While soft celebrity news has found its way onto the CNN news ticker, an underappreciated struggle for the soul of American companies has been under way. In Citizens Disunited, Monks pulls back the curtain to reveal the broad outlines of a battle that has been raging for decades, largely outside of the public’s gaze, between activist investors and the companies that they own.

As Monks, who literally wrote the book on Corporate Governance, sees it, the little guys have largely lost in their attempts to reign in executive compensation, sky high options and managerial perks like the personal use of corporate jets, money for pet projects and campaign funds—all of which are provided at shareholder expense.

Read more at Guernica.

Since this development came to light, members of the media have insisted that the assertion that Rosen violated the law by soliciting the disclosure of classified information is wholly incompatible with the First Amendment. As Michael Clemente, Fox News executive vice president, exclaimed, “We are outraged to learn today that James Rosen was named a criminal co-conspirator for simply doing his job as a reporter… We will unequivocally defend his right to operate as a member of what up until now has always been a free press.”

It is more complicated than that. At the outset, it is worth noting that two facets of this situation are clear. First, as a general rule, the First Amendment does not give government employees a constitutional right to disclose to reporters properly classified information. We can therefore reasonably assume, absent evidence to the contrary, that in this situation the source committed a federal crime by disclosing the classified information to Rosen.

Read more at the Huffington Post.

As the second wave of fallout unfolded, however, a number of commentators pivoted from questioning the “insufficient oversight” of line workers in Cincinnati to condemning the IRS’s systemic failure to provide oversight of free spending, purely political groups that abuse the tax code by claiming non-profit status.

These observers are right to argue that the biggest threat to our democracy is that the scandal, by shifting outrage from the groups breaking the law to the agency that is supposed to enforce it, will eliminate any hope of neutral, non-partisan enforcement of the tax and election laws, opening the door to even more flagrant violations than we see now.

Read more at the Brennan Center.

Apple – like hundreds of other high tech and pharmaceutical companies that enjoy enormous profits from royalties or licensing agreements – is able to attribute these profits to offshore subsidiaries located in low-tax havens like Bermuda or the Cayman Islands even when sales revenue and profits are earned primarily in the U.S.

Under current law, these companies continue to owe taxes to the U.S. Treasury on these overseas earnings, as technically, the taxes have only been deferred. But the taxes don’t come due until the profits are repatriated – that is, brought back to the U.S. parent company. A territorial tax system would let these companies repatriate profits without paying the U.S. taxes they owe.

Read more at US News.

Read more at the Levy Institute.

Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. “competitive.”

Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other.

I’m in London for a few days, and all the talk here is about how Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute with the British government; Google is manipulating its British sales to pay almost no taxes here by using its low-tax Ireland subsidiary (the chair of the Parliamentary committee investigating this has just called the do-no-evil firm “devious, calculating, and unethical”); Amazon has been found to route its British sales through a subsidiary in low-tax Luxembourg, and now receives more in subsidies from the British government than it pays here in taxes; Starbucks’ tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course.

Meanwhile, at a time when you’d expect nations to band together to gain bargaining power against global capital, the opposite is occurring: Xenophobia is breaking out all over.

Read more at Huffington Post

But it’s also a pretty good description of the current system of private regulation labeled “corporate social responsibility” that promises far more to factory workers around the world than it actually delivers.

In the wake of horrific workplace accidents, including a number of fires, in Bangladesh, attention turned to the behavior of brand-name companies, like celebrities being investigated after servants die at their mansion. No fingerprints on the murder weapon, just bits of paper documenting business connections that activists dug out of the rubble.

Next came much who-did-what-when analysis, including attention to local officials’ statements that Wal-Mart had worked to block a push for increased fire safety last year, in contrast to its more recent decision to increase safety inspections. Several European company commitments to push for improved safety standards could be counterposed with the Walt Disney Company’s decision to leave the country.

But while famous multinationals are vivid characters in the story, they aren’t determining the plot. Increasingly competitive globalization and increased emphasis on flexible, low-cost outsourcing limits their room for maneuver (though not their earnest efforts to improve their image).

