In 2004 George W. Bush enacted a tax holiday (amnesty) on returning to the United States funds which were being held by U.S. corporations in other countries (repatriation). The treasury forewent $3.3 Billion in unclaimed taxes, and despite the intention - no the specification that the money needed to go toward hiring workers and increasing research, the 15 companies who benefitted the most cut 20,000 American jobs, cut R&D, and increased the pace of their foreign generated profits. Since 2011, the amount held overseas has increased 70%, from $1.4 Trillion to $2.4 Trillion.
This is the strategy that brought us NAFTA and wants to bring us TPP. It is called "Trade Without Borders," an idea where a company can be located anywhere, can operate anywhere, and can transfer the money freely from one country to another.
When the GOP tried to introduce another repatriation amnesty, even the Heritage Foundation decided it would have little stimulative effect. So for the past two congresses, John Delaney (D-MD06) has tried to sneak the idea through under the guise of creating an Infrastructure Bank (The American Infrastructure Fund - AIF).
Delaney's bills combine two craptacular ideas into one. The first part is how they use repatriated money to raise $50 Billion in seed capital, and the second is the entire idea of the infrastructure fund.
His original bill, H.R. 2084, was an auction for the right to buy 1% bonds with repatriated money.
His updated bill, H.R. 625, generates about $170 Billion (2015 est) from a flat 8.75% tax on unlimited repatriated funds. In addition to the $50 Billion AIF, this plan would put $120 Billion into the ailing Highway Fund. The flat tax would then live on as a permanent 8.75% tax on repatriated profits.
I calculated the cost of the first bill at $62.5 Billion. Remember that's in order to raise $50 Billion.
The second bill would cost about a half a trillion bucks, and that would raise $170 Billion.
As for the AIF, it takes the $50 Billion and uses it to issue $750 Billion in bonds and loan guarantees.
The first red flag for me is the notion that this AIF will give you something for nothing. The Frederick News-Post claimed the AIF would "help pay for a fast-deteriorating national transportation infrastructure without increasing the nation's debt or raising taxes." All it would do is privatize the debt for infrastructure projects. No state or city will save any money. No taxpayer will be relieved of the cost of the projects. It's just that the interest that the bonds pay will be going into the coffers of corporate America and the AIF, not John Q. Investor.
The other red flag for me was that turning $50 Billion into $750 Billion in loans sounds a whole lot to me like fractional reserve banking. Oh wait that should be Banking with a capital 'B', as in, governed by Banking regulations. But the AIF is not a Bank, it is a Fund, and did not appear as though it would be subject to Banking Committee oversight.
Moreover, I think we can assume that the AIF will not be issuing interest-free loans. If they loan $750 Billion at the same 1% they are paying their own bondholders, it's a 14% annual return on the original $50 Billion, or $7 Billion per year. Crunch the numbers with 2%, 3% or a variable rate and sooner or later we're talking about real money. But Delaney's bills don't go into detail about this money. The bills just say that the AIF boardmembers will be compensated. Richly, I might imagine by the look of things.
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During one of the Democratic debates, Hillary mentioned an "Infrastructure Bank." Her plan would seed the bank with $25 Billion, and then leverage that money into an additional $225 Billion in loans. Sound familiar? Just as soon as she said it, I said "I'll bet it uses repatriated money."
And it did. In an October, 2014 speech she allegedly said
"A number of business leaders have been talking to my husband and me about an idea that would allow the repatriation of the couple trillion dollars that are out there. And you would get a lower rate — a really low rate — if you were willing to invest a percentage in an infrastructure bank."
And there you have it. In typical Hillary fashion, she conveniently hides the element of repatriation amnesty from her public discussion of the infrastructure bank.
The longer this plan gestates, the more outlandish it becomes. I understand the corporations are holding out for a 5% flat tax. Should anyone ever sign a permanent repatriation amnesty it would mark the moment when we flick on the garbage disposal and see what happens to the U.S. economy which is already swirling down the drain.
Some of you old timers may remember me as someone with a far, far left ideology. I say that to my critics who think this is just a GOP hit piece. It is not. It is a stark description of a Clinton Presidency. TPP. Fracking. Repatriation amnesty and infrastructure privatization.
This is what I mean when I say Trump would be awful, but at least we as a nation would be able to recover from him.