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BROKEN MEDIA, BROKEN POLITICS

Charlie Baker

 

If Mass journalists were doing their jobs, Baker would not be so popular

 

May 1, 2018

BY JASON PRAMAS @JASONPRAMAS

 

It’s always funny to hear that Charlie Baker is a very popular governor… The most popular governor in the country at the moment, according to polls. Because he doesn’t do anything very differently than his predecessor Deval Patrick did. Or than Mass House speaker Robert DeLeo does. Or than most any state Democratic leader when it comes down to core economic issues—with the exception of the leaders with little actual power.

 

Baker, Patrick, DeLeo, and all their ilk in both major parties essentially follow the same game plan. They work to lower taxes for those most able to afford them, cut desperately needed social programs to the bone, and give away as much money as possible to giant corporations.

 

Much of the rest of what they do is posturing for the various constituencies that make up their particular electorates. And that’s the stuff that gets the most media coverage. Which is not to say they’re necessarily insincere about such activity. But they’re elected to represent the wealthy interests that run the Commonwealth, and the work they do for that most important constituency is always their top priority.

 

So when Patrick and Baker, for example, shovel over $1.5 billion in free public money at the biotech industry or arrange millions in tax breaks and direct state aid for huge companies that don’t need them on an ongoing basis—with DeLeo’s blessing in both administrations—to the extent those acts get coverage, they’re presented as done deals that are “good for the economy.” Then it’s on to the next press spectacle of the day. Events where they can “show leadership” and the like. As when there’s a snowstorm. In Massachusetts, a northern state noted for its frequent snowstorms. And the current governor gets on TV and says “stay indoors during the snowstorm.” That is apparently showing leadership.

 

Which explains Baker’s high numbers, I think. Simple public relations. Accentuate the positive, eliminate the negative, and all that. With most of the major news outlets gamely playing along. And his numbers are higher than Patrick’s were because he’s a white guy in a super racist state that likes to think it’s super anti-racist.

 

That’s what results in people that don’t pay attention to politics—including the vast majority of white voters—going, “Oh, Baker’s such a nice man” when pollsters ask their opinion of him. More than they did with Patrick. No doubt Baker is a nice man in person or whatever. Lots of people who do bad things when they have power are personally “nice.” Like, I’m sure when some buddy of his from childhood needs money, he’ll give it to him. Or at least loan it to him. But when all the legions of people he doesn’t know personally need good jobs with benefits, need free higher education, need major improvement to infrastructure like the MBTA—because of entrenched structural inequality—that’s a different story.

 

A story whose narrative you can hear if you listen to Baker’s remarks to the 2018 Mass Republican Convention in Worcester last weekend.

 

Stripping away obligatory pleasantries and nods to major supporters, the speech was aimed at the same white middle-class suburbanites who remain the base of the state Republican Party. Baker addressed them directly at one point while enumerating the “successes” of his administration: “We offered early college programs, our Commonwealth Commitment program, which dramatically reduces the cost of a college education. And increases in state scholarships to make the price of college more affordable for moderate- and middle-income families.”

 

See, he thinks they’re so important he mentioned them twice in a row: “moderate- and middle-income families.” No word about low-income families, though. At all. Not even a nod. Sure, working families are discussed. But in Republican-speak, “working families” isn’t code for “working class” as it often is for Democrats. It means “those who work.” As opposed to “those who do not work.” Like all those “lazy shiftless” folks that used to be called working class in more honest times. And those totally nonindustrious [ha!] immigrants. And the “undeserving” poor in general. Everyone who supposedly lives off the bounty of “our”––the good “moderate- and middle-income” people’s, the “taxpayers’”—labor.

 

But no mention of his most important constituency, the one he actually works for, either. “Small business” is mentioned a number of times. But not major corporations and the rich people that own them.

 

Still, they’re there. Lurking behind all of Baker’s remarks. Especially when he said several things that are completely and obviously false to anyone who follows politics reasonably closely. Like taking credit for “dramatically” reducing the cost of a college education. When public higher education is an absolute disaster in Massachusetts. When both the working-class families he seemingly deplores and the middle class he purports to represent—immigrant and nonimmigrant alike—are forced to run up ruinous amounts of debt just to put kids through schools that were once so cheap as to nearly be free. While tuition and fees keep getting raised year after year. Under both Democratic and Republican administrations.

 

The rich and the corporations are there because public higher ed, like virtually every other beneficial government program, is being starved for operating funds. To fatten that 1 percent’s coffers. Because politicians like Baker make a virtue out of cutting taxes. Slashing budgets. Laying off public workers. Privatizing anything they can get away with. As Baker himself has certainly been doing at the much-beleaguered MBTA. Another public service he addressed in Worcester, saying: “We took on the special interests at the MBTA. Created a Fiscal Management and Control Board. And saved taxpayers hundreds of millions of dollars, and we’re rebuilding its core infrastructure.” While, in the real world, that same public transportation infrastructure continues to fall apart for lack of the needed direct infusion of state funds.

 

Is everything Baker does bad? No. Is he as dangerous as federal counterparts like President Donald Trump? Or the feral reactionary theocrat Scott Lively that fully 28 percent of Mass Republican delegates just chose to run against Baker in a primary this fall? No. Not yet at least.

 

But that’s not the point.

 

The point is that a polity where a Charlie Baker can be incredibly popular is a broken polity. And a news media that enables him is a broken news media. Baker does not represent even the interest of the white middle class that keeps voting him into office, let alone the working class as a whole. A media that was doing its job would make that patently clear. Every hour of every day. Yet it does the opposite. Because it too is controlled by the same rich and powerful interests that control politics and ensure pols like Baker keep getting elected. Whether those pols call themselves Republicans or Democrats.

 

So to fix politics, we have to fix the media. And I can’t address how that might be done in a single column. But my colleagues and I are trying our damndest to do it in practice at DigBoston and the Boston Institute for Nonprofit Journalism. And the fix starts with journalists who are independent and strive to tell the truth about problems in media and the political system. Every hour of every day. Beyond that, there’s much more to say. So, I’ll plan to talk about specific potential fixes in future columns and editorials.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

YOUR MOVE, BOSTON

Boston Women's March 2017. Photo by Ryan Dorsey, CC-BY-SA 2.0 Generic.
Boston Women’s March 2017. Photo by Ryan Dorsey, CC-BY-SA 2.0 Generic.

 

Only a massive protest movement can stop government giveaways to megacorps

 

March, 2018

BY JASON PRAMAS @JASONPRAMAS

 

Boston politics—in both its state and local variants—seems to consist largely of backroom deals between government officials and major corporations punctuated by rituals of representative democracy that are increasingly put on just for show. Perhaps it has ever been thus. But that doesn’t mean that Bostonians have to like it.

