Carly Fiorina – Washington Outsider or Corporate Welfare Queen?

Posted on September 28, 2015


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Carly’s claims about being outside the political class don’t line up with her history as a corporate manager. Past is prologue.

Carly Fiorina’s candidacy has heated up in recent weeks on the basis of a couple of factors that are regularly noted by pundits. One is that she is in a class of GOP hopefuls that is considered a group of political “outsiders”, including Donald Trump and Ben Carson.

The appeal is based on the notion that if one of these individuals gains the nomination and possibly the presidency, they will be strangers to the Washington power establishment. It’s an interesting concept in theory, but beyond the abstract, it doesn’t hold up well – except to a degree, with Dr. Carson.

The other aspect of Fiorina’s recent momentum, is a perception, largely reality based, that she is a polished debater. She came across as nails in the debates, with a very intense demeanor. A serious female, who can stand in and trade with the boys. That point is beyond argument. If these items were all that were subject to examination, Fiorina would be ideally positioned to move into the top tier of the contenders going forward – and her surging poll numbers back that up. But there are fatal deficits in Ms. Fiorina’s resume for the highest office in the land. We’ll review them here and demonstrate why Fiorina’s baggage will ultimately be too bulky and burdensome to allow her to board Air Force One, much less wind up on the top of the 2016 GOP nomination heap.

Is Ms. Fiorina really an outsider to the Washington political class? It depends on how you define “outsider”. If by “outsider”, you mean someone who hasn’t held elected office, then yes, Fiorina is a bonafide outsider. But if you include in the definition, active involvement and cooperation with the power elites and a former presidential administration, Ms. Fiorina would not qualify. The reason? Fiorina has a storied history of leveraging government influence from the corporate side of the transaction between companies she’s led and lawmakers and presidential administrations. Ironically, it is the very sort of ‘crony capitalism’ she has denounced in campaign appearances and media engagements.

One example stands out in bold colors. While Ms. Fiorina was CEO of Hewlett Packard, she maneuvered the company into position to suck at the trough of the newly created Department of Homeland Security. The opportunistic money grab involved the so called “Homeland Investment Act of 2004”. It was a component of another, larger appropriation that exploited American’s sincere desire to jumpstart job creation – the “ American Jobs Creation Act of 2004”.

What most potential voters repeatedly fail to understand, is that these supposed job stimulation bills do no such thing, but what they do in reality is line the pockets of the various elements of the Corporate Industrial Complex that lobby for their passage.

These above mentioned “acts”, were represented as initiatives to ramp up jobs and economic growth by handing corporations a 1 year “tax holiday” on billions in overseas profits that were being shielded offshore. The University of Kansas published a study on the “American Jobs Creation Act of 2004” and its companion and estimated that for every dollar spent on lobbying for the bills – the return on investment yielded an average of $220 in tax savings for the companies involved. That was a 22,000 percent return, and Hewlett-Packard’s windfall was even more dramatic.

Now, I’m sure that many of my readers are rightly sympathetic to the idea of incenting repatriation of untaxed offshore profits, with the notion that bringing that money back to America will stimulate investment and all the conceivable benefits to Main Street and the middle and working class struggling to find work. It really does sound good in theory. How it worked out in practice, under Carly Fiorina’s term at HP, is another story.

Hewlett-Packard netted a tax savings of over $4.3 billion. That’s OK, right? Because the law was quite specific that the money could not be be used to raise dividends or to repurchase shares. It was instead, supposed to be funneled into job generating infrastructure investment.

Supporters and K Street lobbying firms assured lawmakers that passage would help the American economy by “increasing domestic investment in plant, equipment, R.& D. and job creation.” It didn’t. As the New York Times discovered, the most detailed analysis of what actually happened — using confidential government data as well as corporate reports — has estimated what happened to the $299 billion companies brought back from foreign subsidiaries. About 92 percent of it went to shareholders, mostly in the form of increased share buybacks and the rest through increased dividends.

