Fiscal Cliff

Why AT&T's CEO Wants Higher Taxes

The phone company does a lot of business with the U.S. government.


AT&T customers, pay attention: your phone company is trying to raise your rates.

No, not your phone rates: your tax rates.

And therein lies a story.

If federal campaign contributions are any guide, the CEO and chairman of AT&T, Randall Stephenson, is, or was, a solid Republican. In February, he gave $30,800 to the Republican National Committee. In September, he gave $20,000 to a committee affiliated with Mitt Romney's presidential campaign. There were no similar gifts from Stephenson to the Obama campaign or to the Democratic National Committee, according to Federal Election Commission records.

AT&T's federal political action committee also gave $10,000 to the Romney campaign. The AT&T political action committee's giving in the 2012 cycle favored Republican candidates, who received about $1.6 million, over Democrats, who received about $850,000, according to the Center for Responsive Politics.

So it was something of a surprise to see AT&T issue a statement on Friday afternoon from Stephenson calling for a federal budget deal that, he said, "will require a compromise involving an increase in both tax rates and revenue."

Stephenson participated in a meeting last week with other business leaders and President Obama that was closed to the press. Maybe Obama, who is pushing for the tax rates to go up, was extraordinarily persuasive. After all, Romney and the Republicans—the ones to whom Stephenson and his company's political action committee donated all that money—had been opposing increases in federal tax rates.

Stephenson's statement said that failure to reach a compromise would "result in severe market disruptions," and "a return to negative economic growth." It's only fair to take him at his word that that is the basis for his concern.

A skeptic might point out, however, that AT&T does a lot of business with the U.S. government. AT&T Government Solutions boasts that it employs "more than 4,000 scientists, engineers and analysts—many with security clearances" who "focus exclusively on the IT requirements of government." One federal contract AT&T won last year had a potential value of $5 billion, which is real money even to a company as large as AT&T. The company, like other wireless phone providers, also earns revenue from the "Lifeline" program that provides subsidized cellphones—so-called Obama phones—to low-income customers. And AT&T has already seen what negative effects hostile government agencies can have on its business—when a Justice Department antitrust lawsuit and FCC opposition blocked AT&T's takeover of T-Mobile, AT&T wound up paying T-Mobile a $4.2 billion "break-up fee."

There's a certain amount of irony here. The left spent the campaign season complaining that the Supreme Court's Citizens United decision would open the floodgates for corporate involvement in politics. Yet now that the election is over, President Obama seems to be encouraging corporate executives to campaign for higher taxes.

Defenders of the Citizens United ruling have argued that customers would help check the political involvement of consumer-facing companies. What that means as a practical example in this case is that though I had been planning to switch my family's two smartphone contracts from Sprint and Verizon over to AT&T, I'm hesitant to do so now that AT&T's CEO is publicly campaigning for tax rate increases that I oppose.

The sad reality, though, is that the thousands of dollars that my business would mean to AT&T, or the millions of dollars that the business of other like-minded Americans would mean, are dwarfed by the value of a $5 billion government contract or winning the favor of a regulator with the power to approve or deny a multi-billion-dollar deal.

Good-government groups and newspaper editorialists spend a lot of energy worrying about the danger that corporate cash or influence will sway political decisions. The greater danger may yet be that the influence runs in the other direction, and that government money and power influence businesses to become presidential cheerleaders, leaving America not only with higher tax rates but with a Potemkin private sector.

NEXT: M23 Rebels Still Too Close For Comfort

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  1. Never mind that a company that is so deep in bed with the government is more than happy to sacrifice your privacy at the behest of the government; especially if any of that cash cow might be in jeopardy.

  2. “Fuck you, cut spending.”

  3. Who is the culprit here?

    I don’t fault a corporation for acting in its own best interests. Its job is to maximize profits for the shareholder, and if a deal with the government gets them there, then they better do it or a competitor will.

    It is the corrupt politicians who let them do it – nay, encourage them to do it – that are at fault. The politicians are the ones that have the ultimate say in this matter, and it is disgusting how they promote this crony capitalism.

    1. I do fault them. Holding out your hand when you’re perfectly capable of getting by without a handout is bullshit whether you’re an individual or corporation. It takes two to tango and the corrupt pols are just one side of the equation. There wouldn’t be a supply if there wasn’t a demand. I have no problem with anyone trying to minimize taxes but trying to increase other peoples taxes so you can mooch off them is despicable. F AT&T.

      1. ” It takes two to tango and the corrupt pols are just one side of the equation.”

        But only one side of that equation has the legal authority to enact laws and tax code that make corruption possible.
        And only one side of that equation has the power can to lock you in a cage if you refuse to fund that corruption.

        Just sayin’.

  4. “One federal contract AT&T won last year had a potential value of $5 billion, which is real money even to a company as large as AT&T.”

    While this sounds large, this is a multiple award indefinite delivery indefinite quantity contract, which means the government awards it to multiple companies and puts an absurdly high ceiling that it will never in fact reach. AT&T will never get anything even close to $5B out of the contract.

  5. Corporate America litterllay makes me \ill!

  6. Nobody professed to understand the question of the frozen railroad bonds, perhaps, because everybody understood it too well. At first, there had been signs of a panic among the bondholders and of a dangerous indignation among the public. Then, Wesley Mouch had issued another directive, which ruled that people could get their bonds “defrozen” upon a plea of “essential need”: the government would purchase the bonds, if it found proof of the need satisfactory. there were three questions that no one answered or asked: “What constituted proof?” “What constituted need?” “Essential-to whom?”

  7. You won’t get any argument from me about that, but that still doesn’t excuse being a parasite.

    1. Supposed to be my reply to skyhawk

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