The right used to be smart....
What’s Wrong with Corporate Welfare?
The above examples illustrate that corporate welfare comes in many flavors. “Crony capitalism” is another name for the problem. These subsidies have many negative effects:
1. They harm taxpayers. A 2012 Cato report found that the federal government spends about $100 billion annually on corporate welfare. Repealing the spending would save every household in the nation an average of about $800 a year.
2. They harm consumers and businesses. Corporate welfare aids some businesses, but it harms other businesses and consumers. Federal import barriers on sugar, for example, raise sugar prices and cost U.S. consumers about $2 billion a year. Some U.S. food companies that use sugar in their products have moved their production abroad to access lower-priced sugar.
3. They create an uneven playing field. Businesses receiving federal subsidies have an unfair advantage over unsubsidized competitors in their industries. Corporate welfare can also have unfair effects on businesses in other industries. As an example, the Export-Import program has subsidized jet purchases by foreign airlines, but that has given the foreign airlines an advantage over U.S. airlines that pay the full prices for their jets.
4. They duplicate private activities. Corporate welfare often duplicates activities that are already available in private markets, such as insurance, loans, marketing, and research. USDA’s Risk Management Agency, for example, says that its mission is to help farm businesses “through effective, market-based risk management tools.” But if these services are “market-based,” then Congress can end this $8 billion agency and let the private marketplace provide the tools.
5. They foster corruption. Corporate welfare fosters political corruption as businesses looking for handouts try to gain the support of politicians and federal officials. A 2011
Washington Post investigation into green energy subsidies was titled, “
Solyndra: Politics Infused Obama Energy Programs.” The investigation found that the business people behind firms receiving green subsidies were often Obama campaign donors, that Solyndra’s corporate decisionmaking was driven by political considerations, and that a major Democratic fundraiser and frequent visitor to the Obama White House, George Kaiser, held a one-third stake in Solyndra through his family foundation. Federal taxpayers lost half a billion dollars on the failed solar company, Solyndra.
6. They weaken the private sector. Corporate welfare draws talented people away from productive pursuits and into wasteful subsidy activities. Companies that take government subsidies often become weaker, less efficient, and distracted from serving their customers. They take on riskier projects, they make decisions divorced from market realities, and they substitute lobbying for innovation. Federal export subsidies, for example, induced Enron Corporation to partake in failed overseas projects that helped pull the company down. And in chasing federal green subsidies, the utility Southern Company has spent more than $6 billion on a disastrous “clean coal” power plant that has doubled in cost.
7. They damage trust in government and business. Public opinion polls show plunging support for politicians and big businesses over the years. Gallup polls find that just one-fifth of Americans have “confidence” in big business, and they find that about three-quarters of people think there is “widespread corruption” in American government. The recent rise of populist politicians partly stems from the feeling that the “system is rigged” in favor of special interests, such as big businesses. Business and political leaders would garner more respect if they cut their ties to each other by ending corporate welfare.
Cato Handbook for Policymakers: 54. Special-Interest Spending and Corporate Welfare
I have an ulterior motive for posting this beyond the obvious.
Dead American Soldiers Making Trump Look Bad According To Pete Hegseth. WTF?
