Cutting Corporate Welfare, by Ralph Nader

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NOTES

1. William Greider, Who Will Tell the People? The Betrayal of American Democracy, New York: Touchstone, 1992, p. 61.

2. Greider, p. 60

3. Paul Houston, "Influence of PAC Money on S&L Bailout Debated," Los Angeles Times, February 15, 1989, p. l

4. Edward Chadd, "Manifest Subsidy: How Congress Pays Industry -- With Federal Tax Dollars -- to Deplete and Destroy the Nation's Resources," Common Cause Magazine, Summer 1995, citing data from the U.S. Public Interest Research Group (PIRG).

5. See the Center for Responsive Politics, "Who Paid for this Election?" http://www.opensecrets.org/pubs/bigpict ... us05b.html

6. John Zebrowski and Jeona Ziman, "Tough Sell," Mother Jones, November/December 1998.

7. Lizette Alvarez, "Senate Repeals Tax Break for the Tobacco Industry," The New York Times, September 11, 1997, p. A26.

8. David Postman, "Stadium Opponents unfazed by State Court -- Special Election Upheld; Appeal Planned," Seattle Times, December 25, 1998, p. B5.

9. David Schaefer, "Allen Showed Them the Money -- the Big Winners in the State's Most Expensive Campaign," Seattle Times, August 12, 1997, p. A1.)

10. Scott Stephens, "Schools in bad Shape, Study Says," The Plain Dealer, December 3, 1999, p. 1B.

11. Dean Starkman, "Condemnation is Used to Hand One Business Property to Another," The Wall Street Journal, December 2, 1998.

12. Scott Wilson, "Marriott Takes Deal to Stay in Maryland," The Washington Post, March 12, 1999.

13. Studies have concluded that many corporate location decisions are made on the basis of objective factors such as the labor pool, transportation, raw materials markets, schools, etc., and that the threat to move that elicits public subsidies is an added but not decisive windfall game that companies have perfected.

14. Jay Hancock, "Marriott Used Va. as Ruse to Raise Md. Bid; Public Records Suggest Bethesda Firm's Threat to Leave Was Bluff," Baltimore Sun, March 27, 1999.

15. See Joanna Cagan and Neil deMause, Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit, Monroe, Maine: Common Courage Press, 1998.

16. Gambling on Trent Lott: The Casino Industry's Campaign Contributions Pay Off in Congress, Washington, D.C.: Public Citizen, June 1999.

17. Paul More, Jessica Goodheart, Melanie Myers, David Runstein and Rachel Stoller, Who Benefits From Economic Redevelopment in Los Angeles: An Evaluation of Commercial Redevelopment in the 1990s, Los Angeles: The UCLA Center for Labor Research and Education and the Los Angeles Alliance for a New Economy, March 1999.

18. Peter Enrich, "Saving the States from Themselves; Commerce Clause Restraints on State Tax Incentives for Business," 110 Harvard Law Review 377 (1996).

19. Robert Pepper, Chief, FCC Office of Plans and Policy, letter to Senator Joseph Lieberman, September 6, 1995. The licenses are technically granted for eight years, but renewal is virtually automatic.

20. Bob Dole, "Giving Away the Airwaves," The New York Times, March 27, 1997.

21. Pepper, September 6, 1995.

22. For a description of how this could be achieved, see Ralph Nader and Claire Riley, "Oh, Say Can You See; A Broadcast Network for the Audience," 5 Journal of Law and Politics 1, (1988).

23. See People for Better TV, http://www.bettertv.org.

24. "Airwave Avarice" (editorial), Los Angeles Times, December 7, 1998.

25. For a history of passage of the 1872 Mining Act, see Carl Mayer and George Riley, Public Domain, Private Dominion: A History of Public Mineral Policy in America, San Francisco: Sierra Club Books, 1985.

26. Mayer and Riley, p. 79.

27. Michael Satchell, "The New Gold Rush," U.S. News and World Report, October 29, 1991.

28. Testimony of Stephen D'Esposito before the Senate Energy and Natural Resources Committee, April 28, 1998.

29. Green Scissors '99: Cutting Wasteful and Environmentally Harmful Spending, Washington, D.C.: Friends of the Earth, Taxpayers for Common Sense and U.S. Public Interest Research Group, 1999.

