he was amazed when he saw an article in The New York Times disclosing Wells Fargo’s dubious insurance practices. “I thought I was the only one going through this,” he said.

Trying to get assurances that his credit report had been corrected, Mr. Dunlap called Wells Fargo again. He said he told the bank that he planned to contact the Times reporter about his experience. “They said, ‘Don’t talk to the reporter, we’ll try to fix this,’” he said. [Finally the bank begins to see that someone may be catching on to their skullduggery.]

The promise from Wells Fargo came more than a year after his problems with the bank began. It was too little, too late, he said.

 

 

C.E.O.s Traditionally Avoid Politics, But No Longer Can

There are times when politics cannot be avoided. Our blog much prefers to remain neutral with regard to Republican/Democrat, Rich/Poor, Upper Class/Working Class, Elitist/Populist, Conservative/Progressive, feeling that the solution to Inequality lies somewhere in between and will require concessions and understanding from both sides to achieve. The issue is one of economics and should be understood that way.  It is not ideological.

What occurred in Charlotteville, Virginia earlier this week has made it impossible for those heads of major companies who advise the President to remain neutral.  Their break with the President  will have consequences with the economy and therefore we must take note of it.                                                               

By JAMES B. STEWART, August 6, 2017 for The New York Times

The bar for a chief executive of a public corporation to repudiate a United States president is extraordinarily high. Corporate leaders aren’t given their power, prestige, responsibility and nine-figure pay packages to use the corner office as their personal soapbox.

With President Trump’s comments on white supremacists and other right-wing extremists ringing in the ears of America’s chief executives, that high bar appears to have been passed.

This week, what had been a trickle of defections from the White House business advisory councils over issues like immigration and climate change turned into a torrent. By Wednesday, both of the councils had collapsed; Mr. Trump insisted that he had decided to disband them.

Such a public schism between a president and a business leadership long considered the backbone of the Republican establishment left corporate historians at a loss for precedent. “There’s never been anything to compare to this,” said Jeffrey A. Sonnenfeld, a dean of leadership studies at the Yale School of Management and the author of “Firing Back: How Great Leaders Rebound From Career Disasters.”

0416_merck-kenneth-frazier-ceo_900

Kenneth Frazier

Referring to a tweet by Mr. Trump criticizing Kenneth Frazier, the Merck executive who led this week’s corporate retreat from the White House councils, Mr.Sonnenfeld,  said, “Never in history has a president attacked and threatened the chief executive of a major U.S. corporation like that.”

After provoking a furor with his initial failure to condemn the white supremacists behind last weekend’s violence in Charlottesville, Va., Mr. Trump might have staved off a full-scale exodus with his somewhat stilted but conciliatory comments on Monday. But then he reignited the flames at a news conference on Tuesday at which he said there was “blame on both sides,” including club-wielding members of what he called the “alt-left,” for the Charlottesville violence.

Jamie Dimon

Stephen Schwartzman

Ginni Rometti

As pressure mounted on prominent council members like Jamie Dimon of JPMorgan Chase, Stephen A. Schwarzman of the Blackstone Group, Ginni Rometti of IBM and Indra Nooyi of PepsiCo, as well as other chief executives who remained silent or issued platitudes, corporate boards were hastily meeting to map strategy. “I’ve heard from 24 chief executives in the past two days,” Mr. Sonnenfeld said on Wednesday. “Boards are having ad hoc conference calls. People are very worried and concerned.”

Those conversations have been far more complicated than one might expect. It’s safe to say that no chief executive wants to be identified with white supremacy, racism or domestic terrorism. At the same time the president wields enormous influence over their shareholders, employees and customers.

“Chief executives don’t have the luxury of ventilating their personal political opinions, whatever they might be,” Mr. Elson said. “They shouldn’t let their personal views influence their business decisions. If they really feel strongly about something, they can always resign and then say whatever they want.”

As he told me shortly after Mr. Trump took office, “When the president calls, you should go to see him, regardless of your political persuasion, out of respect for the office.”

Back then, Mr. Sonnenfeld, too, praised Mr. Trump’s openness to business views . . .

This week was a different story. After the Charlottesville events and Mr. Trump’s comments, “chief executives have a moral duty to use their position as a bully pulpit and to speak out,” Mr. Sonnenfeld said, adding that George Weyerhaeuser, a former chairman of the giant timber and wood products company bearing his name, had once told him, “We have a license to operate from society, and if we violate that license it can be revoked.”

Or as Mr. Elson told me, “At some point, if identification with the administration becomes so polarizing that it impairs your ability to run the company, then you may have to do something.”

