On Monday, Senator Tom Coburn (R-OK) released a report that shows millionaires receive about $30 billion every year in government subsidies, tax breaks, and federal grant programs. In the opening statement of the report titled “Subsidies of the Rich and Famous,” Sen. Coburn laments, “This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations.”

The Associated Press reports:

The report, which compiled government data mostly over the last five years, showed payments to millionaires for programs like Social Security, unemployment and farm subsidies totaled about $1.6 billion annually. Tax credits for deductions like mortgage interest, rental expenses, cancelled debt and business entertainment expenses totaled $28.5 billion annually, according to the report.

CBS News points out some of the benefits big name celebrities have enjoyed:

The Coburn report says that millionaires who have collected taxpayer-funded farm subsidies include former NBA star Scottie Pippen and billionaire media titan Ted Turner. The report cites General Accountability Office findings that highlight the need to prevent USDA farm subsidies from going to the rich.

Also in the report: superstar singer Jon Bon Jovi paid only $100 in property taxes last year on his extensive NJ real estate holdings because he “raises bees” on it; “The Boss” Bruce Springsteen gets subsidies for leasing property to an organic farmer. Quincy Jones, who produced the top selling record of all time, Michael Jackson’s “Thriller,” got a $25,000 award from the taxpayer-funded National Endowment for the Arts for his contribution to music.

While it’s important for the government to create a business friendly environment, it’s just as important to be smart about it. With our economy in the state it is, we can’t afford to be handing out billions of dollars in unnecessary benefits. Sen. Coburn sums it up well: “We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.”BA

One of the rare areas that receives bipartisan support for reform is spending on federal farm subsidies. Democrats generally view them as corporate welfare for large agriculture companies encouraging over-farming, while Republicans decry them as tampering with free market forces. Whichever side you fall on, most agree it’s one area that has the potential to save taxpayers billions.

The New York Times explains:

When it comes to spending cuts, members of Congress like to say that “everything is on the table.” Except, generally, food. But now federal farm subsidies, long decried by policy makers as wasteful and antiquated but protected by powerful political interests, appear to be in serious danger.

A confluence of factors have lined up against the farm programs. While the rest of the economy remains largely stagnant, commodities prices and farm incomes have remained at a protracted high. The House Agriculture Committee, while still dominated by farm state members, is now peppered with freshmen who view cuts to these programs as an essential part of the broader attack on the federal deficit, the centerpiece of their campaigns.

[I]n both parties there is a sense that support for subsidies is waning. This year, Senator Richard J. Durbin, Democrat of Illinois, one of the nation’s biggest farming states, told the state’s farm bureau to expect cuts. Senator Debbie Stabenow, Democrat of Michigan and chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry, told reporters at a state agriculture conference that “making sure that we’re doing our part in being fiscally responsible” would be the biggest challenge in the next farm bill.

As discussions about what to cut grow more and more difficult and contentious, it’s particularly important to capitalize on instances where parties find common ground.

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The New York Times explains:

Topping out at 35 percent, America’s official corporate income tax rate trails that of only Japan, at 39.5 percent, which has said it plans to lower its rate. It is nearly triple Ireland’s and 10 percentage points higher than in Denmark, Austria or China. To help companies here stay competitive, many executives say, Congress should lower it.

But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.

The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals “world leaders in tax avoidance,” according to Edward D. Kleinbard, a professor at the University of Southern California who was head of the Congressional joint committee on taxes. This has profound implications for businesses, the economy and the federal budget.

“Whether the test is fairness or efficiency, the U.S. system gets really low marks,” said Michelle Hanlon, an M.I.T. professor who says the country needs to completely revamp the way it taxes corporations.

We’ve made clear many times before that we have a spending problem, not a revenue problem, but our complicated and onerous tax code has made it increasingly attractive for businesses to shift profits abroad.

The Times continues:

The United States is virtually alone in trying to tax its multinational corporations on their foreign earnings, but it allows companies to avoid those taxes indefinitely by keeping profits overseas. That encourages companies to use accounting maneuvers to shift profits to low-tax countries and to invest profits offshore, says David S. Miller, a partner at Cadwalader, Wickersham & Taft in New York.

It’s past time for the federal government to get out of the business of picking winners and losers and focus on getting its fiscal house in order and living within its means – something families across the country have had to do in these difficult times.BA

The following is an excerpt. The New York Times has the full story.

