In the recent November 2014 midterm elections, Republicans assumed majority control of the USA Congress. They deepened their previous control of the US House of Representatives and swept the US Senate. They now have solid, nearly veto proof majorities in both houses of Congress. They may even have enough votes to override Obama’s rumored plans to govern by executive action, should he go that route in 2015 (which, except for an occasional token effort in that regard, is unlikely).
The past six years of Congressional gridlock is therefore about to end in 2015—but on terms highly favorable to Corporate America and, simultaneously, at the direct expense of American workers, their unions, and middle class households in general.
Technically, the Republican legislative offensive should not begin until the new Republican majorities are sworn into office in late January 2015. However, it now appears those initiatives—i.e. the Republicans’ new legislative offensive—are not on hold until the new Congress is officially seated in January 2015. With the help of many of the Democrats they defeated, the Republicans’ new legislative offensive is now already being rolled out.
In early December 2014, the US Congress passed a 1600 page so-called ‘Omnibus’ spending bill. In an Omnibus bill, all kinds of unrelated legislative proposals are thrown together into one large pot, i.e. one bill. That makes it difficult to vote against any particular proposal. To oppose, to vote against, a particular proposal, one would have to vote against other proposals one supports. For example, to vote against a big tax cut for business might mean necessarily voting against an extension of unemployment insurance as well. So one ends up voting for a big corporate tax cut when actually opposed to it. The ‘Omnibus’ bill is a legislative tactic that was employed typically under prior Republican dominated Congresses, especially during the George W. Bush regime between 2001-2006.
The Omnibus bill just passed by the USA Congress, in which the Democrats still had majority control of the US Senate this December, includes numerous pro-banker, pro-corporate proposals that will soon become law. Senate Democrats have gone along with their Republican counterparts in passing ‘Omnibus’.
Senate Democrats’ excuse, their political cover, for voting Republican is that if they voted against the bill, when Republicans officially take control in January the bill would be ‘even worse’ than voting on the December proposal.
That argument and excuse is just typical politician double-talk to give them—Democrats— a CYA (cover your ass) excuse. What will now happen, in actual fact, is that Republicans, welcoming Democrat Senators’ concessions and their voting support in passing the current Omnibus bill, will follow up in January 2015 anyway with the even worse, more aggressive pro-corporate, anti-worker legislation. Democrats will have gained nothing, except providing themselves convenient political cover.
The Omnibus bill passed last week provides $1.1 trillion in spending by the US government for the coming fiscal year, through September 2015. Among its many provisions, however, are several very big benefits for Corporate America.
Corporate Benefit #1: Banking Deregulation Returns
First, the bill—supported by Obama and quickly signed into law—means the beginning of the end of efforts to regulate the big banks in order to prevent another repeat of the 2008-09 banking crash.
A bill enacted in 2010, called the Dodd-Frank Banking Regulation Act, will now be fundamentally gutted by the Omnibus bill. Dodd-Frank was passed in 2010, but was conveniently (for bankers) left largely undefined at the time. Definition of bank regulation was to be implemented piece meal in the next four years, between 2010-2014, by regulators, according to the Act. During the interim years since 2010, banker lobbyists fought furiously to prevent the implementation of many of the Dodd-Frank Act’s provisions. In many cases they succeeded in ‘defanging’ it. But not completely. However, the Omnibus bill’s provisions will complete what bank lobbyists have not yet achieved in terms of rolling back Dodd-Frank. The Omnibus bill’s several provisions addressing banking regulation are designed to stop bank regulation in its tracks, blocking bank regulatory efforts that bank lobbyists were not able to achieve themselves.
For example, Dodd-Frank contained a particular provision that prohibited banks from trading potentially highly financially destabilizing derivatives, especially the high risk so-called ‘credit default swaps’ (CDS), by banks’ commercial units that also took average Americans’ deposits. Bank units taking deposits from US households were units that were also insured by the US Government’s Federal Deposit Insurance Corporation, FDIC. High risk CDS trading, and other derivatives’ losses by the banks, could technically in the event of another financial crash wipe out average households deposits in the banks. That would require the US government, and taxpayer, to bail out banks that mixed CDS losses with household depositors savings and checking accounts. Bankers and their shareholders would reap the profits from highly risky and volatile derivatives trading; but US household depositors and US taxpayers would pay the bill for derivatives trading in the event of a bust.
