WTF of the Week: The "Double Irish" and "Dutch Sandwich"

No, "Double Irish" does not mean two leprechauns. It is actually much more terrifying.

Why do lawmakers keep claiming we're broke when corporate profits margins are at an 18-year high?

It might have something to do with the billions in revenue lost when multinational corporations use offshore tax havens to get around paying their fair share to the U.S. government. From NPR:

On today's Fresh Air, Bloomberg News reporter Jesse Drucker, who has written extensively about corporate tax-dodging, explains how companies like Google, Pfizer, Lilly, Oracle, Facebook and Microsoft have managed to reduce their tax rates by hundreds of millions — and in some cases, billions — of dollars by taking advantage of offshore tax havens. 

In October, Drucker reported that Google had saved $3.1 billion in taxes in the past three years by shifting the majority of its foreign profits into accounts in Ireland, the Netherlands and Bermuda using financial techniques called "the Dutch Sandwich" and "the Double Irish" arrangement. Basically, he says, Google credited its Irish office with the majority of its non-U.S. sales revenue — and then shuttled that money through various subsidiaries located in Ireland and other countries to save billions in taxes.

 So how do these financial techniques work? Jesse Drucker explains Google's approach in Bloomberg:

When a company in Europe, the Middle East or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.

Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda. (The subsidiary managed in Bermuda is technically an Irish company, hence the "Double Irish" nickname.)

These practices are perfectly legal; however, they raise serious ethical questions. How can lawmakers justify the proposed $6 billion in federal cuts when these profit-shifting techniques cost us $60 to $90 billion in revenue every year?

If it wasn't already clear, suppressing stories like this one is the real motivation behind the GOP's effort to defund NPR.

We're Not Broke

E.J. Dionne had a great article in the Washington Post a few days ago that explains how federal and state lawmakers have manipulated budget "crises" to cut government programs and weaken public institutions. An excerpt from the article:

“We’re broke.”

You can practically break a search engine if you start looking around the Internet for those words. They’re used repeatedly with reference to our local, state and federal governments, almost always to make a case for slashing programs — and, lately, to go after public-employee unions. The phrase is designed to create a sense of crisis that justifies rapid and radical actions before citizens have a chance to debate the consequences.

Just one problem: We’re not broke. Yes, nearly all levels of government face fiscal problems because of the economic downturn. But there is no crisis. There are many different paths open to fixing public budgets. And we will come up with wiser and more sustainable solutions if we approach fiscal problems calmly, realizing that we’re still a very rich country and that the wealthiest among us are doing exceptionally well.

The budget deficits we currently face are not random, unforeseeable events; they are instead the products of intentional policy decisions. In Wisconsin, for example, Governor Scott Walker approved $117 million in new spending on behalf of special interests and corporations only weeks before he announced a $137 million deficit. In Texas, Governor Rick Perry in 2006 enacted a tax reform plan that has cost the state up to $5 billion a year since 2007.

Our federal and state governments' hands are not tied. If they wanted to raise the money to adequately fund our schools, health care, and other social services, they could.

WTF of the Week: Rick Perry's Orwellian Doublespeak

Governor Perry, pictured here shooting the state in the foot.

Despite the almost $10 billion in cuts to public education proposed by the Texas state legislature, Governor Rick Perry has decided that local districts--not government officials--are responsible for impending teacher layoffs. From KVUE (bonus--video embedded in the article has footage of my school!):

During a news conference Wednesday, Perry said the layoffs hitting nearly every school district are not the state's fault.

"The state of Texas is not who employs the members of the school district.  As a matter of fact, the lieutenant governor, the speaker (of the Texas House and) their colleagues, are not going to hire or fire one teacher the best I can tell.  That is a local decision that will be made at the local districts," said the governor.

Yes, you read that correctly: Rick Perry has absolved himself and the state legislature of responsibility for the nearly 100,000 teachers statewide who will likely lose their jobs. It must be easy for Perry to keep claiming he's creating jobs when public employees don't count in the calculation.

