“Better Living Through Chemistry.”
—Advertising campaign slogan employed by DuPont from 1935 until 1982.
“Better Living Through Chemistry.”
—Advertising campaign slogan employed by DuPont from 1935 until 1982.
A 22-year employee of the E.I. DuPont de Nemours (DuPont) plant in Burnside in Ascension Parish has filed a confidential lawsuit in Middle District Federal Court in Baton Rouge that claims the plant has consistently been experiencing toxic gas leaks on almost a daily basis for more than two years without reporting the leaks as required by a 151-year-old federal law.
Jeffrey M. Simoneaux, an Ascension Parish native who served for 14 years as chairman of the plant’s Safety, Health and Environmental Committee, also claims he was harassed, intimidated and denied promotions after he said he complied with DuPont’s own internal procedures for reporting a leak of sulfur trioxide (SO3) gas, a known carcinogen which is regulated under the Toxic Substance Control Act (TSCA) of 1976 and was reprimanded for doing so.
DuPont, headquartered in Wilmington, Del., was ranked 72nd on the Fortune 500 in 2013 and reported 2012 profits of nearly $2.8 billion, down more than 19 percent from 2011, according to a report by CNN Money.
Despite profits from its worldwide operations which employ 60,000 people, DuPont has for years avoided paying any federal income taxes.
The company has contributed more than $21,000 to various state politicians since 2003, including $4,500 to Gov. Bobby Jindal. Its plants in Burnside and in St. John the Baptist Parish have been granted more than $21 million in various tax credits and exemptions by the state.
Those included, in order, the project, the year, parish, total investment, tax exemption and number of new jobs created:
The case has been referred to Federal District Judge Shelly Dick and Magistrate Judge Stephen Riedlinger, according to court documents.
Simoneaux terminated his employment with DuPont on Aug. 13, 2012, he said.
The most recent filing is a Feb. 21, 2014 Response to State of Uncontested Facts submitted by Simoneaux who is represented by Baton Rouge attorneys Jane Barney and J. Arthur Smith, III.
In that filing, Simoneaux claims that DuPont failed to inform the Environmental Protection Agency of the numerous SO3 leaks by the plant despite its proximity and potential threat to an elementary school, Sorrento Primary School, a residential subdivision and the Mississippi River.
He filed his suit under the 151-year-old False Claims Act (FCA), passed by Congress in 1863 because of concerns that suppliers of goods to the Union Army during the Civil War were defrauding the Army.
Under FCA, DuPont should be subjected to mandatory fines of $25,000 per violation per day plus “recovery of three times the amount of damages sustained by the U.S., and an award of attorney’s fees.”
Simoneaux claims that plant manager Tom Miller became irate when Simoneaux attempted to slow the plant production rate so as to reduce the leakage on Feb. 1, 2012. Miller, he said, overrode his decision and said he wished to speak to Simoneaux alone.
Simoneaux said he would prefer to have another operator present during his conversation with Miller, but the plant manager would not allow it.
Miller subsequently berated Simoneaux for sending an email to his supervisor, Elizabeth Cromwell, and directed him “not to send any more written communications about leaks or stack capacity.” Simoneaux said that Miller “clearly advised” him that should he send future emails to Miller about any offsite release, he would “get in trouble.”
He said he advised Miller that the leak was going offsite as they were speaking but that Miller three separate times refused to ride with Simoneaux to the rear of the plant so that Miller could see for himself the gas, visible as a light blue mist, “flowing over the fence line.”
He said he asked Miller where he thought the gas was going and Miller “looked out the door and said, ‘Who is the plant manager, me or you? I’m telling you I don’t see any gas going off the site.’”
Simoneaux said to properly repair the leaks, the plant should be completely shut down so repairs could be made. Instead, temporary stop-gap measures were attempted utilizing a rubber suction hose that deteriorated quickly because of the acid contained in the lines.
On April 11, 2012, Simoneaux again observed a cloud of leaking SO3 and entered the information in a log book, again provoking Miller’s anger. “The plant manager said he did not want someone ‘coming in her to do an environmental audit and coming across this stuff written in this log book, reading it and getting the wrong idea.”
Simoneaux also said that Miller, during an employee meeting, verbally discouraged employees from calling authorities about the gas leak. He also said an investigation was conducted by management and their report “states that there was no on-site impact and no off-site impact, giving a score of zero to both issues” despite the fact that one employee was treated for eye and throat irritation after being exposed to one leak.
A contract worker also was burned when acid dropped onto him from the rubber hose, the petition says.
A Material Safety Data Sheet was submitted as an exhibit by Simoneaux’s attorneys and provides information under both potential acute and chronic health effects of exposure to SO3.
Potential Acute Health Effects:
Potential Chronic Health Effects:
DuPont, as might be expected, denied Simoneaux’s claims but in its response to Simoneaux’s first set of requests for production of documents, standard procedure in any civil litigation under the rules of discovery, the company made several glaring admissions that tend to substantiate Simoneaux’s claims and deposition testimony of several of Simoneaux’s former co-workers at DuPont’s Burnside plant:
Lonnie Blanchard, a contract worker at the DuPont Burnside facility, testified in his deposition that there were up to two dozen SO3 leaks. He described the leaks as “a real problem” and said on several occasions he could see the cloud of gas escaping from the plant from the Sunshine Bridge that connects the east and west banks of Ascension which is split by the Mississippi River.
