A Nation of Moochers (12 page)

Massachusetts is one of forty-three states offering inducements to movie and television production companies to shoot within their borders, part of the scramble to compete for a brief cameo by Johnny Depp or Angelina Jolie. A relatively recent phenomenon, the subsidies had risen to $1.5 billion by 2010, money that the Center on Budget and Policy Priorities states “otherwise could have been spent on public services like education, health care, public safety, and infrastructure. In 2009, that money would have paid for the salaries of 23,500 middle school teachers, 26,600 firefighters, and 22,800 police patrol officers.” In California alone, the subsidies cost the state $100 million a year.
³

The median tax credit is worth about 25 cents for every dollar a Hollywood producer spends; but some states are far more generous: Alaska and Michigan offer 44 cents and 42 cents in credits respectively. This very sweet deal actually gets even sweeter, because film companies are often allowed to claim the credits even if they lose money. Better yet, some states make the credits “refundable.”

The Center on Budget and Policy Priorities explains that it works this way: “If a producer lacks sufficient tax liability to use all of a
refundable
film tax credit, the state pays the producer the whole credit anyway, in effect giving the producer an outright cash grant. For example, suppose that a producer is awarded a film tax credit of $100,000 but has a pre-credit tax liability of only $50,000. A non-refundable credit would reduce the producer’s tax liability to $0 but leave it with $50,000 in unusable credits. If the tax credit is refundable, the state pays the producer $100,000, including the $50,000 in credits it otherwise could not use.”
*

In other words, the state transfers money from waitresses and truck drivers in Lowell to celebrity moviemakers in Beverly Hills.

Even among the makers of successful and profitable films, there is an entrenched sense of entitlement about this Glitterati Welfare. “If you take that away, I think production will leave the U.S.,” producer Brian Oliver told
The New York Times.
Even though his production company can boast such hits as
Black Swan,
he complained that it “could not function without public money.”
⁴

But the Center on Budget and Policy Priorities concludes that the Hollywood subsidies are “wasteful, ineffective, and unfair.”
⁵
Like many of the special-interest giveaways, the center concluded that the “benefits to the few are highly visible; the costs to the majority are hidden because they are spread so widely and detached from the subsidies.”

Here we need to return to the larger question: How did we get to the point where taxpayers are required to subsidize Hollywood millionaires? By what standard of equity do we take money from schoolteachers and firefighters and transfer it (however indirectly) to Lindsay Lohan or Ben Affleck? And how does the Hollywood elite justify sticking those taxpayers with a tab? Could it be because so many others are doing the same thing?

If the Hollywood handouts illustrate the breadth of our moocher culture, modern American agriculture has come to symbolize the depth of its addictive power.

Harvesting OPM

As John Stossel surveyed the landscape of rip-offs, trough feeders, and scam jobs, he noticed one of the paradoxes at the heart of Moocher Nation: Today’s biggest welfare queens, wrote Stossel, were probably farmers. “This is odd,” noted the Fox News correspondent, “because farmers were once the most self-sufficient of Americans.”
⁶
It is, indeed, remarkable what several generations of dependency can do.

No discussion of corporate welfare or of mooching in general would be complete without the fiasco of agricultural subsidies, the bureaucratic blizzard of overlapping programs that include direct payments, marketing loans, so-called counter-cyclical payments, conservation subsidies, insurance, disaster aid, export subsidies, and agricultural research. Together, they have become one of the largest middle- and upper-class welfare programs in the country. Between 1995 and 2009, federal taxpayers paid out a quarter of a trillion dollars in agricultural subsidies.
⁷

While aid to farmers is romanticized as necessary to save family farms run by rugged individualists at the mercy of the next plague of locusts, the reality is far different. From 1995 to 2009, 73 percent of the total aid went to just 10 percent of the recipients, generally some of the country’s largest and richest farms.
⁸
Most of the subsidies, in fact, go to farms with net worths of $2 million or more and average incomes of $200,000 a year.
*
While the average total payment to big farms was $445,127 over that period, the bottom 80 percent of farmers received just $8,682.

Stories of the rich and well heeled feeding at the farm welfare trough have become deservedly legend. ABC’s Sam Donaldson famously pocketed thousands of federal dollars in “wool and mohair” subsidies because he raised sheep and goats on his ranch. Like so many of the other recipients of the federal aid, Donaldson had the grace to admit that the payments were a “horrible mess,” but he rationalized his acceptance of them by comparing the payments to the home mortgage deduction, telling Stossel: “As long as the law is on the books, it’s appropriate to take advantage of it.”
⁹

He was hardly alone in that respect. Stossel noted that some other affluent moochers included basketball star Scott Pippen ($131,575), TV mogul Ted Turner ($176,077), and David Rockefeller ($352,187).

The byzantine network of payments, subsidies, and transfers have many of the worst elements of both bailouts and welfare, but as the Environmental Working Group points out, comparisons with the agricultural subsidies are unfair to both bailouts and welfare. “After all, with bailouts taxpayers usually get their money back (often with interest),” notes the group’s president Ken Cook, “while welfare recipients are subjected to harsh means-testing, time-limited benefits and a work requirement.… None of those characteristics apply to America’s farm subsidy system, a
sui generis
contraption that might have sprung from the fevered anti-government fantasies of tea party cynics if Congress hadn’t thought it up first.”
¹⁰

An investigative series in
The Washington Post
in 2006 concluded that the subsidy programs have “little basis in fairness or efficiency.” Beginning as a “safety net” program during the Great Depression, the farm programs have morphed into an intricate network of payments, subsidies, and transfer payments that by 2005 were nearly 50 percent more than the federal government’s payments to welfare families—at a time when farm profits were at near-record levels.
¹¹

Embarrassed

Perhaps most striking about the billions of dollars in farm payments, besides the extraordinary cost and economic inefficiency, are the number of recipients who frankly admit they are embarrassed they are taking the cash (but take it anyway). Several farmers told
The Washington Post
they were chagrined at taking offers of unearned and unmerited federal money for disasters they didn’t suffer or for crops they never grew but, in the end, the stigma was too light and the draw was simply too strong.

