2. The Budget Does Not Have to be Balanced on the Backs of the Poor

by Project Censored
Published: Updated:

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 budget axe:

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 go sour.

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 Defense.

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.”