Another employee, Percy Bell, testified in his deposition that plant management had issued a policy saying employees were prohibited from taking photographs of the mist clouds.
In his deposition, he was asked, “In the last two years, has there ever been a time when you were working (at the plant) and there hasn’t been a leak?”
“No, I haven’t,” he answered.
Simoneaux said DuPont identified gas leaks to which it will respond “only by visible assessment and (it) has no monitors at equipment sites.”
He added that the stop-gap measure used “is appropriate only for temporary use until permanent repairs can be made” because it is not made of material designed for that purpose and is “known to fail without warning.”
Employees and contractors work in proximity to the leaks on a daily basis with no warning given before there is a visible gas leak. Employees, he said, must watch a windsock at the plant in attempts to stay upwind of any gas leaks in efforts to avoid exposure.
First Gov. Bobby Jindal refused to expand the state’s Medicaid program and then he vetoed a $4 million appropriation aimed at shortening a waiting list for home-based services for the developmentally disabled.
And now there is this:
“AIDS patients in Obamacare limbo as insurers reject checks.”
That was the headline on the Reuters story that moved on the Internet at 9:23 a.m. on Saturday. The upshot of the story was that hundreds of HIV/AIDS patients in Louisiana attempting to obtain coverage under the Affordable Care Act are in danger of being rejected by the insurance plan they selected.
Just as significant is the roar of stony silence emanating from the State Capitol’s fourth floor office of Bobby Jindal who, six years ago first swore an oath to uphold the rights of all the citizens of Louisiana—even those several hundred adversely affected by the latest BCBS decision. Some would even speculate that Jindal may have leaned on BCBS, which holds two contracts worth $1.1 billion with the state through the Office of Group Benefits.
Others might even raise the question that if Jindal did influence the decision, did he do so at the behest of the Louisiana Family Forum?
The issue revolves around a dispute over federal subsidies and the interpretation of federal rules about preventing Obamacare fraud
BCBS, the state’s largest carrier, is rejecting checks from a federal program that is specifically designed to assist HIV/AIDS patients in paying for AIDS drugs and for insurance premiums under the Ryan White CARE (Comprehensive AIDS Resources Emergency) Act.
Ryan White, a hemophiliac from Kokomo, Indiana, was diagnosed with AIDS at age 13 from a contaminated blood transfusion. He and his mother Jeanne White Ginder fought for his right to attend school. He died in 1990 at age 18, a month before his high school graduation and only months before Congress passed the act that bears his name.
The Ryan White Program is the single largest federal program designed specifically for people with HIV and benefits more than half a million patients each year. It provides care and support services to individuals and families affected by the disease, serving as the “payer of last resort” by filling the gaps for those who have no other source of coverage or who face coverage limits.
But now, inexplicably, BCBS says it will no longer accept third-party payments such as those provided by the Ryan White Program.
“In no event will coverage be provided to any subscribers, as of March 1, 2014, unless the premiums are paid by the subscriber (or a relative) unless otherwise required by law,” said BCBS spokesman John Maginnis (no, not the journalist).
The decision stems from a series of communications from the Centers for Medicare and Medicaid Services (CMS), the lead Obamacare agency. In September, CMS informed insurers that Ryan White funds “may be used to cover the cost of private health insurance premiums, deductibles and co-payments” for Obamacare plans.
But in November, CMS warned care providers and “other commercial entities” that because of the risk of fraud, it had “significant concerns” about their supporting premium payments and assistant Obamacare consumers pay deductibles and other costs.
BCBS seized on that to say it had implemented a policy, “across our individual health insurance market, of not accepting premium payments from any third parties who are not related” to the subscriber, according to Maginnis.
Not so fast, says CMS. “The third-party payer guidance CMS released (in November) does not apply” to the Ryan White programs, it said.
Hundreds of HIV/AIDS patients who are not eligible for Medicaid depend on Ryan White payments for Obamacare. That is because Gov. Bobby Jindal chose not to expand the low-income Medicaid program and Obamacare federal subsidies do not kick in until people are at 100 percent of the federal poverty level.
The only other carrier currently refusing to accept such payments is BCBS of North Dakota, according to a CMS spokesperson but that policy is currently under review.
Jessica Stone, a member of U.S. Sen. Mary Landrieu’s staff, in an email to health care advocates, wrote, “BCBS LA told me their decision was not due to the CMS guidance or any confusion (as we thought before) but was in fact due to adverse selection concerns” in an effort by insurers to keep AIDS patients from enrolling in their plans.
Adverse selection refers to the situation where an insurer attracts patients with chronic conditions and expensive care. John Peller, vice president for policy at the AIDS Foundation in Chicago, said the action “sure looks to us like discrimination against sick people.”
BCBS LA denied that. “We welcome all Louisiana residents who chose Blue Cross and Blue Shield of Louisiana,” Maginnis said.
