Corporate Special Interests Launch
Sneak Attack in Washington

October 28, 2001
New York Times

Taking Care of Business
By PAUL KRUGMAN

Cynics tell us that money has completely corrupted our politics, that in the
last election big corporations basically bought themselves a government that
will serve their interests. Several related events last week suggest that
the cynics have a point.

Consider, for starters, the airport security issue. On Thursday morning this
newspaper reported that London- based Securicor < the biggest of the three
companies that provide almost all airport security in the United States <
was threatening to sue for damages if baggage screening is taken over by
federal employees. This just two weeks after we learned that Securicor's
U.S. subsidiary < which had already been fined for employing convicted
felons < continued to hire employees without checking their background after
Sept. 11, and then lied about it to regulators.

Under the circumstances, to claim that federalizing the business would
represent a "taking" showed remarkable chutzpah. (Chutzpah, according to the
classic definition, is when you kill your parents, then plead for mercy
because you're an orphan.)

But the company evidently has friends in high places. Later that day the
Bush administration endorsed the proposals of House Republican leaders, who
have refused to allow an airline security bill to come to a vote unless it
leaves baggage screening in private hands. The rhetoric behind this position
emphasizes the supposed advantages of the private sector < competition,
accountability, etc. But there is little real competition in this industry,
and < as we've just seen < not much accountability for companies with the
right connections.

Then there was the House "stimulus" bill. The remarkable thing we learned
from that bill was that conservative politicians < who used to claim that
they were improving incentives by reducing marginal tax rates, and that it
was just an incidental side effect that big corporations and wealthy
individuals were so richly rewarded < no longer feel the need to disguise
their payoffs. The core of the bill was a repeal of the corporate
alternative minimum tax retroactive to 1986, which means that selected
companies would immediately receive huge lump sum payments from the
government, totaling around $25 billion, with no incentive effect at all.

The bill's sponsors claim that the money would be invested and used to
create jobs, but it's hard to see why: a potential investment that Texas
Utilities or ChevronTexaco wouldn't have made a week ago, because the
project won't yield a sufficiently high return, will seem no more profitable
after each company gets its $600 million thank-you gift. And there are no
strings attached to those gifts: if the companies want to, say, pay huge
bonuses to top executives, they can. Republicans have always depended on the
kindness of corporations, but this bill takes that faith to extremes.

True, defenders of the House bill remind us that "business" doesn't just
mean giant corporations < it also means the mom-and-pop shop around the
corner. Indeed < but the tax refund wouldn't be going to mom-and- pop shops.
Where it would go, disproportionately, is to energy and mining companies.
Why? Because they already receive so many special tax breaks that in the
absence of the alternative minimum tax many would pay little or no taxes.
Now the House proposes not only to remove that little inconvenience, but to
refund the taxes they've paid for the past 15 years.

Just to cap off a great week for the mining interests, the Bush
administration also announced on Thursday that the Interior Department
would no longer be able to veto mining projects on public land. You might
think that extracting minerals from public land, without even paying a royalty,
was a privilege rather than an entitlement; but in today's Washington,
financial might apparently makes right.

I'm sure I'll be accused of being unpatriotic for suggesting that the
administration and its Congressional allies are pandering to special
interests at a time like this. That, of course, is what they are counting on
< that and the difficulty of getting people's attention when the news is all
anthrax, all the time.

But the truth must be spoken. Lately our government has not exactly inspired
confidence; its response to terrorism is starting to look a bit
scatterbrained. But on some subjects our leaders are quite clearheaded:
whatever else may be going on, they make sure that they are taking care of
business.