In case the rain didn’t already have you grumbling going into the weekend:
Videos By Rare
This week an Illinois-based watchdog group, Open the Books, issued a new report that scrupulously tallies up all federal grants, loans, direct payments, and insurance subsidies flowing to individuals and companies. It examined all accounts from the Department of Commerce to the Department of Transportation and found that corporate-welfare payments from the federal government to the Fortune 100 companies, from 2000 to 2012, amounted to $1.2 trillion. I recommend a visit to the website openthebooks.com, if you can stomach it.
That $1.2 trillion number does not include the hundreds of billions of dollars in housing, bank, and auto-company bailouts in 2008 and 2009, because those payments are kept mostly invisible in the federal-agency books. It also doesn’t include the asset purchases of the Federal Reserve, indirect subsidies such as the ethanol mandate that enriches large agribusinesses like Archer Daniels Midland, or special tax breaks for wind and solar manufacturers.
Most of the payments Open the Books uncovered were contracts between government agencies and private firms. The largest of these are military-procurement deals with such firms as Lockheed Martin ($392 billion), General Dynamics ($170 billion), and United Technologies ($73 billion). At least taxpayers get services in exchange for these tax dollars. Still, the overall size of the government-industrial complex makes it all the harder to cut federal spending, because the recipients of all this money become high-roller lobbying forces for higher appropriations.
Far less defensible is the $21.3 billion that was doled out in the form of outright income-transfer subsidies to corporate America. On average, each Fortune 100 company received about $200 million in such handouts. So who are the major corporate-welfare queens? The biggest grant recipients were General Electric ($380 million), followed by General Motors ($370 million), Boeing ($264 million), Archer Daniels Midland ($174 million), and United Technologies ($160 million).
That’s from a piece at National Review Online by Stephen Moore, formerly of the Wall Street Journal editorial page and now chief economist at the Heritage Foundation. If you didn’t know, those affiliations are three pillars of the conservative movement, which is increasingly critical of corporate welfare as its anti-debt and -deficits mantra takes on a whiff of what’s been called libertarian populism.
And with good reason. Contracts are one thing, even if, as Moore notes, they tend to foster lobbying for more contracts. That is, more spending. Not to mention that Uncle Sam doesn’t have a sterling reputation for ensuring the contracts we do need are written as leanly as possible with the taxpayer in mind.
Outright transfers are quite another matter. And while $21.3 billion is a fraction of both the corporate-welfare total and overall debt accumulation between 2000 and 2012, that number combined with tax-code preferences, bailouts and the like would almost certainly be much more substantial.
If politicians aren’t willing to smash the entire trough at once, a good start would be to mimic what’s been proposed for farm subsidies and cut off the money going to large companies. Of course, that hasn’t happened with farm subsidies, either.
Moore offers a nice illustration of how ludicrous the situation is:
Imagine for a moment that you are sitting on your couch watching TV and there is a knock on the door. There in a corporate suit is an employee of General Dynamics with a tin cup and he asks if you would contribute a dollar for a research project. You would slam the door in his face. But somehow when the government collects a dollar from each of us and gives the money to General Dynamics, this is considered in Washington a wise “investment.”
Republicans and Democrats alike are guilty of this, even though activists on both sides are critical of (at least some) corporate welfare. Although the debt has fallen out of the headlines as annual deficits have fallen to “only” hundreds of billions of dollars a year, neither party has a good excuse for keeping the gravy train running.