This Panama Papers revelation is really unfortunate for the boosters of the TPP. It makes it scandalously clear how these promises are just crap.
DB: Now these laundering operations in Panama, Cayman Islands, it's sort of like everybody is treated equally. You've got banks like HSBC, Colombian drug traffickers ... and we know, for instance, the banks are busy floating the drug trade. So this is a place where everybody does business together. Right?
Wallach: Well, the main economy of Panama, the comparative advantage is financial crimes, money laundering, tax evasion. That's the service they offer. They are a service economy and those are the services they specialize in.
DB: You talk about a way of hiding money offshore to avoid paying taxes. The implications, of course, are that ... right now I've been investigated twice in the last eight years. I gross about $40,000 a year, and I've been investigated a couple of times. I owe money, whatever. But these evasions are what cause major troubles. We don't have good schools, hospitals; this is all part of a product and a process by which these corporations suck the money out of our country, right? Am I exaggerating? And don't pay their fair share. So we don't have schools and hospitals and infrastructure. Is there a connection there?
Wallach: Well, when we were fighting against the Panama FTA, it was along with the Korea FTA, it was the same time the votes were happening. And what we said was, the Korea FTA is going to further gut our manufacturing base, increase our trade deficit, and we're going to see a lot of manufacturing firms close. In addition to the jobs that we lost, it is the income of all of those workers, and then the taxes they would have paid. And it's the taxes those companies would have paid that will have a second whammy, in a community that doesn't just lose jobs, but then loses the tax revenue necessary to support public infrastructure, from roads and bridges, to schools, to hospital construction, etc.
And that FTA, we said, would cause that problem vis-a-vis hurting on the jobs end. And, yeah, three years into the agreement the trade deficit with Korea doubled. In the first three years, using the formula the administration used to claim that 70,000 jobs would be created, we have lost 90,000 jobs. It's not trade deficit increase. And then you add to that Panama.
Now Panama's trade balance is small. It's a small country, not a lot of trade, about the same as it was before. But the difference there is just what you said. We may not be losing manufacturing jobs to Panama, but our quality of life and our community is getting undermined, because the U.S. companies and wealthy individuals that are still here can dodge having to contribute to the common good and the infrastructure that we all rely on, by making sure that they find ways to use offshore in havens like Panama, to avoid paying taxes.
DB: Yeah. Let's talk about that a little bit more in terms of how difficult it's going to be to untangle it. I have been watching the Pritzker family for many years. Liesel Pritzker's name just came up, I guess it was reported. This is Penny Pritzker's niece or cousin. She's the Secretary of Commerce, Penny Pritzker is. Her name came up doing business in Columbia. Some import/export in places where the FARC were formerly operating. Now I don't know what kind of business, what they were doing, what was in there. But the point is that here's the Pritzker family, and we don't know about Penny. It seems that most of their stuff is in the Cayman. But how do I phrase this question without being too vicious? How can we expect there to be any change when you have, for instance, I'm referring to a 2003 Forbes magazine article, the Secretary of Commerce coming from a family that has structured and set up, set the tone, been on the forefront of putting money offshore to protect themselves from paying taxes? Now we have people like the Pritzkers, Secretary of Commerce ... she already crashed the Superior Bank in Chicago, engaged in all kinds of subprime stuff. She was part of that structure that marketed these instruments to Wall Street, the packaging of these subprime loans with other loans.
So the point I'm making here is that somebody inside, right inside, is benefiting from it. Can we expect anything but the free-trade agreements that you're describing, that are continuing to devastate poor and working people? How's that for a question?
Wallach: Well, I think we can expect something different, and I'll tell you why. Because we the people ultimately can stop an agreement like the TPP. Let us have the horrible past agreements serve as a lesson and a motivator to just say "No! No more of these agreements." And we have it at this point within our grasp to box and bury the TPP, and really start a turnaround to unravel the agreements that are so rotten, the captured agreements that aren't even mainly about trade, and try to shift over to having trade agreements that are actually about trade. Meaning they are aimed at harvesting the benefits of trade expansion, without being Trojan Horse operations for all of these non-public interests agendas, all these retrograde policies now being catapulted into place via trade agreement vehicles.
And the reason why it's within our grasp is we're seeing in the presidential primary this enormous bipartisan trade revolt. And it is affecting the prospects of the TPP. The TPP was signed, NAFTA on steroids, with 12 countries. It was signed. The administration thought they could whiz it right through. But actually, thanks to a huge bunch of public activism last year, the procedure needed for a TPP, the fast track, hardly squeaked through Congress. It's a procedure that basically makes it much harder to stop when it comes to a vote. But the fast track is not that helpful if in the end you just don't have the votes. It's going to actually come down to something that your listeners have a lot of say over: The vast majority of Congressional House Democrats are against the TPP. There are just a handful of them who aren't.
But Nancy Pelosi, the Democratic leader and a very important member of Congress from California, has yet to come out against the TPP, much less rally her troops and stand up and say, "Hey, we're the Democrats. We're against this, this is bad. That's why the presidential candidates are against it. We're not going to let this happen. We're not going to let it get snuck by in a lame duck session after the election. We're not going to have it go, as is, in 2017. This is not an agreement we can be for. And all of our presidential candidates are saying that. And all the Democrats are unified on that point." Her standing up and saying that would be one of the final nails in TPP's coffin. But if she does not do that, if she does not unify the last remaining Democratic House members, if she waits until the very last minute to say anything about it like she did when fast track came for a vote, then there is a real chance it could slime through in the lame duck, with just a few votes. The same way fast track limped through. But you know you only need to pass it by one vote, and it's now the law. It is within this listening audience's power to make a huge difference.
Frankly, if you look at all of California ...there's a guy, Ami Bera, the guy who's trying lose his seat over his vote for fast track who had told a lot of people he'd be against fast track, and then he flipped. He's lost his union support, he couldn't get Democratic Party support, the environmentalists are on a warpath against him, and he basically is all by himself. All the environmental groups have come out against TPP, and he hasn't said where he is. So maybe he'll realize how bad his fast track vote was, and he'll come out against TPP like everyone else.
But the whole rest of California, you've got to go all the way down to San Diego to find any Democrats who are contemplating supporting the TPP. And that's the two Democrats down there, Scott Peters and Susan Davis. Otherwise, you look at the rest of the state, there are a couple of people who are saying, "Hmm, what would this mean for ..." way up north, or Congressman Thompson saying, "What does this mean for wine?" Well, wine may have some tariff cuts in its future, under the TPP, but what would it mean for the rest of country, for the rest of the state, for the environment? And those are the kinds of issues that Congressman Thompson is judging. That and the whole set of California Democratic members, those are your only guys who are out there contemplating. Everyone else is pretty much with the program.
Also, frankly, a big handful of the Republicans in California and the House of Representatives are against the TPP. Just on a commercial basis the agreement is just crap. It doesn't have disciplines against currency cheating, even though it includes a lot of countries that are notorious for cutting their currency values in order to cheat on their imports, making their stuff unreasonably, unfairly cheap, and then making our goods too expensive just by dropping the currency value of their currency.
DB: Now, I have to jump in here. You said that Nancy Pelosi hasn't come out against it?
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