What Happens When Bad Money Supports Good Foreign Policy?

The Koch Brothers’ Moonshine

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In November, the Charles Koch Foundation announced that it would provide nearly $ 4 million in grants to Harvard University and MIT to train the next generation of foreign policy professionals. It’s part of the foundation’s effort to steer U.S. foreign policy away from its emphasis on military intervention and big Pentagon budgets.

Yes, that’s right: Charles Koch.

He’s the same fellow profiled in Jane Mayer’s devastating critique of how right-wing billionaires have injected their anti-government toxins into the American bloodstream. In Dark Money, Mayer describes how Charles and his brother David have funded organizations that have promoted tax cuts for the wealthy, an anti-regulatory agenda that trashes the environment in favor of energy companies (like Koch Industries), and Tea Party formations that want to shrink government to the point of non-existence.

The Kochs subscribe to a radical, right-wing version of libertarianism according to which nothing should stand in the way of free enterprise. No surprise that the Kochs’ philosophy helps their own bottom line. They spent nearly a million dollars in support of George W. Bush and other Republicans in 2000, and then benefited hugely from the Bush administration’s preferential treatment of energy companies (not to mention the tens of millions of dollars in government contracts they secured since 2000). Even during the Obama years, their efforts at the federal and state level to “get government off their backs” helped to double their fortune, from $ 19 billion each in 2008 to $ 41 billion each in 2016.

The Kochs are disgusting in many ways. But they can’t be faulted for being inconsistent in their hatred of government, all government. Most right-wing “deficit hawks” employ a national-security exception when they try to defund all parts of the government except the Pentagon. But the Kochs at least treat defense spending like all other government spending. In this case, it even goes against their pecuniary interests. The Kochs made around $ 170 million between 1996 and 2011 from defense contracts. In the grand scheme of things, of course, $ 10 million a year is a rounding error for billionaires.

Their anti-war and anti-intervention philosophy has meant that the Cato Institute, the libertarian think tank started and funded by the Kochs, has taken consistently good positions on foreign policy over the years. But the Cato Institute, even with its huge budget and swank downtown headquarters, has always been a little off to the side in the Washington policy community. The Kochs crave mainstream credibility.

So that’s why the Charles Koch Foundation is providing money to Harvard and MIT — the very definition of mainstream credibility — to encourage anti-interventionist thinking in academia. The two people who will administer the program are thoughtful critics of U.S. militarism: Harvard’s Steven Walt and MIT’s Barry Posen. Walt and John Mearsheimer wrote a perceptive essay in Foreign Affairs in 2016 laying out the argument for “offshore balancing,” a grand strategy of scaling back U.S. military commitments overseas that Posen also supports.

I have a lot of respect for Walt and Posen. I have also worked with folks at Cato on various foreign policy initiatives.

But in the current political climate, when the Trump administration is launching an all-out assault on federal programs and a Koch-supported tax bill is making its way through Congress, should progressives welcome the few crumbs that the Kochs are throwing in the direction of anti-war initiatives?

The Kochs and Trump

As a candidate for president, Donald Trump made some noises about opposing military interventions and reducing the Pentagon’s footprint overseas. Thanks largely to his senior advisor Steve Bannon, Trump also came to embrace the radical anti-government positions that right-wing libertarians favor.

But Charles and David Koch actively disliked Trump (a third brother, Bill, supported the Republican nominee). As the 2016 campaign heated up, rumors circulated of a Koch-funded anti-Trump campaign and of Charles Koch even supporting Hillary Clinton. Those turned out to be false. The Kochs didn’t activate their network to support Trump, but they also didn’t rule out cooperation.

Indeed, a number of Koch-friendly politicians and operatives were embedded in the campaign, from Mike Pence (Trump’s running mate) to Corey Lewandowski (Trump’s campaign manager, fired in June 2016). Marc Short, Pence’s communications advisor and then Trump’s legislative director, once headed up Freedom Partners, a Koch-funded organization. “The vacuum in Trump not having his own network is filled by people who’ve been cultivated for years by the Koch network,” Richard L. Hasen, a UC Irvine law professor told the Los Angeles Times.

