Category Archives: Industry Jobs Oil Economics

America Recovery Reinvestment Act, NOT SO Much

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When one visits the government website www.recovery.gov, these description reads that the board is a non-partisan, non-political agency and then in bold letter in a heading it also reads ‘The Recovery Accountability and Transparency Board’.

Additionally the site mission statement reads: “To promote accountability by coordinating and conducting oversight of Recovery funds to prevent fraud, waste, and abuse and to foster transparency on Recovery spending by providing the public with accurate, user-friendly information.”

Sheesh note the one particular case below and then ask yourself if there is a violation.

From Watchdog.org:

Company that got millions from U.S. taxpayers now profits Chinese owners

The good news is electric car battery maker A123 Systems is finally on track to turn a profit.

The bad news is taxpayers don’t figure to see any of the $133 million the federal government spent and the estimated $141 million in tax credits and subsidies secured from Michigan to help the company take off in 2009, only to see A123 Systems crash, declare bankruptcy in 2012 and then get purchased by a privately held Chinese conglomerate.

“In the case of A123, they created some jobs and a year or two later those jobs were gone, so taxpayers weren’t getting that money back,” said Jarret Skorup, a policy analyst at Michigan’s Mackinac Center, a free-market think tank .

Earlier this month, CEO Jason Forcier announced that A123 Systems’ parent company, the China-based Wanxiang Group, will spend $200 million to double the capacity of three lithium-ion battery plants, including two in suburban Detroit.

Forcier told Crain’s Detroit Business that A123 Systems is expected to generate $300 million in revenue this year and plans to double that amount by 2018. The company, Forcier said, will turn a profit for the first time in its history in 2015.

“The strength of A123 has never been greater and we are honored to be expanding our existing customer relationships and establishing new ones at the same time,” Forcier said in a company news release.

It would mark a dramatic turnaround for the company that was on the verge of collapse when Wanxiang bought it a little more than two years ago at a stripped-down price of $256.6 million. 

But finding out if taxpayers will ever see any of their money back is another matter.

Watchdog.org sent an email and left two voicemail messages with A123 Systems, asking whether any refunds are coming or if — under the terms of the bankruptcy — Wanxiang is under no financial obligation to do so.

The one-sentence response from Paulette Spagnuolo, A123’s marketing and communications manager: “A123 continues to meet and exceed all of the terms of the state and federal grants including all job creation, repayment and investment requirements.”

Spagnuolo did not respond to inquiries asking her to elaborate.

Skorup says the money is gone for good.

“There are a lot of local and state rebates and they are largely upfront costs, so yes, taxpayers are sunk on those,” Skorup told Watchdog.org in a telephone interview. “They’re not going to be getting money back from them … Michigan doesn’t require (A123 Systems) to pay them back anyway.”

How much money?

On the federal level, A123 Systems was originally slated to receive $249 million in grants from the U.S. Department of Energy in 2009 to build production facilities in the towns of Romulus and Livonia, Michigan — just $7.6 million less than Wanxiang eventually bought the entire company for four years later.

But A123 Systems ran into trouble early on. After some of its batteries were involved in a recall for the company’s biggest customer, the electric car company Fisker Automotive, the company’s federal grant was cut off after A123 received $133 million. 

Figuring out how much Michigan passed out has been more difficult.

The Detroit Free Press and the Mackinac Center have been rebuffed in attempts to see how much of an investment the state made in A123 Systems because the Michigan Economic Development Corporation will not disclose specifics.

Skorup estimates Michigan approved A123 Systems for $100 million in a tax credit program and another $41 million in subsidies.

“How much they actually cashed in those we don’t know,” Skorup said. “We’ve tried to find out, but the state won’t give it to us … they say it’s a private contract.”

The federal money was part of the stimulus package and a green-tech initiative the Obama administration touted would spur economic success.

A123 Systems was one of a number of Michigan battery companies that received a surge of tax credits from the state in 2009, but the incentives did not spur the jobs and dollars that were promised.

Detroit Free Press estimated $861 million in Obama administration grants were awarded in the fledgling Michigan battery industry and another $543 million in state tax credits were awarded during the administration of then-Gov. Jennifer Granholm, a Democrat.

