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Corporations Get Welfare Too

Posted By Spencer Irvine On August 9, 2012 @ 2:33 pm In Faculty Lounge | No Comments

The classic left-right debate is over the best way to aid the poor—through government programs or private charity. Nevertheless, you would think that there would be widespread agreement on the dubious value of giving federal aid to the rich.

The Cato [1] Institute does not pull any punches from the get-go in their policy analysis on corporate welfare and its funding from the federal government. They cite the astronomical (but unsurprising) number of $100 billion in subsidies to large and small businesses, and in light of the federal budget deficit this should not be acceptable to most if not all American taxpayers. Cato also notes that in this upcoming year this, the federal government will have  the fourth consecutive deficit that ran to more than a trillion dollars.

Cato nails one of the most important arguments against corporate welfare: there is no constitutional precedence for the government to choose winners and losers in the private sector. The enumerated powers of the Constitution were designed to limit, not expand, the scope and reach of the federal government. However, policy makers (politicians and judges alike) have abused these powers to force taxpayers to pay for subsidies such as subsidies to farms (whose households have a higher average income than the average American) and even minority businesses, which  Cato argues are, conversely,  discriminatory in nature. It ends up creating more losers than winners and creates a corrupt relationship between the subsidized businesses and the policy makers in areas such as research, information technology, auto manufacturing and energy industries.

One wonders how many more Solyndras [2] there are.

Spencer Irvine is a research assistant at Accuracy in Academia.

If you would like to comment on this article, e-mail mal.kline@academia.org [3].

 

 


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URLs in this post:

[1] Cato: http://www.cato.org/pubs/pas/PA703.pdf

[2] Solyndras: http://www.aim.org/special-report/the-case-of-ch2m-hill-2-billion-in-crony-stimulation/

[3] mal.kline@academia.org: mailto:mal.kline@academia.org

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