corporate welfare

Big Company With Ties to White House Paid No Taxes; GE Also Got Corporate Welfare and Bailout on Special Terms

by Hans Bader on March 27, 2011

in Bailout Watch, Economy, Energy, Environment, Stimulus to Nowhere

“The top corporate tax rate in the United States is 35 percent, one of the highest in the world,” but General Electric, whose CEO was recently tapped to lead President Obama’s Council on Jobs and Competitiveness, pays no taxes at all, reported the New York Times.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.  Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

This negative tax rate is the product of lobbying aimed mostly at liberal lawmakers. “G.E. has spent tens of millions of dollars to push for changes in tax law,” such as “‘green energy’ credits for its wind turbines.” “Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.”

In his State of the Union address, President Obama called for even more spending on forms of energy that benefit GE.  Government energy spending and tax credits disproportionately benefit GE, which recently spent  $65.7 million on lobbying to get government subsidies.

[click to continue…]

More Corporate Welfare on the Way?

by Ryan Young on February 17, 2011 · 1 comment

in Bailout Watch, Economy

Politico headline from today: “Qualcomm exec calls for small-business research funding.”

Alternative headline: “Businessman asks government to give money to businesses.”

Government should not give money to private businesses, period. Businesses should compete in the marketplace, not Washington. There is a lot of money to be made by selling people things they want. Companies that do a good job of that deserve every cent they earn.

Subsidies are not earned. Nor are they given to companies make things people want. Companies already doing that don’t need handouts. In short, corporate welfare is allocated by politics instead of economics.

What Mr. Jacobs is asking for would be a boon for lobbyists and politically favored businesses. But it would be a drag on everyone else. And not only because they would be paying for the handouts. Lost innovations are part of the price. The money spent on corporate welfare is money not spent on more worthy projects.

See also Wayne Crews and I on corporate welfare in the new edition of CEI’s Agenda for Congress.

BP Supported Obama Stimulus Package, Global Warming Bill, and Corporate Welfare; BP Bankrolled Obama Campaign

by Hans Bader on June 9, 2010

in Agriculture, Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Ethanol, Global Warming, Health and Illness, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

Columnist Tim Carney notes that BP, responsible for the massive oil spill, is “a close friend of big government whenever it serves the company’s bottom line.” It lobbied for President Obama’s $800 billion stimulus package, the “cap-and-trade” global-warming bills backed by Obama, and “the Wall Street bailout” that Obama voted for.  “BP has more Democratic lobbyists than Republicans.”  Obama is the biggest recipient of campaign cash from BP executives.

Obama’s global warming legislation expands ethanol subsidies, which cause famine, starvation, and food riots in poor countries by shrinking the food supply, and also result in deforestation, soil erosion, and water pollution. Subsidies for biofuels like ethanol are a big source of corporate welfare: “BP has lobbied for and profited from subsidies for biofuels . . . that cannot break even without government support.”

The $800 billion stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It is also destroying jobs in America’s export sector.

Obama falsely claimed that the stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run.”  Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”  In 2008, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Obama’s global warming legislation would also drive jobs overseas, since it would impose a costly cap-and-trade carbon rationing scheme on American industry, while leaving foreign plants operated by multinational corporations unregulated.  That’s one reason why many big companies with plants overseas are lobbying for the global-warming legislation, which would give them an advantage over competitors that make their products largely in America.  The legislation would result in a tax increase for American consumers of up to $200 billion a year or $1,761 per household.

Unlike other oil companies, which have good records of safety and avoiding spills when it comes to oil drilling, BP has a bad record, earning it the label of “serial environmental criminal” from critics.  The Obama administration granted BP a waiver of environmental regulations in April 2009, yet it blocked Louisiana from protecting its coastline against the oil spill by delaying rather than expediting regulatory approval of essential protective measures.  It has also chosen not to use what has been described as “the most effective method” of fighting the spill, a method successfully used in other oil spills.  Democratic strategist James Carville called Obama’s handling of the oil spill “lackadaisical” and “unbelievable” in its “stupidity.”

Obama is now using BP’s oil spill to push the global-warming legislation that BP had lobbied for.

