Monday, June 30, 2014

The Corporate Welfare State Revisited

In early 2013, I wrote a piece titled "Welcome to the Corporate Welfare State," which generated considerable reader response. It remains the most-viewed post on this blog to date, with close to 250 views.

In the post I pointed out that corporate welfare--in the form of bailouts, subsidies, handouts, loopholes, tax-breaks and Tax Increment Financing (TIFs)--far outpaces traditional or individual welfare.

(Contrary to Maine Republican Gov. Paul LePage's recent statements, Social Security is not welfare. It is an earned-income benefit that workers pay into throughout their working-lives.)

For instance, in 2012 alone the government spent $205 billion on corporate subsidies according to the Cato Institute. Compare that to the roughly $59 billion spent on individual welfare programs annually. In the words of U.S. Uncut co-founder, Carl Gibson, this means taxpayers spent "six times more on giving free money to companies making record profits than we did to making sure the people who were laid off by these corporations can still feed their families" ("Cut Corporate Welfare, Not the Safety Net," Huffington Post, 01/07/13).

He adds, the $205 billion in "corporate goodies" was "okay with [House] Speaker [John] Boehner, but $60 billion in Hurricane Sandy relief apparently wasn't."

Yet this disparity is almost never highlighted in media discussions of welfare.

Instead, most media "debates" on welfare remain myopically focused on individual welfare recipients (whom Ronald Reagan once callously dubbed "Welfare Queens"), typically thought of as single mothers, immigrants or people of color--even though actual welfare statistics dispel this stereotype. Statistically, black and white Americans take advantage of welfare benefits at nearly comparable rates.

Then again, most of our news comes from networks owned by the very corporations living high on the government teet (tax-dodger G.E.-NBC, for instance). So it makes sense they would not want to shine too much light on just how much they are costing American taxpayers.

Case in point is a recent front page story in the Portland Press Herald/Maine Sunday Telegram highlighting a recent poll on Mainers' views on welfare ("In Maine, a stark divide in attitudes about welfare," 6/23/2014).

The poll results are, frankly, nothing especially surprising or even newsworthy.

Conservative voters believe welfare "does more harm than good," and recipients "do not need the assistance and are taking advantage of the system." (The latter claim constitutes a wholly unsubstantiated accusation, which the story offers zero evidence to support.) Liberals, meanwhile, tend to be more supportive of welfare programs.

Overall, 46 percent of respondents claim welfare does "more harm than good," with a close 43 percent asserting the reverse.

Predictably, the nearly 1,700-word story by PPH staff writer Steve Mistler makes no mention of corporate welfare. The subject was not included in any of UNH's polling questions.

When I called UNH Survey Center director Andrew Smith to inquire why questions on corporate welfare were left out, he gave the telephonic equivalent of a shrug.

"It's not the kind of thing most voters think exists or see," he said.

But this logic is completely circular:

Voters are not knowledgeable about corporate welfare because the mainstream media--where the majority of Americans get their information about the world--rarely ever report on it. Reporters and editors, in turn, claim they do not cover the issue because their readers and viewers do not express concern over it. But how can they express concern over something they know nothing about...?

This is the same baseless excuse the corporate press use to exclude third-party candidates from their election coverage. There is a term for this deliberately selective sort of news coverage which intentionally leaves out major aspects of a story: Agenda-setting.

So, when are these behemoth corporations going to start working for a living? When will they pull themselves up by their own bootstraps? Most of them do not pay taxes as it is.

Thirty Fortune 500 companies routinely avoid paying any federal income taxes according to a 2011 report by the group Citizens for Tax Justice. Of the companies scrutinized, 280 paid "only about half" their obligatory amount at the current 35 percent tax rate. These corporate tax-dodgers include Proctor & Gamble, DuPont, Verizon Wireless, Wells Fargo, General Electric, and weapons-manufacturer Honeywell International.

Additionally, it is impossible to talk about corporate welfare without bringing up the minimum wage, as the two issues go hand-in-hand. In essence, we as taxpayers are paying low-wage workers at Walmart, McDonald's, and Starbucks because their employers are too cheap to.

A recent study by the University of California Berkeley finds U.S. taxpayers dole out nearly $7 billion a year to fund the public assistance programs utilized by the majority of fast-food workers, most of whom subside on $8.94 an hour or less. The fast-food industry--which accounts for 44 percent of job growth since the Great Recession--is a multibillion dollar industry, with McDonald's alone boasting profits of $1.5 billion last year.

This is yet another form of corporate welfare. Fast-food franchises intentionally keep worker wages low while they reap the profits. This is not "free-market" capitalism in any way, shape or form. It is socialism for the rich.

Furthermore, these pervasive instances of corporate welfare completely undermine Friedmanites' utopian vision of an unregulated economy free of any government "distortions." Corporate welfare is the ultimate distortion. As Naomi Klein makes clear in her seminal 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, such a completely unfettered capitalist economy has never existed in any human society on its own. Free-market ideologues and Chicago School disciples have always had to install such an economy by violent force and repression (a la Pinochet's military coup of Chile in 1973).

Turns out Adam Smith's "Invisible Hand" is not so invisible after all.

Let's just call these perpetual attacks on welfare and the social safety net what they really are: a war against the poor.

Both Republicans and Democrats have their sights on privatizing Medicare, Medicaid, and Social Security. The great irony--and one of the chief reasons neither George W. Bush nor Barack Obama have been successful with privatization efforts--is these so-called "entitlement" programs are actually extremely popular with Americans of all political persuasions. Conservatives may rant and rave against welfare programs in polls like the PPH's, falsely believing they are to blame for our country's fiscal woes. But when it comes to their personal Social Security checks or Medicare benefits, they suddenly change their tune. (Funny how that works out, isn't it?)

Frankly, I think polls like this one do more to reinforce the bogus narrative there is a supposedly irreconcilable ideological divide between congressional Democrats and Republicans. But if papers like the PPH insist on conducting these surveys, let's at least present both sides of the debate--you know, "objectivity" and all of that.

"Freeloading large corporations have taken too much for too long," writes Ralph Nader ("President Obama--Get Tough on Corporate Welfare," Huffington Post, 02/12/13).

He is right. Let's make corporate handouts an integral part of welfare discussions. Goldman Sachs, G.M., Bank of America and others are the true "Welfare Queens,"--not the single mother working three part-time low-wage jobs just so she can (barely) get by.

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