Replies to post #440078 on Tornado Alley (PROG)

[Hanibal]

Yeah yeah we know you paid your college tuition by working part time at McDonald's so why can't others do the same.

But you always fail to mention your tuition cost $500 a semester and in most cases was paid for, and get this - - by the government! - - via the GI bill.

Nothing irritates me more than out of touch boomers who talk down to kids today. Especially conservative boomers who are removed from reality even further. Take your bootstrappy diploma (thanks GI bill!) roll it up real tight and shove it up your ass.

[newmedman]

Sounds good to me! Pay for it all! If the ultra wealthy and mega corporations would pay their fair share of federal taxes it could all be doable. We're the only large economy on the globe that doesn't have socialized medicine, so that would be a start. If we were able to take the bloodsucking Pharma companies off the table there would be a fuckton of disposable income to go around. 20% of our expenses and 4.2 trillion dollars a year would now be in our pockets and nobody would have to worry about going into bankruptcy because they needed their appendix removed.

I would be all up for a tuition free two years at a community college too but I'm afraid we need to start again from the bottom and start coming up with some solutions there first. I know what doesn't work is banning books and forcing teachers to lie to their students about racial and gender issues in order to create a bunch of mind numb little nazis.

It also doesn't help when the GOP gives state tax money to their wealthy donors to build and fund charter schools filling them up with unaccredited instructors and entitled little rich kids whose parents could afford a tuition anyway.

I can't speak for the other trades but my Carpenter training school is free to anyone as long as their dues are paid, which at maximum Journeyman level are 33 bucks a month. It's cheaper dues for an apprentice and you work while you go to school for the four year program, wages and dues increasing each year until journeyman status is reached. As things stand now, a journeyman can easily eclipse 100k a year in gross wages alone with a great health care program for themselves and their families.

Well, school is not actually "free". For each class you sign up for you give them a check for 25 dollars to reserve a spot and as soon as the class is completed, they give you the check back and you can use it for another class or rip it up. They only cash it if you don't finish the class and even then, that is subject to the circumstances for your absence.

General hygiene products are usually available at food banks if you ask for them, so we already do that. Glasses and contacts would be part of a comprehensive healthcare plan along with.dentistry.

Now you're getting the idea!!! Good for you!

[arizona1]

How to Republican

[fuagf]

conix waffle. Where is your latest post on corporate welfare in the USA -- Business Subsidies Fleece Taxpayers

This from a right-wing outfit so needless to say i don't agree with all it says. However the point of the post to you is that i don't
recall you railing about corporate welfare. But comparatively small efforts to help children stay clean sets you off. Yuck.

Federal subsidies to U.S. businesses now cost American taxpayers nearly $100 billion a year.

[Insert: 24 years ago.]

If all corporate welfare programs were eliminated, Congress would have enough money to entirely eliminate the capital gains tax and the death tax. Alternatively, Congress could cut the personal and corporate income tax by 10 percent across the board. Either of these alternatives would do far more to enhance the competitiveness of U.S. industry than the current industrial policy approach of trying to help American companies one at a time.

Federal subsidies to corporate America take many forms: direct grant payments, below-market insurance, direct loans and loan guarantees, trade protection, contracts for unneeded activities, and unjustified special interest loopholes in the tax code. Despite their promises to downsize government, congressional Republicans have retreated from any serious attempt to reduce business subsidies. The Clinton administration has routinely requested budgetary increases for corporate handouts, including the Export Import Bank, the Overseas Private Investment Corporation, and the Commerce Department's Advanced Technology Program.

This study refutes common myths about corporate welfare programs: that they create jobs and promote growth; that they =`level the playing field=' with our foreign competitors; that they help small businesses; and that the payments are provided without regard to political considerations. The main effects of industrial policy programs are to undermine the free enterprise system and corrupt the political system. Congress should get businesses off the dole and use the savings to cut taxes, reduce the national debt or both.

Saturday, May 1, 1999 31 min read

Welfare for the Well-Off: How Business Subsidies Fleece Taxpayers

PART 1

Introduction

For most Americans the term welfare is associated with any number of negative images: laziness, illegitimacy, family breakup, irresponsibility, and wasted tax dollars. We hear "welfare" and our minds conjure up a young unwed mother of two or three infants, huddled in front of a TV set in a public housing tenement and living at taxpayer expense on monthly Aid to Families with Dependent Children (AFDC) checks and food stamps. We react negatively because too often these checks subsidize bad behavior and encourage dependency rather than self-responsibility.

The American Heritage dictionary defines welfare as "receiving regular assistance from the government or a private agency because of need." What is surprising about our modern-day welfare state is just who it is that Congress really believes to be "in need."

Some of the most subsidized recipients of public assistance are not welfare queens housed in public tenement apartments. They are not even poor or ailing at all. Far from it.

