Mr. corporate welfare - Pres Clinton and liberals

National Review, Jan 29, 1996 by Stephen Moore

The Republican plan, snickers GOP-bashing commentator Kevin Phillips, savages federal programs that help "the elderly, the working poor, and college kids," while providing "candy-corn treats and chocolate kisses for Corporate Welfare Kings." The Washington Post agrees, calling federal subsidies to big business "the pork that won't slice." In the GOP budget, the paper declares, "Everything gets cut -- but not corporate welfare."

Yet when the media condemn corporate welfare as "GOP pork," they get the story only half right -- at best. That the Republican record in cutting taxpayer subsidies to big business has been disappointing is true enough. By and large, however, notwithstanding the laissez-faire rhetoric, the record of liberal Democrats has been worse.

Corporate welfare has its origins in the New Deal. Many of the corporate-aid programs that the Left seems so eager to purge from the federal budget today -- the Tennessee Valley Authority, the Rural Electrification Administration, the Export - Import Bank, subsidized deposit insurance for banks, farm price-support programs -- are vestiges of FDR's 1930s-style socialism. The second great cornucopia of corporate statism was LBJ's Great Society. His list of oinkers includes the Economic Development Administration, and public-housing, public-works, and mass-transit programs that have done little to help the poor but a great deal to create wealth for the construction industry. The military - industrial complex that Ike warned of in 1961 pales in comparison to the legacy of the Great Society and its aftermath: a half-trillion-dollar-a-year social-policy - industrial complex.

And what of the tax code? How did it become so polluted with ethanol subsidies for Archer Daniels Midland, tax write-offs for bull sperm and windmills, low-income-housing credits for slumlords, and other gaudy paybacks to corporate political givers? Newt Gingrich had it about right when confronted at a recent press conference on the issue of corporate pork in the tax code. "Liberals have spent forty years building up the corporate welfare state," he shot back. "Republicans shouldn't be expected to dismantle it in 18 months."

True, but the relentless attacks would not sting so much if Republicans at least chiseled out more bricks. My colleague Dean Stansel and I calculated back in March that Uncle Sam doles out $80 billion each year in unwarranted direct cash subsidies to business. The spending subsidies range from high-tech-R&D handouts for companies like General Electric, AT&T, and Chevron, to export assistance to companies like Boeing and General Electric, to billions of dollars of peanut, sugar, wool, and mohair price supports to multi-million-dollar agribusinesses. Get rid of all this sludge and you could cut the budget deficit in half or alternatively almost pay for the abolition of the entire corporate income tax.

Some of the corporate slurpees retained this year are downright embarrassments to a party allegedly dedicated to shrinking the size of the state. For example, supposed deficit hawk Pete Domenici granted a stay of execution to Jimmy Carter's long-defunct Department of Energy -- now a grand repository of energy-related handouts to big business, many of which happen to be located in New Mexico. All that stands between American consumers and lower milk and cottage-cheese prices at the grocery store is House Rules Committee chairman Gerry Solomon, who wants to raise price supports for marginally competitive upstate New York dairy farmers.

Meanwhile, the poster child of corporate welfare, the $100-million-a-year USDA Marketing Promotion Program -- which underwrites overseas advertising for the Pillsbury Dough Boy, Dole pineapples and lemons, and Ernest and Julio Gallo cabernets -- was actually rewarded with a 20 percent budget hike for 1996. How's this for providing ammunition to the enemy? While the GOP wisely voted for a two-year time limit for families on Aid to Families with Dependent Children, the MPP allows corporations five years before they are nudged out of the safety net. Yet if the GOP is selling votes, it's selling them awfully cheap: but of the enormous $80-billion industry slush fund, the GOP extracted less than $10 billion in 1995.

In any case, it turns out that the single greatest obstacle to tearing down the walls of the corporate welfare state today is not Gerry Solomon, or Pete Domenici, or Bob Dole, but -- Bill Clinton.

Time and again the Clintonites have foiled congressional Republicans' attempts to shrink business subsidies. A prime example is the Department of Commerce -- Washington's command-and-control center for doling out corporate aid, with 102 programs and 36,000 bureaucrats. Republican freshmen tried valiantly to shut down the agency, but they eventually were derailed by a massive lobbying campaign orchestrated by Clinton's Commerce Secretary Ron Brown (who set up a "war room" to fend off the GOP assault). Brown protested that shutting down the agency would be "tantamount to unilateral disarmament in the global economy." And he continues to allege that his trade-promotion activities "helped businesses win export contracts worth almost $25 billion supporting more than 300,000 jobs." If we only had ten more Ron Browns, America's trade deficit and unemployment would presumably vanish.