You and a handful of other members on this Committee have been heroes on this issue. You are among the few members of Congress who have made a valiant effort to reduce federal taxpayers subsidies to business. Before I begin my testimony, I will state for the record in accordance with the Truth in Testimony requirement that neither I, nor the Cato Institute, receive any government funding. I have divided my testimony on corporate welfare into 7 observations about the economic and political state of affairs regarding corporate welfare. Then at the end of my testimony I provide 6 recommendations regarding how Congress can reduce the size of the corporate welfare state.
Corporate welfare is a large and growing component of the federal budget.
America's most costly welfare recipients today are Fortune 500 companies. These welfare payments come in every conceivable shape and size, including government grants, contracts, cut rate insurance, loans, and loan guarantees. Our latest survey of the corporate welfare subsidy programs finds that in each of the past three years corporate welfare subsidies have increased. although congressional Republicans had pledged an attack against unwarranted business subsidies back in 1995, these programs have actually expanded on average by almost 10 percent over the past 4 years. Table 1 below compares the budgets for about 60 of the most egregious examples of corporate welfare in 1998 and 1999. Corporate subsidies were again up 2 percent in FY 1999.