The Case For and Against Corporate Welfare

In November 1995, Senator John McCain (R-Arizona) and Senator Fred Thompson (R-Tennessee) cosponsored legislation to eliminate the "Dirty Dozen" list of corporate welfare programs. The McCain-Thompson proposal was defeated by a lopsided Senate vote of 75-24. But with such a broad ideological consensus allied against it, why does corporate welfare continue virtually unabated? It survives because of a conspiracy of parochial ("pork-barrel") politics, high-powered corporate and industry lobbying, and a campaign finance system that keeps these programs, regulations, and subsidies a constant on the Washington budget scene.
The Case For and Against Corporate Welfare

The proponents of business subsidies and exemptions--and they include members of both parties--offer a host of economic, social, and national security justifications for continued federal assistance to corporations. The Cato Institute has identified the following arguments in support of corporate welfare programs, regulatory protection, and direct subsidies:
* They protect industries from failure to preserve high-paying American jobs.
* Important research activities are subsidized that private industries could not finance themselves.
* They counteract the business subsidies of foreign governments to ensure a "level playing field" for domestic industries.
* They boost high-tech industries whose profitability is vital to American economic success in the twenty-first century.
* They maintain the viability of "strategic industries" that are essential to American national security.
* Ventures are financed that would otherwise be considered too risky for private capital markets.