 

One would be tempted to call this politics incipient fascism were it not all such a desultory affair—unsullied by any ideology other than a very primitive capitalist greed. And in that way, it is reminiscent of current federal politics. The fact that most of the damage is being done by people calling themselves “Democrats” rather than people calling themselves “Republicans” making almost no discernible difference.

 

Which is why it becomes tiresome to write about. One disgusting display of government servility to corporate power replaces another week by week, month by month. The storyline is always the same. Only the brand names change.

 

On the ground—physically close to the halls of actual power in the Financial District, Back Bay, and now the Seaport District, but a million miles away in terms of elite awareness—the situation is dire. People don’t have good jobs. Or affordable housing. Or adequate public schools. Or cheap, safe, frequent, and environmentally friendly public transportation. Or a proper healthcare system. Or pensions. Or sufficient leisure time. Or freedom from several kinds of debt peonage.

 

But city and state political leadership have no plans to fix these problems. Because they can’t do so without discomfiting the ascendant rich and powerful. So they squirrel around the edges. They juggle budget lines, and change program names, and reorganize departments, and send out obfuscatory press releases, and do whatever they can do to cover up the fact that they aren’t taxing giant companies and their owners nearly as much as they should be. And in failing to collect sufficient tax revenue, they lack the needed funds to fix the worst damage done by those companies.

 

Yet they never fail to find millions in ready cash for vast conglomerates like General Electric. And now Amazon. A multibillion dollar trust that did not pay a cent in US income taxes last year, according to the Institute on Taxation and Economic Policy—and is expecting a one-time $789 million break from thanks to Pres. Donald Trump’s kinder, more corporate-friendly tax plan.

 

So, sure, I could write another column this week inveighing against Mayor Marty Walsh’s new scheme to dump $5 million in local tax breaks on Amazon in exchange for bringing another 2,000 jobs to the city. Well, not to the actual city, but to job sites within 25 miles of the city, according to the Boston Globe. And not right away, but by 2025. Maybe. And dumping another $5 million if Amazon brings yet another 2,000 jobs to (Greater) Boston. Not the decent working class jobs that most Bostonians need, of course. Jobs that highly educated people from around the world will come to the area to fill. Exacerbating our housing, transportation, and environmental crises in the process.

 

And, yes, the proposed $5-10 million is not as much as Walsh arranged to throw at GE—in a deal swiftly running off the rails as that corporate behemoth crashes and burns thanks to the gentle ministrations of its own “activist” investors. But once Gov. Charlie Baker adds state money to the kitty, the new Amazon deal will start to look very similar to the earlier deal. Which he will almost certainly do. Given that he’s so excited for Boston to “win” the far larger “HQ2” boondoggle that he wants to pass a new law that will allow the Commonwealth to shovel truly epic wads of public lucre at the rapacious anti-worker multinational, according to State House News Service.

 

Yet with such deals becoming so frequent, it really strikes me that writing is never enough to change the politics that allows this kind of backroom deal making by itself—regardless of how boring or exciting it is for me to crank out. After all, providing information to the population at large only goes so far.

 

Political action is inevitably required. And not just by one journalist. Because stopping the public gravy train for corporations that are also among the biggest donors to state and local politicians’ war chests is going to take truly massive and sustained protest on the part of the people of Boston (and the rest of Massachusetts).

 

How massive? Well, remember last year’s Women’s March of over 175,000? Or last year’s 40,000-strong march against a few ultra-right weasels? That’s the scale of the street actions that would be required on a regular basis—in tandem with concerted and well-coordinated lobbying efforts—to not only stop particular giveaways to corporations like GE and Amazon, but to outlaw them. And, for good measure, start criminal proceedings against politicians and corporate leaders that collude to loot the public till.

 

Who will lead such efforts? Hard to say. But at the end of the day, I think it will be new entrants that will step into the political vacuum I’ve outlined, and directly challenge state and local government deals with major corporations. People like most of my regular audience. Working people, many without college degrees, that will finally decide that enough is enough. I think that the existing oppositional forces—ranging from the left wing of the Democratic Party through formations like Our Revolution to grassroots activist coalitions like Poor People’s Campaign to rising socialist organizations like Democratic Socialists of America to some of the more enlightened elements of organized labor—will play a role in the necessary popular movement that will emerge. But I suspect that the main energy will not come from those forces, but from new ones. As has been the case with the Occupy and Black Lives Matter movements in recent years. The trick will be sustaining early momentum long enough to bring some big corporations down to earth. And then moving on to tackling the truly terrifying federal corruption.

 

Until that happens, it’s going to be one sad government giveaway to huge companies after another in Boston. And I’ll do my best to keep you all up to speed on at least the worst of them. But I look forward to the day that I can help chronicle the victory of a powerful movement for social justice. Rather than merely track democracy’s looming demise.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2018 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

TOWNIE: CORPORATE TAX FABLES AND COMMUNITARIAN KIDDIE TABLES

CORPORATE TAX FABLES AND COMMUNITARIAN KIDDIE TABLES

 

December 12, 2017

BY JASON PRAMAS @JASONPRAMAS

 

Big local corps quiet about huge profits to come from Repub tax scheme… except GE

An interesting WBUR article, “Largest Mass. Companies Are Mostly Silent On GOP Tax Plans,” asked the top 12 corporations in the Commonwealth to comment on the recently passed Republican scheme to transfer vast amounts of money from the working and middle classes to the rich and the corporations they control—euphemistically called “tax reform” in most of the major news media. Unsurprisingly, Bay State business leaders didn’t want to take time away from rubbing their hands together and cackling with glee about all the free money they’re going to get—choosing instead to remain mum for the moment.

 

But WBUR did get a statement out of General Electric after the Senate vote on the tax plan:

 

GE commends Congress and the White House for their commitment to comprehensive tax reform. GE supports the Senate tax reform plan because it would upgrade the U.S. to a territorial tax system, bring rates in line with other countries, and allow U.S. businesses and workers to compete fairly around the world, so it’s the quality of our products that determine whether we win global deals, and not tax differences.

 

No surprise GE would say that, since it will benefit tremendously from the drop in federal corporate tax from 35 percent to only 20 percent. But it will also get to repatriate as much of the lucre it’s been offshoring as it would like at a one-time tax rate of merely 12 percent. And now that the feds are “upgrading” to a “territorial tax system,” the company will make even more money. Why? Because a territorial tax system means that all the profits multinationals sock away in offshore tax havens will be taxed at a rate of zero percent. You read that correctly. Nada. No taxes at all on foreign profits.

