Lately, as we’ve been talking about entitlement programs and the taxes they create, some people have been bringing up Corporate Welfare. It’s a term that I’ve tossed around as one of the great inequities of the welfare argument, but admittedly I used it mostly as a liberal talking point more than anything else.
Certainly the government “Bailout” of the banks falls into the realm of CW and so I find myself looking a bit cross-eyed; while I am no fan of bailing out the companies largely responsible for our current economic crisis, the “Too Big to Fail” argument resonated with me.
I do not profess to be an economist, but I would like to remind all of us that, while our debate can be healthy, not many among us are actually economists or military strategists, yet we often feel that our limited knowledge qualifies us to criticize many who are. Having said that……
What is Corporate Welfare? Well…it is comprised of the grants, real estate giveaways, tax incentives, exemptions, deductions, credits and low interest rates given to corporations. In America they amass to the tune of 125-150 billion dollars a year.
Why does it exist? Well…it is the result of political power possessed by corporations, via lobbyists and clout, campaign donations and political spiffs, to enhance the profitability of these corporations.
Those who support breaks for corporations point out that they encourage businesses to grow and supply jobs; better jobs with better pay. Those critical of these breaks say that it’s a smoke and mirrors argument and only lines the pockets of CEO’s by emptying ours.
What does Corporate Welfare look like? There are thousands of examples, but here’s a look at a few to illustrate:
The Pentagon’s merger subsidy program. It pays defense contractors to merge, lessening competition for government bids and increasing the lobbying power of newly combined defense mega-firms. The industry asked for and won encouragement in the form of payments to cover the costs of consolidation and that included “golden parachute’, bonuses to executives of acquired companies. When Lockheed merged with Martin Marietta, for example, taxpayers paid $30 million in bonuses for company executives.
The National Association of Broadcasters. Congress handed over to broadcasters the rights to broadcast digital television on the public airwaves-a conveyance worth $70 billion, in exchange for… nothing. The public owns the airwaves but broadcasters have never paid for the rights to use them because broadcasters are huge political donors. They have ties to key political figures who threatened the FCC if it failed to oversee the transfer of the licenses. Few members of Congress would challenge the giveaway because they feared that would result in slanted news coverage in the next election.
Western state senators still uphold an antiquated Mining Act that allows mining companies to extract billions of dollars worth of minerals a year from federal lands without paying royalties. The giveaway creates few jobs but also creates massive environmental problems with high economic costs. The western senators stand behind the mine companies, which pour millions into campaign contributions.
That is a cynical snapshot and this doesn’t mean that all corporate perks from government are bad and that there aren’t legitimate corporate welfare packages that really do stimulate the economy, it does indicate, however, that this is a completely un-regulated arena that needs to come under scrutiny.
It does indicate that there are billions of dollars being misspent and that money belongs to us, the taxpayers. In the discussion about welfare, there is a disproportionate amount of tax money that goes to special interests compared to individuals in need and it seems to me it would be more beneficial to our paychecks if we focused our attention in this direction and developed regulations to contain it’s misuse.
Who remembers the Savings and Loan meltdown in the 80’s?
I do! Do you remember why the collapse occurred? It was from a lack of regulations that led to lending on the promise of high returns; shady speculative trading. S and L’s cooked the books and at the helm were opportunistic executives. The government then manipulated the market by lowering interest rates to expand high risk loans.
Sound familiar??? But this was 25 years ago. George Bush Sr. then “bailed out” the S and L’s to the tune of 150 billion dollars. That welfare cost the American people over 500 billion dollars in principle and interest.
The point I’m making is not to indict Reagan or Bush, or the circumstances that preceded them, rather it is to illustrate the fact that fair regulations, aligned with fiscal conservatism, have never existed and the fact that as we wage a partisan war over spending and tax dollars put into “welfare” we have to address where all of it is going, not just the easy targets like the poor. The deficit-spending/bailout/debt- ANGER that the right wing directs against the left is part and parcel with their own practices.
That hypocrisy has bothered me from the start. It has been a partisan fight all along, not a rational one looking for solutions. If we are really looking for a Debt Solution, we can start by regulating and reining in Corporate Welfare by 50%.
Then….
1) Roll back tax tables to Clinton era levels
2) End the war in Afghanistan
3) Decrease overall military spending 10%
Now…discuss…..
