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The corporate

The study also provides case studies of some

Introduction

of the most egregious corporate welfare pro-

welfare state tran-

grams, assesses the strength of the Bush

scends any partic-

In its first budget, the Bush administra-

administration's proposed cuts in programs

ular agency or

tion hinted at its intent to reappraise the fed-

and how Congress has already begun to resist

eral government's role in subsidizing private

them, and concludes by proposing a way to

interest group.

businesses. The administration's proposed

end corporate welfare programs.

cuts in a handful of corporate welfare pro-

grams are a clear departure from the White

Estimates of Corporate

House policy of years past. In contrast,

Welfare

President Clinton proposed aggregate

increases of 10 percent for major corporate

welfare programs almost every year he was in

The federal government dished out $87

office.1

billion for corporate welfare in the federal

budget in fiscal year 2001, as detailed in

It's been many years since the last attempt

Table 1. Descriptions of the programs appear

to cut government subsidies to business. An

in Appendix 1. In 1997 the Cato Institute

attempt was made under the Contract with

estimated the cost of corporate welfare as $65

America when the Republicans took control

of both houses of Congress in 1994.2 That

billion a year.6

attempt failed, and little has been done since

The corporate welfare budget supports a

to curtail corporate welfare spending.3

wide-ranging collection of programs. As

Table 2 shows, many agencies administer fed-

There are some signs that the new admin-

eral subsidies to business. The departments

istration is willing to take a fresh look at gov-

that are the leading corporate welfare

ernment subsidies to business, even if the

providers are the Departments of Agriculture

Bush White House staff does not use the

and Commerce, followed by the Department

term "corporate welfare" in its public state-

of Energy. That multiagency spigot of corpo-

ments. For example, Mitch Daniels, director

rate welfare spending is one of the institu-

of the Office of Management and Budget,

tional biases in favor of budget growth since

recently noted that some programs "have

it's hard for any one congressional commit-

nothing to show for years and years and years

tee to target much of the corporate welfare

of essentially subsidizing corporate research

budgets."4 At times, Daniels has been even

budget. The corporate welfare state tran-

scends any particular agency or interest

more pointed in his criticism of corporate

group.

welfare. As the Financial Times reported in

These estimates differ from measures of

March, he said that "it was not the federal

corporate welfare by other groups. For

government's role to `subsidize, sometimes

deeply subsidize, private interests.'"5 Subsi-

instance, the Congressional Budget Office

occasionally updates its estimate of "federal

dizing private interests not only costs taxpay-

financial support of business."7 The CBO esti-

ers money; it is beyond the bounds of the fed-

eral government's role as outlined in the U.S.

mate typically includes only programs that

Constitution.

have a stated goal of promoting commerce or

Even though there is bipartisan support

business. It excludes major research and devel-

for eliminating many major corporate wel-

opment (R&D) initiatives that underwrite the

fare programs, little has been done to stem

research budgets of private corporations, and

the tide of funding for them. This study pro-

it ignores most infrastructure spending, much

vides detailed estimates of the billions of dol-

of which funds transportation boondoggles

lars in the federal budget that go to assisting

that would not have been funded in the

private business and descriptions of the fed-

absence of federal support and that serve only

eral programs that distribute that money.

to enrich the bottom line of local contractors

2