30. Thomas Power, Not All That Glitters: An Evaluation of the Impact of Reform of the 1872 Mining Law on the Economy of the American West, Washington, D.C.: Mineral Policy Center and the National Wildlife Federation, 1993.

31. D'Esposito, April 28, 1998.

32. "Investigation of Government Patent Practices and Policies: A Report of the Attorney General to the President," 1947, quoted in Background Materials on Government Patent Policy: The Ownership of Inventions Resulting in Federally Funded Research and Development. Volume II: Reports of Committees. Commissions and Major Studies, House Committee on Science and Technology, August 1976, p. 22.

33. For a fuller account of the taxol story, see Ralph Nader and James Love, Testimony Before the Senate Special Committee on Aging, February 24, 1993 (available at http://www.cptech.org/pharm/pryor.html ).

34. See Nader and Love, February 24, 1993, especially Table 3 and Appendix A, for a close analysis of the federal involvement in discovery, pre-clinical research and clinical research of pharmaceuticals labeled as priority drugs by the Food and Drug Administration.

35. Heather Skale, "Gore's Efficient-Car Project Fuels Detractors; Environmentalists Fear It Will Run Dirtier," The Washington Times, June 26, 1999.

36. Complaint in United States v. Automobile Manufacturers Association, et. a1. (1969), reprinted in Congressional Record, September 3,1969 (91st Congress, 1st Session).

37. Tom Incantalupo, "Lean, Clean Driving Machine: Carmakers Switching Gears to Develop Green Cars," Newsday, March 8, 1998.

38. For a model legislation to create such an organization, see Robert Leflar and Martin Rogol, "Consumer Participation in the Regulation of Public Utilities: A Model Act," 13 Harvard Journal of Legislation 235 (1976).

39. See Ralph Nader and Jonathan Brown, Report to U.S. Taxpayers on the Savings and Loan Crisis, Washington, D.C.: BankWatch, February 1979.

40. Glendale Federal Bank v. The United States, 43 Fed. Cla. 390 (1999).

41. Stephen Labaton, "West Coast S&L Wins $909 Million from Government," The New York Times, April 9, 1999.

42. Labaton, April, 9, 1999.

43. See Laurence Kallen, Corporate Welfare: The Mega Bankruptcies of the 80s and 90s, New York: Lyle Stuart, 1991.

44. Estaban Ortiz, et. al. v. Fibreboard Corporation, et. al., 1999 U.S. Lexis 4373 (1999).

45. "Analytical Perspectives," Budget of the U.S. Government FY 2000, Washington, D.C.: Government Printing Office, 1999.

46. Ibid., Table 5-2.

47. On the general matter of the anti-recycling bias of taxpayer subsidies, see Welfare for Waste: How Federal Taxpayer Subsidies Waste Resources and Discourage Recycling, Washington, D.C.: GrassRoots Recycling Network, Friends of the Earth, Taxpayers for Common Sense and Materials Efficiency Project, April 1999.

48. "Analytical Perspectives," Table 5-2.

49. For a compelling argument that tax expenditures frequently do not achieve their intended purpose in an efficient fashion, see Robert McIntyre, Tax Expenditures -- The Hidden Entitlements, Washington, D.C.: Citizens for Tax Justice, May 1996.

50. "Analytical Perspectives," Budget of the U.S. Government FY 2000, Table 5-2.

51 Foreign- and U.S.-Controlled Corporations That Did Not Pay U.S. Income Taxes, 1989-1995, Washington, D.C.: General Accounting Office, March 1999

52. Robert McIntyre, GAO Report: Big Foreign-Controlled Firms Operating in U.S. Pay Lower Taxes Than American Companies, Washington, D.C.: Citizens for Tax Justice, April 1999.

53. To take one example of the earlier awareness, John LaFalce, D-New York, then chairman of the House Small Business Committee, and an array of expert witnesses at a February 1993 hearing described a peso meltdown to be a high probability almost two years before the crisis transpired.

54. Jill Dutt and John Berry, "In Rescue, Banks See Least Pain; Action Called 'Calming Force,'" The Washington Post, December 25, 1997.

