Eliminating Corporate Welfare Would Reduce the Deficit by Almost 10%

Corporate welfare, crony capitalism, or the upward redistribution of wealth; no matter what you call it, the taxpayers lose. The problems that capitalism has been blamed for over and over again, are actually caused by government involvement in capitalism. Capitalism is simply mutually beneficial transactions entered into without force. When the government gets involved, force is introduced to the equation, and capitalism no longer exists. The system we live under in the United States today is Crony Capitalism, more commonly referred to as corporate welfare.

In fiscal year 2012 almost $100 Billion tax dollars were spent on corporate welfare: money went to businesses mostly in the form of subsidies. $25 Billion of this went to the Department of Agriculture, I have posted in the past about how taxpayers spend Billions to make food less healthy and more expensive. These subsidies to the farm industry have made small, family owned, and organic farms disappear while giant farms spring up because of their government connection. Capitalism would generally be blamed for these giant companies like Tyson with lower health standards and more risk of contamination, yet these companies would never have been able to grow that large without the government subsidies. Plus, when the government offsets the cost of running a giant farm with taxpayer money, it is impossible to compete as a smaller farm without the government funding.

While crony capitalism is easily identified in the farming industry, it hurts the economy in other realms as well. The $18 Billion that the Department of Energy dished out last year will actually hurt the green energy industry. This is because it went to companies like Solyndra, which seem well meaning, but are so terribly run that they lose taxpayer money. In the private sector while the chance of failure is still there, the consequences are much greater to private investors as opposed to taxpayers footing the bill. Private investors will insist that everything is done to keep the company afloat, meaning more successful investments in energy had that $535 Million that went to Solyndra stayed in the private sector.

Small businesses starting out are not only at a loss because of the subsidies flowing to larger companies, but they also must spend a greater percentage of profits to abide by government regulations, and plod their way through the tax code. Big companies hardly notice the dozen or so lawyers and accountants who interpret regulations and find tax breaks, but this burden on small companies can be devastating to the business and the individual who took a risk to start the business.


…subsidies also undermine the market by diverting resources from market-preferred businesses to those preferred by policymakers and allow policymakers to “bet” on firms with shaky finances and questionable business models, fostering a “corrupt relationship between big business and government.”

The Cato analysis concludes by saying that rising spending and huge deficits are pushing the nation toward an economic crisis – and cutting corporate welfare programs is a good start.

“Despite [the] hurdles to reform, Congress is entirely capable of cutting spending and will have to do so in coming years to avoid economic calamity,” DeHaven wrote.

“Corporate welfare doesn’t aid economic growth and it is an affront to America’s constitutional principles of limited government and equality under the law. Policymakers should therefore scour the budget for business subsidies to eliminate,” the report said.

This is an easy $100 Billion that could be cut from the budget. It would make up almost 10% of this year’s budget deficit, keeping that money in the private sector while the government takes on less debt. Cutting this upward redistribution of wealth is a no brainer, and a win for every taxpayer in America. (Full Article Here).

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