America's most costly welfare recipients today are Fortune 500 companies. In 1997 the Fortune 500 corporations recorded best-ever earnings of $325 billion, yet incredibly Uncle Sam doled out nearly $100 billion in taxpayer subsidies.1 These welfare payments come in every conceivable shape and size: government grants, sweetheart business deals arranged by the Commerce Department, cut-rate insurance, low-interest loans, a protective wall against foreign competition, exclusive government contracts, and a mind-boggling maze of special interest loopholes in the tax code. Table 1 lists the 1997 appropriations for fifty-five of the most unjustified federal business subsidy spending programs as compiled by the Cato Institute. Their combined price tag came to $38 billion in 1997.

All but a small handful of America's wealthiest corporations have participated in the hunt for federal or state government subsidies. Most of these companies are double-, triple-, and quadruple-dipping. In 1996 General Electric won fifteen grants for $20.1 million. Rockwell International received thirty-nine grants for $25.4 million. Westinghouse Electric received fourteen grants for $26.1 million. Yet each of these companies had profits of at least half a billion dollars in 1996.

Corporate welfare has all the systemic debilitating effects, including dependency and self-destructive behavior, that characterized the troubled legacy of the Great Society social welfare agencies. Just as the social welfare state became a pernicious, self-perpetuating industry inside Washington, so it is today with the corporate welfare state. For example, Representative Dick Armey has shown that the growth of the tax code and its special interest provisions has exactly paralleled the growth of the Washington K Street lobbying industry (see figure 1).

In the mid-1990s Congress and the states--at the urging of the American voters--enacted major reforms in social welfare programs. There are now time limits on welfare benefits. Work, training, or education is now typically required in exchange for benefits. The result: welfare rolls are down by 40 percent over the past five years and record levels of former recipients now working and paying taxes, not collecting them.

None of this reform ethic has taken root in the realm of corporate welfare. There is no plan in Congress or the White House to attack business subsidies. In fact, the business community has come to regard subsidy payments as de facto entitlements. There is no "two years and off" time limit when it comes to corporate handouts.

With the exception of a few valiant anticorporate welfare warriors--such as Republicans Senator John McCain and Representative John Kasich and Democrats Senator Russ Feingold and Representative Tom Andrews--almost no one in Washington wants to make an enemy of big business. As a Washington Post exposé on fiscal favors for big business noted, "Corporate welfare is the pork that won't slice." Republicans in Congress won't cut even the most egregious corporate welfare programs, such as the Department of Commerce's high-tech grants to Silicon Valley and the advertising subsidies for Ralston Purina cat food and California's dancing raisins. Bill Clinton and Al Gore say they want to "reinvent government" and end irresponsible business subsidies, but their actual record has been to call for larger benefits. In 1997 alone, for example, the Clinton administration requested a 4 percent overall increase in corporate welfare payments.2 Sixteen corporate subsidy programs were scheduled to receive increases of 10 percent or more.

If perhaps for different reasons, both the left and the right in America should recognize the damaging effects of the expansion of the modern corporate welfare state. Democrats should understand that corporate welfare is the essence of corrupt government. We have basically put Uncle Sam up for sale to the highest bidder--and that is seldom the poor, the disabled, or the working-class family with two wage earners struggling to pay the electric bills each month. Meanwhile, Republicans on the right should see that business handouts make big business a mere ward of the state--an advocate of government expansionism and a well-financed enemy of Adam Smith's invisible hand capitalism. Corporate welfare, in sum, is the antithesis of good government and the antithesis of a free market economic system.

Your Tax Dollars at Work (for IBM, GE . . .)

Corporate welfare comes in all shapes and sizes. Here are some prominent examples of the misappropriation of tax dollars in the federal budget.

* Through the Rural Electrification Administration--now called the Rural Utilities Services (obsolete federal programs never go away, they just change their identity)--and the federal Power Marketing Administrations, the federal government provides some $2 billion in subsidies each year to large and profitable electric utility cooperatives, such as ALLTEL, which had sales of $2.3 billion last year.3 Federally subsidized electricity holds down the costs of running ski resorts in Aspen, Colorado, five-star hotels in Hilton Head, South Carolina, and gambling casinos in Las Vegas, Nevada.4

* In 1997 the Forest Service spent $140 million building roads in national forests, thus subsidizing the removal of timber from federal lands by multimillion-dollar timber companies. Over the past twenty years the Forest Service has built 340,000 miles of roads--more than eight times the length of the interstate highway system--primarily for the benefit of logging companies.5

