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Contents
Corporate welfare takes many forms, ranging from direct gifts for research and development, to overseas marketing, to tax-free public financing of sports stadiums. This area is very broad and we will show just some of the highlights here and let the studies below explain in detail the extent of the problem. In future issues there will be a more in-depth look at agricultural subsidies and, as part of an issue on free-market enviromentalism, a review of how U.S. environmental policies give aid to logging companies.
Finally something is being done about corporate welfare. A broad coalition of groups called the Stop Corporate Welfare Coalition is banding together with Rep. John Kasich (R-Ohio) and several other members of Congress to bring about and end to corporate subsidies. They have created a list of the "dirty dozen" and legislation to eliminate the Overseas Private Investment Coporation has already been introduced before Congress.
The list of companies receiving these benefits reads like the Fortune 500: General Electric, Archer Daniels Midland, Hewlett Packard, General Motors, Ford and Chrysler, to name a few. How do they protect their welfare payments while social welfare is being cut? Most of these companies are major contributors to congressional and presidential campaigns and also hire lobbyists to protect their subsidies. Other companies, like sports franchises, use threats and intimidation to get what they want (mainly economically questionable sports facilities -- see our bonus coverage Franchise Free-Agency).
And there are other groups who support the continuation of these programs. Edmund Rice, executive director of the Coalition for Employment Through Exports has said, "Dismantling or reducing these programs would amount to unilateral disarmament in the battle for world markets." The agencies themselves also continually lobby Congress against termination and release reports on the effectiveness of their programs in creating or saving American jobs.
Some of the major examples of corporate welfare are (see related links for additional programs and their Web sites):
Summarized below is a list of articles and policy reports explaining the issue and explaining why we need to do something about it, as well as links to Web sites of interest on the subject.
The Solutions
The Cato Institute has been fighting corporate welfare for many years and has released a number of reports highlighting some of the most egregious examples.
In a White Paper titled Federal Aid to Dependent Corporations: Clinton and Congress Fail to Eliminate Business Subsidies released in January, Dean Stansel and Stephen Moore provide a background on the issue and list 55 programs they consider the most expensive and unjustifiable.
Cato has released a number of Policy Analysis papers in the past two years on this subject.
Ending Corporate Welfare as We Know It discusses why corporate welfare is bad for the free market and looks at President Clinton's record on the issue.
Market Opening or Corporate Welfare? "Results-Oriented" Trade Policy Toward Japan questions the U.S. trade policy as protectionism to benefit U.S. companies.
HOW CORPORATE WELFARE WON: Clinton and Congress Retreat from Cutting Business Subsidies examines the record of both President Clinton and the Republican Congress on the issue of corporate welfare.
Archer Daniels Midland: A Case Study in Corporate Welfare
Edward Huggins, Director of Regulatory Studies has testified before Congress on the Advanced Technology Program which subsidized research and development costs for private industry. On March 23, 1995 he testified before the House Subcommittee on Technology on this issue.
Dean Stansel, Fiscal Policy Analyst testified before the House Subcommittee on Procurement, Exports, and Business Opportunities against the Federal Export Promotion Programs.
Cato has also released these op-ed pieces on corporate welfare.
Reason is the premier libertarian magazine and one of the best Web sites for libertarian commentary.
Brian Doherty writes that corporate welfare is not always defined correctly and that tax breaks should not be included in the definition. He also raises the point that welfare to corporations goes against the principles this country was founded on. The government, Doherty writes, should not show favoritism or pick winners and losers in the marketplace.
Competitive Enterprise Institute
The Competitive Enterprise Institute is one of the leading free-market environmentalist groups and fights against aid to logging companies and others.
CEI has joined Rep. Kasich's coalition; you can read their press release here.
The Independence Institute publishes a wide variety of free-market policy recommendations and opinion pieces.
Robert Higgs, Editor of The Independent Review wrote this op-ed piece in 1995 on the expectations of the Republican majority to finally reduce corporate welfare. Op-Ed: Will Big Business Thwart the Republican Revolution?
Many other groups have made their opinions on corporate welfare known; listed below is a small sample of what is out there
Washington Institute for Public Policy
In Washington State, aid to private companies is prohibited by the state constitution, there is a renewed battle against corporate welfare. Prof. Dale F. Rubin has authored a report called Public Subsidies to Private Corporations and the Washington Constitution that shows the historical fight against corporate welfare in Washington State.
LP Chairman Steve Dasbach outlines the party's opposition to corporate welfare in this press release from January 31, 1997
The Libertarian Party has also released two sets of talking points on the subject:
Citizens for Leaders with Ethics and Accountability Now
CLEAN is one of the leaders of the fight against corporate welfare in the state of Washington. They are currently working against a plan to provide public funds to aid in the development of a new shopping center in Spokane. These two press releases below show what they are doing.
CLEAN sues City of Spokane for corporate welfare plan
Corporate welfare, Spokane style
The Pacific Research Institute is California's preeminent public policy think-tank promoting individual freedom and personal responsibility
This article from their Chief Executive magazine titled explores some CEO opinions on Corporate Welfare.
he Heritage Foundation is the leading conservative think-tank in Washington, D.C. It publishes studies on a wide variety of topics, from economics to social issues.
In Congress, Not Clinton, Supports the End of Corporate Welfare Andrea Antonelli questions President Clinton's commitment to ending corporate welfare.
Town Hall is a collaboration of leading conservative public policy groups to provide access to some of the best in conservative research on the Internet.
F.R. Duplantier of America's Future argues that shareholders, not taxpayers, should pay the cost of research and development in his op-ed piece titled Corporate Welfare
In, Mega Corporations the Small Business Survival Committee questions the proposed government policy to hand out new digital broadcast licenses for free instead of auctioning them off as was done with the last round of cellular frequencies.
Last fall, Americans Back In Charge presented the American taxpayers with a "bill" for corporate welfare as part of their Footing the Bill feature.
Citizens Against Government Waste
Citizens Against Government Waste has been fighting to cut government waste, eliminate the deficit and reduce the size and scope of the federal government since 1984.
In a Reality Check CAGW calls for the abolition of the Commerce Department and the corporate welfare programs it administers.
CAGW shows ways to reduce the size and scope of government in this op-ed entitled How to Downsize Government.
Links to Other InformationRep. John Kasich (R-Ohio) is the chairman of the House Budget Committee and is leading the fight against corporate welfare to balance the budget.
President's FY 1998 Budget in Adobe PDF format
In December 2004 this page was modified significantly from its original form for archiving purposes.
, founded in 1995, is now a part of ISIL.