corporations are hoarding cash, demanding more tax breaks and wanting further deregulation #p2 #tcot

from http://www.barefootandprogressive.com/2011/09/corporate-tax-holidays-deregulation-and-the-trillion-dollar-lie.html

Over the weekend, the Wall Street Journal highlighted a new report out from our friends at the Federal Reserve:

Corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring.

Nonfinancial companies held more than $2 trillion in cash and other liquid assets at the end of June, the Federal Reserve reported Friday, up more than $88 billion from the end of March. Cash accounted for 7.1% of all company assets, everything from buildings to bonds, the highest level since 1963.

ThinkProgress focused on some of the resulting corporate and Republican doublespeak — how the GOP and Big Business seeks to use this hoarding of cash to make corporations even richer, noting:

…Republican presidential candidates and corporate leaders continue to lobby for lower corporate tax rates and huge corporate tax giveaways under the guise that they will lead to higher rates of job creation.

They go on to focus on an even wackier Republican Conclusion… that because the Corporations are hoarding so much cash, it's time to give them a Tax Holiday, a chance to bring home the sizeable (and not included in the above $2 Trillion figure) chunks of change these Giant Coprorations have hidden away in foreign lands and foreign banks.

If the US Government would just not tax them on that money, they could bring it back home and… well, the reasoning sort of breaks down there (for why wouldn't they just bring that cash back home and then hoard it away with the rest of their cash?). But as ThinkProgress points out:

Evidence from past repatriation tax holidays, in which corporations can bring foreign cash holdings back to the U.S. at lower tax rates, shows that companies wouldn't use the funds to spur job growth. As one of the members on President Bush's Council of Economic Advisers said, the 2004 repatriation holiday "didn't accomplish the stated goals of bringing jobs and investment to the U.S." After the holiday ended, corporations cut thousands of jobs and stashed more money overseas in anticipation of a future holiday — a perhaps prescient move, as multiple Republican presidential candidates have endorsed an even bigger tax holiday than the corporations have asked for.

Meanwhile, Republican candidates continue to endorse drastic reductions in the corporate tax rate, even as American corporations pay one of the lowest effective tax rates in the developed world.

Unmentioned by either ThinkProgress or the WSJ is the other part of this equation, the other half of the Republican Party's lie.

For the past few months, Republicans (and some business leaders) have tried to use the $2-3 Trillion hoarding as an excuse for another type of corporate giveaway: Deregulation.

Ed Whitfield says:

American financial institutions and American businesses are collectively sitting on more than $3 trillion in cash unwilling to invest or reinvest in our economy because of the uncertainty coming from our federal government.

Ed blames the government's regulation of Corporate America for Corporate America's unwillingness to use the money they have to expand job markets. Because the EPA wants our water to be safe, Corporations are hoarding "more than $3 trillion in cash." Because the Obama Administration believes Wall Street needs more policing after totally wrecking the economy so that they can't, you know, do it all over again… corporations are hoarding "more than $3 trillion in cash."

Mitch McConnell is making the same argument. As he told Chambers of Commerce in Texas this August:

Regulations are the main reason companies collectively are sitting on between $2 trillion to $3 trillion in cash. They are "afraid to invest any of it," McConnell said.

Afraid!

Corporate America is cowering, clutching its blankie, and sobbing quietly. Those terrible regulations!

The Republican Party and the Giant Corporations they represent are trying to have it three ways.

1. They are hoarding all their cash so that if the economy totally collapses, they'll still be sitting pretty.
2. They are demanding further tax breaks and they are fighting, voraciously, President Obama's modest tax re-valuation.
3. They are attempting to use the fact that they've hoarded $2-3 Trillion in cash to bring about the deregulation they have always wanted.