Barge industry, backed by corporate muscle, keeps its federal subsidy afloat

May 21, 1993|By Boston Globe

WASHINGTON -- It seemed a simple request by President Clinton: In an era of swollen budget deficits, why not ask beneficiaries of the government's largest commercial freight subsidy -- the big grain, energy and shipping firms that ply the nation's rivers -- to pay their own way?

But the inland waterway interests, protected by powerful

lobbies, insured by millions of dollars in campaign contributions and prized by the media as a bit of Americana, are doing quite well at keeping their $750 million annual federal subsidy alive.

The waterway interests and their supporters have portrayed bargemen and the farmers they serve as hardy entrepreneurs, working the nation's fields and rivers like characters from Steinbeck or Twain, now doomed to financial ruin at the hands of insensitive bureaucrats.

Without the subsidy, "most of these barge companies would have to shut their doors," said Sen. Tom Harkin, D-Iowa. "For many farmers in my state [it] would be the difference between making a profit or taking a loss; between keeping a farm or losing a farm."

But a close look paints a different picture. Ten big firms, it turns out, own about two-thirds of the nation's river barge fleet. Seven of these 10 firms are subsidiaries of even bigger transportation, agriculture or energy corporations.

Many of these corporations, in turn, rank among the nation's biggest campaign contributors. In all, the Globe found, big waterway interests contributed $3.7 million to congressional candidates in the 1992 election.

These are firms that might be able to absorb or pass on the cost of of losing their subsidy, but have the clout to keep it. And that is how -- piece by piece, program by program -- campaign vows of "change" can crumble.

"The whole history of civilization is the history of the development of river valleys and their use for transportation," said Sen. Daniel Patrick Moynihan, D-N.Y. "But keep this up and the president's program is in jeopardy."

It will cost the government about $860 million this year to keep America's rivers dredged, the channels wide, and the locks and dams in order. About half that money goes to new water projects, the rest to maintenance.

With the budget he sent to Congress in February, Mr. Clinton didn't attempt to kill the subsidy right off -- just trim it severely by increasing the tax to 29 cents in 1994, 90 cents in 1996 and $1.20 per gallon thereafter.

In doing so, Mr. Clinton joined a queue of prominent critics who have tried to trim the subsidy over the years: a crowd that ranges from conservatives like Ronald Reagan and the National Taxpayers Foundation, to liberals like Ralph Nader, to environmentalists like the National Wildlife Federation.

The waterway interests argue that water projects historically have controlled floods, cut air pollution and highway congestion and kept commodity prices low. But in the 1990s, with the rivers largely tamed, the subsidy for waterways is defended most as a federal jobs program that supports farms; grain, coal and oil firms; and a fleet of barge companies.

Randy Gordon, a spokesman for the National Grain and Feed Association, a coalition of 1,200 grain firms, defines the subsidy as a kind of backdoor industrial policy. The issue is "competitiveness," he says: Without the help of the taxpayers, U.S. farmers and miners can't compete with overseas rivals.

The barge industry has been under intense economic pressure since a wave of overbuilding -- based on wildly optimistic predictions of export growth -- took place in the late 1970s, said Jack Lambert, an industry consultant.

"The biggest, strongest companies, the ones with the deepest pockets, survive everything," Mr. Lambert said.

To scuttle Mr. Clinton's plan, the waterway interests have coupled the ongoing plight of small barge firms and family farms with the behind-the-scenes clout of corporate giants, many of whom have been squeezing their smaller counterparts out of business.

Mr. Lambert publishes an annual statistical analysis, called the "Barge Fleet Profile." According to his 1993 report, the biggest barge line is owned by CSX Corp., a transportation giant.

Many of the smaller barge lines are also owned by corporations like the Exxon Corp., Ashland Oil Co., the Occidental Petroleum Corp., the Dow Chemical Co. and Du Pont.

"There aren't many mom-and-pop barge companies anymore," said David Conrad of the National Wildlife Federation. "The barge industry's clout comes from its association with some of the biggest, best-financed corporations in the country."

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