How Hot Is It – Follow-up

Well, while much of the media may be declining to make connections between (not draw conclusions from, but make connections between) the heat wave and global warming, others are not so reluctant.

The heat wave, it appears, has convinced Christian conservative broadcaster Pat Robertson of the reality of climate change.
Reports Reuters:

“We really need to address the burning of fossil fuels,” Robertson said on his “700 Club” broadcast. “It is getting hotter, and the icecaps are melting and there is a buildup of carbon dioxide in the air.”

This week the heat index, the perceived temperature based on both air temperatures and humidity, reached 115 Fahrenheit in some regions of the U.S. East Coast. The 76-year-old Robertson told viewers that was “the most convincing evidence I’ve seen on global warming in a long time.”

The Reuters story points out that Robertson attributed last summer’s Hurricane Katrina to a rather different cause.

Dateline Hollywood reported at the time:

Pat Robertson on Sunday said that Hurricane Katrina was God’s way of expressing its anger at the Academy of Television Arts and Sciences for its selection of Ellen Degeneres to host this year’s Emmy Awards. ‘By choosing an avowed lesbian for this national event, these Hollywood elites have clearly invited God’s wrath,’ Robertson said on ‘The 700 Club’ on Sunday. ‘Is it any surprise that the Almighty chose to strike at Miss Degeneres’ hometown?’

How Hot Is It?

How hot is it?

It’s so hot that … it almost makes you think of global warming.

But not so much for the mainstream media.

Interestingly, it turns out that the media are now giving significant coverage to global warming. Whether this is just a spike because of Al Gore’s Inconvenient Truth, or the recent Blair-Schwarzenegger meeting to promote a California-UK compact on climate change, or the just-announced Clinton-Large Cities Climate Leadership Group project to cut urban greenhouse gas emissions, remains to be seen.

Whatever the reason, the U.S. press is giving attention to climate change. Run a lexis search, and you get 5,973 stories in the U.S. media since June 1 that mention global warming or climate change.

The media are also, understandably, giving lots of attention to the successive heat waves that have blanketed the country. Since June 1, there have been 2971 stories mentioning “heat wave” or “record heat.”

But of the almost 3000 stories on the heat, only 164 — just over 5 percent — have mentioned global warming or climate change.

Yes, yes, yes, of course, no one single weather event can be attributed to global warming.

But the reporters who have bothered to cover the issue haven’t found this to be a problem. They rely on a metaphor provided by many climatologists: it’s like weighting the dice. You can’t say that global warming is responsible for this heat wave or that hurricane, but you can say that these kind of extreme weather events are becoming much more likely because of global warming.

Is there really anything to complain about here if the media are giving due coverage to global warming anyway?

The problem is that if the public discussion about global warming remains at the level of abstraction, there’s too little motivation for people to get involved and demand meaningful action — before it’s too late. On the other hand, if harsh weather is connected — with all appropriate caveats — to the reality of climate change, then we just might see a mobilization for policy change.

And, by the way, consider:

– The first six months of 2006 were the hottest in the United States since record keeping began in 1895, according to the National Oceanic and Atmospheric Administration’s National Climatic Data Center.

– On a global basis, 2005 tied 1998 for hottest year on record.

– Also on a global basis, 19 of the hottest 20 years on record have occurred since 1980.

And, from the Intergovernmental Panel on Climate Change (IPCC), a UN-affiliated grouping of 1,800 of the world’s climatologists — often needled for the extraordinarily cautious language it employs:

– The Earth’s climate system has demonstrably changed on both global and regional scales since the pre-industrial era, with some of these changes attributable to human activities.

– There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities.

– The rising socio-economic costs related to weather damage and to regional variations in climate suggest increasing vulnerability to climate change.

– The projected rate of warming [over the twenty-first century] is very likely to be without precedent during at least the last 10,000 years.

– The impacts of climate change will fall disproportionately upon developing countries and the poor persons within all countries, and thereby exacerbate inequities in health status and access to adequate food, clean water and other resources.

The media may have trouble drawing connections, but Conan O’Brien didn’t. His take:

A heat wave is gripping the entire country. This week scientists in Boulder, Colo., installed what they call ‘an early warning system to detect global warming.’ The scientists say that they call their global warming detection device a ‘thermometer.’

Only the Little People

It’s a small thing, really.

But so long as the Bush administration is going to help the super-rich out by lowering and lowering and lowering tax rates on the rich — income tax, capital gains tax and the estate tax rates — is it too much to ask the rich to actually pay those taxes?

Apparently so.

“Tax Haven Abuses: The Enablers, the Tools and Secrecy,” a report issued today by the Senate Permanent Subcommittee on Investigations, cites evidence suggesting individuals evade $40 billion to $70 billion in payments to Uncle Sam every year through use of tax havens. This figure is for individuals only — the IRS estimates at least $30 billion in lost corporate taxes thanks to tax haven manipulation.

The complexity of the tax haven scams can boggle the mind. Corporate lawyers make good money dreaming them up, and the rich are willing to pay — because the tax savings can be extraordinary.

