It’s time to end corporate welfare

It’s time to come clean about corporate welfare.

There’s a lot of it, and most of it is completely unnecessary.  We waste billions of dollars on it every year bailing out companies that should go under, financing pie-in-the -sky projects that don’t make sense, incenting companies to do what they’d do anyway,  and propping up industries that shouldn’t exist here anyway.   

If you’re not familiar with corporate welfare by that name, realize that it comes in a variety of forms.  There are subsidies, grants, tax credits, special tax treatment of certain things, loan guarantees, ear marks and more, to name just a few.

But they are all welfare by another name.  Your money is being given to – or not collected from – favored businesses usually for purely political reasons. 

Corporate welfare is also something that unites both Republicans and Democrats – a rarity in this day and age.  Neither party wants changes there.   That’s because removing corporate welfare would seriously undercut every legislator’s power to deliver pork in exchange for votes, or the money to buy votes.  

In our new economic reality, much will have to change.  We have to withdraw or seriously scale back benefits or special treatment some have grown to accept as a part of their business or personal lives.  It’s inevitable; anyone who tells you otherwise is wrong.     

We simply can’t afford to support everything and everyone anymore.  Industries, businesses, a lot of interest groups and significant portions of the American population will just have to learn to adapt.  The unreasonable addiction to, and reliance on, government money has to end.  

While most of the public’s and media’s attention will be focused on social programs facing the chopping block, the real backroom battles will be on cutting or eliminating corporate welfare. 

Congress will be hammered by lobbyists and home-state interest groups to keep corporate welfare just the way it is.  The pitch to provide subsidies, grants or special tax treatment to one industry or another, or one company or another, will ultimately always be the same: 

It’s about jobs.  If so and so business doesn’t get this, they’ll cut jobs or maybe even have to shut down altogether. 

Sure, there will be smoke and mirrors about the need to “support” American businesses, and “building” 21^st century technology expertise, but the end emotional argument is always about “creating or saving jobs.”

And not just any jobs – but usually jobs in a legislator’s home state or Congressional district, and/or in companies that have powerful lobbyists who can channel money into that legislator’s next campaign.    

It really needs to end.  It’s an outrageous use of our money. It smacks of crony capitalism at its worst.  It poisons the democratic process.  And most of it is unnecessary. 

Despite what a number of industries and businesses claim, stopping corporate welfare won’t destroy them, nor devastate consumers.  Most times, these subsidies, special tax treatments and other handouts are anti-competitive and distort the marketplace to benefit a few at the expense of the many. 

So you would think they’d be an easy target in this era of unbridled class warfare. 

However, if the Feds are pouring money into a craptastic, never-gonna-work project in your home town to turn cow pies into hybrid batteries, and it employs your friends and neighbors, that’s not corporate welfare to you – it’s a God send.  You’ll be thanking – and probably voting for – whatever Senator or House member made it happen and brought home the bacon. 

Your community may benefit, but it’s still corporate welfare.  A waste of our money; money down a rat hole that will never pay off, which only encourages more rats to invent their own rat holes for our money. 

And those rats are lobbyists.  They feed on government money.  They exist primarily to work the edges, get special treatment for their clients, and enrich themselves at the same time.  All at our expense. 

Sometimes it’s hard to spot corporate welfare, and social welfare, when they’re wrapped up together in a more pleasing package. 

A classic example is the annual “Farm Bill.”  Like Defense Authorization bills, these set off a lobbyist feeding frenzy, so they are always packed with billions of dollars in subsidies and special treatments so loved by farm state and other legislators.  And after a lot of backroom wheeling and dealing they always pass overwhelmingly. 

You may think these bills are about the “family farmer” and wonder how anyone could question them.  Aren’t farmers the bedrock of America?  These are the people who produce our food, for God’s sake, so we should do everything we can to help them, right?  If we help farmers won’t that keep food prices down? 

Except most of that is a big ol’ steaming pile of manure. 

Most of the “farm” bill has absolutely nothing to do with your image of Ma and Pa standing with pitchfork outside their barn.   

The real farm bill is all about funding food stamps (78%), plus subsidies to support big-time agribusiness conglomerates like ADM, and farming operations here that make little or no economic sense (16%).  The rest is for “agricultural conservation,” whatever that is.  All told, the farm bill routinely costs about $100 billion a year. 

