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Lawmakers give a pass to corporate welfare

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Just a few weeks before the Tax Cuts and Jobs Act was signed into law last December, Speaker of the House Paul Ryan (R-Wis.) announced it was time to reduce the deficit by cutting entitlements. On talk radio, he said, “We’re going to have to get back next year at entitlement reform … it’s the health care entitlements that are the big drivers of our debt …”

Ryan is not alone. The Washington Post reported that Sen. Marco Rubio (R-Fla.) stated, “The driver of our debt is the structure of Social Security and Medicare for future beneficiaries.” Senator Orrin G. Hatch (R-Utah) refers to these expenditures as “liberal programs” for the poor and a waste of money.

But these lawmakers don’t say a word about corporate welfare.

The non-partisan research group, Good Jobs First, tracks both federal and state corporate welfare made in the way of grants, allocated tax credits—separate and apart from tax breaks provided in the IRS code—loans and loan guarantees. Lots of big handouts go to big business.

From 2000 to 2017, the federal government alone awarded big business $72.3 billion in grants and allocated tax credits.

According to Good Jobs First research director Philip Mattera, federal grants and allocated tax credits are now roughly $10 billion per year, and loans and loan guarantees are $30 billion.

Spanish energy company, Iberdrola, tops the list for federal subsidies received since 2000 at $2.1 billion. NextEra Energy is number two at $1.9 billion.

The logic behind these give-aways is they help corporations create jobs, and that’s good for everybody. Still, don’t we pride ourselves as a nation that thrives on capitalism and independence? Legislators see otherwise when it comes to big business.

Surprisingly, you don’t have to be a good corporate citizen to qualify for corporate welfare.

From 1997 through 2015, Goldman Sachs received $675 million in state and local subsidies such as allocated tax credits and property tax abatements. During roughly the same period, Morgan Stanley received $368 million in state and local subsidies. Goldman then paid $5.1 billion to settle a federal action for its role in causing the Great Recession, and Morgan Stanley paid $3.2 billion for its role.

A number of companies on the dole don’t pay their employees an adequate wage.

The top five Ohio companies in 2017 with the most employees receiving Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, are Walmart, McDonald’s, Kroger, Bob Evans and Wendy’s. Each has received subsidies from Ohio or the federal government or both.

To qualify for SNAP, the maximum monthly income for a family of four is $2632. A total of 11,560 Ohio Walmart full and part-time employees and family members received SNAP benefits in 2017. For McDonalds employees and family members, the number was 9927. For Kroger, it was 5051. Public records don’t identify the employers for Ohioans receiving Medicaid, but the income limitations for Medicaid and SNAP are roughly the same, and so it’s likely some Ohio SNAP enrollees also receive Medicaid.

Let’s think about this for a minute. Federal and state governments subsidize large corporations, a practice that doesn’t get questioned. But some corporations that receive government subsidies pay such low salaries their employees depend on government assistance, which conservatives want to cut.

Why such different attitudes for corporate subsidies and social welfare entitlements? Conservatives work from the premise that the common good flows from the top down. President Donald Trump boasted on Twitter, “TAX CUTS will increase investment in the American economy and in U.S. workers, leading to higher growth, higher wages, and more JOBS!”

But here’s the problem: As of as the Census Bureau’s 2016 report, we have over 40 million people living in poverty.

That equate to $24,600 in annual income for a family of four. Sure, the trickle down from the tax cut may help, but it won’t solve the problem.

And yes, corporate welfare is a drop in the bucket compared to Social Security and other safety net programs, which account for roughly 60 percent of the federal budget. Cutting these programs, however, without remedying the root causes of poverty only further imperils the poor and elderly.

The size of the safety net is just one reason it’s such a big target and corporate welfare isn’t. There’s another as well.

Let’s follow the money.

Good Jobs First reports that 75% of government subsidies go to 965 corporations. NextEra Energy, Southern Company, General Motors and General Electric are in the top 20 for federal grants and allocated tax credits, and according to OpenSecrets.org, collectively spent nearly $33.6 million on federal lobbying in 2017.

Take a guess how much people receiving SNAP and Medicaid spent on lobbying.

[This piece was published in the Columbus Dispatch on Jan. 31, 2018.]



Also published on Medium.

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Discussion

  1. Debbie  February 5, 2018

    Is there really anything we can do though? We can vote them in and out and in and out but it doesn’t seem to matter because anyone who doesn’t play the game will be out no matter what the voters do.

    (reply)
    • jdaurora@behallaw.com  February 5, 2018

      I appreciate your frustration, but there is some good news. New people are entering politics, and a number of those newcomers are women. Take a look at https://matriotsohio.com/about/who-we-are/

      (reply)
  2. Al Yannon  February 5, 2018

    Corporate welfare has been around for a long time, but is only now going to become an acute problem for those below the poverty line, seniors and those living on incomes that are imperiled by inflation. There will be more emphasis on helping big business and cutting help to the low and middle classes. Articles like yours should educate everyone as to what is happening, but sadly it might not. Jack, we need to rally around people like yourself and sound the alarm. Your articles need to be voiced by someone or a group that can wield some power. Do you have any ideas how we can find a voice?. Count me in on any group that echoes my sentiments and looks to you for leadership.

    (reply)
    • jdaurora@behallaw.com  February 5, 2018

      I’m flattered by your comments, Al, and would love to be part of a large movement, but I have to be candid about where I am. I have my hands full just writing these pieces and trying to practice law.

      (reply)
  3. Helen  February 5, 2018

    The President’s State of The Union address acknowledged many problems that the American people agree on; however, he didn’t present positive solutions to any of them. He mentioned making healthcare more affordable for the middle class, and then bragged about repealing a key portion of the Affordable Care Act. He also mentioned the need for immigration reform and then talked about dangerous criminals and gang members simply to build the need for more ICE raids and support for his “wall”. He praised law enforcement while he continues to build mistrust in our top law enforcement agency, the FBI.

    All of the above was to sell his harmful agenda, and play to his base.

    (reply)
    • jdaurora@behallaw.com  February 5, 2018

      I think you forgot to mention that he set a record for self-applause.

      (reply)
  4. Frank Wilson  February 5, 2018

    1. Corporate welfare operates under the radar , in part because many Americans are not aware that it even exists.

    2. The American Political System is designed to reward those who help political parties win elections. Democrats and Obama passed the AFCA because their voting base was struggling with health insurance and healthcare. The GOP is in the process of dismantling Obamacare because it is hated by their base.

    3. Tax cuts and Corporate welfare are a way of rewarding the donor class of the Conservative party. Pragmatically, the only way to eliminate CW is to vote Republicans out of office.

    (reply)
    • jdaurora@behallaw.com  February 5, 2018

      I largely agree with you, but let’s look at your point no. 3. The stats from Good Jobs First concerning federal handouts straddle both Republic and Democratic administrations.

      (reply)
  5. Frank Wilson  February 5, 2018

    1. I may need some time to reflect but the the short answer is that both parties have a donor class.

    2. I think I would also argue that even when the Democrats are in power there is no great call from their base to repeal Corporate Welfare.

    3. Tax Reform occurs every thirty years and at least part of the perks granted to Corporations are embedded in the tax code.

    (reply)
    • jdaurora@behallaw.com  February 5, 2018

      I’m with you on all three points.

      (reply)

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