The Case For and Against Corporate Welfare

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					The Case For and Against Corporate Welfare

In November 1995, Senator John McCain (R-Arizona) and Senator Fred Thompson
(R-Tennessee) cosponsored legislation to eliminate the "Dirty Dozen" list of
corporate welfare programs. The McCain-Thompson proposal was defeated by a
lopsided Senate vote of 75-24. But with such a broad ideological consensus allied
against it, why does corporate welfare continue virtually unabated? It survives
because of a conspiracy of parochial ("pork-barrel") politics, high-powered
corporate and industry lobbying, and a campaign finance system that keeps these
programs, regulations, and subsidies a constant on the Washington budget scene.
The Case For and Against Corporate Welfare

The proponents of business subsidies and exemptions--and they include members of
both parties--offer a host of economic, social, and national security justifications for
continued federal assistance to corporations. The Cato Institute has identified the
following arguments in support of corporate welfare programs, regulatory
protection,                   and                   direct                    subsidies:
* They protect industries from failure to preserve high-paying American jobs.
* Important research activities are subsidized that private industries could not
finance                                                                     themselves.
* They counteract the business subsidies of foreign governments to ensure a "level
playing             field"            for             domestic               industries.
* They boost high-tech industries whose profitability is vital to American economic
success              in             the              twenty-first              century.
* They maintain the viability of "strategic industries" that are essential to American
national                                                                       security.
* Ventures are financed that would otherwise be considered too risky for private
capital markets.

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