Even companies with the best intentions can’t guarantee the well-being of workers in a slippery, writhing global supply chain, with layers of temporary subcontractors. As The Economist points out, the disaster in Dhaka makes it hard for any company to claim credibly that it can be sure that its products are “ethically sourced.”

Read more at New York Times

But austerity is succeeding as politics. The German government shows no signs of taking its heavy foot off Europe’s oxygen hose, and President Obama seems determined to strike a 10-year deal with the Republicans that would equal 10 years of sequesters and then some.

What might change this grim politics?

Last seek, Senator Elizabeth Warren — how splendid to be able write the words Senator and Warren in the same sentence — showed the way. Warren introduced her very first free-standing bill, and fittingly it was a bill to cut interest rates on student loans.

Warren’s bill is only a start. It would prevent an increase in Stafford Loans, federally subsidized loans to low and middle-income families, which are slated to double in cost on July 1 from 3.4 percent interest to 6.8 percent. Warren’s bill would cut the rate to the Federal Reserve lending rate to banks, currently 0.75 percent.

But there is in Warren’s proposal the germ of a counter-revolution against austerity politics.

Budget-balance mania is favored by elites. Regular people don’t want cuts in Social Security and Medicare. The Peter G. Peterson Foundation has spent close to a trillion dollars creating one front group after another, trying to sell the proposition that we can somehow deflate our way to economic recovery. Peterson has few takers — except among the group of people who count, beginning with President Obama.

Read more at Huffington Post

We talked about all three of these topics; our discussion is slightly edited for clarity.

Mike Konczal: To start, how do you think Dodd-Frank is unfolding? Specifically, the rules for Title II and “resolution authority.”

Sheila Bair: We finalized most of the rules we could write on our own before I left, though they are working on further clarifications. I think the FDIC has come up with a viable strategy for resolving a large complex financial institution. This is their strategy of using a single-point-of-entry. The FDIC will take control of a holding company and put creditors and shareholders into a receivership where they, not taxpayers, will absorb any losses. This will allow the subsidiaries to remain operational, avoiding systemic disruptions, as the overall entity is unwound over time.

I think this is viable, and they’ve done a lot of great work, particularly coordinating with the Bank of England on the relative resolution regimes. I think bondholders are starting to wake up to the idea that their money is at risk and that they could take losses, which will result in greater market discipline. If you convince the market TBTF is over, debt spreads will go up for large institutions. And you are seeing that happen a bit already. There’s a lot of work left to be done, but so far I’d give implementation a pretty good grade.

 It strikes me that coverage of resolution authority is often very political, with many people making up their minds on whether it will work from before the bill even passed. As such, it’s really difficult to understand if a stronger, versus a weaker, set of rules are being written.

We worked hard to make sure taxpayer bailouts are completely prohibited. I think the language is very tight on that. One of the things that frustrates me with critics of Title II is that they perpetuate the myth of Too Big To Fail by insisting that the government is still going to do bailouts, notwithstanding clear language in Dodd-Frank to the contrary. And that just continues the moral hazard by reinforcing market perceptions that the big institutions won’t be allowed to fail.

Read more at the Washington Post.

Steven Rattner points out in New York Times, “One of the bigger ironies about the I.R.S. imbroglio is that it had nothing to do with taxes. These newly formed entities didn’t seek 501(c)(4) status to avoid taxes….The important benefit that came from achieving 501(c)(4) status was freedom from having to disclose the names of any of their donors.” Rattner goes on to point out that the real story is less about mid-level IRS bureaucrats making bad decisions, and more about the Supreme Court’s disastrous Citizens United decision that created the massive increase in tax exempt applications. His piece concludes, “So let’s, by all means, find the wrongdoers at the I.R.S. and punish them. But the biggest take-away from the I.R.S. mess should be that our campaign-finance system is in desperate need of overhaul.”

So how do we do that? First we must understand that the real crisis is not about what’s illegal. It’s about what is perfectly legal: secret, unlimited money skewing political outcomes, and billions in contributions from lobbyists in exchange for policy favors. If it were only a matter of uncovering specific instances where cash is traded for legislative favors and ejecting corrupt politicians, reform would have succeeded long ago.