Most of the Michigan business tax credit program was eliminated by current Gov. Rick Snyder, a Republican. However, companies that had already secured the tax incentives were allowed to keep them.

“The general lesson for policy makers is that they make very poor venture capitalists because they’re not spending their own money,” said Skorup. “They’re spending other people’s money and those politicians weren’t putting their own stock portfolios into A123 Systems. They were putting taxpayer money into them.

“And the lesson for taxpayers should be, when politicians are making these claims about job projections they should be extremely skeptical. In Michigan, almost none of those — we’ve done multiple studies, other news organizations have done multiple studies — reach the actual projections that they promise.”

“Just because the jobs haven’t happened ‘yet,’ it doesn’t mean that cracking the code to vehicle batteries was the wrong strategy,” Granholm told the Free Press in March 2014.

President Obama appeared by remote broadcast for the grand opening of the A123 Systems Livonia plant in the fall of 2010, an event hosted by Granholm.

“Thanks to the Recovery Act, you guys are the first American factory to start high-volume production of advanced vehicle batteries,” Obama said at the time.

Skorup told Watchdog.org  the video of the event was taken down by the Michigan Economic Development Corporation, but the Mackinac Center, a sharp critic of the battery plan from the start, retained a copy of it:

 

Welfare Use by Immigrant Households with Children

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Some studies speak for themselves. This one is chilling. It demonstrates failure, lack of control and management as well as a continued monetary magnet that wont soon or ever go away.

 

A Look at Cash, Medicaid, Housing, and Food Programs

by: The Center for Immigration Studies

Thirteen years after welfare reform, the share of immigrant-headed households (legal and illegal) with a child (under age 18) using at least one welfare program continues to be very high. This is partly due to the large share of immigrants with low levels of education and their resulting low incomes — not their legal status or an unwillingness to work. The major welfare programs examined in this report include cash assistance, food assistance, Medicaid, and public and subsidized housing.

Among the findings:

  • In 2009 (based on data collected in 2010), 57 percent of households headed by an immigrant (legal and illegal) with children (under 18) used at least one welfare program, compared to 39 percent for native households with children.
  • Immigrant households’ use of welfare tends to be much higher than natives for food assistance programs and Medicaid. Their use of cash and housing programs tends to be similar to native households.
  • A large share of the welfare used by immigrant households with children is received on behalf of their U.S.-born children, who are American citizens. But even households with children comprised entirely of immigrants (no U.S.-born children) still had a welfare use rate of 56 percent in 2009.
  • Immigrant households with children used welfare programs at consistently higher rates than natives, even before the current recession. In 2001, 50 percent of all immigrant households with children used at least one welfare program, compared to 32 percent for natives.
  • Households with children with the highest welfare use rates are those headed by immigrants from the Dominican Republic (82 percent), Mexico and Guatemala (75 percent), and Ecuador (70 percent). Those with the lowest use rates are from the United Kingdom (7 percent), India (19 percent), Canada (23 percent), and Korea (25 percent).
  • The states where immigrant households with children have the highest welfare use rates are Arizona (62 percent); Texas, California, and New York (61 percent); Pennsylvania (59 percent); Minnesota and Oregon (56 percent); and Colorado (55 percent).
  • We estimate that 52 percent of households with children headed by legal immigrants used at least one welfare program in 2009, compared to 71 percent for illegal immigrant households with children. Illegal immigrants generally receive benefits on behalf of their U.S.-born children.
  • Illegal immigrant households with children primarily use food assistance and Medicaid, making almost no use of cash or housing assistance. In contrast, legal immigrant households tend to have relatively high use rates for every type of program.
  • High welfare use by immigrant-headed households with children is partly explained by the low education level of many immigrants. Of households headed by an immigrant who has not graduated high school, 80 percent access the welfare system, compared to 25 percent for those headed by an immigrant who has at least a bachelor’s degree.
  • An unwillingness to work is not the reason immigrant welfare use is high. The vast majority (95 percent) of immigrant households with children had at least one worker in 2009. But their low education levels mean that more than half of these working immigrant households with children still accessed the welfare system during 2009.
  • If we exclude the primary refugee-sending countries, the share of immigrant households with children using at least one welfare program is still 57 percent.
  • Welfare use tends to be high for both new arrivals and established residents. In 2009, 60 percent of households with children headed by an immigrant who arrived in 2000 or later used at least one welfare program; for households headed by immigrants who arrived before 2000 it was 55 percent.
  • For all households (those with and without children), the use rates were 37 percent for households headed by immigrants and 22 percent for those headed by natives.
  • Although most new legal immigrants are barred from using some welfare for the first five years, this provision has only a modest impact on household use rates because most immigrants have been in the United States for longer than five years; the ban only applies to some programs; some states provide welfare to new immigrants with their own money; by becoming citizens immigrants become eligible for all welfare programs; and perhaps most importantly, the U.S.-born children of immigrants (including those born to illegal immigrants) are automatically awarded American citizenship and are therefore eligible for all welfare programs at birth.
  • The eight major welfare programs examined in this report are SSI (Supplemental Security Income for low income elderly and disabled), TANF (Temporary Assistance to Needy Families), WIC (Women, Infants, and Children food program), free/reduced school lunch, food stamps (Supplemental Nutrition Assistance Program), Medicaid (health insurance for those with low incomes), public housing, and rent subsidies.

