Big donors to super committee members have a stake in the outcomeBy Bill Allison Aug 25 2011 2:01 p.m. 1 comment
Members of the Joint Committee on Debt Reduction--the better known as the super committee--bring a host of priorities, policy positions and potential political posturing to the table. Sen. John Kerry, D-Mass., labeled Standard & Poors' revision of the U.S. credit the "Tea Party downgrade," while Rep. Jeb Hensarling, R-Texas, took to the floor of the House to argue against raising the debt ceiling. But beyond their public pronouncements are private interests--longtime supporters of each member of the super committee--who are far more concerned with their own bottom lines than they are with scoring political points.
Lobbying disclosures for large organizations can list dozens or even hundreds of bills and issues that they try to influence or monitor, and the big donors to super committee members are no exception. The companies, trade groups, universities, labor unions and other organizations whose political action committees, employees and their family members have contributed the most to the dozen members charged with addressing the nation's more than $14 trillion debt lobby on a wide range of issues.
We went through the most recent lobbying disclosures for each of the top five donors to the three Republican House members of the super committee, all appointed by House Speaker John Boehner, and highlighted one or two issues that might come up as the members consider ways to cut spending, raise revenues--or both. Not every big donor had an identifiable interest that might figure in the committee's work, but these filings were made before the bill that authorized the Joint Committee on Debt Reduction had been passed into law.
What becomes clear from reading the lobbying reports, then looking at the donors' annual reports, press releases, congressional testimony and other information, is how much effort is put into defending sums of money that wouldn't make a dent in the total size of the debt. The American Bankers Association opposes a ten year fee on large banks totaling $30 billion to offset the costs of the bank bailout; Blue Cross Blue Shield lobbies to preserve a section of the tax code written just for it that is estimated to cost the Treasury about $2 billion over five years; Dow Corning keeps its lobbyist's eyes on a provision of the American Recovery and Reinvestment Act--the stimulus bill--that afforded it and a joint venture of which it's the largest stakeholder some $169 million in tax credits.
As noted, by no means is this a complete list of where these donors' interests might intersect with the work of the debt committee, just a survey of a few of the issues these groups lobby on.
We'll post similar features looking at the other nine members of the debt committee, starting next week.
Rep. Jeb Hensarling, R-Texas: Known as a budget nanny around Capitol Hill, Hensarling is former head of the Republican Study Committee--a group of GOP House members that develop conservative policies--and is currently chair of the House Republican Caucus. He also served on the Bowles-Simpson National Commission on Fiscal Reform. Hensarling is one of the co-chairs of the super committee, along with Sen. Patty Murray, D-Wash. Over the course of his congressional career, his top donors, according to the Center for Responsive Politics, are accounting firm KPMG, Texas-based electric utility operator Energy Future Holdings Corp., Bank of America, the American Bankers Association and AT&T.
- KPMG: Among other things, accounting firm KPMG helps its clients minimize their tax burdens. In 2005, the firm confessed criminal wrongdoing in a tax shelter case, and agreed to pay $456 million in fines and restitution. The firm created $11 billion in phony tax losses that, were they not challenged, would have cost the Treasury about $2.5 billion in lost tax revenue. Currently, KPMG is lobbying on Dodd-Frank implementation--including rules that will impact accounting firms--and the implementation of rules relevant to banking. KPMG released a white paper on the tax implications the act may have on banks.
- Energy Future Holdings Corp.: The biggest issues for the utility are regulatory--particularly the Environmental Protection Agency's cross-state air pollution rule. Its most recent lobbying disclosure form also lists Dodd-Frank implementation, particularly the treatment of over-the-counter derivatives.
- Bank of America: One of the key players in the financial crisis, on its own merits and as a result of its acquisitions of mortgage lender Countrywide Financial and brokerage firm Merrill Lynch, Bank of America has benefited from billions in taxpayer-financed loans and other support. In its most recent lobbying report, Bank of America disclosed lobbying on a House bill that would permanently exempt from taxation some foreign earnings of corporations. Bank of America noted in its most recent annual report that at the end of 2010, it had $17.9 billion of undistributed earnings in foreign subsidiaries, which, if taxed, would have increased its bill to the Internal Revenue Service as much as $2.6 billion.
- American Bankers Association: The ABA, which represents banks of all sizes (the majority of its members have total assets of less than $165 million), lobbied against an Obama administration proposal--the fiscal crisis responsibility fee--that, in its most recent incarnation, would raise $30 billion over ten years by taxing large banks. ABA opposed the bank levy when it was first proposed in 2010.