55. "Asian Crisis: Impacts Worse Than Expected," United Nations Information Service, April 8, 1999.

Similarly, the economic effects have been devastating in Africa, where the Fund has undertaken its traditional structural adjustment programs. Sub-Saharan African countries' debt burdens have risen under structural adjustment: African country debt rose 3.5 percent from 1997 to 1998, despite those countries paying $3.5 billion more in debt payments than they borrowed in 1998. The IMF took out nearly $1 billion more from Africa than it put in last year. The IMF's recessionary policies have led to stagnant economies; an internal IMF review found poor countries undergoing structural adjustment to have averaged zero percent growth from 1986 to 1996. Those outside of the program averaged 1 percent.

56. See Jay Solomon and Kate Linebauch, "Indonesian Bank Merger May be the First of Many: IMF-Directed Move to Lift Capital Requirements Makes Deals Inevitable," The Wall Street Journal, January 20, 1998; Jeff Gerth and Richard Stevenson, "Poor Oversight Said to Imperil World Banking," The New York Times, December 22, 1997.

57. George Schultz, William Simon and Walter Wriston, "Who Needs the IMF?" The Wall Street Journal, February 3, 1998.

58. To see the full report, go to < http://phantom-x.gsia.cmu.edu/IFIAC/USMRPTDV.html

59. In addition to the Price-Anderson Act discussed here, the industry benefits from government assistance in helping address its enormous waste problem, and utilities that own nuclear power plants are now seeking to unload the "stranded costs" of such facilities on unsuspecting ratepayers as part of electricity deregulation. See Public Citizen's Critical Mass Energy Project, "Utility Deregulation: Why Should You Care?" available at http://www.citizen.org/cmep/restructuring/utility.htm .

60. The Price-Anderson Act -- Crossing the Bridge to the Next Century: A Report to Congress, Division of Reactor Program Management, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, October 1998, (NUREG/CR-661).

As originally passed, Price-Anderson maintained a limit on operator liability, but did not maintain the industry risk sharing scheme. Until 1975, the Act limited liability for any single nuclear incident to $560 million. The unit operator was responsible for $60 million, and the federal government was responsible for the next $500 million. Following amendments and revisions in the program, the federal indemnity role has effectively ended.

61. Ibid., p.127.

62. Ibid., pp. 127-128.

63. Ibid., p. 128.

64. Ibid., p. 128.

65. Ibid., p. 36.

66. Jeffrey Dubin and Geoffrey Rothwell, "Subsidy to Nuclear Power Through Price-Anderson Liability Limit," Contemporary Policy Issues, Vol. VIII, No. 3, July 1990, p. 76. The subsidy calculation was based on the NRC's 1985 assumption that a worst case scenario accident had a .0000008 percent chance of occurring, and that such a worst case accident would cause property damage of no more than $10 billion.

67. Milton Benjamin, "NRC Issues Report, Withhold Worst-Case Estimates," The Washington Post, November 2, 1982.

68. The Price-Anderson Act -- Crossing the Bridge to the Next Century: A Report to Congress, Division of Reactor Program Management, p.128.

69. Congressional Budget Office, Assessing the Public Costs and Benefits of Fannie Mae and Freddie Mae, Washington, D.C.: Government Printing Office, May 1996, Summary Table 1.

70. Ibid.

71. Ibid.

72. Ibid., p. 35.

73. The GSE Report, Washington, D.C.: General Accounting Office, June 11, 1999.

74. William Hartung, U.S. Weapons at War: United States Arms Deliveries to Regions of Conflict, New York: World Policy Institute, May 1995. Hartung identified the Pentagon's Military Financing Program, the Defense Department's Excess Defense Articles program, the State Department's Economic Support Funds, the Export-Import Bank's "dual use" loan program and waivers of recoupment fees (designed to recoup payments to defense companies for R&D for domestic purposes) as among the arms export subsidy programs.

75. The jobs argument is further undermined by the fact that the U.S. arms exporters are increasingly pledging to foreign buyers that they will build their weapons in the purchasers' markets. These so-called "offsets" now amount to more than three-quarters of the value of U.S. arms sales, according to the Commerce Department, meaning that the economic benefits of the deals are being realized overseas, not in the United States. Hartung, U.S. Weapons at War.