* The U.S. Department of Agriculture (USDA) Market Promotion Program (MAP) spends some $100 million per year underwriting the cost of advertising American products abroad. In 1995 MAP gave $500,000 to Tyson Foods; $526,000 to the Pillsbury dough boy; $308,000 to Ocean Spray Cranberries; $2 million to the California Prune Board; $1 million to the Kentucky Distillers' Association (yes, Congress subsidizes the production and sale of booze); $14,000 to High Mountain Jerky (they make the famous Beef Jerky), and $281,000 to the Campbell Soup Company. Mmm, mmm, good! In the past MAP has even provided subsidies for foreign sales of U.S. tobacco products--thus contributing to the export of cancer and heart disease. The USDA says that MAP enhances U.S. exports of "high value-added commodities." But then why did Uncle Sam shovel out $239,000 in 1995 to Ralston Purina? Since when is cat food a "high value-added product"? Since Dick Gephardt, who represents Saint Louis, Ralston Purina's headquarters, became the highest-ranking Democrat in the House of Representatives.

* In 1994 a House of Representatives investigative team discovered that federal environmental cleanup and defense contractors had been milking federal taxpayers for millions of dollars in entertainment, recreation, and party expenses.6 Martin Marietta charged the Pentagon $263,000 for a Smokey Robinson concert, $20,000 for the purchase of golf balls, and $7,500 for a 1993 office Christmas party. Ecology and Environment of Lancaster, New York, spent $243,000 of funds designated for environmental cleanup on "employee morale" and $37,000 on tennis lessons, bike races, golf tournaments, and other entertainment.7

* From 1990 to 1994, the Commerce Department doled out $280 million in research grants to eight of the hundred largest companies in America--Amoco Corporation, AT&T, Citicorp, DuPont, General Electric, General Motors, IBM, and Motorola. But as the Philadelphia Inquirer discovered in a brilliant exposé on the Commerce Department program, these firms had combined profits of $26.8 billion in 1994.8 It's doubtful whether these Fortune 500 firms won Uncle Sam's lottery by chance. Federal election campaign records show that these firms, or their executives, doled out nearly $1 million of contributions to both political parties that year.

* An estimated 40 percent of the $1.4 billion sugar price support program benefits the largest 1 percent of sugar farms. The thirty-three largest sugar cane plantations each receive more than $1 million.9

* Sematech was launched in 1986 to promote the U.S. microchip industry over rivals in Japan and Germany. It spent several billion dollars of U.S tax dollars for the purpose of boosting the sales and profitability of U.S. chip producers--such as Intel. Now, some twelve years later and after spending taxpayer funds to prop up Intel, the Federal Trade Commission is spending taxpayer dollars to sue Intel under antitrust statutes for being too big and too profitable.

As these examples demonstrate, government provides special benefits to individual industries and companies through a vast array of policy levers. The three major business benefits doled out by Congress are spending programs, special tax breaks, and trade protectionism.

Tax Breaks

When former labor secretary Robert Reich protested against "aid to dependent corporations" back in 1995, his criticism was directed toward "special tax benefits for particular industries."10 The Democratic Leadership Council's Progressive Policy Institute has specified some thirty such "tax subsidies" that led to a loss of $134 billion in federal revenues over five years.11

One of the most inefficient and unwarranted tax subsidies is provided to the industry that produces ethanol--a corn-based gasoline substitute. Ethanol enjoys two tax breaks: a tax credit for companies that blend ethanol and an exemption from federal excise taxes.12 The tax breaks are allegedly justified on the grounds that they reduce pollution and U.S. dependence on foreign oil. But a U.S. Department of Agriculture study finds that the $500 million subsidy for ethanol "represents an inefficient use of our nation's resources."13 It concludes, "When all economic costs and benefits are tallied, an ethanol subsidy program is not cost effective."14 As for the supposed energy conservation and environmental benefits, a study by agricultural economist David Pimental at Cornell University discovered that "about 72 percent more energy is used to produce a gallon of ethanol than the energy in a gallon of ethanol."15

Politics, not economics, is the principal motivation behind the ethanol subsidies. Archer Daniels Midland (ADM), a $10 billion agribusiness based in Decatur, Illinois, produces 70 percent of the ethanol used in the United States.16 An estimated 25 percent of its sales are of ethanol and corn sweetener (another highly federally subsidized farm product).17 ADM and its CEO, Dwayne Andreas, have been among the nation's most generous campaign contributors, having given more than $150,000 in lifetime contributions to former Senate majority leader and 1996 GOP presidential nominee Bob Dole alone.18

There are scores of other targeted tax breaks that unjustifiably distort competition and create an unlevel playing field among and within industries. Just as government should not use spending subsidies to pick industrial winners and losers, it should avoid using the tax code for that purpose.

