Category Archives: Government

Some New Yorkers Demanding an End to Corporate Welfare

Christian Wade, a journalist for Newsday, details the vast amount of tax breaks that towns in New York are giving to corporations to entice them to relocate. Opponents note that these tax breaks are paid for by the small businesses and taxpayers who receive no net benefits from this process:

In an era of rising taxes, big government budget deficits and public-payroll layoffs, Westchester County cities and towns continue to give away millions of dollars in tax breaks to close development deals and boost local economies.

Milke: How corporate Canada is killing free enterprise

Mike Milke, a senior fellow at the Fraser Institute, writes an editorial for the Calgary Herald about the dangers of corporate welfare. The article is Canada-centric but the problems he describes are universal and universally damaging to free markets:

If business leaders ever wonder why a chunk of the public disdains business, and calls for higher corporate taxes or sector-specific increases (higher royalty rates for energy and mining, higher stumpage fees in forestry), or just increased business taxation in general, here’s a clue: too many companies are addicted to corporate welfare.

Crony Capitalism Protects Wrongdoers, Harms Consumers, and Disrupts Markets

Kenn Connor writes about Tim Carney’s recent cronyism piece, noting that cronyism makes it harder to create products that consumers actually want.

Basically, the special interests invest in political campaigns as a cost of doing business, and they expect a handsome return on their investments. As Mr. Carney explains, that usually comes in the form of pet legislation, subsidies, tax breaks, limitations on liability, preferential treatment . . . the list goes on and on. Of course, politicians are only too happy to accommodate these special interests in exchange for political contributions that help cement and perpetuate their power. As a result, the free market is stymied; it can’t do what it’s designed by nature to do, which is to sift good companies from bad ones, reward efficiency and innovation, and empower consumers with authentic choice in the marketplace.

Wichita Sees Results of New Economic Development Policy

Bob Weeks from Watchdogwire.com has written the following article, analyzing the economic situation of Wichita. Wichita has been adopted economic development policies that on paper were supposed to help the economy and spur economic growth. These policies are misguided and ill-conceived and actually reduce the possibility of sustainable economic growth in Wichita.

There is a lesson to be learned: Economic development incentives have a cost. Other businesses (and people) have to pay these costs. That only increases the motivation to seek incentives from the city and state. In fact, it may make it necessary to receive subsidies in order to be competitive with those companies who have incentives…

Wichita needs to build a dynamic economy that is based on free enterprise and entrepreneurship rather than government planning and handouts. This is the way we can have organic and sustainable economic development that will increase jobs and prosperity for everyone.

Taxpayer Supports for Corn Ethanol in Federal Legislation

Tax Payers for Common Sense has published the following Fact Sheet, emphasizing the problem with Corn Ethanol subsidies. The study analyzes the history of Ethanol subsidies and the current support of these subsidies on current legislation like the 2008 Farm Bill. The study also determines the Taxpayer’s cost and the Environmental cost of this form of corporate welfare and the conclusions of this form of cronyism.

“It’s time the mature corn ethanol industry survived on its own two feet without taxpayer support. After more than 30 years of federal backing, corn ethanol subsidies scattered throughout the federal tax code and farm bill energy title should be eliminated once and for all. Economic, environmental, and public health costs would also decline if unintended consequences of ethanol production were ended, benefiting drivers, consumers, and the general public.”

Five Accused of Diverting Stimulus Money From Tribe

The Washington Free Beacon Staff recently posted this article, concerning the latest case of corruption related to stimulus funds. This time the case concerns a former tribe leader of a Chippewa Cree tribe and a former state lawmaker, who appropriated hundreds of thousands of dollars in federal stimulus money which was supposed to ‘stimulate the economy of the Montana tribe.’ More details here.

The Chippewa Cree Tribe received $33 million in federal funding between 2009 and 2010 for construction of a $361 million pipeline to supply fresh drinking water for the Rocky Boy’s Indian Reservation and surrounding counties in northern Montana. Most of that $33 million came from the 2009 American Recovery and Reinvestment act, also known as the stimulus.

The CEO of the tribal company that headed the pipeline project, Chippewa Cree Construction Corp., awarded contracts and authorized cash transfers in a complex web of transactions to embezzle and launder the money, according to the indictment unsealed Tuesday.

Ex-Im bank will not reduce financing as economy improves, bank’s president says

Andrew Evans from Free Beacon has recently covered the current state of policies that the Ex-Im bank is undertaking. The Export-Import Bank is a government agency that gives credit to companies, often companies with big political connections. This week the president of the Ex-Im bank announced that their effort to “support” the economy will not diminish if or when the U.S. economy improves, which means that they will still support their crony friends indefinitely.

Congress reauthorized the bank after a bitter fight in the House of Representatives last year. Part of the deal that won the bank reauthorization required the treasury secretary to initiate negotiations with other countries to reduce and ultimately eliminate export subsidies. The Treasury Department did not return a request for comment on the status of these negotiations.

Committee ranking member Mike Crapo (R., Idaho) raised several objections to the bank in his opening statement, including that the bank offers “corporate welfare” to businesses and some of its financing hurts domestic companies. The three Democrats who attended the hearing praised Hochberg’s work at the bank.

Richest Man Slim Cited for Profiting From Phones for Poor

Todd Shields from Bloomberg.com has written the following article, stressing how the program that was supposed to help people to find jobs has actually helped the richest man in the world to become richer. The government ‘Lifeline program’ was intended to help people to find jobs quicker; the results are a big subsidy of $2.2 billion last year alone; a quarter of which went to Mr. Slim’s TracFone Wireless Inc.

Started in 1985, Lifeline pays companies $9.25 per customer per month. It disbursed $772 million in 2008 and $2.2 billion last year, according to the Universal Service Administrative Co., a Washington-based nonprofit that oversees the subsidies.

Largest U.S. telephone company AT&T Inc. (T) took in $274.9 million and third-largest wireless provider Sprint Nextel Corp. (S), based in Overland Park, Kansas, received $273.5 million, according to the FCC. AT&T’s share includes aid for wired phone customers.

Why the China Dream Might Be a Mirage

In a reminder that cronyism is not a uniquely American phenomenon, this Bloomberg piece highlights the ubiquity of cronyism, government intervention, and corruption in China.

Above all, the government needs to reduce the state’s outsized role in banking, finance and industry…

Average Chinese who call for leaders to disclose their assets are detained. Journalists who do lifestyle checks on key politicians to find out how their families amassed hundreds of millions of dollars are regarded as subversive.

FreedomWorks Launches the “Market Freedom Project” to Expose Special Interest Deals

Jackie Bodnar from FreedomWorks announces the launch of a new FreedomWorks initiative to expose corporate welfare and cronyism. Grassroots activist will start targeting crony corporations like General Electric, by exposing their relationships with big-government and the ‘stimulus’ funds they have received.

“General Electric has a long history of profiteering off the size and cost of the federal government. Under Jeff Immelt’s leadership, GE lobbied for almost $100 million in grants out of the 2009 Obama stimulus, and continues to cash in with $5 million from the Energy Department this year alone.”

FreedomWorks activists plan to gather outside of GE’s Annual Shareholder Meeting on April 24th ,[..] to demand that GE return its almost $100 million in Obama stimulus money. Deneen and Tom Borelli are GE shareholders and will represent FreedomWorks inside the shareholder meeting.