General Electric Paid No Federal Taxes in 2010

White House Takes Heat for GE CEO Jeffrey Immelt's Advisory Role

By JAKE TAPPER
ABC NEWS
THE WHITE HOUSE, March 25, 2011

The top tax bracket for U.S. corporations stands at
35 percent, one of the highest rates in the world. So h
ow is it possible that a giant of American business,
General Electric, paid nothing in federal taxes last
year, even as it made billions in profit?

And should the CEO of GE, Jeffrey Immelt, be advising
the president on business?

For two years, President Obama has been talking
about the need for corporate tax reform, declaring
that the system is too complicated and that companies
pay too much.

"Simplify, eliminate loopholes, treat everybody fairly,"
Obama said in February.

For those unaccustomed to the loopholes and
shelters of the corporate tax code, GE's success at
avoiding taxes is nothing short of extraordinary. The
company, led by Immelt, earned $14.2 billion in
profits in 2010, but it paid not a penny in taxes
because the bulk of those profits, some $9 billion,
were offshore. In fact, GE got a $3.2 billion tax
benefit.

Watch "World News with Diane Sawyer" for more
tonight on ABC.

"Two things are disconcerting. One is, there's
disproportionate amount of profits being reported
offshore. And then, even for the profits that are
reported onshore, they're paying less than 35
percent," said Martin Sullivan, a contributing editor
for Tax Analysts.

2010 was the second year in a row that GE recorded
billions in profits and paid no taxes.

During that same period, Immelt has been a close
advisor to the president on the business community,
a relationship that rubs some the wrong way. Immelt
serves as the chairman of Obama's Council on Jobs
and Competitiveness.

In a statement, General Electric said that it "pays what
it owes under the law and is scrupulous about its
compliance with tax obligations in all jurisdictions."
The company claims that its zero-dollar tax bill is
largely a result of losses at its financial arm, GE
Capital, due to the Wall Street meltdown.


White House: Immelt Advises on
Jobs, Not Taxes


Today, White House spokesman Jay Carney said that
the president is "bothered" by the idea that a U.S.
company could pay no taxes, but he wouldn't talk
about GE specifically. Carney was also quick to say
that Immelt's council advises the president on job
growth and not on tax policy.

"It is part of the problem of the corporate tax
structure that companies hire, you know, armies of
tax lawyers to understand how it works and to take
advantage of the various loopholes that exist, that are
legal in order to reduce their tax burden," Carney
said.

When President Obama announced his decision to
appoint Immelt to the unpaid advisory role on job
creation in January, some critics wondered whether
the move was appropriate. Under his leadership, GE
laid off 21,000 American workers and closed 20

'Arab spring' drives wedge between U.S., Saudi Arabia

Posted on Thu, Mar. 24, 2011
Warren P. Strobel | McClatchy Newspapers

WASHINGTON — The United States and Saudi Arabia — whose conflicted relationship has survived oil shocks, the Sept. 11, 2001 terrorist attacks and the U.S. invasion of Iraq — are drifting apart faster than at any time in recent history, according to diplomats, analysts and former U.S. officials.

The breach, punctuated by a series of tense diplomatic incidents in the past two weeks, could have profound implications for the U.S. role in the Middle East, even as President Barack Obama juggles major Arab upheavals from Libya to Yemen.

The Saudi monarchy, which itself has been loathe to introduce democratic reforms, watched with deepening alarm as the White House backed Arab opposition movements and helped nudge from power former Egyptian President Hosni Mubarak, another long-time U.S. ally, according to U.S. and Arab officials.

That alarm turned to horror when the Obama administration demanded that the Saudi-backed monarchy of Bahrain negotiate with protesters representing the country's majority Shiite Muslim population. To Saudi Arabia's Sunni rulers, Bahrain's Shiites are a proxy for Shiite Iran, its historic adversary.

"We're not going to budge. We're not going to accept a Shiite government in Bahrain," said an Arab diplomat, who spoke frankly on condition he not be further identified.

