You’ll note in these posts on things to cut, I do not take any prisoners. There is enough waste and abuse (not to mention fraud) going around on all sides to make a big difference.
It is time to end corporate welfare. I’m not saying the federal government should end R&D on important things such as renewable energy or space exploration. I am talking about money given to companies for a wide range of reasons.
The stimulus package basically ended up being a bail out of large corporations. We bailed out giant banks, while leaving tens of thousands of people in foreclosure. Recently, the Fed gave Bank of America and other banks $1.2 Trillion dollars to keep them afloat. Guess how much all the foreclosures in the United States amount to? Yep! $1.2 Trillion.
Instead of directly bailing out banks, then giving Quantative Easings 1, 2, (and stay tuned for part 3), we could have paid off the failed mortgages, kept people in their homes, the money would have flowed back to the banks, and we would have prevented spending trillions more.
We need to allow businesses to succeed or fail on their own merits. Had we not instituted many protections for the “too big to fail” banks and corporations, they would have been more careful in their loans and investments, and the crash may not have occurred in the first place. That said, since we are spending vast sums to prop them up that provides temporary stimulus in only a few areas, it takes money and incentive away from other markets and businesses. We cause an overall stagnation, which now many economists are seeing leading to a double dip recession. Had we propped up the American people, but allowed companies to fail, we probably would not now be going into a second recession.
Next, when Congress establishes tax loop holes for big corporations, it means it is not a fair or balanced market. Either remove all taxes from corporations (since they push taxes down to the consumer anyway), or remove the loop holes so all pay the same amount.
Third, the moneys being spent are going to certain groups, while others are negatively impacted. While overall unemployment is at 9.1%, unemployment for blacks is over 16%, and double that in some areas. Spending tons of money on banks and large corporations does not help the average black person to get a job.
We spend three times as much on corporate welfare as on welfare for the poor (about $167 B vs $51B in 2002). Dozens of corporations pay no taxes at all, and some receive billions back in tax credits due to the loopholes now in place.
If we eliminated all loopholes and established a flatter tax rate, we could save $150 billion a year, or $1.5 Trillion over a decade! Or if we completely eliminated Corporate taxes and directly taxed the American people (as corporations just pass the tax down to us anyway), products would be cheaper to buy, and we would still save $150 billion a year.