President Obama — Get Tough on Corporate Welfare

Ask anti-government ideologues about “welfare” and they are likely to tell you all about an increasingly large group of Americans who are dependent on government handouts. They might refer to the portion of the population who Mitt Romney famously called “the 47 percent,” those who consider themselves to be “victims” entitled to government aid. It’s actually quite an apt description for many companies such as Lockheed Martin, General Motors, Intel, Microsoft, Bristol-Myers Squibb, Boeing, Exxon Mobil, Verizon, PG&E and others.

The phenomenon of corporate welfare — that is, the hundreds of billions of dollars regularly doled out to just about every large, profitable company in the United States — is one that I have been challenging for decades. There are hundreds of programs in existence that directly or indirectly provide billions of dollars of taxpayer money to corporations. One might expect that a serious public discussion about curtailing excess “welfare spending” would focus on cutting these enormous handouts to rich corporations, not the small-by-comparison safety net for the poor. Yet somehow, many purveyors of the “stand-on-your-own-two-feet responsibility” ideology do not apply the same standard to corporations on the dole.

The U.S. federal government is quite possibly the richest property owner on earth, owning valuable tracts of public land, thousands of buildings and plants, the public airwaves and more. Giveaways are one of the many forms of corporate welfare — either handing over valuable assets for nothing, or grossly undercharging for them. Take, for instance, one of the single biggest giveaways in U.S. corporate welfare history. On April 7, 1997 the Federal Communications Commission (FCC) gave broadcast licenses for digital television to the major broadcasters. Essentially, the federal government wrote a $70 billion check to the broadcast industry and asked for nothing in return.

Consider the Research and Development giveaways. Taxpayer dollars have funded discoveries made by NASA, the Department of Defense, and the National Institutes of Health and other federal agencies. In many instances, the rights to those discoveries and breakthroughs were later given to corporations that took credit and profited heavily from them. The result: a corporate welfare payout for the biotech, computer, aerospace, pharmaceutical and other industries.

Consider the land giveaways. Under the archaic 1872 Mining Act, companies are allowed to purchase mining rights to public land for only $5 an acre, no matter how valuable that land might be. In the early nineties, the Barrick Gold Corporation acquired nearly 2,000 acres of land in northeast Nevada, paying the federal government less than $10,000. The land contained over $10 billion in recoverable gold reserves, for which Barrick Gold did not have to pay a cent in federal royalties.

And what about all those professional sports teams that play and profit in taxpayer-funded stadiums and arenas? In many of these giveaway deals, companies offer no return on their profits to the taxpayers, either via royalties or by fulfilling their grandiose promises of jobs or economic development.

And giveaways are just one form of corporate welfare. There are also credits and exemptions, grants, subsidies, and loan guarantees. And, of course, bailouts and “too big to fail.” If a family-owned restaurant goes under, the government doesn’t intervene. If a small factory or shop can’t pay its bills, it goes out of business. The bailout is the premier form of corporate welfare — stacking the deck against small and medium-sized businesses by not allowing their enormous corporate competitors to lose.

Tonight’s State of the Union address is an ideal time for the president and his allies in Congress to focus their attention on corporate welfare. It’s difficult to imagine a comprehensive bill to end corporate welfare passing our current Congress, but there are measures that can be taken to lessen this drain on the taxpayers. For starters, it is important that even beneficial corporate welfare programs contain safeguards to ensure procedural fairness, full disclosure of beneficiaries, frequent review and reaffirmation, reciprocal payments and non-monetary commitments from recipients — for instance when the government bailed out GM and Chrysler in 2009, it was an ideal time to force those companies to adhere to higher fuel efficiency and safety standards (and pass savings on to the very consumers whose tax dollars saved the auto industry.) And it should go without saying that any corporation whose chief officers are convicted of criminal wrongdoing should be prevented from receiving any subsidies from the federal government.

During a public debate in 1976, I urged Ronald Reagan to “speak out against corporate socialism, government subsidies of big business, corporations that are so big they can’t be allowed to fail so only small business can go bankrupt.”

Reagan insisted that he was in agreement. “Mr. Nader, I’ve been speaking out against this for a long time,” he said. “I often tell my business friends not to put their hand in the Washington trough…” Yet when Reagan became president 32 years ago, he was fully supportive of the accelerating corporate welfare train.

Freeloading large corporations in America have taken too much for too long. Tonight the president should say he is getting tough on welfare — corporate welfare.