But one point deserves special emphasis. The problem with the tax code today is not, as many on the left have charged, that corporate America pays too little tax. Most firms today face too high a tax burden, not one that is too low. In 1995 the tax rate on corporate America came to 35 percent of net income. Further, with federal tax collections now above $1.75 trillion the case that Washington suffers from too little tax revenue is unconvincing. Research suggests that policies designed to bring additional dollars into the federal treasury would only invite higher congressional spending, not lower debt.19

As such, the goal in the fight to end corporate favoritism by government should not be to add to the aggregate burden on businesses but rather to spread the existing burden in a more equitable fashion. We should aim to close inefficient loopholes, level out the economic playing field, and use the savings to cut tax rates on all businesses--thus enhancing overall U.S. competitiveness.

Congress should abolish all tax deductions, including all of the special tax breaks for industries identified by the Progressive Policy Institute, in exchange for lower overall corporate and personal tax rates on business and personal taxpayers. That could be accomplished through a flat tax, as advocated by Representative Dick Armey and Steve Forbes; a national sales tax replacement of the income tax, as proposed by Ways and Means Committee chairman Bill Archer; or any policy that lowers rates and broadens the tax base.20

Trade Barriers

"Most of the statutes, or acts, edicts, and placards of parliaments, and states for regulating and directing of trade," wrote Benjamin Franklin, "have been either political blunders or obtained by artful men for private advantage under pretence of public good." Franklin was two hundred years ahead of his time in this observation. He would no doubt be aghast if he observed the entangling web of special interest trade protections that have been erected in recent decades. In 1993 there were more than thirty-six hundred product tariffs and quotas imposed by Uncle Sam, all obtained for private advantage under the pretense of public good.21

By erecting trade barriers, the government rewards one domestic industry at the direct expense of another. For example, in 1991 prohibitive duties were placed on low-cost Japanese computer parts. The motivation was to save jobs in U.S. factories that make computer circuit boards. But the decision to keep out foreign parts inflated by almost $1,100 the cost of a personal computer manufactured by U.S. companies, such as IBM, Apple, and Compaq.22 That gave a huge advantage to Japanese computer companies; it significantly reduced sales of the U.S. computer firms; and, worst of all, thousands of American jobs were lost.

Steel import quotas are equally economically injurious to American manufacturers. Trade specialists believe that the inflated steel prices paid by U.S. firms have contributed to the competitive decline of several American industries, including the auto industry. The cost to the American economy of steel quotas is estimated at $7 billion a year.23

No one knows precisely the total cost to American consumers of barriers to free trade. But several authoritative sources place the figure at $80 billion a year.24 There is virtually no specific U.S. trade restriction the economywide costs of which do not exceed the industry-specific benefits. Therefore, Congress should immediately lift all barriers to free trade. If tariffs are to be imposed at all as a revenue-raising method, they should be uniform among all products and should not violate U.S. trade agreements.

Federal Outlays for Business Subsidies

The most pervasive and pernicious form of corporate welfare is the system of direct federal expenditures. These include government provision of grants, contracts, loans, credit guarantees, and insurance. Most of the rest of this essay focuses on these direct spending subsidies.

The Corporate Interest versus the Public Interest

So what has corporate America's response been to these indefensible taxpayer payments? Back in 1992 when the budget deficit hit its high-watermark of $290 billion, the CEOs of scores of major highly profitable corporations jointly signed a preachy letter calling on Congress to end its cowardice and stop the financial madness of deficit spending. They called for tough choices and a budget of sacrifices.

And then Ralph Nader, of all people, undertook an enlightening experiment. He wrote to these CEOs asking how many would be willing to give up their own subsidies. Are you willing, he asked them, to give up the Export-Import Bank, the Overseas Private Investment Corporation, the International Monetary Fund, or energy department subsidies? Nader got virtually no takers on his offer. Corporate America's communal response was sacrifices, yes, self-sacrifices, never.

In fact many corporations actively fought the feeble efforts of Republicans in Congress to cut off federal aid to business. The Export-Import Bank, which uses federal dollars to provide insurance to major U.S. corporate investments and contracts overseas, for example, was saved thanks for a massive lobbying effort by major U.S. exporters.

Meanwhile, on the tax side of the giveaway equation, the rout of the reformers has been even more complete. The battle to clean out all corporate loopholes and move to some kind of simple flat tax system was torpedoed by corporate special interests jealously protecting their multibillion dollar carve-outs. The home builders, realtors, mortgage bankers, accounting industry, municipal bond traders, life insurance lobby, tax attorneys, and others banded together to squash any serious effort at tax simplification and reform. In fact, the tax code has more corporate carve-outs today than it did five years ago. We have made the internal revenue code even more special interest friendly--a seemingly impossible mission. The stock values of the tax preparation industry--that is, the H&R Blocks of the world--grew at three times the rate of the Dow Jones average between 1996 and 1998.

Part 2

The Illogic of Corporate Subsidies

Much much more -- https://www.hoover.org/research/welfare-well-how-business-subsidies-fleece-taxpayers