Statement on Corporate Welfare by Ralph Nader

January 28, 1996
Washington, DC

Twenty-five years ago we began the drive against corporate welfare. Since then, Public Citizen's Congress watch and Essential Information's Corporate Welfare Project have issued a series of reports titled Aid for Dependent Corporations or AFDC, identifying federal grants, subsides and tax breaks for corporations. The most recent report lists more than 150 federal corporate welfare programs totaling almost $200 billion annually.

Today's coalition shows that cutting corporate welfare has become a bipartisan issue. Organizations from the left and the right and members of Congress from both sides of the aisle finally have come together to begin to tag programs for elimination. This welfare for wealthy companies wastes taxpayers dollars, harms the environment and makes a mockery of the recent reductions in federal social spending programs for the poor and powerless.

Consider the following comparisons between social spending programs and a specific corporate welfare program -- The Overseas Private Investment Corporation or OPIC -- that is included on the Stop Welfare Coalition's list. OPIC provides U.S. taxpayer-subsidized loans, loan guarantees and insurance to multinational corporations.

Beneficiaries of corporate welfare are rich, but children and families who receive federal payments must be poor. For example, in 1995 Citicorp received subsidized insurance from OPIC to cover more than $800 million in potential losses and U.S. West obtained $100 million in OPIC financing. Both companies generated more than a billion dollars each in income in 1995.

Recipients of corporate welfare enjoy benefits for a long or unlimited periods of time, while the recently-enacted welfare changes limit lifetime welfare assistance for individuals to five years. OPIC loans provide maturities of up to 15 years, after a "suitable" grace period and OPIC may offer insurance with terms as long as 20 years.

Corporate welfare beneficiaries have cut jobs in the United States; recent changes in welfare laws require able-bodies adults to work after they have received two years of benefits. Both Levi-Strauss and Kimberly-Clark have received OPIC benefits for trade adjustment assistance from the U.S. government due to the companies' imports.

Foreign companies may receive U.S. corporate welfare benefits: the recent individual welfare changes prohibit Supplemental Security income or food stamp benefits for most legal immigrants who have not become U.S. citizens. Foreign investors may own up to 75 percent of the equity in overseas projects that receive OPIC financing. In 1995, OPIC provided loans to projects owned in part by companies form countries including Russia, Colombia, Jamaica and Ghana.

Recipients of corporate welfare benefits may have committed misdeeds; recent welfare law changes deny cash aid and food stamps to anyone convicted of felony drug charges. In 1995, Magna Copper Company received $200 million in OPIC insurance for copper mining in Peru. The previous year, the company has paid a penalty of more than $1 million to the Mine Safety and Health Administration after being cited for 45 violations of U.S. federal mine safety standards, including 23 that had led to a mine collapse that had killed four workers.

Other programs started by the Stop Corporate Welfare Coalition exhibit the same type of corporate favoritism.

I, however, do not support the categorical inclusion of the Rural Utility Service on this list because some of its subsidized loans, if administered properly, can help insure that now-income families in rural areas have access to affordable electricity and phone service.

Corporate welfare in the form of subsides, grants, tax escapes and bailouts can cost taxpayers many billions of dollars annually. A serious attempt to address the outrage of corporate welfare should focus not only on the programs highlights today but on other big ticket items, including, most notably, the myriad defense boondoggles. Corporate welfare opponents should also work to eliminate the billions of dollars in hidden entitlements contained in the tax code.