One observer said it shouldn’t matter who pays the premiums. “All the insurer should care about is whether the premiums are paid or not. I once loaned money to a friend and had problems getting him to pay me back. His girlfriend finally paid me some of the money. If I had been like BCBS, I would have refused her money, preferring to get it from him—and I would have gotten nothing. This makes no sense whatsoever.”
Perhaps Jindal intends to ignore the 13,400 HIV/AIDS victims served by the program in Louisiana and use the $50.7 million in Ryan White funds the state receives to help plug next year’s all but certain budget deficit.
For five long years now we have patiently (or impatiently in some cases) awaited the arrival of all that transparency touted by Gov. Bobby Jindal upon his part time occupancy of the governor’s office.
Now it seems that heretofore elusive aspect of the Jindal administration has finally arrived.
No, it wasn’t Superintendent of Education John White telling News Corp. Senior Vice President Peter Gorman (aka “Dude”) that he is White’s “recharger.”
Nor is the LSU Board of Supervisors which has refused to release the names of applicants for LSU president on the grounds that the applications are conveniently (convenient for the board and the administration, that is) submitted to a Dallas consulting firm which, being a private entity, is not subject to the public records law.
It wouldn’t be the Louisiana Office of Economic Development either. LED a couple of years back refused to surrender records to the Legislative Auditor’s office so that the state auditors could perform the function with which they are charged—auditing the state’s books.
And, needless to say, it is not Attorney General Buddy Caldwell, who found a way to punt on our request for assistance in prevailing upon the Department of Education to comply with the Louisiana public records law (the law, the AG’s office informed us, says it can intervene on behalf of the public meetings law but there is no provision for it to assist with public records).
That’s a classic case of legal hair splitting, but hey, the attorney general’s office is the official legal counsel for state agencies (a veritable horde of state-contracted legal counsels notwithstanding), so who are we to argue? We’re just the low-lifes who work, pay taxes and vote in this state. Never mind some 80 or so (we finally quit counting when we reached that number) legal opinions by the AG issued to various state agencies which opine that public records must be surrendered.
But we digress (as we often do).
No, it’s none of those. The shocker here is that the transparency that has suddenly and without warning opened up before our very eyes originates in none other than the governor’s office.
Yep, chalk one up for Bobby, our part time, absentee governor who would rather run for president than run the state.
Don’t believe us? Still harboring some doubts as to the veracity of our claim?
Well, we have the proof.
Jindal is proposing scrapping the state personal and corporate income tax and replacing it with…well, something. He hasn’t the vaguest idea what (he said earlier this month that he’s still working on details of his plan).
In general terms, Jindal is talking about an increase in the state sales tax and a dollar increase in the cigarette tax (remember when he refused to sign the renewal of the 4-cent cigarette tax because, he said, he was opposed to “new” taxes?).
Never mind that a sales tax would hit the low- and middle-income taxpayers the very hardest http://louisianavoice.com/2013/01/16/par-lsu-economist-richardson-cast-doubts-on-%CF%80-yush-plan-to-replace-louisiana-income-tax-with-state-sales-tax-increase/, abolishment of state income taxes has become the mantra of Republican governors nationwide because it would represent the ultimate tax break (read: political reward) for corporate campaign donors.
But rather than rely on the lack of merits in a weak proposal, Jindal has enlisted his minions to launch a letter-writing campaign in support of his as yet incomplete tax plan.
That’s correct: the plan isn’t even completed, much less polished and officially presented to the legislature and the public, but the letter-writing campaign has already started. Never mind that the plan has as yet progressed no further than a two-page outline pretentiously entitled “A Framework for Comprehensive Tax Reform.” It apparently suffices for the purposes of initiating a well-orchestrated PR campaign from the governor’s office or perhaps from Timmy Teepell’s OnMessage (Oops, we forgot; they are one and the same).
It officially began on Feb. 20 with the publication in newspapers statewide of a letter by LED Secretary and presumed future LSU President/Chancellor/High Potentate Stephen Moret.
Boiled down to its essentials, Moret’s 12-paragraph letter claims that Jindal’s undefined, unreleased, still-in-the-works, everything-still-on-the-table plan would somehow magically bump Louisiana from No. 32 to No. 4 in something called the State Business Tax Climate.
Fine for business climate, yes, but Moret conveniently neglects how that plan, still being formulated somewhere out there in the fog-enshrouded concepts of the policy wonks, would affect the working stiffs. An addition 2 or 3 percent on the sales tax for the purchase of say, a package of toilet paper won’t be such a burden. But tack that same 2 or 3 percent onto the cost of a new refrigerator, central air and heating unit or a new automobile and suddenly, in the words of the late Illinois Sen. Everett Dirksen, you’re talking about real money.
But no matter; Moret obviously had his marching orders: write a glowing letter about how the Jindal Plan (not to be confused with the Stelly Plan that he repealed, at a cost to the state of about $300 million a year) would be great for business—and everyone knows, as President Calvin Coolidge said way back in 1925, “The chief business of the American people is business.” (The stock market crash, of course, was only four years away when he said that, which subsequently put a lot of American people out of business.)
