Category Archives: Trump

Senators: Leave the GOP for the sake of the nation

Repost from the San Francisco Chronicle

GOP senators, now is a time for integrity: leave your party

Photo of Robert Reich
Robert Reich

To: Sens. Jeff Flake, John McCain,
Bob Corker and Susan Collins
From: Robert Reich

Senators, I write you not as a Democrat reaching out to Republicans, or as a former Cabinet member making a request of sitting senators.

I write you as a patriotic American concerned about the peril now facing our democracy, asking you to exercise your power to defend it.

A foreign power has attacked our democratic institutions and, according to American intelligence, continues to do so.

Yet the president of the United States is unwilling to fully acknowledge this, or aggressively stop it.

Most of your Republican colleagues in the Senate will not force his hand. As a result, because your party has control of the Senate, there is no effective check on the president — or on Vladimir Putin.

What is America to do? We will exercise our right to vote on Nov. 6. But by that time our system may be compromised. The president must be constrained, now. Putin’s aggression must be stopped, now.

If just two of you changed parties — becoming independent and caucusing with the Democrats — the Republican Party would no longer have a majority in the Senate.

The Senate would become a check on the president, as the framers of the Constitution envisioned it would be. And the president could be forced to defend the United States, as the framers intended.

I implore you to do so.

There is precedent. I’m sure you remember Jim Jeffords of Vermont, who served as a Republican senator from 1989 until 2001. He then left the GOP to become an independent and began caucusing with the Democrats.

Jeffords’ switch changed control of the Senate from Republican to Democratic. Jeffords left the Republican Party because of issues on which he parted with his Republican colleagues and the George W. Bush administration. As he said at the time, “Increasingly, I find myself in disagreement with my party. … Given the changing nature of the national party, it has become a struggle for our leaders to deal with me and for me to deal with them.”

I knew and admired Jeffords years before he switched parties. We worked together on a number of initiatives when I was secretary of labor. He was a humble man of principle and integrity. He retired from the Senate in 2007 and died in 2014.

I appeal to the four of you to follow his noble example.

The stakes for the nation are far higher than they were in 2001. The issue today is not one on which honorable people like Jeffords may reasonably disagree. The issue now is the fate of our system of government.

All of you recognize the danger. All of you have expressed deep concern about what is occurring.

Sen. Flake recently introduced a non-binding resolution acknowledging Russian involvement in the 2016 elections, expressing support for the Justice Department investigation and calling for oversight hearings about what happened in Helsinki. But Flake’s fellow Republicans blocked that resolution.

Sen. McCain said the president has “proved not only unable, but unwilling to stand up to Putin”; that Trump “made a conscious choice to defend a tyrant against the fair questions of a free press, and to grant Putin an uncontested platform to spew propaganda and lies to the world”; and that the president has “failed to defend all that makes us who we are — a republic of free people dedicated to the cause of liberty at home and abroad.”

Sen. Corker has likened the Republican Party to a “cult” and conceded that “it’s not a good place for any party to end up with a cult-like situation as it relates to a president that happens to be of purportedly of the same party.”

Moreover, the three of you have decided against seeking re-election. You have no reason not to follow your consciences.

Sen. Collins represents a state that has had a long and distinguished history of independent-minded politicians. (The other senator from Maine, Angus King, is an independent.) Her constituents will surely forgive her if she leaves the Republican Party.

There is a scene in the Robert Bolt play “A Man for All Seasons” in which Thomas More, having angered Henry VIII, is on trial for his life. After Richard Rich commits perjury against More in exchange for the office of attorney general for Wales, More says: “Why, Richard, it profits a man nothing to give his soul for the whole world. … But for Wales?”

You have not pledged your souls to the Republican Party. You have pledged yourselves to America. Now is the time to deliver on that pledge.

© 2018 Robert Reich

Robert Reich, a professor of public policy at UC Berkeley, is co-creator of the new Netflix documentary “Saving Capitalism” and author of “The Common Good.” To comment, submit your letter to the editor at SFChronicle.com/letters.

