Free Enterprise Action Fund Urges Business Roundtable to Defend Capitalism Against Congressional Overreaching

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Mutual fund urges CEO group to defend profits and property rights from Congressional grandstanding.

Action Fund Management LLC (AFM), investment adviser to the Free Enterprise Action Fund (http://www.FreeEnterpriseActionFund.com), invited the Business Roundtable (BRT) to join the Fund in vigorously defending capitalism and free enterprise against efforts in Congress to confiscate business earnings and shareholder assets.

“Republicans and Democrats in Congress are considering so-called ‘windfall’ profits taxes on oil companies and pressuring a pharmaceutical company to waive its patent rights on influenza medication,” said Tom Borelli of AFM. “We are asking the BRT to join the FEAF in defending capitalism and the free enterprise system from what we view as harmful grandstanding on Capitol Hill.”

The Free Enterprise Action Fund (FEAF) is a mutual fund seeking to provide investors with financial returns while defending and advocating for the American system of free enterprise.

As an association of CEOs of leading U.S. corporations with a combined workforce of more than 10 million employees, the BRT says that it “is committed to advocating public policies that ensure vigorous economic growth, a dynamic global economy, and the well-trained and productive U.S. workforce essential for future competitiveness… the Roundtable focuses on issues it believes will have an effect on the economic well-being of the nation.” (1)

In the wake of record earnings by oil companies, several members of Congress have suggested that “excess earnings” be taxed or otherwise used as directed by Congress. (2)

Sen. Judd Gregg (R-NH), Sen. Hillary Clinton (D-NY) and Sen. Byron Dorgan (D-ND) proposed windfall profits taxes. Sen. Charles Grassley (R-Iowa) proposed that oil companies should donate 10% of their profits to a designated social programs. The Senate held hearings today where oil company executives were asked to defend their recent earnings.

Amid current debate over the possibility of pandemic influenza, Sen. Charles Schumer (D-NY), demanded that pharmaceutical manufacturer F. Hoffman La Roche Ltd. license its anti-viral drug Tamiflu to other drug companies. (3)

“Profits and property rights are fundamental to capitalism and free enterprise,” said AFM’s Steve Milloy. “The ideas floating around Capitol Hill right now threaten the two pillars of the economic system that have provided our society with the highest standard of living in history,” added Milloy.

“Not only is the congressional action against profits and property rights problematic from a moral perspective,” Milloy explained, “we don’t believe congressional action will work or is necessary.”

Government action against oil company profits and price controls would likely create fuel shortages and reduce investment in new gas supplies, according to a new Cato Institute report entitled, “Economic Amnesia: The Case against Oil Price Controls and Windfall Profit Taxes.”(4) Prices established by the interplay of supply and demand, and competition ensure consumers face the lowest possible prices. Today's relatively high prices will do more to encourage conservation and new supply than any combination of federal policies.

Production of Tamiflu in 2006 and 2007 by Roche will be enough to meet present orders for the antiviral drug, the World Health Organization said at the bird flu conference on Nov. 9.(5) Moreover, it’s not clear that panic over pandemic influenza is warranted. (6)

“Although only a few oil companies and one pharmaceutical company are directly threatened by current congressional action, all business should be concerned,” said Borelli. “What happens to a few singled-out businesses now, can eventually happen to all.”

“As an association of CEOs, the BRT ought to be out front defending capitalism and free enterprise,” Milloy stated. “BRT has so far been silent about these current threats to business.”

“Last September, we warned 18 member company CEOs participating in the BRT’s “’sustainable growth’ initiative to stop wasting corporate resources on superficial public relations efforts and to concentrate on genuine business development efforts that will increase shareholder value and benefit society,” recalled Borelli. (7) “If BRT members are going to spend corporate assets on public relations, they ought to spend that money defending and promoting the basic principles of capitalism and free enterprise that are essential to their existence and our society’s prosperity,” emphasized Borelli.

The Free Enterprise Action Fund seeks long-term capital appreciation through investment and advocacy that promote the American system of free enterprise. An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the Free Enterprise Action Fund can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-766-3960 or visit http://www.FreeEnterpriseActionFund.com. Please read the prospectus carefully before investing.

Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. The Free Enterprise Action Fund is a new fund with limited investment history and there is no guarantee that it will achieve its investment objectives.

The Free Enterprise Action Fund is advised by Action Fund Management, LLC., which receives a fee for its services, and is distributed by BISYS Fund Services Limited Partnership, which is not affiliated with Action Fund Management, LLC.

References:

1. Business Roundtable, About Business Roundtable. (http://www.businessroundtable.org/aboutUs/index.html)

2. See e.g., Detroit Free Press, Oil executives face Senate questions about big profits (November 9, 2005). (http://www.freep.com/news/nw/oil9e_20051109.htm)

3. Letter from Sen. Schumer to Roche ( Oct. 17, 2005). (http://schumer.senate.gov/SchumerWebsite/pressroom/Letters/2005/10.17.05.Roche%20ltr.pdf)

4. Cato Institute, Economic Amnesia: The Case against Oil Price Controls and Windfall Profit Taxes (Working paper posted November 9, 2005). (http://www.cato.org/pubs/gasoline_price_controls.pdf)

5. Forbes.com, WHO says Roche's Tamiflu production in 2006, 2007 should meet present orders (November 9, 2005). (http://www.forbes.com/work/feeds/afx/2005/11/09/afx2326187.html)

6. Milloy S, Flu Proposal Misguided, FoxNews.com (November 4, 2005). http://www.foxnews.com/story/0,2933,174521,00.html

7. Free Enterprise Action Fund, Free Enterprise Action Fund Warns Business Roundtable Member Companies To Focus On Real Business Growth Strategies, Not ‘Feel-Good’ Public Relations Stunts (September 28, 2005). (http://www.freeenterpriseactionfund.com/release092805.htm)

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