76. Oscar Arias, "Stopping America's Most Lethal Export," The New York Times, June 23, 1999.

77. Senator Mark Hatfield, Statement to the Foreign Operations Subcommittee of the Senate Appropriations Committee, May 23, 1995.

78. See Green Scissors '99: Cutting Wasteful and Environmentally Harmful Spending, Washington, D.C.: Friends of the Earth, Taxpayers for Common Sense and U.S. Public Interest Research Group, 1999.

79. See William Hartung, Military-Industrial Complex Revisited: How Weapons Manufacturers are Shaping U.S. Foreign and Military Policies, Washington, D.C.: Interhemispheric Resource Center and Institute for Policy Studies, November 1998, available at http://www.foreignpolicy-infocus.org/pa ... index.html .

80. For a comprehensive review of fraud and waste, see A. Ernest Fitzgerald, The Pentagonists: An Insider's View of Waste, Mismanagement and Fraud in Defense Spending, Boston: Houghton Mifflin, 1989; and Andy Pasztor, When the Pentagon Was for Sale: Inside America's Biggest Defense Scandal, New York: Scribner, 1995.

81. Office of the Inspector General, Department of Defense, Commercial Spare Parts Purchased on a Corporate Contract, Washington, D.C.: Government Printing Office, January 1999. For other recent reports on fraud and abuse at the Pentagon, see "Pentagon's Fraud Defenses Weak, Two GAO Reports Say," The Washington Post, September 29, 1998.

82. Defense contractors spent $8.5 million in the 1997-1998 electoral cycle on campaign contributions and nearly $50 million in 1997 on lobbyists, according to the Center for Responsive Politics. See http://www.opensecrets.org .

83. In their April 1999 report, Road to Ruin, Taxpayers for Common Sense and Friends of the Earth provide a list a roads projects they have found to be the most wasteful.

84. Korinna Horta, "The Exxon-Shell-ELF-World Bank Plans for Central Africa," Multinational Monitor, May 1997.

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RESOURCE GUIDE

Friends of the Earth
1025 Vermont Ave. NW
Washington, DC 20005
(202) 783-7400
http://www.foe.org/greenscissors/

Taxpayers for Common Sense
651 Pennsylvania Ave., SE
Washington, DC 20003
(202) 546-8500 or Toll Free 1 (800) TAXPAYER
http://www.taxpayer.net

U.S. Public Interest Research Group (U.S. PIRG)
218 D Street, S.E.
Washington, DC 20003
(202) 546-9707
http://pirg.org/index.html

Project on Government Oversight
666 11th Street NW, Suite 500
Washington, DC 20001
(202) 347-1122
http://www.pogo.org

Consumer Project on Technology
P.O. Box 19367
Washington, DC 20036
(202) 387-8030
http://www.cptech.org

Essential Action
P.O. Box 19405
Washington, D.C. 20036
(202) 387-8030
http://www.essentialaction.org

Corporate Welfare Information Center
http://www.corporations.org/welfare/

The Benjamin Banneker Center
647 Plymouth Road
Baltimore, Maryland 21229
(410) 744-6293
http://www.progress.org/banneker/cw.html

Citizens for Tax Justice
1311 L Street NW
Washington, DC 20005
(202) 626-3780
http://www.ctj.org

Citizens for Leaders with Ethics and Accountability Now! (CLEAN)
1524 Tacoma Avenue South
Tacoma, Washington 98402-1806
(253) 572-1212
http://www.clean.org/welfare/welfare.html

People for Better TV
818 18th Street, NW, Suite 505
Washington, DC 20006
(888) 374-PBTV; (888) 374-7288
http://www.bettertv.org

Media Access Project
1707 L Street, NW, Washington, DC 20036
(202) 232-4300
http://www.mediaaccess.org

ICANN Watch
http://www.icannwatch.org/

Financial Markets Center
PO Box 334
Philomont, VA 20131 USA
(540) 338-7754
http://www.fmcenter.org/