When
The Washington Post,
for example, profiled a 67-year-old contractor named Donald R. Matthews who owned an eighteen-acre property in the “heart of rice country,” the paper noted that even though Matthews was not a farmer and didn’t intend to be one, he was pocketing $1,300 a year in “direct payments” because “years ago the land used to grow rice.”

“I don’t agree with the government’s policy,” Matthews told the
Post.
“They give all of this money to landowners who don’t even farm, while real farmers can’t afford to get started. It’s wrong.” But when Matthews tried to give the money back he was told that it would just go to other nonfarming landowners who had never planted a seed—landowners like the 87-year-old woman who had pocketed $191,000 over the previous decade, or the Houston surgeon who had gotten nearly $490,709. “I thought, heck, why should I do that? I wasn’t going to give it to somebody else to put in their pocket.” He uses the money to fund scholarships. But he still doesn’t feel right about it.

“Still, I get money I don’t think I’m entitled to,” he told the newspaper.

Between 2000 and 2006, reported the
Post,
taxpayers paid out at least $1.3 billion in subsidies, like the ones to Matthews for rice and other crops “to individuals who do no farming at all.”
*
In other words they paid them for precisely … nothing.
¹²

As the
Post
documented, billions of dollars are paid with little logic or justification, and no legitimate standard of need. One Illinois farmer profiled in the series who grossed nearly $500,000 a year was still eligible for payments of $120,000. “It’s embarrassing,” one prosperous farmer told the paper. “My government is basically saying I am incompetent and need help.” Over the previous five years, the family had pocketed $357,000 in government money.
¹³

Then there are beneficiaries of “disaster” aid.

Money for Nothing …

Dutch immigrant Nico de Boer was neither needy nor disadvantaged by any conceivable definitions of those terms. He owned a thousand acres of land in Texas, 650 cows that produced 3 million gallons of milk a month, and all the trappings of success and affluence: “a BMW in the driveway, a swimming pool, and two more farms in neighboring counties.”
¹⁴

In February 2003, the Space Shuttle
Challenger
exploded in the skies near De Boer’s ranch. He suffered no damage and never saw any debris—but he was still entitled to $40,000 in “disaster compensation” even though the nearest debris was probably at least ten miles from any of his cows. Reported the
Post
: “The money came from the U.S. Department of Agriculture as part of the Livestock Compensation Program, originally intended as a limited helping hand for dairy farmers and ranchers hurt by drought.” Instead, livestock owners in Henderson County, Texas, collected $751,083 “despite no shuttle damage.”

“The livestock program was a joke. We had no losses,” De Boer told the
Post.
“I don’t know what Congress is thinking sometimes.” But despite his reluctance, De Boer, like the other ranchers, cashed the checks: “If there is money available, you might as well take it. You would be a fool not to.”

Mrs. Davey (the British moocher mom) could hardly have said it better.

My Favorite Crop

The point to be emphasized once again is that this large-scale mooching has little or nothing to do with genuine need. Of the $1.2 billion paid out in the first two years of the Livestock Compensation Program, for instance, the
Post
reported that “$635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all.” There was barely a pretense that the cash was related to genuine misfortune. “None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.”
¹⁵

Reported the
Post
: “In one county in northern Texas, ranchers collected nearly $1 million for an ice storm that took place a year and a half before the livestock program was even created. In Washington State, ranchers in one county received $1.6 million for an earthquake that caused them no damage. In Wisconsin, a winter snowstorm triggered millions of dollars more. For hundreds of ranchers from East Texas to the Louisiana border, the shuttle explosion opened the door to about $5 million, records show.”
¹⁶

The system has also become a classic case of government favoritism. A handful of crops from certain states reap the bounty of federal generosity: More than 70 percent of farm subsidies went to support just five crops: corn, wheat, cotton, rice, and soybeans. In 2009, the Environmental Working Group (EWG) noted, “a full 60 percent of farm subsidies flowed to states represented by senators serving on the Senate Committee on Agriculture, Nutrition and Forestry.”
¹⁷
Hardly a coincidence.

Much of the income transfer is masked by opaque bureaucratese—Orwellian jargon that seems designed specifically to confuse outsiders. A case in point is the so-called loan deficiency program. “Despite its name,” noted
The Washington Post,
“it is neither a loan nor, in many cases, payment for a deficiency. It is just cash paid to farmers when market prices dip below the government-set minimum, or floor, if only for a single day.” The cost to taxpayers in 2006: $4.8 billion.
¹⁸

Then there is insurance. Even after the passage of Obamacare in 2010, the EWG said, “most crops could fairly be said to have better coverage than many people in this country—and it’s single-payer coverage.… Taxpayer subsidized crop insurance is available to farmers if their crop is eligible for coverage in their area, and it provides, at no cost, 50 percent catastrophic coverage to farmers.… Small wonder that since 1995, America’s public option-only crop insurance program has cost taxpayers $35 billion.”
¹⁹