Weighing the benefits of advising a president steeped in controversy versus the risks to shareholders and other constituents from potential consumer boycotts is a calculus that varies widely from company to company.

Unlike some companies with a large consumer base to appease, Boeing has thrived by burnishing its ties to Mr. Trump.

At one extreme is a company like Boeing, which, as I noted last week, has thrived by burnishing its ties to Mr. Trump, who posed for photos in front of a 787 Dreamliner at a nonunion Boeing plant in South Carolina. Boeing is one of the federal government’s largest contractors ($1.1 billion was allotted recently for 14 Boeing fighter jets); the Export-Import Bank once threatened by Mr. Trump finances many of Boeing’s buyers; a host of other executive-branch decisions affect its profits; and it has no direct exposure to consumers.

At the opposite end of the spectrum is Under Armour, the maker of athletic wear, whose chief executive, Kevin Plank, left the president’s council earlier this week. Under Armour’s success depends in part on endorsements from celebrity athletes, many of whom — like Stephen Curry, the basketball star — are African-American. Under Armour customers had already organized a consumer boycott on social media earlier this year, prompting Mr. Plank to issue an open letter pledging to be “a force of unity, growth and optimism for our city and our country” and to oppose “any new actions that negatively impact our team, our neighbors or their families.”

Stephen Curry is among a number of African-American players who endorse products by Under Armour, an athletic wear company that has pledged to be “a force of unity, growth and optimism for our city and our country.”

That new action appears to have arrived.

“The risk of consumer blowback is especially acute for companies like Under Armour, and you’ve seen this elsewhere in the retail space,” Mr. Sonnenfeld said. But he noted that speaking out against a social scourge like racism can also enhance a brand. “Taking a public stand doesn’t mean there’s a misalignment with shareholder interests,” he said. “It can be the right thing to do. Howard Schultz has done this very effectively at Starbucks.”

On Monday, Mr. Schultz publicly criticized the president’s response to the Charlottesville events, and on Wednesday he spoke at an emotional companywide meeting. “I come to you as an American, as a Jew, as a parent, as a grandparent, as an almost 40-year partner of a company I love so dearly,” he said. “I come to you with profound, profound concern about the lack of character, morality, humanity and what this might mean for young children and young generations.”

Howard Schultz, the chief executive of Starbucks, told employees on Wednesday that he had “profound, profound concern about the lack of character, morality, humanity” that he said was exhibited in Mr. Trump’s remarks.

Historically, corporate aversion to politics has at times held firm even under national leadership that threatens the health of the economy, and with it the well-being of every company. The most notorious example was the support of German industry for Hitler and the Nazi regime, which ended up destroying the nation’s economy. American companies also worked with the Nazis before the United States entered the war, including — as the current Amazon production of F. Scott Fitzgerald’s “The Last Tycoon” reminds us — Hollywood studios.

Comparing the Trump administration to the Nazis may be a stretch, but many business leaders are concerned that stirring up deep-seated racial and nationalist animosities could be destabilizing, leading to riots, property damage and widespread civil unrest reminiscent of the late 1960s. . . .

In such circumstances, collective action by business leaders is often the most effective course, as members of the president’s advisory councils appear to have decided this week. That way no one company bears the brunt of the president’s wrath.

After Mr. Trump’s comments about Charlottesville, Mr. Sonnenfeld has been among those calling for collective opposition. “Fomenting racial unrest is not in the nation’s interest and it’s not in businesses’ interest,” he said. “Divide and conquer has always been Trump’s strategy, and somehow it has worked until now. The way to take a bully down is through collective action.”

At Last The Democrats Are Turning to The American Working Man

Finally some politicians are approaching what should be their base but has been appropriated by the President. What has taken them so long? What has happened to the Democratic party? Their wooing of Wall Street, the Tech World and the Entertainment World didn’t win them the last election.

So they’ve finally come home, shabby as it is. Let’s hope they’ve come to stay. For it’s here they belong and here they’ll score their victories because America is a nation of hardworking, earnest men and women and not a rich man’s paradise. The wealthy are merely the frosting on the cake. 

Labor unions—which the Right has doggedly worked to undermine as the greatest threat to itself—need to be rebuilt and strengthened as the ultimate protection for the worker. The working class needs its self-respect restored, most of all through being paid a wage that reflects their value to their country—not cheated, tricked, and taken advantage of by management, as they have been since 1980.

Representative Donald Norcross, left, a Democrat from New Jersey, joined three other representatives as part of cross-country tour to better understand the economic concerns of some workers. Getty Images

By NICK CORASANITI, August 14, 2017 for The New York Times

CAMDEN, N.J. — The three Democratic congressmen sat at one end of a long, rectangular table that extended nearly the length of the Teamsters hall here, surrounded by about 50 union leaders, members and local residents offering a mix of praise, complaints and political strategy.

