Corporate_welfare_report[1]

Corporate_welfare_report[1] - No. 592 May 14, 2007 The...

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The federal government spent $92 billion in direct and indirect subsidies to businesses and pri- vate-sector corporate entities—expenditures com- monly referred to as “corporate welfare”—in fiscal year 2006. The definition of business subsidies used in this report is broader than that used by the Department of Commerce’s Bureau of Economic Analysis, which recently put the costs of direct business subsidies at $57 billion in 2005. For the purposes of this study, “corporate welfare” is defined as any federal spending program that pro- vides payments or unique benefits and advantages to specific companies or industries. Supporters of corporate welfare programs often justify them as remedying some sort of market failure. Often the market failures on which the programs are predicated are either overblown or don’t exist. Yet the federal govern- ment continues to subsidize some of the biggest companies in America. Boeing, Xerox, IBM, Motorola, Dow Chemical, General Electric, and others have received millions in taxpayer-funded benefits through programs like the Advanced Technology Program and the Export-Import Bank. In addition, the federal crop subsidy pro- grams continue to fund the wealthiest farmers. Because the corporate welfare state tran- scends any specific agency—and therefore any specific congressional committee—one way to reform or terminate those programs would be through a corporate welfare reform commission (CWRC). That commission could function like the successful military base closure commission. The CWRC would compose a list of corporate welfare programs to eliminate and then present that list to Congress, which would be required to hold an up-or-down vote on the commission’s proposal. The Corporate Welfare State How the Federal Government Subsidizes U.S. Businesses by Stephen Slivinski _____________________________________________________________________________________________________ Stephen Slivinski is director of budget studies at the Cato Institute and author of Buck Wild: How the Republicans Broke the Bank and Became the Party of Big Government (2006). Executive Summary No. 592 May 14, 2007 ±²³´µ¶
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Introduction The federal government spent $92 billion on direct and indirect subsidies to businesses and private-sector corporate entities—expen- ditures commonly referred to as “corporate welfare”—in fiscal year 2006, as detailed in Table 1. In nominal terms, that’s an increase of 11 percent from fiscal 2001. In real terms, it’s a 3 percent decline. In other words, the corporate welfare state—the sum total of gov- ernment programs that subsidize business in one form or another—grew at a rate just slightly slower than inflation over the past five years. But as you can also see in Table 1, many specific programs grew much faster. The corporate welfare budget supports a
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Corporate_welfare_report[1] - No. 592 May 14, 2007 The...

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