[GE’s] extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

If the average American can’t avoid paying taxes on their income why should corporations be able to? Until Congress tackles corporate tax reform and closes corporate tax loopholes we shouldn’t be surprised to hear stories like this. If you could legally get out of paying millions of dollars in taxes wouldn’t you?

 BA

According to MarketWatch the economy grew 3.1 percent in the fourth quarter of 2010, better than previously estimated.

CNBC says the Sovereign Fiscal Responsibility Index shows the U.S. is one of the worse nations in terms of financial stability. The reason? Growing debt problems.

Bloomberg, The Hill and The Washington Post have the latest on the political wrangling over the fiscal year 2011 continuing resolution (CR) while The Daily Caller takes a look at waste that was in the short-term CRs.

The Washington Post says Democrats are divided over whether or not to tackle the issue of entitlements as part of the current budget debate. The Hill says Democrats will at least have a proposal on Medicaid.

According to The Washington Post state governments are cutting unemployment benefits in order to deal with their budget crises.

On the opinion pages: Chuck Blahous examines whether Social Security will be there for future generations and John Stossel says it’s time to end corporate welfare.

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It actually wasn’t just the bailouts. Public opinion has been turning against stimulus funding as it looks less and less like money is going to the highest-need use and more and more is being used to unfairly pick winners and losers among businesses.

Left-of-center political commentator Robert Reich cites corporate welfare as the leading concern of “the mad-as-hellers” – his label for a third party of angry Americans made up of folks from the left and right, of which Reich counts himself a member.

Reporter John Stossel is joined by many on the right trying to drive a wedge between corporate welfare, or “crony capitalism” as he calls it, and free-market capitalism.  This camp points to the causes of the financial crisis and the government’s responses as recent evidence of just how bad the problem has become.

So why does it continue?  Why is corporate welfare, the great unifying threat that we all agree must be stopped, not receding?

The reality is that politicians have fed this beast for so long, they’re having trouble reining it in.  Whenever government gives more power and money to business or interest groups, it creates a new constituency that will fight tooth and nail to keep – and grow – its funding.

This process is bad for growth and bad for democracy.

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Among the interventions, government assumed an ownership stake in the financial giant Citigroup.  The U.S. Treasury made two separate multibillion-dollar bailouts of Citigroup in 2008 and 2009, ultimately arriving at a 7.7 billion shares (or 36 percent) stake in the company.

The Treasury Department announced on Monday that it was planning to sell its huge chunk of Citigroup back to the open market.  And to help with the sale of Citigroup, Treasury has hired the investment bank Morgan Stanley as an advisor.  According to the New York Times, Morgan Stanley stands to profit between $23 and $135 million from the deal.

To summarize, our government spent billions of dollars to bail out one investment bank and now is going to pay a separate investment bank tens of millions of dollars to unwind that bailout.  First taxpayers bailed out Wall Street – now taxpayers are paying its fees.

BA

These videos are funny, and clearly financial sector regulation is an issue worthy of investigation.  But consider the videos’ message at the end: “The banks have billions of dollars to spend to get their message out but your speech is free.  Contact your Senators about the CFPA.”

The reality: banks are helping craft the CFPA proposal.

That’s because the CFPA – the Consumer Financial Protection Agency – was actually developed by people who receive millions of dollars from banks.  According to the Center for Responsive Politics, Chris Dodd (Chairman of the Senate Banking Committee and architect of the legislation) received his largest portion of campaign contributions from the “securities and investment” industry (which stands to be most affected by financial regulation).

As a result, the CFPA includes many special interest carve outs and exemptions.  The biggest exemptions from the CFPA are for Fannie Mae and Freddie Mac, the two government sponsored institutions widely credited with helping cause the financial crisis.  The reason they are exempted is probably the same reason they were allowed to grow dangerously big in the first place – campaign money and pressure from special interests.

The end of the ad has a call to action: “Contact your Senator about the CFPA, nothing annoys them more than having to do their jobs.”  That’s probably true.  But what Senators really need to understand is that corporate loopholes and favored exemptions benefit Wall Street, not Main Street.

Instead of creating a new regulatory agency (by the same people whose policies helped get us in a financial mess), Congress should consider how current regulations could be reformed to lower the cost of doing business.

BA

Bailed-out firms start rebuilding on K St.: “Big banks and automakers bailed out by the government are now on a K Street shopping spree.”

Census hiring blitz of 750,000 to cut jobless rate, offer boost to Obama: “Unemployment rate could drop by half a point and boost Obama, but workers will only be on until June.”

