Corporate Welfare
KQED Commentary
By: Lance T. Izumi, J.D.
10.19.1999
by Lance T. Izumi, Fellow in California Studies
Pacific Research Institute
October 19, 1999
Announcer lead: Time for Perspectives. Lance Izumi says that Congress has done little to cut corporate welfare. When the Republicans took control of Congress in 1994, there was great expectation that they would use their newfound power to slash wasteful government spending. Over the last five years, however, the Republican congressional majority has done little to curb spending on many of the federal government's most indefensible programs. Take, for instance, so-called "corporate welfare" programs. These business aid programs include government subsidies, low-interest loans, tariff protection, special-interest tax breaks, and other taxpayer-financed goodies. A recent report published by the Hoover Institution estimates that the federal government spends $100 billion annually on such programs. Who benefits most from corporate welfare? It certainly isn't the mom-and-pop business down the street. No, the biggest beneficiaries of corporate welfare are some of America's largest companies. For example, the federal government spends $500 million a year underwriting the cost of overseas advertising for big firms such as Tyson Foods and Pillsbury. Federal subsidies to the sugar industry cost taxpayers $1.4 billion annually. Archer Daniels Midland, an agri-business giant, receives $500 million a year in tax breaks to produce the inefficient fuel ethanol. The Hoover report says that the major effect of corporate welfare is to divert credit and capital to politically well-connected firms at the expense of their less influential competitors. Further, research shows that corporate welfare is inherently regressive, with high-income corporate shareholders benefiting, and lower-income taxpayers paying the cost. Yet, despite this evidence, most Republicans in Congress have shown little interest in cutting corporate pork. Then-Speaker Newt Gingrich is quoted as saying it was never one of his priorities. Until Republicans match their anti-big-government rhetoric with real action, they'll continue to face a credibility gap on budget issues. Even in this jaded age, hypocrisy is not an acceptable governing principle. With a perspective, I'm Lance Izumi.
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