Wilbur Ross’s Economic Expertise: Exploiting Tax Law
Following the confirmation of Ross, TRNN replays an interview with former financial regulator Bill Black about the pervasive conflicts of interest in the Trump administration
SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
Former investment banker and private equity billionaire, Wilbur Ross, worth $2.5 billion, is the Trump nominee for the U.S. Commerce Secretary. He’s currently undergoing a confirmation hearing before the Senate Committee on Commerce, Science, and Transportation. Mr. Ross’s Confirmation Hearing was moved from last week because he had no time to finish the Ethics and Financial disclosures paperwork, which are intended to deal with potential conflict of interest.
Those documents were ultimately released on Tuesday; the Wall Street Journal reports that Wilbur Ross played a central role in shaping the U.S. steel industry and with help of tariffs imposed by then President George W. Bush. Reuters reported that Ross’s companies moved some production overseas, eliminating 2,700 U.S. jobs, through offshoring in 2004.
One of the many conflicts of interest which will need to be sorted out, should Mr. Ross be confirmed, involves his investments in steel companies. According to investigative news outlet ProPublica, the Commerce Department is due to make at least five decisions about steel trade soon after the inauguration.
But, before we get into discussing this with our guest, let’s have a look at some of what he had to say.
WILBUR ROSS: China is the most protectionist country –- they talk much more about free trade than they actually practice. We would like to levelize [sic] that playing field and bring the realities a bit closer to the rhetoric.
I think we should provide access to our markets to those countries who play fair, play by the rules and give everybody a fair chance to compete. Those who do not, should not get away with it, they should be punished, and severely.
The President-elect has made no secret in his public remarks, nor have I, in earlier remarks during the campaign, that NAFTA is logically the first thing for us to deal with. We ought to solidify relationships in the best way we can, in our own territory, before we go off to other jurisdictions.
I’m not anti-trade, I’m pro-trade. But I’m pro sensible-trade, not pro-trade that is to the disadvantage of the American worker and the American manufacturing community.
SHARMINI PERIES: Joining us now to discuss Wilbur Ross, and the position of Commerce Secretary, is Bill Black. Bill is an Associate Professor of Economics and Law at the University of Missouri, Kansas City. He’s a white-collar criminologist, and a former financial regulator and the author of “The Best Way to Rob a Bank is to Own One”. Thanks for joining us, Bill.
BILL BLACK: Thank you.
SHARMINI PERIES: So Bill, let’s start with the position of Commerce Secretary, why is it so pivotal to our economy?
BILL BLACK: Well, in truth it hasn’t been a pivotal position to our economy. For many years it’s been the place where presidents have put leading fundraisers. And, unlike Treasury, which has real day-to-day control on most aspects of financial policy, Commerce hasn’t been terribly active in doing things on a policy basis, other than the small business administration, which really does play a fairly powerful role. And, of course, is not something that Ross is talking about as any kind of priority.
SHARMINI PERIES: Bill, President-elect Trump, and now his Commerce Secretary Ross, are also focusing in on NAFTA. There are obviously some issues with it that we’ve had as well, do you think he’ll get rid of it, or renegotiate it?
BILL BLACK: Well, okay, so the important thing was explained very well in “Fiddler on the Roof”, when Tevye sings his famous song, “If I Were a Rich Man”, and says that, if you are incredibly wealthy, all these folks who were the elites would come to him and ask really difficult questions. So difficult, they would cross a Rabbi’s eyes. And Tevye says, “But there’s good news, because it doesn’t matter one bit whether he’s right or wrong when he answers. When you’re rich, they think you really know.” And that would be the story about Wilbur Ross.
These are not people that are particularly good at finance or economics, they’re simply good at the tax laws, which is what they exploit. Ross runs, as you said, a firm that outsources net U.S. jobs and is an infamous vulture fund in the United States — after the financial crisis, but particularly in Ireland, where he’s made much of his money in recent years.
He hasn’t said he’d get rid of NAFTA, and it seems unlikely that he would get rid of NAFTA. Although, you can say this for Trump, he did campaign against the trade deals and he has put the most anti-trade folks in the key positions of any administration, for probably over 45 years.
