Public Campaign announcement, November 28, 2001
America is at war. The economy has been officially in a recession
since March. If the voters were in charge of devising an economic
stimulus policy, their response would be clear. By a margin of
56 to 32 percent, the public chooses increased government spending
over new tax cuts, according to the Gallup Poll. Even a sub-sample
of Republican voters, who are traditionally more tax-cut-loving,
finds this same sense of priorities, albeit by a much narrower
margin of 44 to 42 percent.
According to Gallup, more than nine out of 10 Americans (94%)
support extending unemployment insurance and health coverage for
workers affected by the terrorist attacks. More than eight out
of 10 (86%) support passing new tax cuts for low- and moderate-income
workers. Three out of four support increased government spending
for job training, construction, and other items.
But so far, Washington is spitting in the face of the voters.
And there's only one way to explain this dramatic divergence:
It's the campaign cash, stupid. Despite bipartisan calls in the
days after September 11th for a stimulus package that could be
passed rapidly and that would focus on temporary measures that
would be felt quickly, the debate in Congress has been hijacked
by corporate lobbyists anxious to lock in tax breaks for their
clients. It could be a long dry spell before anything like this
comes around again. James Albertine, president of the American
League of Lobbyists, told the New York Times on November 18. What
is in play is a $100 billion tax bill, and the last time I looked,
that was real money. Given the budget situation, when are you
going to see another major tax bill go through Congress? It's
like squirrels running around finding acorns and putting them
in the ground for winter.
The biggest acorn at stake is the corporate alternative minimum
tax. Under the $100 billion stimulus bill narrowly passed by the
Republican-controlled House, not only is the AMT repealed, all
the payments made under it since 1986 are to be rebated. Just
16 profitable companies, including household names such as ChevronTexaco,
IBM, and General Motors, would receive $7.4 billion in immediate
tax rebates. These same companies have been the source of nearly
$46 million in campaign contributions to federal candidates and
party committees since 1991, two-thirds of that to the GOP, including
half a million dollars for President George Bush's campaign, according
to a new investigative report by Citizens for Tax Justice and
The biggest beneficiaries of the AMT repeal include some of
this country's most generous corporate campaign donors. Enron,
the high-flying and now collapsing energy company with close ties
to the Bush administration, gave $2.4 million in the 2000 elections
to federal candidates and parties. The House bill would give Enron
an immediate tax rebate check of $254 million. General Electric
contributed nearly $2 million and would get a tax rebate check
for $670 million. Ford Motor Co gave more than $780,000; the company
would collect a tax rebate of $1 billion.
How would giving these companies permanent tax cuts and rebates
stimulate the economy? Alan Greenspan, chairman of the Federal
Reserve, testified on October 17th that he would leave such measures
out of any stimulus plan, saying "I would scarcely consider
them as short-term economic stimulus because there's very little
evidence to suggest you get a bang-for-the-buck type of impact.
And economist Paul Krugman writes, "No economic doctrine
I'm aware of, right or left, says that an $800 million lump-sum
transfer to General Motors will lead to more investment when the
company is already sitting on $8 billion in cash."
The sad, but unfortunately predictable, truth is that generous
corporate campaign donors are taking advantage of the national
crisis to push an unpopular law change that they couldn,t otherwise
do. Back in 1995, the House Ways and Means Committee voted to
repeal the AMT, but President Clinton eventually vetoed that bill.
They couldn't get AMT repeal then. Now, under cover of crisis,
they,re on the verge of getting it. Even the latest proposal from
Senate Republicans, which is being praised by pundits as a moderate
compromise, includes AMT repeal. And whatever passes the Senate
will have to be reconciled with the rebates in the House bill.
As for the ordinary Americans who can,t afford to write a
$1,000 check to a politician, let alone hire a K Street lobbyist
to extend their unemployment benefits or save their health insurance,
Treasury Secretary Paul O'Neill says not to worry. The $100 billion
House bill will provide 300,000 new jobs, he told last Sunday's
TV talk shows. That works out to $333,333 in corporate welfare
for every new job. Rather than using the word stimulus, the bill
should be called the Campaign Contributors War Profiteering Act
of 2001, as columnist Al Hunt suggests.