The next time you hear someone complain about how the poor get “all this free stuff,” show them this.
A
small number of incredibly wealthy Americans are ridiculing Bernie
Sanders’ base for wanting “free stuff” when the costliest programs are,
by far, corporate welfare and entitlements for the top 1 percent. Fox
News has been working hard to tear down Sanders’ proposals to provide
Medicare for all, institute tuition-free public college, boost
infrastructure spending, and expand Social Security.
“That’s not fiscally possible unless the federal government starts seizing private assets,” said Bill O’Reilly.
But
O’Reilly is wrong. The money for Sanders’ platform can easily come from
eliminating the costliest entitlement programs for the top 1 percent
and multinational corporations. Here’s a breakdown of the most
superfluous giveaways to the rich and how much they cost the rest of us:
1. Tax Breaks for obscene CEO bonuses ($7 billion/year)
Currently,
the biggest corporations are exploiting a 20-year-old loophole that
allows them to write off inflated compensation packages for CEOs,
billing stock options, and performance-based bonuses to taxpayers. In
2010, the Economic Policy Institute found out that the biggest
corporations cost Americans $7 billion by writing off inflated executive
pay. Between 2007 and 2010, this loophole accounted for more than $30
billion in corporate welfare. According to The Guardian, fast food
industry CEOs cost taxpayers $64 million through this loophole.
That
$7 billion could singlehandedly fund the annual budget for the National
Science Foundation — which, as I recently reported for US Uncut, funds
11,000 scientific research projects each year and has funded 26 Nobel
laureates in the last 5 years.
2. Tax cuts for luxury corporate jets ($300 million/year)
Currently,
corporations can claim a huge tax deduction every year by writing off
purchases of corporate jets, lavish cars, and chauffeurs as “security”
for their top executives. A Bloomberg analysis from 2011 showed that
these tax breaks for some of the wealthiest Americans cost the rest of
us $300 million each year. While that may not sound like much, that’s
approximately 50 percent of the annual budget for the Consumer Financial
Protection Bureau, the brainchild of Elizabeth Warren that protects
Americans from the financial sector’s most predatory schemes.
3. Big oil subsidies ($37.5 billion/year)
According
to Oil Change International (OCI), the U.S. government spends anywhere
between $10 billion and $52 billion per year on corporate welfare for
the fossil fuel industry — one of the wealthiest industries in the
world. OCI estimated that total combined subsidies to big oil approached
$37.5 billion in 2014, which includes $21 billion on production and
exploration subsidies.
These subsidies alone cost more
than what we currently spend on providing rental assistance for
low-income families. In 2013, the department of Housing and Urban
Development allocated a total of $34.3 billion toward tenant-based
rental assistance ($19 billion), project-based rental assistance ($8.7
billion), and general public housing programs ($6.6 billion). These
programs helped 4.5 million families — half of whom are elderly — keep a
roof over their head.
4. Pharmaceutical subsidies ($270 billion/year)
As
US Uncut has previously reported, the pharmaceutical industry costs
taxpayers roughly $270 billion a year when accounting for the cost we
pay for life-saving drugs whose patents have been bought up by Big
Pharma. This is over $1,914 per household in corporate welfare. This is
partly due to the Medicare Part D bill that George W. Bush signed into
law in 2003, which prevents Medicare from negotiating drug prices with
pharmaceutical companies. But the biggest drug companies also make a
pretty penny (a combined $711 billion in profits between 2003 and 2012)
by buying patents for drugs that were largely developed with
taxpayer-funded research, then jacking up the price by absurd amounts
after cornering the market.
This $270 billion annual
subsidy could be virtually eliminated by passing Bernie Sanders’ bill to
establish a government fund that buys up drug patents as soon as they
become available for purchase. Then, the government would sell drugs
at-cost to save money for those who need them. The money saved could pay
for the annual $270 billion in insurance costs from Obamacare that
would help more Americans get access to healthcare.
5. Capital gains tax breaks ($51 billion/year)
When
anyone makes money from selling off investments, the IRS classifies
that as capital gains, which are taxed at a lower rate (20 percent as of
2012) than real, actual work (35 percent). Pew Research found that 53
percent of Americans own no stock at all, and out of the 47 percent who
do, the richest 5 percent own two-thirds of that stock. And only 10
percent of Americans have pensions, so stock market gains or losses
don’t affect the incomes of most retirees. The Century Foundation found
that the total amount of lost revenue by taxing capital gains at a lower
rate than wages cost $256 billion between fiscal years 2012 and 2016,
or $51 billion a year over the last 5 years. According to the Tax Policy
Center, if investment income was taxed at the same rate as wages, 75
percent of that new revenue would come from the richest 0.3 percent of
Americans; 92 percent of that revenue would come from those making
$200,000 or more per year. The chart below shows what percentage of
income each tax bracket makes from capital gains — not surprisingly, the
wealthiest Americans get most of the benefit from capital gains.
