According to a new study by the Open Books Institute, the federal government spent more than $1.2 trillion on direct payments to big corporations between 2000 and 2012. (Hat Tip: The Advocates for Self-Government).
Stephen Moore of National Review provides more details:
......But corporate welfare has strong claimants: deep-pocketed business interests that rely on federal largesse to pad their pockets and jack up stock prices. Too many companies in America, from Boeing to AT&T, have come to regard government as a giant customer. They cheerlead for big government because they are among its chief beneficiaries.
So why hasn’t it happened? Why haven’t Republicans pledged to end corporate welfare as we know it? Part of the explanation is that too many politicians have gotten confused about the difference between free-market capitalism and crony capitalism. Democrats love welfare of any kind and seem to relish the idea of making big business government-dependent. President Obama, with his stimulus plans and his green-energy giveaways, has been a master at that.
The business interests have also gotten away with their taxpayer heist for too long by pretending that business subsidies are just a small, inconsequential part of the budget. Actually, it’s a surprisingly large mountain of cash — even if it is well hidden. This week an Illinois-based watchdog group, Open the Books, issued a new report that scrupulously tallies up all federal grants, loans, direct payments, and insurance subsidies flowing to individuals and companies. It examined all accounts from the Department of Commerce to the Department of Transportation and found that corporate-welfare payments from the federal government to the Fortune 100 companies, from 2000 to 2012, amounted to $1.2 trillion. I recommend a visit to the website openthebooks.com, if you can stomach it.
That $1.2 trillion number does not include the hundreds of billions of dollars in housing, bank, and auto-company bailouts in 2008 and 2009, because those payments are kept mostly invisible in the federal-agency books. It also doesn’t include the asset purchases of the Federal Reserve, indirect subsidies such as the ethanol mandate that enriches large agribusinesses like Archer Daniels Midland, or special tax breaks for wind and solar manufacturers.*
Most of the payments Open the Books uncovered were contracts between government agencies and private firms. The largest of these are military-procurement deals with such firms as Lockheed Martin ($392 billion), General Dynamics ($170 billion), and United Technologies ($73 billion). At least taxpayers get services in exchange for these tax dollars. Still, the overall size of the government-industrial complex makes it all the harder to cut federal spending, because the recipients of all this money become high-roller lobbying forces for higher appropriations.
Far less defensible is the $21.3 billion that was doled out in the form of outright income-transfer subsidies to corporate America. On average, each Fortune 100 company received about $200 million in such handouts. So who are the major corporate-welfare queens? The biggest grant recipients were General Electric ($380 million), followed by General Motors ($370 million), Boeing ($264 million), Archer Daniels Midland ($174 million), and United Technologies ($160 million).
Mr. Moore is right that there are many forms of corporate welfare not counted in the study, such as the bank bailouts and the numerous ways big business benefits from the Federal Reserve. There is also the billions in corporate welfare disguised as "defense" spending or "foreign aid." The study also does not count the ways big businesses benefits from regulations that disadvantage their smaller competitors.
The study also does not consider "that which is not seen," meaning the business, jobs, and products that would have been created had the government not taken the resources out of the private sector.
Don't miss hearing from Tim Carney, one of the nation's leading experts on corporate welfare, along with other great speakers at LPAC 2014!
* Campaign for Liberty and our Chairman, Ron Paul, do not agree that allowing individuals and business to keep their own money for specific purpose is a "subsidy."
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PDFTags: LPAC, Corporate welefare