More Corporate Welfare

[Manix]

LA Times


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After months of bickering with European allies, U.S. unilateralism leads to war. Europe stews for a while, then figures out how to retaliate. This time, the fight is over free trade.


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So far, Congress has declined to cancel the subsidies, which go to powerhouses like Boeing and Caterpillar. The European Union struck back Monday, announcing retaliatory tariffs, starting at $17 million a month, on U.S. agricultural and manufactured goods.

The announcement should be seen as a blessing in disguise, giving Congress an incentive to lose some costly corporate welfare. But as lawmakers take up tax legislation this week, they're doing the opposite. If they repeal the export credit, they want to create costly new tax breaks for industry that will further drive up a projected $5-trillion budget deficit.

Rep. Bill Thomas (R-Bakersfield), who heads the House Ways and Means Committee, is seeking legislation that would tie a repeal of the export subsidy, which is worth about $50 billion to American companies over 10 years, to $60 billion in compensatory tax cuts. Sen. Charles E. Grassley (R-Iowa) is on a productive track in endorsing a Treasury Department proposal to end a $25-billion tax loophole for cities that "lease" their sewage systems or subway cars, often to foreigners. But in the perverse logic of Thomas and some other lawmakers, the "saved" billions are supposed to be used to help "pay" for more tax cuts for industry.

The thinking is that with American manufacturers having shed more than 2 million jobs since the beginning of the Bush presidency, more tax breaks can help stimulate economic growth and competitiveness. But corporate taxes are already at their lowest levels since the 1930s, excepting one year during President Reagan's first term. As a share of the economy, U.S. corporate taxes are almost the lowest in the industrialized world.



LA Times