It wasn’t long after the administration took office that the Koch brothers began to investigatehow the Trump team could advance their agenda. They welcomed Trump’s pullout from the Paris climate accord, the various environmental regulations that the administration rolled back, and the congressional effort to kill the Affordable Care Act.

By May, the brothers identified Trump’s tax plan as something they could get behind — in a big way. As the fight intensified in Congress, the Koch network was going all out. Tim Phillips, president of the Koch-affiliated Americans for Prosperity, told the Boston Globe: “It’s the most significant federal effort we’ve ever taken on.” The Koch network has pooled $ 400 million for the next two years of political work, and it’s applying a good chunk of that to getting the tax bill passed. It’s been a full-court press with op-eds and $ 8 million in attack ads.

So, let’s dispense with the notion that the Kochs can be relied on to fund a big-tent effort against Trump. They don’t like his positions on immigration, marijuana, or criminal justice reform. But they’re eager to exploit Trump as a “useful idiot” in their campaign to pillage the commonwealth.

Against the Globalists

It’s easy for me to take a principled stand against taking money from the Kochs. They haven’t offered me any. But here are some reasons why others might think twice about taking their anti-war resources.

The ideological reason: A progressive anti-war position is part of a larger internationalist program that supports global peacekeeping and post-conflict reconstruction, robust environmental programs, transnational anti-poverty efforts, and human rights mechanisms that hold countries and individuals accountable. The Kochs aren’t interested in any of that.

All of the prescriptive elements of the progressive internationalist agenda require strong states. The Kochs believe that the invisible hand of the free market will solve all problems, without any state guidance or interference. In the same way that Margaret Thatcher didn’t believe in society, only individuals, the Kochs don’t really believe in the international community. The only transnational force that has any import for them are transnational corporations. Their anti-war funding thus comes with some serious (if often hidden) ideological strings attached.

The monetary reason: So far, the Charles Koch Foundation has shelled out less than $ 15 million to support programs at educational institutions to look at a less militaristic foreign policy. That’s a pittance compared to what it’s spending on efforts to unravel Obamacare or get Trump’s tax plan passed. It’s also about what the Kochs make every year off the U.S. military. Perhaps if Koch Enterprises announced that it was divesting from all military-related activities, their charitable giving would have more impact.

The educational reason: As Jane Mayer points out in Dark Money, the Kochs have funded programs at universities to shift academic discourse away from liberal and progressive thinking. Their funding of programs on “law and economics,” for instance, has helped to shift the legal profession toward more laissez-faire thinking. And it’s not as if the Kochs have been particularly transparent about their methods. Jane Mayer quotes a Koch advisor, George Pearson: “Traditional gifts to universities, he warned, didn’t guarantee enough ideological control. Instead, he advocated funding private institutes within prestigious universities, where influence over hiring decisions and other forms of control could be exerted by donors while hiding the radicalism of their aims.”

The legitimacy reason: The Kochs have been trying to give the appearance of being transpartisan. They have collaborated with progressives on sentencing reform, though as Mayer points out they’re probably more interested in getting reduced sentences for corporations than for the poor. They work with the Negro College Fund, but the money goes toward demonstratinghow “principled entrepreneurship, economics, and innovation contribute to well-being for individuals, communities, and society.”

The term “well-being,” as Mayer details, was something the Kochs came up with to put a smiley-face on funding that otherwise destroys communities, social welfare programs, and the environment. Even if their new foreign policy funding doesn’t come with such strings, it still helps with the image makeover of the Kochs.

So, even though Walt and Posen, not Charles Koch, will be administering the funds at Harvard and MIT, the program could well be the thin edge of the wedge. If the Kochs decide to pour money into foreign policy, they could successfully untether the anti-war position from its internationalist foundations.

If such arguments prove successful, the United States will scale back its military presence, but the world won’t become any safer as a result. Overall global military spending might increaseto compensate for U.S. retrenchment. U.S. allies — South Korea, Japan — might decide to acquire their own nuclear weapons programs if the U.S. nuclear umbrella becomes frayed. Absent a strong international security framework, other countries will inevitably fight each other for the mantle of U.S. hegemonic authority.

