Corporate welfare as we know it: No end in sight

July 16, 2004|By Steve Chapman

CHICAGO - Eight years ago, Congress and Bill Clinton agreed to do something the president had promised to do - "end welfare as we know it." But that was for poor people who had grown too dependent on the dole. When it comes to corporations accustomed to public aid, though, we've carefully preserved welfare as we know it.

Corporate welfare - an array of direct subsidies, tax breaks and indirect assistance created for the special benefit of businesses - is one of those things that politicians would rather criticize than abolish. As a general matter, it has a deservedly bad image. But when it comes to helping out companies from their own districts, most members of Congress think there is no such thing as unjustified federal aid.

Even if they oppose corporate welfare in general, they may see no point in killing projects that funnel money to their constituents while leaving other subsidies intact. Congressman A certainly isn't willing to give up his hometown boondoggle unless Congresswoman B gives up hers, which she won't do unless Congressman C gives up his, and so on. As a result, these favors are far easier to start than to end.

When Republicans won control of Congress in 1994, they talked about slashing corporate welfare, which many of them saw for what it was: a fiscal extravagance and a presumptuous interference with the normal functioning of a market economy. But they soon lost interest in such thankless tasks.

Although his budget director once said it is "not the federal government's role to subsidize, sometimes deeply subsidize, private interests," President Bush has proposed only piddling cuts. Under his leadership, the budget for corporate welfare has remained as high as ever - about $87 billion a year, according to the Cato Institute in Washington.

Republican Sen. John McCain has come up with a way to stop the mutual back-scratching and promote the greater good. He wants to create an independent commission that would examine all the corporate handouts in the federal budget and make a list of those that should be scrapped. But instead of letting Congress and the president pick and choose from the list, they would have to accept or reject them all.

Members would still have to sacrifice items prized by a few constituents, but they'd be able to achieve big budgetary savings in exchange. While it's easy to vote to preserve a single item for the folks back home, voting to keep a long list of expensive business goodies is harder. The commission approach was first used for the painful obligation of closing unneeded military bases, and it was a huge success.

Unfortunately, few members of Mr. McCain's party are on board. Steve Moore, who heads the anti-tax Club for Growth, which provides support for conservative Republican candidates, faults congressional Republicans for their selective frugality. "It makes them look like complete hypocrites," he complains. "They want to get single mothers off welfare but not Archer Daniels Midland," referring to the politically connected agribusiness giant.

This year, however, at least one prominent Democratic senator is taking a different approach: John Kerry. As part of his plan to reduce the deficit, he has said, he would "implement the McCain-Kerry commission on corporate welfare to cut special tax loopholes and pork barrel spending projects."

But winning over Congress does not promise to be easy. Just last week, the House voted to expand the Manufacturing Extension Partnership (MEP), which provides all sorts of help to some 18,000 small manufacturers through several hundred offices.

These are services that companies could pay for themselves. If they choose not to, it's probably because the services are not worth what they cost. Based on that sound logic, Mr. Bush had wanted to phase out the program. But this year, he changed his mind, on the dubious grounds that the MEP was needed to save manufacturing jobs.

The administration didn't go far enough, though, in the eyes of most House members. They approved $110 million for the program next year, up from the $40 million it proposed. When MEP was created in 1988, it was going to last just six years, after which the offices it funded would survive on their own. Yet here it is, 16 years later, still draining public resources.

It's a prime example of how hard it can be to eliminate government favors to business. George W. Bush has aided and abetted the expansion of this wasteful program. And what about corporate welfare opponent John Kerry? He's for it.

Steve Chapman is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. His column appears Tuesdays and Fridays in The Sun.

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