4. THE REAL WELFARE CHEATS: AMERICA'S CORPORATIONS

Source: MULTINATIONAL MONITOR, Date: January/February 1993, Title: "Public Assets, Private Profits: The U.S. Corporate Welfare Rolls," (Editorial introduction to special issue reprinted.), Authors: Chris Lewis, Laurence H. Kallen, Jonathan Dushoff, David Lapp, Randal O'Toole

SYNOPSIS: In his presidential campaign, Bill Clinton called for welfare reform, decried welfare cheats, and emphasized workfare. But he failed to mention the largest recipients of taxpayer largesse: U.S. corporations. Ralph Nader's magazine, Multinational Monitor, documents five major areas of government giveaways to corporations.

1. "Public Assets, Private Profits" by Chris Lewis: In 1980, the Government Patent Policy Act opened a floodgate of government research and development money to universities and private firms, then allowed these recipients to keep the patents and the profits on products developed. Amendments in 1984 and 1986 amounted to a giveaway on patents developed with public funds. One glaring example is the AIDS-fighting drug AZT. While AZT was developed with public funds and was in the public domain since 1964, the FDA gave the patent away to Burroughs Wellcome Corp., which has earned over $300 million in sales over the last two years with no royalties going to U.S. taxpayers.

2. "Bankruptcy Bailouts" by Laurence H. Kallen: In 1986, the new bankruptcy code was established. Chapter 11 of this code, known as business reorganization under protection and supervision of a bankruptcy court, has allowed corporations, many of them solvent, to jettison debts. These "debts" have included EPA required toxic site clean-up costs, personal injury judgments, union contracts, and even retirement benefits. Some businesses have remained under Chapter 11 for years while continuing to run business as usual and even get bank loans.

3. "Gold-Plated Giveaways" by Jonathan Dushoff: Under the Mining Act of 1872, companies can mine valuable minerals and metals from federal lands without paying a cent in royalties and they can buy federal lands for five dollars an acre or less. One example of U.S. largesse is the Goldstrike mine in Nevada, the largest single known gold deposit in the U.S. with a gross value estimated at more than seven billion dollars. While the land and mineral deposits are federally owned, the mine has been claimed under the Mining Act by American Barrick Resources, a Canadian controlled company. Barrick is free to mine the gold without paying a royalty fee to the government and has now applied to purchase the seven billion dollars deposit site for five dollars an acre.

4. "The Price of Power" by David Lapp: The 1992 Energy Policy Act guarantees our government will continue to subsidize the nuclear power industry. These taxpayer dollars go to an industry with a dismal record on safety and efficiency. The Congressional Research Service estimates R&D support to the nuclear industry at $39.8 billion (in constant 1982 dollars) between 1948 and 1990. The DOE has failed to collect over $11 billion in past costs due to underselling of its enriched uranium, according to a 1989 General Accounting Office (GAO) study.

5. "Last Stand" by Randal O'Toole: U.S. taxpayers own more than 192 million acres of forest lands that are managed by the U.S. Forest Service and Department of Agriculture. Over the past 15 years, the Forest Service has lost between one and two billion dollars annually in undervalued timber sales. The largest recipient of these subsidies is Louisiana-Pacific. It owns very little of its own timber lands and often pays as little as five dollars per thousand board feet for timber that costs the U.S. taxpayer over $50 per thousand board feet to sell. Yet this financial loss is still small compared to the losses to the public in recreation sites, watershed, and wildlife preservation.

SSU Censored Researcher: Paul Chambers

COMMENTS: "Bankruptcy Bailouts" -- Laurence H. Kallen, author of Corporate Welfare: The Megabankruptcies of the 80s and 90s, said the subject of his article in the Multinational Monitor received no other exposure. Kallen feels the topic deserves greater coverage since "A good number of the largest corporations in this country have taken advantage of the bankruptcy law .. to chisel their suppliers (many of whom are small companies), bust unions, and clean up their balance sheets, with little actual risk. They have gained billions of dollars of benefits through their use and abuse of the Bankruptcy Code -- a form of hidden welfare that we all pay indirectly."

"Gold-Plated Giveaways" -- Author Jonathan Dushoff reports that there have been only one or two brief newspaper stories on mining on public lands, and the stories about the legislation in Congress merely gave the typical summary of "both sides" without going into any substantive detail on the issues. Dushoff says the public would benefit from more exposure of the issue since it could help bring about reforms that could save taxpayers tens of billions of dollars. He notes that the primary beneficiaries of the lack of coverage to the issue are "large American and foreign mining companies who benefit from a vested right to mine federal minerals for free." Dushoff concludes "As I write (11/24/93), both houses of Congress have passed legislation to reform the Mining Act that was the focus of my article. The Senate's bill is what ardent reformers call 'sham reform' intended to cure some of the most glaring abuses of the Act (such as land sales for $2.50 an acre) while leaving the mining industry's power over the federal lands intact. The House bill, on the other hand, would give federal regulators the power they need to make miners follow environmentally sound operation and cleanup practices. The bill is now headed to conference. The battle is far from over."

"The Price of Power" -- David Lapp reports that the huge subsidies given the nuclear energy industry, about $100 billion since 1950, have "not even entered the realm of public debate, largely due to the lack of attention given the subject by the mainstream media." He also charges that the "Clinton administration has reneged on its commitment to eliminate funding for nuclear R&D; it now supports funding breeder reactor technology, a technology rife with uncertainties and the dangers of nuclear weapons proliferation." Lapp strongly feels the public should know more about this issue because "If people knew that for Fiscal Year '93, nuclear energy received $1,012,000,000 in funding compared to $210,000,000 for renewable energy -- about 25 percent of what nuclear energy gets they would be justifiably outraged."

"Last Stand" -- Author Randal O'Toole charges that while many people know that the government loses money on sales of public timber and other natural resources, "few realize that the reason for this is that agencies like the Forest Service are rewarded for losing money on environmentally destructive activities. Media coverage on this fact has been almost non-existent." He believes that people need to know how their tax dollars are being spent and that changes in the budgetary process are required. O'Toole concludes that problems with the Forest Service are symptomatic of the entire federal government and that taxpayers face a multi-trillion-dollar debt "because Congress, bureaucrats, and special interest groups all benefit from wasteful and environmentally destructive activities. The public in general and environmentalists in particular must stop seeing the federal government as their saviors and return instead to the principle of Henry David Thoreau: 'That government is best which governs least."'