The Kochs don’t care. They welcome global anarchy because they think they’ll be able to profit by it. Perhaps Walt and Posen believe that they are successfully using Charles Koch toward their own end of constructing a more realist U.S. foreign policy. But the Kochs, with billions of dollars at their disposal, are more likely to be the ones manipulating, not being manipulated.

The post What Happens When Bad Money Supports Good Foreign Policy? appeared first on Institute for Policy Studies.

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Can Anti-Racist Businesses Put Their Money Where Their Mouth Is?

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(Photo: Stuart Monk / Shutterstock)

Donald Trump’s failure to condemn White supremacists after the violent neo-Nazi rally in Charlottesville several weeks back had an unexpected casualty: the president’s business advisory councils.

My partner works for a Fortune 500 company whose CEO sat on one those councils. Along with many other employees, my partner had been pressuring the CEO through an internal petition for some time.

Eventually, the dam broke: CEO after CEO decided they could no longer associate themselves with the White House after the incident, forcing Trump to dissolve two high-level panels.

I’m glad my partner’s efforts, along with bigger ones like a campaign to target “Corporate Backers of Hate,” rattled these major corporations’ top decision makers.

Corporate execs know that it’s bad for business to be affiliated with racists — and good for business to look like heroes. While rejecting racism is good, it’s a low bar — especially when many still profit off it.

Jamie Dimon, CEO of JP Morgan Chase, jumped into action after Charlottesville. He not only issued a statement, but also announced that JP Morgan Chase would donate $ 500,000 to the Southern Poverty Law Center, an organization that’s fought racism since the 1970s.

It was a smart business move. The last time JP Morgan was on the wrong side of racism, it cost them $ 55 million in settlements for charging Black and brown people higher rates for their mortgages. Looking at that number, a $ 500,000 donation is a drop in the bucket.

The company can’t take back the discrimination lawsuits or its part in the housing crisis, which slashed Black wealth in this country in half. That’s a huge percentage. Black families had already been denied centuries of wealth accumulation due to slavery and racist policies like redlining, and this crisis was a double whammy.

$ 500,000 also isn’t enough to make up for the bank’s financing of mass incarceration.

JP Morgan Chase lent hundreds of millions of dollars to Geo Group and CoreCivic, two major operators of private prisons and immigrant detention centers, despite investor concerns .

All that dirty money makes Dimon’s comments in support of DACA after Trump’s decision to repeal it also ring a little hollow.

DACA, or Deferred Action for Childhood Arrivals, is a program created by the Obama administration that protects some young undocumented immigrants from deportation.

It’s hard to believe that Dimon truly thinks that “when people come here to learn, work hard, and give back to their communities, we should allow them to stay in the United States” when his company supports corporations that profit from warehousing immigrants in detention.

White supremacy doesn’t just look like KKK hoods and swastikas — it can also wear a business suit on Wall Street. Of the top five Wall Street firms, the highest level decision makers are 86 percent white. That’s no coincidence.

Corporations have huge power they can use to fight structural racism. But it’s got to be more than just words.

JP Morgan and Goldman Sachs could publicly commit to pull contracts that contribute to mass incarceration. IBM could refuse contracts that contribute to violent immigration enforcement activities. Wells Fargo could halt its financing of the Dakota Access Pipeline on Native lands. At a minimum, that’s what the Corporate Backers of Hate campaign recommends.

And, by looking inward at their hiring policies, promotion policies, and pay scales, these businesses can begin building towards long term equality.

Don’t get me wrong, it is a good thing that they denounced hatred. I just hope they’ll put their money with their mouth is.

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Money Talks. We Need to Talk Louder.

money-politics-lobbying

(Photo: Flickr/ DustinGinetz.Photography)

In today’s polarized political climate, it seems like there’s no issue that people can agree on — except for maybe one.

Democrats and Republicans, liberals and conservatives, and people on all parts of the spectrum largely agree on one thing: There’s too much money in politics. And it’s only getting worse.

