Stand very quietly on Capitol Hill these days and you can hear the cacophony of squeals as porked-up legislation disguised as "disaster relief" and "economic stimulus" heads for the federal trough. Coming so close behind the worst terrorist attacks in U.S. history, it is causing even fellow partisans to wince.
Last year's herd of pork weighed in at about $18 billion, Capitol Hill number crunchers estimate. So far this year, they are tracking more than $80 billion in corporate welfare alone.
With the White House distracted by military action in Afghanistan and anthrax scares at home, Congress is responding to economic fallout from the terrorist attacks with subsidies, spending and tax adjustments.
Arguing for the Economic Security and Recovery Act of 2001 (HR3090), its sponsor, House Ways and Means Committee Chairman Bill Thomas (R-Calif.), admitted that it was not a perfect tax bill. But, he added, "It isn't intended to be, because that is not what the country needs right now. What it needs is a true fiscal stimulus."
If the theories of liberal economist John Maynard Keynes were dead, say spending critics, these guys have resurrected him. Fiscal watchdogs argue that government intervention rarely stimulates an economy. "How did Congress get out of deficit spending?" asks Sean Rushton, spokesman for Citizens Against Government Waste (CAGW). The answer: compounded economic growth. "Government spending went up," he points out, "but the economy (i.e. tax revenue) grew faster."
For years CAGW has argued that outdated and duplicative programs, fraud, mismanagement and waste in federal agencies estimated at approximately $1.2 trillion have plagued the nation. As a sign of good faith, Rushton says, Congress should redirect every cent of this year's unauthorized porcine earmarks -- estimated at $20 billion -- into defense, intelligence and emergency cleanup spending. "To do otherwise ... is a scandal during a time of national emergency," says the CAGW spokesman. "There comes a point where it seems like [Congress is] profiteering on this tragedy," says Rushton, a one-time aide to former congressman Bill Archer (R-Texas), Thomas' predecessor as House Ways and Means Committee chairman. CAGW is bracing for an official tally of post-Sept. 11 spending proposals it estimates will reach $330.03 billion if all the authorized, requested and proposed spending is enacted.
The CAGW is one of a coalition of antiwaste groups sniffing through the federal truffle patch to track the goodies. That's not an easy task. While pleas and proposals for federal dollars swirl throughout Capitol Hill, little in the way of explaining who ultimately will get what is being committed to the public record. The only thing slowing the porkfest has been the occasional anthrax alert.
Most of the proposed spending in the current packages is for immediate outlays, Rushton advises, but there are rolling subsidies that are destined to be paid over time. "Government is going to be spending [Sept. 11 emergency] money for decades," he laments.
The taxpayer-advocacy groups are hoping that Office of Management and Budget Director Mitchell Daniels will be the fire wall between pie-in-the-sky spending proposals and actual appropriated reality. "We think a lot of him generally," Rushton says. "The message he has consistently sent through the press has been, `Take spending slow.'"
But House Democrats have a laundry list of constituencies they also want to ply with federal programs and their substitute package includes proposals to extend expiring tax provisions such as the welfare-to-work and work-opportunity tax credits, and to provide $11 billion in interest-free financing for school construction. Many of their constituencies and pet programs were left out of the Thomas bill, so House Democrats are appealing to colleagues in the Senate to add to the spending juggernaut that squeaked out of the House on a 216-214 vote.
Even so, many of the Thomas proposals are permanent increases in the size of government and will force borrowing from the so-called Social Security and Medicare trust funds after 2002 for spending that has little to do with the terrorist attacks or their economic aftermath. But the Thomas proposal as passed is not bipartisan and will not be enacted, a House Democratic staffer tells INSIGHT. Both the chairman and ranking member of the Senate Finance Committee had requested that Thomas not proceed with the stimulus package unilaterally. "[So Senate leaders] are now forced to meet by themselves with the administration to craft a separate, and bipartisan, package," says the Democratic staffer.
While the argument about the size of the new profligacy continues, CAGW also is looking into other largesse, trying for example to determine how me $2 million refurbishment of 50-foot statue of Vulcan -- an iron-man monument perched on Red Mountain, overlooking Republican Sen. Richard Shelby's Birmingham, Ala., home t -- was justified in a federal appropriations bill this year, after receiving $1.5 million in fiscal spending last year. "It was bad enough when Senator Shelby used his Appropriations Committee privilege to force taxpayers to pay for this unmistakably nonfederal issue last year," said CAGW President Tom Schatz. "In the wake of Sept. 11, Shelby's continued defense of pork is truly scandalous, especially given his national-security position as vice chairman of the Senate Select Intelligence Committee."
Earlier, farm-belt Sen. Richard Lugar (R-Ind.) chided the House for passing a farm bill (HR2646, the Farm Security Act of 2001) that updates a statute not due to expire until September 2002. In a late-September statement he called it "irresponsible" for the House to take up a farm bill in light of important war issues that need to be considered, the overall recessing economy, the need to pass government-funding bills and the fact that funds available for agriculture will be something less than the $73.5 billion previously assumed.
"It is time for the administration to give a clear idea what the money situation is," said Lugar, who is offering a heavily reduced companion proposal in the Senate. "As we are dealing with a war, the internal security of the country and the enormous economic problems facing the country, we need to determine what is adequate for rural America and agriculture. To proceed down the road in debating a farm bill before we have some context would be inadvisable," Lugar told the Senate Agriculture Committee, on which he is ranking member.
