Corporate welfare is a favorite whipping post of liberals and conservatives alike. Conservatives say the feds shouldn't give corporations a helping hand but should let them live or die by the hand of the free market. Liberals cry foul at what they see as preferential treatment for corporations over, say, poor families. But what exactly is corporate welfare? And is there any rhyme or reason to the handouts industry gets from "the man"?
What is Corporate Welfare?
Corporate welfare is not an official term, but can be loosely defined as government programs that give benefits or advantages to specific companies or industries, in the form of tax breaks, loans, and grants.
Is there a rationale?
Those that support corporate welfare don't call it corporate welfare. They say instead that financial supports and incentives can sometimes help US companies compete on the global market, or allow businesses to focus on new technologies and growth-related activities rather than being bogged down with taxes and worrying about staying afloat.
What is wrong with helping our own businesses out?
Critics of corporate welfare have a couple of answers.
- It means less money to pay for other government expenses.
- It creates an unfair playing field - some businesses are left out of the free money given by the government.
- When industries are subsidized, prices go higher and the consumer gets hurt.
- It props up weak companies and industries and doesn't let the market work its magic by separating out the wheat from the chaff.
How much corporate welfare is there?
Depends on who you ask:
- $93 billion (CATO -pdf - a conservative libertarian group) (2002)
- $125 billion (Public Citizen - a liberal organization) (no year specified)
How do those numbers break down
...by tax breaks, loans, subsidies, grants and tariffs?
Who knows. (At least we couldn't figure it out.) Frustratingly, the critics of corporate welfare don't spell out how they get their numbers - or even what criteria they use to say what counts as CW and what doesn't. Cato, at least, says which departments it thinks is most guilty of CW and gives some examples.
Leading Corporate Welfare Providers: (CATO) Big caveat: As we've said a few times on this page, deciding what qualifies as corporate welfare is subjective. We list Cato's breakdown only because it was the only one we could find (please tip us off to others).
- Dept. of Agriculture: $35 billion
- Health and Human Services: $9 billion
Dept. of Transportation: $11 billion
- Example: $621 million to Amtrak
Dept. of Energy: 6 billion
- Example: $670 for energy supply research
- Housing and Urban Development: $8 billion
- Defense: $4 billion
- Interior: $2 billion
- Commerce: $2 billion
- Others: $16 billion
A little context
How much corporations pay in taxes:
- $286 billion - or 2.3% of GDP (2004) CBO (pdf)
Corporate taxes since '62 - as a % of the national economy (GDP) and of all taxes raised
source: CBO (pdf)
Where the facts are from:
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