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Government by Giveaway

by Open-Publishing - Tuesday 31 January 2006

Public services Economy-budget Governments USA

By Michael Parenti

In December 2005, the reactionaries who are running the government and ruining the country decided to cut about $42 billion from the human services budget over the next few years. Most of the cuts will come out of the hides of the very poorest among us. The victims include persons afflicted with disabling diseases who already have trouble trying to live on a monthly federal pittance.

But there is another side to this Scrooge story. There are others among us who are treated most handsomely by Washington. I am referring, of course, to Corporate America.

A central function of the corporate capitalist state is to maintain and advance the capital accumulation process. This it does by (a) taxing the many to subsidize the few; and (b) privatizing the public wealth, specifically the land, airwaves, mineral deposits, and other natural resources that are nominally the property of the American people.

In the 1950s, the Eisenhower administration sought to undo what conservatives in those days called the "creeping socialism" of the New Deal. So they handed over to private corporations some $50 billion (or $200 billion in today’s dollars) worth of offshore oil reserves, government owned synthetic rubber factories, public lands, public utilities, and atomic installations.

During that time, the federal government also built a multibillion dollar interstate highway system that provided the infrastructure----and an enormous indirect subsidy---for the trucking and automotive industries. The practice of using the public’s money and resources to subsidize private enterprise continues to this day. It is variously estimated that every year, the federal government doles out hundreds of billions of dollars in corporate welfare, in the form of tax exclusions, reduced tax assessments, generous depreciation write-offs and tax credits, price supports, loan guarantees, payments in kind, research and development grants, subsidized insurance rates, marketing services, export subsidies, irrigation and reclamation programs, and research and development grants.

The government leases or sells at a mere fraction of market value billions of dollars worth of oil, coal, and mineral reserves. It fails to collect hundreds of millions of dollars in royalties, interest, and penalties. And it sometimes gives the companies the right to purchase the land title for a nominal fee.

The government pays out huge sums in unnecessarily high interest rates on the billions it has borrowed from private creditors (the national debt). It permits billions in public funds to remain on deposit in private banks without collecting interest.

It lends out billions at below-market interest rates. It tolerates overcharging by firms with whom it does business, and provides long term credits, and tariff protections to large companies. It pays out billions to reimburse big corporate defense contractors for the costs of their mergers.

The government gave away the entire broadcasting spectrum valued at $37 billion (in 1989 dollars)—instead of leasing or auctioning it off-thereby giving the big networks nearly five times the broadcasting space they previously controlled.

Every year, the federal government loses tens of millions of dollars charging "ranchers" below cost grazing rates on over twenty million acres of public lands. These "ranchers" include a number of billionaires, big oil companies, and insurance conglomerates.

Over the past five decades, at least $100 billion in public subsidies have gone to the nuclear industry and many billions worth of federally funded research and development has passed straight into corporate hands without the government collecting a cent in royalties.

The U.S. Forest Service has built almost 400,000 miles of access roads through national forests---many times the size of the entire federal interstate highway system. Used for the logging operations of timber companies, these roads contribute to massive mud slides that contaminate water supplies, ruin spawning streams, and kill people.

The U.S. Agency for International Development (AID), spent over $1 billion in taxpayer money over the past decade to help companies move U.S. jobs to cheaper labor markets abroad. AID provided low interest loans, tax exemptions, travel and training funds, and advertising to the corporate outsourcers. AID also furnished blacklists to help companies weed out union sympathizers from their work forces in various countries.

In any one year, many billions in subsidies go to agribusiness producers of feed grain, wheat, cotton, rice, soy, dairy, wool, tobacco, peanuts, and wine, with relatively little going to small agrarian producers. Subsidies to big commercial farms encourage wasteful water practices and increased toxic runoffs into rivers and bays from pesticides, herbicides, and chemical fertilizers.

The Government Accountability Office (GAO) estimates that agribusiness uses legal loopholes to circumvent subsidy limits, thereby collecting more than $2 billion in unjustified payments each year.

The federal government subsidizes the railroad, shipping, and airline industries, along with the exporters of iron, steel, textiles, tobacco, paper, and other products. It doles out huge amounts in grants and tax incentives to the big petroleum companies to encourage oil exploration.

In the 1970s, several major petroleum companies leased acreage in Alaska for oil exploration, paying $900 million for public lands that yielded $50 billion.

Numerous medications marketed by the pharmaceutical industry have been paid for in whole or part by taxpayers---who sometimes then cannot afford the high prices charged.

Whole new technologies are developed at public expense nuclear energy, electronics, aeronautics, space communications, mineral exploration, computer systems, the internet, biomedical genetics, and others only to be handed over to industry for private gain.

Thus, AT&T managed to have the entire satellite communications system put under its control in 1962 after U.S. taxpayers put up the initial $20 billion to develop it. The costs are socialized; the profits are privatized.

Under corporate capitalism the ordinary citizen pays twice for most things: first, as a taxpayer who provides the subsidies and supports, then as a consumer who buys the high priced commodities and services. Overall, federal spending represents an enormous upward redistribution of income.

As the Bible says (Matthew 13:12): "To them that have shall be given, and from them that have not shall be taken even what little they have." If this is the way we bring God back into public life, then let’s hear it for atheism.

Michael Parenti’s recent books include Superpatriotism (City Lights), The Assassination of Julius Caesar (New Press), and most recently, The Culture Struggle (Seven Stories Press). For more information visit: www.michaelparenti.org