2. The Budget Does Not Have to be Balanced on the
Backs of the Poor
SOURCE: PUBLIC CITIZEN, July/August 1995, "Cut Corporate Welfare:
Not Medicarel;" Author: John Canham-Clyne
SYNOPSIS: Congress could go a long way toward balancing the
budget by 2002 without slashing Medicare, Medicaid, education, and social
welfare. In fact, the Washington-based Center for the Study of Responsive
Law has identified 153 federal programs that benefit wealthy corporations
but cost taxpayers $167.2 billion annually. For comparative purposes,
federal support for food stamps, housing aid, and child nutrition costs
$50 billion a year.
An analysis by Public Citizen reveals how Congress could balance the
budget by cutting "aid to dependent corporations." The federal
budget and tax codes are rife with huge subsidies to business -- the
sums involved make traditional "pork barrel" spending look
like chicken feed.
Public Citizen President Joan Claybrook said the budget axe misses
the subsidies for the wealthiest and most powerful U.S. corporations.
"The proposed $250 billion, or 15 percent cut in Medicare, demands
serious sacrifice from the more than 80 percent of seniors with incomes
below $25,000 -- yet big corporations on the public dole are not asked
to sacrifice at all."
Following are some examples of corporate welfare that miss the Congressional
Direct Subsidies: Under the Market Promotion Program, the U.S. Department
of Agriculture in 1993 gave $75 million for overseas product advertising,
including $500,000 to advertise Campbell's soup and $10 million to promote
beer, wine, and liquor.
Indirect Subsidies: The Forest Service, for example, spends $100 million
annually building more than 340,000 miles of access roads through national
forests to assist timber companies' logging operations.
Bailouts: From Lockheed and Chrysler to the S&L industry, the bigger
the failure, the more likely Uncle Sam will save it. The most recent
example is the so-called "Mexican peso bailout" -- more of
a bailout for American banks, Wall Street, and wealthy individuals who
made bad investments in Mexican bonds.
Below Market and Guaranteed Loans: The federal government loans businesses
money at below-market interest rates, or offers the credit of the U.S.
government as a guarantee to a lender if a business opportunity should
Insurance: Limiting the liability of certain businesses is a nuclear
time bomb; the Price-Anderson Act makes it likely that almost the entire
cost of a Chernobyl-style nuclear catastrophe would be shifted to taxpayers
or the victims.
Tax Expenditures: The largest of all corporate welfare programs are
specially targeted tax loopholes and provisions in the tax code. Citizens
for Tax Justice identified $412 billion in potential savings over five
years by closing just 10 tax loopholes.
Trade Barriers: For example, U.S. government trade quotas on imported
sugar cost the taxpayer virtually nothing but cost consumers over $1.4
billion a year in higher sugar prices.
Giveaways of Government Intellectual Property for Private Use: Tens
of millions of dollars annually fund research contracts to develop new
drugs, aircraft for NASA, and weapons systems for the Department of
SSU Censored Researcher: Tina Duccini
COMMENTS: Author John Canham-Clyne notes that while "corporate
welfare" was largely ignored in the past, it recently received
substantial coverage and now "the budget debate opened a window
for occasional presentation of the issue as a source of alternative
budgetary savings." However, Canham-Clyne continued, "It has
not reached the same level of assumption as has the false notion that
the budget absolutely cannot be balanced without slashing so-called
entitlements. The media generally operate from a corporate conservative
framework which assumes that taxes cannot be raised, the military cannot
be seriously cut, and that 'entitlements' are therefore the only significant
source of budgetary savings. This framework congealed over the past
two decades, and because ideas like 'corporate welfare' were not discussed
seriously for so long, the new conservative congressional majority was
able to seize the high ground and dominate the budget debate.
"Thus, corporate welfare issues were presented in the media as
a sort of quirky alternative, but reporters do not feel comfortable
saying or writing without attribution that 'Congress could easily save
$100 billion a year simply by cutting corporate subsidies,' as they
do saying 'if Medicare and Medicaid aren't brought under control, they'll
consume almost the entire federal budget by the year 2050.' The later
statement is a nonsensical idea, and doesn't lead logically to the conclusion
that Medicare benefits need to be cut, but by accepting the assumption,
the media have facilitated the asserted solution."
If the public were better informed about the scope of corporate welfare,
Canham-Clyne said, it "would understand better how the political
economy functions: that the 'free market' is not the solution to every
problem; that corporate CEOs who advocate 'free market' solutions don't
really mean what they say because their businesses generally benefit
from federal subsidy; that the budget can be balanced without unduly
burdening the poor, the young, the elderly; that our society is dominated
by a very small number of wealthy individuals and large corporations;
that our politics are driven by the selfish concerns of the creditor
class; and that the policy wonks and pundits who appear on our television
screens often haven't the faintest idea what they're talking about or
else knowingly assert ideology as economic fact."
Canham-Clyne said that the primary beneficiaries of the limited coverage
given this issue are "multinational corporations, and the politicians
and alleged intellectuals they purchase."
"There's no line item in the budget entitled 'corporate welfare,'
which makes getting rid of it extremely difficult," he continued.
"A number of ad hoc coalitions have arisen around specific groups
of corporate welfare issues, including mineral rights on public lands,
white elephant nuclear reactors, timer roads, and so forth. However,
there were relatively few victories in Congress this session, despite
the supposed fervor for fiscal responsibility. Notably, funding for
the Gas Turbine Modular Helium Reactor, a useless technology that benefits
a single company, was eliminated in both the House and Senate Energy
Appropriations bills. However, the mother lode has yet to be mined,
and the assault on working families and the poor continues while corporations
and the wealthy continue to stuff themselves at the public trough largely
unscathed by congressional and media outrage."