While much focus around Congress’ return has been around the “fiscal cliff” and Benghazi, Congress faces a whole host of unfinished business.
The farm bill, which sets agriculture policy and funds the food stamp program, expired Sept. 30. Its expiration hit farmers immediately, especially dairy farmers who have not received their supplemental payments. If Congress doesn’t act by January 1, the cost of milk is expected to skyrocket and dairy farmers would have to comply with decades-old regulations that don’t conform to the modern industry. As for crop farmers, they have been in limbo, unsure of what sort of subsidies and priorities Congress will set for next year. The Senate passed a bill but the House has not. Analysts say a one-year extension is possible during the lame duck session but a full-fledged five-year reauthorization is unlikely.
The U.S. Postal Service is another area in need of Congress’ attention. The broke quasi-government agency is not government funded but lacks autonomy to make much needed changes in service and pension payments as it’s constrained by the heavy hand of Congress. The service has been unable to meet $1.1 billion in payments for future retirees’ pensions and is asking Congress to act. The Senate passed a bill but the House has yet to act over wrangling over the high cost of the food stamp program.
Congress also faces deadlines to extend the post-9/11 surveillance bill, the Foreign Intelligence Surveillance Act, funding for the intelligence community and a bill to authorize defense spending and programs.
Flashback: Paul Ryan and His Family to Benefit From the $45 Billion in Subsidies for Big Oil in His Budget
Paul Ryan’s budget, which means austerity for most Americans, turns out to mean prosperity for Ryan and his family.
That budget, which the GOP-led House adopted as its blueprint, slashes funding for everyone from seniors to the disabled to students while preserving $45 billion in tax breaks and subsidies for Big Oil over the next 10 years, as has been widely reported.
But what we have only just learned from Ryan’s financial disclosure forms for Congress (here) that were made public this week is “he and his wife, Janna, own stakes in four family companies that lease land in Texas and Oklahoma to the very energy companies that benefit from the tax subsidies in Ryan’s budget plan,” as The Daily Beast reported today.
Ryan’s father-in-law, Daniel Little, who runs the companies, told Newsweek and The Daily Beast that the family companies are currently leasing the land for mining and drilling to energy giants such as Chesapeake Energy, Devon, and XTO Energy, a recently acquired subsidiary of ExxonMobil.
The Mercatus Center has released a great new interactive graphic about the dangers of crony capitalism. As they make clear, the 2008 bailouts are just the tip of the iceberg. Crony capitalism distorts markets and promotes inefficiencies and bubbles through regulations, subsidies, protectionism, and more.
Hover your mouse over each form of cronyism to see Mercatus’s take on the issue. You can see some of AEI’s related material here.
Egypt’s Subsidy Blues: When Egypt’s Next Rulers Finally Tackle Urgently Needed Economic Reform, They Should Look to Iran
If people are hungry, provide food at prices they can afford. If they need fuel to cook it, or perhaps to bring their crops to market, give them a break at the pump. What could be fairer or more straightforward?
What, indeed. Governments all over the developing world have been seduced by the populist logic of subsidizing consumer necessities. The approach was especially alluring in centrally planned economies (including hybrids such as China and India), where prices didn’t reflect costs to begin with. And, of course, subsidies for petroleum proved to be as Arab as hummus for the oil exporters of the Middle East, where citizens have come to think of fuel at circa 1979 prices as a birthright.
If subsidies are good for the poor, why not let everybody else in on the deal? That’s a formula for multiplying the waste — subsidies reduce prices below cost, after all, artificially increasing demand and, where the subsidies are borne by the producers, undermining supply incentives. Nonetheless, extending eligibility to include both middle-class and business users has, more often than not, proved irresistible.
The catch, of course, is that few developing countries can really afford the drag on efficiency or budgetary cost. Case in point: Egypt, which devotes an astounding 10 percent of GDP to subsidies for food and fuel - both of which it must import. Whoever wins the presidential election runoff this weekend will thus face the unenviable task of prying both the middle-class and powerful business interests from their accustomed perquisites.
It needn’t (and probably shouldn’t) be done overnight; among other problems, that would spike inflation, which Egypt can’t afford, either. The big question is whether the new government will have the will and the way to manage it at all. Much, alas, is at stake here: Egypt’s failure to confront the subsidy issue would put at risk the gains of two decades of growth in which GDP per capita, measured in terms of purchasing power, almost tripled.
Joe Barton, he sticks to Republican talking points even when it doesn’t make sense! Today in daily Republican speak Joe Barton insists that people who benefit from Food Stamps and Meals on Wheels should go to work, (scroll up to the 5:20 point) that is the goal of Republicans to put everyone to work. Bashir reminds Barton who are the recipients of Meals on Wheels, Joe Barton looks like a complete ass.
Does Joe Barton realize he didn’t make any sense? Does he realize those standard talking points didn’t really work for what he was discussing with Bashir? Dumb and craven, these traits mark almost every Republican in congress. Do Republicans have any kind of deep policy beliefs other than cut more taxes and make sure corporations get more subsidies.
Of course Joe Barton will be reelected. SMH.
