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The Welfare Connection
What isn't reflected in the government's spending breakout is that
money from each of these categories winds its way, in massive
amounts, to the pockets of the wealthy, who don't pay in nearly
what they take out. Capital gains taxes have plummeted. The
percentage of U.S. income taxes paid by corporations (as opposed
to individuals) has dropped from 25% to 8% in the last 40 years;
the U.S. has by far the lowest corporate income tax rate of any
Western country.
Boeing, for example, not only paid no income tax last year
(for a company that, were it a sovereign country, would have a
greater GDP than all but about 35 countries in the world), but it
got $34 million in rebates from the feds. Its acquisition
of McDonnell-Douglas and Rockwell this year ought to bring more
such generous bonuses. Congresses and Presidents and Governors and
state legislatures of both parties keep cutting taxes for the
best-off, giving us a more and more regressive tax system. The end
result: a massive asset-suction device in which we pay in, but we
never see most of the benefits.
In FY 1997, conservative estimates pegged about $170 billion--some
15% of discretionary funds--as going directly into corporate
welfare. That didn't include the enormous category of taxes not
collected through tax breaks or legal loopholes (e.g, the Clinton
administration's gift of accelerated depreciation deductions, an
accounting trick that amounts to a interest- free federal loan to
corporations--worth an estimated $19 billion a year).
The $170 billion corporate welfare total also doesn't include
payments (such as the debt interest) that go from the Federal
Reserve directly into private banks. Or, for that matter, the
money spent to administer regulatory agencies that are acting
essentially as profit-boosters for the industries they supposedly
regulate. Or regulations (e.g., tariffs on foreign goods, but free
trade for outsourced production) that allow companies to keep
their labor costs low and/or artificially inflate their prices at
consumers' expense. Or undervaluation of public resources given to
private enterprise. And on, and on, and on.
How wretched is the corporate welfare you're paying for on Tax
Day? Here's a few scattered highlights:
Mining. Every year, gold, silver, and other mining
companies extract an estimated $3.6 billion of minerals from
public lands, while paying nothing to the federal treasury. Under
the archaic Mining Law of 1872 (which the Clinton regime, under
heavy pressure, has refused to amend), mining companies can
purchase these lands for $2.50 or $5 per acre. In 1995, Interior
Secretary Babbitt sold public land containing $10 billion worth of
gold for less than $6,000. Afterwards, cleanup of the cyanide,
arsenic, and other mining wastes left behind is also done, or not
done, at public expense.
Timber. The Forest Service, under the U.S. Dept. of
Agriculture (that should warn ya right there), is in the business
of clearcutting our National Forests. Fly over the Cascades; it's
a moonscape. That's largely public land, with public roads built
to make the extraction for private profit easier. The resulting
environmental damage, erosion, flooding, etc. also gets dealt
with (if at all) out of our pockets.
Anti-Anti-Trust. The law is supposed to prevent monopolies.
Instead, especially under Clinton, it's now promoting them. Even
deals like the Boeing-McDonnell Douglas merger, which leaves
Boeing as the only commercial jet maker in the U.S., not
only get winks and nods from the FTC and Justice, but get
subsidized--the feds, under current law, actually pay for the
costs of the merger and resulting downsizing. (This law resulted
in a windfall of over $1 billion, including some $31 million in
federally- funded executive bonuses, when Lockheed swallowed
Martin-Marietta last year.) Taxpayers get hit all over again in
monopolized industries that can raise the prices of what they sell
to the government--most notably, military contractors, where the
two dozen or so major companies of five years ago are now down to
five, and will probably be down to three (Boeing, Lockheed, and a
merger of the rest) by the end of the year.
Weapons Exports. The U.S., in the wake of its successful
genocidal attacks on Iraq, has zoomed to an unprecedented
dominance of the world's arms trade market--now approaching 70% of
global sales. But behind the fancy equipment is massive government
spending, particularly under Bill Clinton. Last year, government
subsidies for foreign arms sales (through mechanisms like the
Import-Export Bank) came to $7.6 billion. These weapons--in
addition to being morally reprehensible in their own right--are
also developed entirely at taxpayer expense. And then sold by
transnationals like Boeing to whomever has the cash, for whomever
they wanna kill.