 

Currently, companies like GE stash profits in other countries because, although they have been technically taxed on all profits—foreign and domestic—at the base 35 percent rate (basically a total joke since there are so many corporate tax loopholes that big companies like GE actually end up with a negative tax rate some years, but let’s play along for the purpose of this explanation), they are only required to pay those taxes when they “repatriate” the money back to the US. Which has often been never thanks to a complicated system called “transfer pricing” where corporations book profits in low tax countries, and take deductions in the US and other higher tax countries. And then borrow cheap money on the strength of their foreign bank accounts to make more profits.

 

The result will be even more offshoring of both money and jobs by megacorps. Because why would a company like GE not move more of both away from the US if foreign profits are  tax free—without nearly as much of the tricky accounting that’s currently needed to play the transfer pricing game? Just really bad news for Mass workers. And for boosters of the GE Boston deal. And anyone who thinks big companies like Amazon are going to have much incentive to add lots of jobs anywhere in the US going forward.

 

BPDA “PLAN: Glover’s Corner” protested in Dorchester

As the neoliberal capture of the government and the public sector continues apace, earnest technocrats at the Boston Planning and Development Agency (BPDA, formerly known as the BRA) still find it necessary to play the communitarian “public meeting” game when trying to sell bad deals that advance corporate interests to the working families who are all too often the targets of such deals.

 

Communitarianism being the decades-old fad where institutions representing the rich and powerful work hard to make sure that “every constituency has a seat at the table” when they want to do something that will harm those constituencies. But, of course, the power relations remain unchanged. The rich and powerful remain rich and powerful. Everyone else does not. And “the table” isn’t the real table—where bankers, CEOs, and top government leaders meet to make policy decisions happen. Usually behind closed doors. It’s basically a kiddie table where regular people can pretend they have some impact on a process that’s over before it begins.

 

Which is why it’s nice to see that housing activists with the Dorchester Not For Sale coalition decided to crash a recent BPDA transit-oriented public meeting on its “PLAN: Glover’s Corner”—which is slated, among other things, to add hundreds of units of housing that will be mostly unaffordable to current Dot residents.

 

According to the Bay State Banner and the Dorchester Reporter, the Dorchester activists are taking a page from JP and Roxbury housing activists with the Keep It 100% for Egleston coalition who protested the larger BPDA PLAN: JP/Rox—which might ultimately involve thousands of units of new housing—until the city relented and mandated that 36 percent of the new units (and 40 percent overall, including units currently permitted for construction) must be affordable.

 

The definition of “affordable” for the JP/Rox plan area is pegged to percentages of the average median income of the Boston region set by the US Department of Housing and Urban Development (HUD). So, for example, according to an August Spare Change News article, some “affordable” units being rented and sold as part of the 3200 Washington complex are being offered to households making 70 percent of the region’s average median income, and some to households making 100 percent.

 

But JP and Roxbury advocates have continued to protest PLAN: JP/Rox even after it was made official because its definition of “affordable” remains too high.

 

Spare Change continues, “For the Boston metropolitan region, the average median income is just over $100,000, and according to the U.S. Census Bureau, the average household income for all of Jamaica Plain is $76,968. However, households within the plan’s range have an average income of just over $50,000.”

 

According to a March Bay State Banner article, activists three goals for the plan are “to deepen the affordability level on designated affordable housing units so that they are attainable by households making less than $35,000 per year; increase goals for the portion of new housing that’s designated as affordable from 36 percent to 55 percent; and require the conversion of 250 market-rate units into affordable units..”

 

So while their activism raised the amount of “affordable” housing the BPDA planned to offer in the deal from 30 percent to 36 percent, it’s not going to help many people currently living in or near the affected neighborhoods to stay in the area unless the definition of affordable is changed to reflect economic reality. Given that fact, Mayor Marty Walsh’s much-vaunted progress on getting more affordable housing built on his watch is based largely on smoke and mirrors because much of it remains unaffordable to the people who need it most.

 

The Dorchester activists, meanwhile, are demanding that the BPDA accept a six-month moratorium on PLAN: Glover’s Corner, use the extra time to provide more data to the community on the plan, and do things like provide childcare at public meetings to allow more locals to attend.

 

Thus far, the BPDA is blowing off such demands and trying to plow forward without significant changes to its plan. Boston City Councilor Frank Baker, who attended the Glover’s Corner meeting, agreed with the BPDA in a recent Spare Change article, saying “As far as I’m concerned, it’s not a valid request.”

 

Seems the fight for housing justice is far from over in Dorchester.

 

Townie (a worm’s eye view of the Mass power structure) is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GENERAL ELECTRIC FAIL

 

Conglomerate’s woes throw Boston HQ deal contradictions into bold relief

 

November 15, 2017

BY JASON PRAMAS @JASONPRAMAS

 

What a surprise. General Electric is tanking, and the scheme to bring the multinational’s headquarters to Boston is looking worse by the day. And whom shall the public blame if that once-secret deal cut by Gov. Charlie Baker and Mayor Marty Walsh in January 2016 goes south? Potentially tossing away millions in tax breaks and direct aid to a company that has already done massive damage to the Bay State over the past few decades? Readers of the dozen columns I’ve written criticizing the boondoggle will already know the answer to that question. But for those of you who have made the mistake of believing all the massive amounts of PR bullshit that the Boston Globe and other area press have been tossing around about the affair since that time, here’s a bit of a recap.

 

Where to begin? So, the governments of Boston and Massachusetts agreed to shovel tens of millions of dollars at GE in “exchange” for “800 jobs” in a new corporate headquarters campus in the Fort Point district of the Hub. Many of which would simply be transferred from the old headquarters, and most of which would be executive level jobs that will not help Boston’s struggling, underemployed working class.

 

Now there’s a problem. GE’s been losing money all year. According to the New York Times, its stock price had already dropped by 35 percent since January. Then, according to CNBC, the company’s share value dropped another 13 percent this week as of this writing after new CEO John Flannery announced a restructuring initiative—including the one thing investors hate most of all: dividend cuts. Only the second for GE since the Great Depression. So the knives are coming out around the beleaguered behemoth, and it remains to be seen whether some internal reorganization (doubtless costing legions of employees their jobs) and some belt-tightening by its execs will be enough to stop investors from moving to carve the conglomerate up like a Thanksgiving turkey. But let’s not assume the worst just yet.

