Trim 'corporate welfare' as well, Congress is urged

March 07, 1995|By Knight-Ridder News Service

WASHINGTON -- If the Republican Congress is truly serious about ending dependence on government handouts, it should look beyond the poor and also slash subsidies to corporate America, an unusual alliance of moderate, conservative and liberal policy experts declared yesterday.

The government could save $265 billion over five years by eliminating or scaling back 120 spending programs and tax breaks that benefit particular industries, according to a report released by the Progressive Policy Institute (PPI), a moderate Democratic think tank.

Also joining in the call for an end to "corporate welfare" were the Cato Institute, a think tank representing the libertarian wing of the Republican Party; the Center on Budget and Policy Priorities, a liberal advocacy group for the poor; and conservative columnist and author David Frum.

"It is these subsidies that create the impression that government is often for sale in the United States," Mr. Frum said. He added that it would be "a bad thing, morally and politically," if Republicans went to the voters in 1996 having chopped programs for the poor but leaving business subsidies untouched.

Supporters of the subsidies, meanwhile, call them an investment that preserves U.S. jobs and provides an edge for vital industries.

Among the programs and tax breaks singled out were:

* The Commerce Department's Market Promotion Program, which spends $110 million a year to help advertise U.S. products abroad. According to a Cato Institute analysis, taxpayers spent $10 million in 1991 touting Sunkist oranges; $2.9 million advertising Pillsbury muffins and pies; $2.5 million promoting Dole pineapples, nuts and prunes; and $465,000 to boost sales of Chicken McNuggets in foreign lands.

* The alcohol-fuel tax credit and excise-tax exemption, tax breaks worth $770 million a year to gasohol producers and users.

* Sematech, a partnership between the Pentagon and U.S. microchip producers, which receives $100 million a year for research to improve manufacturing techniques. The Cato Institute said Sematech was being used by big producers to undercut competition from smaller firms.

* The sugar price-support program, which has been estimated by congressional auditors to cost sugar users $1.4 billion a year.

"You would be hard pressed to find a single Fortune 500 company that doesn't receive federal aid," said Stephen Moore, a budget expert with Cato.

Rob Shapiro, an economist with PPI, said government subsidies to particular industries were wasteful and encouraged companies to become less productive and less competitive.

Many of the subsidies also reflect economic priorities that predate the computer age.

Labor Secretary Robert B. Reich recently gave a speech attacking corporate subsidies, but the White House brushed off his comments.

The administration has been an avid promoter of U.S. products abroad and backs government support for a range of new technologies.

Representatives of some of the industries being criticized were not amused.

"It's not corporate welfare -- you're talking about American farmers," said sugar industry spokesman Joseph Terrell.

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