At first glance, there’s no obvious connection between Mitt Romney’s “47 percent” video clip and another clandestine tape – the one depicting Gov. Paul LePage at a Republican fundraiser in Bangor.
LePage’s big pitch was a pledge to call a special legislative session to do something really big before November -- an empty boast with no basis in reality. If I were a legislator it would concern me, but as a political controversy it had a short life.
Not so with Romney’s comments identifying those households that don’t earn enough to pay federal income taxes as “dependent on government” and who “believe they are victims” – so they will automatically vote for President Obama.
Yet beneath the surface, the Republican arguments are quite similar. LePage believes “welfare” costs are bankrupting state government, and defines “welfare” as Medicaid health care benefits, paid two-thirds by the federal government. Hence his quixotic crusade for a $20 million federal waiver to ax certain groups, something that will never be granted but is in the Republican-passed state budget nonetheless.
Romney is targeting the same group – the poor and near-poor – as the explanation for federal deficits.
Much has been written about the absurdity of Romney’s claim that being income- tax free makes a near-majority of American voters free-loaders. When federal payroll taxes are figured in, plus regressive taxes most states levy on sales and property, the poorest 20 percent of Americans generally pay taxes at higher rates than the richest 1 percent. Special low rates for capital gains earned predominantly by the very rich are the reason.
But little has been said about the rest of Romney’s claim – that the lower half is uniquely dependent on government. The truth is almost exactly opposite.
Aid for poor families and children has steadily declined. Housing subsidies, Head Start payments, heating assistance – you name it – have all been cut, often dramatically.
What remains untouched are subsidies that support big business – tax subsidies so ingrained in the federal budget that hardly anyone talks about them.
Two examples: We handsomely subsidize high fructose corn syrup, part of a Byzantine set of corn price supports that also unwisely props up ethanol, the gasoline additive. Corn syrup is the predominant sweetener in soft drinks, even though it’s far more expensive than sugar from the Caribbean. Congress levies high tariffs on sugar from desperately poor countries to protect Florida growers who are largely gone, thanks to reduced water withdrawals from the Everglades. Without the tariffs and corn subsidies, food prices would fall and taxpayers would save. Obviously, it’s too sensible for Congress even to talk about.
Second example: We’re still subsidizing petroleum drilling through the oil depletion allowance, an egregious tax expenditure reformers fought to end in the 1970s but never did. The original premise was that drilling was risky because companies couldn’t be sure where oil was. High-tech surveying equipment has largely eliminated the risk, but the subsidies live on.
But for my dollar, the worst federal subsidies to big business aren’t usually considered subsidies at all, and add inexorably to our mammoth health care costs.
When for-profit insurance companies helped defeat President Clinton’s health care plan in 1994, they began lobbying for a bigger piece of the federal pie. It arrived in such seemingly progressive packages as the Children’s Health Insurance Program, which for the first time allowed states to use federal dollars to buy private insurance for kids, rather than enrolling them in Medicaid. They also got a piece of Medicare through “Advantage” plans that somehow cost more and provide fewer benefits than the standard model.
The drug companies got their big payoff when Congress approved the Medicare prescription drug benefit proposed by George W. Bush. It barred price negotiations with drug companies, which basically allows them to charge us whatever they want.
It’s like walking into Wal-Mart and finding you’ll have to pay an ever-higher list price set by the manufacturer – even if it’s 30 percent more than the price anywhere else. This is why it actually makes financial sense to “re-import” a drug from Canada. State politicians, including LePage, support re-importation without acknowledging the absurdity of federal policy.
We could cut bloated health care costs quickly without adverse effect on patients by repealing these outrageous sops to Big Pharma. Yet when President Obama designed what became the Affordable Care Act, he actually preserved the no-negotiation policy, so great is the perceived power of the drug lobby – just one of an onslaught of corporate giveaways.
Mitt Romney is right that the budget deficit is far higher than it needs to be because of the dependency of certain groups on the federal treasury. He just misidentified them.