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Corporate welfare is a term that analogizes corporate subsidies to welfare payments for the poor. The term is often used to describe a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations, and implies that corporations are much less needy of such treatment than the poor. In practice, the term is often used virtually interchangeably with crony capitalism. To the extent that there is a distinction, the latter term could be considered broader, including all types of governmental decisions that favor the "cronies" (big businesses and industry lobby groups providing the bulk of political campaign contributions), while corporate welfare might be restricted only to direct government subsidies.
The term "corporate welfare" was popularized by Ralph Nader in 1956. The Canadian New Democratic Party picked up the term as a major theme in its 1972 federal election campaign. Its leader, David Lewis, used the term in the title of his 1972 book, Louder Voices: The Corporate Welfare Bums.
Subsidies considered excessive, unwarranted, wasteful, unfair, inefficient, or bought by lobbying are often called corporate welfare. The label of corporate welfare is often used to decry projects advertised as benefiting the general welfare that spend a disproportionate amount of funds on large corporations, and often in uncompetitive, or anti-competitive ways. For instance, in the United States, agricultural subsidies are usually portrayed as helping honest, hardworking independent farmers stay afloat. However, the majority of income gained from commodity support programs actually goes to large agribusiness corporations such as Archer Daniels Midland, as they own a considerably larger percentage of production.
Alan Peters and Peter Fisher (Associate Professors, Graduate Program in Urban and Regional Planning, University of Iowa) have estimated that state and local governments provide $40–50 billion annually in economic development incentives, which critics characterize as corporate welfare.
Some economists consider the recent bank bailouts in the United States to be corporate welfare. U.S. politicians have also contended that zero-interest loans from the Federal Reserve System to financial institutions during the global financial crisis were a hidden, backdoor form of corporate welfare.
Policy analysis conducted by the Cato Institute, an American libertarian think tank, argued that United States fiscal policy allocated approximately US$92 billion in the 2006 federal budget toward programs that the authors considered to be corporate welfare. Subsequent analysis by the institute estimated that number to be US$100 billion in the 2012 federal budget. It should be noted, however, that Cato's criteria, which are not clearly defined, do not include tax loopholes or trade barriers.
Daniel D. Huff, professor emeritus of social work at Boise State University, published a comprehensive analysis of corporate welfare in 1993. Huff ratiocinated that a very conservative estimate of corporate welfare expenditures in the United States would have been at least US$170 billion as of 1990. Huff compared this number with social welfare:
In 1990 the federal government spent 4.7 billion dollars on all forms of international aid. Pollution control programs received 4.8 billion dollars of federal assistance while both secondary and elementary education were allotted only 8.4 billion dollars. More to the point, while more than 170 billion dollars is expended on assorted varieties of corporate welfare the federal government spends 11 billion dollars on Aid for Dependent Children. The most expensive means tested welfare program, Medicaid, costs the federal government 30 billion dollars a year or about half of the amount corporations receive each year through assorted tax breaks. S.S.I., the federal program for the disabled, receives 13 billion dollars while American businesses are given 17 billion in direct federal aid.