If
we taxed wealth like work, the extra $51 billion per year in savings
could fund two-thirds of the annual budget for food stamps.
6. Corporate tax subsidies from state and local governments ($80.4 billion/year)
In
2012, the New York Times did an analysis of every existing tax break in
each of the 50 states and learned that 1,874 programs cost taxpayers
$80.4 billion every year for corporate welfare in their state. Compare
that cost with the cost of providing tuition-free public college to
every student, which The Atlantic estimated would be a mere $62.6
billion. As the chart below shows, this is actually way cheaper than
what we currently spend on federal student aid.
7. Handouts to Big Ag ($18 billion/year)
Crop
insurance — a program originally intended to help farmers recover from
the dust bowls of the 1930s — has become a slush fund for wealthy
corporate farmers who have become experts at manipulating the system for
their own means. As Bloomberg reported, the median income of commercial
farm households (in which farming makes up more than 50 percent of a
household’s income) was $84,649 in 2011 — 70 percent more than the
average American household. Farmers have learned to exploit the program
by growing crops on land they know will be unproductive, then making
money from insurance claims rather than crops. In 2011, 26 farmers each
got an annual subsidy of $1 million, including one tomato farmer in
Florida who got a $1.9 million subsidy.
This $18
billion in corporate welfare is more than NASA’s annual budget, which
has hovered around the $17 billion mark since 2009.
8. Welfare for Wall Street ($83 billion/year)
The
biggest banks have grown even bigger than they were just before the
2008 financial meltdown. And due to their size, these banks are
perceived as “too big to fail,” as their demise would spell doom for the
US financial sector as a whole. So as these big banks grow bigger, the
Federal Reserve allows them to borrow at lower interest rates than other
big banks — essentially subsidizing the continued growth of the big
banks. In 2013, Bloomberg estimated the ten biggest TBTF banks suck up
$83 billion per year in corporate welfare.
If we were
to force the big banks to borrow at the same interest rates as every
other bank at a rate of $83 billion per year, that would be enough to
double the current federal budgets for highway spending ($48.6 billion),
Head Start ($10.1 billion), the Environmental Protection Agency ($7.89
billion), nutrition assistance for women, infants, and children ($6.2
billion), the National Parks Service ($3 billion), and the Federal
Deposit Insurance Corporation ($2.39 billion), with $5 billion left
over.
9. Export-Import bank subsidies ($112 billion)
This
week, the House of Representatives voted to revive the Export-Import
(Ex-Im) bank, which has been maligned as a slush fund for large,
multinational corporations. In its most recent year, the Ex-Im bank had a
$112 billion portfolio, of which $90 billion went to multinationals. If
that wasn’t bad enough, a huge portion of that money went to just 10
wealthy corporations.
According to the New York Times,
the federal government spends roughly $105 billion on public K-12
schools. If we allow the Ex-Im bank to fade away, the money formerly set
aside for corporate subsidies could instead double that investment in
public education.
10. Federal contracts for the top 200 biggest companies ($880 billion/year)
The
biggest 200 corporations have an excessively unfair advantage over
their competitors due to their influence in Washington. According to the
Sunlight Foundation, the top 200 companies spent a combined $5.8
billion on lobbying Congress between 2007 and 2012. And in those same
years, those companies received $4.4 trillion in federal contracts. That
$4.4 trillion is $100 billion more than what the U.S. government spent
on providing a basic income to the nation’s 50 million Social Security
recipients.
The combined cost of these 10 corporate
welfare programs is $1.539 trillion per year. The three main programs
needy families depend upon — Temporary Assistance for Needy Families
($17.3 billion), food stamps ($74 billion), and the Earned Income Tax
Credit ($67.2 billion) — cost just $158.5 billion in total. This means
we spend ten times as much on corporate welfare and handouts to the top 1
percent than we do on welfare for working families struggling to make
ends meet.
Read more: 10 corporate welfare programs that will make your blood boil
