Can we put an end to corporate finance welfare programs?
If the Republicans are really looking to become the party that reforms Washington (no, really) they can start by ending welfare as we know it – for corporations.
Rep. Paul Ryan of Wisconsin appears to be one of the few Republicans who are serious about this. He’ll run up against plenty of opposition, of course, but his efforts need to be applauded and supported.
“We can’t make the case to the American people that we are the reform party if we won’t reform the giant corporate-welfare state in Washington,” he has said recently. He’s right; to be a credible party of reform is going to take a concerted effort. The fed-up, edgy and rightfully distrustful conservative electorate can’t – and won’t – take too much “more of the same.”
Ryan is scheduled to release his House Republican budget and he says one of his themes will be fighting to end corporate welfare. It’s too bad that he’ll be getting a great deal of pushback – from Democrats, sure, but also from his own party, the one that used to stand for smaller, leaner, more efficient and less intrusive government.
Far too many American firms, from the big defense contractors to the telecoms and banks, rely too much on government largess today to line their pockets and increase their stock prices. They stump and lobby for bigger, more pervasive government because they are direct beneficiaries of it.
“So why hasn’t it happened?” writes Stephen Moore at National Review. “Why haven’t Republicans pledged to end corporate welfare as we know it?”
Part of the reason, he says, is that too many politicians (Republicans especially) have confused the difference between free-market capitalism and crony capitalism. For years the Democratic Party has been the party of big government welfare; making businesses depend on government was only natural and, according to their way of thinking, logical. President Obama, using government as the “engine of development” (think all of the green energy projects that have gone belly up) is an expert at this game.
Only, it’s not a game. And it’s serious money that the government is handing out to corporations that are already insanely profitable – lots of it.
According to Open the Books, an Illinois-based organization that has uncovered the hidden corporate largess, says that between 2000 – 2012, taxpayers were on the hook for more than $1.2 trillion.
Keep in mind that figure does not include the hundreds of billions in taxpayer-funded auto and bank bailouts in 2008 and 2009 because, as Moore notes, those payments are largely kept invisible by federal bookkeepers.
The amount also does not include the massive “asset purchases” by the Federal Reserve, or the indirect subsidies like the ethanol mandate that line the pockets of agribusiness giants such as Archer Daniels Midland, and special tax breaks for wind and solar manufacturers.
Hundreds of billions more dollars are spent on gigantic military contractors, and at least taxpayers are getting something for their money. But 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,” Moore writes.
Billions more are simply taxpayer transfers to corporate America. And on average, each Fortune 100 firm got about $200 million; the biggest welfare queens are General Electric ($380 million), followed by General Motors ($370 million), Boeing ($264 million), Archer Daniels Midland ($174 million), and United Technologies ($160 million).
Taxpayer-subsidized loans are also a big part of the equation: $8.5 billion worth. This group of winners included Chevron, Exxon Mobil, Ford Motor Company, and multibillion corporations whose franchisees got Small Business Administration loans.
As Moore points out and as Ryan has said, unless or until Congress gets serious about ending this kind of absurd welfare for profitable American corporations, there is simply no way to balance the budget. There are other reforms needed as well, but this should come as a no-brainer to Republicans who used to decry this kind of largess as anti-capitalistic and anti-small government.
Worse, the Republicans have a perception problem: Thanks to a hostile mainstream media and entertainment industry, most of the public believes that the GOP, not the Democrats, is the party of corporate welfare. That’s not true, but that’s the perception.
Republican leaders have said they want to widen the base and broaden GOP appeal. How easy would it be to accomplish those goals if the Republican Party became the Democratic Party of the 1950s – friendly to taxpayers and less of a burden on corporate America?
Corporations spend more than a trillion dollars a year on compliance costs; manufacturing is the hardest-hit. Maybe if Republicans became the party of cutting expensive and needless regulations on industry, taxpayers wouldn’t be on the hook to subsidize them.