TOTAL $2,390
[ACKNOWLEDGMENTS]
Many more people than I will be able to name here helped in one way or another during the four years I researched this book in the United States, Europe and Asia. To those who are left out, my apologies and my appreciation for the time you took to teach and to ferret out obscure records and to interpret them, especially the clerks and other record keepers in government offices and executives and specialists at companies named here who asked not to be identified.
At Reuters, Jim Impoco, who brought me in as a columnist in July 2011, and my editor, Howard Goller. At Tax Notes, where I was a columnist for three years until July 2011, CEO Chris Bergin and the editors, including David Brunori, Joseph Thorndike, Jeremy Scott, John Bell, Robert Goulder and Meredith Fath.
At Syracuse University College of Law, all of my colleagues, but especially Dean Hannah Arterian and assistant deans Aviva Abramovsky, Christian Day and Terry L. Turnipseed, professors David Driesen and Rob Nassau and my research assistants since 2009, Megan E. Dodge, Jacqueline S. Lawrence, Jessalyn M. Mastrianni, Fred Pugliese, Kenneth R. Williams and Ju-Hyun Yoo, now practicing law in Seoul. Also, my Syracuse colleagues Keith Bybee, Len Burman and Eric Kingson at the Maxwell School and Joseph Comprix at Whitman School of Management, where I have a joint appointment.
On taxes, John Buckley at Georgetown Law, Professor Michael McIntyre of Wayne State University, H. David Rosenbloom of Caplin & Drysdale and New York University Law School, Robert S. McIntyre at Citizens for Tax Justice and the rest of the staff at CTJ, and Ed Meyers at the Institute on Taxation and Economic Policy.
At the University of Missouri–Kansas City, professors Bill Black, June Carbone, L. Randall Wray, Stephanie Kelton and John F. Henry. At the University of California–Riverside, Mason Gaffney. At the Tax Policy Center, Gene Steuerle, Jeff Rohaly and Bill Gale, and Elizabeth Boris at the Urban Institute.
On medical and public health matters, Drs. Stephen Bezruchka, Michael J. DeVivo, Art Moss and Marvin Hoffman as well as Nancy Yanes Hoffman.
In Oregon, David Bean, Ann Fisher, Mary Geddry, Bob Jenks, Nigel Jaquiss, Dan Meek, Chuck Sheketoff and my brother Eric, whose blue-collar insights always inform.
On utilities, Charles Acquard, Jim Baller, Dan Berman, Patrick Crowley, Charlie Harak, Robert McCullough, Pat Power, Harry Trebing, Howard Spinner, as well as Judge Richard D. Cudahy of the Seventh Circuit Court of Appeals and Professor William D. Henderson of Indiana University. On contracts, Professor Judith Resnik at Yale Law School, Ralph Nader and many others.
On geology and coal mining, Ronald C. Surdam, the former Wyoming state geologist; on coal mining, Geoff O’Gara, John Meklin and Ray Ring, now or formerly of High Country Times; on unions, Leo Gerard, president of the United Steelworkers; on public finance, Irene Rubin; on railroads, Richard White of Stanford University, and Gerald McCullough; on wealth distribution, economists Brad DeLong and Emmanuel Saez of the University of California–Berkeley, G. William Domhoff of UC–Santa Cruz, and Ed Wolff of New York University; on subsidies, Greg LeRoy, Phil Mattera and Bettina Damiani of Good Jobs First, Kenneth Thomas of the University of Missouri–St. Louis and Bruce Fisher of Buffalo State College; and on Census Department data, Steve Doig of the Arizona State University.
On investing, John C. Bogle, the founder of Vanguard, and my stockbroker friends Nannette Nocon and Mike Millard.
For their advice and thoughtful criticism, Dean Baker, Kate Berry, Fred Brock, Lynnley Browning, Pablo Eisenberg, Glenn Hubbard, Emily Kaminski, Sherm Levey, Lauren Lipton, Susan Long, Betty Lukas, Kevin Morrissey, Danelle Morton, Mindy Spatt, Chi Chi Wu, and the great reporters David Burnham, formerly of the New York Times, and Morton Mintz, formerly of the Washington Post, for reminders of abuses past.