For me, this goes beyond numbers on a page.

I’ve been active in the political process for years, and I’ve campaigned hard for candidates I support. But I can’t help but feel more disenfranchised than ever by wealthy donors who can give their hand-picked candidates hundreds of thousands of dollars with a single check.

I’m hardly alone. Recently I was telling my brother about my efforts trying to get signatures for a candidate here in Virginia. He replied with something that touched on doubts I was too fearful to voice.

“Money is more influential than campaigning and votes,” he said. “So why are you wasting your time bothering to even campaign?”

Is he right? Let’s look at those numbers after all.

$ 6.9 billion: That’s how much money was spent during the 2016 election cycle — over a third of that on the presidential race alone. Just the top 10 individual donors together donated more than $ 300 million to Super PACs, many of which don’t have to disclose their donors at all.

So it’s no surprise that in a recent poll, three-quarters of respondents believed that elected officials put their own interests first. A similar number said politicians don’t care what “regular people” think.

Another less than surprising result? About 40 percent of eligible voters abstained from voting last year.

Like my brother, many people I’ve spoken to while campaigning say they choose not to vote because they don’t see a point. They believe, not implausibly, that our political system is being taken over by a small number of wealthy people.

After all, Trump and his cabinet picks now make up the wealthiest administration in U.S. history. And Trump’s Supreme Court pick Neil Gorsuch has sided with big donors over and over again, cynically believing that donors are just exercising their right to “free speech.” On the bench, he could well vote to dismantle the few remaining campaign finance restrictions in place today.

Is all hope lost, then? Are we stuck with representatives who don’t truly represent us anymore?

Not necessarily.

Represent.Us and Wolf PAC are two grassroots organizations that are working to pass laws and constitutional amendments to stop political bribery and get big money out of politics. They’re working in red states and blue, and in local communities all over. Represent.Us has already helped pass anti-corruption laws in Pennsylvania, South Dakota, Oregon, and beyond.

Since the recent election, more and more people have felt a drive for civic engagement. To effectively capitalize on this newfound movement, we need to talk about the source of what drives most of the issues in our country: the few, but powerful, who are able to get their way in politics through their money and influence.

This country is for all of us, not just the top few who are able to buy their member of Congress. But there’s a catch for them: They’ll always be few.

The power is with us to get big money out of politics.

Razan Azzarkani is a Next Leader at the Institute for Policy Studies.

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The Best Education Our Money Can Buy

Yale University Gates

(Photo: littleny / Shutterstock)

Most of us know folks who owe everything they have in life to education. That explains, I suspect, why we nod in agreement whenever we hear somebody describe education as the ultimate antidote to inequality.

Education certainly can serve as a brake on our widening divides. But education, if structured the wrong way, can also reinforce inequality — and perpetuate privilege.

We saw this unfortunate dynamic at work most blatantly back in the days of legal school segregation. “Separate but equal” kept children of color distinctly unequal.

Legally segregated schools no longer scar our nation. But our educational systems are still, in many different ways, perpetuating privilege. And the most powerful perpetuating of all may be taking place at the tippy top of America’s educational order, on the campuses of our nation’s most prestigious elite universities.

We tend to view these elite schools — places like Harvard, Yale, and Princeton — as national treasures. One thing’s for sure: These private universities certainly sit atop treasures. They all boast endowments that run into the many billions of dollars.

In 2012, Harvard, Yale, Princeton, and five other elite schools had endowments worth a combined $ 112 billion. For this enormous nest egg, elite private schools owe the American people a debt of gratitude. Without us, their endowments wouldn’t be anywhere near as large.

Elite universities, keep in mind, get the bulk of their contributions from wealthy alumni. These alumni — thanks to the generosity of the American taxpaying public — get to deduct charitable contributions off their taxes. This generous tax break gives the wealthy a mighty incentive to donate to dear old ivy. The more they give, the more they can deduct.

With this tax break in place, elite universities get to accumulate vast endowments, and the phenomenally rich get to pay taxes at bargain basement rates — and stay phenomenally rich.

