According to the TV news, lots of rich people think the government spends too much money, especially on something called entitlement programs. I asked M what those were, exactly, and he said that many of them are welfare payments of one sort or another. These are ways to help people who are struggling to make ends meet, and they include stuff like Medicaid, Food Stamps, Public Housing Assistance, Aid to Families with Dependent Children, and Unemployment Compensation. I told him helping those less fortunate sounds like a pretty good idea to me, and he agreed.
He also pointed out that two of the best-liked entitlement programs aren't just for poor or out-of-work people, but for middle-income and very rich ones, too, just as long as they are old. These programs are known as Social Security and Medicare.
"It's odd, though," he said, "that folks who are well-off love to complain about runaway entitlement spending, but they never gather on the courthouse steps to burn their Medicare and Social Security cards in protest." That's probably true, because I'm sure if they did, it would be on the news over and over again.
Then M said something about a huge kind of public assistance program that most people aren't even aware of, unless they happen to be big business executives. It's corporate welfare, and it consists of things like giving money called subsidies to companies in certain industries that our lawmakers want to promote. I asked what kind of industries, and he said all kinds--manufacturing, mining, agribusiness, even sports team owners who want to build new stadiums. (He also told me that the executives whose companies get corporate welfare hate to hear it called by that name, which they never use themselves because the truth sometimes hurts.)
"Where does all that subsidy money come from?" I asked, and he replied that sometimes the government borrows it from investors, but in the long run it's paid for by taxing everybody, most of whom aren't corporate bigwigs. Some of the folks who pay, he added in the case of sports team subsidies, might not even like the sport, and most of them will never go to those government-backed stadiums to watch a game.
I thought about this and tried to pull it all together. "So with corporate welfare, the government takes money from the not-so-rich and gives it to the very rich--just the opposite of regular welfare. That's interesting."
"And direct subsidies are just the beginning," M said. "A lot of corporate welfare takes place by passing laws that help big companies pay little or no income tax. Sometimes this is done with tax credits. But often these laws encourage them to 'go offshore' and operate in foreign countries where the tax rates are lower and where they also benefit by getting to pay lower wages. So profits go way up and the stockholders of these 'multinational' firms do very well. Of course, the taxes that they avoid here in the U.S. have to be made up by taxing ordinary people harder--unless they're 'lucky' enough to get laid off when their jobs get shipped overseas. Then they have no income to pay taxes on, which isn't exactly a victory."
"But if they're out of work," I replied, "they get to cash in on that unemployment thingy, right? They get paid for not working?"
"That's not as great a deal as it sounds," he informed me. "Unemployment insurance doesn't even come close to covering someone's lost wages."
"So how do the rich people on corporate welfare get these laws passed?" I asked, and he said it's because they make huge campaign contributions to the lawmakers, plus they hire lobbyists to go twist the lawmakers' arms--which I think means plying them with drinks and golf junkets--and that most regular taxpayers and voters are pretty clueless about what ends up being in the laws.
Man, I'm getting a real education hanging out with ol' M.
I got a good chance recently to see my new insights about corporate welfare displayed in one of my favorite comics--Dilbert. M says Dilbert is a good source of information about big business. He likes it because it shows their shenanigans in a funny way, so you aren't prone to get too depressed about them. I like it mostly because it's the only strip I've found that has a dog as a consultant.
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