What is Corporate Welfare?

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.

What is Social Security?

Social Security is a mandated supplemental retirement system in the US that was established in 1935 as part of Roosevelt's New Deal. It was motivated largely by the events of the Great Depression, which saw many Americans out of work and the nation's retired elderly often left in the direst of poverty. The intent of the Social Security program is to ensure a threshold subsistence level below which any worker who had paid into the program cannot fall. Social Security is funded out of payroll taxes; that is, a certain percentage of a worker's paycheck goes directly into the Social Security fund to help provide benefits to current Social Security recipients. This has in recent years become a bone of contention with some current workers, who complain that the system is unsustainable and that after paying into the system their entire working lives, there will be nothing for them to collect in their own retirement years. Social Security has long been the so-called 'third rail' of American politics, an analogy to the electrified third rail on the subway systems. Touch it and you're dead. Social Security is an enormously popular program to a very large and powerful portion of the electorate -- the retired and the soon-to-be-retired. Any attempt to change the program runs the risk of incurring their wrath, and elected officials are notably reluctant to anger such a powerful group of voters. Recent attempts to put Social Security on a more sustainable footing centered on the notion of 'privatizing' it. That is, it was suggested that workers be allowed to invest their own contributions in the stock market, opting out of the defined benefits of the Social Security system in favor of a 'defined contribution' system. One major defect in this proposal is that it never addresses the issue that caused the creation of the Social Security system in the first place -- that is, what happens in economic hard times when the payouts from one's private investments diminish or there are widespread business failures that leave retirees with no income at all? Rhetoric aside, the Social Security system is more solvent than the system reformers would like you to believe. Current estimates are that funds flowing into the system will be greater than or equal to funds flowing out of the system for several decades. Recent shortfalls in private retirement plans, such as those being experienced by the major airlines, have made it clear that whether or not privatizing Social Security is a good idea, it is certainly politically impossible right now.

What is Welfare?

There are many different types of welfare, but each are generally concerned with a government trying to provide for the welfare of its citizens. This may take place through social welfare provisions, social security, or financial aid. When the government is seen as supporting businesses directly, rather than allowing the Free Market to cause some businesses to fail, it is pejoratively described as corporate welfare. And when a government allows its welfare programs to grow to a point deemed excessive by critics, they may choose to describe the government as a welfare state. Really, any program in which the government provides money or services to citizens who are in need is a welfare program. As such, many programs that welfare critics do not criticize are in fact welfare, and in these cases the term welfare should be seen to mean primarily programs in excess of a certain base level. At the same time, proponents of greater welfare would point to theoretical welfare programs as simply looking after more base needs, and therefore on a similar footing as existing social support systems. A social welfare provision, which is what many people mean when they speak of welfare, is a program that aims to give a base level of income to people who may be out of work, disabled, or elderly. The idea is that without the government stepping in to help these groups, they would otherwise not survive, and so the government has a moral obligation to support them. Proponents also point out that keeping people at a certain minimum level allows them to work, and therefore ultimately helps the society at large financially. People who have been laid off, for example, may be eligible for welfare while they look for other work. This may come in the form of direct financial assistance, or in the form of a scrip, such as food stamps, which may be exchanged for necessary commodities. Those who have a disability which keeps them from working may be eligible for the same sorts of welfare programs, although they do not face the requirement of searching for a new job. Many nations have a national health care system, which acts as a massive form of welfare, allowing those of all socioeconomic groups access to medical attention should they need it. In the United States, certain medical welfare systems exist to support those most at risk, particularly children, but there is no universal health care system in place. One universal form of welfare that does exist in the United States, and has for a long time, is free education for all citizens up to the completion of high school. The government covers the cost entirely, including in cases of need transportation and food, and this is one of the least contentious forms of welfare currently in the United States. In the United States, welfare may also be used in a more specialized context, to refer specifically to what was historically known as Aid to Families with Dependent Children, and is now known as Temporary Assistance to Needy Families. Since 1997 this welfare system has been handled by the states, who use money given to them by the Federal government as they see fit. This welfare system is limited to a maximum of 60 months during the recipient’s lifetime, and has a requirement that while receiving assistance the recipient must be actively seeking new employment.

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