PORK IN THE BUDGET ALERT | Citizens Against Government Waste

PORK IN THE BUDGET ALERT

Press Release

For Immediate Release   Contact:       Jim Campi at CAGW, 202.467.5300
October 16, 1998Karen Kerrigan at SBSC, 202.785.0238

 

FIRST CORPORATE WELFARE; NOW GOVERNMENT WELFARE?

U.S Treasury Forced to Forgive One-Billion Dollars In TVA Loan Payments

(Washingon D.C.) – In the final hours of the budget deal this week, Tennessee Valley Authority lobbyists worked overtime to include a provision that will "forgive" $1 billion in loan payments owed by the TVA to the U.S. Treasury and the nation's taxpayers.

The TVA-already $30 billion in debt-is a government-owned agency funded annually by taxpayer dollars.  But, to meet its enormous spending habit, the TVA borrowed an additional $3.2 billion directly from the U.S. Treasury's Federal Financing Bank.  In this year's budget deal, however, TVA lobbyists successfully inserted a provision that forces the Treasury Department to refinance this $3.2 billion debt under 'more favorable'terms, such as a prepayment plan.  This refinancing scheme saves TVA - and costs U.S. taxpayers - $1 billion in forgiven loan payments.

"We've seen corporate welfare in Washington, but this kind of government welfare is obscene," said Thomas Schatz, president of Citizens Against Government Waste (CAGW).  "This latest loan-forgiveness scam goes far beyond the boundaries of responsible government and is an offense to the nation's taxpayers."

"The new loan terms forced upon the U.S. Treasury may be 'more favorable' to TVA, but they are reprehensible for the U.S. taxpayer," said Small Business Survival Committee (SBSC) President Karen Kerrigan.  "TVA's 'spend, borrow and waste' philosophy is outrageous, even in Washington terms."

The Federal Financing Bank, which makes loans to governmental agencies, has a firm policy not to waive prepayment penalties.  In this case, TVA has secured a statute that will waive this policy and lose the Treasury $1 billion in expected debt payments.

"I hope TVA is more responsible with it's other $30 billion in debt and won't find a way to stick the taxpayer with that bill as well," said Schatz.  "This is another call for Congress and the Administration to scrutinize TVA's actions.  This isn't the first time they've wasted government money, but I strongly suggest it be the last," added Kerrigan.

The Small Business Survival Committee is a national, nonprofit, small business advocacy organization with nearly 50,000 members nationwide.  SBSC monitors activity both at the state and federal level to ensure that the voice and concerns of small business remain represented.  Citizens Against Government Waste is a 600,000 member, private, non-partisan, non-profit organization dedicated to educating Americans about the waste, mismanagement and inefficiency in the federal government.

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