50 Years Is Enough
1247 E Street, SE
Washington, DC 20003
(202) IMF-BANK
http://www.50years.org/

Center for Economic and Policy Research
1015 18th St., NW, Suite 200
Washington, DC 20036
(202) 293-5380
http://www.cepr.net

ACORN (National)
739 8th Street SE
Washington, DC 20003
(202)547-2500
http://www.acorn.org

Center for Community Change
1000 Wisconsin Ave., NW
Washington, DC 20007
(202) 342-0567
http://www.communitychange.org/

Corporate Welfare and Foreign Policy
Janice Shields, Foreign Policy in Focus,
http://www.foreignpolicy-infocus.org/papers/cw/

Arms Trade Resource Center
World Policy Institute
New School University
65 Fifth Avenue, Suite 413
New York, NY 10003
(212) 229-5808
www.worldpolicy.org

Sierra Club
85 5econd Street, Second Floor
San Francisco CA, 94105-3441
(415) 977-5500
http://www.sierraclub.org/

Union of Concerned Scientists
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(617) 547-5552
http://www.ucsusa.org/

Natural Resources Defense Council
40 West 20th Street
New York, NY 10011
(212) 727-2700
http://www.nrdc.org

Critical Mass Energy and Environment Program
Public Citizen
215 Pennsylvania Avenue, SE
Washington, DC 20003
http://www.citizen.org/cmep/index.html

Nuclear Control Institute
1000 Connecticut Avenue NW, Suite 804
Washington, DC, 20036, U.S.A.
(202) 822-8444
http://www.nci.org

Nuclear Information and Resource Service
1424 16th Street NW, #404
Washington, DC 20036
(202) 328-0002
http://www.nirs.org/

Physicians for Social Responsibility
1101 14th Street Northwest, Suite 700,
Washington, D. C. 20005
(202) 898-0150
www.psr.org

Public Citizen
1600 20th St. NW
Washington, DC 20009
(202) 588-1000
http://www.citizen.org/

Mineral Policy Center
1000 Connecticut Avenue NW, Suite 804
Washington, DC, 20036, U.S.A.
(202) 822-8444
http://www.mineralpolicy.org

Public Employees for Environmental Responsibility (PEER)
2001 S Street, NW, Suite 570
Washington, DC 20009
(202) 265-7337
www.peer.org

Forest Service Employees for Environmental Ethics
P.O. Box 11615
Eugene, OR 97440
(541) 484-2692
http://www.afseee.org/

American Lands Alliance
726 7th Street, SE,
Washington, D.C. 20003
(202) 547-9400
http://www.americanlands.org

Earthjustice Legal Defense Fund
180 Montgomery Street, Suite 1400
San Francisco, CA 94104-4209
(415) 627-6700
http://www.earthjustice.org

National Wildlife Federation
8925 Leesburg Pike
Vienna, VA 22184-0002
(800) 822-9919
http://www.nwf.org

American Rivers
1025 Vermont Ave., N.W. Suite 720
Washington, D.C. 20005
(202) 347-7550
http://www.americanrivers.org

National Audubon Society
700 Broadway
New York, NY 10003
(212) 979-3000
http://www.audubon.org

Citizens Against Government Waste
1301 Connecticut Avenue, NW, Suite 400
Washington, DC 20036
(202) 467-5300
http://www.govt-waste.org/
(conservative organization)

ABOUT THE AUTHORS

RALPH NADER has co-founded numerous public interest groups including Public Citizen, Essential Information, Commercial Alert, the Center for Auto Safety, and the Center for Women's' Policy Studies. Green Party Presidential candidate for the year 2000, Ralph Nader continues to be a relentless force for grassroots activism and democratic change in the United States.

WINONA LADUKE is an Anishinaabekwe (Ojibwe) enrolled member of the Mississippi Band Anishinaabeg. She lives and works on the White Earth Reservation and is the mother of three children. As Program Director of the Honor the Earth Fund, she works on a national level to advocate, raise public support and create funding for frontline Native Environmental groups. She also works as Founding Director for White Earth Land Recovery Project; a reservation-based non-profit focused on land, cultural, and environmental issues. She is the 2000 Green Party candidate for vice-president, an author of two books and numerous articles and a graduate of Harvard and Antioch Universities.