Exactly a week after Moret’s letter, on Feb. 27, the Baton Rouge Advocate (and probably a few other papers across the state) published a second letter endorsing the still mythical tax plan. This one was written by someone named Matthew Glans, who identifies himself as senior policy analyst for The Heartland Institute in Chicago (described by The Economist last May as “The world’s most prominent think tank promoting skepticism about man-made climate change,” according to the institute’s own web page) and which also describes itself as an advocate of free market policies.
Probably its greatest claim to fame, however, came in the 1990s, when it worked with Philip Morris in attempts to debunk the science linking secondhand smoke to health issues and to lobby against government public-health reforms.
(The Heartland Institute bears an eerie resemblance to the fictional “myFACTS” currently being lampooned by Garry Trudeau in the comic strip Doonesbury.)
Glans calls Jindal’s plan “a strong step towards improving the state’s economic competitiveness and returning tax dollars to Louisiana citizens and businesses.”
At the same time he cautions against a system “that allows the government to choose winners and losers.”
“A tax system filled with tax increases on targeted items such as tobacco or subsidies for certain businesses (read: tobacco, in states like North Carolina), however, is not sound policy,” he says, adding, “A system that lowers rates across the board, like much of Jindal’s proposal, would spur economic growth.”
Strange how Glans, sitting in Chicago, could know so much about the part time, absentee governor’s tax plan when Jindal himself confesses that his “plan” is still evolving and stranger still that he would single out tobacco (and tobacco subsidies) as a potential victim of increased sales taxes.
Curious, too, that he is so knowledgeable when legislators remain in the dark.
But, hey, we wanted transparency from our governor.
And this “independent” letter-writing campaign is about as transparent as it gets.
It’s interesting to note that the very existence of the American Legislative Exchange Council (ALEC), which writes “model legislation” for lawmakers to introduce back in their respective state capitals rests on one ginormous paradox.
For example, consider this mission statement from ALEC’s 4th edition of its state economic competitiveness index entitled Rich States, Poor Stateshttp://www.alec.org/docs/RSPS_4th_Edition.pdf: “ALEC’s mission is to discuss, develop and disseminate public policies which expand free markets, promote economic growth, limit the size of government (emphasis ours), and preserve individual liberty within its nine task forces.”
Yet, for all its breast beating about making government smaller and more accountable, it’s curious and somewhat contrary to that theme that of the top 100 companies in the Fortune 500, fully one-half are—or were—corporate members of ALEC http://money.cnn.com/magazines/fortune/fortune500/2012/full_list/.
In fact, 31 of the 50 largest corporations in America helped pay the bills to wine and dine state legislators at seminars, conferences, planning sessions and annual meetings of ALEC delegates, including the 2011 annual meeting held in New Orleans at which Gov. Bobby Jindal was the keynote speaker.
Fallout over the shooting of teenager Trayvon Martin in Sanford, Florida, last February coupled with ALEC’s endorsement of the controversial “Stand Your Ground” law in that state which was linked to his shooting has resulted in the decision by some two dozen corporations to drop their ALEC memberships.
Among those who have bailed out are Wal-Mart, General Motors, General Electric, Bank of America, Entergy, PepsiCo, Walgreen, Dow Chemical, Marathon Petroleum, Procter & Gamble and Coca-Cola.
Some of those retaining their memberships, however, include Hunt-Guillot of Ruston, ExxonMobil (the largest corporation in the U.S.), Chevron, AT&T, Verizon, UnitedHealth Group, Archer Daniels Midland, Wells Fargo, Pfizer, Boeing, Microsoft, and FedEx.
ALEC’s “small is better” philosophy for government takes a sharp 180 when its corporate membership is placed under the microscope. While 50 of the 100 largest members of the Fortune 500 are ALEC members, that number drops precipitously in the ensuing blocks of 100.
For example, of the corporations ranked in size from 101 to 200, only 29 are ALEC members and for 201 to 300, the number is 17. For 301 to 400, the membership is 13 and for the final group, 401-500, you will find only seven who are ALEC members.
So while the lobbying group maintains that small is better, it appears that it goes after the larger corporate sponsors first and is increasingly disdainful of the smaller companies.
The 116 Fortune 500 companies who are members of ALEC combined for $4.5 trillion in revenues in 2011 and altogether realized net profits of $484.2 billion. Remember, that does not include the other 384 Fortune 500 companies—just the 116 ALEC members.