 

Funny thing about that belt-tightening, though. According to the Boston Herald, cuts are now in store for GE’s still-small local workforce, and construction of the new Fort Point headquarters building was already pushed back two years from 2019 to 2021 in August. The plan is to make do with the two old Necco buildings already being refurbished on the site at first. The PILOT (payment in lieu of taxes) agreement signed by the Boston Planning and Development Agency (formerly the Boston Redevelopment Authority) and the city of Boston guarantees up to $25 million in tax breaks to GE if it provides the much-ballyhooed 800 full-time jobs. But by what date?

 

The discussion around GE moving its HQ to Boston has focused on the corporation creating those jobs by 2024. Herein, then, lies the rub about the PILOT deal: The agreement is framed around GE hiring “approximately 800 employees at the Headquarters Building and the Necco Buildings within eight years of the Occupancy Date.” But that occupancy date is explicitly defined as “the date upon which the Company initially occupies the Headquarters Building.” Which has now been pushed back from 2019 to 2021, according to the Boston Business Journal. So 2024 cannot be the year that GE will need to have 800 employees on its new campus. 2027 would have been the earliest it had to meet that target. And now that’s been pushed back to 2029, given the delay with the headquarters building.

 

Yet it turns out that the PILOT agreement doesn’t actually require 800 jobs to be created. Remember, it starts by stating GE will employ “approximately” 800 people on the Fort Point campus. But further down in the document, in a table explaining the specific tax break the city will actually give the company during each year of the deal, it allows for the creation of as few as 400 jobs in a chart with five tax break tiers between “Job Figure is between 400 and 499” and “Job Figure meets or exceeds 800.” Keeping in mind that the agreement also specifies a “stabilization” period of seven years between 2018 and 2024, during which GE gets $5.5 million in tax breaks no matter what and isn’t required to provide any jobs at all for the first six years. GE is then only required to provide between 400 and 800 jobs from 2024 until the agreement ends in 2037.

 

Job figure table from the GE Boston PILOT agreement
Job figure table from the GE Boston PILOT agreement

 

What’s super puzzling is that agreement first requires the company to start providing annual job figures “from and after” the aforementioned occupancy date. But the agreement already established that it only really has to start meeting any job targets as far out as eight years from the date it occupies its headquarters building. Making the job target requirement trigger as late as 2029, according to current plans. Despite the tax break table in the PILOT agreement using job targets to calculate tax breaks beginning in 2025 based on the 2024 job count.

 

The state, for its part, committed a total of about $120 million to the project. Late last year, GE spent $25.6 million to buy 2.5 acres on the Fort Point Channel that includes the land the existing buildings sit on and the land the new headquarters building will (perhaps) one day occupy from Procter & Gamble. MassDevelopment, part of the Commonwealth’s economic development apparatus, took out a $90 million loan from Citizens Bank—an interesting maneuver worth looking into—using $57.4 million to purchase the two old Necco buildings on the site from P&G, and the rest to refurbish the buildings. The remainder of the state’s “investment” is slated to go to fixing up the area around the site.

 

So, GE is getting basically free rent on the Necco buildings plus free upgrades on abutting public land courtesy of the state. And a big chunk of the taxes it would normally pay over the next 20 years is coming free from the city. Without any real requirement that it actually provide any jobs in Boston for many years, and then only (maybe) 400 jobs by 2029—assuming the headquarters building is built in 2021.

 

Which is the problem with all such erstwhile “economic development” deals in the Bay State. From their origin as a way to help encourage investment in areas of the state that were down on their luck precisely because GE and companies like it moved their manufacturing operations away from cities like Pittsfield, Lynn, and Fitchburg to places without the decent labor and environmental regulation that was in place by the 1970s, they have become yet another way for rich and powerful corporations to get richer and more powerful. Worst of all, such corporations hold all the cards in the deals. If they don’t get lavished with free public money, they can refuse to move their operations here or can leave if they’re already operating in the area. Once they get the cash they’re looking for, they can basically pull out at any time. Or as is the case with GE, they can “alter” the deal Darth Vader-style, leaving our local “Lando Calrissians” like Baker and Walsh to “pray” the deal is not altered “any further.”

 

The Boston Business Journal was correct to point out that GE will get $2.1 million in tax breaks on the Fort Point Complex by 2021—the year that the company now claims it’ll be completing its new 12-story headquarters building on the site. But what if it doesn’t build the new structure at all? It’s not clear. Because the PILOT agreement is pegged to job creation starting as far out as eight years after the headquarters building is built, and then allows for the company providing as few as 400 jobs between 2024 and 2037 rather than the 800 everyone’s been assuming. While not actually demanding any job creation until as late as 2029, making it unclear how the tax break will be calculated between 2025 and 2029 should GE drag its feet for the full eight years. The conditions for the company defaulting on the agreement are also pegged to job creation. Not to the construction of the headquarters building. Oh, and by the way, the PILOT deal only covers the headquarters building and the land the company purchased under and just around it (which the agreement calls the “Headquarters Project”). Not the Necco buildings, now owned by the state. Also, there’s no word about what happens if the company has less than 400 workers in Boston at any point from 2024 to 2037. Do these curious contradictions amount to loopholes for GE to bag the whole deal? It certainly looks that way.

 

The minimum GE will get in tax breaks from the city of Boston over 20 years is $5.5 million by 2024 plus whatever breaks it qualifies for between 2025 and 2037. However, the amount the company actually puts out in annual PILOT payments after 2024 is calculated by a complicated formula based on the taxes that would have been assessed without the PILOT agreement. And the assessed value of the relevant property could change from current projections. So it’s hard to know what the total value of the PILOT deal will ultimately be to GE, other than that it will be a bunch of money… however many jobs it actually creates.

 

But why exactly are Boston and Massachusetts giving a huge company that’s still profitable any money at all? And what happens if GE bails on the scheme by hook (simply running and fighting its PILOT default in court with its vast legal department) or by crook (not building the headquarters building at Fort Point and possibly getting away with delaying the job creation target trigger until the deal ends in 2037)? And what happens if worse comes to worst for GE, and the company actually does collapse?

 

These remain my central questions. And I continue to encourage all of you to ask those and related questions to every Boston and Massachusetts politician you can find. And ask the Globe while you’re at it. They’ve got a loooot of ’splaining to do about their cheap boosterism… which they’ve become awfully quiet about of late. Preferring, it seems, to focus on the next giant company that’s demanding public bribes to come to town, Amazon.