Saudi Arabia has registered its displeasure bluntly. Both Secretary of State Hillary Clinton and Defense Secretary Robert Gates were rebuffed when they sought to visit the kingdom this month. The official cover story was that aging King Abdullah was too ill to receive them.

Ignoring U.S. pleas for restraint, a Saudi-led military force from the Gulf Cooperation Council, a grouping of six Arab Persian Gulf states, entered Bahrain on March 14, helping its rulers squelch pro-democracy protests, at least for now.

A White House statement issued the day before enraged the Saudis and Bahrainis further, the diplomat and others with knowledge of the situation said. The statement urged "our GCC partners to show restraint and respect the rights of the people of Bahrain, and to act in a way that supports dialogue instead of undermining it."

In a speech Sunday in the United Arab Emirates, Saudi Prince Turki al-Faisal, a former ambassador to Washington, said the Gulf countries now must look after their own security — a role played exclusively by the United States since the 1979 fall of the Shah of Iran.

"Why not seek to turn the GCC into a grouping like the European Union? Why not have one unified Gulf army? Why not have a nuclear deterrent with which to face Iran — should international efforts fail to prevent Iran from developing nuclear weapons — or Israeli nuclear capabilities?" Turki said, according to a translation of his remarks by the UAE's state-controlled Emirates News Agency.

U.S. relations with the Saudis and other Gulf monarchies "are as bad as they were after the fall of the Shah," said Gregory Gause, an expert on the region and political science professor at the University of Vermont.

"The whole idea that Saudi Arabia still needs U.S. protection for anything ... we've already moved beyond that," the Arab diplomat said. He termed it "not necessarily a divorce, (but) a recalibration."

The Saudi embassy in Washington did not respond to requests for comment.

Despite the falling out, experts say there are limits to the U.S.-Saudi disaffection, if only because both countries share a common interest in oil flows, confronting Iran and countering al Qaida and other violent Islamic extremist groups.

Past efforts by the GCC countries — Saudi Arabia, Bahrain, Kuwait, Qatar, the United Arab Emirates and Oman _to handle their own security have failed. In 1990, when Iraqi leader Saddam Hussein invaded Kuwait, the Saudis and Kuwaitis turned to the U.S. military to save them.

"In the end I think geopolitics will push the U.S. and Saudi Arabia back together again," Gause said. "Iran is still out there."

Still, the tensions have already had real impact.

Saudi Arabia is moving on its own to secure its interests in neighboring Yemen, where Saudi-and-U.S.-backed President Ali Abdullah Saleh is barely clinging to power after weeks of protests.

The United Arab Emirates had pledged military aircraft to support the no-fly zone over Libya. But it has reconsidered, and for now is offering only humanitarian assistance.

U.S. officials acknowledge stark differences with the Saudis over Egypt and Bahrain. Washington does not see Iran's hand behind the protests in Bahrain, they said, nor does it view the entire region through the sectarian lens that the Gulf monarchies do.

While tempers are said to have cooled over Bahrain — the Obama administration did not denounce the Saudi incursion or demand GCC troops withdraw _tensions seem certain to persist.

Saudi concerns about U.S. policy are deep-seated, dating to the 2003 U.S. invasion of Iraq, which brought into being the first Shiite-led Arab nation in modern history. In Lebanon, Washington has not been able to stop Iranian-backed Hezbollah from steadily expanding its political clout.

"The problem is, the Saudis and the Gulf states are terrified by change," said Ken Pollack, director of the Brookings Institution's Saban Center for Middle East Policy.

Sanctions in 72 hours: How the U.S. pulled off a major freeze of Libyan assets

By Robert O’Harrow Jr., James V. Grimaldi and Brady Dennis,
The Washington Post
Wednesday, March 23, 2:38 PM

The Treasury Department team had been working nonstop on a plan to freeze Libyan assets in U.S. banks, hoping they might snare $100 million or more and prevent Moammar Gaddafi from tapping it as he unleashed deadly attacks against protesters who wanted him gone.