My Portfolio publisher, Adrian Zackheim, whose idea this book was, showed remarkable patience. My editor for much of the book, Courtney Young, provided valuable help, as did my loyal literary agent, Alice Fried Martell. Hugh Howard polished the final manuscript.
And, as always, those among my eight children who helped, this time Andy, Kate, Marke, Molly, Steven and especially Amy, as well as my wonderful wife, Jennifer Leonard, CEO of the Rochester Area Community Foundation and a guiding light on integrity and compassion whose motto is: always do your best.
Reuters, which hired me after it was largely completed, has no role in this work.
[ NOTES ]
A Note on Sources
This book is based on hundreds of interviews and the reading of many tens of thousands of pages of official government documents as well as law reviews, corporate and academic studies and innumerable books. Words in quotation marks were actually spoken or written by those named.
Readers who wish additional documentation beyond the Notes should write to the author at [email protected]. The documents, if digital, or references to print will be posted at davidcayjohnston.com in the section for this book’s sourcing.
Chapter One: Jacking Up Prices
3 Kushnick knew a research gold mine: Bruce Kushnick, “The $300 Billion Broadband Scandal.” Teletruth ebook. www.newnetworks .com/broadbandscandals.htm.
7 Since 1913 Americans: “Milestones in AT&T History.” www.corp.att .com/history/milestones.html.
9 The worst of these are laws: http://blogs.reuters.com/david-cay -johnston/2012/04/12/taxed-by-the-boss/ and http://blogs.reuters.com/david-cay-johnston/2011/07/19/paying-taxes-your-employer-keeps/ and www.youtube.com/watch?v=SF4J-y7wJc0 and www.goodjobsfirst .org/taxestotheboss.
10 In deciding Ostrowski’s suit: Opinion in Bordeleau v. State of New York. www.courts.state.ny.us/CTAPPS/Decisions/2011/Nov11/190opn11.pdf.
11 What does it cost banks: Perdue v. Crocker Nat’l Bank, 38 Cal.3d 913, 702 P.2d 503 (Cal. Sup. Ct. 1985).
Chapter Two: Corporate Power Unlimited
17 Nearly four thousand years ago: L. W. King translation of Hammurabi’s Code at www.fordham.edu/halsall/ancient/hamcode .asp.
18 We give the Athenians: Maureen B. Cavanaugh, “Democracy, Equality, and Taxes.” Alabama Law Review, Winter 2003.
19 In ancient Rome: Cullen Murphy, Are We Rome? The Fall of an Empire and the Fate of America. Boston: Houghton Mifflin, 2007.
20 The poor have become: Miguel Helft, “Google Founders’ Ultimate Perk: A NASA Runway.” New York Times, September 13, 2007. www.nytimes.com/2007/09/13/technology/13google.html.
21 Back on earth: David Cay Johnston, “First Look at US Pay Data, It’s Awful.” October 19, 2011, http://blogs.reuters.com/david-cay-johnston/2011/10/19/first-look-at-us-pay-data-its-awful/ and “The Richest Get Richer,” March 15, 2012, http://blogs.reuters.com/david-cay-johnston/2012/03/15/the-richest-get-richer/.
21 More recently, when the economy: Author calculations from www.ssa.gov/cgi-bin/netcomp.cgi?year=2009 and http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2008.
23 Among the world’s: OECD, “Divided We Stand: Why Inequality Keeps Rising,” May 5, 2011. www.oecd.org/document/40/0,3746,en_ 21571361_44315115_49166760_1_1_1_1,00.html.
24 The Southern Pacific Railroad: Jack Beatty, The Age of Betrayal: The Triumph of Money in America, 1865–1900. New York: Alfred A. Knopf, 2008, p.;173.
25 Very much later Associate Justice: First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978). http://caselaw.lp.findlaw.com/cgi-bin/getcase .pl?court=us&vol=435&invol=765.