“(Legal) contributions from lobbyists and special interests to public servants are bribes,” declared disgraced super-lobbyist Jack Abramoff. It is this legalized system of bribery that must be fixed, but in order to do so, we must also understand how power actually works in Washington. We must understand the real problem that is baked into the culture of the entire political class that runs American government: a culture of common understanding that identifies organized money as the most important form of power in politics. It infects newcomers rapidly and either converts them or spits them back to where they came from. It is the container in which U.S. politics operates.

Read more at Huffington Post

Over the past forty years, the United States has seen a rapid and sustained rise in income inequality, as wages failed to keep pace with productivity gains. The consequence has been a substantial hollowing out of the middle class. Like a modern-day version of the “ghost of Christmas yet to come,” this is a warning of what can happen to an economy and to the people of a nation as a result of a reckless economic journey. However, like the warning delivered in Dickens’ novel, it doesn’t have to be this way. There are a number of steps that can be taken to avoid another lost decade in the United States, which also apply more broadly to European progressives.

In order to reverse this fate – or avoid it altogether – we need to reject the failed economic model of recent times. The supply-side, trickle down narrative is based on a set of unproven assumptions about how the economy works and there is a growing body of economic evidence that inequality has a negative effect on the strength and stability of the economy writ large. For decades, we have been told that growth would result if we left firms alone; if we reduce the costs faced by firms, through lower taxes and limited regulation, then they will have more funds available for investment and they will hire more workers and the economy will grow. Yet, this hasn’t turned out to be the case. Low taxes, at least in the US case, have not been associated with better economic outcomes. Instead, they have been associated with lower and less stable growth, alongside high inequality and a lost decade for America’s middle class.

Read more at Policy Network

State legislatures across the country are hard at work expanding the right to vote. Already, more than 200 bills to improve voting access have been introduced in 45 states in 2013. Friday in Denver, Gov. John Hickenlooper made Colorado the latest to expand rights, joining Maryland, New Mexico, Oklahoma, Virginia, and West Virginia. More legislation isawaiting signature in Florida. To be sure, some states continue to push needless restrictions on the ability of citizens to participate in elections, and voters and their advocates must remain vigilant against any such efforts. Still, the trend is unmistakable: After years of backsliding, states are embracing free, fair, and accessible elections.

In many cases, the bills have enjoyed broad bipartisan support, another encouraging trend. Legislators are expanding access to the ballot in a variety of ways, from reducing the burden of voter identification requirements, to modernizing voter registration, to expanding early voting.

Colorado provides a great example. The Voter Access and Modernized Elections Act includes a number of provisions that would make it easier to register and vote. With the governor’s signature Friday, Colorado is now the 11th state to enact Election-Day registration, which leads to higher registration rates and turnout. The bill institutes a system of portable registration, so that when voters move they can still cast a ballot which will count. It also establishes a bipartisan election modernization task force, paving the way for future reforms. Further, the bill eliminates the problematic “inactive – failed to vote” status that led to voters being denied ballots in certain elections simply because they had failed to vote a single time.

The Voter Access and Modernized Elections Act is truly a comprehensive election reform bill. And the most promising development is the bipartisan way it was conceived. The Colorado County Clerks Association — the officials who actually run elections, and come from both political parties — worked with lawmakers, community groups, and election officials to hammer out a compromise that expands voting access and works for election administrators as well.

Read more at Huffington Post

Should the blame fall mainly on congressional Republicans and their allies in the right-wing media, whose vitriolic attacks on Obama are unceasing?

After all, the only thing the GOP stands for — the sole mission that unites its warring factions — is an unwaivering determination to block anything the Administration seeks while distracting public attention from any larger issue.

But surely some of the seeming disarray is due to the president, whose insularity and aloofness make him an easy target, and whose eagerness to compromise and lack of focus continuously blurs his core message.

Is the central goal of his second term to achieve a grand bargain on the budget deficit? Or progress on gun control? Or restore jobs? Or reform the immigration laws? It is difficult to tell.

Read more at Huffington Post

In an effort to determine the identity of the government employee who leaked the classified information to the AP, the Justice Department, after conducting an extensive investigation without success, subpoenaed from the AP’s phone company the records for more than twenty telephone lines used by the AP and its journalists. The hope was that, by examining the incoming and outgoing phone numbers, it could identify the leaker and prevent him or her from releasing additional classified information in the future.

