Corporate Welfare: Pork for All
by Abby Sher
Dollars and Sense magazine, May / June 2000
Have you ever wondered why the United States has the biggest
military budget in the world? Defense Secretary William Cohen
had an answer at a press briefing in February: "We are putting
more money into procurement, and that will help the defense industries."
Washington, D.C. has turned into a town almost wholly governed
by the philosophy "You scratch my back and I'll scratch yours."
Donations from corporations flood to politicians who then turn
around and support subsidies and tax breaks buried in appropriation
bills. These hidden forms of corporate welfare cost U.S. taxpayers
more than $ 125 billion a year-and that's only at the federal
level. As investigative journalists Donald L. Barlett and James
B. Steele discovered during an 18-month investigation for Time
magazine, states and localities often do not document their subsidies,
resulting in a cover-up of more unknown billions in corporate
Sometimes the subsidies are not so hidden-like the $ 12 billion
increase in spending President Clinton requested for the military
in his 2001 budget, up from the $293 billion dedicated to the
military in the year 2000.
Military contractors didn't have to spend a lot for this election
year bonus either. For instance, Lockheed Martin contributed only
$377,878 to federal candidates in the 1999-2000 campaign season
and another $156,000 in "soft" money that went direct
to the major political parties, according to the Center for Responsive
Politics. In return, the feds gave the corporation $ 16.6 billion
in military contracts (the company's total outlays amount to only
$26 billion), says Dan Koslofsky, a policy analyst with Council
for a Livable World. This included the purchase of such admitted
boondoggles as Lockheed Martin's C130J cargo planes to the tune
of $250 million. Even Secretary Cohen said, "There is not
an existing requirement right now for the number of C- 130Js.
Research and development grants are another favored form of
corporate welfare, says Steve Weissman of CongressWatch. General
Electric, Xerox and Caterpillar are only three of the big names
pocketing a total of $ 1 billion in federal R&D money annually.
Another $ 1 billion in federal subsidies goes to the pharmaceutical
industry for the development of drugs - which together earned
$22 billion in profits and probably didn't need any help from
the government. Plus these corporations get to hold on to all
patent rights-and all of the profits generated from these subsidies.
The federal government also hands over public resources to
make mining companies rich-under an old law dating to 1872, mining
companies need not pay for the $2 billion worth of minerals they
extract from public lands, a loss to taxpayers of $2 million in
royalties a year. "Land itself can be acquired by mining
companies at $5 an acre and taxpayers pay for the cleanup,"
says Weissman. Oil companies reap their own $66 million giveaway
since the feds undercharge them by about $2 a barrel for the oil
they extract from public property.
"There are 77 programs that could be cut and save taxpayers
$55 billion over five years," says Lexi Shultz, staff attorney
with the U.S. Public Interest Research Group. USPIRG has joined
with Friends of the Earth and Taxpayers for Common Sense in a
coalition called Green Scissors which targets subsidies like those
to mining companies that damage the environment. These subsidies
are worse than giveaways-they "distort the economy"
by encouraging corporations to act in ways that are environmentally
destructive. For instance, agribusiness is more likely to plant
on flood plains that shouldn't be cultivated because the U.S.
Department of Agriculture subsidizes crop insurance even on marginal
land to the tune of $1.5 billion a year.
If the Green Scissors coalition opposes pork from the left,
the Cato Institute, a think-tank promoting free enterprise and
individual liberty, opposes it from the right. Occasionally they
meet in the center, and join with members of the House and Senate
who also oppose pork-usually to no avail. Perhaps to prepare for
his presidential bid, in 1997 Senator John McCain, the Arizona
Republican, proposed creating a federal panel beyond the reach
of Congress that would cut pork in much the same way that a commission
shut military bases once considered untouchable because politicians
fought to keep them in their districts. McCain's proposal died
despite support from Democrats like Edward Kennedy, a well-known
pork-procurer for his home state of Massachusetts.
Public investment has fallen by more than a third since the
late 1970s. Parts of the government are indeed shrinking, and
since 1996 true welfare- aid to families with children-is no longer
guaranteed to all in need. With corporate taxes going down, and
corporate subsidies growing, the government is fast becoming a
shell through which citizens pay out to big business, and receive
little security in return. Meanwhile, big business-champions of
the free market in theory-ensure with their donations that their
profits never face the risk of the "free market."