Introduction

Concern that immigrants may become a burden on society has been a long-standing issue in the United States. As far back as colonial times there were restrictions on the arrival of people who might become a burden on the community. This report analyzes survey data collected by the Census Bureau from 2002 to 2009 to examine use of welfare programs by immigrant and native households, particularly those with children. The Current Population Survey (CPS) asks respondents about their use of welfare programs in the year prior to the survey,1 so we are examining self-reported welfare use rates from 2001 to 2009. The findings show that more than half of immigrant-headed households with children use at least one major welfare program, compared to about one-third of native-headed households. The primary reason immigrant households with children tend to have higher overall rates is their much higher use of food assistance programs and Medicaid; use of cash assistance and housing programs tends to be very similar to native households.

Why Study Immigrant Welfare Use?

Use of welfare programs by immigrants is important for two primary reasons. First, it is one measure of their impact on American society. If immigrants have high use rates it could be an indication that they are creating a net fiscal burden for the country. Welfare programs comprise a significant share of federal, and even state, expenditures. Total costs for the programs examined in this study were $517 billion in fiscal year 2008.2 Moreover, those who receive welfare tend to pay little or no income tax. If use of welfare programs is considered a problem and if immigrant use of those programs is thought to be high, then it is an indication that immigration or immigrant policy needs to be a adjusted. Immigration policy is concerned with the number of immigrants allowed into the country and the selection criteria used for admission. It is also concerned with the level of resources devoted to controlling illegal immigration. Immigrant policy, on the other hand, is concerned with how we treat immigrants who are legally admitted to the country, such as welfare eligibility, citizenship requirements, and assimilation efforts.

The second reason to examine welfare use is that it can provide insight into how immigrants are doing in the United States. Accessing welfare programs can be seen as an indication that immigrants are having a difficult time in the United States. Or perhaps that some immigrants are assimilating into the welfare system. Thus, welfare use is both a good way of measuring immigration’s impact on American society and immigrants’ adaptation to life in the United States.

Read on if you dare by clicking here.

Honduran President at WH, Where is the Money?

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Juan Carlos Hernandez has been a busy man reaching out to the White House several times since 2014. He is after money and he is likely getting it.

Hernandez has a big problem that the White House and the State Department are overlooking….it is called corruption and Hondurans know it well. Earlier this month, the protests began against the president and the with some amazement the United Nations anti-corruption body actually uncovered corruption in Guatemala but not so much in Honduras. Hondurans are calling for the resignation of Hernandez and the country has one of the highest murder rates globally for 2014.

Honduras is a key country in the matter of the DACA insurgency of people coming across our southern border in 2014. The matter was so bad that both Obama and Biden spoke to President Hernandez on the phone in 2014 on humanitarian issues and that those fleeing the country are not eligible for the DACA program.

Still desperate, President Hernandez was in the United States and had important time allotted to him at the State Department that was part of a 2 day program titled ‘Americas Society and Council of the Americas’ where the charter is to cover items including LGBT rights, economic development and the rule of law.

At the core of the corruption charges against President Hernandez is social security embezzlement. In 2014, yet another Honduran official was arrested for stealing more than $330 million in public money from a health pension fund.