Just for the record, here are 50 ALEC members from the Fortune 100 with 2011 rankings, revenue and profits in parentheses http://money.cnn.com/magazines/fortune/fortune500/2012/full_list/:
• ExxonMobil—(1; $452.9 billion; $41.1 billion);
• Wal-Mart—(2; $446.9 billion; $15.7 billion—terminated membership);
• Chevron—(3; $245.6 billion; $26.9 billion);
• ConocoPhillips—(4; $237.3 billion; $12.4 billion);
• GM—(5; $150.3 billion; $9.2 billion—terminated membership);
• GE—(6; $147.6 billion; $14.2 billion—terminated membership);
• Ford—(9; $136.3 billion; $20.2 billion);
• AT&T—(11; $126.7 billion; $3.9 billion);
• Bank of America—(13; $115.1 billion; $1.4 billion);
• Verizon—(15; $110.9 billion; $2.4 billion);
• CVS—(18; $107.8 billion; $3.5 billion—terminated membership);
• IBM—(19; $106.9 billion; $15.9 billion);
• UnitedHealth Group—(22; (101.9 billion; $5.1 billion);
• Wells Fargo—(26; $87.6 billion; $15.9 billion—terminated membership);
• Procter & Gamble—(27; $82.6 billion; $11.8 billion—terminated membership);
• Archer Daniels Midland—(28; $80.7 billion; $2 billion);
• Marathon Petroleum—(31; $73.6 billion; $2.4 billion);
• Walgreen—(32; $72.2 billion; $2.7 billion—terminated membership);
• Medco Health Solutions—(36; $70.1 billion; $17.8 billion—terminated membership);
• Microsoft—(37; $69.9 billion; $23.2 billion);
• Boeing—(39); $68.7 billion; $4 billion);
• Pfizer—(40; $67.9 billion; $10 billion);
• PepsiCo—(41; $66.5 billion; $6.4 billion—terminated membership);
• Johnson & Johnson—(42; $65 billion; $9.7 billion—terminated membership);
• State Farm Insurance—(43; $64.3 billion; $845 million);
• Dell—(44; $62.1 billion; $3.5 billion—terminated membership);
• WellPoint—(45; $60.7 billion; $2.6 billion);
• Caterpillar—(46; $60.1 billion; $4.9 billion);
• Dow Chemical—(47; $60 billion; $2.7 billion);
• Comcast—(49; $55.8 billion; $4.2 billion);
• Kraft Foods—(50; $54.4 billion; $3.5 billion—terminated membership);
• Intel—(51; $54 billion; $12.9 billion);
• UPS—(52; $53.1 billion; $3.8 billion);
• Best Buy—(53; $50.3 billion; $1.3 billion—terminated membership);
• Prudential—(55; $49 billion; $3.7 billion;
• Amazon.com—(56; $48.1 billion; $631 million—terminated membership);
• Merck—(57; $48 billion; $6.3 billion—terminated membership);
• Coca-Cola—(59; $46.5 billion; $8.6 billion—terminated membership);
• Express Scripts Holding—(60; $46.1 billion; $8.6 billion);
• FedEx—(70; $39.3 billion; $1.5 billion);
• DuPont—(72; $38.7 billion; $3.5 billion—terminated membership);
• Honeywell International—(77; $37.1 billion; $2.1 billion);
• Humana—(79; $36.8 billion; $1.4 billion);
• Liberty Mutual Insurance Group—(84; $34.7 billion; $365 million);
• Sprint Nextel—(90; $33.7 billion; –$2.9 billion);
• News Corp.—(91; $33.4 billion; $2.7 billion);
• American Express—(95; $32.3 billion; $4.9 billion);
• John Deere—(97; $32 billion; $2.8 billion—terminated membership);
• Philip Morris—(99; $31.1 billion; $8.6 billion);
• Nationwide Insurance—(100; $30.7 billion; -$793 million).
Of course, ALEC also pushes its agenda of lower taxes very strongly (who do you think helped write Gov. Jindal’s proposal to eliminate the state individual and corporate income taxes in favor of increase sales taxes? Surely, one would not believe he came up with that all by himself).
It’s no coincidence that Louisiana is pushing to ditch the state income tax at the same time as several other states, including Nebraska, Missouri, Oklahoma, Kansas, and North Carolina. Each state has read the ALEC playbook.
“Money is spent more efficiently by the private sector than by governments, so it is reasonable to expect that states with lower overall taxes have better economic environments than states with high taxes and more government spending,” the Rich States, Poor States report says.
Apparently the authors of that statement did not bother to review the histories of the subprime mortgage crisis, junk bonds, Enron, Bernard Madoff, Stanford Financial Group, the savings and loan crisis of the 1980s, collateralized mortgage obligations (CMOs), Tyco, WorldCom, AIG, Lehman Brothers, and the bursting of the dotcom bubble.
Be that as it may, let us go back to ALEC’s mantra of lower taxes and see how that might apply to its corporate membership.
General Electric is the poster child for tax dodges. With $19.6 billion in net profits for the years 2008-2011, GE managed not only to pay no taxes, but got $3.7 billion in tax refunds.
Other ALEC members, their net profits and taxes/refunds for years 2008-2011 include: http://www.ctj.org/pdf/notax2012.pdf
• PG&E—($6 billion; $1 billion refund);
• CenterPoint Energy—($3.1 billion; $347 million refund);
• Duke Energy—($5.5 billion; $216 million refund);
• Con-way—($422 million; $23 million refund);
• Ryder System—($843 million; $46 million refund);
• DuPont—($3 billion; $325 million paid in taxes—10.8 percent, less than one-third the standard 35 percent tax rate);
• Consolidated Edison—($5.9 billion; $74 million refund);
• Verizon—($19.8 billion; $758 million refund);
• Boeing—($14.8 billion; $812 million refund);
• Wells Fargo—($69.2 billion; $2.6 billion paid in taxes—3.8 percent, barely 10 percent of the 35 percent standard rate);
• Honeywell International—($5.2 billion; $102 million—2 percent).