So forget about Ma and Pa and the family farm.  Think food stamps and corporate jets

Yes, we’re still paying some farm operation NOT to produce certain things, and punish them if they do.  And yes, we also still pay other operations to produce crops they would otherwise lose their shirts on if it weren’t for subsidies.  The Feds manipulate everything through subsidies.   

Common sense tells you that if farmers can’t make a living growing and then selling a certain crop, then they should plant something else that’s more profitable.  But farmers – not the government – should decide what that is in the total absence of government subsidies.  If that creates a shortage and drives prices up, then someone else will start planting and selling that other crop again.  The same goes for milk, cheese, eggs, butter, soybeans or whatever.  Everything will balance out once you take government’s heavy hand out of it.

It’s called supply and demand.  Government intervention upsets the balance.   

The ethanol fiasco is what you get when government gets involved.  Through subsidies and government mandates to refiners, farmers moved food crops into a waste-of-time and woefully inefficient fuel that causes more environmental damage than the gasoline it’s supposed to replace.  Oh, and by shifting food crops to this boondoggle, most basic food prices spiked. 

This subsidy stupidity is not limited to the Farm Bill.   

Take the ever-popular wind-energy subsidies which are about $12.1 billion a year.  We’re giving money to support foreign companies to build wind turbines here.  Yes, there’s a short-term job gain, but it’s still short term.  And now that natural gas is so cheap – thanks to supply and demand – orders for big wind turbines are drying up. 

So there go the jobs we subsidize for about $142,000 each, per year.  You can bet the average Joe on the factory floor building those turbines isn’t seeing an annual paycheck that big, so your money is flowing to foreign companies, not workers here, thanks to Uncle Sam. 

Then there are subsidies for electric cars nobody wants, domestically-produced solar panels we can buy much more cheaply from China, about $200 million annually in subsidies for tobacco production while we are trying to cut tobacco consumption, and a host of other silly things.  You name it – whether it’s fly-fishing tackle or lamp finials – if some or all of it is still made in the USA there’s probably some subsidy or special tax treatment associated with it. 

So what would actually happen if we decided to end corporate welfare altogether? 

You could knock out practically every industry subsidy and handout today and it wouldn’t make a damn bit of difference, except to accountants and lobbyists.  Loser companies would go out of business, which is what should happen anyway.  Remaining companies would get stronger and hire more people from the losers.  Everything would even out in short order. 

Everybody – including Obama – always talks about a “level playing field.”  If you take away all the corporate welfare, that’s what you’d get.

Companies would have to make business decisions based on real market dynamics, instead of how this might affect their tax position.  Companies would have to compete fairly for business, which is something big corporations don’t like to do, not just against other domestic firms, but also foreign firms.  With no safety net, they’d have to become more nimble, more efficient and more productive or fail and go under.  There would be no rich uncle to bail them out if they made stupid business decisions.    

Plus, if you took away all the subsidies, handouts and tax breaks that make up the majority of corporate welfare, you could probably lower the corporate tax rate to zero.  Honestly, most big corporations here aren’t paying much if any taxes anyway, so where’s the harm in just recognizing that?   Plus, that would make the U.S. one of the most attractive business environments in the world.  Companies would flock here.  Hiring would go up. 

Stopping corporate welfare now, and forbidding the arbitrary awarding of corporate and industry subsides and bail outs in the future would also have other beneficial effects.  We’d never have to hear about “too big to fail” ever again.   Or see our tax dollars squandered on nit-wit “investments in our future” schemes like Solyndra and the Chevy Volt. 

Oh yeah, there would suddenly be a lot of vacant office space on K Street.  A very good thing. 

Frankly, if something doesn’t make economic sense unless it gets government subsidies – aside from defense development stuff -- then it probably never will.  Conversely, if it does make economic sense over time, private investors will pony up and government money isn’t needed. 

All government money usually does is support businesses and industries that aren’t ready for prime time, may never be, and will now be dependent of government money until Hell freezes over.  There’s no incentive for these companies to become more economically competitive and efficient as long as Uncle Sam’s providing a safety net. 

It’s time.