On the Extent of “Corporate-Welfare Subsidies”

In one of his typical defenses of tax cuts, Lawrence Kudlow claimed:

There are a couple hundred billion dollars in farm and corporate-welfare subsidies that can easily be scrapped.

It does seem these Bush minions were for pork barrel spending before they were against it, but I have to wonder as to Larry’s undocumented claim. Table 3.13 of the national income product accounts from BEA suggested total subsidies for 2004 were only $43 billion not $200 billion. So I tried to see if Google could help me figure out what Larry was talking about and I found something from Todd Altman who thinks all transfer payments are morally wrong. But he also wrote:

Corporate welfare is defined by the Cato Institute as “any government spending program that provides unique benefits or advantages to specific companies or industries.”

as he linked to a Cato publication that identified less than $93 billion in “corporate welfare spending” of which $35 billion was attributed to agriculture.

It is interesting that the Cato publication disagreed with Mr. Altman on the morality issue as it found both pros and cons with regard corporate subsidies. Also note that for the same year, BEA identifies only $38 billion in subsidies with $11 billion attributed to agriculture. The Cato publication also said that the White House was committed to reducing corporate welfare and yet subsidies rose to $43 billion in 2004.

So how did Larry get his $200 billion figure for “farm and corporate-welfare subsidies”? Let’s turn to Wikipedia which notes that corporate welfare can be broadly defined as:

a government’s bestowal of grants and/or tax breaks

Yes – if one decides to incorporate tax breaks into one’s definition of corporate welfare, one can get a much larger number than is reported in BEA’s definition of subsidies.

If anyone has the opportunity, I’d like the following questions to be put to Mr. Kudlow. How did he arrive at his $200 billion figure? Did he really mean subsidies and other forms of corporate welfare such as tax breaks? And isn’t he typically arguing FOR these tax breaks? Now if he has changed his mind and is now against these types of tax breaks, I may have to agree with him on this point.

Update: Greg Sargent is advising Democrats on how to tie this GOP corruption to the fact that they will have to pay more both in taxes and at the doctor’s office and the pump with this choice comment:

Some Dems, including ones charged with taking back Congress, say they think Dems should begin making the case more aggressively that GOP corruption is part and parcel of a larger alliance between the Republican Party and major corporations in certain sectors, particularly in energy and health care – an alliance, the argument continues, which shafts ordinary working- and middle-class Americans.

As I think about how this line relates to the issue of “corporate welfare”, Gary seems to be saying that the GOP version of crony capitalism is causing average Americans to pay more for gasoline and more for health care – and a lot of these goodies to corporations are not line items in the Federal budget.