Litmus Test for Corporate Pork

August 4, 1998 • Commentary

Remember corporate welfare? Republicans in Congress promised a “frontal assault” against unwarranted corporate subsidies back when they took control of Congress in 1995. And led by then‐​labor secretary Robert Reich, the Clinton administration asserted its own eagerness to attack this $70 billion a year virus in the budget.

Here we are three years later and the corporate welfare safety net has … expanded. Despite good‐​faith efforts by some courageous souls like House Budget Committee chairman John Kasich, not a single major corporate subsidy program in the budget — of the more than 100 we at the Cato Institute have cataloged — has been terminated. Corporate welfare, it turns out, has influential sponsors in both parties.

Later this month the Senate will have one last chance to target what is arguably the most absurd of all corporate subsidies: the Department of Agriculture’s Market Access Program (MAP).

MAP provides taxpayer assistance to some of America’s most profitable food companies to pay for the overseas advertising of their products. The list of recent beneficiaries includes the Pillsbury dough boy, the California dancing raisins and Fruit of the Loom underwear. In 1995 MAP gave $500,000 to Tyson Foods; $730,000 to Welch Foods, the fruit juice company; $42,000 to Pepperidge Farms; $308,000 to Ocean Spray Cranberries, Inc.; $14,000 to High Mountain Jerky Inc. (they make the famous Beef Jerky); and $281,000 to the Campbell Soup Co. Mmm, mmm, good!

Not long ago MAP was subsidizing foreign sales of U.S. tobacco and furrier companies, but, of course, these days such taxpayer promotions are the height of political incorrectness. To refine its tainted image and to try to fend off the few budget hawks left in Congress, MAP also says it will no longer offer grants to Fortune 500 firms like Dole, Ernest and Julio Gallo and Ralston‐​Purina — yes, cat food has long been considered a strategic export under this silly program. Instead, MAP will emphasize handouts for small and minority‐​owned food companies, such as the Great Western Tortilla Co. in Denver and Sire Power, Inc. of Texas, which exports bull sperm.

It is an affront to free enterprise for Congress and the USDA to be passing out $100,000 checks to the favored few firms with the political clout to chase tax dollars around Capitol Hill.

Another MAP “reform” established in 1996 was a new time limit on how long any firm can stay on the USDA dole. Ironically, while welfare mothers now face a two‐​year limit for AFDC, Congress gave corporate food giants five years to wean themselves from government aid.

This is a government program that is constantly reinventing itself, as evidenced by the fact that its name has been changed three times in the past five years. But the highly questionable nature of its charity remains. Is it really essential to U.S. global competitiveness to give $500,000 this year to the Popcorn Institute, $75,000 to the Mohair Council, $8.4 million to the U.S. Meat Export Federation and $3 million to the California Wine Institute? Should American tax dollars be used to post grocery store displays in Canada and Mexico touting California‐​grown kiwis?

Absolutely, yes, says Democratic Rep. Cal Dooley of California. “Frankly,” he insists, “we should be spending more” on MAP. Almost all the California delegation — including normally free‐​market Republicans and anti‐​big‐​business Democrats — sing MAP’s praises. Congressional supporters recite a mantra that MAP creates $16 in exports for every $1 spent and that it is essential to the $60 billion a year U.S. agriculture export market. That’s not the view of the independent General Accounting Office, which finds that MAP is essentially inconsequential to U.S. food exports.

MAP even spends some of its $85 million budget soliciting companies to submit grant requests for Uncle Sam’s free money. This has prompted Rep. Charles Schumer (D-N.Y.), a long‐​standing foe of MAP, to ask, “Is this a government program or is this a Publisher’s Clearing House contest?”

Or consider this preposterous waste of federal tax dollars. Several years ago the California Raisin Board spent $3 million of MAP money to run its famous dancing raisin ads in the Far East. The problem was that the ads ran in English and the baffled Japanese and Hong Kong audiences didn’t get the joke when the cartoon raisins started singing Marvin Gaye’s “I Heard It Through the Grapevine.” The Japanese and Chinese thought they were watching dancing potatoes. It’s doubtful that the California Raisin Board would have so cavalierly dumped $3 million of its own money into an advertising campaign without first testing its appeal.

MAP cannot and should not be reformed or renamed. It is an affront to free enterprise for Congress and the USDA to be passing out $100,000 checks to the favored few firms with the political clout to chase tax dollars around Capitol Hill. “Providing seed money for multi‐​billion‐​dollar corporations to advertise beer, nuts, fruit, wine or any other product overseas is simply not one of the federal government’s central priorities,” says Rep. Schumer.

That seems patently obvious to taxpayers who have been fleeced by this program for some two decades. “If we can’t get rid of advertising subsidies to agri‐​giants, we can’t rid of anything in this town,” budget hawk John Kasich (R‐​Ohio) laments. Unfortunately, he is probably right.

About the Author