Corporate Welfare Just ‘Robin Hood in Reverse’

America is a land of rugged entrepreneurs, fighting fiercely to sell their goods in a free market unfettered by the heavy hand of government.

Not quite. Maybe the image is real for the software geniuses of Silicon Valley or the owners of garment workshops in Los Angeles or the family farmers in the San Joaquin Valley.

But Washington has a much different version of free enterprise. Here, the struggling entrepreneurs who need a helping hand are companies such as Ralston Purina, which gets federal dollars to defray the cost of advertising its cereals overseas; General Electric, the recipient of research grants to develop new high-technology products; and Archer-Daniels-Midland, growing richer on tax subsidies for ethanol.

Adam Smith’s invisible hand, the competition that keeps prices down and brings benefits to consumers, is more like a grasping paw in the nation’s capitol. Politicians have their hands open for campaign contributions, and business executives are glad to get the influence and the favors government can dole out.


“Everyone believes in marketplace competition except when it applies to them,” said Bruce Vladeck, the man who runs Medicare.

He’s been struggling in vain to introduce something quite radical to the massive health program: competitive bidding for the big health maintenance organizations that provide hospital care and doctor services for millions of Medicare beneficiaries.

Vladeck’s abortive venture into capitalism for HMOs was blocked in Baltimore by powerful politicians, and the HMO industry recently won a court injunction in Denver to stop the government from using competitive bids.



Corporate welfare is the label applied to the pervasive coziness between government and big business by the Cato Institute, a conservative Washington think thank. Cato estimates that the federal government is spending $65 billion a year on more than 100 programs to aid business.

Stephen Moore, Cato’s corporate welfare expert, said it is not surprising that some of the fund-raising scandals plaguing the Clinton administration erupted at the Commerce Department. The politicians “shake down big business for money, and the favors are returned through these nice trade missions,” said Moore, whose father spent 40 years successfully selling industrial valves and pipes throughout the world without getting any boost from the U.S. government.

The Clinton administration boasts about its help for business, citing jobs as the justification. On a recent trade mission, “we had BellSouth, and we had a little company from Colorado called Earth Watch,” Commerce Secretary William M. Daley said in an interview. “You can’t say because a company is big it shouldn’t get assistance. Those are American companies. They employ people.”

“You can’t punish a company because it is successful,” added Daley. “After all, not long ago Microsoft was just an idea in someone’s mind.”

President Clinton “has a strong commitment to his export strategy--he makes sure his government is out there promoting American industry.”

The promotions for business are sprinkled through the federal budget. They include:

* The Agriculture Department’s market access program. It gives companies money to help with their foreign advertising budgets. Recipients include Pillsbury, Tyson Foods, Dole, Campbell Soup and Ernest & Julio Gallo.

* The Commerce Department’s advanced-technology program. It spends money for basic research to help spawn new industries. Sharing in the grants have been small and large companies, including giants such as GE, Caterpillar and Xerox.


* The Partnership for a New Generation of Vehicles. It has spent $1 billion, with most of the money going to Chrysler, Ford and General Motors to develop affordable vehicles that would get 80 miles to the gallon.

* The Overseas Private Investment Corp. The agency provides loans and loan guarantees for U.S. companies to invest in developing countries. Companies helped include Motorola, ITT, Anheuser-Busch, McDonald’s and Coca-Cola.

Purging these and other goodies for business from the federal budget could cut the budget deficit in half, according to Cato, which denounces the current process as “Robin Hood in reverse,” with the IRS extracting money from middle-class taxpayers and Congress forwarding the largess to giant corporate winners. Anyone who argues for a return to free enterprise without strings attached is dismissed as hopelessly naive. But a powerful member of Congress, House Budget Committee Chairman John Kasich (R-Ohio), is willing to tilt against the windmills.

He has corralled groups from the right and left ends of the political spectrum to join in a crusade against corporate welfare. He wants to wipe out some of the subsidies, “zero them out,” in Washington budget jargon, and has offered a single bill to slash 11 different programs.

“We are realistic enough to know that the comprehensive bill will not come to the floor for a vote,” said Bruce Cuthbertson, a spokesman for Kasich. “But we hope to win this battle item by item, targeting each of these programs” as it comes up separately for congressional authorization.


But the odds seem high against Kasich because his fellow members of Congress depend on the generosity of lobbyists and corporations to raise the cash that is the mother’s milk of politics.

A Cato Institute tally of 13 giant companies that gave generously--more than $6 million total, to both the Democratic National Committee and the Republican National Committee--showed they had shared in more than $250 million in government advanced-technology awards over the last three years. And that was just the harvest from a single federal program.


“Corporate welfare becomes a ‘cash-in, cash-out system,’ ” said Cato’s Moore. “Campaign contributions are transferred into government grants, and that is the really insidious thing about the corporate welfare state built up in Washington over the past 30 years.”


Rosenblatt covers financial and aging issues for The Times’ Washington bureau. His e-mail address is