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General Electric’s Jeffrey Immelt: ‘Looter’ or ‘Producer’?

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Atlas Shrugged: Part I drew a respectable $1.7 million this weekend considering it was only available in 300 theaters and received decidedly mixed reviews. The New York Post‘s Kyle Smith wrote: “‘Atlas Shrugged’ is like the Bible (the only title that outscored it in an unscientific 1991 survey that asked readers which books had most influenced them). Neither is to be taken literally.”

But what if, just for a moment, we did take it literally? How would we classify some of today’s top titans of industry through a Randian lens? Take, for example, General Electric CEO Jeffrey Immelt. Would Rand cast him as a heroic “producer” like steel magnate Henry Rearden, or a dastardly “looter” like Wesley Mouch? Consider that GE does produce a mountain of wealth for its investors every year. In 2010 alone, the company produced $14.2 billion in profits. But as The New York Times reported last month, and ProPublica later confirmed, GE paid little taxes on that $14.2 billion in taxes and even was able to book a $3.2 billion tax benefit.

That was no accident. As The Washington Examiner’s Tim Carney reported, days after President Barack Obama’s inauguration, Immelt wrote to GE shareholders:

[W]e are going through more than a cycle. The global economy, and capitalism, will be ‘reset’ in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.

President Obama solidified government’s partnership with GE this January when he named Immelt chairman of the President’s Council on Jobs and Competitiveness. But this placement did not come cheap. The Times notes that GE has spent more than $200 million on lobbying over the last decade. And that is just the political spending that GE is willing to label as lobbying. There are plenty of other expenditures on political activities as well. Consider this nugget also from NYT:

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The shelters are so crucial to G.E.’s bottom line that when Congress threatened to let the most lucrative one expire in 2008, the company came out in full force. G.E. officials worked with dozens of financial companies to send letters to Congress and hired a bevy of outside lobbyists.

The head of its tax team, Mr. Samuels, met with Representative Charles B. Rangel, then chairman of the Ways and Means Committee, which would decide the fate of the tax break. As he sat with the committee’s staff members outside Mr. Rangel’s office, Mr. Samuels dropped to his knee and pretended to beg for the provision to be extended — a flourish made in jest, he said through a spokeswoman.

That day, Mr. Rangel reversed his opposition to the tax break, according to other Democrats on the committee.

The following month, Mr. Rangel and Mr. Immelt stood together at St. Nicholas Park in Harlem as G.E. announced that its foundation had awarded $30 million to New York City schools, including $11 million to benefit various schools in Mr. Rangel’s district.

There is nothing illegal about lobbying or giving to charity. In fact, in our current system, it is hard for a capitalist to compete without “investing” in politics. The U.S. corporate tax rate is the highest in the world at 35 percent. If GE did not have a Washington office dedicated to lobbying for benefits from the government, over the last five years it would have had to pay somewhere around $9.1 billion in taxes on its $26 billion in American profits alone. ProPublica was not able to confirm what GE has actually paid in taxes (GE does not have to disclose the number and only admitted that “a small U.S. income tax liability” would be paid for 2010), but let’s say is a billion more than The New York Times originally reported. That would translate to an $8 billion profit on a $200 million lobbying investment. What kind of capitalist could say no to that kind of return on investment?

When once-great exemplars of capitalism like GE are profiting more by investing in lawyers and lobbyists in Washington instead of engineers and innovators, the line between looter and producer gets pretty blurry.



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