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No. 415

October 10, 2001

The Corporate Welfare Budget

Bigger Than Ever

by Stephen Slivinski

Executive Summary

While the House kept intact the cuts for the

Federal subsidies to private businesses cost tax-

Advanced Technology Program and the Overseas

payers $87 billion per year. That is over 30 percent

Private Investment Corporation, it diluted the cuts

more than the Cato Institute's 1997 corporate

for the Small Business Administration and the

welfare estimate of $65 billion. If corporate wel-

Export-Import Bank. The Senate voted to increase

fare were eliminated tomorrow, the federal gov-

the budgets for the Advanced Technology Program

ernment could provide taxpayers with an annual

and federal assistance to energy companies.

tax cut more than twice as large as the tax rebate

The Advanced Technology Program, the Small

checks mailed out in 2001.

Business Innovative Research program, the

President Bush's first proposed budget recom

-

Partnership for the Next Generation of Vehicles,

mends about $12 billion in total corporate welfare

and the Export-Import Bank are among the worst

cuts. Most notable are the proposed cuts for the

corporate welfare programs. They subsidize large,

Advanced Technology Program, the Export-Import

profitable corporations at the expense of taxpay-

Bank, the Overseas Private Investment Corporation,

ers for projects that already receive, or could

the Maritime Administration's guaranteed loan pro-

receive, adequate funding from the private sector.

gram, and the Small Business Administration.

A good way to abolish corporate welfare pro-

However, the Bush budget proposal also increases

grams would be to convene a corporate welfare

some of the largest corporate welfare programs, such

reform commission (CWRC). That commission

as federal aid to oil companies through the fossil ener-

could function like the successful military base

gy research and development program and research

closure commission. The CWRC could compose

subsidies to aerospace companies as well as increases

a list of corporate welfare programs to eliminate

for the National Agricultural Statistics Service, the

and then present that list to Congress, which

Foreign Agriculture Service, and the Conservation

would have to hold an up-or-down vote on the

Reserve Program.

commission proposal. The commission would

Spending bills working their way through the

help reform-minded legislators to end federal

House and Senate Appropriations Committees

subsidies to business.

have reversed or diluted Bush's proposed cuts.

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Stephen Slivinski is a fiscal policy analyst at the Cato Institute.