The Council for Citizens Against Government Waste (CCAGW), which is CAGW's lobbying arm, argues that the House farm bill "represents a dramatic backward step in farm policy." It adds another $73 billion in subsidies, a 65 percent increase to the already existing $95 billion, 10-year base. Lugar's proposal still is quite generous, adding $25 billion in new farm spending over a five-year period. But he would keep farm reform on track by phasing out crop subsidies and replacing them with risk-management programs.
Meanwhile, lawmakers are arguing that it is legitimate to ask for funding for badly wounded industry sectors and rising unemployment in their districts. For example, Rep. Jim Gibbons (R-Nev.) was looking for a stimulus package that would support the restaurant, hotel and entertainment industries, which have been forced to lay off close to 30 percent of their workforce. He advocated temporary government assistance with COBRA health-care insurance payments to recently unemployed workers and a temporary payroll-tax holiday for both employers and workers in the hospitality sector.
"You can't restore a dysfunctional economy without helping businesses stabilize and recover," says Thomas. "The creative range of tax adjustments in this bill will free up money that businesses would otherwise have to send to the IRS, so they can channel it back into the economy through salaries, training and investments like equipment."
Even the more liberal member of the watchdog coalition, Citizens for Tax Justice (CTJ), scoffs at that. CTJ's Robert S. McIntyre estimates the House stimulus package will cost $212 billion and, in a recent editorial in the American Prospect, calls it a "special-interest love feast." McIntyre and fiscal conservatives among the House Democrats are seething about the House bill's abolition of the Clinton-era alternative minimum tax (AMT). A punitive tax which ignores the fact that all corporation taxes ultimately are paid by the consumer, the AMT not only would be repealed but "corporations would be entitled to an immediate rebate of any alternative minimum tax they have paid since the tax was established in 1986."
Republicans in the Senate agree sort of. At press time the Senate Republicans, led on the Senate Finance Committee by ranking member Charles Grassley (R-Iowa), also would repeal the corporate AMT -- but only for future taxes due.
During a postattack address, President George W. Bush expressed his confidence that administration officials "can work with Congress to come up with an economic-stimulus package, if need be, that will send a clear signal to the risk-takers and capital formatters of our country that the government's going to act, too." Later he ordered Congress to get to work
However, McIntyre at CTJ questions whether corporate risk-takers should get government assistance. He also seems skeptical about whether the companies -- many of which are multinational -- will invest their tax benefits in the United States.
The Thomas bill's proposed total of $25 billion in instant rebates for profitable tax-avoiding corporations is almost twice as big as the $13.7 billion in added individual rebates that the tax committee decided to provide to 37 million (mostly low-income) families and singles whose 2000 earnings were too low to qualify for the previous round of personal tax rebates.
Unless the administration puts the kibosh on this spending frenzy, declares Rushton at CAGW, the impact will do damage far into the future. "These guys are just using the emergency as an excuse to spend."
Of the airline industry, which would benefit from the stimulus bill as well as its own $15 billion bailout, he says tepidly, "Our group has real questions about that. But given the circumstances of Sept. 11, as a temporary measure it may be appropriate."
Nonetheless, other critics complain, it was that $15 billion bailout of the already-faltering U.S. airline industry that started a queue of industry porkers heading to Capitol Hill with their squeals of woe. Travel agents, bus lines, Amtrak, "they're all acting as though if their companies go out of business their demise will destroy the entire industry. That is not necessarily the case," Rushton says.
Rushton does make one possible exception: the insurance industry. Although the insurance industry says all Sept. 11-related claims can be fully paid out of current reserves, spokesmen have pointed out that terrorism on a major scale never was included in rate calculations, and bills going out for future coverage will have to reflect much higher rates for terrorism coverage. All other industries depend upon being insured, Rushton notes. Citing arguments made in a recent Wall Street Journal editorial, he says even the pinchpennies at CAGW could cautiously support some federal help for insurers. But even then, he adds, "only if a good policy that is not open-ended can be devised."
Disaster Relief and Pork Spending
Money up for grabs for disaster relief could be as much as $250 billion to $330 billion!
AUTHORIZED THUS FAR - $56.6 Billion
$40 billion for the Disaster Recovery Bill (or DRB) of which $20 billion in allocations are up to the White House and $20 billion are up to Congress to spend.
What Bush has spent thus far:
* Sept. 21, $5.1 billion for 20 different government entities, including money for FEMA's rescue and recovery operations in New York City, Pennsylvania and at the Pentagon.
* Sept. 28, $1.8 billion for the DOD, Executive Office of the President and the judicial and legislative branches to handle national security, recovery and humanitarian needs.
* Oct. 5, $196 million in humanitarian aid to the captive people of Afghanistan.
* Oct. 23, $1.7 billion to the departments of Agriculture, Defense and State; international-assistance programs; and the Broadcasting Board of Governors.
How White House wants rest of DRB to be spent:
* Oct. 17, requested Congress to allocate $20 billion from the DRB for following: $6.3 billion is for New York City, $6.9 billion for disaster and security needs and $7 billion for the war on terrorism.
Remainder of total authorized thus far:
* $15 billion for airlines and victims.
* $600 million in economic aid to Pakistan.
* $300,000 for Capitol-flown flags to the survivors and to the families of the deceased victims of the terrorist attacks.
STILL ON THE TABLE: $194-$274 Billion
* These are various piggypets still around from previous years' litters that would like to slop in as disaster-relief or emergency-spending legislation.
SOURCE: Citizens Against Gov't. Waste
SHEILA CHERRY IS A WRITER FOR Insight.…