Capitalist logic and student debt

May 12, 2012

Those who are interested in understanding the American political system–And shouldn’t we all be?–would do well to pay close attention to these two organizations:

1. Republic Report (

2. Open Secrets (

Both organizations are doing good work keeping track of how the US Chamber  of Commerce and the major corporations pervert the political process and prevent politicians from working in the public interest. One good example of this was illuminated in a recent Truthout article by Lee Fang that connects corporate lobbying with a looming rise in student loan interest rates. The following passage gives the essence of Fang’s article:

On Tuesday afternoon, Senate Republicans blocked a measure that would have prevented a big hike for student loan interest rates. The legislation would have kept “subsidized Stafford loans at 3.4 percent for an additional year, rather than doubling automatically for new loans starting July 1.”

While the vote yesterday was certainly a partisan battle, a closer look at the interest groups driving the roll call vote explains the greater powers at play. Democrats wanted to pay for the student loan support by closing a tax loophole that even the late Robert Novak and the Wall Street Journal lamented as one the most egregious problems in the tax code. Essentially, wealthy individuals and large corporations often file using ‘subchapter S’ companies to dodge paying employment taxes. With Republicans refusing to close this loophole, student loan interest rates are set to double.

Republicans blocked the student loan interest rate bill simply because big businesses and campaign contributors lobbied aggressively against closing the loophole. The National Journal published a letter from a number of Beltway lobbying groups — among them, the U.S. Chamber of Commerce, which represents many multinational corporations, and the American Banking Association — protesting the measure. These lobbying groups have wide sway over both parties, but particularly the GOP. 

The following list from Republic Report shows some of the corporations represented by the US Chamber of Commerce and how much money they contribute each year to the Chamber. 

 Coca-Cola Inc provides yearly dues between $100,000-$499,999 to the Chamber.

– American Electric Power (AEP), a large utility company, provided the Chamber with $500,000 in dues in 2010.

– Health insurance company AETNA provides $100,000 in yearly dues to the Chamber.

– eBay provides $100,000 in yearly dues to the Chamber.

– Defense contractor United Technologies provides at least $50,000 in yearly dues to the Chamber.

– Dow Chemical provided $1,648,750 in dues to the Chamber in its latest company report.

– ALCOA provides at least $25,000 a year to the Chamber.

– News Corporation, a Chamber member, gave the group at least $1 million in 2010.

– CSC, a major defense contractor and computer IT corporation, provides the Chamber with $100,000 in yearly dues.

– Eli Lilly and Company pays the Chamber at least $50,000 a year in annual dues.

– The Campbells Soup Corporation pays the Chamber at least $10,000 in regular dues.

– Prudential Financial gave the Chamber $1,057,300 in 2010, and $2 million in 2009.

– AHIP, the health insurance lobbying association that represents WellPointUnitedHealth, and other major insurers, gave the Chamber over $86 million in 2010. AHIP continues to fund the Chamber, but the current amount is unclear.

– Procter and Gamble is a dues-paying member of the Chamber but does not disclose the dollar amount.

– Chevron donated $500,000 to the Chamber in 2010.

– Merck, the pharmaceutical company that makes well known drugs like Clarinex and Zocor, is a dues-paying members of the Chamber that gave $725,000 in 2010.

– Microsoft provides at least $141,000 in yearly dues to the Chamber.

– Norfolk Southern Corporation spends at least $50,000 a year in dues to the Chamber.

– Xcel Energy provides at least $40,000 in dues to the Chamber.

– Xerox provides at least $25,000 to the Chamber.

– Hartford Financial Services gave $50,000 to the Chamber in 2010.

– Intel gave the Chamber $225,000, according to the most recently available company report.

– Abbot Labs Corp. is a Chamber member but does not reveal the dollar amount.

– The Chamber maintains a foreign fundraising effort to bankroll the 501(c)(6) nonprofit the group uses to run attack ads. In 2010, I reported that foreign companies like the Tata Group, the State Bank of India, and the Bahrain Petroleum CompanyBahrain Financial Harbour Holding Company collectively contribute about $885,000 to the Chamber. The Chamber acknowledged this foreign funding for its political organization, but maintains that the funds are somehow segregated from political spending.

Notice that this list–a who’s who of corporate America–is a list of the very corporations that students will be approaching for employment as they graduate. Keeping in mind the report by Lee Fang, one can’t help but notice a striking example of corporate rationality here. The major corporations of the US economy fund a group that lobbies Congress to, in effect, drive up interest rates on student loans in order to maintain existing loopholes on corporate taxes.  So by contributing modestly to this rogue lobby organization, the US Chamber of Commerce, these corporations  not only maintain artificially and unjustifiably low tax rates, they also ensure a steady stream of employees ready and willing to work under any conditions and carry out any type of work–no matter how unethical–because they are drowning in such student debt that they really have no choice. It’s a wonderfully rational, elegant, and cynical system.   

Footnote: the New York Times is now running a series on student debt in the U.S. Here are two articles from that series:

A Generation Hobbled by the Soaring Cost of College

Slowly, as Student Debt Rises, Colleges Confront Costs


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