Now is the Moment to Take Back the Economy
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The Democratic primary is over, and Senators Obama and McCain now face an electorate angry over high gas prices, stagnant wages and a sour economy. The call for change is so loud and so persistent that it's already become a campaign clichÃ©.
ClichÃ© or not, it's a major force driving this election, and whichever candidate harnesses the country's mood will win this election. Henry Kravis, founder of KKR-effectively the nation's second largest private employer and one of the largest buyout firms in the nation-has more to do with the country's unease than people imagine.
He's a symbol of the "Just Us" corporate business mentality that so many Americans want to see change. Rich beyond belief, he still lobbied tenaciously last year against a little reform that would have leveled the playing field between hedge fund managers and buyout executives and teachers, nurses, and other middle class Americans. At stake was the elimination of a single tax loophole that saved Henry Kravis up to $96 million in 2006. Because of the loophole, Kravis and a handful of other buyout executives are able to pay a 15 percent tax rate on much of their income, far less than the tax rates that many middle class Americans pay.
That loophole was just the tip of the iceberg.
Kravis' portfolio companies pay significantly less in taxes to state and federal treasuries after being bought out by KKR. Why? Because he has the companies borrow up to 70 percent of the purchase price, and the companies can then deduct that interest from their taxes, frequently eliminating their tax burden altogether. By our estimate, just two of KKR's deals (Biomet and SunGard) could cost the government up to $1.2 billion in tax revenue. While the use of debt has turned Kravis and other buyout executives who use the same model into a new glided class, it can also weaken the companies that are bought out, and it has contributed to the credit crunch that has thrown our economy into freefall.
I'm writing this from San Juan, host of the SEIU 2008 Convention. We've spent the better portion of a week debating and discussing that tension between a "just us" mentality and how we can deliver justice for all working people. Today, we launched a global campaign at www.july17action.org to take back the economy and raise the alarm about the impact of these deals on the economy as a whole and on workers and communities world-wide. Activists have already pledged to participate in actions in 25 countries and more than a hundred cities in the United States and Canada.
It's time that we start working for justice for all. I urge you to visit www.july17action.org, learn more, sign up for the campaign and join thousands of working families to take back the economy on July 17.