 

A shorter version of this column appears in this week’s DigBoston print edition.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

TOWNIE: A WORM’S EYE VIEW OF THE MASS POWER STRUCTURE

Students at rally at Boston City Hall by NewtonCourt (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Students at rally at Boston City Hall by NewtonCourt (Own work) [CC BY-SA 4.0], via Wikimedia Commons

From the guy that brings you Apparent Horizon

October 18, 2017

BY JASON PRAMAS @JASONPRAMAS

 

The rich and powerful interests that control Massachusetts politics and the state economy have their fingers in every conceivable pie. So numerous are their projects that it’s difficult for most news outlets to keep track of them, let alone cover them all. Yet it’s critical for our democracy that they be covered. Which is why I’m launching Townie—a regular news column that will provide short takes on all the elite wheeling and dealing that most people never hear about.

 

Business Organizations Sue to Down “Millionaire’s Tax” Referendum

In an era when taxes continue to be slashed for wealthy people and corporations as government social programs are starved for funds, one would think that the Fair Share Amendment (a.k.a. “millionaire’s tax”) proposed by the Raise Up Massachusetts coalition of religious, labor, and community organizations would be a no-brainer. The idea is slated to be put in front of Massachusetts voters as a binding referendum question in November 2018. If passed, it would amend the state constitution to add a 4 percent tax on top of the Bay State’s infamously inadequate 5.1 percent flat income tax for all households earning $1 million or more. The money collected will be mandated to fund public schools, transportation, and road maintenance. All sectors that really need the money. And best of all, only 19,500 families would have to pay in 2019 if the tax goes into effect—0.5 percent of all filers.

Well apparently any tax is a bad tax in the eyes of the Commonwealth’s “business community.” No matter how many people it would help, and how painless it would be for the tiny number of 0.5 percenters. So, according to an Associated Industries of Massachusetts (AIM) press release,  the leaders of five pro-corporate organizations are trying to torpedo the referendum before it can be voted on by filing a lawsuit against it at the Supreme Judicial Court. The plaintiffs are: Christopher Anderson, president of the Massachusetts High Technology Council, Inc. (MHTC); Christopher Carlozzi, Massachusetts state director of the National Federation of Independent Business (NFIB); Richard Lord, president and chief executive officer of AIM; Eileen McAnneny, president of the Massachusetts Taxpayers Foundation (MTF); and, Daniel O’Connell, president and chief executive officer of the Massachusetts Competitive Partnership (MACP).

They claim that the referendum language is “riddled with constitutional flaws,” with the MTHC’s Anderson remarking that “Amending the Constitution to achieve taxing and spending by popular vote is just a terrible idea, and could undo much of the good work that Massachusetts has done in terms of creating a successful economic climate.” But no matter what kinds of arguments they try to make, it seems like what they’re most afraid of is democracy. Let’s see how far they get with the SJC.

 

About That Opioid Epidemic…

More proof that the rising number of deaths from opioid abuse has more to do with corporate greed than any personal failings of individuals suckered into addiction by pliant doctors colluding with pharma sales reps. And also that those few drug companies that pay any penalty at all for their role in destroying communities across the state, get little more than a slap on the wrist. According to a press release by the office of Mass Attorney General Maura Healey, “An opioid manufacturer will pay $500,000 to resolve allegations that it engaged in a widespread scheme to unlawfully market its fentanyl spray and paid kickbacks to providers to persuade them to prescribe the product…  Insys Therapeutics, Inc. misleadingly marketed Subsys, a narcotic fentanyl product that is sprayed under a patient’s tongue.” The money will be used to “help fund the AG’s prevention, education and treatment efforts.”

Fentanyl is a synthetic opioid that is 30-50 times more powerful than heroin. The company claimed its spray version of the drug was useful for treating “minor” pain in non-cancer patients—despite the fact that the FDC had only approved the drug for use in more severe pain in cancer patients. It then pushed its sales staff to give kickbacks to doctors in the form of “fees paid to speak to other health care providers about the product.”

 

Boondoggle in Progress?

When a public college gets involved in land deals, it’s definitely worth keeping an eye on. Especially when that college is UMass—a troubled multi-campus institution whose leadership would rather engage in property speculation than fight the legislature for more money for public higher education.

In 2010, the school’s independent development wing, the UMass Building Authority (UMBA), bought the former Bayside Expo Center property after its owners went into foreclosure. According to the Dorchester Reporter, in August, the UMBA issued “a Request for Information (RFI) as it seeks out ideas for the ‘highest and best use’ of the former Bayside Expo Center site on Columbia Point in Dorchester with an eye toward transforming the 20-acre site into a ‘modern-day Harvard Square.’”

Last week, the newspaper reported that 16 developers have responded to the university’s request, including: Accordia Partners; American Campus Communities; Beacon Capital Partners; Bracken Development; Capstone Development Partners LLC & Samuels & Associates; Corcoran Jennison & BTUHWF Building Corp; Core Investment Inc.; Hunt Development Group, LLC & Drew Company Inc.; The HYM Investment Group, LLC; LendLease; Lincoln Property Company; Lupoli Companies; Rhino Capital & Ad Meliora; SKANSKA; University Student Living; and Waterstone Properties Group Inc. The Reporter says the UMass Building Authority “hopes to leverage public-private partnerships toward the massive mixed-use project.” Which usually means big public giveaways to corporations. One way or the other. Stay tuned.

Townie is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: THE MISSING MANUAL, PART 4

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February 29, 2016

BY JASON PRAMAS @JASONPRAMAS

In May 2012, three former GE executives were imprisoned after being convicted on multiple charges of conspiracy to commit wire fraud and defraud the United States. Dominick Carollo, Steven Goldberg and Peter Grimm had all worked for GE Capital—the financial division that operated as a semi-legal “shadow bank,” and that accounted for about half of its parent corporation’s profits until the global financial collapse it helped precipitate began in 2007. Between 1999 and 2006, the trio conspired to skim millions from municipal bond investment contracts. With the full approval of their bosses.

According to Rolling Stone’s Matt Taibbi, the scam worked as follows for the company that Marty Walsh, Charlie Baker and cheerleaders like the Boston Globe have welcomed to Boston with open arms: Municipal governments commonly partner with big banks to sell bonds to pay for significant capital costs—like building schools. The banks invite investors to buy the municipal bonds and deposit the resulting funds in tax-exempt accounts from which all necessary project expenses can be paid. However, since all the bond money does not get spent at once, municipal governments typically hire brokers to find major financial institutions to invest it for them through a public auction process. In general, it is legally required that brokers get bids from at least three financial institutions—and the one that offers the highest annual rate of return wins the contract to invest the spare cash from a given bond fund.