Now, at 2:22 Friday afternoon, Feb. 25, an e-mail arrived from a Treasury official with startling news. Their $100 million estimate was off — orders of magnitude off.

The e-mail said there was in “excess of $29.7 Billion — yes, that’s a B.”

And most of the money was at one bank.

It was a piece of extraordinary good fortune for the Obama administration at a crucial moment in the efforts to address the bizarre and deadly events unfolding in Libya.

Never before had U.S. officials so quickly launched economic sanctions affecting so many assets of a targeted country.

The frenetic 72 hours leading up to the Executive Order 13566 illustrate how a process of identifying and freezing assets — something that customarily has taken weeks or months — has become one of the first tactical tools to employ in the midst of fast-breaking crises.

It also shows that government officials have learned from other recent economic sanction efforts, including against Iran and North Korea. Instead of being a secondary measure, as in the past, economic sanctions have become a centerpiece of national security policy.

The same global electronic networks that dictators use to move billions in state assets can also be turned against them, when government and financial industry officials summon the will. The successful Libyan sanctions effort relied on cooperation with a wide range of financial firms in the United States, including the bank holding the bulk of the Libyan assets, which Treasury officials have declined to identify.

Officials also would not provide detailed information breaking down the assets, which include holdings by individuals and Libya’s sovereign wealth fund. Investigators are expected to focus on whether any laws were broken in the handling of the money.

The $32 billion frozen so far by the United States represents a significant portion of the nation’s wealth. In 2009, Libya had a gross domestic product of $62 billion; its sovereign wealth fund is estimated at $40 billion and its central bank reserves at $110 billion.

The European Union has added the central bank, the wealth fund and three other Libyan institutions to its sanctions — two weeks after the U.S. action. So far, British officials have seized more than $19 billion in Libyan assets.

U.S. Treasury officials said they see their sanctions as one thrust in a broader campaign to isolate Gaddafi.

“Gaddafi is still there and is still brutalizing his people; there’s obviously still work to be done,” said David S. Cohen, acting undersecretary for terrorism and financial intelligence. “We never expected that this by itself was going to persuade Gaddafi to give up power.”

He said Gaddafi is still “paying mercenaries. He’s paying his troops. He’s in a cash-intensive business. And not having access to the Libyan Investment Authority assets, the Central Bank of Libya assets, other assets that he and his children have overseas, is going to be a problem for him.”

‘Incredibly intense, but in the best way’

The plan to find and freeze Libyan assets began taking shape Feb. 23, during an 8:30 a.m. meeting of senior officials in the White House Situation Room.

Libya was deteriorating quickly. The Libyan air force had bombed civilian protesters. In a rambling and incoherent speech on state television, Gaddafi had blamed “foreign rats” for the chaos. He also promised to fight “to the last drop of my blood.”

The possibility of a military response or imposition of a no-fly zone over Libya came up at the Situation Room meeting that morning. But those steps were considered politically untenable for the moment. Officials worried that any aggressive move might trigger a deadly backlash against American citizens who had been unable to leave the country.

“No one wanted to do anything and certainly the president didn’t want to do anything that would put those people at risk,” said Stuart Levey, the Treasury official who led the drafting of the executive order.

National Security Adviser Thomas E. Donilon asked Treasury to prepare options for economic sanctions, an undertaking usually weeks or months in the works. But Levey and the others at Treasury scrambled virtually nonstop over the next two days.

Some of the Treasury people involved had helped launch a prior economic sanction against Libya nearly a decade earlier.

They immediately reached out to their contacts in U.S. financial institutions — many of whom had become close allies in the effort to stop terrorism financing. The Treasury officials quietly asked the bankers to identify assets controlled by the Libyan government, Gaddafi, his family and their associates.