But these same endowments are also creating fabulous wealth — for the money managers and hedge fund kingpins that universities hire to invest their endowment dollars. These money manipulators rake up enormous fees, often many millions of dollars a year.

What about us, the general public? What’s our return on investment for the hefty tax breaks we extend to wealthy people for their college contributions?

University PR staffers have a ready answer. Elite private universities, they assure us, are serving the public interest. Those billion-dollar endowments, these flacks note, fund scholarships that enable students from families of modest means to get the finest educations available anywhere in the world.

Elite universities, the claim goes, are broadening opportunity.

But not by much, a new landmark study makes clear. The academics behind this new research — economists from Stanford, Berkeley, and Brown — examined data for over 30 million students who attended college in the United States between 1999 and 2013. They found that students from lower-income families make up a shockingly paltry proportion of the enrollments at elite private universities.

In fact, 38 elite institutions have more students from families making over $ 650,000 a year — our top 1 percent — than from the under-$ 65,000 ranks of the low- and middle-income families who make up America’s entire bottom 60 percent.

We do have colleges in the United States, the researchers also found, that do a good job reaching large numbers of lower-income students and helping them succeed. The vast majority of these colleges happen to be public institutions — places like the City University of New York.

These public schools aren’t sitting on billion-dollar endowments subsidized by tax breaks for mega millionaires. These colleges depend on our tax dollars for their support. What do you think? Maybe they should get more of those tax dollars — and mega millionaires less.

Sam Pizzigati is an associate fellow at the Institute for Policy Studies.

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How Can You Keep Standing with Standing Rock? Move Your Money

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(Photo: Peg Hunter / Flickr)

After months of Native American water protectors gathering in peace, prayer and solidarity to protect their sacred lands, the Obama administration announced on Dec. 4 that it’s sided with the Standing Rock Sioux and halted the construction of the Dakota Access Pipeline.

A battle was won. But with a Trump administration looming, the fight isn’t over.

The president-elect has pledged to remove constraints on fossil fuel projects, and it’s likely he’ll try to reverse this decision once he takes office. But there’s something you can do to help stand up for life and for justice.

The controversial pipeline would be 1,170 miles long and cost $ 3.7 billion. A project of that scale doesn’t build itself. Behind the lead investor, Energy Transfer Partners, stand heavily armed police forces, sound-cannon trucks, water cannons, tear gas and attack dogs – and 38 banks funding it all.

That’s why the Institute for Policy Studies, where we work, is pulling its money from one of these banks – SunTrust – and switching to a more socially responsible institution. Banks that fund the planet-destroying fossil fuel economy and undermine Native American land rights aren’t the ones we should be doing business with.

Read the full article on US News and World Report’s website.

The post How Can You Keep Standing with Standing Rock? Move Your Money appeared first on Institute for Policy Studies.

John Cavanagh is the director of the Institute for Policy Studies.
Domenica Ghanem is the media manager at the Institute for Policy Studies.

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U.S. Military Names Climate Change an Urgent Threat, But Where’s the Money?

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(Photo: Tobin / Flickr)

Our military calls climate change “an urgent and growing threat to our national security, contributing to increased natural disasters, refugee flows, and conflicts over basic resources like food and water.”

And this month the Obama administration announced a comprehensive strategy to incorporate climate change into our national security strategy. But there was no mention of money: how much this would cost or where the money would come from.

Next month, we’ll know whether we’ll have a climate denier or an advocate for climate action in the White House, and a Congress either continuing to resist or ready to tackle this threat. They’ll need to know what we’re currently spending as a baseline for debate over what we need to spend. Next to regulation, money is the key tool government has to spur CO2 reductions in the atmosphere.

But the federal government hasn’t produced a climate change budget since 2013. Meanwhile, we’re at the white-hot center of the refugee crisis in Syria. And though the conditions leading to this tragedy were laid by geopolitics and internal politics, one of the worst long-term droughts in history that gripped the country from 2006 to 2010 also played a major role.

Read full article on U.S. News & World Report’s website.

The post U.S. Military Names Climate Change an Urgent Threat, But Where’s the Money? appeared first on Institute for Policy Studies.

