corporate welfare

2044: The Novel Comes True

Eric Lotke — Fri, 26 Jun 2009 13:17:01 -0700

Remember a while ago I wrote about my new novel, 2044? 2044 starts where George Orwell’s 1984 left off. The problem isn’t Big Brother and the leviathan government. The problem is Big Brother Inc., and the all-powerful marketplace.

The 2044 story is about water. Giant businesses control the water supply. An entrepreneur who figures out how to take salt out of seawater gets hammered.

Of course, I want you to read my novelized version of corporate domination. But reality is even scarier.

As Arianna Huffington puts it, the lobbyists are “on a roll.” What’s getting rolled? The change we need.

The first roll is over health care reform. The American people want health care reform, and more than three-quarters of them (76 percent) want a public plan option. But the insurance lobby doesn’t, and their lobbyists outnumber elected officials on Capitol Hill by more than three to one. The health care industry spent $267 million on lobbying and campaign contributions last year alone, and they aren't spending money for nothing.

But oil and gas companies are racing to catch up. They increased spending on lobbying faster than any other industry, according to the Associated Press with data from the Center on Responsive Politics. It’s better for the old fuel industries to keep us hooked on dirty and finite fossil fuels than to explore new sources. And they’re paying to advance their interests. The industry spent $44.5 million lobbying Congress and federal agencies in the first three months of this year, on pace to shatter last year's record, which itself was up 73 percent from the year before that.

And the bailout on Wall Street continues to consume billions, with virtually no accountability. We give the mega-banks money to make loans, and the banks use our money to buy other banks, reconstructing the house of cards that got us into this mess. The banks are "still the most powerful lobby on Capitol Hill," lamented Senator Dick Durbin (D-Ill.)." And they frankly own the place."

Goldman Sachs is set to make record bonus payouts this year. According to the London Guardian, “Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.”

Record bonus payouts! That’s the reward for (not quite) wrecking the global economy. Or in the words of the stranger watching TV in 2044, “They couldn’t say it if it wasn’t true.”

2044 is a warning. One of many. There’s a lot of work to do.

Voters Want A New Balance of Power in Washington, D.C.

Alex Carter — Wed, 12 Mar 2008 12:27:31 -0700

Voters want a new balance of power. To achieve significant change, voters see a need to rearrange the balance of power in Washington. Business interests, in particular, need to be challenged. Not only does business have too much money and power, described previously, it is not using its power wisely.

In January 2007, Pew Research Center asked adults whether “business corporations generally strike a fair balance between making profits and serving the public interest.” Only 38% agreed and 58% disagreed, the highest distrust in the 20 year history of the question.

Pew explored these issues further in a survey of adults released on Valentines Day 2008. Pew asked the 81% of people who rated the condition of the economy “fair” or “poor,” who bore responsibility for the problem. The greatest blame went to George Bush and Congress, followed by multinational corporations, large investment firms and banks.

Tax Breaks Sweeten Purchase of Subprime Lender

OurFuture.org Staff — Tue, 15 Jan 2008 08:49:47 -0800

For purchasing subprime giant Countrywide Financial, Bank of America will get half a billion in tax breaks over five years.

Pay-to-play Politics

Terrance Heath — Fri, 28 Dec 2007 12:36:11 -0800

Legislators who raise money rise to the top. Those who can't, fall farther and farther behind. Money is the yardstick for success in conservative government. Performance is irrelevant. Tom Delay’s notorious K Street Project was all about using government money to reward campaign contributors in a mutually rewarding quest for power—leaving the public behind.

Related Conservative Failures

Quagmire in Iraq

When Bush crony Joseph Albaugh left FEMA to start a consulting company to held businesses drum up opportunities in war-torn Iraq, part of what he was selling was his government experience—his intimate knowledge about where to place the right contributions to get what you want. read more »

Failing Hurricane Katrina Victims

HUD secretary Alphonso Jackson admitted that he hands out contracts based on their loyalty to President Bush. And one way, of course, to show your loyalty to a politician is to raise money for them. read more »

Rotting Regulatory Standards

When removing one tiny line in a massive federal statute can mean millions more profit for your company, is it any wonder business tries to buy access? read more »

More conservative failures

Disdain for Government > Pay-To-Play

What could better demonstrate conservative contempt for government than their literal attempt to institutionalize the power of a single political party? As Nick Confessore wrote in the Washington Monthly in 2003:

When presidents pick someone to fill a job in the government, it's typically a very public affair. The White House circulates press releases and background materials. Congress holds a hearing, where some members will pepper the nominee with questions and others will shower him or her with praise. If the person in question is controversial or up for an important position, they'll rate a profile or two in the papers. But there's one confirmation hearing you won't hear much about. It's convened every Tuesday morning by Rick Santorum, the junior senator from Pennsylvania, in the privacy of a Capitol Hill conference room, for a handpicked group of two dozen or so Republican lobbyists. Occasionally, one or two other senators or a representative from the White House will attend. Democrats are not invited, and neither is the press.

