We need a 3-strikes law for corporations

Blogging at Kos, David Sirota shows us that the dirty game of corporate welfare continues:

In a unanimous decision today, the U.S. Supreme Court struck down a lower court ruling that would have invalidated massive taxpayer giveaways to Corporate America. The Supreme Court has long been the victim of a hostile takeover by Big Money interests - it is a court now headed by a corporate lawyer that has repeatedly gone out of its way to protect Corporate America's ability to bleed the middle class dry. Today's ruling, though, is particularly egregious. Not only did the court strike down an important ruling, but it essentially emasculated taxpayers' ability to bring any such lawsuits against their own government in the future.

The money quote in Chief Justice Roberts' opinion is that "State taxpayers have no standing ... to challenge state tax or spending decisions simply by virtue of their status as taxpayers." All taxpayers get to do is vote for one of the two approved corporate-backed candidates; then they must sit back and say nothing when those candidates dole out millions of dollars to their wealthy contributors.

Sirota shows that this is a growing concern:

Remember - these taxpayer giveaways are accelerating and come at a huge cost in terms of higher taxes for individuals. As USA Today noted, "In 1977, nine states gave tax credits to corporations [but] by 1998, that number had grown to 36." At the same time, "individual income taxes are growing at a faster rate than corporate income taxes" because state/local governments are recovering the tax giveaways from ordinary citizens. According to the Census Bureau, "corporate income taxes collected rose 6.5% from 1994 to 2004, while individual income taxes collected went up 49.7%."

Also remember that, as Greg LeRoy notes in his book The Great American Jobs Scam, these taxpayer giveaways often do not result in the benefits Big Business promises. In fact, many of the corporations that receive these taxpayer giveaways never even follow through on the economic development or job creation they promise.

Clearly, the Republican Party, the party of personal responsibility, and increasingly the corporate wing of the Democratic Party, none of them feel any need to force corporations, seen as people in the eyes of the law, to have any sort of personal responsibility for the success of their business, instead showering gifts and cash payouts upon them. And to think, these huge cash outlays are called "business-friendly" policies. How about "taxpayer-unfriendly" policies?

This is such a troubling story. The only way we're going to stop this is by starting at the roots and making this the huge issue it deserves to be. This is nothing more than earmarking (you know, what's got the libertarian faction of the GOP up in arms) on a massive scale, where politicians earmark funds to go directly into the pockets of their corporate funders rather than towards projects which the public at least might have a chance to enjoy.

Well, I've got an idea to push this issue into the forefront using the initiative process at the state level. It's way past time for a three-strikes law for corporations.

We all know that corporations are not all bad. Indeed, much like with other power-law distributions, there are a number of repeat offenders at one end of the scale that flagrantly violate the law over and over again, plead "nolo contendre" or even plead guilty, pay a meaningless fine and continue to violate statutes. If only we could get away with this in court.

The Foundation for Taxpayer and Consumer Rights has a chart of several repeat offenders, including Teledyne, International Paper, and Royal Caribbean Cruises.

It's bad enough that local and state governments are offering hundreds of millions of taxpayer dollars to companies. But in addition, some of those companies are abusing the laws of the land without feeling any kind of pressure to quit. Indeed they're using TAXPAYER money to pay fines for the criminal activity they continue to perpetuate. And if they aren't doing that, they're passing on the cost of breaking the law by charging more for their products. So why do we give longer and harsher sentences to criminals who are repeat offenders, but not to corporate criminals, who are governed by the same laws? Why aren't we "locking up" corporations after they continue to commit a series of crimes?

As it turns out, in April of 2003 California State Senator Gloria Romero introduced a corporate three strikes bill that would have punished corporate repeat offenders. Obviously it's impossible to "lock up" a corporation, since it's nothing more than an artificial person under the law. So the bill would have done this:

40003. (a) A corporation that commits three or more major violations of law within a ten-year period, commencing after the effective date of this title, is declared to be a corporate repeat offender.

(b) A corporate repeat offender shall not be permitted to be incorporated or to transact intrastate business in California .

(c) A corporation shall not be permitted to be incorporated or to transact intrastate business in California if a majority of its directors or officers have ever been directors or officers of a corporate repeat offender as determined by the Secretary of State after notice to the corporation and an opportunity for the corporation to respond.

(d) A corporation shall not be permitted to be incorporated or to transact intrastate business in California if it is legally controlled by a corporation a majority of whose directors or officers have ever been directors or officers of a corporate repeat offender, as determined by the Secretary of State after notice to the corporation and an opportunity for the corporation to respond.

There's an FAQ on the intricacies of the legislation here.

Why didn't this pass? See for yourself. It didn't even get out of committee:

Corporate crime walked free today in the California Senate when three Democrats joined five Republicans on the Appropriations committee to kill the Corporate Three Strikes Act.

The Bill was friendly to business because it restored honest competition. It was unfriendly only to corporate felons. Yet the Republicans all instinctively voted against it. They are filled with fulminations against the teenager who steals a slice of pizza, ready to lock him up for life. But their hearts bleed for the corporation caught dumping toxic waste or defrauding consumers of millions of dollars. Their position is that Three-Strikes-And-You're Out is good for pizza thieves, but corporate felons deserve perpetual existence.

Today, three Democrats on the Committee showed that their hearts, too, march to the beat of that Republican double standard. Democrats Debra Bowen (D-Redondo Beach), Jackie Speier (D-San Francisco) and Michael Machado (D-Stockton), whose votes could have saved the Bill, killed it instead.

"It became clear to me in long discussions with Bowen and Speier's offices that they were madly hunting for excuses to destroy it," commented Professor Robert Benson of Loyola Law School who advised Romero on the Bill. "They were ignorant of the history of corporate regulation, and of the fact that legal authority for the state to put corporations out of business for law violations has been on the books in California for 150 years. They were unaware that even the American Bar Association recommends this legal tool and that Senator Romero was just trying to get the state to actually use it, at least in outrageous cases of three-strike repeat-offender corporate felons. They had long lists of technical quibbles, all of which were precisely answered, but they didn't care about the answers. They kept pulling more rabbits out of the hat and asking you to play fox in a disingenuous game. They should have just come clean in the first place that Bowen and Speier have made a political calculation that cozying up to corporate power is going to help them run for statewide office in 2006. We'll see about that."

Incidentally, Bowen and Speier are running for state office this year, and while I still have tepid support for Bowen's campaign she needs to explain this to me to get my vote.

Clearly it would be nearly impossible to get a bill like this passed by the politicians whose campaigns depend on corporate money and big-donor donations. But there's an initiative process, and in California there's a low barrier to entry. I don't think the public even realizes that corporations must apply for a state charter that can be revoked by the state at any time if they determine that the corporation is not working in the state's interests.

It seems that the corporations are wise to this, and while it almost never gets enforced, they have sought to strike democratic enforcement of corporate charters from state Constitutions. They're not content with beating the states into submission through intimidation and protection money shakedowns; they actually want to remove all accountability. This should not stand.

An education campaign that shows this three-strikes proposal would be 1) as tough on corporate crime as many states are on individual crime, 2) a business-friendly propostion seeking to level the playing field and eliminate the repeat offenders at one end of the scale, 3) a taxpayer-savings initiative designed to stop corporate criminals from charging state governments and consumers for their own sins, could absolutely work. I'm convinced of it. We need some sanity in corporate justice. If corporations want to be treated like human beings, they need to suffer the consequences the same way.