BP: A “Serial Environmental Criminal” With Close Ties To The Obama Administration

by Hans Bader on June 2, 2010

in Agriculture, Economy, Energy, Environment, Ethanol, Global Warming, Health and Illness, International, Natural Resources, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

BP, which is responsible for the terrible oil spill in the Gulf of Mexico, has a safety record infinitely worse than other oil companies, which make safety a priority in drilling for oil.  ABC News reports that “BP ran up 760 ‘egregious, willful’ safety violations, while Sunoco and Conoco-Phillips each had eight, Citgo had two and Exxon had one comparable citation.”  Exxon, the oil company most critical of global warming hysteria, had the best safety record.  BP’s record is so bad that it has been described as a “serial environmental criminal.”

While other companies have invested money in safety, BP has “invested heavily” in an environmentally-conscious advertising campaign that brands the company as “Beyond Petroleum,” and until recently spent money lobbying for the global-warming bill backed by the Obama administration, a bill full of  corporate welfare dressed up as “green energy.”   The company’s advertising campaign successfully duped consumers into viewing it as “the greenest oil company.”

Earlier, the Obama administration ignored the pleas of Louisiana’s governor to allow Louisiana to build barrier islands to contain the damage from the oil spill, insisting that any such islands should be built, if at all, only after a slow and complicated regulatory process that could take years.

Democratic strategist James Carville, who was raised in Louisiana, called Obama’s handling of the oil spill “lackadaisical” and “unbelievable” in its “stupidity.”

The Obama administration granted BP a waiver from environmental regulations in April 2009.  Obama received lots of campaign contributions from BP.  ABC News reports that the “top recipient of BP-related donations during the 2008 cycle was President Barack Obama himself, who collected $71,000.”

The $800 billion stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. Its regulations are destroying jobs in America’s export sector.

The global warming legislation backed by President Obama would also drive jobs overseas, since it would impose a costly cap-and-trade carbon rationing scheme on American industry, while leaving foreign plants operated by multinational corporations unregulated.  That’s one reason why many big companies with plants overseas are lobbying for the global-warming legislation, which would give them an advantage over competitors that make their products largely in America.

Although Obama and other backers of this “cap-and-trade” concept claim it will cut greenhouse gas emissions, it may perversely increase them by driving industry overseas to places with fewer environmental regulations, resulting in dirtier air, and damage to forests and water supplies.   It would enrich politically-connected corporations, and result in massive destruction of the world’s forests.

By expanding ethanol subsidies and mandates, it would cause enormous “damage to water supplies, soil health and air quality.” Ethanol subsidies have already resulted in forests being destroyed in the Third World.

The Washington Examiner earlier explained how the global warming bill would cause deforestation by expanding ethanol subsidies, and thus increase greenhouse gas emissions in the long run.  Obama’s so-called “cap-and-trade” bill is full of pay-offs for special interests.

Myths About Green Energy: The Truth Is, It’s Corporate Welfare That Destroys American Jobs

by Hans Bader on May 28, 2010

in Agriculture, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Ethanol, Global Warming, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

In The Washington Post, Robert Bryce debunks five myths about green energy: it won’t create jobs, won’t help the environment, and won’t make America less dependent on despotic foreign regimes.

The $800 billion stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It is also destroying jobs in America’s export sector.

The global warming legislation backed by President Obama would also drive jobs overseas, since it would impose a costly cap-and-trade carbon rationing scheme on American industry, while leaving foreign plants operated by multinational corporations unregulated.  That’s one reason why many big companies with plants overseas are lobbying for the global-warming legislation, which would give them an advantage over competitors that make their products largely in America.

Although Obama and other backers of this “cap-and-trade” concept claim it will cut greenhouse gas emissions, it may perversely increase them by driving industry overseas to places with fewer environmental regulations, resulting in dirtier air, and damage to forests and water supplies.   It would enrich politically-connected corporations, and result in massive destruction of the world’s forests.   By expanding ethanol subsidies and mandates, it would cause enormous “damage to water supplies, soil health and air quality.” Ethanol subsidies have already resulted in forests being destroyed in the Third World.