Some of the CEOs for ALEC member corporations received more in compensation in 2010 than their companies paid in taxes. Here are a few with salaries first, followed by taxes paid: http://www.dailyfinance.com/2011/08/31/ceo-pay-vs-corporate-taxes/
• International Paper: $249 million refund; CEO John Faraci received $12.3 million;
• Prudential: $722 million refund; CEO John Strangfeld received $16.2 million;
• Verizon: $705 million refund; CEO Ivan Seidenberg paid $18.1 million;
• Chesapeake Energy: paid no taxes; CEO Aubrey McClendon paid $21 million;
• eBay: $131 million refund; CEO John Donahoe paid $12.4 million;
• Coca-Cola: paid $8 million taxes; CEO John Brock paid $19.1 million;
• Dow Chemical: $576 million refund; CEO Andrew Liveris paid $17.8 million;
• Ford: $69 million refund: CEO Alan Mulally paid $26.5 million.
If you still believe that ALEC favors smaller government over, say, being able to exercise control over government taxation and spending, then consider the General Services Administration’s list of $69 billion in federal contracts held by these ALEC members in fiscal year 2011: https://www.fpds.gov/fpdsng/index.php/reports
• Boeing: $21.6 billion;
• Northrop Grumman: $15 billion;
• Raytheon Co.: $14.8 billion;
• Humana: $3.4 billion;
• General Electric: $2.8 billion;
• Honeywell International: $2.2 billion;
• Dell: $1.4 billion;
• IBM: $1.7 billion;
• FedEx: $1.6 billion;
• Merck: $1.3 billion;
• Shell: $913 million;
• Pfizer: $1.2 billion;
• UPS: $701 million;
• AT&T: $743 million;
It’s easy to preach small government and lower taxes but to achieve this, a lot of ALEC members would stand to lose a chunk of business with Uncle Sam.
And that doesn’t even include state and local contracts like the $18.3 million in state contracts currently held by ALEC member Hunt, Guillot & Associates of Ruston and the $11.4 million state contract awarded to Northrop Grumman.
Smaller, more streamlined and accountable government sound great, most would agree. But the implementation of changes across the board may well affect one’s bottom line and that, as they say, is when the cheese gets binding. It is then that we simply must follow the money.
Charter schools and vouchers, for example, would benefit investors who see a fortune to be made in private education—especially when most of that money would be paid by the state.
The continued growth in the number of private prisons (along with more laws that send more people to prison) would be quite a windfall for those operators who contract with state and local governments to incarcerate lawbreakers.
Elimination of personal and corporate income taxes in favor of sales tax increases would further lighten the financial burden of business and industry—and shift that burden onto the backs of low- and middle-income citizens.
The rejection of a federal grant to build a broadband internet system for rural Louisiana certainly benefitted commercial cable companies like AT&T which contributed $250,000 to the Supriya Jindal Foundation.
Likewise, relaxed environmental regulations endorsed by ALEC certainly aided member Dow Chemical which coincidentally kicked in $100,000 for the Supriya Jindal Foundation. Soon after that donation, proposed fines of subsidiary Union Carbide for allowing the release of a toxic pollutant and failing to notify authorities of the leak were dropped.
Or Marathon Oil, whose $250,000 donation to the foundation may have greased the skids for the awarding of $5.2 million in state funds to a Marathon subsidiary.
Instead of listening to the rhetoric of ALEC’s membership, one would do well to watch how certain specific proposals might affect that membership.
In other words, don’t listen to what they say; watch instead for what they do.
“If you’ve got some states doing it, it’s hard for the others not to do it. It’s like unilaterally disarming.”
—Former Illinois Gov. Jim Edgar, on his unsuccessful efforts to rein in the runaway trend toward tax incentives offered by states to lure industry.
Ninety-five of her fellow House members agreed with Rep. Katrina Jackson (D-Monroe).
Her HB 1104 that would have required state agencies which administer tax credits, exemptions and rebates to report certain information needed by the Legislative Auditor’s Office in determining whether each tax credit, exemption or rebate was “effectuating the purpose they were enacted to achieve” passed 96-0 in the House and by a 35-0 vote in the Senate.
In the end, it appears that Gov. Piyush Jindal had the only vote that counted and he voted no in vetoing the bill, proclaiming that safeguards against abuses were already in place.
Never mind that over the past four years, Louisiana has given away $18 billion in corporate tax exemptions, plus about $300 million per year lost by the repeal of the Stelly Plan.
Almost lost in all of this is an April 25 Legislative Auditor’s report which says in effect that those safeguards Jindal alluded to don’t really work.
The Louisiana Department of Economic Development’s Enterprise Zone program “does not meet the statutory purpose of the program, which is to stimulate business and industrial growth in enterprise zones,” the 17-page audit report says.
The state’s EZ, program is a jobs incentive program that provides Louisiana income and franchise tax credits to businesses hiring at least 35 percent of net, new jobs from one of four targeted groups:
• New employees who heretofore were receiving some form of public assistance;
• New employees below the ninth grade proficiency in reading, writing or math;
• New employees who are unemployable by traditional standards.
Enterprise zones are areas with high unemployment, low income or a high percentage of residents receiving some form of public assistance. A business must create permanent net, new jobs at the EZ site.
