Magazine article The American Prospect

The Unrelenting Corporate Welfare Lobby. (the Taxonomist)

Magazine article The American Prospect

The Unrelenting Corporate Welfare Lobby. (the Taxonomist)

Article excerpt

IT'S NOT OFTEN THAT I AGREE WITH REP. BILL THOMAS, THE Republican Chairman of the House Ways and Means Committee. But we're in complete agreement that--contrary to what you may have read in the papers--the so-called stimulus bill Congress enacted in March showers money on corporations while offering only crumbs to unemployed workers.

At the end of last year, it seemed that Senate Democrats had stymied efforts by the Bush administration and congressional Republicans to use the economic slowdown as an excuse to pass more regressive tax cuts, this time mostly for big business. As winter waned, there was improved economic news and growing federal budget problems. On top of that, Enron-inspired public outrage about corporate tax avoidance appeared to make the idea of new corporate welfare subsidies impolitic.

Yet just as Federal Reserve Chairman Alan Greenspan pronounced the short-lived recession over, congressional Republicans and Democrats cut a backroom deal to pass virtually the same package of corporate tax breaks that Democrats had railed against since October.

The story line in the press was positively weird. "House GOP Relents in Fight over Stimulus" read The Washington Post's March 7 front-page headline. The revised stimulus bill, the Post told its readers, "will focus largely on new benefits for unemployed workers."

Being naturally suspicious, I examined the actual legislation as soon as I arrived at my office. I was appalled to discover that, along with $15 billion in extended unemployment benefits over the next three years, the bill included the same $114 billion in corporate tax cuts over three years as last fall's version. In a quixotic attempt to correct the Post's misinformation, I rushed out a press release headlined "House GOP Corporate Tax Slashers Unrelenting."

Meanwhile, on the House floor, Thomas thundered, "No, we are not relenting." He said that by his calculation, only 7 percent of the bill's cost would go to helping the unemployed, while the "remainder is for reduction of taxes to ... business. And only The Washington Post could say that 7 percent of something is largely focused on [the unemployed]. That shows you how far off The Washington Post is."

The bill swept through the House by a 417-to-3 margin (only three Blue-Dog, deficit-hating Democrats voted nay), and it passed the Senate the next day 85-to-9.

So in the end, the corporate lobbyists and their allies got what they most wanted, a 30 percent increase in corporate depreciation write-offs in each of the next three years, tax breaks for multinational corporations that use offshore tax havens, and measures that make it easier for companies with lots of loopholes to apply for rebates of taxes paid in the past. …

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