The Washington Examiner earlier explained how the global-warming bill backed by Obama will lead to deforestation, and thus increase greenhouse gas emissions in the long run.  Obama’s so-called “cap-and-trade” bill is full of pay-offs for special interests.

Such cap-and-trade energy rationing schemes would lead to big tax increases, administration officials privately have conceded, even though they publicly claim otherwise.  “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times” by CEI.  It could raise household taxes by $1761 per year, equivalent to a 15 percent tax increase.   It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”

Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket,” since its costs would be passed “on to consumers.”

Citizens would be wise not to trust Obama’s utopian claims about mythical green jobs, given that the foreign green jobs programs he seeks to imitate have completely failed.  Obama’s past claims about job-creation have turned out to be false. Obama falsely claimed that the $787 billion stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run”.  Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”  In 2008, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Antitrust as Corporate Welfare for Aggrieved Competitors

by Ryan Young on December 9, 2009

in Economy, Legal, Politics as Usual, Regulation, Regulation of the Day

Wayne Crews and I have an article in today’s American Spectator about the antitrust crusade against Intel. Our key points:

-An FTC picking winners and losers is not capitalism. It is crony capitalism.

-Chips in “Wintel” desktop computers increasingly constitute just one subset of a vast semiconductor market. Only a small fraction of the chips in non-PC devices are Intel’s — and these devices are where the future lies.

-Regulators’ charges against Intel have changed over the years, but their verdict always remains the same: guilty. Suspicious.

-We’d be better off prosecuting the DOJ and the FTC for colluding against free enterprise.

Obvious answer to electric car “range anxiety” – gov’t handouts!

by Michael Fumento on November 18, 2009 · 1 comment

in Energy

What’s the greatest fear of the owner of a purely electric car? Running out of juice, of course! Not even a tiny gasoline engine to chug on home or to the nearest gas station. This not only eliminates long trips but can induce a nervousness even around town dubbed “range anxiety.” But fear not; there’s an answer! Installing recharging facilities – and lots of ‘em because juicing up a car battery is a sloooooooow process. (Car owners, bring a book. Like “War and Peace.)

On Monday, reports the Washington Post, a coalition of companies including “Nissan, FedEx, PG&E and NRG Energy issued a report calling for billions of dollars in government aid to support the transition of the U.S. vehicle fleet to cars that run on batteries. The group is asking for $124 billion in government incentives over eight years including $13.5 billion for tax credits to build public charging stations.”

What shock! (Pardon the pun.) Aren’t government handouts, including corporate welfare, the answer to all problems? And everybody knows about the big fat surplus the Obama Administration is running. Meanwhile, buyers of electric cars are already getting a fat $7,500 write-off.

Message to electric car sellers and buyers about “range anxiety”: Sounds like a personal problem.

Carney on Cash for Clunkers

by Ivan Osorio on August 5, 2009 · 3 comments

in Bailout Watch, Economy, Politics as Usual

Former CEI Warren Brookes Fellow Tim Carney, highlights the high cost of the Cash for Clunkers program, which I wrote about here yesterday.

Two experts — car-selling Web site Edmunds.com and economic modeler Macroeconomic Advisers — estimated that a vast majority of the trade-ins that take advantage of Cash for Clunkers would have happened anyway.

But were Cash for Clunkers mere waste. The program has created some winners.

One lobbyist for this bill was Nucor Steel. In Cayuga County, N.Y., Nucor turns scrap steel into sheet metal and other steel products. The clunkers are now becoming a subsidized feedstock for Nucor, which helps explain why Sen. Chuck Schumer, D-N.Y., has led the push for $2 billion extra in clunker cash.

Then there’s Enterprise Rent-a-Car also backing the bill, supposedly out of solidarity with automakers. But Enterprise sells its rental cars after a few years. As a rental firm that buys its cars new, Enterprise benefits every time someone else scraps a used car.

And losers.

On the other side of the lobbying debate were non-dealer auto-repair shops, whose businesses depend on used or older cars, which the owners don’t take to the dealer for repair. Also, the Automotive Aftermarket Industry Association opposed the bill.

These are the guys who can sell you the headlight for your 1998 Ford Taurus, or who rebuild an engine out of a junked car.