In the case of HP under Fiorina, it saved more than $4.3 billion and put more than $4 billion into stock buybacks. At the same time, HP not only did not increase employment of American workers – it laid off 14,500 of them! Other members of the lobbying group that bribed this $265 billion corporate giveaway through Congress, busted similar moves. Fellow tech giant Dell, was another follower of Fiorina’s example. According to Kristin J. Forbes, a professor of economics at the Massachusetts Institute of Technology and one of the authors of a study on the actual results of the Homeland Investment Act:

They lobbied very hard for the tax holiday. They said part of the money would be brought back to build a new plant in Winston-Salem, N.C. They did bring back $4 billion, and spent $100 million on the plant, which they admitted would have been built anyway. About two months after that, they used $2 billion for a share buyback.

Profits from collusion with the federal government during Fiorina’s tenure at HP were far from unusual. In fact, it has been recently confirmed, by Ms. Fiorina herself, that HP cooperated with the NSA, providing HP servers to be used in implementing a massive domestic surveillance apparatus dubbed “Stellar Wind” – now notorious thanks to the whistleblowing of Edward Snowden.

Stellar Wind comprised an illegal, warrantless wiretapping scheme, combined with the bulk collection of millions of American citizens’ phone records, private communications and emails, ordered in secret by the Bush administration and continued under Obama. Former NSA director Michael Hayden, now distinguished for having to admit he lied under oath to Congress on numerous details of the various surveillance programs, personally made a call to Ms. Fiorina asking for equipment and quotes himself as saying, “Carly, I need stuff and I need it now.”

Yahoo News notes that after Hayden became CIA director in 2006, he named Fiorina chair of an agency external advisory board consisting of former top intelligence officials, generals and business leaders. In that capacity, Yahoo reports that she made regular trips to CIA headquarters in Langley, Va., including overseeing one specific project requested by Hayden: Provide advice on how the CIA could maintain its undercover espionage mission in a culture of increasing government leaks and demands for greater public accountability and openness.

I won’t get into the weeds on Ms. Fiorina’s track record of failure at HP as far as the specifics of her leadership and dismissal by the executive board is concerned. That is all hashed out in detail in other reports and has been regurgitated in sound bites in the debates and on the campaign trail. But one other aspect of Ms. Fiorina’s business experience, warrants examination in brief because it demonstrates what her instincts are as an executive.

Before she came aboard at HP, Fiorina was at the helm of Lucent Technologies. As president there, she was instrumental in engineering a shocking mode of operation involving landing multi billion dollar contracts whose key features including extending massive credit lines to Lucent clients when risk reviews indicated the strong likelihood that the client’s would default on them.

One such glaring example was the deal with Winstar Communications – a $2 billion dollar credit extension for building a fixed wireless network grid. Winstar, a debt risk that was obvious from the get go, later filed for bankruptcy – but there’s no stigma to that, according to Donald Trump.

It was not, however, an isolated case. There was also PathNet. In 1999, Fiorina, President of Lucent’s global service division, extended PathNet a $2 billion credit line for a fiber optic network infrastructure. This to a relatively tiny partner that had less than $2 million in annual revenue. Comparisons have been made to the sub prime mortgage deals that stuck taxpayers for billions in bailouts to Wall Street banks. In this case, however, Lucent and its stock took the brunt of the hit, retreating from a high of $84 dollars to a little more than $2 a share.

So, the answer to the question of whether Carly Fiorina is of presidential timber with respect to her track record of leadership, is no. She is also not the “Washington Outsider” she and her campaign tout her to be. Open Secrets documents that Fiorina contributed $25,000 to Hewlett-Packard’s PAC over the years. The Hewlett-Packard PAC, in turn, has consistently donated significant sums of money to Democratic candidates — including $15,000 to Boxer this decade, $5,000 of which came during Fiorina’s tenure.

Bottom line according to Open Secrets? The Hewlett-Packard PAC funneled between 39.1 percent and 45.4 percent of its federal political donations to Democratic candidates during the election cycles in which Fiorina led Hewlett-Packard, CRP’s analysis indicates. And the organization dedicated to campaign transparency, also revealed that in 2000, Fiorina also donated $5,000 to the Technet PAC. That election cycle, Democratic candidates received more than 47 percent of the Technet PAC’s more than $133,000 in political contributions.

Fiorina, despite her rhetoric about changing the culture of corporate welfare and influence in Washington, has a record of fostering it and taking advantage of it. Worse, she’s not committed to Constitutional principals. Under her watch at HP and in her dealings with the Federal Surveillance Industrial Complex since then, the 4th Amendment was expendable whenever a promise of profits and false security rendered it so.

Time to look elsewhere.

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