The federal government spent $167 billion in 1994 on corporate tax breaks and handouts – an average of $1400 per taxpayer (not including subsidies from counties and cities, hazardous waste cleanup costs, or limits on corporate liability). By contrast, the total price tag for Aid for Families with Dependent Children (AFDC), food stamps and public housing came to $50 billion, or $400 per taxpayer.
Not many politicians talk about this. A rare exception is former Labor Secretary Robert Reich who said to the Democratic Leadership Council in November 1995 that people are mad because “we are on the way to becoming a two-tiered society composed of a few winners and a larger group left behind.” Then, he said, “Since we are committed to moving the disadvantaged from welfare to work, why not target corporate welfare as well?”
The White House quickly distanced itself from Reich’s speech, but activists of all kinds picked it up: Perot’s United We Stand-America made it a major target of angry-middle groups; the right-wing Heritage Foundation and libertarian Cato Institute joined Ralph Nader to present a list of corporate pork barrel reforms. Yet, neither Congress nor the White House makes much of corporate giveaways in budget-balancing plans.
What are the giveaways? The active variety includes agribusiness, military contractor subsidies, loan guarantees, and the bailout of the S&Ls, and computer databases. The rights to lumber and minerals on federal lands are routinely granted for $5 per acre, making the United States the only country in the world that virtually gives away its depletable natural resources! Drugs developed with taxpayer money are routinely given to drug companies for monopoly marketing with no restraint on price, or royalties returned to the people. The major television networks get free broadcast licenses with minimal public responsibility or obligation.
Passive corporate giveaways come in the form of tax breaks and loopholes. Private individuals pay taxes at higher rates than corporations. The investment tax credit designed to increase economic activity is historically taken as a windfall. Tax breaks granted to be put back into productive equipment, plants and jobs, are commonly used to buy out other companies, creating no new jobs or wealth. Subsidies actually debilitate innovation and efficiency.
In the debate over budget deficits, many ask, “How can we take food out of poor kids’ mouths and continue to subsidize the rich?” Scant legislation has been introduced to rid us of tax loopholes for the rich. There’s been no serious move to initiate cost-benefit analysis of corporate giveaways, in the same way they’ve meticulously reviewed health and safety regulation for years, and assaulted affirmative action and the minimum wage.
One problem is that connections are frequently not made between things that people don’t like and what causes them. Well-funded corporate lobbies and toadies are too adept at directing people’s anger against government in a massive, daily, Rush Limbaugh-/Lars Larsen-esque hate-your-government drumbeat. They work to keep the focus away from corporations, which are the dominant institution in our society.
Government has been only a minion, a simply willing agent, for transferring tax dollars to corporate coffers. We are the richest nation in the history of the world and our richest (corporate) citizens behave as if divine providence, rather than selfish market decisions doom the poorest (human) citizens. However, if the corporate greed issue is connected with people’s deprivation – and we brand-name the greediest corporate kings in the United States – we can turn the tide against the self-interested, compassionless and undemocratic aspects of the corporate institution. Corporations should pay their fair share to the citizens and communities, which enable their success. That can result in real tax reform, without creating unnecessary hardships for the poor and middle class.
To hear it from the big financial companies, the big crash started when poor people bought homes they couldn’t afford. But that was at most 1% of the problem. Editor’s note: The following is an excerpt from Nomi Prins’ new book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street.
The Second Great Bank Depression has spawned so many lies, it’s hard to keep track of which is the biggest. Possibly the most irksome class of lies, usually spouted by Wall Street hacks and conservative pundits, is that we’re all victims to a bunch of poor people who bought McMansions, or at least homes they had no business living in. If that was really what this crisis was all about, we could have solved it much more cheaply in a couple of days in late 2008, by simply providing borrowers with additional capital to reduce their loan principals. It would have cost about 3 percent of what the entire bailout wound up costing, with comparatively similar risk.
US DOLLAR SET TO BE ECLIPSED World Bank President Predicts by Heather Stewart
The United States must brace itself for the dollar to be usurped as the world’s reserve currency as American dominance wanes in the wake of the financial crisis, the World Bank president, Robert Zoellick, warned yesterday. United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency, says Zoellick. Speaking ahead of the World Bank/IMF annual meetings in Istanbul, he said it was time for a “responsible globalisation”, in which decision-making was shared between the old powers and developing countries such as China and India.
CLEAN COAL IS FICTION says Jessy Tolkan: Washington saying coal industry can be “clean” is pure fiction.
Paul Jay speaks to Jessy Tolkan at the Tides Foundations’ Momentum conference in San Francisco. They speak about Tolkan’s coalition on climate change fighting Obama to establish a moratorium on all coal mining. Tolkan says that Washington’s push for “clean coal” is not enough because the coal industry’s and President Obama’s argument that the production of coal can be clean is “an absolute, 100% lie.” She also says that “the science is clear that if we don’t address coal head on, it’s almost “game over” for the planet.”
CASSANDRAS OF CLIMATE by Paul Krugman
Every once in a while I feel despair over the fate of the planet. If you’ve been following climate science, you know what I mean: the sense that we’re hurtling toward catastrophe but nobody wants to hear about it or do anything to avert it.
And here’s the thing: I’m not engaging in hyperbole. These days, dire warnings aren’t the delusional raving of cranks. They’re what come out of the most widely respected climate models, devised by the leading researchers. The prognosis for the planet has gotten much, much worse in just the last few years.