The chief purpose of these gatherings is to discuss jobs—specifically, the top one or two positions at the biggest and most important industry trade associations and corporate offices centered around Washington's K Street. This canyon of nondescript office buildings a few blocks north of the White House is to influence peddling what Wall Street is to finance. In the past, those people were about as likely to be Democrats as Republicans, a practice that ensured K Street firms would have clout no matter which party was in power. But beginning with the Republican takeover of Congress in 1994, and accelerating in 2001, when George W. Bush became president, the GOP has made a determined effort to undermine the bipartisan complexion of K Street.

That's the world of pay-for-play politics that conservative control has ushered in—a political machine as notorious as anything Boss Tweed could have dreamed up in 19th- century New York. San Diego congressman Randall "Duke" Cunningham literally drew up a "bribe menu" specifying the amount it would take to get him to put earmarks into bills. Cunningham ended up in jail. Other malefactors have simply lost their jobs. But pay-for-play politics won't be going away until conservatives give up their addiction to money and their contempt for government—and that's not going to happen any time soon.

Free Market Fundamentalism> Pay-To-Play

K Street Project

Incredible as it may seem, conservatives don't consider such corruption incidental to their governing project. They see it as crucial. With their contempt for the idea of a disinterested civil service, they look at corporate influence peddling as a normal part of the operations of the free market. There's even a highly developed sub-discipline of economics, called "public choice," which argues that civil servants, with their salary and their conscience and their bureaucracies as their only incentive to do a good job, can't possibly do a good job. Only someone with "skin in the game" is supposed to be motivated to work for the public—by working, of course, for their own self-interest. It's the only kind of interests conservatives can grasp.

Deliberately and with malice aforethought, conservatives have been dismantling the checks, balances and transparency that made our country great. From legal campaign contributions to illegal junkets, government now serves the wealthy few, not the American people as a whole.

How Conservatism Caused This Failure...

Disdain for Government

Why not condone buying your way into government when your official ideology is that you don't even respect government in the first place? read more »

Ends Justify the Means

Crazy as it seems, conservatives can justify pay-to-play politics for ideological reasons—because it helps discredit government, and that's the end they're after. read more »

Free Market Fundamentalism

Since conservatives miscast anything having to do with business as part of the free market, it's easy for them to excuse the actual harm to freedom brought by pay-to-play politics. read more »

Corporate Welfare

When government's for sale, what corporation wouldn't demand, from the politicians they've bought and paid for, special favors out of the public purse? read more »

Cronyism

In order to pay to play, the big boys have to let you step up to the window in the first place. It's not just money that buys access in conservative government, it's who you know. read more»

Deregulation

When removing one tiny line in a massive federal statute can mean millions more profit for your company, is it any wonder business tries to buy access? read more

Corporate Welfare

Terrance Heath — Fri, 28 Dec 2007 12:28:55 -0800

Conservatives like giving away government money too, they just do it differently. Whether they are billion dollar sole-source contracts to Halliburton, farm subsidies that benefit California millionaires with a hobby ranch in Wyoming, or the twelve billion dollars squandered monthly in Iraq, conservatives are quite liberal with American tax dollars.

Related Conservative Failures

Quagmire in Iraq

The special government favors that private contractors in Iraq—from Halliburton to Blackwater—enjoy, are like money in the bank to their stockholders—and a drain on the rest of our pocketbooks. read more »

Corporate Wilding

Corporate Wilding Sometimes it’s hard to figure out where corporate welfare ends and outright corporate malfeasance begins. When California privatized its power grid, it was both a gift to energy companies like Enron, and an open invitation to swindle the public. read more »

Failing Hurricane Katrina Victims

After the federal government set up special tax-advantaged "Gulf Opportunity Zones" to help Katrina victims who needed housing, is it any surprise that some of the money ended up with developers building luxury condos hundreds of miles from the storm? read more »

Abandoning Patients at Walter Reed

When conservatives privatize a government function like the management of Walter Reed, they always say it's to make the services better and more efficient. They never call it what it actually is—a giveaway straight from the public purse. read more »

More conservative failures

In the name of individual responsibility, conservatives proudly deny a helping hand to the poor and powerless. Meanwhile they ladle money into the banks of the rich and powerful in the form of tax subsidies or unquestioned contracts.

Free Market Fundamentalism > Corporate Welfare

Free Market Fundamentalism often leads to corporate welfare because deregulated markets often allow corporations to become so overgrown, even to the point of monopoly, that their influence over the government balloons and balloons. They can game the system so that government programs end up funneling money straight into their own pockets.

The giant retailer Wal-Mart has more workers enrolled in many state Medicaid programs—which are supposed to be reserved for poor people—than any other employer. They even hand out guides to help workers enroll in the programs. When the taxpayers subsidize services that companies should be providing to their employers themselves, that's corporate welfare.

