A leading source for news and analysis about Mexico and the U.S.-Mexican border.

Wednesday, May 2, 2012

López Obrador, in Tijuana, makes promise after promise; in blasting Wal-Mart, he says it pays 0.2% in taxes, when the real figure is more than 26%

He pledges pensions for everyone over 78, says he will create an additional 700,000 jobs annually, will lower gasoline and electricity prices, and will provide higher education to everyone who wants it

He says he would do better than what he calls the PRIAN, saying the PRI and the PAN amount to the same thing

By David Gaddis Smith

All the presidential candidates this year are making a lot of promises, but it may be the populist Andrés Manuel López andres manuel lopez obrados marco antonio blasquezObrador who is making the most, or at least the most difficult to keep. The Democratic Revolution Party politician said in a Labor Day appearance in downtown Tijuana on Tuesday that if elected, he would cut the presidential pay in half and also halve the salaries of other top officials. He said elderly Mexicans would receive a pension or grant equivalent to half the minimum salary earned in a month. Single mothers and the handicapped would receive government assistance. He said Mexico needs to create 1.2 million jobs a year but only is creating 500,000; he said he would create the other 700,000 jobs. (That is a promise similar to the one made by Vicente Fox in 2000, that Mexico would have 7% growth during his six-year presidency; it did not happen.) López Obrador said the countryside would get more support. He said Mexico is exporting oil, and importing food and gasoline. "It is like exporting oranges and importing orange juice," he said to the laughter of the crowd. He said he would lower gasoline prices (no matter what world market prices are) by doing away with corruption. There would be more government-run day care. Education quality would be improved,

When he asked the thousands in attendance to raise their hand if they would ask five others to back him, nearly everyone did, and enthusiastically. He will need such enthusiasm: He is third in the polls, far behind front-runner Enrique Peña Nieto of the Institutional Revolutionary Party, although on the heels on the National Action Party's Josefina Vázquez Mota in recent surveys. López Obrador said he would do a far better job than what he called the PRIAN, a combination of PRI and PAN. The former PRIista said both parties were the same.

Wal-Mart scandal, and a goof on Wal-Mart taxes: López Obrador said Wal-Mart, recently involved in a bribery scandal in Mexico involving getting permits to open its stores, is not paying its fair share of taxes. While he said Wal-Mart paid 70 million pesos in taxes, he said it was only paying 0.2% in taxes on its sales, which he said were 380 billion pesos ($29 billion). But he has some trouble with numbers, and understanding how tax rates are computed; all three of his figures were way off the mark. In his speech, López Obrador accidentally added three zeroes to Wal-Mart's sales and one zero to its taxes. After López Obrador made previous erroneous statements about Wal-Mart's taxes, columnist Sergio Sarmiento pointed out that Wal-Mart paid 7.9 million pesos ($620,000) in taxes while it had 379 million pesos ($29.25 million) in sales. Sarmiento said Wal-Mart's effective tax rate was 26.3% on its profits, close to the maximum 30% called for in Mexican law. However, Sarmiento, while far closer to the truth, also goofed up at least one number. Wal-Mart's annual report put its Mexico sales at nearly 330 million pesos ($25.47 million), and total sales for Mexico and Central America at 379 million pesos. Wal-Mart's report did not separate out the taxes it paid in Mexico and Central America. If one divides the taxes Wal-Mart paid in Mexico and Central America by its sales, that would be around 2%; however, companies are not taxed on sales, but on profits. Sarmiento said Wal-Mart de México's net profit of 5.8% is low for Mexico and for much of the world. Sarmiento's column (PDF). Wal-Mart's annual report (PDF): Taxes paid, page 57; effective tax rate, page 68.

