Tuesday, June 26, 2012

Ending Corporate Welfare as We Know It

One of the principle articles of faith among conservatives is that there are currently “too many people on welfare.” These welfare “freeloaders,” Tea Party activists assure us, are draining state and federal budgets, and are chiefly responsible for the economic recession.

The radical Right, aided by ill-informed pundits and propagandistic corporate news networks, has successfully directed the anger of conservative, middle-class Americans away from the “too big to fail” mega-banks and Wall Street insiders whose fraudulent trading practices actually caused the 2008 collapse, to public workers, teachers, firefighters and social-workers and their “Cadillac”-style pensions.

This is precisely the strategy embattled Republican Gov. Scott Walker used to survive his recall election in Wisconsin. The fact that Walker outspent his thoroughly uninspiring Democratic opponent, Tom Barrett, by a margin of eight to one--with much of the money coming from out-of-state contributors--did not hurt, either.

Here in Maine, Gov. Paul LePage has made “welfare reform” one of his chief goals. Yet while LePage insists we must all “share the sacrifice” because the state is “broke,” his recent remarks at the Maine Republican convention seem far more indicative of his actual feelings toward those in need of government assistance. “Get off the couch and get a job!” LePage chastised Maine’s welfare recipients in his speech. The governor went on to add that the state’s welfare program is “cannibalizing the rest of state government.” Indeed, LePage’s press secretary, Adrienne Bennett, in an Op-Ed to the Portland Press Herald/Maine Sunday Telegram (Maine Voices, 6/22/2012) lauded the fact that her boss “is not a polished politician or politically correct…” Well, that’s one way of describing the man, I suppose.

(Hey, here’s a question: If the state is “broke” as LePage and his budget-slashing cronies routinely claim, then where did we come up with the $300,000 for a feasibility study for the proposed—and highly controversial—east-west highway?)

Of course, if the number of welfare recipients has increased, it is only because so many Americans are unemployed, or underemployed. Rather than railing against welfare, politicians like LePage could put their efforts toward encouraging job creation, thus reducing the need for government assistance. But all of this focuses only on public welfare. What about corporate welfare?

The local and national media constantly highlight the problems with general assistance, Social Security and Medicare, but rarely do they mention any of the numerous abuses of the system by corporations. As it turns out, corporations benefit more from welfare—in the form of government subsidies, tax-breaks, bailouts and, at times, outright fraud—than any individual food-stamp recipient. Who are these freeloading corporate moochers, you ask? Let’s take a look at some of the biggest culprits.

There is JPMorgan Chase, for starters.

The credit card company--whose Chief Executive Jamie Dimon has been doing damage control in the wake of reports the company lost $20 billion to risky bets—is a huge recipient of government largess, according to a recent article by Bloomberg. JPMorgan receives a government subsidy of close to $14 billion a year—much of which is goes toward “big salaries and bonuses.” According to the article, these subsidies account for nearly 77 percent of JPMorgan’s total income for the past four quarters. And, as with the Wall Street bailouts, all of this is taxpayer money.

Corporate welfare abuser case study number two is General Electric. According to a widely-circulated story in The New York Times last year (3/24/2011), G.E. utilizes a vast array of offshore banking practices, lobbying for tax-breaks and other intricate financial loopholes to avoid paying taxes entirely. “Such strategies,” the Times article notes, “…have pushed down the corporate share of the nation’s tax receipts—from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.”

G.E., of course, is partial owner of NBC, as well as one of the world’s largest weapons manufacturers. The company, in other words, has plenty of money. There is no reason why it cannot pay its fair share of taxes just like you and I are expected to.

And the third and final example of unwarranted corporate welfare is the 2008 Troubled Asset Relief Program (TARP), more commonly known as the Wall Street bailout.

Quite simply, Wall Street institutions like Bank of America, Morgan Stanley and JPMorgan Chase trashed the global economy through fraudulent trading, betting against toxic assets, and through the sub-prime mortgage scandal.

Now, the dictum of laissez-fair, free-market capitalism suggests these Wall Street banks that took reckless, unethical risks deserve to pay the financial (and, one would also assume, the legal) consequences for their business actions. This is the essence of the Darwinian, “Invisible Hand” of the “self-regulating” free-market. As the Bloomberg editorial notes, “…such [government] bailouts encourage a reckless confidence among creditors.” Why should big banks change their behavior if they know the government will be there to save them from bankruptcy? It is also important to keep in mind, the TARP bill was hardly the first time the banking industry has received a taxpayer-financed bailout. The “Savings and Loans” crisis of the 1980s lead to a similar instance of government intervention.

Yet, citizens rarely consider these examples of corporate welfare when discussing the issue. The topic is almost exclusively focused on public welfare programs. The great irony of these pervasive forms of corporate welfare is they essentially negate the essential framework of free-market capitalism. What we actually have in this country is a form of socialism for the rich wherein profits are privatized and costs are externalized—and passed on to the taxpayers.

All of which begs the question: When will JPMorgan, G.E. and others heed LePage’s advice, come down from their corporate thrones, and break their culture of dependency?




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