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Ralph Nader > In the Public Interest > Those Costly Subsidies

Tony Bonillo, the new president of the League of United Latin American Citizens (LULAC), paid a visit recently to Vice President George Bush. Because minority group leaders are expressing deep worry about the way budget cuts are being made, Ronald Reagan has instructed his vice president to be the administration’s point of highest contact with blacks and Hispanics.

Bush listened intently to the Hispanic leader, nodded frequently and, as is his practice, asked for new ideas. This is the Reaganite manner of avoiding discussion of existing programs, now being slashed, that have helped the poor. Bonillo surprised the vice president by handing him a three-page letter (with six pages of attachments) that describe a new strategy for minorities in dealing with the Reagan-Bush government. It is a strategy which confronts the political parties and the political system with the real issues of politics—the distribution of power, wealth and subsidies between the rich and the poor.

Bonilla’s letter to Bush wastes no time getting to the point: “No administration can long survive if it fails to apply its scrutiny and budget-cutting standards in a fair and equal fashion to both the rich and poor. The Hispanic community thereby seeks your assistance in eliminating certain unnecessary subsidies to the wealthy that are costing the American taxpayers over $32 billion a year.”

The followed Bonillo’s explanation of these “certain unnecessary subsidies” for the wealthy:

“No. 1: You have pledged to eliminate the $321 million subsidy for legal services to the poor largely on the grounds that government money should not be used to promote a particular point of view. More than $24 billion per year is deducted by corporations for legal expenses, much of it for lobbying and litigation that clog the courts. This constitutes a $12 billion-per year taxpayer subsidy. This is 36 times last year’s budget for Legal Services and equal to the annual cost for food stamps.

“The Hispanic community requests your unequivocal support in eliminating this subsidy…In the long run, its elimination will also make more lawyers available to low- and middle-income persons, thereby reducing the cost of litigation for all Americans.’

“No. 2: You have supported a substantial reduction in housing subsidies for low-income persons despite the typical subsidy being less than $3,000 per family.

“The typical lobbyist and Cabinet member pur­chasing a home during your administration will receive a federal tax subsidy in excess of $20,000 per year. This is based on a 15 percent interest rate on a $300,000 mortgage. We, therefore, seek your support to eliminate the present subsidy of mansions and million-dollar second homes.

“No. 3: You have proposed a number of cutbacks in assistance to the needy on the ground that they are either not truly needy or that some poor are welfare cheaters.

“Are you saying that the American taxpayer gives a gift of $63,000, on the average, to every American who buys a foreign-manufactured, gas-guzzling Rolls-Royce that helps create unemployment for U.S. autoworkers? In addition, we believe that this tax subsidy is being used frequently. Specifically, we believe that a careful IRS investigation will document that the majority of these Rolls-Royce owners are, in effect, ‘welfare cheaters.’ That is, more than 50 percent fraudulently claim that the Rolls-Royce is used for business, thereby entitling them to the 10 percent investment tax credit and the use of a double-declining balance depreciation deduction.

“The Hispanic community requests your support in rooting our and prosecuting Rolls-Royce ‘welfare cheaters’…

“Over the next three years, LULAC and the Hispanic community intend to help balance the budget and counter inflation through effective scrutiny of subsidies to the privileged as well as to the disad­vantaged. We will do so via a combination of meetings with top administration officials, legislative action and public organizing.”

Tony Bonillo’s approach foreshadows the corporate challenge that will be coming from the ghettos and barrios of America. The call of “no welfare for the rich” soon will reach the luxurious trappings of executive suites where million-dollar-a-year bosses spend their time figuring out how many goodies they are going to get from Uncle Sugar in Washington.

Asked for a response to Bonillo’s letter, the office of Vice President Bush replied with a terse “no com­ment.”

For a copy of Tony Bonillo’s letter to George Bush, send a self-addressed, stamped envelope to LULAC, Suite 716, 400 First Street N.W., Washington, D.C., 20001