But for GE Capital—and a host of other major financial institutions—the process was rigged from top to bottom. In the case of GE’s Carollo et al, the defendants conspired with executives at the brokerage CDR and financial institutions like Bank of America, JPMorgan Chase, Wells Fargo, and Morgan Stanley to divvy up investment contracts for municipal bond funds. CDR would drum up business with local politicians around the country—often bribing them with various kinds of campaign donations and gifts. The pols would then reward CDR with contracts to invest unspent funds from municipal bond issues, while CDR would work with the GE Capital—in concert with the other major financial institutions—to illegally decide which corporation would win which auction for such investment contracts in advance. The “winner” of each auction would collude with the other bidding financial services companies on the bid rate to ensure that the “winning” bid was as low as possible. The agreed upon rate was usually lower than a fair market rate by just a few tenths of a percent. But that was enough to make a killing.

For example, if a fair bid in an auction might have been that GE Capital would invest a municipal government’s unused bond funds at a 5.04 percent annual rate of return, CDR would coach the company to only offer 5 percent. The other bidders would purposely offer lower rates, losing in exchange for winning future rigged auctions. GE would then pocket the .04 percent windfall. A municipal bond fund that might have $200,000,000 to invest in its first year would return around $80,000 extra to GE in that fashion. Which doesn’t sound like much. But such bond funds would be invested by GE Capital for years until they were spent down fulfilling their original purpose to build schools and the like. And GE Capital and CDR colluded on huge numbers of such illegal arrangements, pouring vast sums into GE’s coffers. While depriving municipal governments of that same money. GE Capital then kicked back some of its take to CDR as “fees.”

Given the complexity and ubiquity of this practice, no one knows exactly how much was stolen. But since fines paid by large corporations to governments at various levels for such crimes tend to be vanishingly small, it’s possible to get an idea of the scale of the crime. According to the Securities and Exchange Commission (SEC), GE paid a $70 million coordinated settlement in 2011 to the SEC, Department of Justice, Internal Revenue Service, and a coalition of 25 state attorneys general. The SEC alleged that “from August 1999 to October 2004, [GE Capital] illegally generated millions of dollars by fraudulently manipulating at least 328 municipal bond reinvestment transactions in 44 states and Puerto Rico.”

GE committed yet another massive crime against the public interest. And got away with it. In November 2013, Carollo, Goldberg and Grimm were freed on appeal. The reason? The government had taken too long—ten years—to build its case against the former GE executives.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: THE MISSING MANUAL, PART 3

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Image by Kent Buckley

February 15, 2016

BY JASON PRAMAS @JASONPRAMAS

Returning to our ongoing look at General Electric’s recent and inconvenient history of violating the public trust, in part 2 of this “missing manual” the corporation got out of the subprime housing loan market just in time to avoid destruction in late 2007. But it could not escape from the consequences of an economy based on selling toxic home loans to poor people who were defaulting in vast numbers by 2008.

That year, everything began to unravel for GE—as it did for all other large interlocked financial services companies that derived a substantial percentage of their profits from predatory loans in the same period.

According to Fortune magazine, after reporting an unprecedented first quarter loss of $700 million, GE’s stock price began spiraling downwards in April 2008. Failing to sell off its light bulb, appliance, and private-label credit card businesses over the summer due to the worsening economic climate stopped the corporation from making typical course corrections to get back on its feet.

In September 2008, GE’s stock price crashed after Lehman Brothers—a financial services titan—collapsed on the heels of Bear Stearns’ disintegration that March. The company became starved for operating funds. But the private credit markets were frozen in terror.

On September 30, GE made two desperate moves. At 7:30 am it sold $3 billion in preferred stock to billionaire investor Warren Buffet’s Berkshire Hathaway Inc. on very bad terms. At 1:44 pm, GE announced its deal with Buffet and said it would sell $12 billion of common stock the next day at prices far lower than it had paid to buy back $15 billion of its own stock over the preceding year. Meaning it was selling the stock at a huge loss in exchange for ready cash.

The next day, the coup de grace: Word spread throughout the markets that GE would be unable to cover billions in regular payouts to holders of its commercial paper. Basically a kind of I.O.U., commercial paper is a kind of short-term promissory note that big corporations like GE are able to issue on an ongoing basis to raise money to cover things like daily expenses. There is no collateral behind commercial paper. Only the good name—and, ideally, top-flight credit rating—of the company issuing it. In normal times, it’s a far cheaper way to borrow money than a line of credit with a commercial bank. But 2008 was not a normal time. At one point that year, GE had over $100 billion dollars out in commercial paper as it tried to stay afloat.

Executives clearly knew their company was doomed unless the government bailed it out. Already on September 30, a GE spokesperson “e-mailed the media with a message that Congress must act ‘urgently’ on the pending financial bailout package.” But the company didn’t wait for congressional action. Since it was not a traditional bank, GE did not qualify for a significant direct cash infusion under the infamousTroubled Asset Relief Program (TARP). So it spent the next few weeks brokering a backroom deal with the Federal Deposit Insurance Corporation (FDIC).

According to the New York Times, on November 12, 2008 the FDIC announced that it would back GE’s commercial paper for up to $139 billion under the Temporary Liquidity Guarantee Program (TLGP). A program that the federal government changed overnight to allow GE to qualify—just as TARP was changed to benefit Goldman Sachs et al—according to Pro Publica and the Washington Post. GE had “joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates.” The company was able to sell $74 billion in government-backed commercial paper and longer-term notes by Spring 2009.

And how did GE survive the period between its early October 2008 financial collapse—when it was still short on funds despite the precipitous sale of $15 billion of its stock—and its November 2008 bailout by the TLGP program? In 2010, Pro Publica reported that Federal Reserve Board documents released that year showed that GE had effectively borrowed $16 billion more dollars at that time by selling commercial paper through the Fed’s Commercial Paper Funding Facility (CPFF).

So General Electric was saved by two government programs that provided it with upwards of $90 billion dollars of cheap credit. According to the corporation’s own September 30, 2009 10-Q filing to the Securities and Exchange Commission, GE paid only $2.3 billion in fees for its participation in the TLGP and CPFF programs. Meaning that GE got unbelievably good loan terms—the equivalent of a flat 2.56 percent interest rate. Less than the rates that Americans pay on most any other loans. Including the housing loans that wrecked the economy in 2007-2008. And the student loans that could very well lead to another financial catastrophe before this decade is out.

That is how GE got to survive the recession it helped create. By gaining access to a massive pool of public funds totally unavailable to its tens of thousands of subprime housing loan victims. The same company under the same leadership that Massachusetts officials are paying $270 million to bring to Boston. Excelsior!

