Pruning squad urged for 'corporate welfare' Independent panel pushed by senators

March 06, 1996|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- Acknowledging that Congress does not have the political will to do the job itself, a bipartisan group of senators pushed yesterday for the formation of an independent commission to help drastically cut the subsidies and tax breaks for business that they called "corporate welfare."

With the role of business in society emerging as a potent issue in the presidential campaign, the senators, ranging from conservative Republicans such as John McCain to liberal Democrats such as Edward Kennedy, argued that the time is right for a sweeping reduction in the tens of billions of dollars in special breaks.

While the benefits help particular companies and industries and do protect some jobs, they said, they also cost taxpayers money, inhibit competition and slow long-term growth.

But since Congress has proved not to have the stomach to confront the issue, the senators said, the only realistic way of doing so would be to turn the problem over to a panel of appointees who would presumably be less susceptible to pressure from lobbyists, interest groups and campaign contributors.

There is no corresponding proposal in the House, but John Kasich of Ohio, chairman of the Budget Committee, has supported efforts to cut corporate breaks.

White House advisers said an independent commission poses some problems, but has an appealing political logic that could help advance the idea. But they said they had no position yet on the proposal.

The commission would be loosely modeled on the one set up several years ago to close military bases. But Congress had to either accept or reject the recommendations of the base-closing commission, with no changes allowed. By contrast, The recommendations of the corporate-aid panel would be subject to piecemeal review by congressional committees, allowing into the process some degree of the political pressures that the plan was intended to minimize.

The plan for a commission was developed late last year by a

group of senators led by Mr. McCain of Arizona and it had its first hearing before the Senate Governmental Affairs Committee yesterday.

It was also sponsored by Sens. Fred Thompson of Tennessee and Daniel Coats of Indiana, both Republicans, along with Mr. Kennedy of Massachusetts and Russell Feingold, a Wisconsin Democrat.

"The public cannot understand why we continue to shell out billions of dollars in subsidies to powerful corporate interests when we simply cannot afford such largess, and at a time when many corporate CEOs are earning bonuses that are larger than the budgets of most school districts," Mr. McCain said.

Lobbyists said business groups invariably supported reining in unjustified corporate subsidies and tax breaks -- while arguing that the programs that benefited their industries and companies were justified.

The Cato Institute, a research group usually identified with conservative policies, calculated last year that the government was spending $75 billion a year on 125 programs. It defined corporate welfare as "the use of government authority to confer special benefits or privileges to specific firms or industries where there is no corresponding societal benefit."

Mr. McCain said he and Mr. Thompson introduced an amendment in November to eliminate 12 egregious examples of "corporate pork" in the budget. "The fact that 74 senators voted against the amendment is ample testimony to the problem," Mr. McCain said.

Liberal research organizations such as the Progressive Policy Institute have also taken aim at corporate subsidies, as has pTC Common Cause, the self-styled citizens' lobby. They said that most special breaks , while perhaps justified initially, have long since outlived their purpose and now do little more than enrich companies and their shareholders at the expense of taxpayers, customers and competitors.

Pub Date: 3/06/96

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