This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
If it had been revealed that Jeffrey Immelt once hired an undocumented nanny, or defaulted on his mortgage, he would be forced to resign as head of President Barack Obama’s “Council on Jobs and Competitiveness.” But the fact that General Electric, where Immelt is CEO, didn’t pay taxes on its $14.5 billion profit last year—and indeed is asking for a $3.2 billion tax rebate—has not produced a word of criticism from the president, who in January praised Immelt as a business leader who “understands what it takes for America to compete in the global economy.”
What it takes, evidently, is shifting profit and jobs abroad: As of last year only 134,000 of GE’s total workforce of 304,000 was based in the US and according to the New York Times for the past three years 82% of the company’s profit was sheltered abroad. Thanks to changes in the tax law engineered when another avowedly pro-business Democrat, Bill Clinton, was president, US multinational financial companies can avoid taxes on their international scams. And financial scams are what GE excelled in for decades, when GE Capital, its financial unit, which specialized in credit card, consumer loan and housing mortgage debt, accounted for most of GE’s profits.
That’s right, GE, along with General Motors with its toxic GMAC financial unit, came to look more like an investment bank than a traditional industrial manufacturing giant that once propelled this economy and ultimately it ran into the same sort of difficulties as the Wall Street hustlers. As the New York Times’ David Kocieniewski, who broke the GE profit story, put it: “Because its lending division, GE Capital, has provided more than half of the company’s profit in some recent years, many Wall Street analysts view GE not as a manufacturer but as an unregulated lender that also makes dishwashers and MRI machines.”
Maximizing corporate profits at the taxpayer’s expense is what top CEOs are good at, and after all it was Immelt who presided over GE when it got so heavily into the subprime mortgage business that it needed a government bailout to avoid bankruptcy. This was before Obama made him a trusted adviser.
Back at the end of 2008, Bloomberg reported that the US government had agreed to insure an additional $139 billion in GE Capital’s debt holdings, the second such intervention within a month, adding, “The company’s exposure to the deepest financial crisis since the 1930s has cut its market value by more than half this year.” A Washington Post exposé titled “How a Loophole Benefits GE in Bank Rescue” documented the power of Immelt’s lobbying operation in Washington. GE was not initially deemed eligible for the debt guarantee program offered to failing banks, “but regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.” And it worked; as the Post reported, “The government’s actions have been `powerful and helpful’ to the company, GE chief executive Jeffrey Immelt acknowledged.” For the next two years, GE would still report enormous profits without paying taxes, adding insult to the injury that financial shenanigans had inflicted on ordinary taxpayers who bailed the company out.