by Stephen Moore | Illinois Conservative Examiner
If Republicans are going to get truly serious about cutting government spending, they are going to have to snip the umbilical cord from the Treasury to corporate America. You can’t reform welfare programs for the poor until you’ve gotten Daddy Warbucks off the dole. Voters will insist on that — as well they should.
So why hasn’t it happened? Why hasn’t the GOP pledged to end corporate welfare as we know it?
Part of the explanation is that too many have gotten confused about the difference between free-market capitalism and crony capitalism.
And part of the problem is corporate welfare that is so well hidden from public view in the budget that no one has really measured how big this mountain of giveaway cash to the Fortune 500 really is. Finding out is like trying to break into the CIA.
Until now. Open the Books, an Illinois-based watchdog group, has been scrupulously monitoring all federal grants, loans, direct payments and insurance subsidies flowing to individuals and companies.
This week is Sunshine Week in Washington, a designation made 10 years ago to promote transparency in government operations and how tax dollars are spent.
It’s an attempt to force federal agencies to release information on where the $4 trillion budget is really spent — and Open the Books will release a new report on corporate welfare payments to the Fortune 100 companies from 2000 to 2012.
Over that period, the 100 received $1.2 trillion in payments from the federal government.
That number does not include the hundreds of billions of dollars in housing, bank and auto company bailouts in 2008 and 2009, because those payments and where they went are kept mostly invisible in the federal agency books.
It also doesn’t include the asset purchases of the Federal Reserve or indirect subsidies like the ethanol mandate that enrich large agribusinesses such as Archer Daniels Midland (ADM) or special tax breaks for wind turbine makers.
Most of the payments Open the Books uncovered were contracts between government agencies and private firms. The largest of these are military procurement deals with firms such as Lockheed Martin (LMT) ($392 billion), General Dynamics (GD) ($170 billion) and United Technologies (UTX) ($73 billion).
At least taxpayers get services in exchange for these tax dollars, though the enormous scale of the government-industrial complex makes it all the harder to cut federal spending because the recipients of all this money become high-roller lobbying forces for higher appropriations.
Far more indefensible is the $21.3 billion doled out in the form of outright corporate welfare subsidies to corporate America. On average, each Fortune 100 company took about $200 million in taxpayer handouts.
So who are the major corporate welfare queens? The biggest grant recipients were General Electric (GE) ($380 million), followed by General Motors (GM) ($370 million), Boeing (BA) ($264 million), ADM ($174 million) and United Technologies ($160 million). Many of these grants were for President Obama’s “green technologies,” such as the advanced battery project.
About $8.5 billion of the largesse came in the form of taxpayer-subsidized loans. The big winners here were Exxon Mobil (XOM), Ford Motor (F), Chevron (CVX) and other multibillion-dollar corporations whose franchisees received Small Business Administration loans.
Double- and triple-dipper ADM got just under $1 billion of USDA farm program loans, and this doesn’t include ethanol subsidies.
Another $10 billion was doled out through federal insurance, often in the form of Surety Bonds. The No. 1 federal insurance program was the Export-Import Bank, with Wells Fargo (WFC) and JPMorgan Chase (JPM) both receiving more than $3 billion in such aid and Citigroup (C) and Bank of America (BAC) getting more than $1.5 billion in taxpayer backstop insurance. (Remember, this doesn’t include TARP money.)
Deere (DE), American Express (AXP) and even Wal-Mart (WMT) reeled in federal insurance as well.
Amazingly, all but one of the Fortune 100 stood in the federal soup line to take at least some form of corporate welfare benefit. In other words, as Open the Books founder Adam Andrzejewski puts it: “Mitt Romney had it wrong: When it comes to the Fortune 100, it’s 99%, not 47%, on some form of the government’s gravy train.”
Uncle Sam could save billions of dollars a year if it just limited corporate welfare to any firm with profits of $1 million or even $10 million or less and prevented double-dipping by prohibiting the Fortune 100 from receiving more than one form of federal assistance at a time.
This won’t be easy. Big government and big corporate America are now financially connected at the hip. Many in the Fortune 100 now regard recession-proof Uncle Sam as their biggest and most reliable customer.
The pipeline of federal dollars into the coffers of corporate America runs so full now that many top university MBA schools offer courses in how to lobby for government grants, contracts and other giveaways.
Sen. Rand Paul, R-Ky., and Rep. Paul Ryan, R-Wis., are two of the few heroes willing to take on the corporate titans feeding off the taxpayers. The cowardice of the rest of the party leaders may explain why congressional Republicans are so unpopular with voters these days.
Moore is chief economist with the Heritage Foundation.