Miriam Pemberton directs the Peace Economy Transitions program at the Institute for Policy Studies.

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Don’t Spend Your Money on Already Rich Schools

Don’t go to Bowdoin College. Don’t give a huge check to Stanford. Don’t give Wilt Chamberlain a hard time for shooting free throws underhanded. And don’t underestimate how much inequality rots our society from all sorts of different angles.

You’ll take away these insights and plenty more like them from Malcolm Gladwell’s fascinating new Revisionist History podcast. His new series, currently ranked number one on iTunes, rummages the past for events and ideas that we as a society have badly misread and really need to rethink.

Gladwell asks, for instance, whether the American Dream is still alive, and that question leads to a novel review of America’s deeply unequal college scene.

In one episode, titled Food Wars, Gladwell compares both the proportion of low-income students attending elite universities and the schools’ dining halls. The premise is that spending significant sums on food takes away from spending on scholarships for needy students. Two schools are highlighted on either end of the “food vs scholarships” spectrum: Bowdoin College in Maine and Vassar College in New York.

Bowdoin has the best dining hall in the country with fresh local organic meals that could just as easily be found at a Michelin rated restaurant. And that is the problem with American higher education today, according to Gladwell.

Don’t go to Bowdoin, he advises, don’t let your friends or children go to Bowdoin. The money wasted on fancy food that doesn’t go to scholarships for needy kids is what’s driving the gap in education. (As you can imagine, Bowdoin took issue with this.)

Vassar, on the other hand, has a mediocre dining hall, but has double the low-income students Bowdoin has. Overly simplistic? Yes. But it’s not really about food, it’s about priorities and Gladwell wants to see those priorities shift.

Mostly left out of the conversation is the role of public colleges and the steady disinvestment in higher education by state legislatures. All but three states spend less on higher education today than they did ten years ago. This speaks to Mr. Gladwell’s bias, whose focus is generally on the elite and the gifted, not on the average poor student with average or even below average intellect.

How do we educate those less gifted and ensure that they too can rise above their social class? How do we treat education as public good, one deserving of public investment? This might be the one major blind spot throughout the series, but it’s a small critique of an otherwise brilliant analysis.

In the next episode, “My Little Hundred Million,” Gladwell touches on this topic with a look at Rowan University in New Jersey. Rowan is a rather unremarkable school, a small public university with mostly local, low-income students. But about 20 years ago, Rowan got a huge boost—a hundred million dollar donation from philanthropist Hank Rowan (for whom the school was subsequently re-named). At the time, this size gift was unheard of and it had a huge impact on the school and the students who would later attend. Gladwell praises Rowan for selecting a school like Rowan to give his money to, a school that could put it to good use.

Unlike, say Stanford.

Stanford, like many of the Ivy League schools and similar institutions, has a massive endowment. At over $ 20 billion, it’s bigger than the gross domestic product of most island nations. Yet, it was the recent recipient of a $ 400 million gift earlier this year from Nike founder Phil Knight. And there too is the problem in higher ed, according to Gladwell.

Almost all of the big donations going to higher education go to wealthy universities that already have plenty of money. While Stanford catches the ire in this episode, it could just as easily have been Harvard. Last year, Gladwell jokingly tweeted in response to headlines that billionaire John Paulson was giving the school $ 400 million, “If billionaires don’t step up, Harvard will soon be down to its last $ 30 billion.”

The message is clear: if you’ve got big money to give and want to fix education, don’t give it to schools that already have a ton of money.

Like his best-selling books, Gladwell’s podcast is engaging and moves seamlessly back and forth between nuanced academic studies and interesting character profiles. His critiques are a welcome shake-up to beliefs about education and the American Dream.

The post Don’t Spend Your Money on Already Rich Schools appeared first on Institute for Policy Studies.

Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies. 

