Yes, these are dire political times. Many who optimistically hoped for real change have spent nearly five years under the cold downpour of political reality. Here at CounterPunch we’ve always aimed to tell it like it is, without illusions or despair. That’s why so many of you have found a refuge at CounterPunch and made us your homepage. You tell us that you love CounterPunch because the quality of the writing you find here in the original articles we offer every day and because we never flinch under fire. We appreciate the support and are prepared for the fierce battles to come.
Unlike other outfits, we don’t hit you up for money every month … or even every quarter. We ask only once a year. But when we ask, we mean it.
CounterPunch’s website is supported almost entirely by subscribers to the print edition of our magazine. We aren’t on the receiving end of six-figure grants from big foundations. George Soros doesn’t have us on retainer. We don’t sell tickets on cruise liners. We don’t clog our site with deceptive corporate ads.
The continued existence of CounterPunch depends solely on the support and dedication of our readers. We know there are a lot of you. We get thousands of emails from you every day. Our website receives millions of hits and nearly 100,000 readers each day. And we don’t charge you a dime.
Please, use our brand new secure shopping cart to make a tax-deductible donation to CounterPunch today or purchase a subscription our monthly magazine and a gift sub for someone or one of our explosive books, including the ground-breaking Killing Trayvons. Show a little affection for subversion: consider an automated monthly donation. (We accept checks, credit cards, PayPal and cold-hard cash….)
To contribute by phone you can call Becky or Deva toll free at: 1-800-840-3683
Thank you for your support,
Jeffrey, Joshua, Becky, Deva, and Nathaniel
CounterPunch PO Box 228, Petrolia, CA 95558
When CEOs Sound Off
The CEO of Caterpillar recently spoke at Georgia State University’s World Affairs Council of Atlanta. Mr. Doug Oberhelman talked about the state of manufacturing in the US and America’s global competitive position. And just what insightful and informed tidbits did the head of one of the largest corporations in the country provide?
SPOILER ALERT: As you can imagine, all of the usual tired old bogeymen haunting today’s businessman were dragged out of the cupboard and paraded before the audience. Also on display was a degree of cluelessness that one should find disturbing in the CEO of a Fortune 500 company.
Mr. Oberhelman tells us that high taxes, over regulation and poor infrastructure are all hurting America’s competitive ability. But what really gets Mr. Oberhelman’s goat is entitlement spending. “I worry an awful lot about that,” the troubled CEO tells us. As well he should. It is easy to see how old people, infants, sick people, students, the unemployed, the under-employed, disabled veterans, and other “useless eaters,” (nutzlose Esser as one of the most evil regimes in all of human history referred to them as) all sucking at the government teat, would rightfully get under the skin of the CEO of the 42nd largest corporation in America.
(Author’s Note: To be fair to Mr. Oberhelman, when he spoke of being troubled by “entitlements” he very well could have been talking about the $ trillions that the Federal Reserve Bank made available to Wall Street as a reward for having engineered the worst financial crisis in 80 years, or he could have been referring to the $ trillions that have been given to the Military Industrial Complex by way of the illegal, undeclared and unfunded wars in Afghanistan and Iraq).
As for Mr. Oberhelman’s concern over high corporate taxes, this is completely understandable, considering the fact that in 2010, GE had profits of $14.2 billion and yet paid no US taxes (it actually claimed a tax benefit of $3.2 billion). Moreover, between 2002 and 2011, GE had an average Federal tax rate of 1.8%.
And just how much is Caterpillar being gouged by greedy Uncle Sam? According to CSIMarket, a financial information provider, Caterpillar’s most recent effective tax rate (third quarter 2013) was 24.58%. While I would like to say that this is scandalous, since it’s less than what my 70 year old retired Mother is currently paying in taxes, you’ll excuse me if I don’t cry.