Under Hillary Clinton at the State Department and with collaboration with the World Bank loans for more than a billion dollars have been pledged and then the United States augmented those dollars with 200 and 300 million going separately to countries in the region. With all this monetary infusion, why no clean up in corruption or a global cocaine network or an exodus of Hondurans?

Well at 3:00 PM, on June 17, 2015, President Hernandez just left the White House again.

President of Honduras Juan Orlando Hernandez speaks to reporters on June 17, 2015 in Washington, DC

In part from AFP news: Hernandez has come to Washington to meet with the new secretary general of the Organization of American States, Luis Almagro, and with US Vice President Joe Biden to discuss the development plan.

President Barack Obama has asked Congress for one billion dollars for the initiative but Republicans in Congress have expressed reservations.

– Taking responsibility –

To overcome those misgivings Honduras will disclose details of the plan to leaders of the two chambers, Hernandez said.

A Central American region that is prosperous and peaceful “is a tremendous investment for the American people”, the president said.

“I would hope that the leaders in Washington would understand that,” he added.

Still, the American aid is only symbolic.

Passing the package, he said, would mean Washington acknowledges that a huge part of the problem is Americans’ appetite for drugs like cocaine that are produced in South America and smuggled through destitute nations like Honduras, El Salvador and Guatemala to reach the streets of the United States.

“In the end, it is not so much the money. It is the message that the United States takes responsibility for generating violence and migration as a result of drug trafficking in the region,” he said.

WalMart has a Secret Global Operation

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In 2013, WalMart announced an ‘All American’ objective….yet there are other truths.

Wal-Mart Stores Inc will buy an additional $50 billion in U.S.-made goods over the next decade in areas like sporting goods and high-end appliances in what the world’s largest retailer called a bid to help boost the U.S. economy. Wal-Mart, the largest private employer in the United States, also said on Tuesday it plans to hire 100,000 newly discharged veterans over the next five years, at a time when the U.S. unemployment rate is at 7.8 percent.

The moves are likely to receive a cool reception from critics, who claim Wal-Mart does not pay its workers enough and slam the retailer for selling too many goods made in lower-cost countries like China. The company is also under pressure over its sourcing practices, particularly after a deadly fire at a Bangladesh factory that made Wal-Mart clothes.

Then Walmart went all in with China.

But WalMart is fully offshore hiding monies for tax purposes…what would Barack Obama say?

Wal-Mart Has $76 Billion in Undisclosed Overseas Tax Havens

Wal-Mart Stores Inc. owns more than $76 billion of assets through a web of units in offshore tax havens around the world, though you wouldn’t know it from reading the giant retailer’s annual report. A new study has found Wal-Mart has at least 78 offshore subsidiaries and branches, more than 30 created since 2009 and none mentioned in U.S. securities filings. Overseas operations have helped the company cut more than $3.5 billion off its income tax bills in the past six years, its annual reports show. The study, researched by the United Food & Commercial Workers International Union and published Wednesday in a report by Americans for Tax Fairness, found 90 percent of Wal-Mart’s overseas assets are owned by subsidiaries in Luxembourg and the Netherlands, two of the most popular corporate tax havens.

Units in Luxembourg — where the company has no stores — reported $1.3 billion in profits between 2010 and 2013 and paid tax at a rate of less than 1 percent, according to the report. All of Wal-Mart’s roughly 3,500 stores in China, Central America, the U.K., Brazil, Japan, South Africa and Chile appear to be owned through units in tax havens such as the British Virgin Islands, Curacao and Luxembourg, according to the report from the advocacy group. The union conducted its research using publicly available documents filed in various countries by Wal-Mart and its subsidiaries. Randy Hargrove, a Wal-Mart spokesman, called the report incomplete and “designed to mislead” by its union authors. He said the company has “processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate.”

Mailbox Subsidiaries

The union behind the study backs the Organization United for Respect at Wal-Mart, a group that campaigns for wage increases and more predictable schedules. Wal-Mart has historically resisted unions and discourages employees from joining them. The report comes a week after the Group of Twenty nations unveiled its latest effort to combat multinational corporate tax avoidance. The body wants companies to disclose to regulators where they book profits, employees and sales, so tax authorities can be aware of discrepancies between where corporations report income and where they have operations. Hargrove, the Wal-Mart spokesman, pointed to guidance issued by the SEC that permits companies to avoid disclosure of subsidiaries with significant “intercompany transactions.” He said Wal-Mart’s tax savings overseas was driven by lower rates in markets including Canada and the U.K.

