Last month this column examined government intrusion into private banking and how the Export-Import Bank is an expensive, unnecessary fiefdom for a favored few. This month the broader issue is corporate welfare, an $89 billion political squandering of resources in the 2003 budget, down from $94 B in 2002. This estimate is not complete because government owned enterprises ($13.6 B), trade barriers ($12.4 B) and tax preferences ($1+B) are not included, meaning that corporate welfare amounts to at least a $115 B drain on the American economy. President Bush has "wimped out" on welfare reform, in spite of the fact that Mitch Daniels, OMB Director, noted that "it is not the federal government's role to subsidize¿rivate interests." The budget results in a call for better management of bad programs. Think of this: By eliminating corporate welfare, individual taxpayers could receive $1800 tax rebates, three times bigger than 2001 rebate checks. As former President Reagan said, "to say Congress is spending like drunken sailors is an insult to drunken sailors."
This welfare (Table I) is defined as government payments or benefits to specific companies or industries and is fostered by almost every elected Member of the House and Senate. There are many reasons to fault welfare practices because it is not in the national interest to encourage corporate dependency on government. Regardless of what politicians and beneficiaries say, there is no evidence of national economic gain from welfare: it does not protect industries from failure, does not preserve employment, does not fund useful work that industry would otherwise neglect, does not maintain industrial competitiveness and does not assist the disadvantaged. Protectionism never produces long-term benefits.