Corporate Welfare News
Date: Wed, 8 Mar 95 18:26:10 PST
From: Peter Langston <psl>
Subject: Corporate Welfare News
[These two items that took very different paths turn out to be the short and
long form of the same story... -psl]
From: email@example.com (Jeff Elliott)
... quite a good piece appears in today's San Francisco Chronicle
(March 7, page A3, by Carolyn Lochhead, Chronicle Washington Bureau).
In summary: liberal, moderate, and conservative thinktanks (Center for
Budget and Policy Priorities, Progressive Policy Institute, and Cato
Institute) have joined forces, warning that corporate welfare must be
slashed. Business and ag subsidies equal half of the federal deficit.
Examples: $2.9 million in advertising for Pillsbury; $263,000 to pay for a
Smokey Robinson concert associated with Martin Marietta. Nearly every member
of the Fortune 500 recieves some subsidy. Labor Sec'y Robert Reich compares
to AFDC, and Republicans should "be equally eager to get companies off
welfare..." But making such cuts will be politically difficult for dems and
repubs. Repubs often argue that welfare harms those it is supposed to help;
it's the same in business, weaking their incentive to be competitive.
Examples are the subsidized steel and textile industry (inefficient) vs.
efficient computers/film industry.
"Empty wagons make the most noise." -- Farmer's Almanac, 1881
There was an excellent article in yesterday's St. Paul Pioneer Press regarding
corporate welfare. It was written by R. A. Zaldivar of the Washington Bureau:
If the Republican Congress is truly serious about ending dependence on
government handouts, it should look beyond the poor and also slash subsidies
to corporate America, an unusual alliance of moderate, conservative and
liberal policy experts declared Monday.
The government could save $265 billion over 5 years by eliminating or
scaling back 120 spending programs and tax breaks that benefit particular
industries, according to a report released by the Progressive Policy
Institute (PPI), a moderate Democratic think tank.
Also joining in the call for an end to "corporate welfare" were the Cato
Institute, a think tank representing the libertarian wing of the Republican
Party, the Center on Budget and Policy Priorities, a liberal advocacy group
for the poor; and conservative columnist and author David Frum.
"It is these subsidies that create the impression that government is often
for sale in the United States," said Frum.
He added that it would be "a bad thing, morally and politically," if
Republicans went to the voters in 1996 having chopped programs for the poor
but leaving business subsidies untouched.
Supporters of the subsidies, meanwhile, call them an investment that
preserves American jobs and provides an edge for vital industries.
Among the programs and tax breaks singled out were:
* The Commerce Department's Market Promotion Program, which spends $110
million a year to help advertise American products abroad. According to
a Cato Institute analysis, taxpayers spent $10 million in 1991 touting
Sunkist oranges; 2.9 million advertising Pillsbury muffins and pies; $2.5
million promoting Dole pineapples, nuts, and prunes; and $465,000 to
boost sales of Chicken McNuggets in foreign lands.
* The alcohol-fuel tax credit and excise-tax exemption, tax breaks worth
a total of $770 million a year to gasohol producers and users. One
company, Archer Daniels Midland Co., accounts for the bulk of U. S.
production of ethanol, the corn-based alcohol used to make fuel.
* Sematech, a partnership between the Pentagon and U. S. microchip
producers, which receives $100 million a year for research to improve
manufacturing techniques. The Cato Institute said Sematech was being
used by big producers to undercut competition from smaller firms.
* The sugar price-support program, which has been estimated by
congressional auditors to cost sugar users $1.4 billion a year.
"You would be hard-pressed to find a single Fortune 500 company that doesn't
receive federal aid," said Stephen Moore, a budget expert with Cato.
Rob Shapiro, an economist with PPI, called for a national commission,
modeled on the military base closings panel, to sort through corporate
subsidies and recommend a single package of cuts for an up-or-down vote by
"The president and Congress can break the budget impasse and substantially
reduce spending if they are willing to eliminate scores of programs targeted
to private industry," said Shapiro.
Labor Secretary Robert Reich recently gave a speech attacking corporate
subsidies, but the White House brushed off his comments. The administration
has been an avid promoter of U.S. products abroad and backs government
support for a range of new technologies.
Representatives of some of the industries being criticized were not amused.
"It's not 'corporate welfare'--you're talking about American farmers," said
sugar industry spokesman Joseph Terrell. "Who's complaining about it,
anyway? Have you ever heard any housewife complain about the price of sugar?
They're still giving it away in restaurants."
Terrell said the $1.4 billion estimate of costs to consumers was greatly
Sematech spokesman Mark Nelson said the microchip partnership had decided
not to take any more federal money--after next year.
"It's not 'corporate welfare,' it's an investment in America's future," said
Nelson. "It's an investment in our national security and our economic
security. It made a difference for a critical industry" in the 1980's."
Hope this helps. I thought it was excellent.
Upward Bound Program
University of Wisconsin-Eau Claire
Eau Claire, WI 54701
© 1995 Peter Langston