116 3rd St SE
Cedar Rapids, Iowa 52401
By Nicholas Johnson
Democrats and Republicans in Washington are seemingly suffering from ideological immobilization regarding the national debt.
Republicans' Grover Norquist famously said he'd like a government small enough that he “can drown it in the bathtub.” Republicans fear that if taxes are increased, the liberal tax-and-spend Democrats will just squander the money on bigger government and more wasteful giveaways. Meanwhile, Democrats fear that free-range, feral Republicans will ultimately leave us with no solution for our surfeit of poor children other than Jonathan Swift's suggestion that we eat them.
I understand their dilemma. Being honorable men and women, they know that when you take hundreds of thousands of dollars from someone you have a moral obligation to reciprocate, to meet your donor's expectations of reward.
Years ago, I documented their expectations. The average rate of return was 1,000-to-one or more. The official gets a $100,000 “contribution”; the donor's repaid $100 million for his “investment.” The payback can take the form of, say, subsidies, price supports, tax breaks, government contracts, public land, bailouts or tariffs.
The total isn't chump change. The International Monetary Fund says global subsidies for fossil fuels alone are $1.9 trillion a year.
Recently, 10 percent of the Fortune 500 corporations had so many tax breaks they not only owed no taxes, they actually got refund checks!
Sen. Tom Coburn, R-Oklahoma, explains what others fear to whisper: “It's not about tax policy, it's about benefiting the political class and the well-connected and the well-heeled in this country.”
Legislators need money to be re-elected. Can you see why it's easier for them to cut Social Security or food stamps than their donors' rewards programs? (The poor are notoriously miserly when it comes to large campaign contributions.)
So what's our nation's first step on this journey of a thousand miles?
Here's an idea. Ask the Congressional Budget Office and IRS to, first, identify all the special interest tax breaks that lobbyists have obtained. Some benefit an individual company; others an industry, or all business. Forget the other trillions in giveaways; focus on tax breaks.
Don't eliminate these tax breaks; just make them visible subsidies, as appropriations. Publish them online. Hold news conferences to brief journalists and bloggers, and let them run with it.
Then see what happens. If the public doesn't respond, well, that's democracy for you. If they do, it might provide some backbone implants for our “representatives” in Washington.
And Des Moines.
The Gazette's Erin Jordan has skillfully brought this approach to Iowa's sales tax. (March 23) “Report: Iowa lost $3.9 billion in sales tax breaks in 2010; Breaks up 62 percent since 2005.”
I've written about applying it to TIFs (tax increment financing) - the local form of handing taxpayers' money over to for-profit businesses, as in “TIF Towers,” http://fromdc2iowa.blogspot.com/2012/04/tif-towers.html.
When it comes to federal, state and local politicians transferring taxpayers' money to for-profit companies (often in exchange for campaign contributions), the practices and consequences are similar, whether the special treatment comes from local TIFs, state sales taxes or federal corporate income taxes.
The first step to reform is also similar: public disclosure of what's going on.
How much money is at stake? Who's getting it? In exchange for how much in campaign contributions?
Neither the media nor public in our democratic society can begin to redress these abuses so long as they take the form of essentially invisible tax breaks, rather than debated appropriations of giveaways, openly arrived at, and shamelessly set upon the table, under lights.
If only Congress' journey of a thousand miles could begin with this simple, single step.
Nicholas Johnson, a former FCC Commissioner, teaches at the University of Iowa College of Law. Comments: www.nicholasjohnson.org and FromDC2Iowa.blogspot.com