Energy issues: Oil is a touchstone issue in Mexico, because of its effect on day-to-day living and because the oil sector was nationalized by President Lázaro Cárdenas in 1938. López Obrador repeated the announcement he made Monday, that he would name Lázaro Cárdenas's son, Cuauhtémoc Cárdenas, to head the state oil monopoly Pemex. (Monopolies, if they are run by the state, seem to be OK under López Obrador, but he said he would do away with corruption in Pemex and in the state electricity monopoly.) He decried the lack of refineries in Mexico and said that under his watch, many more would be built. This is another issue Sarmiento has addressed, pointing out that building more refineries would not be cost-effective. Mexico has six refineries; López Obrador said he would build five more. February story on the refinery issue. When López Obrador said all the data about oil sales and bulk gasoline purchases would have to be revealed following his election, the crowd cheered wildly. López Obrador said that in 2006, then-PAN presidential candidate Felipe Calderón (whom López Obrador called Calderoncito) signed a pledge in writing to lower Mexicali electricity prices, but that the costs never came down. López Obrador alluded to the many written promises that have been made by PRI presidential candidate Enrique Peña Nieto by saying that "signing promises is all the mode now." But López Obrador said, "I am not going to sign anything. I give you my word, and I will keep it."

andres manuel lopez obrador in tijuanaCorruption: López Obrador said he would do away with Mexico's culture of corruption. He got good applause when he said, "Some say it would be better for the PRI to return to power because they steal, but also let others steal." He said he had no fear about fighting to stop corruption: "My hand will not tremble." That is a phrase many Mexican politicians, including former Tijuana Mayor Jorge Hank Rhon, have used in recent years to say they have no fear of organized crime. López Obrador said corruption would be cleaned up, "just like stairs are, starting at the top." He said the savings from ending corruption would pay for most of his programs, which observers have said is highly doubtful.

Monopolies: He also said he would attack monopolies, saying the cost of a bag in cement in Mexico far exceeds the price in the United States. Indeed, Mexican cement giant Cemex was recently ruled to be liable for taking actions to prevent a smaller competitor from importing Russian cement. The man whose company won the ruling, Ricardo Alessio Robles, said in 2004 that Mexican cement prices were so high that he could ship foreign-made cement halfway around the world and still make a profit.

Organized-crime violence: Insofar as Mexico's violence is concerned, López Obrador said, "You cannot fight fire with fire." He said the key is treating the cause of violence, which he indicated was a lack of opportunity and education. He did not spend much time on the issue.

Education: "Why is Mexican education so far behind? There are many interests. It is easy to say that Señora (teachers union leader Elba Esther) Gordillo is to blame." He asked why she had the influence she has and answered: "Because they protect her from above.... Because she helped Calderón with his electoral fraud (in the 2006 election)." It is generally acknowledged that Calderón would not have won without Gordillo's support. López Obrador pointed out that Gordillo's people were named to top posts in the Education Ministry, the ISSSTE and the national lottery. López Obrador said that if he were elected president, there would be more scholarships, including for all high school students, and more free uniforms. He said all high school graduates would be guaranteed a higher education, even if they failed admission tests, which he said existed only to deny entry to students because there is no room for the students under the current system.

Income redistribution: He said if Mexico's budget were to be divided equally among Mexico's 26 million families, each would get 10,000 pesos ($773) a month. He said those in Mexico's "pharaonic government" where he said some officials make 600,000 pesos ($46,000) a month and travel in executive jets and helicopters. "This kind of life is going to end," he said. He said he would push for a more progressive taxation system where the rich pay more.

López Obrador's travels: Before López Obrador arrived around 5:20 p.m. at an event set for 4 p.m., one of the warmup speakers noted that López Obrador had visited every municipality in Mexico over the last number of years as part of his quest for the presidency. But López has complained of being tired of campaigning: Could it be that he went himself one too far, as Richard Nixon did in 1960 when promising to visit every state? (Nixon lost that election to John F. Kennedy.)

Loving Republic: Much has been made of López Obrador having changed his style and advocating a república amorosa, a loving republic. But he only made one allusion to this, late in his speech.

After 52 minutes, he said he could keep talking, but figured he had talked enough. He then spoke for more than 20 more minutes. Humor columnist Catón on length on López Obrador speeches.

Story on López Obrador visit, El Mexicano (PDF). Jump.
Story, Frontera (PDF), with picture of López Obrador talking with a building with the lettering "Azteca massage" in the background.
Frontera story on one of Jorge Hank Rhon's sons, César Hank Inzunza, appearing at López Obrador rally. Hank Inzunza, a member of a reggae group, said he has backed López Obrador for eight years. Story, Frontera (PDF).

Update, June 22: Catón on "López Obrador campaign speeches longer than an hour"
The people endure them without much dissent
The tenacious listeners even give him a hand.
Perhaps the speeches will even expand
if he becomes president.

Catón's column, in the far better original Spanish.