But Perry doesn't stop at excusing himself from blame; in the same speech, he goes on to imply (through false choice) that school districts have caused the budget crisis by hiring on too many administrators. From The Statesman:

"Over the course of the last decade, we have seen a rather extraordinary amount of nonclassroom employees added to school rolls," he said. "Are the administrators and the school boards going to make a decision to reduce those or are they going to make a decision to reduce the number of teachers in the classroom?"

"I certainly know where I would point," Perry said. "I think the nonteaching corps would be the first place that I would look if there were going to be reductions that are made."

Even if Perry's claims were true (non-teacher positions have increased about 1% statewide over the last decade), his rhetoric would still border on demagogy. Perry's real strategy is to make the budget crisis seem inevitable--by pinning blame for layoffs on school districts, he circumvents any discussion about other options for closing the budget deficit. 

Meanwhile, students in my classes this morning created and began circulating a petition protesting proposed cuts to their elective classes and the shortening of their school day. Both of these changes will have significant, negative impacts on my students; however, so will the 62 other proposed cuts to the district budget (totaling nearly $12 million). 

There is no crisis

Today, for the first time in my short teaching career, I thought seriously about what I would tell my students if I were to lose my job.

I thought about this today because I, along with thousands of teachers at schools across the country, am facing the possibility of being laid off due to proposed cuts in education spending. Before, I had been able to ignore the thought long enough to continue doing my job every day without letting the fear or anxiety get to me; today, I had my first real conversation with students about what might happen to their school next year, and I am worried for them.

Also, there is a good chance that I will lose my job.

Before I go any further, let me first explain the purpose and title of this blog. I've been meaning to start it for a long time--mostly as a way to refine my own thoughts on education and share ideas with other teachers and colleagues. I've tried more than once to write the perfect "first post," so it seems ironic that my actual first post is about how I might not be a teacher for much longer. The title comes from my belief that kids learn more from their teachers than we think they do. They forget most of the content. What they remember is what they watch us do: what we prioritize, why we do our jobs, how we respond when there is conflict. They can see us even when we don't think they're watching.

So since the example teachers set for their students is so important, how should we act when we learn we're being laid off? I want to be as honest as possible with my students; but they're also 12 years old. Is it fair for me to demoralize my students to relieve my own stress?

What does a parent tell her child when she loses her job? As difficult as it is to answer this question, I think it's even more difficult to answer the inevitable question that follows: Why?

Answering a child when he asks this question is so difficult because the adults who are supposed to have the answers do not always have them. "Budget cuts," "this recession," "tough economic times"--these words are as hollow for adults as they are for children. Most of us do not really know why we are let go--but we accept the decision because the economy is in a state of crisis and the decisions being made about our jobs and our schools are out of our control.

The truth, however, is that there is no crisis.

We have been led to believe that there is one by repeated claims both that we are facing a major fiscal shortfall and that our schools are terrible. In Texas, for example, legislators who advocate cuts keep hammering the fact that the state is facing a $27 billion budget deficit; these same legislators also repeat the refrain that too many of our schools are failing due to incompetent teachers. 

What is happening in Texas is the same thing that is happening in Wisconsin, Ohio, Indiana, Idaho, and other states where government has simultaneously ramped up attacks on school funding and teachers--the only difference is that we're facing a more advanced stage of attack, since Texas is a right-to-work state and there are no real unions to bust. Here and elsewhere, our leaders are using the illusion of crisis as a pretext to expand corporate control of public institutions and redefine the relationship among corporations, individuals, and government.

So then what do I tell my students if (when) I am let go? Can I be honest with them and not explain how there is no crisis--that the $9.8 billion deficit in education could easily be balanced with a slight tax increase, or by dipping into the state's $9.4 billion rainy day fund? How do I tell my students that their leaders are refusing to pay for the education they deserve?

A few years ago, I picked up Naomi Klein's The Shock Doctrine because I had heard the book gave an incisive breakdown of how corporate-styled "disaster capitalism" came to dominate United States foreign policy in South America, Asia, and most recently Iraq. Since reading the book, I have watched as the same ideology has been directed towards public institutions in the United States. Busting teachers' unions, decreasing job security, expanding charter schools, slashing public school funding, and increasing racial and economic segregation of students, all in the name of escaping a fabricated catastrophe--this is the shock doctrine at work.