|Time to Cut the Cost of Big Government
July 2, 1997
July 3 has been designated as "Cost of Government Day 1997" by a
number of Governors and organizations in the hope that this will alert
Americans to the fact that we work more than half of the year, up until
the first days of the seventh month, to support government. More than
half of everything we earn is spent by the politicians for purposes of
their choice, not ours.
Those are the same people everyone is griping about because they
accept special-interest campaign donations. So why in the world do we
give them more than half of our hard-earned money?
As the 221st observance of our Declaration of Independence
approaches, it is instructive to remember that the taxes that incited
our forefathers to start a revolution were nowhere near as oppressive
as the tax burden we suffer today. The Republicans have become so
entangled in balanced budget politics that they've lost sight of what
should be their primary goal: tax reduction and cutting back Big
A new report by the Cato Institute answers the oft-repeated
challenge, "where would you cut?". We could cut the budget deficit in
half by eliminating subsidies to corporations, otherwise known as Aid
to Dependent Corporations.
More than $65 billion a year in federal taxpayer subsidies is
gushing out through more than 100 programs to American businesses,
particularly the exporters. Dozens of government programs give unique
benefits or advantages to specific companies or industries, including
outright subsidies, grants, cut-rate insurance, low-interest loans,
loan guarantees, or trade restrictions.
The Overseas Private Investment Corporation (OPIC) uses $750
million a year of the taxpayers' money to guarantee risky private
investments in foreign countries. For the exporters, it's a win-win
situation: if the U.S. corporation makes a profit, it's all gravy, but
if the investment goes belly up, the U.S. taxpayers cover the losses.
The Export-Import Bank gets an annual appropriation of $772
million to subsidize financing for foreign purchasers of U.S. goods.
Eximbank makes direct loans to foreign buyers at below-market interest
rates, guarantees their loans from private institutions, and provides
export credit insurance to exporters and private lenders.
Eximbank subsidizes the exports of some of America's largest
companies, including Boeing, General Electric, and Westinghouse.
Eximbank has lost $8 billion on its operations, mostly in the last 15
The International Monetary Fund costs us $730 million annually,
which is used to grant loans to governments in developing countries
that can't pay their bills to large American banks and other
corporations. This amounts to a taxpayer subsidy of private banks and
corporations that have foolishly made risky investments.
The Export Enhancement Program pays out $350 million in cash
bonuses to U.S. exporters to sell their goods to foreigners at a
discount. Half of the $7 billion spent since the program started in
1985 has gone to three huge agribusinesses: Cargill, Continental
Grain, and the French-owned Louis Dreyfus.
The Commodity Credit Corporation Export Loan program spends $393
million to subsidize and guarantee loans to the customers of U.S.
agricultural commodities. The Conservation Reserve Program gives out
$1.8 billion to pay farmers not to grow crops on their land.
The Farm Price Support program gives out $5.385 billion a year.
Two-thirds of these payments go to the wealthiest 15 percent of all
The Federal Highway Administration funds hundreds of demonstration
projects to the tune of $800 million a year. Cato calls this "pork-barrel politics at its finest" because much of it goes to benefit
highway contractors and private companies in the districts of powerful
members of Congress.
Grants-in-Aid for Airports cost us $1.4 billion a year. Why
should the cost of airport planning, development, expansion and
improvements be borne by the taxpayers instead of by the airlines?
The International Trade Administration provides $270 million to
counsel businesses on exporting, to facilitate their participation in
trade shows, and to provide other marketing services. The Advanced
Technology Program doles out $300 million every year in R&D grants to
Caterpillar, General Electric, Xerox, and other high-tech corporations.
The Defense Advanced Research Projects Agency funds $1.1 billion
in R&D programs, some of them for nonmilitary purposes which end up
subsidizing the development of profitable new civilian technologies.
General Science and Research activities cost $996 million to underwrite
research in high-energy physics and nuclear physics, most of which has
little commercial or scientific utility.
There is much, much more in the Cato report. It shows why big
business has no interest in cutting the level of federal spending.
The Alexis de Toqueville Institution estimates that in 1964 there
were 31 lobbyists in Washington to every one Congressman. The ratio is
now 125 to one. Does the taxpayer have a chance against this army?