That’s exactly what happened in 2008-09. Big banks like Citigroup and others mixed deposits with derivatives and, when the latter crashed in 2008, it threatened the loss of general depositors’ savings. The government had to step in and bail out the banks, which it did, including Citigroup, a massive financial conglomerate that technically went bankrupt in 2009 but was bailed out by a $300 billion guarantee by the US government. Dodd-Frank provisions in the 2010 Act were supposed to prevent this from happening again, by requiring banks to trade derivatives, like CDSs, in bank business units that were separated from bank units holding depositors’ savings accounts. But bankers like the idea of using depositors money to invest in derivatives like CDSs. So they lobbied hard since 2010 to eliminate the Dodd-Frank provision. Reportedly in the business press, Citigroup actually wrote the language on exempting derivatives that was passed by the US House version this past summer. Lobbying by Citigroup and other big US banks then intensified over the summer. It paid off in the Omnibus bill just passed.
The derivatives exemption passed the US House version of the bill without even a recording of the vote. It passed the US Senate by a 56-40 vote in the Omnibus bill, with more Democrats (31) voting for the bill than even Republicans (24). Less than half of the Democrats in the US Senate (only 21) voted against the spending bill and its derivatives deregulation.
One Senator, Elizabeth Warren of Massachusetts, publicly described the Omnibus, and specifically the derivatives provision, as follows: “Congress proved tonight that if you’re a Wall Street bank, Washington works great for you”—which is not exactly a recent revelation to most Americans since 2008. Nor is Warren’s recognition that the stripping out of the derivatives provision will result more money for the bankers. So ‘Chalk up’ one big one for big banks in the Omnibus bill just passed by the US Congress, a Christmas gift by Senate Democrats to their Republican counterparts even before the latter take control!
Corporate Benefit #2: Corporate Tax Cut Machine Leaves the Station
Another big win for Corporate America in the Omnibus is big business tax cuts, of which there are many in the 1600 page bill. Too many to list and describe here. But to note just a few:
Special tax cuts for big health insurers, Blue Cross and Blue Shield, which were to be eliminated by the Affordable Care Act (aka Obamacare), were conveniently deleted by the Omnibus bill just passed.
The Omnibus provides another $41 billion in what is called ‘tax extenders’ tax cuts, many of which are corporate related cuts already in effect, for yet another year through 2014. Just three corporate tax cut extensions—for multinational companies offshore income, business expensing, and business research & development—amount to $18 billion. Conspicuously excluded from the ‘extenders’, however, were previous tax cuts for workers in the form of costs due to loss of a job as a result of free trade and health care costs tax cut eligibility.
Much of the debate on taxes in the Omnibus bill concluded, by both parties, that a major tax code overhaul is high on the agenda of the 2015 Congress. No doubt even more corporate tax cuts are in the works.
Corporate Benefit #3: Gutting the Environmental Protection Agency
The Omnibus bill signals the beginning of a major rollback of environmental initiatives in the USA once again, providing significant benefits to the dirtiest polluting industries in the USA—i.e. oil, coal, utilities, agribusiness, transport, chemicals, etc. The major means by which these rollbacks have been accomplished in the past, under George Bush and Ronald Reagan, has been to gut the funding of the Environmental Protection Agency (EPA). The bill returns to this process by reducing the EPA’s budget for 2015 by a further $60 million—a budget which has already been reduced by 21% below its 2010 levels.
The Coal Industry in addition got a provision that reduces US government limits on coal-fired power plants. The Clean Water Act’s regulatory scope was reduced, exempting ponds and irrigation systems. Big farm and cattle ranch companies were excluded from reporting greenhouse gas emissions from methane. And in a direct attack on work environments, the Omnibus bill eliminates previous rules for US truck drivers, whose maximum workweek was set at 70 hours; truck drivers may now be required by their employers to work as much as 82 hours a week—i.e. and 11 hour day, seven days a week!
Corporate Benefit #4: Defense Corporations ‘Pig-Out’ Again
Another major benefit for big business is the Omnibus bill’s authorization for at minimum half of the $1.1 trillion bill, at least $554 billion, to be spent on national defense, much of that for jet aircraft, missiles and submarines. That includes $94 billion to big military equipment manufacturers like Lockheed and Boeing. $64 billion for new military research & development. Another $64 billion earmarked for more spending to fund Syrian rebels and for offensives against ISIS forces in Iraq. Plus an immediate $175 million minimum for emergency military equipment and aid to Ukraine’s new pro-USA government in its fight against separatists in its eastern regions, another $810 million for new rapid deployment forces in east Europe and the Baltics, as well as unknown further bailout funds for Ukraine’s collapsing economy.
More defense spending, and therefore profits, for US war contractors is still to come, however. The Omnibus specifically left out spending for ‘Homeland Security’ beyond January 2014 in the Omnibus. That will be taken up by Congress in another bill in February 2015 again. It will mean still further military spending, now targeted for the USA itself, financing still more surveillance of US citizens, more use of drones, electronic spying, military-police equipment, training, and cooperation, and no doubt other nefarious domestic control initiatives in the works.