Coming soon in part 4: GE’s municipal bond scandal and other amusements.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: THE MISSING MANUAL, PART 2

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Image by Kent Buckley

February 1, 2016

BY JASON PRAMAS @JASONPRAMAS

Two weeks after the first installment of this Missing Manual, we now know that GE will receive up to another $100 million of Boston’s largesse in the form of reopening the Old Northern Avenue Bridge and $25 million in state money for work on roads, pedestrian walkways, and bike lanes near the corporation’s new Seaport District HQ. Pushing the total giveaway to over $270 million in public funds.

Gov. Charlie Baker, Mayor Marty Walsh, and boosters like the Boston Globe claim that the investment will be worth it. Yet GE’s record of slashing jobs, despoiling the environment, and evading taxes says otherwise. And their role in the subprime mortgage crisis further repudiates such official optimism.

Back in 1999, the Glass-Steagall Act—a critical piece of Depression-era social legislation that put up a firewall between commercial banks and investment houses—was torpedoed by Congress. One of the excuses for the deregulatory push was the claim that so-called “shadow banks”—institutions that perform banking functions outside of the traditional system of federally-regulated banks—were doing great business with less regulation. The now-diminished GE Capital was then one of the largest shadow banks, since as the finance arm of an industrial concern it was not classified as a bank. Thanks to that fact and the happy coincidence that GE Capital owned a small Utah savings and loan operation, it was allowed to “engage in banking under the lighter hand of the Office of Thrift Supervision.” Rather than the more strict banking regulations overseen by the Federal Reserve—which do not allow banks to engage in commerce—according to a 2009 report by ProPublica and the Washington Post.

Ironically, the deregulation of the banking system proved to be a key factor in the 2007 subprime mortgage crisis and the resulting 2008 financial crisis. And the much-praised practices of shadow banks like GE Capital were precisely the ones that nearly wiped out the US economy. GE had long used GE Capital, equivalent to the seventh largest banking company in the US until 2008, to fatten its bottom line. According to Maureen Farrell of the Wall Street Journal, “GE got into lending decades ago and grew that arm of its business steadily in the years before the crisis, as it was able to leverage its triple-A credit rating for access to cheap capital. Before the credit crisis, GE relied upon lending for around 50 percent of its earnings.”

So in 2004 GE Capital had plenty of ready cash to buy California-based WMC Mortgage Corp.—a company that specialized in foisting subprime housing loans on poor families that couldn’t really afford them, using highly unethical sales tactics—for about half a billion dollars. According to a 2012 report by Michael Hudson of The Center for Public Integrity, even before the purchase, WMC “… was producing $8 billion a year in subprime home loans and boasting profits of $140 million a year.”

Then in 2006, US housing prices declined sharply. Subprime borrowers with no reserve cash were unable to refinance their home loans as their adjustable-rate mortgage payments increased mercilessly. Subprime lenders then began to automatically slap late-paying borrowers with even higher penalty rates. More and more people defaulted on their loans. Lenders like WMC suddenly went from being cash-rich to being cash-poor.

GE Capital was hemorrhaging money by 2007. During the first half of that year WMC lost over $500 million as the mortgage industry “spun into chaos.” By October 2007, the Center for Public Integrity report concludes, “WMC Mortgage was effectively out of business, dead after having pumped out roughly $110 billion in subprime and ‘Alt-A’ loans under GE’s watch.”  

Meanwhile, GE Capital, like many other financial institutions of the period, had rolled packages of subprime mortgage debt into Residential Mortgage-Backed Securities (RMBSs)—which it then sold to investors. Including institutional investors like government-sponsored housing lender Freddie Mac. When the WMC subprime mortgages collapsed in 2007, the GE Capital RMBSs based on them followed suit. And the whole house of cards built on bad mortgages to poor people fell down. GE Capital immediately put hundreds of millions of dollars aside to pay off its investors. But not its mortgage holders. WMC-issued mortgages failed at rates of up to 75 percent in some areas. Ruining the lives of tens of thousands of working families in the process.

GE had gotten out of the subprime racket just in time to stay solvent into 2008. The most significant federal blowback from the episode came in 2011 when the Federal Housing Finance Agency that regulates Freddie Mac sued General Electric for selling them $549 million in subprime-based RMBSs. According to American Banker, they “charged GE’s former mortgage lending unit with presenting a false picture of the riskiness of residential mortgages behind securities that were sold to Freddie Mac.”

GE settled the suit in 2013 for just $6.25 million.

Coming soon in part 3: the 2008 financial crisis and federal bailout of General Electric.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: AN ACTIVIST HANDBOOK

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Images (from 2012 protest against GE in Boston) by Chris Faraone

January 28, 2016

BY JASON PRAMAS @JASONPRAMAS

Say friend … is a multinational corporation with a terrible reputation, a limitless PR budget, and a penchant for backroom deals with fawning politicians bleeding your state for hundreds of millions of public dollars that would be better spent on virtually anything else? A multinational named General Electric?

Are you afraid of the consequences of such malfeasance for your community and for democracy itself? Want to do something about it? Then look no further. What you need is a corporate campaign. Sourcewatch—a fine resource for journalists and researchers alike—has a concise definition of the term:

Corporate campaigns were developed in the mid twentieth century by activists and organizers such as Saul Alinsky, and honed in recent decades by labor unions and non-governmental organizations in the environmental, social justice and consumer movements. The goal of a corporate campaign is to publicize undesirable behavior or practices by a corporation through various strategies and tactics that can force change upon the company and thus allow the campaigning organization to claim a victory for its cause. At any given time organizations and even individual citizen activists are waging scores of corporate campaigns, some of which last for years, with varying results.

In my own experience, a corporate campaign is a limited strategy. It does not automatically lead to a broader democracy movement in a society, but can be a stepping stone along that path. It is not always a progressive strategy, although progressives probably use it more than any other political current. NIMBY activists in rich towns use it to keep apartment buildings and wind farms out. Right-wing Christians use it to attack companies that publicly support things they oppose—like reproductive rights, gay marriage, and the wheel.

That said, a corporate campaign is still a useful arrow in the proverbial quiver of justice. And here’s how you can run one.

