Corporate welfare can be defined generally, as any assistance provided by a government, which gives a private business an advantage over others. In the United States, corporate welfare refers to any number of favors, costing billions of dollars each year, bestowed on corporations by the federal government. It includes, but is not limited to, tax breaks, direct grants for corporations, and various other forms of special favorable treatment.
As with other forms of welfare, many individuals and groups oppose the concept. One of the main contentions concerning corporate welfare is the fact that it like other welfare programs is unconstitutional at the federal level. The Constitution provides no authority for Congress to redistribute money collected via taxation, in an effort to subsidize businesses or individuals. In fact, the spending power of Congress is specifically detailed and limited.
While entitlement programs ostensibly designed to assist families or individuals are often described as “leveling the playing field,” those who support public assistance rarely apply this position to corporate welfare. In fact, it is as inaccurate concerning corporate welfare as it is in regard to other entitlement programs.
Corporate welfare is accused of not leveling the field at all, but distinctly providing advantages for select industries or companies at the expense of other businesses and often consumers. Not only that, but the cost is astronomical, and the taxpayer doesn’t get a say in which companies will be propped up. Adding insult to injury, some say that the government seems to choose blindly when determining which industries or businesses will yield a return on this huge investment.
Corporate welfare is not always recognizable in its various forms. Along with cash bailouts there is also money provided to pay for research and development, insurance, or for subsidized loans. Favors also include acts of protectionism, shielding only certain American industries or businesses, from foreign competition. This of course, stifles free trade, limits other companies, and means that Americans often pay more for goods and services.
Many people believe that corporate welfare also breeds corruption. It seems that frequently, those that make the greatest campaign contributions receive the greatest windfalls. Aside from monetary concerns, certain industries sometimes have greater lobbying power when it comes to legislation. Can you think of any industry that has been able to persuade the government that the purchase of its product or service should be mandatory? If so, you have just discovered another form of corporate welfare.
