The heart of the right wing attack on poor people in recent years has been the myth created around the welfare system. Claims that it creates an underclass of people who feel no personal responsibility for their lives accompany racist depictions of single mothers as "welfare queens". Legislation reforming that system gained support from both Democrats and Republicans, and the restructuring it produced is still underway in most states. What was never discussed were the billions of dollars also given away to those on the opposite end of the power spectrum in our society: corporations. Somehow, the government dollars doled out to them escaped the reform efforts focused with such effect on poor families.

What is this corporate welfare system all about? Basically, government at all levels practices it when they give tax breaks, advertising money, and new buildings (plus the roads leading to them) to corporations. Corporations also get to write off some of the perks received by their high-paid executives, sell goods to other countries who are paying for them with US aid dollars, and receive government grants in order to do research which will improve their products and thus their profits. Our national government gives out $125 billion per year in corporate welfare, and that doesn't even include the states and cities falling over themselves to attract new business through similar programs. In comparison, only about $85 billion dollars a year is spent on Temporary Assistance to Needy Families, food stamps, and Medicaid. That makes corporations like General Motors, Intel, and Sunkist the real queens of welfare.

Who pays for all this? You, the individual taxpayer. It certainly isn't the corporations themselves. In fact, back in 1989 Citizens for Tax Justice did a study of 44 big American corporations and found that none of them were paying any federal taxes whatsoever, even though all together their profits totaled $53.6 billion. Back in the 1960's, corporate taxes accounted for 25% of all federal income. But after the re-write of the U.S. tax code in the 1980's, corporate taxes fell to 7%. Guess who made up the difference? Individual citizens, including you, me, and probably most everyone you know. In fact, every working person in America shells out the equivalent of a two week paycheck straight into the pockets of big corporations receiving corporate welfare.

Why do our government officials give these breaks to companies? They assume that whatever is good for the corporations will also be good for the communities in which they are located. They make a bet that these corporations will create new jobs and improve the local economy. All to often, they lose that bet. Many of the corporations who have been the biggest recipients of corporate welfare are also the ones which have been downsizing like mad for the last ten years, cutting jobs, factories, and businesses in an effort to become more streamlined and efficient. It is pathetic to see the lengths to which cities and states will go to get a company to relocate to their area. According to Time magazine, Philadelphia gave $307 million to a Norwegian company to get part of the city's shipyard up and running again. They created 950 jobs, which means that the city paid $323,000 per job. They could have created 7 times as many jobs, each paying $40,000, if the city had simply decided to hire those folks themselves. And some localities have learned one of the harshest lessons of corporate welfare: corporations are perfectly willing to take the cash to build a new factory in a particular city, but they are also perfectly willing to shut that factory down and move it somewhere with cheaper labor, lower operating costs, or higher tax breaks. Durant, Mississippi started the whole thing back in 1936 when it lured in Real Silk Hosiery to provide jobs in one of the most depressed areas of the country. Twenty years later, before the first city bond was due to be paid, the factory had closed. Durant became another example of the games which corporations play every day with the dollars which our politicians are willing to give them.

Virginia, too, has been fooled by the mirage of corporate welfare. In 1996, a joint Volvo-GM plant closed in Oreville, Ohio to move to our own Pulaski County, where it found lower-paid workers and millions of dollars in economic incentives. After the current debate over deregulation of the energy industry, Virginia Power may be allowed to write off "stranded costs", or losses incurred from running obsolete power plants which actually cost more to run than they earn. Most of these plants also pollute the surrounding environment. Over time, these stranded costs could amount to a massive cost for taxpayers. And recently, construction of the Motorola factory in Goochland County west of Richmond has been put on hold for a second time. This factory will provide a lot of jobs paying $9-10 hr _ not exactly high paying, high tech positions. Motorola will get $12 million each year for five years from the state if they provide 2500 jobs by the year 2002. The County alone has spent over $60 million in water and sewer infrastructure, and the state paid for a major road project giving access to the plant. And considering how computer industry plants all over the country have cut back due to the Asian financial crisis, there is no guarantee that the plant will get built or that the jobs it creates will be permanent. The decision to delay the West Creek site comes at a time when Motorola is restructuring its semiconductor business, including dismantling its consumer chip unit. Motorola's Semiconductor Products Sector is expected to eliminate 25 percent to 30 percent of its work force as part of a corporate restructuring.

The practice of corporate welfare has many downsides, but the most basic is that it is unfair. It is only the corporations with political connections that get the breaks, and that means that small- and medium-sized businesses lose out to big ones. This doesn't even make sense to conservative economists, who argue that the market must be left alone if it is to work properly and truly benefit good companies. As it is, the playing field is constantly skewed in favor of those who most aggressively seek out a free ride from the government. And most of the companies that receive the handouts aren't even the ones who need it, but ones which are making record profits already.

What does this mean for an organization working for social change? As Randolph Holhut says in "The Real Welfare Cheats: Corporate America", "[The real welfare cheats are] the people who can pay for the lobbyists to influence legislation and are able to deduct it off their taxes; who have benefited from policies that have eliminated millions of American jobs; who have put the pursuit of ever-higher profits ahead of the public interest." We know how to tackle this problem. It means doing research on who is getting what in our cities and counties, our state, and our nation. It means building relationships to create a base of people large enough to overcome the spell which big business has cast over our governments. And it means educating our legislative representatives so that they understand who benefits from corporate welfare and who is paying a high price to fatten the same old cats.

Individuals and organizations interested in confronting issues of corporate welfare should contact the VOP office at (434) 984-4655. VOP will be offering workshops on “Understanding the Economy” beginning June, 1999.