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Government Spends More on Corporate Welfare Subsidies than Social Welfare Programs: FOR GODS SAKE DO THE MATH PEOPLE

Jeff King 2012/09/09 15:48:01
http://thinkbynumbers.org/government-spending/corporate-welfa...
About $59 billion is spent on traditional social welfare programs. $92 billion is spent on corporate subsidies. So, the government spent 50% more on corporate welfare than it did on food stamps and housing assistance in 2006.

Before we look at the details, a heartfelt plea from the Save the CEO’s Charitable Trust:

There’s so much suffering in the world. It can all get pretty overwhelming sometimes. Consider, for a moment the sorrow in the eyes of a CEO who’s just found out that his end-of-year bonus is only going to be a paltry $2.3 million.

“It felt like a slap in the face. Imagine what it would feel like just before Christmas to find out that you’re going to be forced to scrape by on your standard $8.4 million compensation package alone. Imagine what is was like to have to look into my daughter’s face and tell her that I couldn’t afford to both buy her a dollar sign shaped island and hire someone to chew her food from now on, too. To put her in that situation of having to choose… She’s only a child for God’s sake.”

It doesn’t have to be this way. Thanks to federal subsidies from taxpayers like you, CEO’s like G. Allen Andreas of Archer Daniels Midland was able to take home almost $14 million in executive compensation last year. But he’s one of the lucky ones. There are still corporations out there that actually have to provide goods and services to their consumers in order to survive. They need your help.

For just $93 billion a year the federal government is able to provide a better life for these CEO’s and their families. That’s less than the cost of 240 million cups of coffee a day. Won’t you help a needy corporation today?

The Traditional Welfare Queen

When one thinks about government welfare, the first thing that comes to mind is the proverbial welfare queen sitting atop her majestic throne of government cheese issuing a royal decree to her clamoring throngs of illegitimate babies that they may shut the hell up while she tries to watch Judge Judy. However, many politically well-connected corporations are also parasitically draining their share of fiscal blood from your paycheck before you ever see it. It’s called corporate welfare. The intent here is to figure out which presents the greater burden to our federal budget, corporate or social welfare programs.

There are, of course, positive and negative aspects to this spending.The primary negative aspect is that you have to increase taxes to pay for it. Taxing individuals lowers their standard of living. It reduces people’s ability to afford necessities like medical care, education, and low mileage off-road vehicles.The common usage definition of social welfare includes welfare checks and food stamps. Welfare checks are supplied through a federal program called Temporary Aid for Needy Families. Combined federal and state TANF spending was about $26 billion in 2006. In 2009, the federal government will spend about $25billion on rental aid for low-income households and about $8 billion on public housing projects. For some perspective, that’s about 3 percent of the total federal budget.

TANF (Temporary Aid to Needy Families)

Another negative aspect relates to the fact that social welfare programs reduce the incentive for recipients to become productive members of society. However, in 1996, Congress passed a bill enacting limited welfare reform, replacing the Aid to Families with Dependent Children (AFDC) program with the new Temporary Aid to Needy Families (TANF) program. One key aspect of this reform required recipients to engage in job searches, on the job training, community service work, or other constructive behaviors as a condition for receiving aid. The bill was signed by a man named Bill Clinton, who is much better known for an act of fellatio which, of course, had far greater societal implications. Regardless, the success of this reform was pretty dramatic. Caseloads were cut nearly in half. Once individuals were required to work or undertake constructive activities as a condition of receiving aid they left welfare rapidly. Another surprising result was a drop in the child poverty rate. Employment of single mothers increased substantially and the child poverty rate fell sharply from 20.8 percent in 1995 to 16.3 percent in 2000.

Child Poverty by Living Arrangements

The Corporate Welfare Queen

Now, let’s consider the other kind of welfare.

Definition: corporate welfare

n. Financial aid, such as a subsidy, provided by a government to corporations or other businesses.

The Cato Institute estimated that, in 2002, $93 billion were devoted to corporate welfare. This is about 5 percent of the federal budget.To clarify what is and isn’t corporate welfare, a “no-bid” Iraq contract for the prestigious Halliburton, would not be considered corporate welfare because the government technically directly receives some good or service in exchange for this expenditure. Based on the Pentagon’s Defense Contract Audit Agency (DCAA) findings of $1.4 billion of overcharging and fraud, I suppose the primary service they provide could be considered to be repeatedly violating the American taxpayer.On the other hand, the $15 billion in subsidies contained in the Energy Policy Act of 2005, to the oil, gas, and coal industries, would be considered corporate welfare because no goods or services are directly returned to the government in exchange for these expenditures.

