Cutting corporate welfare would save taxpayers billions of dollars each year, according to a recent Cato Institute policy analysis.
Rising federal spending and huge deficits are pushing the nation toward a financial and economic crisis. Policymakers should find and eliminate wasteful, damaging, and unneeded programs in the federal budget. One good way to save money would be to cut subsidies to businesses. Corporate welfare in the federal budget costs taxpayers almost $100 billion a year.
Policymakers claim that business subsidies are needed to fix alleged market failures or to help American companies better compete in the global economy. However, corporate welfare often subsidizes failing and mismanaged businesses and induces firms to spend more time on lobbying rather than on making better products. Instead of correcting market failures, federal subsidies misallocate resources and introduce government failures into the marketplace.
While corporate welfare may be popular with policymakers who want to aid home-state businesses, it undermines the broader economy and transfers wealth from average taxpaying households to favored firms. Corporate welfare also creates strong ties between politicians and business leaders, and these ties are often the source of corruption scandals in Washington. Americans are sick and tired of "crony capitalism," and the way to solve the problem is to eliminate business subsidy programs.
Here’s a summary of corporate welfare by federal department (in billions of dollars):
-Housing and Urban Development, $16.0
-Other Programs/Independent Agencies, $20.4
Businesses should get back into the full-time business of…well…doing business, not lobbying. Government, meanwhile, should get out of the business of picking winners and losers with corporate welfare.