Congressional Ethics Reforms Miss Corporate Welfare

The Abramoff scandal has spurred one of the episodic “reform” moments on Capitol Hill.

Republicans and Democrats are competing to offer ethics reform packages that ignore entirely their past entanglement in the very activities they now seek to regulate or eliminate.

Not all of these reforms are toothless, and if enacted and enforced, some may, perhaps, reduce the scale and scope of corruption that has reached a zenith in the Congress.

But there is far too little attention being devoted to what exactly is provided in exchange for the favors that lobbyists bestow on members of Congress.

Those gifts — the campaign contributions, the airplane rides, the visits to resorts disguised as speech opportunities — are not really gifts as such. They are more like investments (or quasi-bribes). And they are investments that pay back beyond the dreams of the greediest Wall Street prospector, in the form of corporate welfare: grants and direct subsidies, government giveaways, bailouts, tax subsidies, loopholes and other escapes, below-market loans and loan guarantees, export and overseas marketing assistance, pork for defense, transportation and other companies, regulatory removals, immunities from civil justice liability, and a host of other government-provided benefits.

To take one example of note: the Washington Post reported on December 31 how Jack Abramoff helped arrange the payment of half a million dollars from textile firms in the Mariana Islands in the Pacific, to a front group controlled by Tom DeLay. In exchange, they “solicited and received Rep. DeLay’s public commitment to block legislation that would boost their labor costs, according to Abramoff associates,” the Post reported. Textiles made in the Mariana Islands may be labeled “Made in the USA,” the factories there are exempt from U.S. labor law, and working conditions are appalling.

The goodies bestowed by Congress on their patrons are too numerous and diverse to be addressed with any single reform approach.

But good legislation could go a long way toward reducing corporate welfare doled out in the form of giveaways, subsidies, and cheap loans.

In one sweeping bill, Congress should decree that every federal agency shall terminate all below-market-rate sales, leasing or rental arrangements with corporate beneficiaries, including of real and intangible property; shall cease making any below-market-rate loans or issuing any below-market-rate loan guarantees to corporations; shall terminate all export assistance or marketing promotion for corporations; shall cease providing any below-market-rate insurance; shall terminate all fossil fuel or nuclear power research and development efforts; shall eliminate all liability caps; and shall terminate any direct grant, below-market-value technology transfer or subsidy of any kind. The bill should also amend the Internal Revenue Code to eliminate all corporate “tax expenditures” (Beltway talk for loopholes and gimmicks for corporate taxpayers) listed in the President’s annual budget.

Some of what gets cancelled in such a bill might be good public policy. If so, Congress should reauthorize it. But there’s too much accumulated contribution/lobbyist-driven institutionalized graft for a case-by-case review to eliminate what’s in place. What’s needed is a clean slate.

Other steps should be taken to complement a clean-sweep bill:

Citizens should be given standing to sue to challenge corporate welfare abuses — to restrain agencies that reach beyond their statutory powers to dole out corporate welfare.

Automatic corporate welfare sunsets should be established, with every corporate welfare program automatically phasing out in four years after initial adoption, and every five years thereafter.

Annual agency reports should be required on corporate welfare, with each federal agency listing every program under its purview which confers below-cost or below-market-rate goods, services or other benefits on corporations — and identifying the recipients. The president’s budget already does this for tax giveaways, though the beneficiaries are not identified.

A ban on corporate welfare for corporate wrongdoers. Corporations convicted of serious wrongdoing should not be eligible to receive the government’s largesse.

Corporate welfare cuts to the core of political self-governance, because it is perpetuated in large measure through campaign contributions and the subversion of procedural and substantive democracy; and because the perpetuation of corporate welfare itself misallocates public and private resources and exacerbates the disparities of wealth, influence and power that run counter to a functioning political system in which the people rule. The current reform moment is the time to address the problem.

Recent Posts

The Official Site of Ralph Nader