Corporate Welfare State Is on a Roll : Taxes: From S&L; bailouts to cut-rate timber leases to toxic cleanups, it’s the individual taxpayer footing the bill.

Raiding taxpayer assets is the big game in Washington, but not everyone can play. From bailouts to outright giveaways and from military procurement fraud to bloated subsidies, our national government has become a golden accounts receivable for hordes of organized, corporate claimants who lobby daily to get something for nothing or a lot for a little.

Taxpayers and their lobbying groups focus on tax rates and loopholes, paying insufficient attention to misappropriation of their dollars by corporate welfarists. One reason for this inattention is that the laws shut taxpayers out--they may not petition the offending agencies and departments or take them to court for the arbitrary and capricious transfer of taxpayer assets to corporate use and control. The stakes are enormous for both present and future generations of Americans.

Four areas of abuse are booming:

Bailouts. The prominent bailouts of the 1970s--the $250-million Lockheed loan guarantee and the $1.5-billion Chrysler loan guarantee--were legislated after public hearings and now look like small change. The taxpayer bailout of the wreckage caused by fraud and speculation in the savings and loan industry will reach at least $300 billion before the dust settles. Estimates of cleanup costs for U.S. nuclear weapons plants, managed by private firms such as DuPont and North American Rockwell, range from $50 billion to $150 billion.

Bailouts are increasingly being shaped and decided with fewer and fewer congressional standards. In December, 1988, in a secret frenzy of round-the-clock giveaways, the Federal Home Loan Bank Board unloaded the assets of dozens of S&Ls; into the laps of financiers who had to invest comparatively tiny amounts of their own capital, while the board assumed open-ended liability for these failing institutions. The board obligated the taxpayers for more than $40 billion in this feeding frenzy, without any congressional authorization. Congress turned down efforts to reopen these deals (whose full texts are still secret) and instead retroactively ratified the board’s wildcat indebtedness.

To illustrate the lucrativeness of these back-room bonanzas: One financier, Ronald Perelman, recouped 80% on his investment in a Texas S&L; in just the first 90 days after concluding his deal with the board.

It is not corporate taxpayers who must endure the bailout burden of these corporate scandals; it is primarily the small taxpayer, who neither caused nor benefited from the scandals.

Resource depletion. Public lands make up one-third of the United States. The laws declare them to be commonwealth: They are owned by the people in trust for posterity and managed largely by the Departments of the Interior and Agriculture. For a century, in a trend that accelerated under the Ronald Reagan-James Watt regime, rich mineral rights, timberland and other wealth have been taken from the commonwealth and leased at bargain-basement prices to corporations. The cost to taxpayers to facilitate private cutting of virgin timber lands is more than 10 times what they get back in royalties. One Alaskan pulp mill paid $2.12 for a 100-foot-high spruce, while taxpayers footed the bill for roads to make the cutting possible. Third World nations demand tougher royalty agreements from U.S. oil companies than our own government does. The under-reporting and under-payment of royalties, and the longer-range depletion and destruction of public natural resources, erode these taxpayer assets.

Taxpayer-funded research and development. This giveaway also expanded rapidly under the Reagan Administration. The prevailing practice is to give exclusive patents on government-financed inventions to private contractors. Even inventions generated by government laboratories are being given over to private business. The National Cancer Institute, which developed the application of the drug AZT against AIDS, allowed Burroughs Wellcome, Inc. to obtain an exclusive patent to market the medicine without any price restraints or royalties. A year’s treatment with AZT costs from $6,000 to $10,000. Under Medicaid, the taxpayers are paying twice for a drug their taxes developed for clinical use. Total federal and state purchases of AZT from Burroughs Wellcome between 1982 and 1987 are estimated at $2.4 billion.

The federal government funds nearly half of the nation’s R&D.; Taxpayers, who provide the roots for this work, are denied the fruits, which mostly flow into corporate coffers.

Subsidies to profit-making businesses. Perhaps the most grotesque example of corporate welfare is the millions of dollars in Urban Development Action Grants and other subsidies given to General Motors in 1981 to build an automated Cadillac plant in Detroit. There are many examples of UDAG grants going to profitable companies, along with a large menu of other direct grant and subsidy programs. There are even subsidies for exporting nuclear power plants and tobacco. The overall value of these corporate welfare payments is easily more than $100 billion a year.

There are simply no open administrative procedures, as there are with environmental and consumer regulations, for taxpayer participation in the use and disposition of such public wealth. The Supreme Court has ruled that federal taxpayers cannot appeal to the courts to stop waste, fraud and unlawful conversion of taxpayer assets because they have “no standing to sue.” The usual argument by the court is that a taxpayer’s interest is shared with millions of others and is comparatively minute and indeterminable. When Richard Nixon’s White House aides were openly using their time and government facilities to advance his reelection campaign in 1972, a federal court refused to admit a taxpayer’s suit to enjoin such unlawful behavior because of the standing issue. Even 50 million taxpayers in a class action would not have made a difference to the court.

Many states give taxpayers standing to sue state government. Some explicitly authorize taxpayers to sue as private attorneys general to uphold the laws that officials are ignoring. If President Bush and Congress really are serious about preventing taxpayer assets from being looted, mismanaged or converted to private parties, legislation is needed to protect the public’s property from giveaways, as in the patent area; to establish procedures that will assure more open and accountable government policy-making regarding taxpayer assets, and give taxpayers standing, under what constitutional lawyers call a “participant-review provision,” to defend their interests in federal courts.

Hundreds of billions of dollars in tax-payer assets have been squandered. It is time to give taxpayers the means to correct these injustices. After all, they pay the bills.