Saturday, March 26, 2011

Nightly News Protects G.E.

It's well known that the Nightly News producers steal (excuse me, borrow) many of their stories from The New York Times. Well, here's a Times story we're not likely to see on Nightly News. On the front page of Friday's Times--above the fold--was a story about the shady and duplicitous tax practices used by General Electric, the former majority owner and current minority owner of NBC. Despite worldwide profits of $14.2 billion ($5.1 billion of that from the U.S.), G.E. is paying no corporate income tax for 2010. According to the article by David Kocieniewski, "[G.E.'s] extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan 'Imagination at Work' fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress."

The entire article can be read at: Meanwhile, here are some of the highlights:

> "Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to 'green energy' credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas."
> "The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion."
> "Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion."
> "The [tax] shelters are so crucial to G.E.’s bottom line that when Congress threatened to let the most lucrative one expire in 2008, the company came out in full force. G.E. officials worked with dozens of financial companies to send letters to Congress and hired a bevy of outside lobbyists. The head of its tax team, Mr. Samuels, met with Representative Charles B. Rangel, then chairman of the Ways and Means Committee, which would decide the fate of the tax break. As he sat with the committee’s staff members outside Mr. Rangel’s office, Mr. Samuels dropped to his knee and pretended to beg for the provision to be extended — a flourish made in jest, he said through a spokeswoman. That day, Mr. Rangel reversed his opposition to the tax break, according to other Democrats on the committee. The following month, Mr. Rangel and Mr. Immelt stood together at St. Nicholas Park in Harlem as G.E. announced that its foundation had awarded $30 million to New York City schools, including $11 million to benefit various schools in Mr. Rangel’s district. Joel I. Klein, then the schools chancellor, and Mayor Michael R. Bloomberg, who presided, said it was the largest gift ever to the city’s schools. G.E. officials say the donation was granted solely on the merit of the project. 'The foundation goes to great lengths to ensure grant decisions are not influenced by company government relations or lobbying priorities,' Ms. Eisele [a G.E. spokesperson] said. Mr. Rangel, who was censured by Congress last year for soliciting donations from corporations and executives with business before his committee, said this month that the donation was unrelated to his official actions."

A huge donation to schools in Rep. Rangel's district after he reversed his position and granted tax breaks beneficial to G.E. might be seen by some as quid pro quo. Some might even call it an after-the-fact bribe. Apparently, the Nightly News producers don't call it anything, since they won't be reporting this story.

A little over two years ago (March 4, 2009), Brian Williams shamelessly took two minutes on his broadcast to try to prop up G.E.'s falling stock price. He (along with CNBC's David Faber) desperately tried to reassure the public that G.E. is a rock-solid company with more than enough capital to weather the financial crisis. And on Jan. 21, Brian was more than happy to report that Pres. Obama had picked G.E. CEO Jeff Immelt to lead his Economic Advisory Council. Brian loves to report good news about G.E. But when the news is not flattering, Brian and his producers ignore it. If the Times article had been about a mega-company other than G.E., Lisa Myers would have been all over the story. She would have done a five-minute in-depth investigation about the company's evil accounting practices. Obviously, we're not going to see that story.

In case anyone thinks that the G.E. story was not reported because of all the important breaking news happening in Libya and Japan, I would remind them that this week, Nightly News wasted five minutes alone on two "Making A Difference" stories without a shred of news value--one about a woman who helps obese people lose weight and another about a doctor who is also a nun. Clearly, it was not time constraints that prevented Nightly News from reporting the G.E. story. It was their policy of protecting their former parent company from negative publicity.

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