Corporate welfare is a term describing a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations. The term compares corporate subsidies and welfare payments to the poor, and implies that corporations are much less needy of such treatment than the poor. The Canadian New Democratic Party picked up the term as a major theme in its 1972 federal election campaign. Ralph Nader, a prominent critic of corporate welfare, is often credited with coining the term.
As corrupt subsidies
Subsidies considered excessive, unwarranted, wasteful, unfair, inefficient, or bought by lobbying are often called corporate welfare. The label of corporate welfare is often used to decry projects advertised as benefiting the general welfare that spend a disproportionate amount of funds on large corporations, and often in uncompetitive, or anti-competitive ways. For instance, in the United States, agricultural subsidies are usually portrayed as helping honest, hardworking independent farmers stay afloat. However, the majority of income gained from commodity support programs actually goes to large agribusiness corporations such as Archer Daniels Midland, as they own a considerably larger percentage of production.
According to the Cato Institute, the U.S. federal government spent $92 billion on corporate welfare during fiscal year 2006. Recipients included Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric.
Alan Peters and Peter Fisher have estimated that state and local governments provide $40-50 billion annually in economic development incentives, which many critics characterize as corporate welfare.
Some economists consider the recent bank bailouts in the United States to be corporate welfare. U.S. politicians have contended that zero-interest loans from the Federal Reserve to financial institions during the global financial crisis were a hidden, backdoor form of corporate welfare.
Full article ▸