Chapter Three: Buffett Buys a Railroad
31 Buffet paid a stiff premium: Berkshire Hathaway announcement at www.bnsf.com/media/news-releases/2009/november/2009-11-03a.html.
32 A look at government data: Laurits R. Christensen Associates, “A Study of Competition in the U.S. Freight Railroad Industry and Analysis of Proposals That Might Enhance Competition: Final Report.” Madison, Wis., Nov. 2008 available at www.stb.dot.gov/stb/elibrary/CompetitionStudy.html.
34 In recent public talks: Mulvey PowerPoint at www.naco.org/searchcenter/pages/results.aspx?k=mulvey.
36 This means: Hoover’s electric generation guide
at www.hoovers .com/industry/electric-power-generation/1856-1.html.
37 Wall Street even measures: http://news.morningstar.com/articlenet/article.aspx?id=91441, last accessed May 24, 2012.
38 As a result of my work: David Cay Johnston, “Enron Avoided Income Taxes In 4 of 5 Years.” New York Times, January. 17, 2002, www .nytimes.com/2002/01/17/business/enron-s-collapse-the-havens-enron-avoided-income-taxes-in-4-of-5-years.html.
40 This assertion is belied: John Boyd, “US Railroads Are Holding Up as the Healthiest Segment of the North American Freight Carrying Industry.” Journal of Commerce, August 17, 2009.
Chapter Four: Railroaded
44 In a quirky: “Surface Transportation Board Announces Second Favorable Appeals Court Ruling in ‘Bottleneck’ Cases.” STB release no. 00-11, February 17, 2000.
44 Big railroads also erect: “Unfair Federal Policies” in Consumers United for Rail Equity, www.railcure.org/issue/issue_unfair.asp.
47 The evidence of a lack of competition: “Railroad Regulation,” GAO, RCED-87-109, June 1987; available at http://archive.gao.gov/d28t5/133518.pdf.
Chapter Five: In Twenty-ninth Place and Fading Fast
57 Braverman later wrote: Burt Braverman, “Cities Should Stay Out of the Cable Business,” Multichannel News, April 28, 2003.
60 South Korea has taken: “Pando Networks Releases Global Internet Speed Study.” September 22, 2011. www.pandonetworks.com/Pando-Networks-Releases-Global-Internet-Speed-Study.
60 We do consistently rank: Product-offering brochures of Orange.com and bills sent to Dana Kennedy in Vieux Nice, France.
61 In terms of job creation: Michael Spence and Sandile Hlatshwayo, “The Evolving Structure of the American Economy and the Employment Challenge.” Council on Foreign Relations, Greenberg Center, http://b.rw/gEq7Wo.
Chapter Six: Profits Upkeep Commissions
65 PG&E diverted much: California Public Utilities Commission, Pacific Gas and Electric Company, 2011 General rate case, prepared testimony exhibit (PG&E-2), December 21, 2009.
67 This story is as old: “Edison’s Electric Light: ‘The Times’ Building Illumination by Electricity.” New York Times, September 5, 1882.
69 But we’re not quite done: State of New Jersey Board of Public Utilities. In the matter of the Energy Master Plan Phase II proceeding to investigate the future structure of the electric power industry, docket no. EX94120585Y, attachment H: testimony of Dr. Colin J. Loxley.
71 These and other tax benefits: MSB Energy Associates, “Major Federal Tax Breaks that Lower Investor-owned Electric Company Costs and U.S. Treasury Revenues 2006.” www.publicpower.org/files/PDFs/MajorIOUTaxBreaks2006.pdf.
72 Bill Bagley: Phillip Matier and Andrew Ross, “CPUC Foundation to Raise Money from Utilities.” Wednesday, January 26, 2011. SFGate, www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/01/26/BAEI1HE615 .DTL.
73 Niagara Falls generates massive: James Heaney, “Power Failure: Region Home to Cheap Power, High Bills and Huge Corporate Subsidies.” Buffalo News, April 29, 2007.
