In Part Two of a two-part series, we look at corporate influence on the debt debate, Wal-Mart’s credibility woes, Superstorm Sandy’s disaster capitalism, and Chevron’s attack on shareholder activists.
Corporate Cash Driving Debt Debate
The ink is barely dry on the not-so-grand bargain to avert the fiscal “cliff” hammered out in the wee hours of the morning on January 2nd (the Senate passed it on New Year’s Eve.) Caving on his campaign pledge to retain the Bush tax cuts for those earners making $250,000 or less, Obama pushed through an agreement that would raise taxes only on the top 1 percent of earners making $400,000 or more.
Tom Harkin, one of only three Democratic senators to vote no on the deal, charged on NPR’s All Things Considered that the deal discriminates against moderate income earners, because, as he said:
“All of the tax benefits that go to rich people and the high-income earners are made permanent. The tax benefits that we Democrats put in in 2009 to help modest-income people, those are made temporary. To me, that just stands logic on its head.”
In fact, with the payroll tax break of 2009 expiring, taxes will go up an average of $1,200 for an estimated 70 percent of earners. Meanwhile, spending cuts will be on the agenda just as the debt limit talks happen in two months – making crucial social and environmental programs available bargaining chips ripe for the chopping block.
So how did it happen that policies needed to “build prosperity from the middle out” – spending on jobs creation (infrastructure, green energy), supporting social insurance programs, as well as vitally needed funds to repair our environment and combat climate change — are under threat, while policies to bring down the debt by cutting our bloated military and boosting revenue through taxes on a larger share of the wealthy and on Wall Street are off the table?
The fault could very well lie with the outsized influence of corporate propagandists such as Fix The Debt, funded by billionare Peter Peterson and “an impressive amount of corporate cash,” as Paul Krugman pointed out in a recent op-ed:
Like all the Peterson-funded groups, Fix the Debt seems much more concerned with cutting Social Security and Medicare than with fighting deficits in general … all the Peterson-funded groups are trying to exploit the fiscal cliff to push a benefit-cutting agenda that has nothing to do with the current crisis, using artfully deceptive language… to hide the bait and switch.
Meanwhile, not all corporations are pushing the Peterson agenda. A group of business leaders called for corporations to pay their fair share in resolving the fiscal cliff, proving that companies can don halos, instead of horns, in supporting an equitable path to deficit reduction.
Wal-Mart’s CSR Credibility Problem
Once upon a time, Wal-Mart’s [NYSE: WMT] praises were being sung to the skies for the retail giant’s leadership on a host of sustainability issues. But the company’s laurels are starting to crumble after revelations about corrupt practices in Mexico and its failure to insure safe working conditions among suppliers, resulting in the terrible fire that took the lives of more than 100 workers in Bangladesh.
Wal-Mart’s longtime practice of union-busting also came under attack in 2012, as workers around the country and their supporters staged demonstrations highlighting the company’s unfair labor practices, not only toward its own workers but also among warehouse workers servicing the retailer.
In this video from the group Our WalMart, that mounted the protests, the company’s brand (“Save money. Live better.”) takes a beating from workers who say they are unable to make ends meet on the paltry wages, skimpy hours and unpredictable work schedules the company gives them.
Prior to the Tazreen fire, Wal-Mart nixed a program to make fire safety more robust among its suppliers in Bangladesh because of high costs.
As I pointed out in an earlier post, real commitment to ethical practices, like exercising oversight over the supply chain, “depends on the commitment of the buyer to promoting worker well-being across the board, including decent wages, good working conditions, and fair prices to suppliers.”
After revelations about unsafe working conditions in its supplier factories in China, Apple started to get serious about forcing improvements. Will Wal-Mart start putting its money where its mouth is in 2013?
Superstorm Sandy: Banks Profit While Homeowners Go Into Debt
Perhaps the most underreported story of 2012 is how banks are profiting off the victims of Superstorm Sandy.
A terrific report by Strike Debt – the Occupy offshoot that is buying up distressed medical debt for pennies on the dollar and forgiving the loans* (another top story of 2012) – explains the disaster capitalism that is feeding off the Sandy tragedy. Its findings include:
“The economic costs of the disaster are placed on individuals” because federal aid programs are requiring victims to first apply for private loans before qualifying to apply for FEMA aid.
This means that individuals are taking on debt when they are least able to support it under circumstances that smack uncomfortably of the mortgage market that led to the crash of 2008:
“There is little real choice in taking on these loans, and they are granted based on opaque and questionable credit standards. With high unemployment rates, it’s easy to see how loan based “aid” could precipitate a second round of crises in impacted areas, as many residents will be left on their own.”
Furthermore, this policy is exacerbating inequality, since those who are too poor to take on debt to begin with, are shut out of aid.
Insurance companies aren’t taking up the slack – much like what happened after Hurricane Katrina, insurers are parsing their coverage in a manner that denies many claims or limits coverage to a fraction of the damage.
And Congress has just played its part in hitting Sandy victims when they are down. House Speaker John Boehner failed to bring a $60 billion Sandy relief bill to the floor before Congress adjourned. That means thousands of residents of New York, New Jersey and Connecticut won’t be getting any help any time soon while many remain without power or heat months after the storm.
Wall Street has recovered after being under water for a few days after the storm, but it looks like its banks will be mopping up profits at others’ expense for a long time to come. However, not all corporations are using the disaster to make out like bandits. Dow [NYSE: DOW], for one, has pledged to help rebuild communities devastated by Sandy with a half million dollar gift.
Chevron Goes After Shareholder Activists
We’re closing out this 2012 retrospective series on one of the most egregious cases of corporate bad acting in a year replete with them because 1) it’s hard to top for sheer, bald-faced arrogance, and 2) it’s creating a healthy backlash in the shareholder activism community.
It’s the case of Chevron [NYSE: CVX] vs. its shareholders.
After facing an $18 billion fine for massive contamination of the Ecuadorian rain forest, the company has filed motions in court to subpoena records of its investor, Trillium Asset Management. Also named is shareholder activist Simon Billenness, formerly of Trillium, who has been filing shareholder proposals for Amnesty International, ICCR and other groups. He wrote a report showing that the energy company gave differing risk reports on the Ecuador case to shareholders than in sworn legal documents.
But the subpoena is stiffening the resolve of the shareholder activist community, Billeness told CSRwire.
After the subpoenas arrived, the activists re-filed three resolutions from the previous year and gained new co-filers in bringing forth an additional one. “This has really galvanized shareholders rather than intimidate them,” Billeness said. “If Chevron’s goal was to intimidate shareholders, it’s completely backfired.” (We’ll bring readers more about this story in January.)
As we look ahead to 2013, we can expect further developments on all these important stories of 2012. Will the environment and climate action get the shaft during the debt ceiling talks? Will Wal-Mart face up to its responsibilities to workers? How will Sandy’s victims find their way back to recovery? And will shareholder activists get justice in the courts against Chevron? For those stories and more, stay tuned.
Part 1: Click here
This article was originally published on CSRwire
Francesca Rheannon is an award-winning journalist and managing editor for CSRwire’s blog, Talkback.