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Not the time for ‘throwing money around’ – The Australian Financial Review


The Australian Financial Review
Not the time for 'throwing money around'
The Australian Financial Review
Using increased tobacco taxes, Labor will honour the original funding pledge made under the needs-based Gonski reforms.. The government's money is not only much less, but will come with conditions on the states and territories, including literacy and

and more »

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US Relies Heavily on Saudi Money to Support Syrian Rebels – New York Times


New York Times
US Relies Heavily on Saudi Money to Support Syrian Rebels
New York Times
Since then, the C.I.A. and its Saudi counterpart have maintained an unusual arrangement for the rebel-training mission, which the Americans have code-named Timber Sycamore. … In addition to Saudi Arabia's vast oil reserves and role as the spiritual
Saudis key to CIA's secret arming of Syrian rebelsThe Boston Globe

all 446 news articles »

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FOR IMMEDIATE RELEASE: Money to Burn

(Washington, DC) President Barack Obama is using his trip to Alaska to urge a speedy transition to a new energy economy. A just-released Institute for Policy Studies report sheds light on one overlooked obstacle to this shift—our CEO pay system.

Executive Excess 2015: Money to Burn explains how fossil fuel executives are incentivized to continue down a destructive climate path. The report is based on in-depth analysis of the 30 largest U.S. publicly held oil, gas, and coal companies.

Key findings:

  • Beating the S&P 500 average: CEOs of these 30 largest fossil fuel companies averaged $ 14.7 million in total 2014 compensation, over 9 percent more than the S&P 500 CEO average.
  • Five years, $ 6 billion: These firms’ management teams have taken home $ 6 billion over the past five years. That would be enough to weatherize 3.3 million homes or double the $ 3 billion U.S. pledge to the Green Climate Fund, a new institution to help vulnerable nations address climate change.
  • Bonus incentives: All 13 oil producers on our list of 30 major U.S. fossil-fuel corporations reward executives for expanding carbon reserves, even though these firms are already sitting on far more reserves than could be burned without catastrophic climate effects.
  • Short-termism: Most CEO compensation comes in the form of options and stock grants, a pay stream that encourages a fixation on pumping up share prices. Executives at distressed coal companies Peabody and Alpha Natural Resources cashed in stock options worth $ 47 million and $ 33 million, respectively, in the four years before their industry began to implode.
  • Buybacks: In 2014, 23 of the top 30 fossil fuel companies spent a combined $ 38.5 billion on share repurchases. That was six times global corporate spending on research into renewable energy that year. Buybacks artificially inflate share prices, which, in turn, inflates executives’ stock-based pay.
  • Pay for non-performance: The top 10 U.S. publicly held coal companies have also been increasing their cash-based executive pay as their share prices have been plummeting. When paychecks grow even as businesses sink, executives have little incentive to shift to a new energy future.
  • Retirement security: Top fossil fuel executives have accumulated company-provided retirement assets worth a combined $ 1.2 billion at the same time their indifference to environmental degradation has been putting the futures of average Americans at risk.

“Our perverse executive pay system encouraged the recklessness that led to the 2008 financial crisis,” notes Sarah Anderson, IPS Global Economy Project Director and a veteran executive compensation analyst. “These same misplaced incentives are encouraging the recklessness of fossil fuel executives that is putting the entire world at risk.”

“The short-term incentive system is not only bad for the planet, it’s bad for investors as well,” adds IPS Senior Scholar Chuck Collins. “A rational system would encourage global energy leaders to shift investment away from drilling and mining untapped reserves towards renewable energy options.”

This Executive Excess report, the Institute’s 22nd annual, also includes an updated CEO pay reform scorecard.

 

More Information:

Elaine de Leon, IPS Communications Director
Elaine@ips-dc.org, Office: 202.787.5271, Mobile: 202.714.3443

Sarah Anderson, Institute for Policy Studies
(202) 787 5227sarah@ips-dc.org

The Institute for Policy Studies (IPS-DC.org) has conducted path-breaking research on executive compensation for 22 years. The 2014 edition of their annual Executive Excess report received coverage in the Washington PostReuters, and Wall Street Journal Marketwatch, among other outlets. IPS also provides a constant stream of inequality analysis and solutions through our online weekly Too Much and our website Inequality.org.

The post FOR IMMEDIATE RELEASE: Money to Burn appeared first on Institute for Policy Studies.

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