My Opinion
Unveiling the hidden welfare state for the corporate rich

Singing odes to the free market and to "fiscal responsibility," Newt Gingrich and his allies have recently cut funding for food stamps, public housing assistance, summer youth programs and other forms of "wasteful social spending."

On the state level, Gov. Tom Ridge has proposed significant reductions in welfare for the unemployed and for higher education, slicing the crucial Tuition Challenge Grant in half. With impressive discipline, the dominant Republicans have launched an all-out war on the excesses of the welfare state.

Or have they?

Budget-cutters have focused intently on programs for the poor, elderly and children. But a substantial class of beneficiaries from federal assistance have largely escaped notice: the powerful members of corporate America. With their highly effective lobbyists and generous campaign contributions, corporations have hitherto protected their cherished federal handouts and kept them invisible to the public.

How extensive is this hidden welfare state for the rich? According to the Office of Management and Budget and Congress' Joint Committee on Taxation, taxpayers will dole out $51 billion in direct subsidies to corporations this year, and lose another $53.5 billion in tax breaks for corporations. This $104 billion giveaway to business contrasts with the present $75 billion dedicated to all federal welfare programs for individuals, including food stamps and aid for the handicapped. Amazingly, federal welfare programs currently favor corporations more than people.

A recent report from the Cato Institute, a conservative think tank in Washington, D.C., notes how "federal aid to corporations" comprises "a major contributor to the budget crisis." Claiming that "corporate pork is everywhere," the Cato Institute argues that any serious attempt to balance the budget must target those dependent corporations. But, as The New York Times points out, "most tax breaks and payments to the well-situated are practically exempt from the debate over controlling expenditures."

Notably, this January, the conservative National Taxpayers Union joined forces with the environmental Friends of the Earth in releasing "The Green Scissors Report." This report illustrates how huge handouts to corporations are not only overtly wasteful, but often serve to subsidize environmentally destructive activity. Some examples:

Mining -- Companies annually extract $3.6 billion worth of minerals from public lands while paying virtually nothing to the federal treasury. Precious federal lands are given away at $5 an acre to these mining companies, under the antiquated Mining Law of 1872. Just this year, the Interior Secretary sold public lands containing an estimated $10 billion worth of gold for just $6,000. Also, taxpayers are often left with the massive mine cleanup costs, judged by the Mineral Policy Center to cost at least $32 billion.

Timber -- Taxpayers heavily subsidize timber sales from national forests, to the tune of $323 million annually, according to the Wilderness Society. Companies presently buy timber from the Forest Service below the federal cost of preparing the timber for sale. More than 360,000 miles of logging roads (eight times the size of the interstate highway system!) have been built to facilitate the subsidized foresting of public lands. Consequently, less than one-tenth of our ancient forests remain uncut.

Grazing -- Every year, corporations such as Texaco and Pacific Power graze cattle on public lands for one-fifth of the fair market value. The Committee on Government Operations claims taxpayers lose $150 million through this subsidized grazing. Such low fees also encourage overgrazing, leading to extensive soil erosion, watershed destruction and desertification. Overgrazing continues to be the primary destroyer of native habitat and species diversity on land administered by the Bureau of Land Management.

Most of these subsidies stem not from economic logic but from political influence. Industry political action committees (PACs) contribute heavily to sympathetic legislators to maintain their massive taxpayer subsidies. For instance, mining PACs spent more than $17 million the last seven years in lobbying against reform of the 1872 Mining Law, according to the Federal Elections Commission. During this same period, taxpayers lost an estimated $2.56 billion in royalties from the mining industry.

If recent history is any guide, the army of lobbyists for these freeloading corporations will continue to influence congressional budget-cutters to leave "their" form of welfare alone. And in seeking to balance the budget, legislators will once again target the powerless in our society to bear the brunt of further reductions. Under the present money-dominated politics of Washington, the real consequence of the Contract with America will be "Socialism for the rich, free market for the poor." Will we stand idly by to let this happen?

For more information on "The Green Scissors Report," go to the Eco-Action office at 223 HUB.