According to the media (to say nothing of Republicans and Fox News), in pursuing this investigation the Obama administration brutalized the Constitution and flagrantly violated the law. The hysteria of the media’s response is predictably self-involved and self-interested and the reaction of Republicans is predictably hypocritical.

Let me say at the outset that I am a card-carrying member of the ACLU, a strong proponent of press freedom and a staunch believer in both a robust First Amendment and a vibrant Fourth Amendment. But I also care about rational public discourse, and the furious condemnation of the Department of Justice in this situation is way over the top.

The Fourth Amendment prohibits “unreasonable searches and seizures.” Almost forty years ago, in a regrettable decision, the conservative justices on the Burger Court held that individuals have no “reasonable expectation of privacy” in information we voluntarily reveal to third parties. The Court therefore held that for the government to obtain our financial records from our bank, or our phone records from our phone company, is not an “unreasonable search or seizure” within the meaning of the Fourth Amendment.

Read more at Huffington Post

Why, for example, has the IRS been so indulgent of far bigger, flagrantly partisan tax-exempt groups like Karl Rove’s Crossroads GPS and Charles and David Koch’s Americans for Prosperity?  Such groups spent hundreds of millions of tax-exempt dollars to influence the last two elections, in clear violation of IRS rules.

If the IRS is supposedly so zealous about tax enforcement, why has it left on the table hundreds of billions of dollars in offshore tax evasion by the wealthiest — money owed to the Treasury that could reduce the budget deficit?

As Republicans mount hearings to pillory the IRS, beginning Friday when the House Ways and Means Committee officially reviews the Treasury Inspector General’s Report on the Tea Party affair, these crucial issues will likely be sidelined. And the Republicans don’t have entirely clean hands.

For decades, dating back at least to former House Speaker Newt Gingrich’s “Contract with America” in 1994, th­­e Republicans have demonized the IRS, cut its enforcement budget and created procedural obstacles to tax collection in the name of taxpayer rights. Under President George W. Bush, the IRS even shifted scarce audit resources from investigations of tax dodges used by the wealthy to alleged fraud on the part of working families relying on the Earned Income Tax Credit.

When agencies are chronically understaffed, they tend to target the small fry and resort to short cuts. It is far easier to go after a taxpayer who depends on EITC than to challenge a complex offshore trust or hedge fund whose artful tax fraud could consume thousands of investigative hours to unearth.

Read more at Reuters

Their argument has three elements. First, big financial companies can be resolved either in bankruptcy or, more likely, through using the orderly liquidation authority, or O.L.A., created by the Dodd-Frank Act of 2010. Second, the key to making O.L.A. workable is sufficient “loss-absorbing” long-term debt and equity at the holding-company level. Third, the implication is that most or all of the big banks already have sufficient “loss-absorbing” debt and equity at the holding company level to make this work.

As a result, the authors contend, we (or perhaps financial-sector executives) are in luck — no significant structural changes, like simplification or reductions in scale, are needed at megabanks.

All three parts of this argument are unconvincing — and the bottom-line policy implication, “do little, be happy,” is downright dangerous.

The first point about the workings of bankruptcy and O.L.A. may sound good on paper but is simply not plausible in the real world. We are talking about huge, complex and opaque companies — typically including hundreds of thousands of employees across more than 100 different countries, with 2,000-plus legal entities. Even well-informed investors cannot figure out where the risks really lie — and the recent London Whale experience at JPMorgan Chase raises questions about whether officials or even company managements have much more of a clue.

The exercise of having large bank holding companies draw up “living wills” to show how their failures could be handled under normal bankruptcy procedures (part of the Title I requirements under Dodd-Frank) is widely regarded as having yielded little or nothing of value. There will be a do-over later this year, but I have yet to find a well-informed person — in either the private sector or government — who is optimistic about the outcome.

Read more at New York Times

But now the Wall Street behemoths are bigger than ever and President Obama is looking to cut the Social Security benefits of retirees. That will teach the Wall Street boys to be more responsible in the future.

