Robert Reich: Crony capitalism is crippling the economy

The former secretary of labor on specialized tax breaks -- and why we need to get our corporations off the dole


Robert Reich
May 31, 2015 3:00PM (UTC)
This originally appeared on Robert Reich's blog.

Corporations aren’t people, despite what the Supreme Court says, and they don’t need or deserve handouts.

When corporations get special handouts from the government – subsidies and tax breaks – it costs you. It means you have to pay more in taxes to make up for these hidden expenses. And government has less money for good schools and roads, Medicare and national defense, and everything else you need.

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You might call these special corporate handouts “corporate welfare,” but at least welfare goes to real people in need. In the big picture, corporate handouts are costing tens of billions of dollars a year. Some estimates put it over $100 billion – which means it’s costing you money that would otherwise go to better schools or roads, or lower taxes.

Conservatives have made a game of obscuring where federal spending actually goes. In reality, only about 12 percent of federal spending goes to individuals and families, most in dire need. An increasing portion goes to corporate welfare.

Other examples: The oil, gas, and coal industries get billions in their own special tax breaks. Big Agribusiness gets farm subsides. Big Pharma gets their own subsidy in the form of a ban on government using its bargaining power under Medicare to negotiate lower drug prices. And hedge-fund and private-equity managers get a special tax loophole that treats their income as capital gains, at a lower tax rate than ordinary income.

The real issue isn’t the government’s size. It’s whom government is for. Much of government is no longer working for the vast majority it’s intended to serve. If government were responding to the public’s interest instead of the moneyed interests, it would be providing more support for communities, families, and individuals who need it the most.

There’s no reason any corporations should be on the dole, or that your hard-earned dollars should be going to them for no reason but their political clout.

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So we have to demand an end to corporate welfare. No more handouts to particular corporations and industries simply because they’re big enough and powerful enough to get them. No more specialized tax breaks. No more exemptions or special treatment. No more crony capitalism.


Robert Reich

Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written 15 books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "The Common Good." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." He's also co-creator of the Netflix original documentary "Saving Capitalism."

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