Fortune 500 companies receive $63 billion in subsidies
Remember when President Obama was lambasted for saying "you didn't build that"? Turns out he was right, at least when it comes to lots of stuff built by world's wealthiest corporate behemoths. That's the takeaway from a new study of 25,000 major taxpayer subsidy deals over the last two decades.
Entitled “Subsidizing the Corporate One Percent,” the report from the taxpayer watchdog group Good Jobs First shows that the largest corporations in the world aren't models of self-sufficiency and unbridled capitalism. To the contrary, they continue to receive tens of billions of dollars in government handouts. Such subsidies might be a bit more defensible if they were being doled out in a way that promoted upstart entrepreneurialism. But as the study also shows, a full "three-quarters of all the economic development dollars awarded and disclosed by state and local governments have gone to just 965 large corporations" -- not to the small businesses and startups that politicians so often pretend to care about.
The true beneficiaries of subsidies are often hidden under layers of holding companies, shell firms and complex ownership agreements. But Good Jobs First did the tedious work of connecting the subsidies to the parent firms. In the process, the group discovered that a whopping $110 billion -- or 75 percent of cumulative disclosed subsidy dollars -- are going to these 965 large companies. Fortune 500 firms alone receive more than 16,000 subsidies at a total cost of $63 billion. Additionally, eight out of the top 20 firms receiving U.S. taxpayer subsidies are not even U.S. companies, meaning American taxpayers are being forced to directly subsidize foreign firms.
These kind of handouts, of course, are the opposite of anything having to do with a “free market.” They are the definition of government intervention in the market. Yet, the free-market image of companies is rarely tarnished when those companies accept the huge welfare payments.
Consider Koch Industries. Despite the Koch Brothers being the biggest financiers of the anti-government right, and despite their billing as libertarian “free market” activists, their company has relied on $88 million worth of government subsidies.
Similarly, behold the big tech firms. They are often portrayed as self-made up-from-the-bootstraps success stories. Yet, as Good Jobs First shows, they are among the biggest recipients of the subsidies.
Intel, for instance, leads the tech pack with 58 subsidies worth $3.8 billion. Next up is IBM, which has received more than $1 billion in subsidies. Most of that is from New York - a state that is right now in the middle of a full-scale advertising campaign proudly promoting its handouts.
Then there's Google's $632 million and Yahoo's $260 million, most of both companies' subsidies derived from data center deals. Microsoft has pulled in $95 million primarily from Washington State's tax handouts.
There is also Silver Lake Partners, which owns Dell and has by extension benefited from $482 million in corporate welfare payments.
And not to be forgotten is 38 Studios, the now bankrupt software firm that received $75 million in Rhode Island taxpayer cash at the very moment that state was cutting public workers’ pension benefits.
Along with propping up firms that are supposedly free-market icons, the subsidies are also flowing to financial firms that have become synonymous with never-ending bailouts and a perverse kind of corporate socialism. Indeed, firms like UBS, Goldman Sachs, Bank of America and Citigroup - each of which were given massive taxpayer subsidies during the financial crisis -- all are the recipients of tens of millions of dollars in additional subsidies tracked by Good Jobs First.
All of these handouts, of course, would be derided as welfare if they were going to poor people. But because they are going to extremely wealthy politically connected conglomerates, they are typically promoted with cheery euphemisms like "incentives" or "economic development." Those euphemisms persist even though so many of these subsidies do not end up actually creating jobs or generating a net gain in public revenues.
In light of that, the Good Jobs First report is a reality check on all the political rhetoric about dependency. Most of that rhetoric is punitively aimed at the poor. That’s because, unlike the huge corporations receiving all those subsidies, the poor don’t have armies of lobbyists and truckloads of campaign contributions that make sure programs like food stamps are shrouded in the anodyne argot of “incentives” and “development.”
But as the report proves, if we are going to have an honest conversation about dependency and “free markets,” then all the billions of dollars flowing to politically connected companies need to be part of the discussion.