Energy Subsidies Infographic

Tax breaks targeted to benefit specific corporations could also be considered a form of welfare. Tax loopholes force other businesses and individual taxpayers without the same political clout to pick up the slack and sacrifice a greater share of their hard-earned money to decrease the financial burden on these corporations. However, to simplify matters, we’ve only included financial handouts to companies in our working definition of corporate welfare.

Whenever corporate welfare is presented to voters, it always sounds like a pretty reasonable, well-intended idea. Politicians say that they’re stimulating the economy or helping struggling industries or creating jobs or funding important research. But when you steal money from the paychecks of working people, you hurt the economy by reducing their ability to buy the things they want or need. This decrease in demand damages other industries and puts people out of work.

Most of the pigs at the government trough are among the biggest companies in America, including the Big 3 automakers, Boeing, Archer Daniels Midland, and now-bankrupt Enron.

Farm Subsidies

However, the largest fraction of corporate welfare spending, about 40%, went through the Department of Agriculture, most of it in the form of farm subsidies. (Edwards, Corporate Welfare, 2003) Well, that sounds OK. Someone’s got to help struggling family farms stay afloat, right? But in reality, farm subsidies actually tilt the cotton field in favor of the largest industrial farming operations. When it comes to deciding how to dole out the money, the agricultural subsidy system utilizes a process that is essentially the opposite of that used in the social welfare system’s welfare system. In the corporate welfare system, the more money and assets you have, the more government assistance you get. Conversely, social welfare programs are set up so that the more money and assets you have, the less government assistance you get. The result is that the absolute largest 7% of corporate farming operations receive 45% of all subsidies. (Edwards, Downsizing the Federal Government, 2004) So instead of protecting family farms, these subsidies actually enhance the ability of large industrial operations to shut them out of the market.

Farm Subsidies

Wal-Mart. Always high subsidies. Always.

The same is true in all other industries, too. The government gives tons of favors to the largest corporations, increasing the significant advantage they already have over smaller competing businesses. If, in the court of public opinion, Wal-Mart has been tried and convicted for the murder of main street, mom-and-pop America, then the government could easily be found guilty as a willing accomplice. Wal-Mart receives hundreds of millions of dollars of subsidization by local governments throughout the country. These subsidies take the form of bribes by local politicians trying to convince Wal-Mart to come to their town with the dream of significant job creation. Of course, from that follows a larger tax base. For example, a distribution center in Macclenny, Florida received $9 million in government subsidies in the form of free land, government-funded recruitment and training of employees, targeted tax breaks, and housing subsidies for employees allowing them to be paid significantly lower wages. A study by Good Jobs First found that 244 Wal-Marts around the country had received over $1 billion in government favors.

The Big Picture

So now let’s look at the big picture. The final totals are $59 billion, 3 percent of the total federal budget, for regular welfare and $92 billion, 5 percent of the total federal budget, for corporations. So, the government spends roughly 50% more on corporate welfare than it does on these particular public assistance programs.

Should we spend less on corporate welfare and/or social welfare programs? Or should we spend even more? It’s up to you. A bunch of people died horrible deaths to make sure this country remained a democracy, so if you feel strongly about this issue you owe it to them to call or write your congressman and senators and give them a piece of your mind.

Dear wonderful citizen reading this sentence,

HELP ME!

I am extremely appreciative of any corrections or additional info that I left out. Please includehyperlinked SOURCES.

VOTE!

I encourage everyone to use the voting system to vote up comments containing facts with sources.

I also encourage everyone to vote down ad hominem attacks directed at anyone. We all share the same goal of minimizing the amount of suffering in the world. Name-calling is completely unproductive.

Finding truth is the first step to solving any and all of the world’s problems. We all need to work together to find the truth about every issue. Allowing disagreement about solutions lead to poisonous and paralyzing animosity before we’ve even arrived at the basic truths of the issues is a recipe for a dead world.

THE FUTURE…

I want to update this post with more recent numbers and more expansive definitions of both corporate and social welfare. Unfortunately, I’m crazy busy right now. I manage a chemistry lab full time and I’m building a Quantified Self data integration web application. Plus, I have a damn family, too.

My ultimate solution to this problem is wiki-izing ThinkByNumbers.org so that good citizens such as yourselves can correct any unfortunate omissions. I hope to have that feature functional in the coming months.