“This is a forum that was desperately needed for a long time,” James H. Paylor Jr., a top organizer for the International Longshoremen’s Association, told the lawmakers. “There’s a saying that it’s never too late as long as you start today.”

The need for the Democratic Party and the labor movement to take stock of their historically close alliance became clear after November’s election when Hillary Clinton’s support among union voters declined by 7 percentage points from 2012 when former President Barack Obama was re-elected.

For months, Democrats have been grappling with how to reconnect with the union and working class vote they once considered their base, prompting former Vice President Joseph R. Biden Jr. to lament after the election that “my party did not talk about what it always stood for.”

Representatives Mark DeSaulnier of California, Mark Pocan of Wisconsin and Donald Norcross of New Jersey finished a four-stop, cross-country tour on Aug. 4 that set out to do just that: understand and tap into the economic anxiety felt by many working class voters, as part of a broader, fractious and painful self-examination Democrats have undertaken following Donald J. Trump’s ascension to the White House.

“We in labor, we may not have the billions of dollars, but we still have a lot of people,” said New Jersey State Senate President Stephen M. Sweeney, a Democrat and the general vice president of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers. “And there’s a lot of seats that belong to working class people. It’s up to us to claim them.”

The Democratic Party leadership recently released its “Better Deal” platform, a progressive policy agenda designed to address issues central to the working class.

Along with Representative Debbie Dingell of Michigan, who could not make the final leg of the trip, the four Democratic House members are planning to release their report, “The Future of Work, Wages and Labor,” in the coming months. Though they view their work as a complement to the party’s progressive platform, they also acknowledge that fellow Democrats may disagree with some of their proposals.

Some of them that might even sound, well, Trumpian.

“Those trade agreements, we’re still paying a price on NAFTA,” Mr. Norcross said in an interview, referring to the North American Free Trade Agreement, a frequent target for Mr. Trump on the campaign trail last year.

Mr. Norcross argued that some of the demands within his party for uncompromising legislative positions has left Democrats on the wrong side of the jobs argument.

“It’s not yes to everything environmental, no to everything with jobs,” he said. “It’s a matter of working those together to try to move them forward.”

The idea for the initiative began a year ago when Mr. DeSaulnier, a freshman congressman from the Bay Area, saw the booming so-called gig economy spawned largely by Uber and other tech start-ups in his district, and wondered how lower paying, part-time jobs might be affecting working families. So he asked the two tradesmen he knew in the House, Mr. Pocan, a painter, and Mr. Norcross, an electrician.

That conversation inspired a yearlong tour by the four members of Congress, which culminated this month in a labor town hall meeting inside a crowded Teamsters building in this struggling city in southern New Jersey.

Ending the tour here, after stopping in California, Michigan and Wisconsin (which have “right-to-work” laws that prevent organized labor from forcing all workers to pay union dues or fees), offered a bit of a throwback case study: Though working class families in New Jersey face similar problems as the working class elsewhere, the state still maintains strong ties between organized labor and the Democratic Party.

The Democratic candidate for governor, Philip D. Murphy, heavily courted the major state unions and relied on union-organizing efforts to help him to his overwhelming primary win. The New Jersey Education Association, which endorsed Mr. Murphy, is considered one of the most powerful teachers unions in the country, while Mr. Sweeney holds a powerful position in an international union.

“Unions may be weaker than they once were, given the dynamics of the American political landscape,” said Ben Dworkin, director of the Rebovich Institute for New Jersey Politics at Rider University. “But New Jersey remains a place where unions are very politically active and are relied upon by politicians to help deliver in politics.”

After the town hall meeting, Mr. Paylor expressed both comfort and frustration. He did not know that Mr. Norcross had been working to introduce bills aimed at his interests, including one that would direct the Department of Energy to provide training for energy industry jobs and another that would allow people paying for apprenticeships to receive the same tax benefits as those paying for traditional college.

“Most working class people don’t even understand that that’s going on in Washington, so they’re willing to vote against their own personal interest in many cases,” Mr. Paylor said. The Democratic Party and its elected officials, he added, need to do a better job of communicating, and “to identify themselves that they are representative of the working class.”

And, if Mr. Norcross has his way, maybe a few more working class candidates will appear on the ballot.

Mr. Norcross told the crowd in the Teamsters hall that there were more than 200 attorneys in the House of Representatives. “There’s one electrician, one painter, and one iron worker and one carpenter. We need some more help folks. We need some more.”