Brand USA: a Gravy Train Keeps Rolling | Citizens Against Government Waste

Brand USA: a Gravy Train Keeps Rolling

The WasteWatcher

On the increasingly rare occasion that Congress gets around to passing a bill, it is not at all uncommon for the final version to include measures that bear no relation to the legislation’s title or stated intent. 

The 2013 Farm Bill, for example, which was miraculously defeated by a vote of 195 to 234 the House on June 20 and is 85 percent food stamps and 15 percent farm programs.  that – political discussions of their merits aside – have nothing to do with farming.  The Senate-passed immigration bill includes an indefinite extension of one of the federal government’s most unseemly programs: the Corporation for Travel Promotion, or “Brand USA,” a corporate welfare scheme that subsidizes the marketing campaigns of some of the travel industry’s most successful firms, and has nothing to do with immigration.   

Originally contained in the Travel Promotion Act of 2009 and signed into law by President Obama in 2010, Brand USA is an independent corporation intended to “increase international visitation to the United States and to grow America’s share of the global travel market.”  In essence, Brand USA serves as a public relations and marketing firm for American tourism.  However, unlike most marketing firms, which must earn their business by providing valuable services for which customers willingly pay, Brand USA receives its funding from private donations that are matched two-to-one by the federal government.  In fiscal year 2012, Brand USA received $100 million in federal funds.

Its backers are fond of describing the arrangement as a “public-private partnership,” a dog-whistle phrase that can often be swapped for “handout.”  And now, that handout looks likely to continue indefinitely: the version of the “Border Security, Economic Opportunity, and Immigration Modernization Act” that passed the Senate was altered in April to include funding for Brand USA in “each fiscal year after 2012,” rather than “for each of fiscal years 2012 through 2015,” as was stated in a previous version of the bill. 

Brand USA is naked corporate welfare run by the tourism industry, for the tourism industry.  The group’s incentives encourage cronyism and waste.  Its board consists of CEOs and other high-powered executives from titans of the travel industry, including Disney Destinations, Starwood Hotels and Resorts, Amtrak, Travelocity, Star Alliance airlines, and Marriott International.  Brand USA presents a unique opportunity for each of these firms to have the federal government pay for their advertising.   

As its supporters are quick to point out, American taxpayers do not pay directly for Brand USA’s matching funds.  Instead, its revenues come from a $10 tax on foreign visitors.  Furthermore, the Congressional Budget Office (CBO) predicted in 2007 that the establishment of the Corporation for Travel Promotion would create $62 million in additional federal revenue over its first three years, and $145 million over five years. 

Of course, federal tax revenue is fungible, and the government’s $100 million cap on matching funds for Brand USA could be put to much better uses than marketing subsidies for hotel chains.  Further, the CBO made its estimates well before Brand USA existed, and before its advertising and promotion plans had ever been drafted.  Even worse, Brand USA is decidedly not being run responsibly or transparently.  According to an October 2012 report from the offices of Sens. Jim DeMint (R-S.C.) and Tom Coburn (R-Okla.), Brand USA’s process for securing its federal matching funds is wasteful at best and probably corrupt. 

Because Brand USA can only receive 20 percent of its “donations” from board members in cash, the rest must be made up via in-kind donations.  The result has been that board members frequently charge the federal government for their own companies’ expenses, only to see them doubled by Uncle Sam.  Among the in-kind contributions made by board members since 2010 were $6,180.98 by Amtrak for 22 tickets to a Washington Nationals game, more than $10,000 in flights, hotels, and food expenses by Disney Destinations Executive Vice President Randy Garfield, and more than $200,000 in “voluntary” time billed to Brand USA by board members at rates as high as $258 per hour, just to name a few.  In other words, members of some of the world’s most successful tourism companies have found a loophole that allows them to throw money around and get it back, two-fold.  That loophole is Brand USA. 

Raiding federal coffers to pad the advertising budgets of private firms is bad policy in any fiscal environment.  In times of high debt and employee furloughs, it is lunacy.  With luck, some sharp-eyed lawmaker will strip the indefinite extension of Brand USA from the immigration bill before it becomes law.  If not, CAGW will continue to call for its elimination.  Marketing is not a public good; hotels, booking websites, airlines, and casinos, like members of every other industry, should pay for their own promotions.

Luke Gelber

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