    NYT: In Rebuke of Trump, Tillerson Says Lies Are a Threat to Democracy

    Repost from the New York Times
    [Editorial comment by Marilyn Bardet: “How ironic! For years, Exxon promulgated lies, denying or casting doubt on any scientific research that pointed to humans’ contribution…to climate change, despite the fact that Exxon funded its own independent research on climate that confirmed the very thing the company denied!  Go figure.  So, Tillerson’s statements now are rather astounding— almost bespeaking a conversion or ‘mea culpa’. He’s certainly not wrong that the lies now being told by Trump and Co. thwart the existence of any semblance of democracy.”  — Marilyn Bardet]

    In Rebuke of Trump, Tillerson Says Lies Are a Threat to Democracy

    Rex W. Tillerson, the former secretary of state, in March. Credit Jacquelyn Martin/Associated Press
    By Gardiner Harris, May 16, 2018

    WASHINGTON — In what appeared to be a rebuke of President Trump, former Secretary of State Rex W. Tillerson warned on Wednesday that American democracy is threatened by a “growing crisis in ethics and integrity.”

    “If our leaders seek to conceal the truth, or we as people become accepting of alternative realities that are no longer grounded in facts, then we as American citizens are on a pathway to relinquishing our freedom,” he said in a commencement address at the Virginia Military Institute in Lexington, Va.

    Even small falsehoods and exaggerations are problematic, Mr. Tillerson said. (Mr. Trump is prone to both.)

    “When we as people, a free people, go wobbly on the truth even on what may seem the most trivial matters, we go wobbly on America,” Mr. Tillerson said.

    “If we do not as Americans confront the crisis of ethics and integrity in our society and among our leaders in both the public and private sector — and regrettably at times even the nonprofit sector — then American democracy as we know it is entering its twilight years,” Mr. Tillerson warned.

    The former Eagle Scout — who often cited a commitment to respect, integrity and accountability as the guideposts of his life and leadership — has been in near-seclusion at his Texas ranch since he was fired by tweet in March, just hours after returning from a trip through Africa. He had agreed to deliver the V.M.I. commencement address before he was fired.

      GOP Tax Law Bails Out Fracking Companies Buried in Debt

      Repost from DeSmogBlog
      [Editor: See also the Pacific Standard report, Inside The Tax Bill’s $25 Billion Oil Company Bonanza.  – RS]

      GOP Tax Law Bails Out Fracking Companies Buried in Debt

      By Justin Mikulka • Thursday, April 26, 2018 – 08:44

      A Scrabble board spells out 'Bankruptcy' overlaid on an unconventional oil and gas rigEOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill passed by Republicans and President Donald Trump at the end of last year, EOG had an exceptionally strong year compared to 2016.

      In 2017, the company reported a net income of $2.6 billion. The previous year? A loss of $1.1 billion. That financial turnaround seems very impressive until you realize that $2.2 billion, or about 85 percent, of its 2017 income was the result of the new tax law. Without that gift from the GOP and Trump, EOG would have lost approximately $700 million between those two years. Instead they are $1.5 billion ahead of the game.

      With numbers like these, it is easy to see how the Tax Cuts and Jobs Act of 2017 was a much-needed lifeline for the money-losing fracking industryEOG is routinely touted as one of the best shale oil and gas companies. Yet the company still lost $700 million in the past two years. Or at least it would have if not for the tax bill.

      This is the same company that an analyst at the investment advice website Seeking Alpha says is “generally considered one of the best unconventional upstream oil and gas players in the business, and its financials back it up.” If those are the best financials in your industry, your industry has a big problem.

      An interesting side note is that EOG stands for Enron Oil and Gas, which was spun off as its own company from Enron — the company notorious for one of the great energy Ponzi schemes of the 20th century. Today, an Enron spinoff company is being held up as the most fiscally sound in the shale oil industry.

      And Seeking Alpha is now pushing EOG as a good investment and wondering when “the equities market will wake up and smell this opportunity” despite EOG still being over $6 billion in debt. Without the tax overhaul it would be much harder to make this argument.

      There is one prominent person in the shale industry warning against rosy forecasts for shale oil, and that is Mark Papa, head of independent oil company Centennial Resource Development. Papa’s last job? CEO of EOG Resources.

