Studies on Corporate Subsidies, 1989-2002

In the mid-1990s, numerous organizations, liberal, conservative, and libertarian, began to point out that U.S. corporations are receive millions of dollars worth of subsidies from the public every year. These subsidies received the label "corporate welfare," and corporate welfare was contrasted to social welfare programs. The following chart summarizes some of the more comprehensive and careful studies:

Year Published

Author

Title of report

Description

1989; revised 1994

Federation for Industrial Retention and Renewal and Grassroots Policy Project

No More Candy Store:
States and Cities Making Job Subsidies Accountable

Describes billions of dollars worth of job subsidies from state and federal governments.

1991

Laurence H. Kallen

Corporate Welfare : The Megabankruptcies of the 80s and 90s

 

1993

Wilderness Society and Environmental Defense Fund

The Living Landscape: Volume 3: Taxpayers' Double Burden

Recovery of wildife species endangered due to unsustainable natural resource extraction on federal lands would cost between $72 million and $136 million per year.

1994

Essential Information

Aid for Dependent Corporations: Federal Estimates of Corporate Welfare for 1994

In 1994, taxpayers spent $51 billion in direct subsidies and $53 billion in tax breaks.

1994

Progressive Policy Institute
(Democratic Party)

Cut-and-Invest to Compete and Win: A Budget Strategy for American Growth

Over a period of five years, $114 billion in expenditures and $111 billion in tax breaks could be replaced with $100 billion in more productive public investment.

1994

U.S. House Committee on Natural Resources, Subcommittee on Oversight and Investigations

Taking from the Taxpayer:
Public Subsidies for Natural Resource Development

Examines subsidies to mining, timber, irrigation, hydropower, grazing, and recreation. Concludes that federal programs are inconsistent, are not based on need, and do not consider the effects on the economy or environment.

1995

Cato Institute

Ending Corporate Welfare As We Know It

In 1995, more than $85 billion was spent to subsidize private businesses.

1996

U.S. Public Interest Research Group

Feeding at the Trough:
Campaign Contributions and Taxpayer Handouts for Polluters

From 1989 to mid-1995, PACs representing industries that pollute contributed $47 million to candidates who provided $23 billion in subsidies.

1996

U.S. House of Representatives, Budget Committee

Corporate Welfare (U.S. House Budget Committee hearing March 7, 1996)

Gathers testimony on various subsidies to business.

1997

Public Information Network

Matrix of Energy & Transportation Studies

Summary of subsidies to automobiles, coal, nuclear, oil and gas, and other energy and transportation industries.

1997

Davita Silfen Glasberg and Dan Skidmore

Corporate Welfare Policy and the Welfare State : Bank Deregulation and the Savings and Loan Bailout

 

2000

Ralph Nader

Cutting Corporate Welfare (Open Media Pamphlet Series)

 

2001

Dexter Whitfield

Public Services or Corporate Welfare : Rethinking the Nation State in the Global Economy

 

2001

Brian Reidl

How Farm Subsidies Became America's Largest Corporate Welfare Program

 

2001

Norman Myers and Jennifer Kent

Perverse Subsidies: How Misused Tax Dollars Harm the Environment and the Economy

 

2002

Nikki Mandell

The Corporation As Family : The Gendering of Corporate Welfare, 1890 to 1930

 

 

Many of these studies add up line items such as direct government grants and tax breaks from the U.S. federal budget and estimate that such subsidies total around $100 billion every year. These studies were helpful in revealing some of the worst abuses of corporate subsidies -- but they revealed only the tip of the iceberg, because they measured only direct tax subsidies. A more meaningful measure of what business is costing would be to measure externalities, that is, any cost which is hidden or which is paid by some other sector of society.

Externalities range from the health care costs of smoking and automobile use, to the cost of repairing of buildings damaged by air pollution, to the costs to consumers of price-fixing conspiracies, to military contract fraud. Clearly these are benefits to industry at the expense of some other sector of society or the environment, and it is clear that externalties are a much more complete measure than direct subsidies.

Externalities are much harder to measure than subsidies, because they aren't included as line items in government budgets. For this reason (and for political reasons that have to do with ending programs they oppose), most organizations avoid externalities and focus on budgeted subsides. But externalities are not impossible to estimate. Former corporate accountant Ralph Estes added up those externalties that he could credibly document, and came up with $2.5 trillion per year. This is 25 times greater than the estimates of direct budget subsides. Click here to see a breakdown of the $2.5 trillion in corporate subsidies.

As David Korten pointed out in his book The Post-Corporate World, U.S. corporate profits total about $500 billion per year, and so costs to the taxpayer outweigh profits to the corporations by five to one -- not a very efficient system, even from the narrowest economic point of view of providing goods and services efficiently.

Imagine spending $2,500,000,000,000 per year so that corporations can make $500 billion in profits. Then imagine adding the unknown and ultimately unknowable costs to ecosystems, other species, and future generations of humans. Imagine arranging things so that three-quarters of the $500 billion in profits go to the 500 largest of the tens of thousands of corporations in the U.S. Imagine that eighty percent of the corporate stock and bonds are owned by a ten percent of the population. Click here for more facts about the concentration of wealth.

See also:
Muller, Mendelsohn, and Nordhaus. 2011.
Environmental Accounting for Pollution in the United States Economy.
American Economic Review, 101(5): 164975.