Ad hawk; how Paul Newman and McDonald's get the U.S. government to push their products abroad

Washington Monthly, July-August, 1991 by Doug Turetsky

All in all, Paul Newman seems like a straight-up guy-the liberal causes, the lasting marriage, those sporty little cars. It's his salad dressing and spaghetti sauce that have got us wondering. Here's an entrepreneur who commands multimillion-dollar salaries for his films, and his gourmet goodies are on the dole. Over the past three years, Newman's Own has received more than $100,000 from the U.S. government to help it hawk its products overseas.

In the world of government-subsidized advertising, of course, $100,000 to Newman's Own is barely a crouton. Through a little-known U.S. Department of Agriculture (USDA) enterprise called the Market Promotion Program, some of the biggest private corporations in the country receive millions each year in public money to fund ads, billboards, and supermarket displays abroad.

If it seems odd to you that the U.S. government would subsidize wine tastings in Tokyo or radio campaigns in Turkey, it's even odder which companies it chooses to fund. Despite the rhetoric with which the program was founded, many of the beneficiaries of this government giveaway aren't companies squeezed out by the unfair trade practices of competitor nations or even struggling enterprises whose survival might depend on U.S. government largess. Rather, they're some of the most powerful and profitable multinational conglomerates around-companies that don't need anyone's help (let alone taxpayers') when it comes to peddling their wares.

Take McDonald's. In the past five years it has spent more on advertising than virtually any other U.S. company. It boasts 70 billion served worldwide; in Paris, Rome, and Tokyo, young people flock to the golden arches to be seen and to drink milkshakes. Yet in 1989, Mcnational conglomerate Castle and Cook, whose fruit farms in Costa Rica, Honduras, and the Philippines are often blamed for undercutting the U.S.'s own citrus farmers.

But perhaps the most disturbing beneficiaries of the Marketing Promotion Program are those industries that, instead of facing unfair trade practices abroad, are legendary for promoting them at home-like U.S. peanut farmers. For some 50 years, those farmers have enjoyed both lucrative government price supports and strict quotas on peanuts imports-the same kind of trade practices we label unfair when imposed by other nations. You actually need a license to join the elite group that comprises the nation's peanut farmers. These protections hit taxpayers twice-in the public treasury and in the private purse. (Bought an $8 jar of Skippy lately?) But to make the public shelling complete, the farmers' trade association, the National Peanut Council, has received more than $27 million over the past six years from its friend, the Marketing Promotions Program.

At least the peanut farmers will tell the public where their money goes-to market Skippy in Korea and Taiwan and to sell honey roasted peanuts to the French. Many companies on USDA's dole won't.

William Quarles, a vice president with Sunkist, gets testy when asked how he spends the federal money. And even Ursula Hotchner of that nice Newman's Own (whose profits, she notes, go to Paul's favorite charities) refuses to discuss any specifics of the overseas advertising efforts her company undertakes with federal dollars. "They certainly don't cover cocktail parties or flights," she says helpfully.

The reluctance of company executives to talk about how they spend their federal subsidies, or even how much of their advertising budgets are composed of public dollars, might make you forget that you're paying for their ads. Some executives even make it sound as if they're performing a patriotic duty by marketing their wares overseas. "We're exporting something of our culture," effuses Nancy Light of the Wine Institute, an industry trade group that's divided some $10 million in federal money among California wine groups since the marketing program began.

Even USDA is reluctant to talk turkey about how all that money is spent, providing only general information. Still, one example of what our tax dollars are buying can be excavated from documents provided by the USDA. Blue Diamond, the California almond company, used some of its millions in subsidies to insert advertisements on wrestling videotapes shown in Kuwait. Not exactly top secret stuff, but you can see why company ad directors and government officials aren't bragging.

Since its creation in 1985 (under the name Targeted Export Assistance Program) the quiet Marketing Promotion Program has become the biggest federal export assistance program in the entire U.S. government. But amazingly, as it's grown, it's managed to sell out its original purpose-to rectify foreign wrongs-altogether. In the past Congress, while allocating $1 billion to the program over the next five years, legislators also made one minor change to the program's mandate. Participants no longer have to prove their products faced unfair trade practices to get government money.

As we've seen, and the GAO recently speculated, that law simply put into writing what had been fact since the program's inception. New York Rep. Charles Schumer, a longtime opponent of the subsidies, claims the original impetus came not from a congressional concern with countering unfair tariffs and restrictions but from a desire to appease powerful agricultural constituents who claimed that their products were left out of the nation's hefty farm subsidy programs, which give special subsidies to commodities like honey, sugar, wool, dairy products, and mohair.