With the government running again, the joint Senate and House Budget Conference Committee has begun meeting to hammer out, if not a grand bargain, at least a small one. The Committee must deliver a report by December 15 and, to avert another shutdown, Congress must extend government funding by January 15.
It’s difficult to overstate the political importance of a compromise, but the economics are important here, as well. The federal deficit has been declining since it hit a high of 10.1% of GDP in 2009 (though most American’s don’t know it). The deficit today is about 7% of GDP and the Congressional Budget Office (CBO) expects it to fall to about 2.4% of GDP by 2015.
Yet the CBO does not expect this downward trend to continue. As a result of an aging population, rising health care costs, and growing interest payments, the CBO expects (if policy remains at the status quo) the deficit will begin rising again the coming decade. In the long-term this is a rather significant problem to the extent that it contributes to a continued growth in public debt, which will likely exceed 71% of GDP by 2018.
While economists don’t agree on timing, most will say that the U.S. federal government needs to bring its expenditures in line with its revenues. On the expenditures side, many analysts and politicians have focused on the importance of reducing entitlement spending. For good reason—the cost of Social Security Insurance, Medicare and Medicaid are expected to grow at levels that many term unsustainable.
This Op-Ed originally appeared in European Voice.
The UK is showing the way forward on financial transparency
Last week, the British prime minister, David Cameron, announced that the UK plans to create a central public register of who ultimately owns and controls companies, or so-called ‘beneficial owners’. This should make it much harder for criminals to hide their identities behind sham UK companies, and for the corrupt to steal billions of dollars from developing countries.
Currently, corporations can be formed worldwide without disclosing who actually owns or controls them. Criminals often exploit this ability to create anonymous companies for the sole purpose of hiding their identities, whilst using them for laundering the proceeds of crime, corruption, and tax evasion.
The Huffington Post published an interesting blog, titled “Government must shut down corporate tax havens,” from U.S. PIRG’s Jaimie Woo. In her blog she points out that “The $150 billion we lose in tax havens a year would be enough to provide Pell grants to 10 million students for four years of college; it could also guarantee loans for half a million small businesses; or revamp America’s aging transportation infrastructure by building 15 commuter rail lines, 50 light rail transit lines, and more than 800 bus rapid transit lines.” To read the full blog click here.
By Jesús Lizcano, Transparency International
Cross posted from Transparency International’s Space for Transparency Blog.
Once the new law takes effect, all levels of government in Spain will have to publish information on the companies they have contracts with and how much they are worth.
After a summer of corruption scandals in Spanish politics, the country’s Congress passed a new piece of legislation on transparency and access to information this September.
Public tolerance for corruption had reached boiling point with companies, parties and even the royal family seemingly acting with impunity after graft allegations.
The new legislation is now headed for the Senate, where it will be debated before coming into effect.
Posted 5 November 2013 by Transparency International Secretariat
Most European Union countries fail to legally protect whistleblowers enough from retaliation in the workplace, shutting out an important actor in the fight against corruption, according to a new report from Transparency International.
Whistleblowers play a prominent role exposing and preventing corruption, yet only four EU countries – Luxembourg, Romania, Slovenia and the United Kingdom – have advanced whistleblower protection laws in place, according to the report Whistleblowing in Europe. Only in these four countries would a government or company employee who discloses serious wrongdoing be adequately protected by law from being fired or harassed.
Of the remaining 23 EU countries in the study, 16 partially protect employees who report wrongdoing, while seven have either no or very inadequate laws in place.
With all of the talk last week in the transparency community of David Cameron’s historic announcement regarding beneficial ownership, little mention was made of the US Government’s draft set of commitments to the Open Government Partnership (OGP). Porter McConnell, Manager of the Financial Transparency Coalition, was asked by OpentheGovernment.org to provide her views, which have now been published alongside those of other civil society leaders.
Check out this great BBC broadcast covering David Cameron’s groundbreaking commitment to introduce a public register to reveal the true beneficial owner of companies. Global Financial Integrity’s E.J. Fagan was interviewed for this broadcast. You can find his comments starting at the 3.20 mark.
In this terrific blog the Economist’s Matthew Valencia looks into the contentious issue of transparency and trusts.
What exactly are trusts, why do they exist (100 points if you knew they were developed in the 12th century for Knights leaving for the Crusades) and should they be part of the international push for public registries of beneficial ownership. What do you think?
Nuance can be a challenge for Financial Transparency Coalition issues. To the average citizen or politician, the relationship between banking laws in developed countries and poverty in developing countries is not self-evident. On its face, it’s not obvious that public registries in the United Kingdom have anything to do with corruption in the Democratic Republic of the Congo. Yet there are compelling connections between these issues and strong causal relationships between them. Our challenge is to explain why.
At the risk of sounding too self-congratulatory, I must say the group of organizations who work on these issues does a phenomenal job of explaining these connections in ways that both citizens and politicians can understand. This week this fact is evidenced by two very different, but connected, developments. The first is a brilliant public outreach campaign by the ONE campaign called Stash the Cash. The second is a promising development toward public registries of beneficial owners in the United Kingdom, which, if you read this blog, you’ve already heard about.
First, in the spirit of connecting the dots, let me say a bit about beneficial ownership, public registries, and their connection to economic development and corruption. Criminals and corrupt business and politicians use anonymous shell companies (or “phantom firms”) to avoid taxes, launder the proceeds of crime, and steal public money. Via these phantom firms, dirty money flows from the developing world to banks and trusts in developed countries. Which means developed countries have the power to curtail it. Yet the inadequacy of anti-money laundering standards and laws on beneficial ownership in many developed countries and secrecy jurisdictions allows these flows of cash to continue.
Financial Transparency Coalition Manager, Porter McConnell was quoted in Patrick Wintor’s article “Register revealing firms’ true owners will be open to public, says Cameron” appearing on the Guardian’s website.
In this article, Porter is quoted as saying “David Cameron has made a brave and far sighted decision with the introduction of this vital transparency measure. That the UK has become the first country to commit to introducing a public register to disclose the beneficial owner of companies is a watershed moment.
“The UK is helping deprive corrupt politicians and criminals of the use of anonymous companies to hide their real identities. This will go a long way in curbing corruption, money laundering, drug trafficking, tax evasion and financial crime responsible for the continued loss of much needed wealth from the world’s poorest countries.”
London, October 31, 2013 – David Cameron is expected to become the first leader of any country to commit to introducing a public register to reveal the true beneficial owner of companies.
The Financial Transparency Coalition (FTC) strongly welcomes this move, as we have been calling on world leaders to put these public registries in place since our founding in 2009. We believe public registers of beneficial ownership will go a long way towards reducing corruption, money laundering and tax evasion.
December 5, 2013·
The FACT (Financial Accountability and Corporate Transparency) Coalition today praised Representative Lloyd Doggett (D-TX) and Representative Rosa DeLauro (D-CT) for the introduction ...
December 3, 2013·
Transparency International’s Corruption Perceptions Index 2013 offers a warning that the abuse of power, secret dealings and bribery continue to ravage societies ...
November 25, 2013·
Some of the world’s most infamous secrecy jurisdictions, such as the British Virgin Islands and Jersey are considering becoming more transparent, whereas ...