European governments are cutting their support for culture, and American arts lovers are starting to feel the results.
In Italy, the world-famous opera house La Scala faces a $9 million shortfall because of reductions in subsidies. In the Netherlands, government financing for arts programs has been cut by 25 percent. Portugal has abolished its Ministry of Culture.
Europe’s economic problems, and the austerity programs meant to address them, are forcing arts institutions there to curtail programs, tours and grants. As a result, some ensembles are scaling down their productions and trying to raise money from private donors, some in the United States, potentially putting them in competition with American arts organizations.
For Americans used to seeing the best and most adventuresome European culture on tour in this country, the belt-tightening is beginning to affect both the quantity and quality of arts exchanges. At least three European troupes that were expected to perform in January at the Under the Radar theater festival in New York, for example, had to withdraw as they could not afford the travel costs, and the organizers could not either.
“It is putting a pretty serious crimp in international exchanges, especially with smaller companies,” said Mark Russell, artistic director of Under the Radar. “It’s a very frustrating environment we’re in right now, tight in part because of our own crash, but more generally because it seems to me now that every time we get around to the international question, we have a meltdown and go back to zero.”
For artists and administrators in Europe, such changes are deeply disquieting, even revolutionary. In contrast to the United States, Europe has embraced a model that views culture not as a commodity, in which market forces determine which products survive, but as a common legacy to be nurtured and protected, including art forms that may lack mass appeal.
“Culture is a basic need,” said Andreas Stadler, director of the Austrian Cultural Forum in New York and president of the New York branch of the European Union National Institutes for Culture. “People should have the right to go to the opera.”
Over all, he added, “Culture is much higher on our political agenda than it is here, because it is so linked to our identities.”
Germany and France, the largest and most stable economies in Europe, are suffering the least and can even point to increases in financing for some officially favored programs, genres and ensembles that are seen as promoting the countries’ images abroad, like film.
But other countries with governments that are led by conservatives or technocrats — like Italy, Hungary, the Netherlands and Britain — have had their culture budgets slashed. So have others that are being forced to cut public spending to remain in the euro zone, including Greece, Portugal, Spain and Ireland.
President Barack Obama is proposing to cut the corporate tax rate from 35 percent to 28 percent and wants an even lower effective rate for manufacturers, a senior administration official says, as the White House lays down an election-year marker in the debate over tax policy.
In turn, corporations would have to give up dozens of loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face a minimum tax on their foreign earnings.
Treasury Secretary Timothy Geithner on Wednesday was to detail aspects of Obama’s proposed overhaul of the corporate tax system, a plan the president outlined in general terms in his State of the Union speech last month.
Chances of accomplishing such change in the tax system are slim in a year dominated mostly with presidential and congressional elections. But for Obama, the proposal is part of a larger tax plan that is central to his re-election strategy.
The corporate tax plan dovetails with Obama’s call for raising taxes on millionaires and maintaining current rates on individuals making $200,000 or less.
The 35 percent nominal corporate tax rate is the highest in the world after Japan. But deductions, credits and exemptions allow many corporations to pay taxes at a much lower rate.
Under the framework proposed by the administration, the rate cuts, closed loopholes and the minimum tax on overseas earning would result in no increase to the deficit.
That means that many businesses that slip through loopholes or enjoy subsidies and pay an effective tax rate that is substantially less than the 35 percent corporate tax could end up paying more under Obama’s plan. Others, however, would pay less while some would simply benefit from a more simplified system.
The official said the Obama plan aims to help U.S. businesses, especially manufacturers who face strong international competition. Obama’s plan would lower the effective rate for manufacturers to 25 percent while emphasizing development of clean energy systems. The administration official spoke on condition of anonymity to describe what the administration will do.
BP announced today that its 2011 profit totaled $26 billion, a 114 percent jump from the year before, when the company’s ‘failure of supervision and accountability’ caused the worst oil spill in U.S. history. As the company prepares for its upcoming criminal trial, let’s take a look at how BP has made out after the Deepwater Horizon disaster:
* BP earned $3 million every hour in 2011. Its fourth-quarter profits reached $7.69 billion, which is up 38 percent from 2010.
* The company is sitting on another $14 billion in cash.
* BP contributions to federal candidates totaled more than $98,000 in 2011, with more than half (65 percent) to Republican candidates.
* For every dollar the big five oil companies use in lobbying, they effectively receive $30 in subsidies. This could mean BP potentially gained up to $243 million in subsidies, although the exact amount for an individual company is undisclosed.
* In the third quarter, BP’s Bob Dudley announced the company had reached a ‘definite turning point’ of boosted profits. However, nearly two years following the Deepwater Horizon disaster, BP has still only paid $7.8 billion of the $20 billion fund they created to compensate individuals and businesses for losses incurred by the spill.
Despite being found ‘ultimately responsible’ for the most devastating oil spill this nation has ever seen, BP has spent millions lobbying on bills that would speed offshore drilling and leases.
At the time, Interior Secretary Ken Salazar accused House Republicans of having ‘amnesia’ about the oil spill. No doubt the total $137 billion profits in 2011 for the five big oil companies had something to do with it.