‘Continuing Evidence’

Companies such as Google Inc., Apple Inc. and Starbucks Corp. have come under fire for avoiding billions of dollars of income taxes by attributing profits to mailbox subsidiaries in low-tax jurisdictions like Bermuda. The Group of Twenty has directed the Organization for Economic Cooperation and Development to develop plans to crack down on such strategies. The new Wal-Mart disclosures could expand the scope of international tax reform, which has often focused on technology companies that move profits offshore by assigning valuable patent rights to mailbox units. Bloomberg News reported last year that Inditex SA, the parent of Zara, the world’s biggest fashion retailer, cut its taxes by shifting billions of dollars of profits to a tiny Dutch unit. “This report is continuing evidence that everybody has been engaging in cross-border tax avoidance,” said Stephen E. Shay, a professor at Harvard Law School and former deputy assistant secretary for international tax affairs for the Obama Treasury Department.

Hybrid-Loan Strategy

Nearly a decade ago, Wal-Mart ran into trouble over strategies to avoid U.S. state income taxes. It used a real estate investment trust to effectively pay rent to itself, generating big tax deductions, even though the rent payments never left the company. At least six states changed their tax laws after publicity about the tactics. Since then, Wal-Mart has stepped up its use of offshore tax havens. It has created 20 new subsidiaries in Luxembourg alone since 2009, according to the report. Wal-Mart employs a popular legal strategy in that country called a hybrid loan. It permits companies’ offshore units to take tax deductions for interest paid — typically on paper only — to their parents in the U.S. The parent, however, doesn’t include that interest as taxable income in the U.S. The OECD has called for an end to the tax benefits of such loans. Luxembourg generated headlines last year after the International Consortium of Investigative Journalists revealed its role in cutting the tax bills of hundreds of multinationals.

Union Funding

U.S. companies owe tax at a rate of 35 percent but can defer indefinitely the income taxes on profits attributed to overseas units. In 2011, Wal-Mart’s then-chief executive officer, Mike Duke, called in testimony before Congress for a system that would exempt from U.S. income tax the earnings that multinationals generate overseas. Wal-Mart’s accumulated offshore earnings have doubled to $23.3 billion in 2015 from $10.7 billion 2008. The company operates about 6,300 stores in 27 countries outside the U.S. and last fiscal year reported 28 percent of its sales abroad, or about $137 billion. Wal-Mart paid $6.2 billion in U.S. income tax last year, Hargrove, the company spokesman, said, or “nearly 2 percent of all corporate income tax collected by the U.S. Treasury.” Americans for Tax Fairness called on the European Union to open investigations into whether the Luxembourg tax benefits constitute illegal state aid. The EU has issued preliminary findings that this was indeed the case with companies using similar strategies in various countries, including as Starbucks in the Netherlands, Apple in Ireland and Fiat SpA in Luxembourg. The tax group receives most of its funding from foundations, including the Ford Foundation, Open Society Foundations, Bauman Foundations and Stoneman Family Foundation. It’s also funded by public-sector unions, including the American Federation of State, County and Municipal Employees and the National Education Association.

Obama and DHS Fully Compromised our Security

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Getting into America just got easier….

Easier? Yes and while no one is talking about it but I got a tip from an insider. Did you hear the announcement by Jeh Johnson? This program already exists.

It might be a lot easier – and faster – for international travelers to fly into the United States soon.

The U.S. Department of Homeland Security said Friday it will seek approval to put pre-clearance centers at 10 airports in nine foreign countries.

If negotiations are successful, those centers will allow travelers to go through U.S. Customs and Border Protection clearance before they get on their airplane headed to the United States. Once landed, they would not have to be rescreened.

Here’s what Homeland Security Secretary Jeh Johnson said in the DHS announcement:

“A significant homeland security priority of mine is building more preclearance capacity at airports overseas. We have this now in 15 airports. I am pleased that we are seeking negotiations with 10 new airports in nine countries.

