Amazing. A congressional committee forms to develop a plan to reduce the deficit. The committee fails but, in the meantime, proposals in Congress to undo previously agreed to cuts and to expand tax loopholes - both of which will increase the deficit - gain steam. A Congress supposedly focused on deficit reduction leads us to the brink of greater deficits. Only in Washington.
There are ways to responsibly reduce the deficit. Congress could start by looking at recommendations developed by the U.S. Public Interest Research Group (U.S. PIRG) and the National Taxpayers Union (NTU). These two grassroots organizations, with sizeable citizen memberships, have been on opposite sides of almost every political battle of the last two years, including the stimulus, health care reform, and Wall Street reform. Yet the two groups found common ground on 56 specific deficit reduction measures adding up to more than $1 trillion dollars in savings - that's four out of every five dollars the committee was tasked with cutting.
Many of the U.S. PIRG/NTU proposed cuts go after subsidies to mature and profitable corporations that don't need taxpayer dollars. Taxpayers could save $50 billion in the next decade if we ended government handouts to big agribusinesses. Seventy-four percent of the subsidies went to just ten percent of agribusinesses over the last 15 years.
Likewise, taxpayers shell out more than $27 million every year to pay oil companies to research how to drill and $200 million a year for companies like McDonalds and Fruit of the Loom to market their products overseas.
These should not have been tough budget choices to make.
We could save $1.23 billion in the next decade if we stopped paying to clean up old mines that have already been cleaned up. And it costs taxpayers $1.7 billion ever year just to maintain 55,000 unused or underutilized federal buildings.
Some subsidies do more harm than good. Taxpayers would save $60 billion over the next decade by eliminating subsidies for ethanol, the negative environmental impact of which outweighs the positive.
By failing to point a finger at specific taxpayer rip-offs, the Super Committee left the federal budget open to the indiscriminate hatchet. The across-the-board cuts mandated by law will make no distinction between wasteful handouts like subsidies to big agribusiness and public priorities like critical funding for Pell Grants, which allow millions of students to go to college.
At the same time, proposals to make it easier for large corporations to game the tax system to avoid paying taxes on their profits are gaining support. Plans that either sound good, like a "repatriation tax holiday," or wonky, like a "territorial taxation system," masquerade as tax reform packaged by the best and the brightest marketers for large special interests. Companies like GE, Verizon and Wells Fargo are some of the current leaders in their respective industries ... for tax avoidance.
With armies of tax lawyers, they compete not on product quality but on cleverness of tax schemes. Profits made in the U.S. are shifted to shell companies in the Cayman Islands or other tax havens through a web of interconnected subsidiaries. These subsidiaries overcharge or undercharge one another until the profits look to be made in a low-tax or no tax country.
Outside of Washington, there is widespread agreement that these tax loopholes should be closed. Such tax code carve outs serve no public purpose and, especially in times of scarce resources for true public priorities, we can no longer afford to let the well-connected take advantage of them while the rest of us shoulder more taxes, service cuts or a growing share of the debt.
The decision on how we achieve deficit reduction now returns to the full Congress. They can do right by the American people and end wasteful subsidies, close corporate tax loopholes and direct taxpayer money to important public priorities. While it should be easy, these changes will be strongly opposed by the narrow interests that reap the benefits. Polls indicate great public skepticism that Congress can or will resist the lobbying push. Please, members of Congress, prove us wrong.
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