Hey folks, Bill Clinton’s back in the USA, having a little confab in Chicago with his Global Initiative friends; the objective is job creation. Good-o; hope y’all create some! I know it’s not nice to find fault with such a Philanthropic Rock Star, but I just have to remain a skeptic for now, given what’s still going on in Haiti vis a vis Disaster Capitalism and neoliberal corporate profiteering (more on that another day, perhaps).
But this diary is about Bill (He’s not a Real Economist) Clinton weighing in wherever he can on economic policy and financial regulation, or the bits that are still to come via the regulators with major input from the banking industry; and we all know that they have fairness for the consumer and the future of the nation in mind as they write them, right? Right.
The Hill reported on June 30 that Mr.Bill was on CNBC advising that:
“…the implementation of the Dodd-Frank financial reform be slowed.
As the one-year anniversary of the financial overhaul draws near, Clinton was generally positive on the law as a whole, but suggested regulators should parcel out the new rules bit by bit for the benefit of businesses.”
Now you remember the crap Dodd-Frank would-be financial regulation bill that was all the White House would countenance, right? And defenders said it actually could provide that too big to fail banks might possibly/maybe/could be broken up if certain conditions were found to prevail? And the banks were allowed to assess themselves for financial health? They all passed…I think. Whew.
And that all those regulations, especially concerning derivatives, that weren’t really in the bill, but would be up to ‘regulators’ to fashion in a year’s time? Well, that deadline seems to be coming up at the end of July, and here is Bill Clinton saying:
“One way to clear that up may be to stagger [the regulations] in over a more pronounced time table,” he said on CNBC. “I think there’s only so much change that institutions can handle at one time.”
Really, no one wants to cut into those massive profits the big banks have made, even though they still feel too poor to lend money for things like mortgages, or small business start-ups or even loans to healthy existing businesses. But go on, Bill; tell us what’s good for America now, ya heah?
On the same day Clinton did an interview with Bloomberg’s Al Hunt, and expressed favor of a tax repatriation day, which idea Obama had floated, then decided to oppose.
““I favor it under certain circumstances,”Clinton said. He suggested an approach that would give companies a 20 percent tax rate on repatriated profits, which could be reduced to 10 percent if they “reinvest it in increasing employment in America.””
Well, among other smart economists like Jared Bernstein, Paul Krugman thinks the idea’s a crock of crap. Hell, even Obama backed off the idea not long after he floated it, maybe because Tim Geithner objected to it. But apparently it’s gaining some traction among ‘progressives on the Hill’, Krugman says. Maybe he needs to re-classify those folks, eh?
It seems Edward Kleinbard, a law professor at the University of Southern California dug into the 2004 repatriation tax holiday, and found that the 5.25% tax rate Congress allowed corporations as long as they submitted plans for domestic investment…pretty much failed, and that much of the money was used to buy back shares and pay dividends, and that the Joint Committee on Taxation estimates that a new repatriation holiday would encourage companies to move more profits offshore in anticipation of another holiday. Yves Smith agrees:
“Oh, please. How exactly will we determine that they “increased employment” over what they would have done regardless? And how pray tell would a program like this be monitored? Plus, as Bernstein notes, all you do is incentivize companies to play this game all over again, since they can expect another holiday in the future. And giving them a break for hard-to-be-sure-anything-happened initiatives is a less good idea that higher tax receipts and programs that provide employment more directly (like investments in areas that are national priorities).
But this is just another example of the fish rotting from the head, or in this case a former head. And the really sad thing is that this sort of thing has become so routine that hardly anyone sits up and takes notice.”
Another knee-slapper is that Clinton really, really, really likes the proposed settlement of the Bank of America mortgage settlement for $8.5 billion, a nice deal since the Bloomberg piece said:
“Moynihan agreed to pay the $8.5 billion to avoid repurchasing faulty loans placed into $424 billion of bonds. About $106 billion of that total either defaulted or are “severely delinquent,” and $203 billion has been paid off, Bank of America said in a presentation”.
But Our Rock Star waxed poetic about the proposal; perhaps he believes BoA will succeed where HAMP so miserably failed:
“You’d relieve the anxiety of countless Americans who would know they could hold onto their homes [if funds were used to make mortgage modifications],” and “There is “enormous potential” to reduce the drag of U.S. housing on the economy if aspects of the Bank of America settlement are applied to the entire industry,” and “you lift not only an economic, but a psychological burden off of the homeowners and the banks,”… “And we’re free to start lending again, we’re free to engage in normal economic activity.”
Yves explains what’s wrong with his sexual favorish thinking here, but reminds us of some of Clinton’s BFFs who sit on his CGI board:
“Bank of America is participant in the Clinton Global Initiative meeting which is underway in Chicago. I assume that requires a financial commitment of some sort, although not at the level of a sponsor. The mayor of Charlotte, North Carolina, which is where BofA is headquartered, was a “featured participant”. The CGI website lists only a sampling of “Notable Members: Private Sector” and they include Lloyd Blankfein, Jamie Dimon, Jeff Immelt, and Warren Buffett. His CEO is a former Goldman partner.”
After taking apart the sheer wonderfulness of the proposal, she ends with this; hope it makes you laugh a little (damn, we need some laughs lately!):
“So the Ministry of Truth, with one of the biggest brand names as mouthpiece, has spoken. A settlement that if it were implemented, is certain to lead to fewer mortgage modifications, is spun as the reverse. But what do you expect when so much of the officialdom is directly or indirectly on the banking industry meal ticket?”
Thanks, Yves; and no, thanks, Bill. You’re not a real economist, but you do know who your New Best Friends are. And Politico reported that at the Aspen Ideas Festival on July 3 that you think the corporate tax rate should be lowered to 25% or something, as we only ever collect about 23% anyway…sure, it made sense when you raised the corporate rate on companies making over $10 million, but you don’t think it makes sense now… What percentage of corporations paid ZERO taxes last year? And jeez; how ‘bout just sittin’ on some of those Grand Aspenish Ideas that would benefit your buddies?