Now, as Congres considers an additional $2 billion in funding for Cash for Clunkers, the Obama administration is refusing to release data on the effectiveness of the program. But hey, it’s not like this administration and Congress have tried to rush legislation before!

More Government Waste, Corruption, and Corporate Welfare, Thanks to the Obama Administration

by Hans Bader on June 14, 2009

in Odds & Ends

Rapidly-rising Medicare spending already threatens “to crush the federal budget,” and much Medicare spending is wasteful, yet the Obama Administration claims it can somehow save money by creating Medicare-like programs to cover all Americans. In the New York Times, economics professor Tyler Cowan calls it “the new voodoo economics.” Washington Post columnist Robert Samuelson concludes that Obama’s health-care plan “is naive, hypocritical or simply dishonest. Probably all three.”

Obama is firing an inspector general who exposed wrongdoing by one of his supporters, and previously uncovered millions of dollars in waste and fraud in the troubled AmeriCorps program, whose budget is being dramatically increased by the Obama Administration. Inspector General Gerald Walpin was fired after he uncovered misuse of Americorps funds and sought to keep the wrongdoer from accessing federal “stimulus money.” The recently-passed stimulus package repealed welfare reform, and it subsidizes waste and corruption.

Congress is moving towards passing a “cash for clunkers” bill that would give people tax credits, but only if they own an old gas-guzzler that they are trading in for a new car. So if you bought a fuel-efficient car in the past, your tax dollars will be used for welfare for people who bought inefficient cars (cars with less than 18 MPG). The bill will increase the national debt (and thus future taxes) by billions of dollars. As Mike Budnick notes in the Wall Street Journal, “This type of legislation rewards people who have made poor decisions and penalizes only people who have already made good choices. Not the kind of incentive that we should propagate. Let the market work.”

Taxpayers are being ripped off to the tune of hundreds of billions of dollars to enrich wealthy buyers of so-called “toxic assets.” Meanwhile, the Obama Administration’s $787 billion stimulus package is actually killing jobs and shrinking the economy.

Congress passed an FDA tobacco regulation bill, but not without adding insidious provisions that will reduce competition in the tobacco industry, and actually make it harder to introduce products that reduce the harms and health risks of tobacco, notes the Wall Street Journal. We earlier described the bill’s pitfalls and counterproductive provisions. Obama has said he will sign the bill into law.

Billions of tax dollars are being spent on bailing out carmakers, but the primary beneficiaries of this corporate welfare are not the car companies themselves, which could have survived without federal bailouts by simply abrogating their collective bargaining agreements and dealer-contracts in a standard bankruptcy-court reorganization, but the United Auto Workers Union, which spent millions electing Obama and is now calling the shots. Taxpayers and pension funds are being ripped off to enrich the UAW, which enjoys wages much higher than the average American.

A similar government bailout of the auto industry actually backfired in England in the 1970s, destroying its carmakers by leaving them with excessive wages, inefficiency, and political meddling in car design.

Now, even liberal commentators are questioning whether the mushrooming auto bailouts pass constitutional muster, such as Charles Lane in today’s Washington Post. (Lane is so liberal and pro-government that in a front page article in 2003, he characterized the Supreme Court’s 2003 decisions as collectively being great for “civil liberties,” even though he admitted that the Supreme Court had rejected free speech claims in 7 out of its 8 First Amendment cases that term, largely because Lane approved of its decision upholding the University of Michigan Law School’s race-based affirmative action plan — even though legally permissible affirmative-action plans are a discretionary government function, not an individual right or civil-liberty).

Conservative columnist George Will also has a column today criticizing the auto bailouts. He points out that the Administration’s current claim that it can use TARP bank-bailout money for an auto bailout is at odds with the Treasury Department’s past admissions to the contrary: “Last September, Treasury Secretary Henry Paulson testified to the Senate that TARP money was necessary for ailing ‘financial institutions.’ Nowhere in the bill’s 169 pages was there any reference to government funding of ‘automobile’ or ‘manufacturing’ companies. In November, Paulson told a House committee: ‘I’ve said to you very clearly that I believe that the auto companies fall outside of [TARP's] purpose.’”