So, in addition to Ross, who decided to highlight his pro-protectionist views, they’ve appointed to the Special Ambassador for Trade, someone who is exceptionally hostile, and spends most of his time suing on behalf of folks like Wilbur Ross, against trade by other countries. And then they’ve appointed a Special Econ guy, apparently taking away some of the slot of the National Economic Commission Director, to a wild and whacky economist, Navarro, from University of California at Irvine, who has some of the most radically anti-trade philosophies. Well, certainly he’s the most extreme economist that I’ve ever heard of on trade issues.
So, I think they’ll keep NAFTA. I think that they will do something symbolic about NAFTA. There are two really big problems with NAFTA, and Ross and Trump haven’t identified either of them. One is, you know, you’re going to have, when you have lower tariffs, winners and losers. The really big problem is that we haven’t taken care of the people who lose. We’ve just thrown them onto the rubbish heap. So, you could have a federal program where you ensure that those people got jobs, and if they wanted retraining, got jobs. That would be a very good thing. That’s not what they’re proposing.
The other really bad part of NAFTA, the terrible part of what was going to be the Trans-Pacific Partnership, is these deals that say, businesses and only businesses, get to sue governments whenever they don’t like, pretty much anything the government does. And this includes, for example, the government running a health program against cigarettes, where there have been two of these suits. And these are tried, not in front of courts of any kind, but in front of kangaroo tribunals, that are heavily tilted in favor of the corporations.
While all the other things in the supposed trade deals, for example, the pro-environment ones, the pro-labor standards ones, those are not enforceable by the citizens, unions, workers, etcetera, who would actually be hurt by them. They can’t bring an action. So, but the trade is not really why they’re passing these deals, these deals are constructed secretly by the lobbyists for the largest corporations in the world. They don’t even let Congress see the text, but they let the lobbyists, not only see the text, but create the text, secretly. Not exposed to the rest of the world, and what they always want, is this ability to sue to prevent any kind of effective safety and health regulation.
But, again, is Trump in favor; is Ross in favor of safety and health regulation? No. That’s what they want to get rid of. So, they will do the worst things on trade, when they could have done the best things on trade.
SHARMINI PERIES: Right. And those secret wheeling and dealing that happens in favor of corporations will only continue, if you take a look at what Ross’s background has been like, when it comes to leading some of these organizations that he’s been a part of. For example, Ross has extensive business ties across the world which make avoiding criminal conflict of interest laws particularly tricky for him.
For example, Ross sits on the board of five publicly traded companies, including the Bank of Cypress, where he’s Vice-Chairman. How important is it that he divests from these interests before he takes office?
BILL BLACK: Well, he has now said that he’s going to have divestment. We’ll see, of course, whether that’s true. But, as you said, the Republicans were all set to confirm him without even the most basic disclosures of conflicts of interest. That Republicans have insisted in the past when it was a Democratic President should be hyper due diligence reviewed.
Here they were going to do no disclosure, no review and, of course, this will be the first president in modern times, who has not disclosed his massive conflicts of interest. And who is not ending his massive conflicts of interest, as we talked about in a prior interview, this phony trust and a violation of even constitutional prohibitions, about receiving funds commercially from foreign governments, while he’s president.
SHARMINI PERIES: And, Bill, finally, what do you think of his little nab there about China not playing fair in terms of trade deals? And I guess that raises the question, have we been playing fair?
BILL BLACK: Well, clearly, the Trump administration loves all things Russian, and is hostile to all things Chinese. The Chinese do play a number of games, so does the United States, so does Russia, so do the Japanese, still. They have many, what we call non-tariff barriers to effective trade. And it would fine to work against those kinds of barriers, and it’s fine to try to respond to — China’s leader is at Davos in Switzerland saying, “Oh, I’m the world leader now of globalization and free trade.” There is a lot of hypocrisy to that and so, that’s sort of politics as usual. But I’m happy that… Trump administration is so in favor of fairness, that they’ve invented a new word to describe it. They ‘re going to “levelize” the playing field.
SHARMINI PERIES: Bill Black’s going to be joining us for inauguration coverage on Friday, so tune in. And, Bill, I thank you so much for joining us today.
BILL BLACK: It’s good to be back. Nice talking to you.
SHARMINI PERIES: And thank you for joining us on The Real News Network.