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U.S. Resources Subsidizing Private Business, Report Says

August 08, 1994|From Associated Press

WASHINGTON — Toward an outdated goal of developing the West, the federal government is virtually giving away billions of dollars' worth of natural resources to subsidize private business, a congressional report says.

The subsidies come in the form of cheap water, underpriced timber and help for private interests ranging from mining companies to ranchers and farmers, according to a study released Sunday by the House Natural Resources Committee.

The study said the subsidies--which range from mining claims being sold for a few dollars to cheap electricity from government dams--are so widespread that no one can calculate the total cost to taxpayers.

"We simply don't know," Rep. George Miller (D-Calif.), the committee's chairman, told reporters. "It runs into the hundreds of millions, sometimes billions of dollars. And on a cumulative basis, it's off the charts."

Congress has discussed many of these subsidies for years, but the debate has intensified since the Clinton Administration began pushing for higher grazing fees, royalty payments on hard rock minerals and higher prices for timber taken from federal forests.

Critics say some subsidies should be eliminated, some curtailed and others subjected to means testing to ensure that wealthy individuals or corporations do not get tax-funded support.

The report lists dozens of cases in which private individuals or corporations enjoy tax benefits or cheap access to federal land, water or mineral rights. It also points out that some subsidies work at cross-purposes. Some farmers, for example, have used subsidized water to grow surplus crops on land leased from the government at lower-than-market rates.

Among the examples it cites:

* Mining companies that purchase through a "patenting" process the rights to federal land, then reap billions of dollars from hard rock minerals such as gold and platinum without paying the government a penny in royalties.

* Cheap electricity from federal power suppliers in the Northwest and in the Missouri River Basin.

Although the price gap has narrowed in some cases, federal power is still much cheaper than other sources, the report said.

* The sale of timber from federal forests at prices that do not cover the costs of administration or of building at taxpayer expense the miles of roadways needed.

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