Amnesia? More like corruption, graft, and bribery to me. If you tried to pay $50 to a police officer to get out of paying a ticket, you’d be tossed in jail faster than a pot-plant possessor. But when oil companies stuff millions into the g-strings of GOP politicians in exchange for legislative favors, it’s perfectly legal.
This is why America can’t have nice things.
Startling numbers of Americans are “underwater” — homeowners and students alike — and so, for that matter, is Congress, even if in quite a different way. In these last years, it’s been flooded with money. Millionaires, including at least 10 centimillionaires, now make up nearly half of our representatives there, and as a group, they have been growing ever richer as Americans grow ever poorer. Bad times? Never heard of them. Congress’s median net worth rose by 15% between 2004 and 2010 — and this news, in a recent front-page New York Times piece, hardly caused a stir.
Of course, everything is relative. Compared to the giant energy companies, ours is a Congress of paupers. After all, the Big Five oil outfits (BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell) announced a combined $36 billion in profits in the second quarter of 2011. Exxon alone pulled in $10.7 billion (and spent more than half of those profits simply to buy back its own stock). In the third quarter, the same five companies returned for an encore. They made another $32.6 billion in profits, with Exxon at $10.3 billion (about half of which it again spent on stock buybacks).
Out of a deep sense of civic-mindedness, they and other oil and gas companies have, in turn, showered Congress with their pocket change. From 1989 through 2010, according to the Center for Responsive Politics’ invaluable OpenSecrets.org website, oil and gas companies gave Republicans in Congress $126 million and Democrats $42 million. Throw in a few hundred thousand dollars for the odd “independent,” and you’ve got $169 million dollars of pure oil and gas generosity over that period, which for them, as Jackie Gleason might once have said, is a “mere bag of shells.”
In case you’re interested, you, the American taxpayer, through Congressional subsidies for the oil and gas industry, reach deep into your own pockets and pony up billions every year to support those poor dears. And they turn around and pour what is, in essence, your money into the American electoral process to achieve the usual noble oil-and-gas ends. And just how well does all of that work? Here’s a little surprise: oil company political action committees (PACs) handed out $1.2 million to members of the House of Representatives in the first six months of 2011 and let’s not say “in return,” but — consider it an unrelated fact — 94% of the House members who received such funds voted to keep those industry subsidies flowing.
Then, of course, there’s the presidential race where, thus far, Rick Perry has raised $1.2 million from the energy sector, Mitt Romney $532,000, and Barack Obama $395,000. (If you’re talking just oil and gas, the figures are: Perry $648,000, Romney $274,000, and Obama $83,000.) And that’s just the beginning. After all, we’re officially only five days into presidential campaign 2012! And here’s the thing: you can’t always tell just where oil and gas money is likely to pop up. It might even, for instance, turn out to be behind the energy questions people have been asking in Iowa recently.
This is political (and corporate) life as we now know it, and most Americans are remarkably resigned to it. Not Bill McKibben, TomDispatch regular and author most recently of Eaarth: Making a Life on a Tough New Planet. As he showed with the ongoing dispute over the Keystone XL pipeline, when he sets his mind to it, he has a way of making us take another look at the previously accepted and acceptable. (To listen to Timothy MacBain’s first Tomcast audio interview of the new year in which McKibben discusses how the rest of us can compete with a system in which money talks, click here, or download it to your iPod here.) Tom
And here I thought that the conventional wisdom in the Republican party was that government handouts were only for liberals and welfare queens who want to cheat the system and who don’t want to work for anything.
Instead, we now find out that those same handouts are the rewards for success. Who knew?
Speaking at a town hall meeting last weekend in his home state of Florida, Stearns displayed a very sketchy grasp on how subsidies should work, explaining to Climate Progress that incentives should be given to mature companies, not early-stage companies.
‘When somebody is successful, then you give them the subsidies and the tax credit,’ explained Stearns, talking to Climate Progress.
Eh? Isn’t that entirely backwards? You’d think that the subsidies and incentives would go to the start-up and smaller companies in order to compete, not to the major oil companies raking in billions in profits.
Of course, when those relevant start-ups are in renewable energy and alternative energy, we begin to see why Rep. Stearns might have an issue. Can’t have that green technology getting any subsidies. That might convince people to start seriously investing in it, or in looking for ways to break the stranglehold of the oil companies.
Rep. Stearns then continues in his economic brilliance, explaining loan guarantees to his constituents:
Er, no. Loan guarantees aren’t free money. They are, in fact, the opposite of what Stearns says they are. As Think Progress explains:
It is simply an agreement with private lenders that the government will back a loan in case of default. The government is not actually giving any money outright — it only provides federal funds through a loan guarantee in a worst-case scenario. In order to qualify for the program, recipients must prove that they’ve raised adequate private capital. And in the case of power-plant developments, companies must have a long-term agreement to sell the energy.
Thus far, there is no statement from Rep. Stearns or his office correcting his obvious errors and setting the record straight.
Then again, denial of reality and presenting contradictory information as the truth seems to be a hallmark of the GOP these days, so maybe Rep. Stearns should get a government subsidy for his efforts.