Here’s a summary of one of the scams identified in the report released today:

POINT: Offshore Securities Portfolio. This case history examines a complex securities transaction used to shelter over $2 billion in capital gains from U.S. taxes, relying in part on offshore secrecy to shield its workings from U.S. law enforcement. In contrast to the case histories examining offshore structures used over a period of years, this inquiry focuses on the use of offshore secrecy jurisdictions to facilitate one-time tax shelter transactions. The tax shelter was designed, promoted, and implemented by a Seattle-based securities firm, Quellos Group, LLC, (“Quellos”), with the assistance of lawyers, bankers, and other professionals. Quellos sold the shelter, called POINT (Personally Optimized Investment Transaction), to five wealthy clients in six separate transactions. Together, the tax shelters were used in an effort to erase over $2 billion in capital gains that would otherwise have been taxed, costing the U.S. Treasury lost revenue of about $300 million.

The Subcommittee found that the POINT tax strategy was based upon billions of dollars worth of fake securities transactions that were used to generate billions of dollars in fake capital losses to offset real taxable capital gains of U.S. taxpayers so they could avoid paying taxes to the U.S. Treasury. The fake securities transactions were undertaken by two offshore shell corporations in the Isle of Man, Jackstones and Barnville, whose ownership has been kept secret. The transactions were carried out by compliant offshore administrators and trustees, since the corporations had no employees of their own. Using circular transactions and offsetting payments that cancelled each other out, these offshore corporations created a paper portfolio of over $9 billion in U.S. high tech stocks that appeared to suffer price drops and generated the fake capital losses used in the POINT transactions. The fees charged by Quellos depended upon the amount of tax loss generated in each transaction for the taxpayer who bought the shelter; the more money the taxpayer “lost” from the transaction, the more Quellos charged for the scheme.

Five U.S. taxpayers, including Haim Saban and Robert Wood Johnson IV, purchased the tax shelter, paying fees totaling approximately $65 million. Prominent law firms, such as Cravath, Swaine & Moore and Bryan Cave, provided written tax opinion letters affirming that it was “more likely than not” that the Quellos plan would produce the favorable tax consequences promised, and collaborated with Quellos on its design or implementation. The factual statements used to support the legal analysis in the opinion letters inaccurately described the nature of the securities transactions generating the capital losses. The law firms accepted the representations of Quellos on these matters without inquiring behind them. Prominent U.S. and foreign financial institutions, including HSBC, provided financing for the POINT transactions, without conducting adequate due diligence into the underlying transactions. Some communications involving persons who helped design, promote, and implement the tax shelter indicate that they may have deliberately hidden key aspects of the POINT transaction from the clients, lawyers, and financial institutions who participated in them.

These aren’t yokels involved in this scheme.

Haim Saban — he’s a Democratic Party fundraiser who got rich promoting Mighty Morphin Power Rangers.

Robert Wood Johnson IV — that’s the owner of the New York Jets.

Cravath Swain — among the whitest of white shoe law street firms, Cravath’s website grandiosely proclaims, “For nearly two centuries, OUR FIRM has been widely recognized as the premier American law firm.”

Saban and Johnson are described in the report as duped by their lawyers and advisers. Indeed, the report makes clear that what might be termed the tax avoidance industry deserves much of the blame for the tax haven scams.

The Senate Permanent Subcommittee makes some serious proposals to prevent tax haven abuse.

“Offshore tax havens hold trillions of dollars in assets supplied by high-net-worth individuals around the world,” said Subcommittee Ranking Minority Member Senator Carl Levin of Michigan. “Our investigation blows the lid off tax haven abuses that use sham trusts, shell corporations, and fake economic transactions to hide the fact that U.S. citizens are controlling offshore assets, circumventing U.S. legal requirements, and dodging taxes. These outrageous tax haven abuses are eating away at the fabric of our tax system, and it is long, long past time to shut them down. Tax havens have, in effect, declared war on honest U.S. taxpayers, and we’ve got to fight back utilizing the full legislative, executive, and administrative powers of the United States government.”

Levin rightfully told the New York Times that the law “should assume that any transaction in a tax haven is a sham.”

Even though the Republican Subcommittee chair Norm Coleman of Minnesota says, “Using offshore jurisdictions to shelter income is unfair and I intend to fix this problem,” the odds on reforms getting enacted, one would have to surmise, are bleak.

There is no legitimate purpose served by tax havens. And, if governments are serious about cracking down on them, the job is easily done. Explained William Brittain-Catlin, the author of Offshore: The Dark Side of the Global Economy, an examination of the pervasive phenomenon of financial offshoring, in an interview in Multinational Monitor:

The government can simply prohibit any company or individual that has an offshore connection from doing business in its jurisdiction. Onshore you’re in, offshore you’re out, simple as that. You could phase in such a policy over a 10-year period. During that time, corporations and individuals that had an offshore connection would pay an offshore tax. A proportion of this revenue could be directed to offshore tax havens in order to develop their economies away from the provision of offshore financial services.

For corporations, the problem is more complicated. As Brittain-Catlin says, “There is no way the U.S. would give up the offshore ‘rights’ of its corporations unless other nations were to do so too.”

So, although the tax haven business is almost impenetrably complicated, the solution is not. The issue is political will.

Unfortunately, there is a lot more political will to eliminate the estate tax — President Bush and the Republican Congressional leadership’s current obsession — than to make the rich pay what they do owe.

The New York Times story is here.

The Washington Post story on the Senate Permanent Subcommittee on Investigations report is here.