Story by Amanda Girard
The Panama Papers may be the defining story of the 2016 Democratic Primary. And Bernie Sanders is on the right side of history.
The 11.5 million documents, which came from Panamanian law firm Mossack Fonseca and were leaked to the International Consortium of Investigative Journalists (ICIJ), expose how the upper end of the 1 percent utilizes shell companies and gray areas in tax law to stash untold billions of dollars in overseas tax-free accounts. The leak was so massive, it took an army of 400 journalists working for an entire year to sift through the documents. At least 140 world leaders from 50 different countries were implicated in the leaks.
Bernie Sanders saw this coming from a mile away. On October 12, 2011, Sen. Sanders took the Senate floor to denounce the Panama trade pact, shooting down the conventional arguments in favor of the deal.
“Panama’s entire economic output is only $26.7 billion per year, or about two-tenths of one percent of the US economy,” Sanders said at the beginning of his speech. “No one can legitimately claim that approving this free trade agreement will significantly increase American jobs.”
Then, Sanders warned of the widespread corruption that would follow should the pact become official.
“Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade US taxes by stashing their cash in offshore tax havens. The Panama free trade agreement will make this bad situation much worse. Each and every year, the wealthiest people in this country and the largest corporations evade about $100 billion in taxes through abusive and illegal offshore tax havens in Panama and in other countries.”
As Secretary of State, Hillary Clinton was on the complete opposite side of the issue. In an official statement issued by the US Department of State on October 13, 2011 (one day after Sanders’ floor address), Clinton congratulated President Obama for passing the trade pact, citing the very same job creation arguments Sen. Sanders shot down a day earlier. Clinton made no mention of Panama’s reputation as a tax haven, and even invoked “working families” in her statement:
“These initiatives are the leading edge of a job-creating trade agenda that will open markets, level the playing field for our businesses and workers, and champion America’s working families in an age of tough global competition. They deserve the historic and widespread support they received in Congress tonight. We will continue our work to rebuild an American consensus on trade.”
No Americans have been named in the current leaks, as American clients have to do their tax evasion outside of the Panamanian law firm due to a taxation clause in the 2010 free trade agreement. But the editor of Süddeutsche Zeitung, the paper that initially broke the explosive story, promised American readers that they wouldn’t be disappointed.