Bernie Sanders made a speech on the Senate floor in October of 2011 that warned that a proposed trade agreement with Panama would open the floodgates of American money flowing into off-shore tax havens, a plea that ultimately fell on deaf ears as the agreement was signed by President Barack Obama later that year.
That warning now appears to be prescient as a global tax evasion scandal known as the Panama Papers is sweeping through the news. A treasure trove of nearly 11.5 million documents — which NBC News reported were obtained by cryptic means — were released to media outlets around the globe. Extensive reports on the tax evasion scandal hit the news this weekend, implicating a number of powerful politicians, athletes, and celebrities who are hiding money in offshore accounts.
It was just as Bernie Sanders predicted in 2011. In his speech to the Senate, Sanders ripped the proposed trade agreement, noting that wealthy individuals and corporations were already avoiding $100 billion in U.S. taxes by utilizing these illegal offshore tax havens.
Sanders said there was no other legitimate reason to enact a trade agreement with a country as small as Panama.
“Panama’s entire annual economic output is only $26.7 billion a year, or about two-tenths of one percent of the U.S. economy. No-one can legitimately make the claim that approving this free trade agreement will significantly increase American jobs.
“Then, why would we be considering a stand-alone free trade agreement with this country?
“Well, it turns out that 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. And, the Panama Free Trade Agreement would make this bad situation much worse.”
Sanders was not the only one warning that the Panama trade deal would open up the possibility of tax evasion on a massive scale. Many other watchdogs called on Barack Obama and Hillary Clinton, then Secretary of State, to back away from the free trade agreement that had originally been negotiated by the Bush administration, the International Business Times noted.
Opponents believed the deal would make it more difficult to root out companies and wealthy individuals who funneled money into Panama to avoid taxes.
Rebecca Wilkins, a senior counsel for the non-partisan group Citizens for Tax Justice, was one of those sounding the alarm along with Bernie Sanders.
“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 noncooperation with other countries on exchanging information about tax matters,” she told the Huffington Post in 2011. “Panama has all three of those… They’re probably the worst.”
The vocal opposition to the Panama free trade agreement could be a major boost to Sanders’ campaign. He has often spoken out about the damage of an unchecked economy in which large corporations can evade taxes and crush working class Americans, and the Panama Papers seem to be validation of his platform.
At the same time, his opponent is attracting criticism for her role in the matter. After Obama signed the Panama free trade agreement, Hillary Clinton praised it as a measure to bring jobs back to America.
“The Free Trade Agreements passed by Congress tonight will make it easier for American companies to sell their products to South Korea, Colombia, and Panama, which will create jobs here at home,” she said. ‘The Obama Administration is constantly working to deepen our economic engagement throughout the world and these agreements are an example of that commitment.”
Bernie Sanders has yet to make a major statement on the Panama Papers leak, but with a critical primary this week in Wisconsin, a major attack on the issue has the potential to turn a race that already has momentum moving on Sanders’ favor.
[Picture by Ralph Freso/Getty Images]