While Clinton Backed 2011 Trade Deal, Sanders Foresaw Panama Papers Fiasco
'Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade US taxes,' Sanders told Congress in 2011.
Turns out, Sen. Bernie Sanders did.
In fiery speech before the U.S. Senate in 2011, Bernie Sanders declared his "strong opposition" to the "unfettered free trade agreements" with Korea, Columbia, and Panama—agreements that were being pushed for by both President Barack Obama and then-Secretary of State Hillary Clinton, Sanders' current rival for the Democratic nomination.
"Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in off-shore tax havens," Sanders stated. "And, the Panama Free Trade Agreement would make this bad situation much worse."
Watch Sanders' entire speech below:
Each and every year, the wealthy and large corporations evade $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.
According to Citizens for Tax Justice, "A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters. Panama has all three of those. ... They're probably the worst."
Mr. President, the trade agreement with Panama would effectively bar the U.S. from cracking down on illegal and abusive offshore tax havens in Panama. In fact, combating tax haven abuse in Panama would be a violation of this free trade agreement, exposing the U.S. to fines from international authorities.
In 2008, the Government Accountability Office said that 17 of the 100 largest American companies were operating a total of 42 subsidiaries in Panama. This free trade agreement would make it easier for the wealthy and large corporations to avoid paying U.S. taxes and it must be defeated. At a time when we have a record-breaking $14.7 trillion national debt and an unsustainable federal deficit, the last thing that we should be doing is making it easier for the wealthiest people and most profitable corporations in this country to avoid paying their fair share in taxes by setting-up offshore tax havens in Panama.
Sanders was in the minority with that view and shortly thereafter the Panama-U.S. Trade Promotion Agreement (TPA) was passed and signed into law, a move that was lauded by Sec. Clinton as an example of the Obama Administration's commitment to "deepen our economic engagement throughout the world."
What's more, as International Business Times senior editor David Sirota and others have pointed out, the Obama administration even included a loophole in the deal "that allows Panama to sidestep new tax transparency provisions" included in the trade pact.
— David Sirota (@davidsirota) April 4, 2016
Though the world was stunned by the leak of 11.5 million documents from the Panama-based law firm Mossack Fonseca, which detailed how government and corporate officials around the world erected shell companies to stash billions of dollars in to avoid tax liability, much of those activities were not necessarily illegal—thanks to agreements such as the Panama TPA.
"Tax avoidance is an inevitable feature of any tax system, but the reason this particular form of avoidance grows and grows without bounds is that powerful politicians in powerful countries have chosen to let it happen," Vox's Matthew Yglesias wrote Sunday. "As the global economy has become more and more deeply integrated, powerful countries have created economic 'rules of the road' that foreign countries and multinational corporations must follow in order to gain lucrative market access."
Indeed, reclaiming an economy that has been "rigged" for the one percent is the hallmark of Bernie Sanders' presidential campaign, and it is a theme that has galvanized voters and fueled primary upsets across the United States.
On Monday, 22,000 people demonstrated outside the Parliament building in Reykjavik, Iceland calling for the resignation of Prime Minister Sigmundur Davíð Gunnlaugsson, who is just one of the world leaders implicated in the leak. Observers speculate that is just the beginning of the popular backlash to the revelations.
Though there has been little reporting on what Americans have been exposed in the Mossack Fonseca data dump, there are already murmurs that the Panama Papers can provide the necessary boost for Sanders to overtake Clinton.
"All of the presidential candidates will be questioned about the scandal. And nobody is going to be under more pressure than Hillary Clinton," columnist Matthew Turner wrote at the Independent on Tuesday. "For some Americans, she is the embodiment of a 'global elite,' while Bernie Sanders is its antithesis."
But this more than a battle of candidates, it is a battle of ideas. Globalization, heralded by the likes of Hillary Clinton, has enabled the richest in society to exploit the system while ordinary working people pick up the tab. This has been going on for decades; as a political family, the Clintons have done nothing about it. Hillary continues to describe her opponent’s policy platform as ‘pie in the sky’, yet corporations paying their fair share of taxes could easily fund many of Sanders’ proposals. The longer this scandal this kept alive the more beneficial will be for Sanders. And if any more skeletons in the Clinton closet see the light, it will parachute Bernie Sanders into the White House.
Sanders has not yet released a statement on the Panama Papers, but in an interview on Monday he sharpened his attack on "greed, recklessness and illegal behavior on Wall Street," telling the New York Daily News:
A rigged economy is when you have corporations making billions of dollars a year in taxes, billions of dollars a year in profit, and not paying a nickel in taxes. A rigged economy is where you have companies able to shut down as a result of trade agreements that they have written, and move abroad and pay people pennies an hour. That is a rigged economy. A rigged economy is when, in the wealthiest country in the history of the world, the top one-tenth of 1% now owns almost as much wealth as the bottom 90%.
"If that's not a rigged economy," Sanders adds, "I don't know what a rigged economy is."