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The Shell Game Being Played on America

Published 14 hours ago5 minute read

Each day another story comes out about the games and outright deceptions being run on the public and members of Congress as the effort to enact a budget plan drags on. The process is so cumbersome and mutated because Congress is unable or unwilling to enact spending plans in the right and proper way, through appropriation bills to fund duly authorized programs. That is the way the civics books say it should be done. It has not gone that way for a very long time.

As a result, we end up with the opaque system of reconciliation and continuing resolutions that allow for every special interest under the sun to push for special privileges for themselves while working to harm competitors. There is zero regard for the working people affected, the communities hurt, and the greater national interest considered.

A case in point surfaced recently that shows just how Congress operates. In the tax law there is a little thing called a duty drawback incentive. Originally developed by Alexander Hamilton in 1789, the duty drawback is designed to support American business, increase exports, and block foreign dumping in the U.S. It has worked extremely well at all those things, which may be why there is an underhanded, quite campaign to repeal the duty drawback.

Currently there is a duty drawback that is used by some tobacco companies. Here is the process: These companies buy tobacco from foreign producers, pay the import fees and taxes and then blend it with U.S. grown tobacco and export it to countries overseas. The cigarettes are produced in the U.S., which means America working families are paid and their communities reap the benefit of taxes and a stable community.

Why do this? Simple. While there is a huge demand overseas for high quality U.S. tobacco, it is too expensive to sell on its own. But, if lower cost foreign tobacco is mixed it, the resulting product can be exported at a price people overseas can afford. When the product is exported, the companies claim the “drawback.” The original taxes and fees are refunded since the products on which they had been paid are going overseas, reducing our trade deficit and supporting American industry, workers and communities.

So, what’s the problem, why end this useful tool that has benefited America for over 200 years? The problem is that the big tobacco company doesn’t produce much in the U.S. anymore. As an example, Phillip Morris International employs over 83,000 workers but only 6,200 inside the U.S. With all those jobs shipped off overseas they do not want any competitor to be able to sell in markets that they want to dominate. The fact that by killing the drawback means U.S. workers get hurt doesn’t bother them in the slightest, since more than 90 percent of the production staff is not American.

Using slick lobbying tactics, they were able to get the House of Representatives to repeal the duty drawback in its version of the reconciliation bill. While the Senate is being far more judicious on the matter, the same propaganda- peddlers have gotten House Freedom Caucus members to beg the Senate in a June 12 letter to Senate Finance Committee Chairman Mike Crapo to support the repeal on the very flimsy point that the “money saved” can be used to offset reinstatement of the Trump tax cuts.

It’s a con. I believe most of the members who signed the letter honestly believe they are doing the right thing. But they have been sold a bill of goods it is the old carnival shell game where the house always wins and the deal is rigged from the start. Not since native Americans sold Manhattan Island for some beads has there been such a dumb deal.

First, there are no “savings.” If the money is not available to the companies importing foreign tobacco, they just won’t import any. If they do not import, there are no duties or fees to be paid. So, the $12 billion over ten years is illusory smoke and mirrors.

Second, the meaning of Make America Great Again is the development of U.S. industry and jobs, not the subsidy of many thousands of overseas jobs. Repealing the duty drawback has the direct effect of subsidizing overseas employees while hurting U.S. workers. We have been paying for that lunacy for decades. The goal is to stop it. Repealing the duty drawback undercuts the work of the Trump administration to encourage domestic production.

And finally, if finding a way to “pay for” the tax cuts is so important, there are far larger pieces of spending that can be used as an “off set.” Again, it is illusory to think that there are enough $1 billion and $1.5 billion a year fixes to do that. But whatever Congress does to address this math problem, hurting working families, increasing the trade deficit and subsidizing foreign workers is not the way to do it.

There are many more such deals out there, swirling around the halls of Congress like a putrid smell. But the disinfectant of public exposure can clean it up and bring some sense to the situation. The lobbyists depend on the public not knowing what is happening. It is all our duty not to let them blind us.

Robert Romano is the Executive Director of Americans for Limited Government.

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Bandera Bulletin
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