May 14, 2007 4:42PM

Uncle Sam: Electrician

My new Cato policy analysis goes into great detail about how the federal government uses your tax money to subsidize businesses. In fiscal 2006, the “corporate welfare state” cost $92 billion, all of which funded programs that provide unique benefits to particular companies or industries.


One of these programs is the Rural Utilities Service (RUS). A relic of the New Deal, the goal of the program was to electrify the countryside. Now that reading by candlelight in the boonies is a thing of the long forgotten past, the RUS has morphed into a fountain of cash for rural electricity co‐​ops. 


As a story on the front page of this morning’s Washington Post highlights, it’s always easier to create a program than to kill it:

The key to the longevity of the Agriculture Department’s programs for rural utilities has been the [electricity co‐​ops’] powerful political voice. More than 30,000 members gave an average of $41 last year to the co‐​op association for political contributions. Given their geographic scope, the co‐​ops can mobilize letter‐​writing campaigns across a vast number of states and congressional districts.

To learn more about the corporate welfare budget generally, tune in to my live interview on Bloomberg Radio’s “On the Economy” today at 6:30 pm Eastern. A podcast about the corporate welfare state will be featured on the Cato website on Tuesday.