Welfare for Fat Cats Hits $100 Billion
The Cato Institute has released a report on the extent of corporate welfare payments by the U.S. government in fiscal 2012. It estimates that the total package is $100 billion.
Of course, this was more than offset by the costs of federal regulation.
As to which companies won, net, this has not been traced, nor is this likely to be traced. But the usual rule is this: regulation benefits large established firms, who can hire lots of lawyers. These costs keep out newer, innovative firms. These are huge barriers to entry. As for subsidies, the large firms usually have more clout through lobbying. On the whole, the large firms are way ahead of the small ones.
Subsidies come from federal agencies. These grants are so varied and in so many departments that estimates are guess work. But the Department of Agriculture provided at least $25 billion. This money goes to large agribusiness firms. Family farms have been disappearing since about 1820.
Meanwhile, the on-budget, admitted federal deficit is $1.2 trillion. This does not count the unfunded liabilities in Social Security and Medicare.
The Department of Energy gave away about $18 billion. Solyndra is the poster child of DoE subsidies.
DeHaven said the subsidies also undermine the market by diverting resources from market-preferred businesses to those preferred by policymakers and allow policymakers to “bet” on firms with shaky finances and questionable business models, fostering a “corrupt relationship between big business and government.”The Cato analysis concludes by saying that rising spending and huge deficits are pushing the nation toward an economic crisis – and cutting corporate welfare programs is a good start.
Is there any possibility that cuts will come? The report does not assess this. My estimate: none. But this is not scientific.
The United States government is going to default. The politicians will not stop spending until the money owed is too great to be paid off. Then the government will default. It can do this with hyperinflation or by changing the rules on retirement/Medicare. It can do this by simply not sending out any more checks.
Anyone who thinks this can go on forever is naïve. But it can and will go on until the government defaults. The politicians will not come to their senses in time to save the system. It is way beyond the point of no return already.
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Published on August 9, 2012. The original is here.