Mr. Oberhelman then takes us on a trip down memory lane, back to the good old days of the 1970s, to a time when he fondly remembers the United States as having the lowest corporate tax rate of any major industrialized country in the world. Now, sadly, according to Mr. Oberhelman, the US has one of the highest tax rates in the world, almost double those of other competing nations.
My apologies to the good CEO, but one has to ask, “Is that statement true?” Yes, on paper, US corporations face some of the highest taxes in the world. But the reality is somewhat different. According to the Government Accountability Office (GAO), large U.S. companies had an average effective Federal tax rate of 12.6% in 2010. A rate that is not unreasonable by any objective standard.
Mr. Oberhelman also complains about burdensome regulations. This is rich, coming from the CEO of a company that has a subsidiary that is currently under investigation by Federal prosecutors in California for environmental violations and other “alleged improper business practices.” Previously, in 2011, Caterpillar agreed to a $2.55 million settlement with the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) over alleged Clean Air Act violations (the company was accused of shipping over 590,000 diesel engines without proper emissions controls and failing to comply with reporting and engine-labeling requirements). In another case, the Occupational Safety and Health Administration (OSHA) cited Caterpillar for safety violations (also in 2011), proposing a fine of $66,000. The company has also been accused of being complicit in human rights violations for providing the Israeli army with bulldozers, knowing full well that they would be used in the demolition of Palestinian homes. In 2003, American peace activist Rachel Corrie was killed by a Caterpillar D-9 military bulldozer. Her family sued the company in 2005.
It is easy to see why Mr. Oberhelman would want to get rid of pesky rules and burdensome oversight, just the kind of things that are holding back entrepreneurs like him.
He also decried the poor state of America’s infrastructure as another reason why the country is having problems competing globally. Here, I would have to agree. America is literally falling apart, with the American Society of Civil Engineers (ASCE) giving the country’s infrastructure a D+ rating.
But let’s think back for a minute. It is important to remember that as the gravity of the worst economic crisis in over 80 years was starting to become clear, there were some people calling for a massive jobs and infrastructure program to be instituted on the same scale as the ones used during the Great Depression. The logic for these programs was based on a radical theory known as “Basic Macroeconomics 101.”
If the extreme policies of “Basic Macroeconomics 101” had been instituted – on the size and scope that many economists were calling for – undoubtedly Caterpillar would have been a huge beneficiary. Unfortunately, many leaders in Washington D.C. (mostly Republicans with a new found religion against spending) believed that the perfect time to get our “fiscal house” in order was during the worst economic crisis in over 8 decades. They were not amenable to huge spending programs that would have created jobs. Well, that is unless the money was going to Wall Street or the Military Industrial Complex (the “good” type of entitlement spending).
Mr. Oberhelman laments the fact that other countries are making much needed investments in ports and transportation infrastructure, like roads and railroads. Even more galling, they are doing it at rates with which the US used to do it at! Menacingly, the clairvoyant CEO tells us, “That’s going to come back to bite us in the not-too-distant future.”
Unfortunately, Mr. Oberhelman doesn’t “square the circle” by explaining how we are supposed to lower America’s insufferably high average effective Federal corporate tax rate of 12.6%, while at the same time increasing spending on infrastructure (which, one must imagine, is not considered entitlement spending in Mr. Oberhelman’s world).
But Mr. Oberhelman’s sour mood is completely understandable. His company recently announced a 44% drop in third-quarter earnings, mostly due to poor sales in the mining sector. In a conference call with analysts, he said that his company is on a “a cost-lockdown binge.” To turn the situation around, thousands of management employees have been temporarily laid off, with “structural” reductions in costs being sought. This has involved a 9% cut in global head count (compared to last year) and asking some workers to accept salary freezes and a reduction in their benefits. Surely the tonic needed to turn Caterpillar around and something that will in no way have a negative impact on US entitlement spending.
