The Fleecing of America

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By Stephen Lendman (about the author) Page 9 of 11 page(s)

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Lavish (Taxpayer-Funded) Corporate Subsidies

Corporations get tens of billions annually in taxpayer-funded subsidies. Giveaways. From looting the national treasury and returning nothing to the public.

The Cato Institute is no bastion of egalitarianism. It's for limited government and unfettered "free market" capitalism. Here's what its May 2007 Policy Analysis Number 592 had to say on subsidies. It's titled: "The Corporate Welfare State - How the Federal Government Subsidies US Business." Cato's budget studies director Stephen Slivinski prepared it.

He calls subsidies "corporate welfare" and defines them as "any federal spending program that provides payments or unique benefits and advantages to specific companies or industries." In FY 2006, he calculates it totaled $92 billion "in direct and indirect subsidies to businesses and private-sector corporate entities." Handouts he opposes. Examples are cash payments to farmers, primarily to agribusiness. Others to defense contractors. Research grants to high-tech companies, and indirect funds such as for promoting US products and industries overseas. Outside his definition are preferential tax treatment and advantageous trade benefits. Combined they add tens of billions more.

"What's wrong with federal business subsidies," Slivinski asks? Its supporters say they're in the national interest. They promote business, enhance US competitiveness, and remedy market failures. Misguided reasoning for him (and Cato) as follows:

-- business, not government, is best-suited to finding the "Next Big Thing;"

-- subsidies "create an incestuous relationship between business and government;" and

-- they're unconstitutional as opposed to infrastructure spending that benefits everyone; business and the public.

A case study example: Agribusiness subsidies. In FY 2006, the largest of all direct ones totaling $21 billion. In the mid-1990s, Congress (in the 1996 Freedom to Farm Act) voted to scale down and eliminate the program, but instead increased it to record levels.

Another example: the 1988 Advanced Technology Program (ATP) and Small Business Innovative Research (SBIR) one to grow the high-tech economy. Since inception, it funded 768 ATP projects costing $2.3 billion through 2006. Another $1 billion to SBIR. Cato calls it ill-directed. To already generously-supported private sector research ventures in some cases. In others, by crowding out private research spending. The net result is that government subsidies produce no overall increase in R & D. Instead, they underwrite it and increase business profits - at the taxpayers' expense.

An example Cato omitted. A likely greater subsidy than to agribusiness. One media scholar and critic Robert McChesney has studied and states: "The (US) media and communications systems have been the recipients of enormous direct and indirect subsidies, arguably as great as or greater than any other industry in our economy." He lists:

-- free monopoly licenses to commercial radio and TV stations; spectrum for satellite television; and monopoly cable TV and telephone franchises; valued at about $500 billion;

-- since the advent of radio in the 1920s, this amounts to hundreds of billions of dollars;

-- many billions more in postal subsidies for magazines, periodicals and other publications;

-- hundreds of millions for film and television production;

-- indirect subsidies through government advertising;

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I am a 72 year old, retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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