Most people are now familiar with President’s Obama’s proposal to cut Social Security by reducing the annual cost-of-living adjustment (COLA). While the final formula is somewhat convoluted, the net effect is to reduce benefits by an average of roughly 3.0 percent.

Since Social Security benefits account for more than 70 percent of the income of a typical retiree, this cut is more than a 2.0 percent reduction in income. By comparison, a wealthy couple earning $500,000 a year would see a hit to their after-tax income of just 0.6 percent from the tax increase that President Obama put in place last year.

While President Obama is willing to make seniors pay a price for the economic crisis, his administration is unwilling to impose any burdens on Wall Street. Specifically, it has consistently opposed a Wall Street speculation tax: effectively a sales tax on trades of stock and derivatives. The Obama administration has even used its power to try to block efforts by European countries to impose their own taxes on financial speculation.

If the idea of taxing stock trades sounds strange, it shouldn’t. The United States used to impose a tax of 0.04 percent until Wall Street lobbied to eliminate it in the mid-1960s. Many countries, including the United Kingdom, Switzerland, China, and India already impose taxes on stock trades.

The tax in the UK is 0.5 percent on stock trades (0.25 percent for both the buyer and the seller). It dates back more than three centuries. The country raises more than 0.2 percent of GDP ($32 billion in the United States) from the tax each year. The tax has not prevented the London stock exchange from being one of the largest in the world.

Read more at Huffington Post

My organization, Citizens for Responsibility and Ethics in Washington, has regularly criticized the IRS for spending the past two elections sitting on its hands while dark-money groups, organized under Section 501(c)(4) of the tax code, spent millions of dollars contributed by anonymous donors to run vituperative, deceptive political ads. Under the law, 501(c)(4) status is reserved for groups promoting social welfare; it was never intended to apply to political groups.

Nevertheless, largely because of the disastrous 2010 Citizens United decision, the number of applications for 501(c)(4) status more than doubled from 2010 to 2012. The tea party became a political force during the same period. As a result, an overwhelming number of the new groups attempting to benefit from 501(c)(4) status supported Republican candidates and causes. While there are some 501(c)(4)s oriented toward Democrats, including Priorities USA, because of liberal opposition to dark-money groups, the vast majority are conservative.

Under these circumstances, it is understandable that IRS agents would have been concerned about whether many of these newly minted groups were in fact political parties and therefore not entitled to 501(c)(4) status. It is noteworthy that IRS officials made no effort to stymie the efforts of clearly conservative groups to register as 501(c)(4)s. One of the largest, the American Action Network, headed by former Republican Sen. Norm Coleman of Minnesota, sped through the approval process in less than six weeks, and the Commission on Hope, Growth and Opportunity — which had a strong presence in 2010 but is now defunct — had its application approved in less than a month.

Read more at Roll Call

Shelby County is a largely white suburb of Birmingham, Ala., that has challenged the constitutionality of Section 5 of the Voting Rights Act (VRA).⁴ Originally proposed by President Lyndon B, Johnson and enacted by Congress in 1965, the VRA was passed in response to discriminatory practices impacting voters. While the VRA has several provisions that cover the entire United States, such as a ban on some overt discriminatory practices, Section 5 covers only certain states and localities, including Alabama.

When seeking any change in its election laws, covered jurisdictions must obtain advance approval by the Department of Justice or a three-judge federal court. This “preclearance” requirement is designed to ensure that election changes do not discriminate against minority voters, whether intentional or otherwise. When the law was first enacted, only several southern states were designated for coverage by Section 5. Over the years, Congress amended the bill to add jurisdictions, including the Bronx, Manhattan and Brooklyn, and to extend to additional ethnic, racial and language communities. When last reauthorized by Congress in 2006, 16 states were covered in whole or in part by Section 5.⁵

In 2006, the City of Calera, which lies within Shelby County, and is thus covered by Section 5 of the VRA, enacted a redistricting plan that reduced the city’s lone African-American council member’s district from 70.9 percent black registered voters to 29.5 percent. Contrary to law, the city failed to seek review of this change from the Justice Department. The council member lost his seat, but the Justice Department ordered a new districting plan, and he regained it under the approved plan.

Read more that the New York Law Journal