The Bailout Era: How the politics of corporate handouts is shifting for better and worse

By David Sirota , written on February 19, 2014

From The News Desk

In this age of budget austerity, cuts to basic government services and proposals to renege on pension commitments to public workers, the politics of handing money to already-wealthy corporate interests is slowly but surely changing. Sometimes for the better, sometimes for the worse.

Let's start with the better, by going back just a few years to review the basic history of the politics of subsidies - a politics that, to date, has served tech companies, professional sports teams and so many other profitable industries so well. In their little-noticed study in 2010, researchers at Washington University and the University of California found that despite all the purported outrage about bailouts and rhetoric glorifying the "free market," Americans actually love when politicians spend their tax money on market-distorting bailouts to private companies. Summing up the findings, Maclean's magazine recently noted:

Corporate subsidies are almost always good politics. In 2010, researchers from Columbia University surveyed 2,000 American voters on their attitudes toward corporate welfare, and found they were actually far more likely to support a governor who had attracted new business investment by offering incentives than a governor who had landed the same investment without spending any money. “If you are a governor of a state and are certain that a firm is going to locate within your borders, offering a tax incentive gets you an extra 5.6 percentage points of votes from independent voters,” they found.

Ironically, governors got nearly the same boost by offering money to companies they knew weren’t likely to invest in their state. Simply offering up cash allowed politicians to claim credit for new jobs, or defend themselves when they lost them. OK, now the good news: there's a growing body of evidence that the knee-jerk support for throwing money at companies is waning. In national and local polling, there seems to be stronger opposition to these ongoing corporate bailouts. In places like Sacramento and the Atlanta suburbs, opposition to these handouts has become a focal point for grassroots organizing. In San Francisco, the opposition has evoked public protests. Meanwhile, thanks to cash-burning spectacles like the Super Bowl, the wastefulness of the subsidies are so obvious that media outlets can't help but cover it, thus fomenting more opposition.

Of course, the bad news is that the newly intensifying opposition to taxpayer-funded corporate subsidies also has a dark side, as evidenced by the bizarre turn of events in Tennessee in the past few weeks. There, during a United Autoworkers organizing drive, top Republican lawmakers threatened to use their legislative power to revoke or limit current taxpayer subsidies to Volkswagen if the company's workers opted to join the union.

This was something of a riff off of the disturbing pattern of taxpayer-subsidized union busting whereby companies simultaneously taking public money busting labor organizing drives. In this reverse-engineered version, lawmakers threatened to halt taxpayer money to a company should its workers exercise their rights to organize. Either way, it is the same effect: public money is used to distort the market - in this case, the labor market.

In this ongoing story (which Pando has been aggressively covering), party labels don't really tell the whole story. For every Republican trying to wield subsidies for the GOP's anti-union agenda, and for every Democratic official endorsing stadium subsidies and tax handouts to tech companies, there are Republican lawmakers earnestly trying to shut down the most egregious subsidies and there are Democratic lawmakers publicly berating their fellow Democrats for handing out goodies to the corporate class.

This is the politics of buy-partisanship. It may be ignored by media outlets because it doesn't fit neatly into their red-versus-blue narratives. But with billions on the line, it is indeed one of the biggest economic stories of this moment. Our lawmakers are making choices between basic social services and handouts for server farms - between stuff like food stamps that people desperately need and stadium subsidies that don't create any jobs.

Its your prerogative to ignore how it is all shifting and changing - but you better believe the money coming out of your wallet is on the line. These ongoing bailouts, after all, are your taxpayer dollars at work.

CORRECTION: This article originally attributed the survey of voter attitudes about corporate subsidies to Columbia University. Though the survey was published by Columbia University's FDI Perspectives, it was conducted by researchers at Washington University in St. Louis and the University of California, San Diego.