76 In reality, Wyatt wrote: Dennis Wyatt, “CPUC: California’s Profits Upkeep Commission,” Manteca Bulletin, Dec. 12, 2010. www .mantecabulletin.com/archives/19207/.
Chapter Seven: “We Lead the Industry with Integrity”
78 Joe Seeber knows: David Cay Johnston, “Businessman Ordered Jailed in Dispute with Utility,” September 12, 2007, and “Businessman Avoids Jail in Dispute With Utility.” New York Times, September 13, 2007.
78 Joe Seeber owns: www.tristem.com/.
79 Late in 2009, the small: City of Beaumont v. Entergy Texas, Jefferson County District Court 172 case E184-962, filed September 21, 2009.
89 And the attempt: “Code of Entegrity,” www.entergy.com/about _entergy/entegrity/.
Chapter Eight: Paying Other People’s Taxes
93 The court reversed: BP West Coast Products LLC v. FERC et al., 374 F.3d 1263, 362 U.S. App. D.C. 438.
96 This time Judge Sentelle: ExxonMobil v. FERC 04-112, www.ll .georgetown.edu/federal/judicial/dc/opinions/04opinions/04-1102a.pdf.
97 In California, SFPP sought: David Cay Johnston, “Tax.com Helps Win One for Taxpayers.” Tax.com, June 28, 2011, www.tax.com/taxcom/taxblog.nsf/permalink/uben-8j9kyv?opendocument.
98 Gooch says that corporate-owned: David Cay Johnston, “Pipeline Profiteering.” Reuters, October 17, 2011. http://blogs.reuters.com/david-cay-johnston/2011/10/17/pipeline-profiteering/.
99 How many other rules: The Shelf Project at www.utexas.edu/law/faculty/calvinjohnson/shelf_project_inventory_subject_matter.pdf.
Chapter Nine: Investors Beware
103 We met Sam Insull: Hon. Richard D. Cudahy and William D. Henderson, “From Insull to Enron: Corporate (Re) Regulation after the Rise and Fall of Two Energy Icons.” Energy Law Journal 25, no. 1 (2005): 35–110.
Chapter Ten: Playing with Fire
105 The explosion came: Ellis E. Cinklin, “Boys Who Died Were ‘Unwitting Heroes’ in Pipeline Fire.” Seattle Post-Intelligencer, June 18, 1999.
106 Rushing down to the Pecos River: Carol M. Parker, “The Pipeline Industry Meets Grief Unimaginable: Congress Reacts with the Pipeline Safety Improvement Act of 2002.” Natural Resources Journal (Winter 2004).
107 If you live in an urban: David Cay Johnston, “Poorly Maintained Gas Pipelines Put Increasing Numbers at Risk.” Remapping Debate, Dec. 14, 2010. www.remappingdebate.org/article/corroding-pipelines.
109 At pipeline safety conferences: Jeff Nesmith and Ralph K. M. Haurwitz, “Pipeline Office Is Small Agency with Big Job and Many Critics.” Austin American-Statesman, July 22, 2001.
114 In the Carlsbad disaster: National Transportation Safety Board, Pipeline Accident Report: Natural Gas Pipeline Rupture and Fire Near Carlsbad, New Mexico, August 19, 2000; TSB/PAR-03/01 PB2003-916501 Notation 7310B adopted February 11, 2003, at p. 32.
117 Prior to protests from parents: Dina Capielli, “Pipelines: What Lies Beneath.” Houston Chronicle, Nov. 12, 2006.
Chapter Eleven: Draining Pockets
119 How high can it go?: Tim Reiterman, “Small Towns Tell a Cautionary Tale About the Private Control of Water.” Los Angeles Times, May 30, 2006.
120 In Felton, California: Felton FLOW, www.feltonflow.org/.
123 Then, in 2005: “Felton Backs Water Buyout.” Santa Cruz Sentinel, July 27, 2005.
Chapter Twelve: How We Beat the Garbage Gougers and Their Stinking High Prices
134 One community: “Firefighters Watch as Home Burns to the Ground.” WPSD Local 6 News, www.wpsdlocal6.com/news/local/Firefighters-watch-as-home-burns-to-the-ground-104052668.html.
