Corporations Are Not People: Why They Have More Rights Than You Do and What You Can Do About It (16 page)

The trillion-dollar bailouts after the 2008 financial crisis may be the champion of corporate welfare programs. Government bailouts to corporations after the financial crisis add up to $562 billion
as of March 2011 ($256 billion has been returned), including loans to Fannie Mae and Freddie Mac ($154 billion); AIG ($68 billion); General Motors and other auto companies ($80 billion); and Citigroup, Bank of America, Goldman Sachs, and other banks ($245 billion).
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Estimates that include additional federal assistance set bailout spending at $4.7 trillion, with $2 trillion returned to date.
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I explore the financial sector and its impact on our economy in more detail in
Chapter Five
.

Our military spending, the largest component of the federal budget, is as big as all of the defense budgets of every other country in the world combined. The budget includes billions of dollars of corporate handouts, weapons systems that the Pentagon does not want, and a troubling expansion of corporate contractors for every aspect of military activity, from supply to mercenary corporations like Haliburton or Blackwater (now called XE, after its name became infamously associated with corruption in Iraq). In 2000, the military budget was $294 billion. For 2011, the military budget is $710 billion, the largest contributor to the deficit this year.

Consider General Electric’s “alternative engine program” for the F-35 fighter jet. The engine is called “alternative” because it is not really the engine for the F-35. Pratt & Whitney, not GE, already makes the F-35 engine. The Pentagon says GE’s proposed engine is not necessary. For years, the military has said that it does not want the “alternative” engine and that the money spent on it is a waste. President Bush urged Congress to kill the program in 2007, and President Obama did the same in 2009. That has not mattered. GE keeps spending political money, and Congress keeps approving spending for the “alternative” engine program. The cost to taxpayers so far for the unnecessary “alternative” F-35 engine has been $3 billion. If you go back to
Table 1
, you will find GE near the top, spending more than $230 million on lobbying in the past decade.
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Corporate power also drives deficits in indirect ways. Corporate lobbyists ensure that even programs intended to benefit the public interest must be designed for corporate profit, at the expense of the government and the American people. This is usually accomplished by writing the law to require hundreds of billions of dollars in corporate revenue, such as health care reform that mandates customers for health insurance corporations or that prohibits the government from negotiating pharmaceutical prices.

Health care costs are among the primary drivers of the deficit. While domination of government by corporations is partly a fiscal issue, the health care area also shows the terrible price many people pay in their personal lives for the disconnection of our representatives from the interests of the people.

Health Care Corporations Block Reform
to Preserve Profits

The reason our government spends so much on health care is not because we are unduly generous for too many of our fellow citizens. Exactly the opposite: We are the only developed country in the world that relies on an expensive, wasteful, private sector, employer-sponsored health insurance system that leaves millions of citizens with nothing. Our health care costs include billions of dollars of CEO pay and corporate profit that other countries do not need to add into the bill. We pay twice as much on health care as other developed democracies—about 17.4 percent of GDP versus 9.3 percent—with less to show for it.
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When President Clinton tried to change this unsustainable system in 1993, the health insurance and pharmaceutical companies spent hundreds of millions of dollars to defeat reform. The system only got more dysfunctional over the next fifteen years, and the corporate lobby got stronger, spending even more in 2009 and 2010 to block effective health care reform again.

Although a version of reform passed in 2010, the corporate-dominated approach to that reform has serious consequences for long-term deficits and continuing financial drain on American businesses and people. What is mainstream and conventional throughout the world—cost-effective single-payer health care—was never given a second of consideration, despite the fact that a majority of Americans favor that approach.
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The so-called public option, which at least would have allowed people to choose to take our business from profit-driven corporations to a government pool to help keep costs down, never had a chance, despite support from three-quarters of the American people. Even after months of assault by corporate money and lobbyists, most Americans did not think the health care reform went too far; they either supported it or thought it did not go far enough.
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We saw a preview of this type of corporate-dominated health care lawmaking in 2003, when Congress enacted and President George W. Bush signed the Medicare “Part D” prescription drug program for senior citizens. The law provided no means for paying for this expensive program, which effectively transfers hundreds of billions of dollars of (borrowed) money from the federal government to global pharmaceutical corporations. Much worse, the 2003 Medicare law actually made it illegal for the government to negotiate fair drug prices. The law also banned the import of cheaper drugs from Canada and made generic alternatives more difficult to obtain.
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According to a House of Representatives committee report, the federal government now pays 30 percent more for pharmaceuticals as a result of the 2003 law, resulting in overcharges to the government of billions of dollars per year. How did this happen? A Republican congressman from North Carolina explains: “The pharmaceutical lobbyists wrote the bill.”
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A few months after the Medicare Part D law was enacted, the leading congressman who worked on the bill, Representative Billy
Tauzin, who had been both a Democrat and a Republican over the years, left Congress. He took a job as president of the pharmaceutical corporations’ lobby group, the Pharmaceutical Research and Manufacturers of America (PhRMA), at a salary of more than $2 million a year. “As a member of Congress, Billy negotiated a large payout to the pharmaceutical industry by the federal government,” said another congressman. “He’s now about to receive one of the largest salaries ever paid to any advocate by an industry.”
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Olga Pierce, a journalist for
ProPublica,
reviewed what had happened to others in government who worked on that 2003 payout to the pharmaceutical corporations:

Former Sen. John Breaux, D-La., … fought against allowing drug prices to be negotiated in Medicare Part D. A year after the bill passed, he left the Senate to begin his lobbying career. He now has his own lobbying firm, Breaux Lott Leadership Group, which this year has received $300,000 to lobby for the pharmaceutical industry.

Former Sen. Don Nickles, R-Okla., who helped negotiate the final version of Part D, then left to form his own lobbying firm. Bristol Myers-Squibb paid the Nickles Group $120,000 this year to lobby for, among other things, “health care reform issues related to Medicaid and Medicare.”

Thomas Scully, the former Medicare chief who helped design Part D, … obtained a waiver allowing him to discuss job offers before he left his government post. Less than two weeks after the bill passed, he went to work for the lobbying firm Alston & Bird, where he works on behalf of drug companies.

Raissa Downs … a top legislative aide in the Department of Health and Human Services … helped spearhead the agency’s efforts to shape Part D. Now she’s a
partner at Tarplin, Downs & Young consulting firm, where she is lobbying against changes to Part D.

Michelle Easton has gone through the revolving door several times, working for Breaux, then the industry, then for Senate Finance Chairman Max Baucus, the Montana Democrat who is a key player in the current reform debate. Now Easton works in Downs’ firm.

John McManus, … staff director of the House Ways and Means health subcommittee when Part D was created, now has his own lobbying firm. Between 2004 and June 2009 the McManus Group earned about $6 million lobbying for PhRMA and various drug companies.
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