      Continental Resources is another of the shale companies being heralded as a good investment in 2018. Continental is run by Harold Hamm who was an advisor to the Trump campaign and has taken the title of “Shale King” that once belonged to Aubrey McClendon. Hamm’s net worth is estimated at over $13 billion.

      Thanks to the new tax law, Continental took home an extra $700 million because its effective tax rate for 2017 was negative 406 percent.


      Continental Resources 2017 Annual 10-K Filing

      And Continental needed that money (although Hamm certainly doesn’t). In 2007 Continental had $165 million in debt and paid $13 million a year in interest on that debt. In 2016 its debt had ballooned to $6.5 billion and the annual interest payments rose to $321 million. The GOP tax law essentially pays off two years of Continental’s interest payments, allowing this failing business model to continue because Continental has not been generating enough income to pay even the annual interest on its debt.

      While the company he leads is drowning in $6.5 billion of debt, Harold Hamm is personally worth twice that amount. He’ll be fine. He was easily able to afford one of the most expensive divorce settlements ever.

      These are just two examples of shale companies receiving an immediate financial lifeline from the GOP tax bill. These companies also will benefit from lowered tax rates in future years. However, this one-time handout simply masks the reality that the shale revolution looks a lot like a Ponzi scheme enriching CEOs and Wall Street financiers by producing oil and gas with borrowed money that is unlikely to be paid back in the future.

      And Hamm and the Wall Street financiers have no incentive to do anything differently. Sure bankrupt energy companies destroy worker pensions, wipe out investors equity, layoff thousands of workers — but if we use the coal industry as an example — CEOs will still get bonuses after driving their companies into bankruptcy.

      Tax Bill Especially Beneficial to Oil Companies

      The benefits of the new tax bill are certainly not unique to oil and gas companies. Utility companies did even better and the big Wall Street banks who are financing the cash-burning shale industry also are awash in new profits thanks to the GOPtax overhaul.

      However, due to the nature of how oil and gas companies book profits and losses — and the epic money-losing streak the shale industry created over the past few years — these companies benefited more than most.

      To be clear — this bill which was signed at the end of 2017 was applied to the deferred tax liabilities that were already on the books — thus erasing a large chunk of the liabilities for these companies that had built up while the industry kept borrowing to drill more and ultimately lose more money. Simply a bailout of reckless financial behavior by any other name.

      And it wasn’t just the companies primarily working in shale that benefited. ExxonMobil raked in a $6 billion benefit from the new tax law, which even CNN Money referred to as a “gift.”

      Industry Will Use Bailout to Borrow and Drill More 

      In discussing the trade deficit President Trump recently tweeted the following:

      Coming from a man whose career includes multiple bankruptcies, this shouldn’t be surprising. The shale oil industry definitely has a kindred spirit in the White House.

      What happens when you give free money to gamblers on an epic losing streak? In the shale industry, they double down.

      ExxonMobil has promised to use the billions it gained from the tax bill to … drill and frack more shale oil. Which is likely to result in further discounts of Permian Shale oil, which will lower the price of oil and put more pressure on the heavily leveraged shale companies.

      While the mainstream media is pushing the industry message that shale companies now are focused on profits instead of just production volume, record U.S. oil production and predictions for even greater increases would appear to reveal the lie in that promise. Just as most sharks must swim to stay alive, shale companies must drill to preserve CEO bonuses, which are often tied to oil production, not profits. So, they drill. Even when that means losing money on nearly every barrel of oil they pump.

      A graphic from the Wall Street Journal reveals just how much money the shale industry has been losing compared to traditional oil — all while CEOs such as Harold Hamm were amassing billions in personal wealth. The shale oil industry generated free cash flow pumping oil for one brief period in the last seven years. Hamm has done a bit better personally during that time frame.

      Shortly after President Trump signed the new tax bill, he took another vacation to Mar-a-Lago where he reportedly told those in attendance: “You all just got a lot richer.”

      A rare moment of honesty from the President. And while he wasn’t speaking specifically to shale oil CEOs — it’s safe to say they got the message loud and clear.


      Follow the DeSmog investigative series: Finances of Fracking: Shale Industry Drills More Debt Than Profit