Areopagus
6th September 2005, 04:22
http://www.chroniclesmagazine.org/www/Chronicles/2005/August2005/Bandow.html
May a Thousand Enrons Bloom
by Doug Bandow
Republicans routinely portray themselves as fiscal guardians. In truth, they, like the Democrats, are irresponsible wastrels. Outlays are up by one third under President George W. Bush, making him the biggest spender since Lyndon B. Johnson. As the Cato Institute’s Stephen Slivinski observes, “Even after excluding spending on defense and homeland security, Bush is still the biggest-spending president in 30 years.”
In contrast, Ronald Reagan cut real domestic spending. Notes Slivinski: “George W. Bush’s tenure, however, is a return to the Johnson and Carter philosophy of budgeting: across-the-board increases in defense as well as nondefense spending, and at astonishing rates.”
Other than a brief moment after the GOP gained control of Congress in 1994, Republican legislators have shown little interest in controlling spending. Outlays continue to move ever upward, irrespective of year or party—or program effectiveness. In its 1994 Contract With America, the GOP promised to kill three Cabinet departments and more than 200 programs. All of the departments and all but 19 of the programs survive. The collective budget of the largest 100 programs on the Republicans hit list are up more than a quarter, even after adjusting for inflation.
Since 2001, total domestic outlays have jumped an incredible 36 percent. As for the Bush administration’s supposed newfound stringency, Slivinski points out that, “Even if Congress passes Bush’s new budget exactly as proposed, not a single cabinet-level agency will be smaller than when Bush assumed office.” Comptroller General David M. Walker reports that the current federal debt and other unfunded liabilities run $45 trillion in current dollars, or about $150,000 per person—the same as Americans’ average net worth. And GOP legislators are no more willing to make hard fiscal decisions than the President is. The irresponsibility is mutually reinforcing. Rep. Tom Cole (R-OK) rightly observes that “we have used the legislative and executive branch as well as anybody to achieve our policy aims.”
Not all expenditures are created equal. There is more than enough simple waste. There also are thousands of pork-barrel projects, whereby legislators take money from U.S. taxpayers to pay for projects for local voters. Even where the government fulfills its formal responsibilities—national defense, for instance—it usually spends far more than necessary (in this case, by protecting almost every country except America).
Particularly obnoxious is our government’s welfare program for business. It is one thing to devote money to poor people, but why should the federal government collect taxpayer dollars to underwrite big exporters, such as Boeing? Or to pay to advertise Big Macs abroad? Or to help the oil companies come up with new oil discovery and recovery techniques? Or to underwrite office developers and home builders?
Slivinski figures some 130 programs underwrite business to the tune of $90 billion annually. These payments pervade the federal budget; even the Department of Defense has been used as a vehicle to enrich business. Economist Stephen Moore testified before the House Budget Committee: “These welfare payments come in every conceivable shape and size, including government grants, contracts, cut rate insurance, loans, and loan guarantees.”
The primary problem is expenditures, because subsidies cost more than tax preferences. Congress frequently twists the tax code to the advantage of special interests, very often individual businesses or single industries. However, there is an important difference between subsidies and targeted tax cuts: Subsidies transfer wealth from those who earned it to those who have not done so, while tax cuts typically allow some earners to keep more of their own money. The best response to preferential tax cuts is to reform taxes more generally, broadly cutting rates for earners while eliminating special preferences.
The largest single font of corporate-welfare programs is the Department of Agriculture. In 1995, the GOP Congress passed the Freedom to Farm Act, nominally designed to reduce the federal role in agriculture. When food prices dropped, however, the Republicans rushed to dump “emergency” cash payments on an important political constituency. Then, in 2002, the Republicans essentially abandoned the legislation. The Congressional Budget Office figures farm spending will run $97 billion between 2006 and 2010.