- AT&T: While much of AT&T's lobbying has been focused on its pending takeover of T-Mobile from Deutsche Telekom, the company has many other issues before federal regulators and Congress. Its lobbying disclosures list numerous bills with tax consequences that the company is following, ranging from a bill that would exempt repatriated offshore earnings from federal corporate income taxes to measures that would extend research and development tax breaks or change taxes on telephone service providers. AT&T also has a huge interest in government health programs--the company took a $995 million charge in additional tax payments stemming from the Patient Protection and Affordable Care Act of 2010, including taxes on "Cadillac" health care plans, changes in Medicare Part D, and mandates for covering retirees. AT&T is also following a bill that would repeal a not yet enacted provision of a 2006 law, the Tax Increase Prevention and Reconciliation Act, that would require federal agencies, state and local governments with expenditures of more than $100 million to withhold taxes amounting to 3 percent of the payments they make to outside vendors of goods and services costing more than $10,000.
Rep. Fred Upton, R-Mich.: Upton is the chair of the powerful House Energy and Commerce Committee. Among his top donors are AT&T, the telecom giant, CMS Energy, a Michigan-based utility, auto maker Ford Motor Company, appliance manufacturer Whirlpool Corp. and DTE Energy, another Michigan-based utility.
- AT&T: See profile above.
- CMS Energy: Michigan-based utility CMS Energy lobbied over an array of issues, including tweaks to the corporate alternative minimum tax. Like its counterpart for individuals, the corporate AMT is designed to ensure that excessive deductions do not prevent otherwise profitable companies from paying some income tax. Unlike individuals, corporations can accumulate credits based on their alternative payments to defer future taxes on income. According to its most recent annual report, CMS Energy has $269 million in alternative minimum tax credits. CMS Energy also lobbied on a bill, sponsored by Upton, that would prevent the EPA from regulating greenhouse gases.
- Ford Motor Co.: Ford is also lobbying on a bill that would permanently extend the tax code provision that allows corporations to avoid U.S. taxes on their foreign earnings, provided they keep those funds overseas. The company's most recent annual report notes, "No provision for deferred taxes has been made on $812 million of unremitted earnings that are permanently invested in our non-U.S. operating assets." The same annual report warns that, "Higher interest rates and/or taxes to address the higher deficits also may impede real growth in gross domestic product and, therefore, vehicle sales over our planning period."
- Whirlpool Corp.: The appliance manufacturer, co-founded by Upton's grandfather, lobbies mostly on international trade issues. They also lobbied on appliance energy tax credits--in their most recent annual report, the company noted that in 2010, "net earnings in 2010 includes … the benefit of $225 million of energy tax credits generated in the United States from the production of certain energy efficient appliances, compared to $113 million in 2009."
- DTE Energy: The electric and natural gas utility supports a series of bills that call for greater federal incentives--tax credits or spending--to promote research and the use of natural gas-fueled transportation and electric cars. They're also lobbying on the Upton-sponsored bill that, among other things, would prevent the EPA from regulating greenhouse gases.
Rep. Dave Camp, R-Mich: The chair of the House Ways and Means Committee's top five donors are Dow Chemical, Blue Cross/Blue Shield, Dow Corning, and a pair of Michigan-based utilities that are also top donors to fellow super committee member Rep. Fred Upton, R-Mich., DTS Energy and CMS Energy.
- Dow Chemical: The world's third largest chemical manufacturer lobbies on a host of regulatory, manufacturing, health, trade and tax issues. They are seeking a permanent extension and expansion of the research and development tax credit--the Joint Committee on Taxation estimates that the credit will cost the Treasury $10.7 billion between 2010 and 1014, and that all deductible research and development will cost an additional $28.5 billion over the same time period. Dow lobbies over international tax issues, including a tax repatriation holiday that would allow it to return revenues earned overseas at a reduced rate of taxation; Dow Chemical's most recent annual report noted that it had more than $9.7 billion in undistributed foreign earnings at the end of 2010.
- Blue Cross/Blue Shied: The Blues have their own section of the Internal Revenue Code, added as part of the 1986 Tax Reform Act, that will cost the Treasury roughly $2.1 billion between 2010 and 2014, according to the Joint Committee on Taxation via Subsidy Scope. Blue Cross mentions the provision in its most recent lobbying disclosure.
- Dow Corning: The joint venture of Dow Chemical and Corning, Inc., Dow Corning is itself the majority stakeholder in the Hemlock Semiconductor Group joint ventures. In January 2010, the Obama administration awarded Hemlock and Dow Corning $169 million in Advanced Energy Manufacturing tax credits, made available under the American Recovery and Reinvestment Act, better known as the stimulus bill. Dow Corning continues to lobby on the tax credit.
- DTS Energy: See profile above.
- CMS Energy: See profile above.
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