The Shady Inside Deals That Are Protecting Goldman Sachs at Your Expense

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http://www.alternet.org/economy/shady-inside-deals-are-protecting-goldman-sachs-your-expense


The Greening of Goldman Sachs

In economist and New York Times columnist Paul Krugman’s book, End This Depression Now!, there’s a chapter titled “The Second Gilded Age” in which he describes the extraordinary rise in wealth and power of the very rich during this era of unregulated greed. Since Ronald Reagan’s election in 1980, the top one percent of Americans have seen their incomes increase by 275 percent. After accounting for inflation, the typical hourly wage for a worker has increased just $1.23.

Big Money, as Krugman writes in his book, buys Big Influence. And that’s why the financiers of Wall Street never truly experience regime change — their cash brings both political parties to heel. So it is that the policies that got us where we are today — in this big ditch of chronic financial depression — have done little for most, but have been very good to a few at the top.

But they’re not satisfied with having only most of it — they want it all. If Krugman were writing his book today, he could find plenty of evidence in the deal that supposedly kept us from going over the fiscal cliff. Behind closed doors, Congress larded it with corporate tax breaks worth tens of billions of dollars — everything from tax credits for NASCAR racing and the railroads to subsidies for Hollywood, rebates for the rum industry and loopholes for off-shore financing that could help giant multinationals like General Electric avoid billions of dollars in corporate income taxes.

Writing in the conservative Washington Examiner, columnist Tim Carney says many of these expensive giveaways were “spawned by a web of lobbyists, donors and staffers surrounding Democratic Sen. Max Baucus of Montana,” chairman of the Senate Finance Committee. As we know from the Obamacare fight, Baucus is a connoisseur of revolving door corruption. “Pick any one of the special-interest tax breaks extended by the cliff deal,” Carney wrote, “and you’re likely to find a former Baucus aide who lobbied for it on behalf of a large corporation or industry organization.” Even the pro-business Wall Street Journal was appalled. They called it a “ Crony Capitalist Blowout.”

[dipsydoodle]

1. tax breaks

from 10 days ago :

Pork-ridden fiscal cliff deal helps fund NASCAR, Hollywood.

$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects.

$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.

$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.

$70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”

$59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.

$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.

http://www.ijreview.com/2013/01/27646-pork-ridden-fiscal-cliff-deal-helps-fund-nascar/

As non US the NASCAR bit remains a complete mystery to me. If anyone can provide a link to its background I would appreciate it.

I'm guessing the "rum" issue is associated with Bacardi almost as a favour for being instrumental in the Helms Burton Act.

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2. i don't get nascar either. nt

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3. Secret Goldman Team Sidesteps Volcker After Blankfein Vow

http://www.bloomberg.com/news/2013-01-08/secret-goldman-team-sidesteps-volcker-after-blankfein-vow.html

Sitting onstage in Washington’s Ronald Reagan Building in July, Lloyd C. Blankfein said Goldman Sachs Group Inc. (GS) had stopped using its own money to make bets on the bank’s behalf.

We shut off that activity,” the chief executive officer told more than 400 people at a lunch organized by the Economic Club of Washington, D.C., slicing the air with his hand. The bank no longer had proprietary traders who “just put on risks that they wanted” and didn’t interact with clients, he said.

That may come as a surprise to people working in a secretive Goldman Sachs group called Multi-Strategy Investing, or MSI. It wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies, including a mortgage servicer and a cement producer, according to interviews with more than 20 people who worked for and with the group, some as recently as last year. The unit, headed by two 1999 Princeton University classmates, has no clients, the people said.

The team’s survival shows how Goldman Sachs has worked around regulations curbing proprietary bets at banks. Former Federal Reserve Chairman Paul A. Volcker singled out the company in 2009, saying it shouldn’t get taxpayer support if it focuses on trading. A section of the 2010 Dodd-Frank Act known as the Volcker rule, drafted to prevent banks from taking on excessive risk, limits short-term investments made with firms’ capital.