Such jobs must be created upon the start date of the project or of construction and either increase current workforce by 10 percent within the first 12 months or create a minimum of five net, new jobs within the first 24 months.
When the state’s Enterprise Zone, or EZ, program was created in 1981, it was designated to stimulate growth in enterprise zones by providing tax incentives to businesses that locate to and operate in those areas. Act 977 of 1999, however, eliminated the requirement that businesses must locate to or operate in an enterprise zone to qualify for EZ incentives, the report noted.
Benefits to the employer include the following:
• A one-time $2,500 credit per new job;
• Rebates of 4 percent of sales taxes on materials, machinery, furniture or equipment;
• The earning of a 1.5 percent refundable investment tax credit.
Businesses may receive EZ incentives for creating part-time jobs, jobs that provide a smaller economic impact and which provide no employee benefits such as health care or retirement plans. This means a business creating a single 20-hour part-time minimum wage ($7.25 per hour) job with an economic impact of $7,450 receives the same EZ incentive as a business creating a single 35-hour full-time minimum wage job with an economic impact of $13,195, plus benefits, the report said.
Moreover, a business is not even required to be located in an EZ and does not have to invest money—only create additional jobs—to qualify.
Louisiana also approves retail businesses, where jobs easily transfer or shift from one business to another with no real gain in the number of jobs, to receive EZ program incentives.
Finally, Louisiana law prohibits the disclosure of the amount of incentives received by businesses and in so doing, denies the public of its right to know how its tax money is spent.
The audit says that during calendar years 2008 (Jindal’s first year in office) through 2010:
• 632 of 930 businesses (68 percent) receiving EZ program incentives were located outside a designated enterprise zone;
• Those 632 businesses received approximately 123.9 million (61 percent) of the $203.1 million in total EZ program incentives granted;
• Approximately $3.9 billion (60 percent) of the $6.5 billion in capital investment by the 930 businesses receiving incentives was located outside a designated EZ;
• Approximately 12,570 (75 percent) of the 16,760 net new jobs created by the 930 businesses were located outside an EZ.
The number and dollar amounts of EZ incentives have increased dramatically since Jindal took office in January of 2008. In 2007, the year before he took office, there were $25.4 million in EZ program incentives approved. In his first two years in office, 2008 and 2009, the amount was about $60 million for each year and in 2010, the amount jumped to $109.6 million, according to information provided by the Louisiana Department of Revenue.
The Department of Revenue could only provide date by fiscal year whereas all other data were from calendar years, thus the difference between the $229.8 million reported by Revenue for the three years of 2008-2010 as opposed to the $203.1 million reported by the Louisiana Department of Economic Development.
Using Revenue’s numbers, the $229.8 million approved during Jindal’s first three years in office eclipsed the previous seven fiscal years’ combined total of $202 million.
“We also determined how Louisiana’s EZ program differs from those in other competing neighboring states—Alabama, Arkansas, Mississippi and Texas,” the audit report said.
Some of the differences included:
• Alabama and Mississippi require businesses to be located in an enterprise zone in order to receive EZ program incentives;
• All four neighboring states exclude retail industries from EZ incentive program qualification;
• None of the four allows businesses to include part-time employees;
• Alabama, Arkansas and Texas require companies to prove the creation of net new jobs before receiving any EZ program incentives. In Louisiana, businesses have up to two years to create the required minimum number of net new jobs;
• Texas requires that the names of businesses that participate in its EZ program and the amounts of incentives each business receives be made public. Louisiana law prohibits the disclosure of the amount of incentives received by each business.
The report suggested that these shortcomings be remedied by corrective legislation.
That, in essence, is what Rep. Jackson attempted to do with her HB 1004 that was approved unanimously in both chambers.
But Gov. Piyush Jindal would have none of it.
“Over the last four and a half years, we have outperformed the national and southern economies, and in order to continue to attract business investment, we need to stay competitive with the rest of the country and the world.”
–Gov. Piyush Jindal, on signing into law two bills to “increase economic competitiveness” by creating a corporate headquarters relocation program.
Add another negative to the list for Louisiana.
While Gov. Piyush Jindal trots all over the country telling everyone who will listen about the state’s robust economy, the low unemployment rate and the incredibly favorable business climate, a national study has revealed that Louisiana has the third widest gap between rich and poor, roughly equivalent to some Third World countries.
The report, by 24/7 Wall Street, employs the widely accepted Gini coefficient which measures income inequality to arrive at its results. The Gini coefficient is a number between zero and one with zero representing perfect income equality and a place with a score of one would have only extremely wealthy and extremely poor people, with no middle class.
The state Gini coefficients range from .419 in Utah to .499 in New York, indicating that all 50 states have relatively high income inequality compared to the rest of the world.
The most alarming aspect of the latest results is the trend toward a widening gap, the report indicates. In 1967, the Gini coefficient for the U.S. was .397. Today, it is .469, evidence that America’s income divide has become greater.
The widening gap between rich and poor has been a growing issue between Republicans and Democrats on both the national and state levels.
Many of Jindal’s proposed programs, critics say, would do much toward widening that breach even further. The privatization of state agencies would result in layoffs of state employees and Jindal’s proposed retirement reforms would have sharply reduced state pensions. Cuts to higher education have resulted in further layoffs.