Senate votes 100-0 to highlight spending: “The Senate voted unanimously Tuesday to tell the public when it isn’t paying for new spending or tax cuts.”

USA Today:

Greek PM: I didn’t ask Obama for ‘bailout money’: “The Greek leader said he didn’t ask Obama to direct aid for his nation’s debt crisis, and that the president expressed support for efforts to crack down on market speculation arising from Greece’s problems.”

Washington Post:

House Democrats seek to limit earmarks: “Seeking to reclaim the reform mantle amid a series of scandals, House Democratic leaders are advocating a move that would shake up the multibillion-dollar practice of awarding no-bid contracts known as congressional earmarks.”

Levin: Job creation to be top priority: “As he takes the reins of the tax-writing House Ways and Means Committee, Rep. Sander M. Levin says that in addition to job creation, he plans to wade aggressively into the debate over national tax policy.”

GOP targets Dems over reconciliation: “Sen. Mitch McConnell (R-Ky.) warns House Democrats that they would be taking a colossal risk if they approved the Senate’s version of health-care legislation before the Senate had acted to remove some of the bill’s most contentious provisions.”

New York Times:

Broad Plan Urged to Battle New York’s Fiscal Crisis: “Lt. Gov. Richard Ravitch will unveil a plan that includes borrowing billions and imposing curbs on future spending.”

A Consumer Bill Gives Exemption on Payday Loans: “Senator Bob Corker wants a proposed bank agency to be more lenient toward nonbank companies, but some advocates say that would hurt consumers.”

China’s Exports Rise 46%: “Economists said the data signaled a rebound in consumer demand in the U.S. and other Western markets.”

Wall Street Journal:

Jobs Bill Clears Senate Hurdle: “The Senate voted 66-34 to approve a procedural motion on a $150 billion bill that extends a series of tax credits, continues emergency-benefits programs and provides additional aid to struggling state governments.”

Mexico Tops Obama’s Trade Agenda: “The Obama Administration’s top trade negotiator, Ron Kirk, said the U.S. is working quickly to resolve a damaging trade spat with Mexico.”

LA Times:

Economic recovery is emerging from U.S. factories: “Improbable as it seems, the brightest spot so far in the nation’s spotty economic recovery is a sector long considered all but dead — good-old-fashioned manufacturing.”

Politico:

Hurdles to financial reform: “The legislation may fall short of resolving conflicts of interest.”

BA

At first glance former President Bush and President Obama seem like opposites when it comes to economic policy making.  Talk of Bush as a free-marketeer and deregulator abounds as Obama’s reputation as a big spender and intervener grow stronger by the day.  A closer look shows their economic policies have more in common than meets the eye.

5. They love to spend. Bush passed a $3 trillion budget for 2009.  Obama posted a $3.5 trillion budget in 2010.  Bush doubled the debt to almost $6 trillion and Obama’s plans would leave us with an IOU of an additional $8.5 trillion by 2020.

4. They shop at the same stores. Contrary to popular belief, defense and homeland security spending only made up about 40 percent of Bush’s new spending.  He increased spending across most non-defense categories – like education, Medicare, Medicaid, income security and regional development – by four to six times the rate of inflation.  In Obama’s first half year in office, as he demanded a departure from the “investment deficit” years under Bush, these budgets rose another 70 percent or 40 times the rate of inflation.

3. They dabble with stimulants. In 2001 and 2008, Bush spent billions on rebates to stimulate consumer spending.  In 2009, Obama upped the ante with his $862 billion stimulus package.

2. They give sweetheart deals to failing corporations. Obama carried out Bush’s unpopular $700 billion bailout for failing corporations.  Together, the presidents have bailed out over 600 businesses since Spring 2008.

1. They enjoy regulating in their free time. Once again contrary to popular belief, President Bush was the biggest regulator since Richard Nixon.  Under his leadership in 2007, the number of pages of regulation added to the Federal Register reached an all-time high of 78,090  – a 21 percent increase from Bush’s first year.  And spending on regulatory activities rose to $42 billion in 2009 – a 62 percent increase.  Since taking office, Obama has proposed a large and sweeping increase in regulation that many worry could lead to another financial crisis in the future.

Despite rhetoric that suggests the contrary, President Obama’s economic policies are strikingly more of the same failed policies that Bush tried before him.  This is unfortunate because, as New York Times columnist Paul Krugman claims, the last decade has seen declining private-sector employment and declining median household income.

BA