Some of them dusted off a list of more than 400 Libyan citizens and entities who had been included in U.S. economic sanctions that were lifted in 2004. Three officials with major banks who spoke on condition of anonymity because of the sensitivity of matter said their institutions helped Treasury officials identify targets for the list.

“Banks were already asking their compliance departments, ‘What do we have? What’s our exposure here?’ ” Adam Szubin, director of the Treasury’s Office of Foreign Assets Control, said in an interview.

Szubin said the effort was “incredibly intense, but in the best way.”

“This is what we’re here to do, is for moments like this when there is a crisis. I don’t know what more you could ask as a career civil servant than the White House turning to you and saying, ‘We need you. We need you to move incredibly fast. How quickly can you deliver?’ ”

Levey, who was then Treasury’s first undersecretary for terrorism and financial intelligence, a job he had held under presidents George W. Bush and Obama, shepherded the effort.

The morning after being assigned the job, Levey handed over a draft and 30 pages of supporting documentation, far sooner than expected. “These are complex, painstaking, exacting processes,” said one participant in the meeting, who spoke anonymously because he was not authorized to discuss the matter.

As much as the members of the group wanted to move forward that day, the consensus was that they had to wait. A ferry hired by the government to retrieve Americans in Tripoli was stuck in port by nasty weather and 15-foot waves in the Mediterranean Sea.

Waiting on a ferry

On the morning of Friday, Feb. 25, everyone kept watch on the ferry. Even as the weather improved, the situation in the country worsened. Even the president was seeking regular updates about when the boat was leaving.

Even as Levey immersed himself in the details of his task, he was leaving the government in a matter of hours for a career in the private sector.

When the 47-year-old Levey returned from the principals meeting at the White House that Friday, he and his top staff members gathered around a conference table stocked with sandwiches and drinks from Cosi — a gift from his mother to his staff for his last day in the government.

After Levey finished his tuna salad, his deputy delivered the surprising news about the potential value of the Libyan assets in the United States. In talks with one bank, Treasury officials were told about billions in Libyan holdings, including cash and investments such as securities.

Levey reported the number to the White House, with a caveat: In 61 / 2 years at Treasury, he had found that early reports often are wrong. “I thought, well, that would be significant, but I don’t know whether that’s true or not,” Levey recalled.

Cohen, who was Levey’s deputy and has been nominated to replace him as undersecretary, said the news created an “intensity of, ‘We’ve got to get this done tonight.’ ”

After three days of delays because of strong winds and high seas, a U.S.-chartered ferry named the Maria Dolores finally sailed away that Friday from the chaos in Tripoli, bound for Malta. The more than 300 passengers aboard included more than 150 U.S. citizens.

Government officials shuttered the U.S. Embassy in Tripoli, and a chartered flight carried the remaining embassy workers out of the Libyan capital.

“There was a lot of relief when the plane left,” said National Security Council spokesman Tommy Vietor.

Administration officials soon carried the executive order to the president’s private residence on the second floor of the White House, where he signed it. At 8 p.m. Feb. 25, the order took effect.

Within minutes, dozens of employees at the nation’s largest banks, who had remained at their desks that night waiting for the signal, sprang into action. They began freezing more than $30 billion in an effort to cripple a violent dictator half a world away.

“We do have reason to believe there are substantial sums of money blocked by this action and preserved for the Libyan people and protected from being looted by the Libyan regime,” Levey said that evening in a conference call to reporters during his last hours at Treasury.

He said the sanctions would send “a strong message to anyone who holds government power anywhere that if you engage in the kind of brutal repression that we’ve seen in Libya in the last several days that the U.S. will do everything in [its] power to find and block assets.”

oharrowr@washpost.com

grimaldij@washpost.com

dennisb@washpost.com

Be Consistent—Invade Saudi Arabia

truthdig.com
Posted on Mar 22, 2011
By Robert Scheer

It’s the black gold that drives nations mad and inevitably raises the question of whether America and the former European colonial powers give a damn about human rights as the basis for military intervention. If Libya didn’t have more oil than any other nation in Africa, would the West be unleashing high-tech military mayhem to contain what is essentially a tribal-based civil war? Once again an American president summons the passions of a human rights crusade against a reprehensible ruler whose crimes, while considerable, are not significantly different from those of dictators the U.S. routinely protects.

