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.
Before we look at the details, a heartfelt plea from the Save the CEO�s
Charitable Trust:
There�s so much suffering in the world. It can all get pretty
overwhelming sometimes. Consider, for a moment the sorrow in the eyes of
a CEO who�s just found out that his end-of-year bonus is only going to
be a paltry $2.3 million.
�It felt like a slap in the face. Imagine what it would feel like just
before Christmas to find out that you�re going to be forced to scrape by
on your standard $8.4 million compensation package alone. Imagine what
is was like to have to look into my daughter�s face and tell her that I
couldn�t afford to both buy her a dollar sign shaped island and hire
someone to chew her food from now on, too. To put her in that situation
of having to choose� She�s only a child for God�s sake.�
It doesn�t have to be this way. Thanks to federal subsidies from
taxpayers like you, CEO�s like G. Allen Andreas of Archer Daniels
Midland was able to take home almost $14 million in executive
compensation last year. But he�s one of the lucky ones. There are still
corporations out there that actually have to provide goods and services
to their consumers in order to survive. They need your help.
For just $93 billion a year the federal government is able to provide a
better life for these CEO�s and their families. That�s less than the
cost of 240 million cups of coffee a day. Won�t you help a needy
corporation today?
The Traditional Welfare Queen
Definition: social welfare
n. Financial aid, such as a subsidy, provided by a government to
specific individuals.
When one thinks about government welfare, the first thing that comes to
mind is the proverbial welfare queen sitting atop her majestic throne of
government cheese issuing a royal decree to her clamoring throngs of
illegitimate babies that they may shut the hell up while she tries to
watch Judge Judy. However, many politically well-connected corporations
are also parasitically draining their share of fiscal blood from your
paycheck before you ever see it. It�s called corporate welfare. The
intent here is to figure out which presents the greater burden to our
federal budget, corporate or social welfare programs.
There are, of course, positive and negative aspects to this spending.The
primary negative aspect is that you have to increase taxes to pay for
it. Taxing individuals lowers their standard of living. It reduces
people�s ability to afford necessities like medical care, education, and
low mileage off-road vehicles.The common usage definition of social
welfare includes welfare checks and food stamps. Welfare checks are
supplied through a federal program called Temporary Aid for Needy
Families. Combined federal and state TANF spending was about $26 billion
in 2006. In 2009, the federal government will spend about $25 billion on
rental aid for low-income households and about $8 billion on public
housing projects. For some perspective, that�s about 3 percent of the
total federal budget.
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.
Graph Source:
http://census.gov/hhes/www/poverty.html
The Corporate Welfare Queen
Now, let�s consider the other kind of welfare.
Definition: corporate welfare
n. 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.
Infographic Source:
http://awesome.good.is/transparency/web/1012/subsidize-this/flat.html
Tax breaks targeted to benefit specific corporations could also be
considered a form of welfare. Tax loopholes force other businesses and
individual taxpayers without the same political clout to pick up the
slack and sacrifice a greater share of their hard-earned money to
decrease the financial burden on these corporations. However, to
simplify matters, we�ve only included financial handouts to companies in
our working definition of corporate welfare.
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 Subsidies
However, 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.
Graph Source:
http://ers.usda.gov/data
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 Picture
So 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.
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
I am extremely appreciative of any corrections or additional info that I
left out. Please include hyperlinked SOURCES. I want to update this post
with more recent numbers and more expansive definitions of both
corporate and social welfare. 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.
http://thinkbynumbers.org/government-spending/corporate-welfare/corporate-welfare-statistics-vs-social-welfare-statistics/