The Corporate Welfare State: How the Federal Government Subsidizes U.S. Businesses

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The federal government spent $92 billion indirect and indirect subsidies to businesses and private‐​sector corporate entities — expenditures commonlyreferred to as “corporate welfare” — in fiscalyear 2006. The definition of business subsidiesused in this report is broader than that used by theDepartment of Commerce’s Bureau of EconomicAnalysis, which recently put the costs of directbusiness subsidies at $57 billion in 2005. For thepurposes of this study, “corporate welfare” isdefined as any federal spending program that providespayments or unique benefits and advantagesto specific companies or industries.

Supporters of corporate welfare programsoften justify them as remedying some sort ofmarket failure. Often the market failures onwhich the programs are predicated are eitheroverblown or don’t exist. Yet the federal governmentcontinues to subsidize some of the biggestcompanies in America. Boeing, Xerox, IBM,Motorola, Dow Chemical, General Electric, andothers have received millions in taxpayer‐​fundedbenefits through programs like the AdvancedTechnology Program and the Export‐​ImportBank. In addition, the federal crop subsidy programscontinue to fund the wealthiest farmers.

Because the corporate welfare state transcendsany specific agency — and therefore anyspecific congressional committee — one way toreform or terminate those programs would bethrough a corporate welfare reform commission(CWRC). That commission could function likethe successful military base closure commission.The CWRC would compose a list of corporatewelfare programs to eliminate and then presentthat list to Congress, which would be required tohold an up‐​or‐​down vote on the commission’sproposal.