Last night the president rightfully railed again special-interest tax breaks and subsidies to the well-connected. He said:
To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected. After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks? How is that fair? How does that promote growth?
Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit.
The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring; a tax code that ensures billionaires with high-powered accountants can’t pay a lower rate than their hard-working secretaries.
He also added that his plan wouldn’t add a dime to the deficit. But his address turned out to be a long list of tax breaks, subsidies, loan guarantees, and spending programs that he wants to give away to the special interests he likes. Here are a few:
So tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Departments of Defense and Energy to turn regions left behind by globalization into global centers of high-tech jobs. And I ask this Congress to help create a network of 15 of these hubs and guarantee that the next revolution in manufacturing is made right here in America. We can get that done.
Clean-Energy (especially wind and solar)
Now, four years ago, other countries dominated the clean-energy market and the jobs that came with it. And we’ve begun to change that. Last year, wind energy added nearly half of all new power capacity in America. So let’s generate even more. Solar energy gets cheaper by the year. Let’s drive down costs even further. As long as countries like China keep going all-in on clean energy, so must we.
In fact, much of our newfound energy is drawn from lands and waters that we, the public, own together. So tonight, I propose we use some of our oil and gas revenues to fund an Energy Security Trust that will drive new research and technology to shift our cars and trucks off oil for good. [...]
Those states with the best ideas to create jobs and lower energy bills by constructing more efficient buildings will receive federal support to help make that happen.
Infrastructure and Construction
So, tonight, I propose a “Fix-It-First” program to put people to work as soon as possible on our most urgent repairs, like the nearly 70,000 structurally deficient bridges across the country.
And to make sure taxpayers don’t shoulder the whole burden, I’m also proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children.
Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates.
Science and Innovation Research
Now, if we want to make the best products, we also have — have to invest in the best ideas. Every dollar we invested to map the human genome returned $140 to our economy. Every dollar. Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s. We’re developing drugs to regenerate damaged organs, devising new materials to make batteries 10 times more powerful. . . .
Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the space race. We need to make those investments.
So, tonight, I propose working with states to high-quality preschool available to every single child in America.
Every dollar we invest in high-quality early childhood education can save more than seven dollars later on, by boosting graduation rates, reducing teen pregnancy, even reducing violent crime. In states that make it a priority to educate our youngest children — like Georgia or Oklahoma — studies show students grow up more likely to read and do math at grade level, graduate high school, hold a job, form more stable families of their own. We know this works. So let’s do what works and make sure none of our children start the race of life already behind. Let’s give our kids that chance. [...]
Tonight, I’m announcing a new challenge, to redesign America’s high schools so they better equip graduates for the demands of a high-tech economy. And we’ll reward schools that develop new partnerships with colleges and employers, and create classes that focus on science, technology, engineering and math, the skills today’s employers are looking for to fill the jobs that are there right now and will be there in the future.
So, tonight, I ask Congress to change the Higher Education Act so that affordability and value are included in determining which colleges receive certain types of federal aid.
And — and tomorrow, my Administration will release a new college scorecard that parents and students can use to compare schools based on a simple criteria: where you can get the most bang for your educational buck.
And more of that:
Through tax credits, grants, and better loans, we have made college more affordable for millions of students and families over the last few years. [...]
We’ll give new tax credits to businesses that hire and invest. [...]
Let’s offer incentives to companies that hire Americans who’ve got what it takes to fill that job opening, but have been out of work so long that no one will give them a chance anymore. Let’s put people back to work rebuilding vacant homes in rundown neighborhoods.
And this year, my administration will begin to partner with 20 of the hardest-hit towns in America to get these communities back on their feet. And we’ll work with local leaders to target resources at public safety and education and housing. We’ll give new tax credits to businesses that hire and invest.
Whether you like these spending programs, tax breaks, and subsidies or not, they contradict the claim that the president never misses a chance to make about ending special-interest giveaways. For instance, as you know most of the solar projects that benefited from the DOE’s 1705 loan programs were well-connected and large companies such as Goldman Sachs and NRG. Siemens, a company the president mentioned in last night’s address (as he did last year), is also one of the biggest beneficiaries of the Department of Treasury’s Section 1603. This program that used to be a tax credit, but in the stimulus bill of 2009 it was turned into a grant that provides up to 30 percent of a project’s cost in cash. Based on the Treasury data, some $823 million in cash went to projects that used Siemens’s turbines.
And further, I am pretty sure that, if the president gets his way, his plan will add many more dimes to the already large current deficit.
Finally, for an explanation of why these loopholes and special-interest giveaways happen, see my colleague Matt Mitchell’s post.