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Welfare: The Dirty Side of Corporate America

Matthew Lynch, Ed.D. – Chair and Associate Professor of Education,  Langston University Posted: 09/17/2012 11:13 am

When you hear the term “welfare” or “welfare reform” what comes to mind? If you are like most people, you conjure up images of people who are getting checks or food assistance each month. You may think of the many children who get assistance, or the millions of working families that get some sort of financial aid to help make ends meet each month. But what you may be surprised to know is that a heck of a lot of money gets spent in this country each year in the form of corporate welfare.

Corporate welfare takes a big bite out of our country’s finances each year. In fact, it’s estimated by the CATO Institute, that $100 billion per year is spent on corporate welfare in America. Yes, that’s billion. It’s a big problem that the country faces, and yet it’s one you barely ever hear about.

Why does corporate welfare pose such a problem? There are a lot of reasons, including:

  1. Corporate welfare goes to businesses that are usually failing or being mismanaged somewhere along the pipeline. Just because money is being thrown at a business to help it stay afloat does not mean that those issues are going to be addressed so that the problem doesn’t happen again. Case in point – Enron. They received billions in corporate welfare, and we all know how that story ended.

  2. We as a people usually have no say over which companies deserve the corporate welfare. How many people were excited to bail out the banks when the mortgage crisis hit? The banks were bailed out with billions in corporate welfare. Meanwhile, millions of homeowners got foreclosure notices. Nobody came along to bail all those people out of the same mess.

  3. When it comes to what businesses will get corporate welfare, there may also be some race issues. There are questions of whether or not the corporate welfare being given out is race-neutral or if particular races and ethnic groups are being overlooked for the funding.

  4. When people talk about making cuts in welfare, especially during an election year, they are usually talking about social programs. Those social programs are in place to help the people, just like you and I, who are trying to make their way in America and need a little extra help. Rarely do you hear someone suggest that corporate welfare allocations should be cut, or even examined. It’s as if it is a given that businesses deserve a financial crutch to stay afloat. Seems to me like this may be in direct conflict with the free enterprise business system that our country is known for.

Can the country afford to keep spending $100 billion per year to keep certain businesses afloat? No, not when we have the financial issues we do and need to make cuts to the budget wherever we can. Rather than focusing on making cuts to social programs, which actually help the people, politicians need to start taking a look at the cuts they can make in corporate welfare. Many of the businesses they are giving it to are making poor choices to begin with, have CEO’s making millions per year, and are wasting the funds left and right.

Corporate welfare is something we rarely see, but that we all feel. It puts a strain on our society and does not always come back to help the little people. This is an issue that both political parties need to take into account and think about the people, rather than the big businesses that will go on to provide them with large contributions later, or will spend a lot of money lobbying.

The next time you hear someone talking about making cuts in welfare or discussing “welfare reform,” ask them if they are referring to those in corporate America to keep mismanaged and failing businesses afloat, or the ones that are helping the people of America to survive. There’s a good chance, like most people, their mind will not have even thought of the corporate welfare. But by putting the thought in their head, perhaps we can begin to make some positive changes in this area.

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