Monday, May 09, 2016

How to Measure Corporate Welfare

A problem I faced is that I am not a leftist.  And since I'm not a leftist, that means I just can't pull statistics out of my ass, start my statements with "I just feel," or outright lie because it suits my belief in how "I feel" the world should be.

I need statistics.  I need facts.  And I need good methodology so I know, as accurately as possible, precisely what the hell I'm talking about.  And one of the few economic stones I have left unturned with empiricism has been "corporate welfare."  Specifically, how much is there?

This is an important statistic to know because when debating leftists they always claim that if we "just got rid of corporate welfare" then we wouldn't have a budget deficit nor (consequently) a national debt.  That if we just stopped giving all those nasty corporations all that government cheese we'd be able to fund everything and everyone, from free education, to free jobs, to free house, and free healthcare.

Of course, when you try to peg them down on precisely how much in "corporate welfare" me and the other taxpayers give to these evil corporations, none of them have any figures.  And so, as always with leftists, you can't rely on any kind of constructive debate that advances our understanding and moves us closer to a practical solution, simply because the left has no freaking clue what they're talking about.  They're merely regurgitating talking points (usually lies) they heard from some other equally misinformed leftist and the real adult work of getting to the bottom of things and conducting research begins.

To be succinct and save you time, the truth is corporate welfare is poorly defined, and thus hard to measure.  Leftists would claim any law or action by the government that would benefit corporations is "welfare."  So if a construction company gets a contract to build a road that's "welfare" (even though the company IS building a road).  Leftists would also claim any tax break or lowering of taxes is corporate welfare, obviously operating from the premise that all those corporate profits are THEIR money, not those stupid shareholders'.  Again, lacking intellectual honesty and not really the definition of "welfare," this does not help us define corporate welfare, nor advance the conversation, let alone nail down a number. 

But I believe there is some common ground we can agree upon.

For example I think we all agree that backroom deals and any UNFAIR gains given to connected corporations via political donations or lobbyists IS indeed corporate welfare.  The TARP bailouts are no doubt corporate welfare.  And the upcoming student loan bail out's is also guaranteed to be corporate welfare (Oh wait, never mind.  It's OK when stupid leftist college students get bailed out of their mistakes like banksters.)

Ergo, somewhere between the $19 trillion in corporate welfare (assuming if we believe the leftists and that without corporate welfare we'd have no debt) and the Benjamin of grease that is slapped on the palms of a local councilman, there is the true measure of corporate welfare that reasonable and intellectually honest people would agree upon.  Unfortunately, I'm too lazy to economics today to find it. But fortunately I don't have to because two economists have done it for me.

A recent study from the Cato Institute suggests in 2012 corporate welfare was around $120 (at the federal level).  Another study, done quite some time ago in 1990 suggested it was $170 billion.  If we were to prorate that today to adjust for inflation and the increase in the budget/economy that would be about $500 billion.  I'd like to split the difference and call it $330 billion, but I noticed the author of the second study was a professor of social work which I don't believe is a real science or discipline.  In short, I don't trust academians over the Cato institution.  Besides which, my suspicions were right.  He is a life long academic, never setting foot in the real world, and in all intellectual honesty I have to believe his research was biased by his ideological leanings.  So with this "mailing it in, back of napkin" economics, I've decided to weight the Cato Institute heavier than the lone socialist academian, I have come up with a cool $225 billion in annual corporate welfare (it should be noted however, this does not include TARP as - hopefully - that was a one time anal raping of the American taxpayer).

Naturally, it is impossible to know how much in corporate welfare there truly is.  We can't measure every penny, won't know every bribe, and don't know which of Obama's cronies got which contract to run Solyndra.  I'm heavily relying on the intellectual honesty and methodology of both economists mentioned above.  And truth is I'd be more tempted to believe when all corruption and inefficiency is taken into account, it may very well be closer to the hippie pothead professor's $500 billion (which would actually make the case for the left for once!).  The key thing, however, is to see if the leftist who parrots the "if we got rid of corporate welfare" line as the faintest clue as to what he's talking about.  Hopefully, this post help you determine that.



Unknown said...

$500 Billion... Wouldn't put a dent in the federal budget.

Let's be clear, in 2014 the Hussein Obama government listed "Welfare" (specifically that word) as costing the US taxpayer $500 Billion.
I'll also point out that the entire military budget for that year was also about $500 Billion.

This "Welfare" also does not include things like: Food stamps, social security, unemployment, and medicair either as those were listed in their own parts separately.

Considering the tax 'revenue' of the US government in 2014 constituted ~$2 Trillion, and the federal government spent over $3 trillion, of which ~75% constituted 5th amendment violating wealth redistribution... an extra $500 B wouldn't stop a damn thing.

It is important to point out however, by shutting down Medicair, social security, and welfare the cost savings would give the US yearly budget a surplus of around $1 Trillion each year.

Go figure why lefties refuse to do anything about those.

minuteman said...

I think to leftists a corporate tax rate of less than 100 percent would be considered corporate welfare.

Anonymous said...

Just to understand, you're saying that all corporate welfare ever in the US is $0.5T (including corruption, excluding bailouts)? So corporate welfare is (0.5/19)= 2.6% explanation for the deficit?

Hardly significant in the grand scheme, but significant enough to investigate for potential remediation after the other 97.4% is etched out.

Anonymous said...

Annually is different than all welfare ever

grey enlightenment said...

Corporate welfare is still probably better than regular welfare or useless-degree welfare

Anonymous said...

If a company or individual makes a bribe to a politician it is a crime not corporate welfare. But money does change hands to affect laws and regulations. There is a school of thought that corporations wouldn't have to do this if government was not so invasive into capitalism/business. Imagine you own/run a company and politicians are going to create regulations that could put you out of business. Would you spend money to lobby them to at the least make the regulations allow you to continue to exist?

Tax treatments/exemptions/rates/etc. are not corporate welfare either. Allowing someone or a company to keep more of their own money is not welfare.

Real corporate welfare is taking money from tax payers and giving it to a corporation with no strings attached. If the money is given to them to force them to do something the government wants it would NOT be corporate welfare.