GOP Aims to Cut Firms’ ‘Corporate Welfare’ : Subsidies: Republicans seeking savings for tax cuts. They’re due to release a hit list of the targeted programs.

Congressional Republicans, struggling to find the savings they need to provide promised tax cuts, are preparing to launch a politically risky assault on an assortment of business subsidies characterized by conservatives and liberals alike as “corporate welfare.”

As early as this week, Sen. Phil Gramm (R-Tex.) and a dozen GOP colleagues are expected to release a hit list of government subsidies to businesses that could top $32 billion. If they can persuade reluctant colleagues to go along with their proposed cuts, the budgetary savings would be enough to finance the capital gains tax cut that is a central element of the GOP’s “contract with America.”

In addition, Gramm says, trading in corporate subsidies for capital gains tax cuts would “get government out of the decision-making business and let families and businesses decide how they want to spend their money.”

In the House too, cutting “corporate welfare” has become a rallying cry among many younger conservatives, who are eyeing subsidies ranging from sugar price supports to export promotion programs for their potential hit list.

But the issue is potentially perilous for Republicans, who traditionally have defended the business interests that benefit from such subsidies, and who have received substantial financial support in return. Indeed, many of the House and Senate’s senior Republicans have authored subsidy programs and can be expected to defend them ardently, which could further expose Congress’ generation gap.

In the House, the search for savings in the world of business breaks is being led by Rep. John R. Kasich (R-Ohio), the firebrand chairman of the House Budget Committee, and by a group of freshman lawmakers like Rep. Gil Gutknecht (R-Minn.). In unveiling a list of $100 billion in “illustrative cuts” recently, Kasich announced that it was time for the denizens of “Gucci Gulch,” Washington argot for well-heeled lobbyists, to begin feeling the pain of government cutbacks. Kasich targeted nine business subsidy programs totaling nearly $8 billion.

A group of freshmen including Gutknecht hope to go still further, finding as many as 25 programs to terminate.

“We have to turn over every rock and look for savings and make every program justify itself,” said Gutknecht. “This is what the American people want.” But when hard proposals begin circulating, Gutknecht predicted, lawmakers will not uniformly fall into line. “You’ll start to see some fur fly.”

Among the “corporate welfare” programs Gutknecht sees as vulnerable is a subsidy to U.S. auto makers for trying out manufacturing technologies. Worth more than $100 million per year, it goes to an industry that makes billions in profits, he said.

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The Progressive Policy Institute, a liberal think tank, has identified corporate subsidies worth $131.2 billion over the next five years as deserving candidates for termination. The institute also identified industry tax breaks worth $101.8 billion that could be discontinued.

Most prominent among the subsidized industries are agriculture, energy, transportation and banking, as well as natural resource industries, such as mining and timber. But even small businesses, which many Republicans see as the beleaguered engine of the nation’s economy, could be targeted.

Each of those industries can be expected to dispatch lobbyists to protect its aid programs, budget-cutters say. But where smaller-scale efforts to pare such programs have failed, some lawmakers hope for better luck under the broader effort to balance the budget.

Many Republicans also see an attack on corporate benefits as an antidote to Democrats’ charges that they are exclusively targeting programs for the poor.

“The Democrats are waging a rhetorical war with claims that we’re doing favors for the wealthy and not going after so-called Republican constituencies,” said Rep. John Shadegg (R-Ariz.). “I don’t personally believe that, but the truth is . . . when you want to bring the budget into balance, you’ve got to be looking not just at duplicative programs and spending on the ‘safety net’ but also on these favors cut on Gucci Gulch.”

But many Republicans warn that Democrats challenging them to target “corporate welfare” may not like the result. A number of programs have been spawned by the Clinton Administration to help industries that could generate “high-wage, high-skill” jobs.

Indeed, Gramm sees the assault on corporate welfare as a way to dismantle the Clinton Administration’s hallmark efforts to re-involve the federal government in “industrial policy.”

“All these corporate subsidies fit the Democrats’ conception of the government as the decision-maker,” said Gramm in a recent interview. “It’s a natural thing for a political liberal to say, ‘You want to talk about welfare, let’s talk about corporate welfare,’ But in reality, they both came about for the same reason--a faith in the federal government’s ability to make decisions for us.”

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Gutknecht warned that a generational fight could ensue.

“Many of the senior members who helped construct these programs--both Republicans and Democrats--are going to be very defensive,” he said. “Freshmen have to be movers and shakers on this issue because we come to the debate with clean hands.”

In the search for savings, some Republicans are treading on perilous political territory. Rep. Dan Miller (R-Fla.), a Republican whose district has many sugar farmers, recently denounced the federal government’s sugar subsidy program--$1.4 billion per year--as a “clear case of unnecessary government intervention.” Angry sugar growers now regularly demonstrate outside Miller’s district office.