136 The 1911 Triangle: “141 Men and Girls Die in Waist Factory Fire,” New York Times, March 26, 1911.
138 These prices should: Waste Management 10-k reports.
Chapter Thirteen: Fee Fatigue
149 The United States Comptroller: OCC’s Quarterly Report on Bank Trading and Derivatives Activities, Fourth Quarter, 2011. www .occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq411.pdf.
149 By waiving Rule 23A: www.federalreserve.gov/aboutthefed/section23a .htm.
151 One set of those blinders: www.fbi.gov/news/testimony/fbi-efforts-to-combat-mortgage-and-other-financial-frauds.
152 Many people saw: David Cay Johnston, “A $1,000 Prize for Disagreeing,” January 18, 2004, and “In Debate Over Housing Bubble, a Winner Also Loses.” New York Times, April 11, 2004.
Chapter Fourteen: “Wells Fargo Will Take Your House”
156 Margaret L. Moses: Margaret L. Moses, “Statutory Misconstruction: How the Supreme Court Created a Federal Arbitration Law Never Enacted By Congress.” Florida State University Law Review 34 (Fall 2006): 99, http://papers.ssrn.com/sol3/papers.cfm?abstract _id=939609#%23.
159 Paul and Pamela Casarotto: Scott J. Burnham, “The War Against Arbitration in Montana.” Montana Law Review (Winter 2005): 66. Mont. L. Rev. 139.
Chapter Fifteen: Giving to Goldman
166 Treasury Secretary—a
nd former: Gretchen Morgenson, “Behind Biggest Insurer’s Crisis, a Blind Eye to a Web of Risks.” New York Times, September 28, 2008.
166 In October 2008: David Cay Johnston, “Invade the Caymans!” Tax Notes, Dec. 22, 2008.
167 As an extraordinarily profitable: Goldman 10-K, 2004–2011.
167 In 2009 alone: Author calculations from Goldman 10-K and IRS data.
168 Taxpayers are not the only ones: Delaware Chancery Court Civil Action No. 6949-CS, decision February 29, 2012.
171 Phil Angelides: David Cay Johnston, “Meltdown Redux.” Reuters, Nov. 15, 2012, http://blogs.reuters.com/david-cay-johnston/2011/11/15/meltdown-redux/.
Chapter Sixteen: Please Die Soon
172 Bob Manning enjoyed a wonderful life: David Cay Johnston, “Paralyzed Since Fall in 1962, Man Is Still Seeking Benefits.” New York Times, May 5, 1995. www.nytimes.com/1997/05/05/nyregion/paralyzed-since-fall-in-1962-man-is-still-seeking-benefits.html.
173 While luckily none of the locked-in: “The McWane Story.” PBS Frontline, www.pbs.org/wgbh/pages/frontline/shows/workplace/mcwane/.
175 Massey Energy contributed: Caperton v. A. T. Massey Coal Co., 129 S. Ct. 2252 (2009).
176 First, a little background: 2009 California Workers’ Compensation Losses and Expenses, Workers’ Compensation Insurance Rating Bureau of California, June 2010. https://wcirbonline.org/wcirb/resources/data _reports/pdf/2009_loss_and_expenses.pdf.
Chapter Seventeen: Your 201(k) Plan
185 Mehling’s essential: Staff Report Concerning Examinations of Select Pension Consultants, May 16, 2005. Available at www.sec.gov/news/studies/pensionexamstudy.pdf.
188 In all, 401(k): Investment Company Institute at www.ici.org/pressroom/news/ret_10_q4.
190 Employers also shortchange workers: David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of History. Oxford University Press, 1996, p. 29.
193 There is no way to know: Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 on Arrangements with Off-Balance Sheet Implications, Special Purpose Entities, and Transparency of Filings by Issuers. Available at www.sec.gov/news/studies/soxoffbalancerpt.pdf.
The Fine Print: How Big Companies Use Plain English to Rob You Blind Page 35
