While President Bush was asking children to send in a dollar and telling patriotic adults to buy war bonds, no sacrifice was demanded of America's biggest corporations. To the contrary, they received the biggest handout in US history, with hundreds of billions of dollars given away to companies that are downsizing their workforce as rapidly as possible.
As the country mourned the workingclass heroes in police and fire departments and donated $1 billion to 9-11 charities, politicians quietly honored a much different group with billions in subsidies: the CEOs and big corporations. Many people say that "everythiing changed" after 9-11. Unfortunately, one thing that hasn't changed is the corporate pork enjoyed by rich corporations that donate huge campaign gifts to politicians.
Profiteering during war is nothing new for American corporations. But after 9-11, companies were "waving a flag and carrying a big shovel," as Ralph Nader noted. Airlines were the first to line up at the feeding trough. Democrats (influenced by the lobbying of Linda Hall Daschle, the Senate majority leader's wife) and Republicans united to give away $15 billion (and immunity from some lawsuits) to airlines that were laying off thousands of employees.
The 9-11 attacks sent the Dow Jones plummeting 14% when trading resumed a week later. However, a few companies benefited from the minimum of $20 billion in new defense spending. Weapons company Lockheed Martin's stock rose 15%. Raytheon, maker of the Patriot missile, saw its stock increase by 21%. Northrop Grumman, which builds the B2 bomber, had a stock increase of 16%.
Corporate lobbyists used 9-11 as justification for everything from fast-track authority for "free trade" treaties to the "Farm Security AM" which would provide $170 billion over 10 years in expanded farm subsidies for corporate agribusiness. James Albertine, president of the American League of Lobbyists, called it "a free-for-all."
One big corporate subsidy comes in the form of government laws providing free insurance coverage. The Bush administration, for example, wants to bail out the insurance industry by having the government pay at least 90% of terrorist-related claims.
In November, a House committee approved a 15-year extension of the Price Anderson Act without debate, an act that commits federal funds for any liability to the nuclear energy industry beyond $9 billion for a nuclear accident.
While the media gave enormous cover age to the $1 billion donated by the American people to relief efforts, they barely noticed the efforts by our politicians to give far more money to America's corporations. The idea that the economy works best when Americans spend themselves deep into debt is never questioned in the mainstream press, because their advertisers only want the public to hear the message of spending more. When adbusters.org tried to buy ads for "Buy Nothing Day," the broadcast networks refused to accept them.
The biggest corporate welfare package comes in the form of tax cuts. Like the $1.3 trillion tax cut the proposed $210 billion economic stimulus package stimulates the rich a lot more than the poor: 70% of the money will go to corporations.
"Late last winter, when President Bush was shaping his $1.35 trillion tax cut, corporate lobbyists were told to wait their turn would come. And now, their turn is here," noted a New York Times (Oct. 27) report. The tax cut aimed at the wealthiest Americans is now being magnified by a tax cut aimed at the wealthiest corporations.
One of the biggest boondoggles is the repeal of the alternative minimum tax, which was imposed on companies in 1986 to prevent profitable corporations from evading taxes. In addition, companies will receive a $25 billion tax rebate for previous payments, including $1.4 billion given away to IBM, $833 million to General Motors, $671 million to General Electric, and $254 million to Enron. About $6.3 billion would go to 14 corporations, who together gave nearly $15 million in soft money donations to Democrats and Republicans in recent years.
The government must increase efforts to stop corporations from evading taxes. While individual payments under the alternative minimum tax increased from $830 million in 1990 to $5 billion in 1998, corporate payments have dropped from $8.1 bil- in 1990 to $3.3 billion in 1998.
Although the corporate tax rate is supposed to be 35%, big corporations use tax loopholes to avoid paying their share. According to Citizens for Tax Justice, the effective corporate tax rate has dropped from 26.5 percent in 1988 to only 20.1 percent in 1998. General Motors made $2.9 billion and paid only 1.5% for taxes. IBM had profits of $5.7 billion, yet it paid only 10.8% in taxes last year-it would have paid 7.6% without the alternative minimum tax. Another tax cut provision to accelerate depreciation expenses would cost $39 billion per year. Since most states follow federal rules, money-starved state governments would also lose billions every year.
Conservatives believe that what's good for corporations is good for America. This is trickle-down-the-flag economics, a kind of supply-side patriotism that somebody named Bush once called "voodoo economics."
Sen. Phil Gramm (R-Tex.) responded in full trickle-down mode, writing to the Wall Street Journal (Oct 19) that "the first lesson in economics I learned was that no "poor person would ever offer me a job." Apparently, Gramm doesn't think the poor voters of Texas elected him, only the rich campaign donors.
After a decade of record profits, America's corporations aren't the ones who suffer most from an economic downtown. "The Republican package shamelessly raids the Treasury at a time of crisis on behalf of the wealthiest corporations and barely throws a bone to unemployed workers," noted Rep. Jan Schakowsky (D-IL).
The theme of patriotic shopping is one way to distract attention from corporate welfare. Vice President Cheney declared that he hoped Americans would "not let what's happened here in any way throw off their normal level of economic activity." Local officials in Florida declared "Freedom Weekend" for people to do their patriotic shopping, and wwwamericaopenforbusiness.org created one million posters featuring an American flag with shopping bag handles.
Americans responded to 9-11 with an outpouring of generosity. American
corporations responded with an outstretched hand, grabbing billions of
dollars in subsidies and tax cuts. For corporate America to use the tragic
deaths of thousands of people as an excuse to make more money isn't just
war profiteering, it's grave robbing.