Some of this taxpayer money does not even go to farmers who are actually farming. Even Rich Lowry of National Review notes:
Federal subsidies are technically designated only for those who actually work in farming. But that restriction is evaded, sometimes by people occasionally participating in farm-related telephone conference calls. Dubious partnerships are a way to get around restrictions on how much any one operation is supposed to get in federal payments. As a result, some agriculture businesses are little better than Enrons with tractors.
The largest amount of government dollars runs through the Commodity Credit Corporation to subsidize crop production. Some subsidies are more complicated: Tobacco subsidies mix production quotas and price guarantees. As if decades of these tobacco subsidies—even as government was conducting yet another War on Cigarettes—were not enough, last year, Congress voted to spend $10.1 billion to buy up tobacco allotments. Now the House is considering legislation to extend the pay-off to reservists serving in Iraq who missed collecting the booty because they were not able to sow a crop in 2003.
Uncle Sam runs a variety of promotion programs, both domestic and foreign. In some cases, the Department of Agriculture collects forced assessments from producers and runs propaganda campaigns. Cattle producers challenged the program, but, in May, the U.S. Supreme Court upheld Washington’s state-managed advertising.
In the case of sugar, direct payments are buttressed by import restrictions, pushing domestic prices up to two or three times international levels. In fact, sugar producers are among the most fervent opponents of the Bush administration’s proposed Central American Free Trade Agreement. Whatever one thinks of CAFTA, U.S. policy should not be decided by a handful of sugar-beet and cane producers desiring to live off of everyone else to the tune of upward of two billion dollars annually.
To its credit, the White House has proposed limiting any individual farmer to $250,000 (compared to the present level of $360,000) per year. Today, a tenth of recipients collect 60 percent of the payments. However, few legislators share even this modest interest in fiscal integrity.
Many other examples of corporate welfare have been in the news of late. For instance, the Pension Benefit Guarantee Corporation (PBGC), intended to protect the retirements of workers at failing companies, has become the dumping ground for uncompetitive airlines. Both US Airways and United have shifted their liabilities onto Washington: The PBGC is now $23 billion in the red.
Delta, Northwest, and other airlines are also clamoring for relief and threatening to follow the other two airlines into bankruptcy. Left unreformed, the PBGC is a potential fiscal black hole. Collectively, private pension plans are underfunded by about $450 billion, and, on average, one plan defaults every three days.
The Bush administration and the European Union have filed competing suits before the World Trade Organization over their respective subsidies to aircraft manufacturers Boeing and Airbus. The United States has the better case, but only relatively. For years, the Export-Import Bank has been known as “Boeing’s Bank” for generously underwriting foreign purchases of that company’s aircraft.
Boeing has reaped federal and state tax benefits, and, moreover, defense procurement has been designed to its advantage. In 2001, the Bush administration proposed $30 billion to lease aerial tankers in a transaction that would have cost more than purchasing the tankers outright. “We all know that this is a bailout for Boeing,” observed Ronald G. Garant of the Pentagon’s comptroller’s office, in an e-mail cited in the newly released Department of Defense inspector general’s report. Conflict-of-interest charges ultimately sank the deal.
Recently, both the House and Senate approved variants of a bloated transportation bill. The Senate’s measure cost almost $300 billion. The House and the Bush administration sought to demonstrate their fiscal bona fides by holding the line at “only” $284 billion—a 35-percent increase over the previous program.
Moreover, in the name of energy independence, the Bush administration is pushing boondoggle-filled energy legislation. Between the President and Congress, virtually no energy business would not be subsidized. For instance, the House bill authorized $11 billion—and as much as $90 billion—for energy research. Two billion dollars of that would be for research on deep-water recovery of oil and natural gas. The House had an $8 million sugar-ethanol pilot project in Hawaii; the Senate included $250 million in loan guarantees for even more projects.
President Bush pressed a Coal Research Initiative to improve the environmental efficiency of coal-powered plants. He has pushed a $1.8 billion Hydrogen Fuel Initiative to create hydrogen-powered fuel cells for cars.