Nuclear Power. No commercial nuclear power plant has been
built since 1973, but the industry receives an estimated $10.5
billion in subsidies. One particularly offensive handout is the
Advanced Light Water Reactor program, which gives millions of
dollars to G.E. and Westinghouse to develop new reactors for which
there is no U.S. market.
Agriculture. Receives over $10 billion a year in subsidies.
Includes the tobacco industry (responsible for perhaps 500,000
deaths annually in the U.S. alone); sugar cane (ravaging the
Everglades); and programs like the $110-million-a-year Market
Promotion Program which pays large, pesticide-intensive companies
like Gallo ($4.3 million a year) and Sunkist ($6.6 million a year)
to advertise overseas. The same program also pays for notorious
welfare gifts like McDonalds' ads for Chicken McNuggets in Russia,
and over $1 million a year in pet food subsidies. Tax breaks on
ethanol, which big-office donor Archer-Daniel-Midlands enjoys a
virtual monopoly on, amount to some $3.6 billion over the last
five years.
Coal. This pollution-intensive, $28 billion a year industry
gets an estimated $8 billion in annual taxpayer handouts,
including research and development and pollution mitigation
costs.
Ranching. Like mining and timber, done on public lands for
virtually no cost--less than a fifth of what ranchers pay to graze
private lands. All on behalf of cows, one of nature's most
efficient designs for ravaging rangeland.
Oil and Gas. Once again, public resources given away to
private polluters--most recently, the massive National Petroleum
Reserve deposits on Alaska's North Slope. Add in $500 million
annually in tax breaks, plus all the federally-funded
infrastructure costs (e.g., highways) that promote oil and gas
consumption.
Health Care. The reason the U.S. has the developed world's
most expensive health care, and the poorest public health
statistics, is that we insist on putting private profit in the
equation. The government helps a lot, underwriting drug research,
limiting competition, and winking at an estimated $100 billion a
year in insurance-industry health care fraud (by latest GAO
estimate). The byzantine payment regulations of the health care
world are also rigged for private profit. As one small example of
federal largesse, in 1995 Clinton's Dept. of Health and Human
Services lifted the requirement of "reasonable pricing" on drugs
developed in cooperation between the feds and private industry.
This means industries can now charge whatever they want for drugs
that were developed with tax money--including charging Medicaid,
Medicare, and other federal agencies that are, again, tax-funded.
We pay to give them the drug, then we pay again to get it back.
Pentagon Bloat. There's truth behind the legends of $600
Pentagon toilet seats and $7,600 coffee pots. There's also a
fuckuvalotta money given away. Or lost--an estimated $15 billion
in the last ten years simply can't be accounted for by invoices,
$7 billion in purchases never ordered, $8 billion in overpayments,
and another $29 billion lost through fiscal mismanagement. Then
there are the "tiny" gems: $380 million annually for the
Pentagon's "VIP Fleet" to fly important people around; $2 million
in 1994 to transport Air Force Adademy cadets to and from sporting
events. Oh, we could go on.
Ship Owners. Buried in the Pentagon's budget is a program
that provides subsidies to private shipping companies that agree
to make their ships available in wartime, at a rate of $3.5
million per year per ship. Annual cost: about $1 billion.
Hydroelectric Power. In addition to killing salmon and
finishing off what parts of the Columbia River wouldn't have been
deadened by Hanford, the Bonneville Power project (like the TVA
and many other utilities) are massively underwritten by taxpayers.
Plentiful, cheap water in places it shouldn't be is a massive
ongoing subsidy for private developers, making possible, for
example, the entire city of Las Vegas.
Communications. The FCC recently wrapped up a deal to give
billions' worth of new HDTV television channels, public airwaves,
to existing broadcasters--for free. Last year's Communications Act
set up the deal, and also give billions' worth of spectrum space
to Microsoft and other future purveyors of a real-time video
Internet. Alone among Western countries, the U.S. has always
treated its radio and TV space (since 1934, anyway) as a gift to
corporations, rather than a precious resource for maintaining
democratic flows of information.
Sadly, this is by no means a comprehensive overview--just a quick
list, with a few examples. That giant sucking sound you hear is
coming from your housing and food budget. Happy Tax Day.
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