Some Examples of the Cost of Corporate Welfare


My thanks to a gentle reader from Independence, who sent along an article from the August 1996 issue of that wonder of conservative writing, Reader's Digest. The article, titled "We Can't Afford Corporate Welfare", was written by T.J. Rodgers, founder, president and CEO of Cypress Semiconductor in San Jose, CA.

In the piece, Mr. Rodgers discusses some little known examples of what this column has been criticizing for years about Corporate America's whores in Washington. In 1987, to counter heavy and effective competition in computer chips from the Japanese, 14 companies combined to form, with Washington's happy approval, Sematech. Led by Intel and IBM, Sematech employed over 700 people whose expenses were subsidized very heavily by you, the American taxpayers. The purported purpose of Sematech was to combat this Asian competition and increase the effectiveness of American computer chip makers.

Now, as with all taxpayer funded corporate systems, the ideal of assisting all American chip makers quickly mutated into just another scam for those wealthy enough to buy in. Charging $1 million minimum dues meant that only the largest companies could be privy to whatever information or designs that the consortium created. From its inception until 1990, Sematech gave away handouts of knowledge and equipment to its members on condition that any next-generation equipment developed be withheld from all other companies for periods of up to a year.

Intel, for one, received the use of a $1.5 million wafer-etching machine from the consortium as well as $1.9 million to install and test this equipment. Cypress Semiconductor, however, had to spend $7 million for the same opportunity.

This type of Corporate Welfare not only cost you, the American taxpayer, $900 million (before it was mercifully stopped) but it also costs American industry because it stifles the section of the industry left out of the information sharing. You, the taxpayer, are helping the wealthiest companies in America undercut their smaller competitors and stifle the innovations at which America's small businesses excel.

Some other examples of the cost to you of Corporate Welfare are:

$700 million to the federal Technology Reinvestment Project to develop "commercially viable technologies" for post Cold War defense industries. The needy corporations who received your tax dollars? Hughes Aircraft, IBM and Honeywell to name just a few.

$1.3 billion to Cargill, an ethanol producer, even though Cargill was a vocal critic of the very program it then bathed happily in.

Untold billions to ADM (Archer Daniels Midland) for federal subsidies to produce ethanol and federal exemptions on excise taxes of 54 cents a gallon.

Even when politicians try to save you a few dollars ($1.8 billion), politics gets in the way of any sensible progress. Bill Archer, then House Ways and Means Committee Chairman, tried to lower the ethanol tax exemption from 54 cents to 51 cents but was blocked by then-Senate Majority Leader Bob Dole (the recipient of over $200,000 in contributions from ADM) who convinced that paragon of fairness, Newt Gingrich, to kill the bill in the House.

The MPP (Market Promotion Program) is another federal program designed to siphon off your money into corporate coffers. This ridiculous set up allows Corporate America to advertise their wares over seas at taxpayer's expense without having to worry about decreasing either their profits or their campaign payments to their governmental property.

Economist Stephen Moore of the Cato Institute warns, "Every major Cabinet department has become a conduit for government funding of private industry." The cost to you, the American taxpayer? The Cato Institute estimates you pay about $75 billion year to keep Corporate America happy. Ralph Nader's Essential Information estimates the gift at closer to $167 billion. Simply put, that is about $403 to $900 a year per American taxpayer.

So, are all of you patriotic anti-Communists out there as enraged by this type of government welfare system as you were about giving money to women and children that you'll cry and holler for its reform or outright abolition? Are you as mad about your money going from your pocket directly into the pockets of the wealthiest Americans as you were when it went into the pockets of the poorest? If you aren't as mad, look inside yourself and ask, "Why should I hate the idea of women and children being helped but adore the idea of my money being taken by the wealthiest people and corporations in America?" I'd really rather not learn your answer, by the way.

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Write me at:jcannon@anotherperspective.org

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Copyright 12/24/97