Love,

Mike P. Sinn

9.3.2012

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Opinions

  • A Founding Father 2012/09/09 22:50:00
    A Founding Father
    +2
    The RWNJs will hate you, deny your words, and post obscene comments here, calling you all sorts of names. They do that often when faced with facts adverse to their denials of what thirty years of "Reaganomics" and "supply side economics" has brought to us. Hang
    tight, some will read and understand.
  • Rebel Yell 2012/09/09 17:24:00
    Rebel Yell
    +1
    Most Americans have no clue. The subsidies were initially set up to help in R & D. In the agricultural industry, that R & D may produce faster and more effiicient milking machines for Wisconsin's dairy farmers. So, they kept asking for more R & D , claiming this would help the industry which in turn helps the tax payers. But that old dog doesn't hunt anymore. They get big bucks for no reason. Big oil is just as bad. And the military complex makes me gag. There is no R & D, or if there is, it is minimal. They will design mulitmillion dollar planes that never see air time ( think the F22s) and then in five years, their hands are out for more money for "improvements".

    Romney and Paul Ryan will continue with these megabucks givaways. Both say they will close the " loopholes" but refuse to say which ones. Romney spokeman also has refused to say. In other words, they have no intention of closing any loopholes, but Wonder Boy Ryan has made it clear he will cut Medicaid by 60%.... in order to continue with this madness and also to pay for his new tax cuts ON TOP of the Bush tax cuts for the 1 %.

    Makes sense. Medicaid receients will not make big campaign donations to get him relected, but guess who will?
  • Daniel 2012/09/09 16:45:38
  • Lady Whitewolf 2012/09/09 16:36:41
  • mymoon 2012/09/09 16:18:29
    mymoon
    +2
    Very good post. Thank you.
  • ed 2012/09/09 16:01:36
    ed
    +2
    We definitely need some changes.
  • Jeff King 2012/09/09 15:55:48
  • ed Jeff King 2012/09/09 15:58:43
    ed
    +1
    I don't guess they are bankrolling obama and the democrats?
  • Jeff King ed 2012/09/09 16:05:54
  • ed Jeff King 2012/09/09 16:15:49
    ed
    +2
    yes because they themselves know how obama is and that is why they are giving more to Romney.
  • Jeff King ed 2012/09/09 16:26:28
  • ed Jeff King 2012/09/09 16:32:31
    ed
    +2
    agreed
  • Daniel Jeff King 2012/09/09 16:47:33
  • brian.southworth.921 2012/09/09 15:53:36
    brian.southworth.921
    It's time for a shrug. Vote Libertarian 2012 ! Down with the establishment on the right and left.
  • Jeff King brian.s... 2012/09/09 15:58:34
  • brian.s... Jeff King 2012/09/09 16:29:36
    brian.southworth.921
    Yes. I know that subsidies far outweigh social welfare. And I do see the need of social programs as a means to balance gross capitalism. Though I do think this should be done through private charities, churches and philanthropy. Unlike many, I do think that Poeple are generally good in nature if the social mindset is geared toward this. Through logic and studying history, we do see that when the rich get too rich the people revolt. However, if we are such a smart nation, the rich would not need to be mandated, but from an act of logic and compassion pick up the short fall or risk the masses screaming "off with their heads".
    There are two extremes to this position, but I do think that there can be a middle ground reached through logic and a lot of soul searching without high taxes or mandates to do the right thing. On one end businesses should be left to their own abilities and sink or swim on their own without government subsidies. And on the other, the welfare state is mandated charity, which is not charity at all if mandated. Neither of these present solutions are fixing the economic state or the welfare state. We are too afraid to look at these problems that exist as problems of faulty thinking and logic because then we would be wrong and we don't like that. We would have ...
    Yes. I know that subsidies far outweigh social welfare. And I do see the need of social programs as a means to balance gross capitalism. Though I do think this should be done through private charities, churches and philanthropy. Unlike many, I do think that Poeple are generally good in nature if the social mindset is geared toward this. Through logic and studying history, we do see that when the rich get too rich the people revolt. However, if we are such a smart nation, the rich would not need to be mandated, but from an act of logic and compassion pick up the short fall or risk the masses screaming "off with their heads".
    There are two extremes to this position, but I do think that there can be a middle ground reached through logic and a lot of soul searching without high taxes or mandates to do the right thing. On one end businesses should be left to their own abilities and sink or swim on their own without government subsidies. And on the other, the welfare state is mandated charity, which is not charity at all if mandated. Neither of these present solutions are fixing the economic state or the welfare state. We are too afraid to look at these problems that exist as problems of faulty thinking and logic because then we would be wrong and we don't like that. We would have to admit that we are not the greatest and most holy society we like to think we are. And we don't like that either. People are afraid to second guess their comfortable lives and hence the problems we have compound.
    (more)

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