The Budget Does Not Have to be Balanced on the Backs of the Poor

An analysis by Public Citizen reveals how Congress could balance the budget by cutting "aid to dependent corporations." The federal budget and tax codes are rife with huge subsidies to business-the sums involved make traditional "pork barrel" spending look like chicken feed.

Public Citizen President Joan Claybrook said the budget axe misses the subsidies for the wealthiest and most powerful U.S. corporations. "The proposed $250 billion, or 15 percent cut in Medicare, demands serious sacrifice from the more than 80 percent of seniors with incomes below $25,000-yet big corporations on the public dole are not asked to sacrifice at all."

Following are some examples of corporate welfare that miss the Congressional budget axe:

Direct Subsidies: Under the Market Promotion Program, the U.S. Department of Agriculture in 1993 gave $75 million for overseas product advertising, including $500,000 to advertise Campbell's soup and $10 million to promote beer, wine, and liquor.

Indirect Subsidies: The Forest Service, for example, spends $100 million annually building more than 340,000 miles of access roads through national forests to assist timber companies' logging operations.

Bailouts: From Lockheed and Chrysler to the S&L industry, the bigger the failure, the more likely Uncle Sam will save it. The most recent example is the so-called "Mexican peso bailout"-more of a bailout for American banks, Wall Street, and wealthy individuals who made bad investments in Mexican bonds.

Below Market and Guaranteed Loans: The federal government loans businesses money at below-market interest rates, or offers the credit of the U.S. government as a guarantee to a lender if a business opportunity should go sour.

Insurance: Limiting the liability of certain businesses is a nuclear time bomb; the Price-Anderson Act makes it likely that almost the entire cost of a Chernobyl-style nuclear catastrophe would be shifted to taxpayers or the victims.

Tax Expenditures: The largest of all corporate welfare programs are specially targeted tax loopholes and provisions in the tax code. Citizens for Tax Justice identified $412 billion in potential savings over five years by closing just 10 tax loopholes.

Trade Barriers: For example, U.S. government trade quotas on imported sugar cost the taxpayer virtually nothing but cost consumers over $1.4 billion a year in higher sugar prices.

Giveaways of Government Intellectual Property for Private Use: Tens of millions of dollars annually fund research contracts to develop new drugs, aircraft for NASA, and weapons systems for the Department of Defense.