Meanwhile, one study found over 240 examples of subsidies from taxpayers to help Wal-Mart build new retail outlets and distribution centers—in fact, 90 percent of these huge warehouses that Wal-Mart claims it needs were subsidized from the public purse. That's corporate welfare, too.

How does a company like Wal-Mart get away with it? Partly, by wrapping themselves in a mythology that their history was an entrepreneurial miracle—and that its gobbling up of smaller retailers happened because they did a better job in some kind of open, dog-eat-dog competition. In actual fact, it couldn't have happened without special favors from statehouses and Washington D.C. It takes a lot of ideological mumbo-jumbo to call that a triumph of the free market—but somehow conservatives manage it.

Trickle-Down
Economics

Conservatives’ false belief that anything having to do with business is automatically part of the free market both causes and justifies corporate welfare. Government subsidies—which conservatives teach us rot moral character, but only in the case of vulnerable individuals—get miscast as the operations of this mythical free market. The institutions that end up with the "freedom" always turn out to be big businesses, who throw around their market power to bully everyone else. Ordinary Americans end up less free—and the wealthiest Americans end up cornering the market. Here's how:

Tax Subsidies. The federal government gives tax subsidies to business for particular purposes. Often these incentives are created in hope that the free market will find solutions to our nation’s problems. However, the tax subsidies given to huge corporations and dishonest businessmen are often abused, subverting the free market in the guise of unleashing its dynamism.

The Oil Industry. With fuel prices soaring, oil companies are reaping record profits. Yet conservatives gave them $30 billion in tax subsidies to offset ordinary business expenses such as exploration.

Disdain for Government > Corporate Welfare

Ronald Reagan summarized the soul of modern conservatism in his first inaugural address "Government isn't the solution to our problem,” he said. “Government is the problem.” By erasing government's role as referee, regulator and guarantor of the common good, such dogma gives away the store to already-powerful interests, and leaves ordinary Americans unprotected. Here are some examples:

Tax Avoidance

Big corporations pay staffs of attorneys and consultants to find legal ways to dodge taxes. They incorporate in Bermuda or the Bahamas, or they create fantasy charitable trusts with no tax liability. Meanwhile, as conservatives shrink government, the number of IRS tax auditors has dropped by a third since the 1990’s.

From 2001-2003, 275 large corporations on Fortune’s 500 list earned almost $1.1 trillion in pretax profits in the United States. Had all of those profits been reported to the IRS and taxed at the statutory 35 percent corporate tax rate, then those 275 companies would have paid $370 billion in income taxes over the three years. Instead, the companies reported only about half of their profits—$557 billion—to the IRS. Instead of a 35 percent tax rate, the companies as a group paid a three-year effective tax rate of only 18.4 percent. Loopholes and other tax subsidies cut taxes for the 275 companies by $43.4 billion in 2001, $60.8 billion in 2002 and $71.0 billion in 2003—for a total of $175.2 billion in tax breaks over the three years.

General Electric tops the list of corporate tax dodgers during the study years. It avoided $9.5 billion in taxes from 2001-2003. Other large scale corporate tax dodgers include: Citigroup at $4.6 billion; IBM at $4.6 billion; Microsoft at $4.6 billion; AT&T at $4.5 billion; and Exxon Mobil at $4.3 billion. Other corporations paid NO taxes during the study years between 2001-2003 while reaping huge profits: Principal Group with $2.1 billion in profits; AT&T with $5.7 billion in profits; and Time Warner with $4.9 billion in profits.

Enron

Enron took advantage of lax oversight following deregulation and formed a complicated web of more than 2,800 subsidiaries — more than 30 percent (874) of which were located in officially designated offshore tax and bank havens.

The federal government gives tax subsidies to favored businesses or to favor certain business behavior. In some cases, it can subsidize important advances. In many cases, it’s just a gift. Pay-to-play politics are another example of the fallout of conservative ideologies in practice.

Oil Companies

Oil Well

During a time of record high oil prices and record profits among oil companies, Congress gave subsidies to oil companies worth $30 billion over five years. They receive $5.4 billion in subsidies for exploration and an additional $4.7 billion for the depletion of discovered wells. Yet the oil companies receiving these subsidies have seen huge profits: Exxon Mobil at $36 billion; Chevron at $189 billion; Conoco Phillips at $166 billion; and Valero Energy at $81 billion.

Miscast Morality > Corporate Welfare

Conservatives rose to political power on the wings of a critique of welfare—so long as the entities getting the welfare critique were single black mothers. Ronald Reagan used to chase around the campaign trail telling a story—entirely invented—about a Chicago mother supposedly receiving so many welfare checks off various phony social security numbers she was able to buy a Cadillac. Unfortunately, stories of corporate welfare—unlike Reagan's welfare Cadillac—are absolutely true. And yet you'll rarely hear conservatives getting their back up over them, let alone using them to try to win elections.

Conservatives are great at moralizing when the target is a vulnerable individual. When it's a big corporation that's exploiting the public purse, they're silent.