Commentary

The Bipartisan Scandal of U.S. Corporate Welfare

When President Bill Clinton and GOP nominee Robert Dole take to the debate stage again, they should be called to account for one of Washington’s great bipartisan scandals: corporate welfare. While the two candidates preach fiscal frugality and deficit reduction, their parties continue Washington’s time-honored practice of subsidizing business.

When the GOP took control of Congress in 1994, the new majority promised to change the way Washington worked. It would cut wasteful spending and eliminate unnecessary agencies.

But not, it turns out, business subsidies. For instance, over the past decade the Agriculture Department’s Market Access Program (MAP) has provided roughly $1 billion to promote the export of goods produced by agribusiness. Impecunious enterprises, such as Jim Beam, Campbell’s, Gallo, McDonald’s, Pillsbury, Ralston Purina, Welch’s and the Wine Institute have ended up on the federal dole. Some freshmen GOP members attempted to put corporate subsidies on the budget-cutting block along with traditional welfare programs for the poor: The majority responded by increasing MAP outlays by $14.5 million annually.

Nor is MAP the only corporate welfare in the federal budget. To the contrary, Uncle Sam spends $75 billion, roughly half the current deficit, on 125 different programs that directly enrich business. To these the supposedly radical Congress made only modest reductions.

“Of the $19.5 billion budgeted for the 35 least defensible programs, Congress cut just $2.8 billion in 1996,” or about 15 percent, report Cato Institute analysts Stephen Moore and Dean Stansel.

But the GOP Congress is not the only culprit. Clinton actually proposed increasing spending on these programs, and vetoed Republican budget bills last year because, he argued, the GOP was cutting corporate largesse too much.

Business subsidies should be slashed as a matter of basic priorities. Deficits continue to accumulate at $150 billion a year, and, unless further cuts are made, will soon start rising again. Policy-makers need to eliminate every low priority program, and outlays benefiting some of the largest and most profitable usinesses in America should be considered the very lowest priority. There is a more fundamental principle at stake, however. It simply isn’t right to take money from average taxpayers to enhance business profits. Put bluntly: Gallo should pay to promote its own products. The role of government is to serve critical common goals that can’t be achieved privately, not to redistribute wealth among private parties based on the size of their campaign contributions.

The fact that major corporations don’t have to pay their own way, and instead are able to enlist legislators to mulct common citizens - and businesses with more modest Washington connections - deforms the entire political system. It is the availability of hundreds of billions of dollars in taxpayer loot that has encouraged the creation of PACs and consequent flow of special interest money into politics. Companies such as Archer Daniels Midland buy access to politicians in both parties, access lacked by the people who pay the bill. The only effective way to “clean up” politics is to eliminate the benefits up for auction, not rerig the political game.

Of course, advocates of corporate welfare rarely admit that their goal is self-enrichment. Rather, they argue that the programs generate countervailing benefits - usually jobs. After all, if McDonald’s sells more hamburgers overseas, it employs more people at home. But federal spending is not free. Money given to Archer Daniels Midland, Boeing, General Electric, IBM and Ralston Purina is taken from people and enterprises across America. This reduces their purchases, investments, and other economic activities - and thus the number of jobs created. There ain’t no such thing as a free lunch, goes the saying, and no where does it apply with more force than to corporate welfare.

Congress and the president should begin killing programs designed to enrich business. They should take the ax to the Departments of Agriculture and Commerce, which do little more than dole out cash to business. Policy-makers should hack away at the generous corporate subsidies buried in the Departments of Defense, Energy, Interior and Transportation. And take a wrecking ball to independent agencies, such as the Export-Import Bank and Overseas Private Investment Corp., with no function other than transferring taxpayers’ wealth to business.

The federal budget has long been filled with waste. But few expenditures are more obnoxious that those for corporate welfare. Democrats and Republicans alike should be able to agree on one thing - government should not mulct taxpayers to enrich business interests. If Congress and the president won’t cut this kind of abusive spending, what programs will they kill?

Doug Bandow is a senior fellow at the Cato Institute. He served as a special assistant to President Reagan.