Christmas came early on K Street. Washington's business lobbyists awoke one morning in late September to find a $40 billion present from Ways & Means Chairman Bill Archer (R-Tex.): a proposal to let companies reclaim and spend massive assets locked away in overfunded pension plans. The loophole was designed mainly to help budget-cutting Republicans, who will garner $10.5 billion in taxes if companies pull out $40 billion in assets, as expected. But Archer's gift was a big hit in Corporate America--and like the very best presents, it was pretty much a surprise. "We didn't ask for it," says a pension lobbyist, "but you can bet we're defending it now."
So much for ending "corporate welfare" as we know it. Early this year, Republican radicals swore they would erase the GOP's image as the Skybox Party. House Budget Chairman John R. Kasich (R-Ohio) targeted $30 billion in special corporate tax breaks for elimination. Strategists warned of a public-relations disaster if Republicans slashed the social safety net while leaving a cocoon of $86 billion in subsidies and breaks for Big Business.
"UNCHALLENGED." Did the majority of Republicans get the message? No. Some have learned to talk the talk: Archer, for example, portrays his pension-raid plan as the centerpiece of "corporate tax reform." But in reality, "corporate welfare continues unchallenged," complains former Bush aide James P. Pinkerton. Even the GOP's struggle to carve $1 trillion from the budget over the next seven years can't shake its reflexive urge to shower business with federal largesse. If they can't repress that instinct, Republicans will never convince voters that they have been reborn as the champions of the middle class.
Most of the biggest corporate breaks were never in peril. Oil drillers and timber companies didn't lose any sleep over their loopholes--not with Texan Archer and, until recently, Oregon Senator Bob Packwood in charge of tax policy. Republicans who had long denounced the "socialism" of the Tennessee Valley and Bonneville Power authorities "got real quiet when their party started winning seats in the Northwest, the land of cheap electricity," says Robert J. Shapiro of the Progressive Policy Institute, a Democratic think tank. Big exporters will continue to enjoy sales help from the Export-Import Bank and the Agriculture Dept.'s marketing-promotion programs.
Even where budget-cutters did propose small nicks in corporate welfare, lobbyists have come roaring back. Iowa Republicans reminded House Speaker Newt Gingrich (R-Ga.) that they're hosting the first event of the 1996 primary season--and persuaded him to eliminate the Ways & Means panel's cap on tax breaks for ethanol, a boon to corn farmers and agribusiness giant Archer-Daniels-Midland Co. Home-state shipping interests prevailed over ideological purity for Senate Majority Whip Trent Lott (R-Miss.), who forced $46 million in maritime subsidies back into the budget.
Budget pressures ultimately may doom some subsidies. The imperative to cut $13 billion from farm programs, for example, may guarantee that something like the Freedom to Farm Act--a 7-year reduction in price supports--will prevail. The pork that's packed into the Pentagon's appropriation will certainly be trimmed in hard negotiations between Capitol Hill and the White House. And tax breaks for pharmaceuticals makers' Puerto Rican plants, long under assault, may slowly wither away.
That's a start--but it's not enough. A GOP that believes social welfare breeds personal dependency can't go on pretending that corporate welfare builds a strong economy. The party that's bold enough to reform health care for the elderly ought to show the same fortitude when tackling oil drillers and airplane manufacturers. If Republicans can't wake up to the glaring disparity in their positions, they can be sure the voters will.