Curt Long

The deal, announced in October 2016, was controversial from the beginning. Then-candidate Donald Trump spoke out against the proposal, saying it would lead to “too much concentration of power in the hands of too few.” It was hard not to see a political motivation in the opposition, however, given the president’s well known criticism of CNN.

AT&T argued that the government’s opposition was politically motivated. That claim was given weight by the DOJ’s antitrust chief Makan Delrahim’s apparent flip-flop on the deal: Before he was nominated to the DOJ, Delrahim told the Business News Network that he saw no problem with the AT&T-Time Warner merger. Leon rejected AT&T’s efforts to argue during the trial that it was being targeted for political reasons.

At trial, the DOJ focused its case primarily on the idea that AT&T, which owns the satellite and streaming TV service DirecTV, could charge rivals more to access content from HBO or CNN, and withhold those channels, leading to “blackouts” for consumers if rivals refused to pay the higher prices. The DOJ argued that AT&T could, in theory, offset any lost revenue from withholding content by selling DirecTV service to customers in affected regions. AT&T argued that the department’s economic models were flawed. Leon ruled that the DOJ had failed to prove that the combined company would have more leverage in negotiations, and that there was insufficient evidence to suggest that AT&T would have the incentive to stop licensing Time Warner to its rivals.

The DOJ’s attempt at blocking the deal broke with decades of precedent in vertical mergers involving companies that don’t compete directly. Had Leon upheld the DOJ’s decision, it could have signalled that other big mergers would face similar trouble.

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“It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” the statement said.

But council member Lisa Herbold, another of the original sponsors, countered that turnabout was the result of a ploy to convince Seattleites that the “increased levels of human suffering we see in our city is caused by government inefficiency rather than by the Gilded Age level income inequality.”

City constraints

Washington state, and by extension Seattle, faces an especially difficult situation when it comes to funding constraints. It is one of the few states in the nation with no income tax, which is illegal under state law. Instead it must rely on property taxes, which can only be raised so high, said Tom Cooke, a professor at Georgetown University’s McDonough School of Business.

A tax on how many employees a corporation has, based on its revenue, is one way for elected officials to create a source of revenue that doesn’t directly affect individual voters.

“That’s historically how we’ve build football and baseball stadiums, by taxing things like hotels and rental cars because it doesn’t affect the individual voter,” said Cooke.

However Seattle quickly realized that the proposed tax, which would have gone into effect in January, could also potentially affect how many employees companies might hire and even if they would stay in town. Construction workers, among others, marched and rallied against the tax. Amazon, in particular, has been on a building spree in the city.

In the end, “the whole thing unfolded in a really bad way. I don’t think anyone has come out of this looking good,” said Shulman.

Still, he’s hopeful that this could be a refresh, signaling a more collaborative approach to address this crisis rather than a demonization of business

“Businesses need to address the homeless challenge,” he said. “I’ve talked to many Amazon employees and it’s just a drain on morale.”

Rising rents the problem

The homeless problem in Seattle and the county it sits in, King County, is largely the result of rising rent costs, even as poverty levels have fallen, according to a report released in May by the consulting firm McKinsey that was commissioned by the Seattle Metropolitan Chamber of Commerce.

At the same time, homeless housing and crisis response systems in the county have improved in performance and efficiency and have functioned well.

The problem is that the shortage of affordable housing options continues to increase, making fewer units available to households earning below 50% of the median area income. In 2011, 35% of county rental units would have been affordable to those residents. In 2017 it was just 18%, the McKinsey study found.

Those numbers show that what the county needs is investment in affordable housing, and given the tax constraints created by state law, there are not many ways to do that, said Alison Eisinger, executive director of the Seattle/King County Coalition on Homelessness.

The corporate head tax was identified as one of the few new potential sources of revenue available by a task force the Seattle City Council created during the budget process last year, she said.

“The right-wing messages that are being trumpeted — that government doesn’t know what to do and can’t be trusted to solve the issues — are false. We have seen very strong results from the things we’re doing,” she said.

She said those fighting to help end homelessness is in no way opposed to businesses profiting from their work.

“We welcome business and jobs. We are interested in corporate reasonability. And what that means is you reinvest in the infrastructure of the community that has welcomed you,” she said.