Earlier, commentators like the Heritage Foundation, Clinton Administration Labor Secretary Robert Reich, and liberal journalist Andrew Sullivan all agreed that the auto bailouts are illegal or unconstitutional.

Corporate Welfare on a Vast Scale: Obama’s Cap-and-Trade Scam Threatens Economy

by Hans Bader on June 1, 2009 · 1 comment

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, Labor, Mobility, Politics as Usual, Regulation, Stimulus to Nowhere

One of Obama’s own advisers admits that the cap-and-trade energy-rationing scheme backed by the “Obama Administration and Congressional Democrats” would “have a trivially small effect on global warming while imposing substantial costs on all American households. And to get political support in key states, the legislation would abandon the auctioning of permits in favor of giving permits to selected corporations.”

Obama adviser Martin Feldstein notes that “the Congressional Budget Office recently estimated that the resulting increases in consumer prices” from capping the amount of carbon dioxide energy users can emit “would raise the cost of living of a typical household by $1,600 a year,” a figure that “would rise significantly” from year to year.

Meanwhile, politically-connected corporations would make a bundle, since the “bill would give away some 85 percent of the permits” to emit carbon dioxide to favored “businesses instead of selling them at auction.”

Feldstein, a Harvard economist who has advised Obama, earlier warned that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compared Obama’s tax increases to the ones that contributed to the Great Depression and the “Lost Decade” of economic stagnation and decay in Japan.

Feldstein, who serves on Obama’s economic advisory board, has also “warned of serious inflation and higher taxes down the road” as a result of Obama’s policies.

Feldstein earlier noted that President “Obama’s biggest proposed tax increase is the cap-and-trade system of requiring businesses to buy carbon dioxide emission permits. . .CBO Director Douglas Elmendorf testified before the Senate Finance Committee on May 7 that the cap-and-trade price increases . . . would cost the average household roughly $1,600 a year, ranging from $700 in the lowest-income quintile to $2,200 in the highest-income quintile.”

That’s a highly regressive tax increase, since lowest-income earners don’t make a third of what highest-income earners make, but they would incur a third as much cost. It’s regressive in the same way as the 1932 excise tax increase by Herbert Hoover that deepened the misery of the Great Depression.

During the Great Depression, Herbert Hoover damaged the economy, and impoverished the American people, with costly, artificial attempts to stimulate the economy through increased government spending, financed by heavy taxes like the Revenue Act of 1932.

Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s regressive excise taxes were in 1932. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air.

In reality, Obama’s proposed “cap-and-trade” tax is likely to raise $2 trillion over the next decade, far more than even Feldstein anticipates. That’s far more than the $646 billion the Administration earlier estimated — amounting to at least $3,100 per family per year. And that figure may be dwarfed by the amount of money siphoned from consumers to well-connected corporations that have learned how to game “cap-and-trade” schemes.

In the Great Depression, President Herbert Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. Similarly, Obama has proposed higher marginal tax rates, which will produce another $1.9 trillion in tax increases.

In spite of its massive size, Obama’s carbon tax won’t begin to pay for all his spending increases, such as a budget that will generate $4.8 trillion in increased deficits, Obama’s trillion-dollar toxic-asset program, and his $800 billion, economy-shrinking “stimulus” package, all of which contradict Obama’s campaign pledge of a “net spending cut.”

These tax increases are breaches of Obama’s campaign promise not to raise taxes on people making less than $250,000 a year, which he earlier broke by signing into law the regressive SCHIP excise tax increase.

It’s part of a long line of broken promises, such as Obama’s pledge to enact a “net spending cut,” which he discarded by offering mind-bogglingly large budgets that will explode the national debt through $9.3 trillion in massively increased deficit spending.

Obama has spent on an unprecedented scale, such as for a stimulus package that has actually shrunk the economy and destroyed thousands of jobs, and an auto bailout that forces cash-strapped taxpayers to bail out high-paid union auto workers, whose pay remains much higher than that of the typical taxpayer, while saddling the car companies with politically-correct mandates that may kill their chance of survival.

← Previous Entries