As long as we're ending handouts to the undeserving, here are some candidates

October 29, 1995|By Janice C. Shields and James M. Sheehan

WASHINGTON -- In all the sparring over the budget, entitlements and discretionary spending, there has been much talk about scaling back welfare programs -- for all but the least needy: profitable corporations.

A quick review of congressional spending plans reveals a bounty of taxpayer handouts to companies that pledge allegiance to the free market and demand government funds.

Across the spectrum

This ''business as usual'' for corporate welfare in the nation's capital continues despite the best efforts of public-interest organizations across the political spectrum -- from the free-market Competitive Enterprise Institute and the libertarian Cato Institute to the Progressive Policy Institute and Ralph Nader's Essential Information.

The poster child for corporate welfare is clearly the Agriculture Department's Market Promotion Program, which funds branded advertising by U.S. companies overseas.

Pitching ginseng to China

Last year, taxpayers shelled out $85 million to promote beer, wine and whiskey, mink coats, pet food and more. We even paid to advertise Wisconsin ginseng in, of all places, China and Taiwan.

This year, despite lip service paid to reducing the deficit and ''ending welfare as we know it,'' Congress raised funding for the Market Promotion Program to $110 million.

Even the investigative arm of Congress, the General Accounting Office, questions whether the program increases demand for U.S. products abroad and suggests that companies might spend their own money if Uncle Sam blocked their access to the public treasury.

Cargo preference

Other examples of corporate welfare abound. This fiscal year U.S. taxpayers will provide at least $162.6 million in ''operating differential subsidies'' to 75 companies that operate U.S.-flagged vessels, to cover the costs of sailing with a U.S. crew, under U.S. regulations. Supplementing the subsidies are cargo-preference laws that require the U.S. government to use U.S.-registered vessels to transport food and military equipment overseas.

A recent GAO report conclud- ed that the cargo-preference laws cost us $578 million a year by forcing federal agencies to pay prices two to four times the market rate.

Though the waste of taxpayer dollars has been rationalized as a national-security measure, many of the vessels supported by the maritime welfare programs are not militarily useful, given that the Department of Defense has its own fleet.

The taxpayer-backed loans and loan guarantees of the Export-Import Bank subsidize the overseas sales of many U.S. firms.

Last year, for example, Westinghouse was the beneficiary of more than $140 million in loans to China, while Hughes Aircraft reaped the rewards of almost $126 million in loans to Indonesia.

Even the U.S. subsidiary of a Japanese firm, Mitsui, profited when the Export-Import Bank provided a $51 million loan to an Indian company to buy Mitsui machinery.

Back in 1981, the Reagan administration tried to get rid of the Ex-Im Bank, arguing that financing export projects with below-market interest rates amounted to corporate welfare.

Now, Congress has increased Ex-Im's budget to $795 million for next year.

When we're not lending money to other countries to develop foreign markets for U.S. corporate titans, we're providing loans, loan guarantees and insurance through the Overseas Private Investment Corporation.

You pay double

This government aid program encourages U.S. companies to shift production abroad -- then pays trade-adjustment assistance to U.S. workers who lose their jobs due to increased imports.

In 1994, for example, Kimberly-Clark obtained $9.27 million in insurance under the program; the same year, the Labor Department certified 600 U.S. Kimberly-Clark workers as eligible to receive federal payments because of the company's imports.

Billion-dollar transfers

These billion-dollar wealth transfers to big business must end.

Now, during this congressional recess, is the time for U.S. taxpayers to make their voices heard. Without prompt action, corporate welfare will only grow.

Janice C. Shields is coordinator of Corporate Welfare Project at the Center for Study of Responsive Law. James M. Sheehan is a research associate at Competitive Enterprise Institute.

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