It is difficult to escape the conclusion that Moammar Gadhafi must now go not because his human rights record is egregious but rather because his erratic hold on power seems spent. After all, from the London School of Economics to Harvard, influential foreign policy experts were all too happy until quite recently to accept Libyan payoffs in exchange for a more benign view of Gadhafi’s prospects for change under the gentle guidance of what Harvard’s Joseph Nye celebrated as “soft power.”

But that revisionist appraisal of Gadhafi suddenly became an embarrassment when this nutty dictator—whom few in the world could ever understand, let alone warm to—was exposed by defections from his own armed forces to be akin to rotten fruit destined to drop. Libya’s honeymoon with the West, during which leaders led by Tony Blair and George W. Bush thought Col. Gadhafi might finally prove to be a worthy partner more concerned with reliably exporting oil than ineffectively ranting against Western imperialism, has suddenly been abandoned as no longer necessary. As with former U.S. ally Saddam Hussein before him, the Libyan strongman now seemed an awkward relic of a time that had passed him by, and easily replaceable. Not so the royal ruler of Saudi Arabia and the surrogates he finances in Yemen and Bahrain; their suppression of their peoples still falls within acceptable limits because of the vast resources the king manages in a manner that Western leaders have long found agreeable.

But this time, in the glaring light of the democratic currents sweeping through the Mideast, the contradictions in supporting one set of dictators while toppling others may prove impossible for the U.S. and its allies to effectively manage. The recognition, widely demanded throughout the region, that even ordinary Middle Easterners have inalienable rights is a sobering notion not easily co-opted. Why don’t those rights to self-determination extend to Shiites in the richest oil province in Saudi Arabia or for that matter to Palestinians in the West Bank or Gaza?

The fallback position for U.S. policymakers is the “war on terror” standard under which our dictators are needed to control super-fanatic Muslims. That’s why the U.S. trained the Republican Guard, led by a man who is the son of the despised ruler of Yemen and also is the counterterrorism liaison with Washington. On Tuesday it was the tanks of the lavishly U.S.-equipped Republican Guard that stood as the final line of support surrounding the Presidential Palace as calls for departure of Yemen’s dictator increased in intensity. The U.S. was still following the lead of Saudi Arabia, long a financier of the Yemeni ruler.

The Saudi lead was made clearer in the kingdom’s support for the royal family in neighboring Bahrain as Saudi troops were sent in along with forces from the United Arab Emirates to suppress Bahraini democracy advocates claiming that freedom would enhance the power of the majority Shiite population. The fraud here is to locate Shiite Iran as the center of terrorism when it was the Sunni monarchies that were most closely identified with the problems that gave rise to al-Qaida. Not only did 15 of the 19 hijackers on 9/11 come from Saudi Arabia but Saudi Arabia and the UAE, along with Pakistan, were the only countries to diplomatically recognize the Taliban regime that harbored al-Qaida. In Bahrain the majority Shiite population is dismissed as potentially under the sway of the rulers of Iran without strong evidence to that effect. Once again it is convenient to ignore the fact that Iran, as was the case with Saddam’s Iraq, had nothing to do with the 9/11 attack that launched the U.S. war on terror.

All of which elevates the question of how long will the U.S. and its allies ignore the elephant in the room posed by an alliance for human rights and anti-terrorism with regimes in the Middle East that stand for neither? While the jury is still out on whether the West’s attack on Libya will prove to be a boon for that nation’s population, at the very least it should expose the deep hypocrisy of continuing to sell huge amounts of arms and otherwise supporting Saudi Arabia and its contingent tyrannies.