REAL Welfare Queens (or "Kings")
It is so tiresome to keep hearing people blast the poor for getting a little aid from the government, when the real pigs at the table are the corporations. - Fr. Rick
Government Spends More on Corporate Welfare Subsidies than Social Welfare Programs
About $59 billion is spent on traditional social welfare programs. $92 billion is spent on corporate subsidies. So, the government spent 50% more on corporate welfare than it did on food stamps and housing assistance in 2006.
The Traditional Welfare Queen
Definition: social welfaren. Financial aid, such as a subsidy, provided by a government to specific individuals.
Note: I do not consider Medicaid to be included in the term “welfare” as it is used in common parlance. Typically, if one states that someone is “on welfare”, they mean that the person is receiving direct financial aid from the government. If we included Medicaid in our definition of social welfare, we would also have to consider any service that the government pays for to be “welfare”. For instance, public roadways to individuals’ homes would also be considered “welfare” under that expansive definition.
TANF (Temporary Aid to Needy Families)Another negative aspect relates to the fact that social welfare programs reduce the incentive for recipients to become productive members of society. However, in 1996, Congress passed a bill enacting limited welfare reform, replacing the Aid to Families with Dependent Children (AFDC) program with the new Temporary Aid to Needy Families (TANF) program. One key aspect of this reform required recipients to engage in job searches, on the job training, community service work, or other constructive behaviors as a condition for receiving aid. The bill was signed by a man named Bill Clinton, who is much better known for an act of fellatio which, of course, had far greater societal implications. Regardless, the success of this reform was pretty dramatic. Caseloads were cut nearly in half. Once individuals were required to work or undertake constructive activities as a condition of receiving aid they left welfare rapidly. Another surprising result was a drop in the child poverty rate. Employment of single mothers increased substantially and the child poverty rate fell sharply from 20.8 percent in 1995 to 16.3 percent in 2000.
The Corporate Welfare QueenNow, let’s consider the other kind of welfare.
Definition: corporate welfaren. Financial aid, such as a subsidy, provided by a government to corporations or other businesses.
The Cato Institute estimated that, in 2002, $93 billion were devoted to corporate welfare. This is about 5 percent of the federal budget.To clarify what is and isn’t corporate welfare, a “no-bid” Iraq contract for the prestigious Halliburton, would not be considered corporate welfare because the government technically directly receives some good or service in exchange for this expenditure. Based on the Pentagon’s Defense Contract Audit Agency (DCAA) findings of $1.4 billion of overcharging and fraud, I suppose the primary service they provide could be considered to be repeatedly violating the American taxpayer.On the other hand, the $15 billion in subsidies contained in the Energy Policy Act of 2005, to the oil, gas, and coal industries, would be considered corporate welfare because no goods or services are directly returned to the government in exchange for these expenditures.
Whenever corporate welfare is presented to voters, it always sounds like a pretty reasonable, well-intended idea. Politicians say that they’re stimulating the economy or helping struggling industries or creating jobs or funding important research. But when you steal money from the paychecks of working people, you hurt the economy by reducing their ability to buy the things they want or need. This decrease in demand damages other industries and puts people out of work.
Most of the pigs at the government trough are among the biggest companies in America, including the Big 3 automakers, Boeing, Archer Daniels Midland, and now-bankrupt Enron.
Farm SubsidiesHowever, the largest fraction of corporate welfare spending, about 40%, went through the Department of Agriculture, most of it in the form of farm subsidies. (Edwards, Corporate Welfare, 2003) Well, that sounds OK. Someone’s got to help struggling family farms stay afloat, right? But in reality, farm subsidies actually tilt the cotton field in favor of the largest industrial farming operations. When it comes to deciding how to dole out the money, the agricultural subsidy system utilizes a process that is essentially the opposite of that used in the social welfare system’s welfare system. In the corporate welfare system, the more money and assets you have, the more government assistance you get. Conversely, social welfare programs are set up so that the more money and assets you have, the less government assistance you get. The result is that the absolute largest 7% of corporate farming operations receive 45% of all subsidies. (Edwards, Downsizing the Federal Government, 2004) So instead of protecting family farms, these subsidies actually enhance the ability of large industrial operations to shut them out of the market.
Wal-Mart. Always high subsidies. Always.The same is true in all other industries, too. The government gives tons of favors to the largest corporations, increasing the significant advantage they already have over smaller competing businesses. If, in the court of public opinion, Wal-Mart has been tried and convicted for the murder of main street, mom-and-pop America, then the government could easily be found guilty as a willing accomplice. Wal-Mart receives hundreds of millions of dollars of subsidization by local governments throughout the country. These subsidies take the form of bribes by local politicians trying to convince Wal-Mart to come to their town with the dream of significant job creation. Of course, from that follows a larger tax base. For example, a distribution center in Macclenny, Florida received $9 million in government subsidies in the form of free land, government-funded recruitment and training of employees, targeted tax breaks, and housing subsidies for employees allowing them to be paid significantly lower wages. A study by Good Jobs First found that 244 Wal-Marts around the country had received over $1 billion in government favors.
The Big PictureSo now let’s look at the big picture. The final totals are $59 billion, 3 percent of the total federal budget, for regular welfare and $92 billion, 5 percent of the total federal budget, for corporations. So, the government spends roughly 50% more on corporate welfare than it does on these particular public assistance programs.
Should we spend less on corporate welfare and/or social welfare programs? Or should we spend even more? It’s up to you. A bunch of people died horrible deaths to make sure this country remained a democracy, so if you feel strongly about this issue you owe it to them to call or write your congressman and senators and give them a piece of your mind.
Dear wonderful citizen reading this sentence,
HELP ME!I am extremely appreciative of any corrections or additional info that I left out. Please include hyperlinked SOURCES.
VOTE!I encourage everyone to use the voting system to vote up comments containing facts with sources.
I also encourage everyone to vote down ad hominem attacks directed at anyone. We all share the same goal of minimizing the amount of suffering in the world. Name-calling is completely unproductive.
Finding truth is the first step to solving any and all of the world’s problems. We all need to work together to find the truth about every issue. Allowing disagreement about solutions lead to poisonous and paralyzing animosity before we’ve even arrived at the basic truths of the issues is a recipe for a dead world.
THE FUTURE…I want to update this post with more recent numbers and more expansive definitions of both corporate and social welfare. Unfortunately, I’m crazy busy right now. I manage a chemistry lab full time and I’m building a Quantified Self data integration web application. Plus, I have a damn family, too.
My ultimate solution to this problem is wiki-izing ThinkByNumbers.org so that good citizens such as yourselves can correct any unfortunate omissions. I hope to have that feature functional in the coming months.
Mike P. Sinn
Some More Sources:2013 Budget: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/budget.pdf
Source: Office of Management and Budget, Budget of the United States Government (Washington: Government Publishing Office), various years; and data from the American Association for the Advancement of Science R&D Budget and Policy Program, various years.
Source: U.S. Department of Agriculture, Economic Research Service, http://www.ers.usda.gov/data.
Source: Export-Import Bank, 2006 Annual Report (Washington: Export-Import Bank, 2007).
Source Data from Chris Edwards at Cato:
Corporate Welfare by Agency
Corporate Welfare by Agency 2
Corporate Welfare by Company