Taxpayers for Common Sense and Clawback name names
Car makers, baseball's Yankees, and Kansas big boxes need subsidies?
Cutting governmental spending makes it easier to put governments on a strict diet of pure “rent”, of social surplus, of the money we spend on the nature we use, trillions of dollars each year, but not enough to waste. We trim, blend, and append two 2008 articles from the right by Taxpayers for Common Sense (TCS), their Weekly Wastebasket of September 19 and 26, and two from the left by Clawback, both of September 19.
by Jeffery J. Smith, October 2008TCS: Detroit automakers’ new bailout is the federally-backed loan guarantee. When taxpayers take on the risk of lending to big business, bankers are willing to lend at cheaper rates. It’s a pretty sweet deal: car manufacturers wouldn’t have to repay principal or interest for five years. The Congressional Budget Office (CBO) estimates that taxpayers will have subsidized the $25 billion worth of loans to the tune of $7.5 billion.
This is just the latest loan guarantee program to be considered. Beyond the Big Three, the nuclear power, domestic shipbuilding, and railroad industries have succeeded in getting government-backed loans. The Department of Energy is in the process of embarking on a loan guarantee program to distribute nearly $40 billion in guarantees for risky energy projects, $18.5 billion of which is for nuclear reactors that after decades of subsidies still cannot receive private financing from Wall Street. The CBO has assessed the likelihood of defaults on loans for nuclear loan guarantees to be well above 50%.
Clawback: Rep. Dennis Kucinich, chairman of the Subcommittee who has held two hearings on the use of tax-exempt bond financing for sports stadiums said: “In the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars subsidizing a project that is for the exclusive benefit of a private entity, the Yankees, but also we have discovered serious questions about the accuracy of certain representations made by the City of New York to the federal government.” That city officials may have helped America’s wealthiest sports team cook the books sheds new light on this project and could prevent the team from getting the additional tax-free bonds they’ve requested.
In Kansas, subsidies are producing winners and losers. After the opening of the Nebraska Furniture Mart in Wyandotte County, subsidized by municipal STAR bonds, a third of existing furniture stores within a 150-mile radius closed. State auditors noted that while an extensive literature finds “incentives don’t have a significant impact on economic growth,” states are compelled to offer them since businesses “view them as an entitlement.”
TCS: How to pay for the $700 billion bailout? Rescuing Wall Street could cost us some amount below the $700 billion; that would be great. But it is just as likely that the costs could balloon to well over a trillion dollars.
Due to interest, piling up more debt will cost our nation even more than the current price tag. We may never see the full extent of our nation's budgetary problems, but our kids certainly will.
Hoping that the bailout costs a "modest" $250 billion or so should not delay our cutting wasteful and unnecessary spending from the federal budget.
Military Spending: The Defense budget should not escape scrutiny simply because some lawmaker has said some item matters for national defense. Non-emergency military spending now makes up half of all discretionary spending in the federal budget. Start with cutting the F-22 and other weapons systems not necessary to fight our enemies.
Wasteful Contracts: The government wastes tens of billions of dollars on failed contracts where the government gets nothing. The cost of failed contracts with the Department of Homeland Security was $15 billion. We have seen similar results in Iraq. So, let's end these contracts. Stop wasting our hard earned tax dollars!
Social Security, Medicare and other entitlements: Right now, Medicare spends more than it brings in. That day looms for Social Security. Finding an alternative to deficit spending would signal to international financial markets that the US is serious about our long-term budgetary liabilities.
Lead by Example: There are many smaller but symbolic acts lawmakers can take. Congress should revoke the $6.6 billion in earmarks just passed for this year. All 535 members should refuse their annual pay raise.
Uncle Sam cannot keep spending money without figuring out a way to pay for it.
JJS: We need not figure out how to pay for waste. We can just cut that out. All we need to figure out is how to fund desired and needed programs.
It’s ironic that the entitlements held up for question go to the public -- Social Security and Medicare. The entitlements to influential businesses, even if questioned by watchdog groups, still get rubberstamped. That’s to be expected when allowing politicians to make spending decisions for us.
Alternatively, we could fund ourselves and decide individually how to spend the cash. That is, abolish taxes on efforts, which boosts economic efficiency and locational values, and recover those land values via taxes or fees. Use the funds for essential government services -- cops, courts, defense of borders -- but return the rest as a dividend to the citizenry. The vast majority of citizens would come out way ahead. We could lose Social Security and Medicare and not miss them, once we enjoy what we’re all truly entitled to -- a fair share of the worth of Mother Earth.
Jeffery J. Smith runs the Forum on Geonomics.
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