Seventeen Solutions – corporate welfare

Continuing my overview of Ralph Nader's book, The Seventeen Solutions. Click here to get the rest of the series.

5. Eliminate Corporate Welfare

In 1996 the GOP, with the approval of Pres. Bill Clinton, enacted welfare reform. That eliminated aid to those pesky single moms who wanted to turn a handout into a hammock.

But nothing was done then, or since, about reforming handouts to corporations. A big reason is welfare moms don't contribute to political campaigns.

For decades, I've been calling on Americans to recognize the phenomenon of corporate welfare as the poster boy for both the exploitation of taxpayers and the hypocrisy of free-market anti-big government ideologues.

Money is given to corporations through credits, exemptions, grants, subsidies, loan guarantees, and such things as an agreement with the Federal Reserve to buy stock in and guaranteeing shaky credit of a huge teetering bank. There is also leasing of radio spectrum, oil, mineral, and land rights for a pittance – allowing exclusive use and profit making from what belongs to all of us. There is free licensing of research done at public universities. There are inflated contracts with the military and NASA. There are deals where the profits go to the corporation and the risk is covered by the gov't. The list goes on.

Uncle Sam's sugar daddy largesse is so rampant that no one has managed to compile a comprehensive survey of even a single department's or agency's giveaways.

Such giveaways are usually sold to taxpayers (when they're visible at all) as job-creation measures. But these giveaways lead to unfair competition. Who will create more – and better – jobs, a series of small businesses that can't afford to make political donations or Walmart, which receives all kinds of tax abatements and is known for underpaying workers?

Nader gives details for a long list of gov't giveaways to corporations. It happens at the federal, state, and local levels. Frequently, once enacted there is no annual review. Such things as tax abatements don't appear in the state or city budget.

Why does all this matter? Because every dollar given to corporations (or not collected from them in taxes) is a dollar not spent on education, infrastructure, and the social safety net. All of which are in pretty bad shape these days. Corporate welfare allows management to take larger risks because they know if something goes bad the gov't will bail them out. And the things that go bad are more than money, they include environmental damage, injury and death to humans, and the trauma of social upheaval. Corporate welfare leads to greater income inequality, leaving even the middle class to struggle. It also undermines democracy.

There are stories of citizen groups that fight back. An example is the rejection of tax money for a new stadium for the New England Patriots. Alas, such examples are rare because the economic forces are too well organized, too powerful, and often too well hidden. In addition, courts remain hostile to reforms. When particular cases come before the courts, they are frequently thrown out with the ruling that citizens don't have standing to sue – which doesn't make sense because it is our money.

What to do?

Yes, gov't needs corporations to fulfill some of its goals. The market can't always meet those needs. But the relationship doesn't have to be reckless or at taxpayer expense. The relationship should be open, publicly deliberated, nonexclusive to the recipients, include repayment of gov't investment, and include ways to benefit the citizens and workers. The taxpayer should benefit as much as the corporation. And the handout must have a review, perhaps every three years.

We need new processes to allow citizens to call for change. One idea is to host town meetings to discuss specific issues. We may not get gov't to fund these, but private foundations can.

Other ideas: Require each corporation to list these handouts in its annual reports. The SEC could require this. If corporate leaders have been convicted of wrongdoing that corporation no longer gets subsidies. Give citizens the standing to bring lawsuits against these handouts and reward citizens who bring a successful suit by giving them a percentage of the money saved.

Finally, Nader puts out a call for a national coalition of taxpayers, workers, and small business owners to act against the corporate state. The sentinels of democracy – lawmakers, regulators, and judges – have failed to stop this raid on the Treasury. We must act.