Eliminating Corporate Welfare Would Cut
Deficit in Half; Business Subsidies Cost
$75 Billion Per Year, Cato Institute Study Says

"In 1995 the corporate safety net was left largely intact," says Stephen Moore, director of fiscal policy studies at the Cato Institute. "If members of Congress balk at cutting aid to dependent corporations again in 1996, they will look like fiscal frauds and fools."

In a new Cato Institute study, "How Corporate Welfare Won: Clinton and Congress Retreat from Cutting Business Subsidies," Moore and Cato fiscal policy analyst Dean Stansel note that the federal government currently spends $75 billion per year on corporate welfare -- the use of government authority to confer targeted benefits on specific firms or industries. They identify the 35 "least defensible" business subsidies and show that Congress moved to cut only $2.8 billion, or 15 percent, from the 1995 level.

The Clinton administration has been hostile to even the modest corporate welfare cutbacks proposed by Congress, Moore and Stansel argue. "If Congress's performance was a disappointment, the Clinton administration's was dismal. In fact, we find that for the 35 corporate welfare programs identified in this study the administration's 1996 budget actually requested a slight increase in spending."

Moore and Stansel recommend eliminating or sharply scaling back programs including the Export Enhancement Program, Foreign Agriculture Service, Market Promotion Program, Advanced Technology Program, National Oceanic and Atmospheric Administration, Army Corps of Engineers, Bureau of Mines, Export-Import Bank and Overseas Private Investment Corporation.

"If all federal assistance to business were purged from the budget, the budget deficit could be cut in half," Moore and Stansel write. "Both the social welfare and corporate welfare states need to be reformed with equal urgency."

from Cato Institute Policy Analysis no. 254 Published May 15, 1996

(The full text of this study is available on the Cato Institute's website (http://www.cato.org)###

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