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Anchored by Jake Tapper, The Lead airs at 4 p.m. ET on CNN.

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March 18th, 2013
06:11 PM ET

Rescuing Carnival Cruises costing American taxpayers millions

Carnival Cruise's latest troubled ship made it back to port without the toilets acting up, and that was the good news. The Carnival "Legend" arrived in Tampa, Fla., yesterday so that crews could fix a glitch with the ship's sailing speed. But passengers had to skip a stop in Grand Cayman and got a hundred dollar refund.

It is the latest in a series of PR nightmares for the company. But here is the real doozy: when the cruise line gets in trouble, it's U.S. taxpayers who are left up the creek.

The Carnival's ship names - The Triumph, The Elation, The Dream, The Legend - haven't exactly matched the experiences on board.

But who pays the bill when cruise ships need help - help that comes directly from the U.S. government?

"Most all of these cruise ships fly foreign flags so you can't regulate them except for the few hours when they're at U.S. shores," says Sen. Charles Schumer, D-N.Y. "They pick up a small amount of responsibility, but the taxpayer ends up picking up most of it. They don't own up to their responsibilities."

The coast guard spent $780,000 to help the Triumph when it was stranded in the Gulf of Mexico a month ago, and that was minor compared to 2010 when the Carnival Splendor was stuck in the Pacific.

More than $3.4 million taxpayer dollars went toward sending a U.S. aircraft carrier to help. But it turns out not only is Carnival not paying the bill for those rescues, they're not paying taxes. Sen. John Rockefeller, D-W.Va., started probing the issue last year after the Costa Concordia incident.

"Their ships are registered in other countries where they can get cheaper labor, and they don't pay taxes in this country, or virtually no taxes in this country," says Rockefeller.

By registering in Panama and the United Kingdom, Carnival paid an effective tax rate in the United States of 1.1 percent between 2004 and 2011.

"When you're in a world of your own you can do whatever you want, and that is exactly what they do. So they don't reimburse the Coast Guard, they don't pay taxes that will help with these 20 federal agencies that are watching over them in various ways and whose services they use, or might use. They just decline to be moved by that," says Rockefeller.

But the West Virginia senator is trying to make them move, sending a letter last week to Carnival's CEO asking: Do you think the federal taxes Carnival pays each year cover the cost of the federal services on which it relies?

Carnival told CNN it is still reviewing the letter.

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