  • First, decide that a campaign is needed. Gather some like-minded friends into a loose organization, and agree to work together towards a common goal.
  • Second, see if there’s already an organization running such a campaign. If there is, check them out. Do they seem to be a real grassroots expression of the needs of some definable community? If they do, then consider joining them or working with them in coalition. Or do they look like what seasoned activists call an “astroturf” group—a fake organization typically set up by some powerful interest or other to help confuse its antagonists and stop them gaining public support. If so, give them a wide berth and spread the word that others should do the same.
  • Third, start researching your target corporation. Talk to librarians, journalists, academics, and experienced campaigners for advice. Find out everything you can about the company —with a focus on their recent activities. Look for proof of bad behavior in their business and political dealings.
  • Fourth, research possible remedies. What have other communities done to reign in the power of your target corporation and corporations like it? Court action, regulation, and legislation are all good avenues to pursue.
  • Fifth, publish your evidence. Papers, articles, broadsides, podcasts, and videos are all good ways to get the word out.
  • Sixth, if you haven’t already, start fundraising. You’ll need money to win a corporate campaign. You might get some small grants from open-minded foundations early on, but your lifeblood will (and should) be donations you raise from your personal network, your new organization’s network, online via crowdfunding using platforms like GoFundMe, and through fundraisers of various types. You’ll never have anything like the money of your opponents. But you’ll have the strength of your convictions, and—if you do your job well—the support of your community. And can therefore overcome any obstacle if you persevere.
  • Seventh, organize your allies. Pull together community organizations, religious groups, non-profits, labor unions, friendly politicians—anyone who is going to aid your campaign and is willing to work with you.
  • Eighth, build a solid social media presence. Make use of widely available free communications technology to make friends and turn them into supporters. Create a page on Facebook, and a central Twitter account—both with your campaign’s name on them. Regularly feed your presence with updates about campaign activities and links to relevant material. Converse directly with your followers as interaction is key on social media.  Keep in mind that you may never have to create a full website for your campaign if you make good use of social media, but it’s usually a good idea to at least launch a blog on one of the many free blogging communities.
  • Ninth, prepare your public relations campaign. Develop contacts in the press. Plan events and actions that will get and hold the public’s attention. Encourage journalists to cover those events and actions.
  • Tenth, hold your events and actions: open forums, lobby days, protests, and boycotts are all good ways to pressure politicians and corporate leaders to change their policies.

Finally, mobilize as many people as you can to support your campaign. Be sure to give them simple things they can do to show their support and attract even more people: like wearing one of your campaign buttons or putting one of your bumpers stickers on their car. If you’ve done your job well, so many people in your community will agree with you that it will become possible to win your campaign goals—whatever they are.

For a useful model, check out the recent successful #NoBoston2024 campaign—which wasn’t a traditional corporate campaign, but that nonetheless had all the elements of one. And it was a slam dunk resulting in a resounding popular victory against putting the City of Boston in hock for decades for a sporting event with a long history of corruption.

Questions? Feel free to contact me at jason@binjonline.org. And for those of you who might launch a corporate campaign against GE: let’s be careful out there.

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

GE BOSTON DEAL: THE MISSING MANUAL

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Image by Kent Buckley

January 18, 2016

BY JASON PRAMAS @JASONPRAMAS

The saga of GE’s flight from Connecticut began with the June 2015 passage of a very much needed package of state tax increases aimed at raising an extra $1.1 billion over the next two years. By extending a temporary 20 percent surcharge on its corporate profits tax and by implementing a more straightforward way of calculating corporate taxes, the Constitution State expects to pull in $700 million of that total from major corporations. The money will be used to fund social programs and improve mass transit. Imagine that.

GE brass immediately flipped out. And followed through on a threat to move their headquarters out of Connecticut. They began publicly courting cities around the US to get the best possible deal. Boston moved to the front of the pack by the fall. Then last week, GE officially announced that they would be moving their HQ to the Hub—specifically the so-called “Innovation District” on our soon-to-be-flooded waterfront.

What followed has been one of the most disgusting spectacles of press release transcription by the Boston mainstream news media in memory. Fulsome praise was lavished on Gov. Charlie Baker, Boston Mayor Marty Walsh, and their busy lieutenants like John Barros for literally selling out the people of this city and this Commonwealth. A massive giveaway of $25 million in city “property tax relief” and $120 million in state “grants, tax incentives, infrastructure improvements, and help with real estate acquisition costs” to GE was treated as if it was the product of genius, rather than another nail in the coffin of democracy. The record of one of the most vicious and capricious corporations in world history was soft pedaled by focusing on the supposed benefits of the deal to the people of the Bay State. Which are … what exactly? The 800 predominantly transplanted jobs at the new GE Boston HQ? The up to 600 jobs at the new Marlborough branch of GE Healthcare Life Sciences by 2017? The assertion that the company will “base a new division, focused on lighting and energy, in a to-be-announced location in the Boston area” at some point? Airy claims about GE’s presence attracting other businesses to the state? Blather about “corporate philanthropy to the arts?” And something about “bragging rights?”

Stuff and nonsense. For starters, the vast majority of jobs that will be created locally by GE in the coming years will be professional/managerial level. Worked by the kinds of helicopter yuppies that will then buy some of the expensive condos that are being built all over the region. These few new jobs are not the jobs that are needed. They are not the tens of thousands of regular jobs that are going to help get beleaguered working and middle class families back on their feet after the economic depredations of the last 40-plus years. Depredations that GE pioneered.

The company had 13,000 mostly unionized workers in Pittsfield, MA decades back. Last fall, the Saudi Arabian-owned remnant of the former GE plastics division based there announced that it was leaving for Houston and taking the last significant group of ex-GE jobs, 300 in total, with it. GE had over 12,000 mostly unionized workers in Lynn, MA as recently as the early 1980s. Now there are about 1,400 unionized workers left, and 3,000 workers overall. GE closed its plant in Fitchburg, MA in 1998—taking 600 good jobs with it. GE is closing its Avon, MA plant later this year. Another 300 jobs gone. Cuts that devastated a number of communities, and contaminated the Housatonic River around Pittsfield with PCBs that GE is still fighting to avoid fully cleaning up—an issue capably reviewed by International Business Times last week.

Over the past year, GE leadership has continued such labor “innovations” by cutting medical and life insurance benefits to all non-unionized retirees over 65 on January 1, 2015. And cutting the same benefits to all unionized retirees over 65 at the start of this year. Tossing a mere thousand bucks a year to tens of thousands of GE retirees around the country and telling them to buy their own supplemental medical plans somehow.

Given this disturbing backstory, the claim by feckless pols that property taxes and other taxes that GE will eventually have to pay Boston and Massachusetts will soon outstrip the $145 million being handed to them beggars belief. GE is a vast corporate behemoth that employs hundreds of tax specialists to avoid paying any taxes at all. According to Citizens for Tax Justice, between 2010 and 2014, GE earned $33.5 billion in profits but claimed federal tax refunds of $1.4 billion—an effective tax rate of -4.3 percent. And paid a combined state tax bill of only $530 million—an effective state tax rate of just 1.6 percent for the period.

This is GE. This is the corporate scofflaw that Charlie and Marty and their many business buddies cut a bad deal with. Now what are readers going to do to stop it and #makeGEpay?

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director.

Copyright 2016 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.