And what of Mr. Oberhelman’s pay? Oddly enough, during his conference call he didn’t discuss his own salary, perhaps thinking that it was in poor taste. One could see why. In 2010, his total compensation was $10.6 million. This was increased to $16.9 million in 2011, and again to $22.4 million in 2012, making for a roughly 111% increase. Not bad. Reassuringly, a Caterpillar spokesman tells us that Mr. Oberhelman’s pay will most likely be “significantly reduced” this year.
Let’s hope not by too much. I’d hate to see the CEO of Caterpillar have to go on a government entitlement program.
Earlier in the day, before giving his speech at Georgia State, Mr. Oberhelman attended a ribbon-cutting ceremony at Caterpillar’s new plant near Athens, Georgia. It is believed that the facility will eventually employ 1,400 people directly and another 2,800 indirectly through nearby suppliers. Hopefully, this will offset the job losses created by the half dozen plants that Caterpillar announced this year that it will be closing.
And just what made the “Peach State” the lucky recipient of Caterpillar’s new plant? Mr. Oberhelman tells us that it was Georgia’s better taxes, worker training programs and infrastructure that sealed the deal. It also might have been the fact that Georgia provided about $75 million in state and local incentives, including tax breaks, improvements to infrastructure and property.
Mr. Oberhelman, as chairman of the National Association of Manufacturers, is a big proponent of increased government spending on roads and other infrastructure projects, the results of which will almost assuredly be an increase in sales for Caterpillar. It’s good to know that the millions being given to a multi-billion dollar corporation by state and local governments is not entitlement spending, but rather a good old fashioned honest investment.
Tom McNamara is an Assistant Professor at the ESC Rennes School of Business, France, and a former Visiting Lecturer at the French National Military Academy at Saint-Cyr, Coëtquidan, France.
“America’s infrastructure gets a D+. That’s not as bad as it sounds” by Brad Plumer, The Washington Post, March 19th, 2013. Accessed at:
“Caterpillar – Fortune 500” CNN Money. Accessed at: http://money.cnn.com/magazines/fortune/fortune500/2013/snapshots/81.html
“Caterpillar CEO says U.S. manufacturing hampered by taxes, regulations and ports” by Walter C. Jones, Savannah Morning News, November 1st, 2013. Accessed at:
“Caterpillar Inc. to Pay $2.55 Million to Resolve Clean Air Act Violations” Press Release, the U.S. Environmental Protection Agency (EPA), Release Date July 28th, 2011. Accessed at:
“Caterpillar Races to Cut Back” by James R. Hagerty, The Wall Street Journal, October 23rd, 2013. Accessed at:
“Caterpillar Shuts West Virginia Mining Factory to Cut Costs” by Shruti Date Singh, Bloomberg news, November 4th, 2013. Accessed at: http://www.businessweek.com/news/2013-11-04/caterpillar-to-close-west-virginia-underground-mining-factory
“Caterpillar unit is subject of U.S. criminal probe” Reuters, through Crain’s Chicago Business, November 1st, 2013. Accessed at:
“Caterpillar’s Effective Tax Rate by quarter” CSIMarket.com. Accessed at:
“Fed’s Once-Secret Data Compiled by Bloomberg Released to Public” By Phil Kuntz and Bob Ivry, December 23, 2011, Bloomberg. Accessed at:
“G.E.’s Strategies Let It Avoid Taxes Altogether” by David Kocieniewski, The New York Times, March 24th, 2011. Accessed at:
“GAO: U.S. corporations pay average effective tax rate of 12.6%” by James O’Toole, CNN Money, July 1st, 2013. Accessed at:
“OSHA cites Caterpillar for safety violations” The Associated Press – through The Peoria Journal Star, June 27th, 2011. Accessed at:
“Press Release: General Electric’s Ten Year Tax Rate Only Two Percent” Citizens for Tax Justice, February 27th, 2012. Accessed at:
“The 14 Worst Corporate Evildoers” The International Labor Rights Forum, December 12th, 2005. Accessed at:
“The Fed’s $16 Trillion Bailouts Under-Reported” by Tracey Greenstein, September 20th, 2011, Forbes. Accessed at: