The Ghosts of Scandals Past

Nicholas Caleb

While Kitzhaber’s resignation comes with the revelation of legitimate scandal, the size and scope pales in comparison to the scandal that should have marked the end of Kitzhaber’s political career in Oregon: the emergency legislative session of 2012 that resulted in Nike being granted 30 years of tax cuts on new developments. As a young person who teaches government at the university level and is engaged in Oregon politics, I saw this as a low point for democracy in our state and a reason for a serious lack of faith in our political actors.

First, the state negotiated with Nike as a sovereign, enshrining the precedent that Nike’s desires should drive state policy. Second, a potentially unstable investment climate (all investment climates are inherently unstable in a capitalist economy) was deemed to be a state emergency. And, future legislatures will be undemocratically bound from raising revenue no matter what existing economic and political conditions emerge in the future. Third, the deal meant decades worth of extraordinarily low taxes for a company that already stashes $6.7 billion in off shore tax havens and, by conservative estimates, had its tax obligation reduced by over 90% when Oregon moved to single-sales factor apportionment in 2006. Fourth, public officials were outwardly arguing that public process was unnecessary for a deal which would have a tremendous impact on the future of the state. Fifth and most important, the entire situation was premised on an outright falsehood advanced by Kitzhaber and other public officials of our state.

On February 20, 2013, Allan Brettman confirmed in The Oregonian that while Nike postured as though they would not be investing in Oregon in the future unless they were able to secure a decades long tax freeze, the company negotiated for the new deal to be retroactive because they had already committed to investments in Oregon. As Chuck Sheketoff of the Oregon Center for Public Policy put it, “Nike extracted a concession from the State of Oregon for something the company was already doing — spending money to expand in Oregon.”

Because this issue was never the subject of an official investigation, we don’t know all of the parties who were involved in this process or who knew what and when. Did Nike orchestrate this economic extortion under faulty premises on its own? We know that Kitzhaber, the chief public official of Oregon, signed a non-disclosure agreement with a major corporation on issues of extreme public import, which for me is scandalous in its own right. But, did Kitzhaber know that Nike had already made capital investments of the kind that the new contract was supposed to cover before the law passed the emergency session? The Oregon DOJ negotiated the contract under Kitzhaber’s authority so he knew before the deal was finalized. Did he knowingly mislead the state about the nature of the emergency session? To what extent did the Democratic legislators who advocated for the emergency legislation know that Nike was investing in Oregon with or without the tax cut?

To my knowledge, these questions were never investigated and Kitzhaber never had to answer for his part of a massive fraud perpetrated on Oregonians.

By Nicholas Caleb Feb. 16, 2015