New York, with a Gini coefficient of .499, had the largest disparity between rich and poor despite having the sixth highest (7.4 percent) percentage of households earning $200,000 or more per year. At the same time, New York’s 14.1 percent of population living below the poverty line was 21st highest in the nation.
Louisiana, with a Gini coefficient of .475, was third behind Connecticut’s .486.
Even though the state’s unemployment rate was lower than the national average and the lowest on the list, Louisianans are limited in other areas that limit upward mobility, the report says. Only 82.5 percent of Louisiana residents older than 25 had a high school diploma and only 21.8 percent had a college degree.
And while the unemployment rate is comparatively low, 15.3 percent of the state’s residents received food stamps and the Louisiana median income is 10th lowest in the nation. The 17.7 percent of the state’s population living below the poverty line was fifth lowest in the U.S., the report shows.
Louisiana’s Gini coefficient of .475 is comparable to those of Ecuador (.469), Madagascar (.475), Nepal (.472) and Rwanda (.468), according to a worldwide ranking of Gini coefficients by the CIA.
Any comparison of Louisiana to those countries in misleading, however, because the Gini coefficient takes into account only the disparity between rich and poor and not median or household income.
Other states named as having income large gaps between rich and poor in the report, in order, include:
• Massachusetts (.475);
• Florida (.474);
• Alabama (.472);
• California (.471);
• Texas (.469);
• Georgia (.468);
• Mississippi (.468)
A Pew Research Center study released today indicates that Louisiana is the sixth-worst state in the nation in terms of chances of employees—any employees—getting a pay raise.
Pew Research Center, a nonpartisan think-tank conducted a study of economic mobility by examining the prime earnings period for residents in each state, specifically, the 10-year period between an individual’s late 30s and late 40s.
The survey employed three economic mobility measures to achieve its rankings: absolute mobility, which measures an individual’s wage increase over time, relative upward mobility and relative downward mobility. The latter two factors measure a person’s movement up and down the earnings ladder over time relative to his or her peers.
Of the nine states cited as exhibiting worse than average scores in at least two of the three parameters, seven have Republican administrations.
Nationwide, absolute mobility increased 17 percent but in many of the worse-off states, it was as low as 12 percent. Additionally, 34 percent of those studied ascended the earnings latter (upward mobility) while 28 percent fell in earnings (downward mobility).
While it may be a surprise to Gov. Bobby Jindal, who has been boasting to television hosts like Sean Hannity and anyone else who will listen to his banter that Louisiana’s business climate is among the best in the country, it is certainly no surprise to the working stiffs—particularly state employees—that Louisiana is one of only three states in which all three measures of economic mobility are significantly worse than the national averages.
The Pew report shows that Louisiana has a poverty rate of 17.8 percent and a median household income nearly $8,000 less than the national average and the state’s violent crime rate is among the country’s highest.
Here are the three factors used to determine Louisiana’s sixth-worst ranking:
• Absolute mobility change: 13 percent (national average: 17 percent);
• Percent with upward mobility: 28 percent (national average: 34 percent);
• Percent with downward mobility: 36 percent (national average: 28 percent).
With the state’s and nation’s upward and downward mobility figures almost exactly transposed, Louisiana citizens have to be wondering how Piyush can be so optimistic when extolling the virtues of the state outside our borders.
Jindal is likely to seize on the statement of Pew communications representative Liz Voyles who said, “Educational attainment is an extremely powerful driver of upward mobility from the bottom, and protects from downward mobility from the top and middle.” She said a college degree “quadruples a person’s chances of making it all the way to the top of the income ladder if they start at the bottom.”
The report’s findings that Louisiana also has one of the lowest high school graduation rates in the country might seem to dovetail nicely with Jindal’s proposed education reform measures were it not for Voyles’s caveat:
Poverty, particularly childhood poverty, has a major effect on a person’s mobility throughout life on a national level. “Growing up in a high-poverty neighborhood…increases a person’s chances of downward mobility by 52 percent,” she said.
The Pew report seems to reflect her words. Data show that all nine of the states with the worst economic mobility were in the top third for poverty and six of those were in the top 10.
Jindal, in all his euphoric pontification about the utopian paradise of quality education that lies just beyond the horizon of the passage of his education reforms, lays 100 percent of the blame for poor grades on teachers.
He has yet to give so much as a nod in the direction of the real root of the problem: poverty. Until he addresses the real problem, there is likely to be no real solution to Louisiana’s education morass.
Having said that, here are the Pew rankings of the nine worst states in terms of pay raise prospects, beginning with ninth worst and moving to the worst (giving, in order, the percentage of absolute mobility change, percent with upward mobility and percent with downward mobility):
• Alabama—12%, 27%, 32%;
• Florida—15%, 32%, 31%;
• Kentucky—13%, 34%, 35%;
• Louisiana—13%, 28%, 36%;
• Mississippi—17%, 26%, 36%;
• North Carolina—14%, 26%, 28%;
• Oklahoma—15%, 30%, 33%;
• South Carolina—12%, 26%, 34%;
• Texas—15%, 31%, 30%.
Which brings us to our suggestion for a new Louisiana State Motto: At least we ain’t Mississippi.