POLITICS

Carney: GOP has chance to wage war on corporate welfare

By |
Photo - U.S. Sen. Rand Paul (Getty Images)
U.S. Sen. Rand Paul (Getty Images)
Politics,Timothy P. Carney,Campaign 2012,Politics Digest

"We've got to make sure that we are not the party of big business," Republican Gov. Bobby Jindal of Louisiana told Politico this week. Republicans, Jindal said, need to be sure they are not too cozy with "big banks, big Wall Street bailouts, big corporate loopholes, big anything."

Sen. Rand Paul, who came to Congress by beating a K Street-backed Republican in the 2010 primary, sounds the same note. "Instead of just talking about welfare to poor people," Paul told me Wednesday, "we oughta be talking about corporate welfare."

Corporate welfare was the dog that didn't bark in this year's elections. "One of the things that got the Tea Party excited was opposition to the bank bailout," Paul said. "That sort of became a nonissue for us because Gov. Romney supported the bank bailout."

The current lame-duck session of Congress provides a few opportunities for House and Senate Republicans to stake out free-market, populist ground.

Sugar subsidies, bank bailouts and special tax credits for well-connected industries will be on the table between now and the end of the year. In every case, the limited-government position is also the anti-big business position.

The sugar prop is probably the nation's least defensible corporate welfare program. The federal government, at the behest of domestic sugar growers, chokes off sugar imports, making sugar much more expensive in the United States than in the rest of the world. Meanwhile, Washington gives generous nonrecourse loans to sugar growers with sugar as collateral. So if somehow U.S. prices fall too low for the growers, taxpayers have to buy up all the sugar.

The sugar program will expire at the end of this year unless Congress renews it. On the campaign trail, President Obama blasted House Republicans for not having passed the farm bill that would reauthorize the sugar program along with other corporate welfare farm subsidies.

Republicans may not yet have the fortitude to wind down all farm subsidies, but the House could easily pass a farm bill that omits the sugar subsidy. If the White House and the Democrat-controlled Senate go to the mat for the sugar program, Republicans could point out that Dems are holding the farm bill hostage for a few politically connected businesses that force American consumers to pay higher prices.

Then there's the shadowy bank bailout that top congressional Democrats and the bank lobby want to extend. It's called the Transaction Account Guarantee. TAG provides a taxpayer guarantee on checking account balances -- above and beyond the $250,000 the FDIC insures.

In the heat of the 2008 financial panic, Congress created TAG to deter bank runs. The 2010 Dodd-Frank bill, which Obama touts as a broadside against banks, extended the bailout measure to the end of 2012.

The American Bankers Association is lobbying hard to extend the provision. Rep. Barney Frank, the top Democrat on the House Financial Services Committee, has supported another extension. So have Democratic Sens. Sherrod Brown and Jon Tester.

The Obama administration disagrees with the bank lobby and some of his party's lawmakers: Treasury Secretary Tim Geithner says TAG should be allowed to expire. Even so, Republicans opposing this bailout could draw a line distinguishing themselves from big-government, big-bank liberals in Congress. Or they could oppose the White House and the free market and side with the American Bankers Association.

Expiring tax breaks provide another opportunity for Republicans to battle the special interests while striking a blow for free markets.

General Electric, the American Wind Energy Association and other lobbying giants are fighting to extend tax credits for renewable energy. If Republicans attacked these credits as corporate welfare, and simultaneously pulled the plug on tax credits for the oil industry, they could plant a flag as scourges of the special interests. And if they kill these loopholes and reduce rates, they can claim real populist tax reform.

Tax reform is itself a populist issue. Tax credits typically accrue to the well-connected. Complexity is an asset for the well-connected and a burden for Mom and Pop. Witness GE's 2011 corporate income tax of $0. It's no coincidence that GE spends more than any other company on lobbying and has a 1,000-person tax division.

Big government benefits those who can afford the best lobbyist. Republicans can reach out to everyone else.

Timothy P.Carney, The Examiner's senior political columnist, can be contacted at tcarney@washingtonexaminer.com. His column appears Monday and Thursday, and his stories and blog posts appear on washingtonexaminer.com.

View article comments Leave a comment