Richard Mo: The wrong priorities in a time of corporate scandal

Our federal government recently cried poverty.

President Bush proposed an increase in the Securities and Exchange Commission's budget, from $438 million to $568 million, down from his stance in July, when he offered an increase to $776 million as part of the sweeping corporate reform bill he signed into law.

The administration's explanation for the backpedaling? There are other pressing spending needs. The increase is enough to strengthen the SEC. It has absolutely nothing to do with the hysteria of corporate scandals, big news in July, but beginning to die down. The timing of the funding with the market crests and troughs is merely a coincidence.

And just last week, Charles Rossotti, the head of the Internal Revenue Service completed his term. The most pressing issue for his successor, he said, is combating widespread tax cheating while being understaffed. The administration's response? You guessed it -- we gave the IRS a modest budget increase, and it doesn't need any more.

Before leaving office, Rossotti was scheduled to testify before Congress about tax cheats. But he cancelled the hearing, according to The New York Times, because the administration did not want him to publicize his desire to increase the IRS' woefully inadequate budget.

When asked by reporters if he had been muzzled, he pleaded no comment. But wouldn't a faithful administration member explicitly deny the allegations if they were indeed false?

The White House is quick to point out that the tax man has a $3.7 billion budget, a 4.8 percent increase from last year. But retired IRS executives and tax lawyers alike point to a minimum need to increase the funding by at least $3 billion.

If national coffers are as empty as claimed, let me propose a solution that will make heaps of money. In previous reports, Rossotti estimated that the government was losing $60 billion in taxes annually from investing partnerships with dubious filings. And the loss from offshore tax evasion? He estimated a figure of $500 million, an amount that includes only those accounts known to the IRS which it can't collect because of a lack of manpower.

It doesn't take a public finance wizard to realize that increasing the IRS' resources will increase tax collections. A $3 billion investment for a $60 billion return? I'll take that any day. Nor will collecting unpaid taxes renege on Dubya's election-year tax cut promise.

While it is impossible to know the real reason for the unwillingness to significantly increase these two agencies' budgets without being a fly on the wall in Washington, it isn't hard to think of a couple of reasonable possibilities -- corporate welfare and political donations.

At the same time the federal government is crying poverty, it passed an increase in military spending, up $34 billion to $355 billion. While I fully support our servicemen, unnecessary military expenditures are egregious when the money can be used for other pressing needs.

A glaring example is $26 billion in the budget for the leasing of 100 Boeing 767 refueling tankers. Also included in the deal is a "you break it, you buy it" clause, which, combined with the construction costs of hangars, add to the cost. Yet, the General Accounting Office, Congress' investigative arm, estimates that upgrading 127 existing KC-135E tankers, which have at least 30 more years of service life, will cost a comparatively cheap $3.6 billion, saving $22.4 billion.

The Boeing tankers will result in a total 2 million pound fuel capacity decrease, whereas upgrading will add 1.7 million pounds to existing capacity. Even Sen. John McCain, our famous war hero and member of the Senate Armed Services Committee, called the Boeing deal "particularly disconcerting" and "egregious."

The military spending bill also includes $7.4 billion worth of funding for 1,760 programs not requested by Bush. Considered as pork, the added appropriations fund companies that go outside the normal competitive bidding process for programs of dubious value.

Wasteful spending is indicative of the donations that have hijacked politics, both Democrats and Republicans alike. Even during an economic funk, the current election cycle raised a record $300 million in soft money from special interest groups for both parties. (The defense industry gave $4 million in soft money, plus untold millions in hard money and lobbying.) The result is the funding of programs in support of corporate welfare and not those that benefit the general population.

It should come as no surprise to anyone that the wealthy donors have managed to squeeze out the SEC and IRS. After all, many wealthy business and financial elites, who donate most of the campaign money and engage in illegal actions, admire the two agencies as much as they admire New York Attorney General Eliot Spitzer and his assault on Wall Street.

The end result: worthy non-partisan objectives take a back seat to special interests, the process covered over with bad lies.

Richard Mo is a senior History and Economics major from Fresh Meadows, NY.

Please note All comments are eligible for publication in The Daily Pennsylvanian.