REMAINDER OF ARTICLE @ SOURCE URL. due to forum limit of 10k characters
May a Thousand Enrons Bloom
by Doug Bandow
Republicans routinely portray themselves as fiscal guardians. In truth, they, like the Democrats, are irresponsible wastrels. Outlays are up by one third under President George W. Bush, making him the biggest spender since Lyndon B. Johnson. As the Cato Institute’s Stephen Slivinski observes, “Even after excluding spending on defense and homeland security, Bush is still the biggest-spending president in 30 years.”
In contrast, Ronald Reagan cut real domestic spending. Notes Slivinski: “George W. Bush’s tenure, however, is a return to the Johnson and Carter philosophy of budgeting: across-the-board increases in defense as well as nondefense spending, and at astonishing rates.”
Other than a brief moment after the GOP gained control of Congress in 1994, Republican legislators have shown little interest in controlling spending. Outlays continue to move ever upward, irrespective of year or party—or program effectiveness. In its 1994 Contract With America, the GOP promised to kill three Cabinet departments and more than 200 programs. All of the departments and all but 19 of the programs survive. The collective budget of the largest 100 programs on the Republicans hit list are up more than a quarter, even after adjusting for inflation.
Since 2001, total domestic outlays have jumped an incredible 36 percent. As for the Bush administration’s supposed newfound stringency, Slivinski points out that, “Even if Congress passes Bush’s new budget exactly as proposed, not a single cabinet-level agency will be smaller than when Bush assumed office.” Comptroller General David M. Walker reports that the current federal debt and other unfunded liabilities run $45 trillion in current dollars, or about $150,000 per person—the same as Americans’ average net worth. And GOP legislators are no more willing to make hard fiscal decisions than the President is. The irresponsibility is mutually reinforcing. Rep. Tom Cole (R-OK) rightly observes that “we have used the legislative and executive branch as well as anybody to achieve our policy aims.”
Not all expenditures are created equal. There is more than enough simple waste. There also are thousands of pork-barrel projects, whereby legislators take money from U.S. taxpayers to pay for projects for local voters. Even where the government fulfills its formal responsibilities—national defense, for instance—it usually spends far more than necessary (in this case, by protecting almost every country except America).
Particularly obnoxious is our government’s welfare program for business. It is one thing to devote money to poor people, but why should the federal government collect taxpayer dollars to underwrite big exporters, such as Boeing? Or to pay to advertise Big Macs abroad? Or to help the oil companies come up with new oil discovery and recovery techniques? Or to underwrite office developers and home builders?
Slivinski figures some 130 programs underwrite business to the tune of $90 billion annually. These payments pervade the federal budget; even the Department of Defense has been used as a vehicle to enrich business. Economist Stephen Moore testified before the House Budget Committee: “These welfare payments come in every conceivable shape and size, including government grants, contracts, cut rate insurance, loans, and loan guarantees.”
The primary problem is expenditures, because subsidies cost more than tax preferences. Congress frequently twists the tax code to the advantage of special interests, very often individual businesses or single industries. However, there is an important difference between subsidies and targeted tax cuts: Subsidies transfer wealth from those who earned it to those who have not done so, while tax cuts typically allow some earners to keep more of their own money. The best response to preferential tax cuts is to reform taxes more generally, broadly cutting rates for earners while eliminating special preferences.
The largest single font of corporate-welfare programs is the Department of Agriculture. In 1995, the GOP Congress passed the Freedom to Farm Act, nominally designed to reduce the federal role in agriculture. When food prices dropped, however, the Republicans rushed to dump “emergency” cash payments on an important political constituency. Then, in 2002, the Republicans essentially abandoned the legislation. The Congressional Budget Office figures farm spending will run $97 billion between 2006 and 2010.
Some of this taxpayer money does not even go to farmers who are actually farming. Even Rich Lowry of National Review notes:
Federal subsidies are technically designated only for those who actually work in farming. But that restriction is evaded, sometimes by people occasionally participating in farm-related telephone conference calls. Dubious partnerships are a way to get around restrictions on how much any one operation is supposed to get in federal payments. As a result, some agriculture businesses are little better than Enrons with tractors.
