Crony Socialism: Obama Proposes New Department of Corporate Welfare

By Gary P Jackson

Tad DeHaven at the CATO Institute reports on the latest corporate welfare scheme coming out of the Obama regime, and just how weak the feckless Republican party really is:

Contrary to what various news outlets are reporting, President Obama is NOT proposing to cut government. The administration is proposing to take four independent federal agencies that specialize in corporate welfare – along with the Office of the U.S. Trade Representative – and combine them with corporate welfare programs at the Department of Commerce to form what would I would argue should be called the Department of Corporate Welfare.

According to reports, this rearranging of the deck chairs would save $300 million a year. That’s peanuts. Worse, those alleged savings will be of no consequence to taxpayers as there is nothing to suggest that the president intends to cut overall spending for the agencies comprising the new bureaucracy. That portends bigger government, not smaller. The president is trying to sell the American taxpayer a false bill of goods.

The president’s proposal is also an attempt to counter the perception – an accurate one – that the administration’s policies are detrimental to commerce. But corporate welfare is detrimental to commerce because the market distortions it creates hinder economic output. Making it easier for select businesses to help themselves to taxpayer-financed subsidies would only perpetrate the same sort of crony capitalist schemes that gave us Solyndra and the Chevy Volt.

Of course, no transparent attempt to appear “business friendly” would be complete without a bone toss to the Small Business Administration. The “bone” this time is the president’s intention to elevate the head of the SBA to the Cabinet. As I discuss in a Cato essay on the SBA, rather than helping small businesses compete against big businesses, the SBA’s loan guarantees mainly help a tiny share of small businesses compete against other small businesses. In reality, the biggest beneficiary of the SBA is the banks, which reap the profits from the loans guaranteed by the agency.

Finally, Republican policymakers talk a good game about cutting government, but they often hide behind calls for making the federal government “more efficient.” Now that the president has seized a political opportunity to sing from the GOP’s hymnal, it’ll be interesting – if not entertaining – to see how Republican policymakers respond. To avoid embarrassment, I recommend offering specific spending cuts.

The Obama regime is running roughshod over the GOP and the country as a whole. One of the reasons our country may never recover from the mess we are in, is the fact government is actively picking winners and losers. Actively rewarding political cronies for their support.

Until we find real reformers, people who will not only create strong ethics rules that will punish those who engage in this activity, but also create reforms that limit politicians’ ability to engage in this activity, this sort of activity will go on unabated. We must reform the way government does business. Remove the situations that allow politicians to engage in unethical and harmful activity.

Government shouldn’t be rewarding [or punishing] any business, unless they actually break the law. We must allow the free market to work as intended. If someone has a good product, a product that meets a demand, and has a solid business plan to bring that product to market, then they will succeed. If not, they will fail. That’s how it works. Businesses failing is just as much a part of free markets as businesses succeeding.

If poor ideas are subsidized, if products that no one wants are subsidized, if businesses aren’t allowed to fail, then what we have is a perversion of the free market system. We have companies building products no one wants or needs, being subsidized by tax dollars. It becomes more about social engineering that actual success.

The above mentioned Chevy Volt is the perfect example. No one wants it. It’s a pathetic car that doesn’t work well. This experiment in social engineering has cost the American tax payer, according to Doug Powers at Michelle, roughly $250,000 per vehicle.

The Volt is such a failure, Chevrolet is likely to end production soon.

This is what happens when you allow politicians, not consumers, decide what the market wants. Obviously all of the billions wasted on nonsense like the Volt is an attempt to “fix” an imaginary problem. [global warming] Never mind the electricity used to recharge these useless, soul sucking appliances comes from coal powered electric generation plants.

Sanctimonious fools can ride around pretending they are “saving the planet.” That’s the only benefit this car offers.

There were well sorted, highly reliable electric cars over 100 years ago. The market left them behind because they weren’t practical. Except for city dwellers who never travel more than a few miles form home, electric cars are less reliable today than they were back in the day.

Now I’m picking on the Volt, but it’s just one of thousands of failures that government subsidizes on a yearly basis. Having government involved in picking winners and losers generally ends up with nothing but losers.

America is filled with creative men and women who successfully bring new and useful products to market on a daily basis. The best thing government can do is get out of their way. Remove the high tax burden, and the over regulation, and you will see businesses and the free market thrive.

Until we elect people who understand government has no place picking winners and losers, and understand that using tax payer money to prop up their buddies, nothing is going to change.

Free markets work well, when left alone. This all went to hell once corrupt politicians figured out they could game the system and gain more power for themselves.

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Filed under In The News, Politics

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