Corporate Benefit #5: More Corporate Money for Political Parties
During the Obama years, the US Supreme Court rendered decisions that essentially allowed, contrary to prior US laws since the 1970s, individuals and corporations to spend as much money as they pleased on US elections. US corporations were declared ‘persons’ and spending money in elections was determined to be ‘free speech’.
Not satisfied with this massive corruption of American democracy and voting processes, both Republicans and Democrats in passing the Omnibus bill opened the corporate money spigot still wider—allowing wealthy political donors to give more money to political parties and not just to individual candidates, as per the Supreme Court’s decisions. A previous maximum limit of $97,200 a year donation by an individual to a political party was raised to $777,000 a year.
Robert Weissman, president of Public Citizen, a research and advocacy group, concluded that the political money provisions of the Omnibus bill essentially wipes out one of the few remaining campaign contribution limits for corporations and the wealthy in the USA. Weissman added, “This is only about the parties’ ability to solicit donations from the super-rich”. Despite efforts by numerous citizens groups to ask Obama to veto the Omnibus bill’s “most corrupt campaign finance provisions ever enacted”, Obama White House spokesman, Josh Earnest, publicly replied “the present made a tactical decision to go ahead and support this piece of legislation”. Some sources report that the political money provisions were actually drafted by Democrats and added to the bill, in order to allow the Democratic Party’s National Committee to pay for its $20 million debt that remains from last November’s elections.
Workers’ Benefits Rollback #1: Cutting Private Pension Plan Payments
In sharp contrast to the many benefits and funding increases for big businesses, bankers, and investors in the Omnibus bill, American workers are forced to give back benefits; specifically their wages they deferred over decades in order to fund their pensions after retirement.
An important provision of the Omnibus bill will allow companies and their pension fund administrators, for the first time ever, to unilaterally cut their pension benefits. More than 10 million American workers in construction, retail, trucking and manufacturing industries will be negatively impacted by reductions in their monthly pensions.
Despite record business profits since 2010, many employers have continued to refuse to make payments to their union pension funds. Many have dropped out of what are called ‘multiemployer pension plans’. Deficits in these plans have consequently risen from $8.3 billion to $42.4 billion in just the past year. Even though the pension plans still have enough to fund pensions for another 15-20 years, according to business press sources, the Omnibus bill gives employers and fund managers the authority to start reducing pension payouts now for retired workers less than 80 years old.
This action by the US Congress toward workers pension funds, which are a financial institution, contrasts dramatically with the more than $14 trillion in US government and Federal Reserve Bank bailouts of big banks, mutual funds, hedge funds and other financial institutions since 2010 where the wealthy keep their investments and income. A more blatant, crass discrimination against workers in the USA has not been seen in many years.
Equally disturbing is that the Omnibus, joint Republican-Democrat, bill’s clear authorization for employers to start the process of a final destruction of workers’ multiemployer pension plans established a clear precedent and signal for other private sector employers with ‘single’ private pension plans to start planning to do the same. In addition to the 10 million workers covered by multiemployer pensions in the USA, there are an additional 31 million covered still by single employer plans.
As Karen Friedman, executive vice-president of the Pension Rights Center, noted in the wake of the Omnibus bill’s passage, the bill will almost certainly encourage similar cutbacks in state and local government pension benefit payments. Friedman added, thereafter possibly even Social Security and Medicare.
The politicians and employers are thus now taking aim at all that remains of collective pension plans in the USA. More than 50 million workers’ deferred wages (i.e. pension benefit payments) are thus now coming under direct attack. And if the practice of pension cutbacks expands to Social Security retirement benefits, that’s another 58 million retirees, spouses, and disabled workers and their families.
The Omnibus spending bill just passed by Congress, and signed by Obama, indicates clearly that the Republican Legislative Offensive is being rolled out faster than otherwise predicted. The rollout is made possible, moreover, by wide Democrat support for many of the initiatives, in both Houses of the US Congress and from the White House as well. The bill is no doubt a harbinger for more pro-Corporate and anti-worker legislation to come.
Jack Rasmus teaches economics at St. Mary’s College in California. He is the author of the book, ‘Obama’s Economy: Recovery for the Few’, Pluto Press, 2012, and ‘Epic Recession: Prelude to Global Depression, Pluto, 2010. He hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network. His blog is jackrasmus.com, his website www.kyklosproductions.com, and twitter handle @drjackrasmus. This article first appeared in teleSUR English.