The largest amount of government dollars runs through the Commodity Credit Corporation to subsidize crop production. Some subsidies are more complicated: Tobacco subsidies mix production quotas and price guarantees. As if decades of these tobacco subsidies—even as government was conducting yet another War on Cigarettes—were not enough, last year, Congress voted to spend $10.1 billion to buy up tobacco allotments. Now the House is considering legislation to extend the pay-off to reservists serving in Iraq who missed collecting the booty because they were not able to sow a crop in 2003.
Uncle Sam runs a variety of promotion programs, both domestic and foreign. In some cases, the Department of Agriculture collects forced assessments from producers and runs propaganda campaigns. Cattle producers challenged the program, but, in May, the U.S. Supreme Court upheld Washington’s state-managed advertising.
In the case of sugar, direct payments are buttressed by import restrictions, pushing domestic prices up to two or three times international levels. In fact, sugar producers are among the most fervent opponents of the Bush administration’s proposed Central American Free Trade Agreement. Whatever one thinks of CAFTA, U.S. policy should not be decided by a handful of sugar-beet and cane producers desiring to live off of everyone else to the tune of upward of two billion dollars annually.
To its credit, the White House has proposed limiting any individual farmer to $250,000 (compared to the present level of $360,000) per year. Today, a tenth of recipients collect 60 percent of the payments. However, few legislators share even this modest interest in fiscal integrity.
Many other examples of corporate welfare have been in the news of late. For instance, the Pension Benefit Guarantee Corporation (PBGC), intended to protect the retirements of workers at failing companies, has become the dumping ground for uncompetitive airlines. Both US Airways and United have shifted their liabilities onto Washington: The PBGC is now $23 billion in the red.
Delta, Northwest, and other airlines are also clamoring for relief and threatening to follow the other two airlines into bankruptcy. Left unreformed, the PBGC is a potential fiscal black hole. Collectively, private pension plans are underfunded by about $450 billion, and, on average, one plan defaults every three days.
The Bush administration and the European Union have filed competing suits before the World Trade Organization over their respective subsidies to aircraft manufacturers Boeing and Airbus. The United States has the better case, but only relatively. For years, the Export-Import Bank has been known as “Boeing’s Bank” for generously underwriting foreign purchases of that company’s aircraft.
Boeing has reaped federal and state tax benefits, and, moreover, defense procurement has been designed to its advantage. In 2001, the Bush administration proposed $30 billion to lease aerial tankers in a transaction that would have cost more than purchasing the tankers outright. “We all know that this is a bailout for Boeing,” observed Ronald G. Garant of the Pentagon’s comptroller’s office, in an e-mail cited in the newly released Department of Defense inspector general’s report. Conflict-of-interest charges ultimately sank the deal.
Recently, both the House and Senate approved variants of a bloated transportation bill. The Senate’s measure cost almost $300 billion. The House and the Bush administration sought to demonstrate their fiscal bona fides by holding the line at “only” $284 billion—a 35-percent increase over the previous program.
Moreover, in the name of energy independence, the Bush administration is pushing boondoggle-filled energy legislation. Between the President and Congress, virtually no energy business would not be subsidized. For instance, the House bill authorized $11 billion—and as much as $90 billion—for energy research. Two billion dollars of that would be for research on deep-water recovery of oil and natural gas. The House had an $8 million sugar-ethanol pilot project in Hawaii; the Senate included $250 million in loan guarantees for even more projects.
President Bush pressed a Coal Research Initiative to improve the environmental efficiency of coal-powered plants. He has pushed a $1.8 billion Hydrogen Fuel Initiative to create hydrogen-powered fuel cells for cars.
REMAINDER OF ARTICLE @ SOURCE URL. due to forum limit of 10k characters