“I want to take every opportunity we have to push our homeland security out beyond our borders so that we are not defending the homeland from the one-yard line. Preclearance is a win-win for the traveling public. It provides aviation and homeland security, and it reduces wait times upon arrival at the busiest U.S. airports.”

The U.S. will enter talks with officials in Belgium, the Netherlands, Norway, Spain, Sweden, Turkey and the United Kingdom in Europe, as well as Japan and the Dominican Republic.

The 10 airports would be Brussels Airport, Belgium; Punta Cana Airport, Dominican Republic; Narita International Airport, Japan; Amsterdam Airport Schipol, Netherlands; Oslo Airport, Norway; Madrid-Barajas Airport, Spain; Stockholm Arlanda Airport, Sweden; Istanbul Ataturk Airport, Turkey; and London Heathrow Airport and Manchester Airport in the United Kingdom.

“These countries represent some of the busiest last points of departure to the United States – in 2014, nearly 20 million passengers traveled from these ten airports to the U.S.,” DHS said.

For travelers to Dallas/Fort Worth International Airport, the pre-clearance would be available on flights from London Heathrow (American Airlines and British Airways); Amsterdam (KLM Royal Dutch Airlines); Tokyo Narita (American); Madrid-Barajas (American); and Punta Cana (Sun Country Airlines).

Officials from trade group Airlines for American and from American and JetBlue Airways quickly praised the DHS effort.

“U.S. airlines drive $1.5 trillion in economic activity, and by improving the passenger experience for visitors or those returning to the United States, while improving security, we can build on that,” A4A President and chief executive Nick Calio said. “The addition of these pre-clearance airports will help increase safety and security while improving the passenger experience with shorter wait times and quicker connections on arrival in the U.S.”

“Expanding air preclearance is a tremendous step forward for improving the overall travel experience for our customers and welcoming more visitors to the United States,” AA chief operating officer Robert Isom said. “Preclearance eases the congestion at our U.S. gateway airports and ensures our customers get to their destinations faster.”

In addition to the three airports served by American from its D/FW hub, the pre-clearance centers would go to four other airports served by American out of other U.S. airports – Manchester, Amsterdam, Punta Cana and Brussels.

JetBlue passengers would benefit from the Punta Cana pre-clearance center.

“We believe that in addition to the need for an increase in CBP staffing at key U.S. gateway airports, more preclearance facilities like the ones being proposed around the globe are an important tool to enhance our nation’s security and reduce the number of travelers clearing Customs stateside — and that ultimately reduces wait times for travelers on all airlines,” JetBlue president and CEO Robin Hayes said.

United also thanked DHS for the proposal.

“We have worked closely with U.S. Customs and Border Protection and support developments that provide more convenience for our customers,” the carrier said in a statement. “We thank Secretary Johnson and his team at the Department of Homeland Security and CBP for their engagement with United and the airline industry, and we look forward to partnering with them on this initiative to facilitate travel and reduce wait times.”

U.S. Travel Association president Roger Dow issued this statement:

“When the experience for the international traveler improves, the U.S. economy improves, and again this administration deserves praise for pressing ahead with innovative policies that simultaneously bolster national security and streamline the customs entry process.

“Customs preclearance is a program that has proven itself effective, and extending it to these key travel markets will undoubtedly boost visitation. As a bonus, adding preclearance facilities will further relieve pressure on the customs entry process here on our shores, improving the system generally.

“Evolving policies such as these are a big reason why we surpassed a record 74 million international visitors to the U.S. last year, and are well on pace to reach 100 million visitors annually by 2021. With overseas visitors spending an average of $4,300 per person, per trip, that’s just good economic sense.”

Customs and Border Protection currently staffs 15 centers in six countries: Dublin and Shannon in Ireland; Aruba; Freeport and Nassau in the Bahamas; Bermuda; Calgary, Toronto, Edmonton, Halifax, Montreal, Ottawa, Vancouver and Winnipeg in Canada; and Abu Dhabi in the United Arab Emirates.

This is a ‘preclearance system’.  Please read the full description here.

In 2013, there was a Customs and Border Patrol hearing on this matter in the House of Representatives. Essentially, we cant control security within our borders now we are extending them globally and relying on foreign governments and security services? That did not work out at all in Benghazi. Here is the testimony and it is a must read.