The federal budget is filled with outrageous, inappropriate, useless, counterproductive, and simply wasteful spending. Washington has become an endless soup kitchen for special interests, with a grant or loan seemingly available for every interest group with a letterhead and at least three members.
Yet Congress resists making even the smallest cut in federal outlays. Every program has a constituency which argues that its favorite expenditure is more important now than ever before. Never mind that the U.S. has been running trillion dollar deficits since 2009. Never mind that Social Security and Medicare have an unfunded liability in excess of $100 trillion. Never mind that America faces a fiscal crisis. Every program must be preserved, lest the world as we know it come to a disastrous end.
Legislators need to find some political courage and take a meat ax to the budget. It is a target-rich environment. Admittedly, there are some essential programs, such as the judicial system. But even where Washington is doing something useful, say national law enforcement, many of its activities are not justified. For instance, the FBI performs a useful role, but not the Drug Enforcement Agency, which tosses people in jail for hurting themselves. Kudos to the Justice Department for targeting child pornographers, but not for prosecuting gamblers, who should be left alone in a free society.
Unless Congress transforms middle class welfare programs, most notably Social Security and Medicare—which despite fake “contributions” and “trust funds” are not paid for by their recipients—Uncle Sam will need to
Moreover, the federal budget is filled with a potpourri of grants, loans, loan guarantees, and other subsidies for virtually everyone in America. The doors of the federal Treasury have been open for years to anyone inclined to pillage the public. Of course, the beneficiaries argue that their enrichment is in the public’s interest. Imagine how Americans would suffer if, for instance, ethanol producers didn’t receive multiple subsidies. Imagine the national hardship if homeowners had to pay the full cost of
Among the most outrageous expenditures is corporate welfare. Desperate businesses now overrun Washington, begging for alms. Believing that profits should be theirs while losses should be everyone else’s, corporations have convinced policymakers to underwrite virtually every industry: agriculture, education, energy, housing, manufacturing, medicine, transportation, and much more.
My Cato Institute colleague Tad DeHaven has published a new study, “Corporate Welfare in the Federal Budget,” on business subsidies, which he figures to cost about $100 billion a year. Slashing corporate welfare obviously won’t balance the budget—which is why middle class and defense welfare also have to go on the chopping block. However, cutting business subsidies would be a good start to balancing the budget. Moreover, going after corporate welfare is essential to create a budget package that the public will see as fair.
Corporate welfare reflects politics at its worst. Local businessmen are important constituents who seek aid in return for political support. Local and state officials press legislators to win federal subsidies for businesses within their jurisdictions. National companies and associations spend generously on campaign contributions and lobbying campaigns.
Although liberal Democrats often are perceived as anti-business, they usually are more pro-government. Which means that many support corporate welfare as enthusiastically as do Republicans, who usually are pro-business even if perceived to be anti- (or at least not quite as pro-) government.
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