One of the few lines in President Obama’s State of the Union address that actually received bipartisan applause was his vow of “no bailouts, no handouts, and no cop outs.” Of course the president then went on to claim credit for his bailout of the auto industry and promise additional handouts to the “green energy” industry.
Both liberals and conservatives often succumb to a narrative that pits big government against big business. No doubt many of big government’s tax and regulatory policies do make it more difficult for businesses to expand and hire people. But just as often, big business and big government are all too happy to work hand in hand to thwart the free market.Confusing support for free markets with support for the corporate agenda is a bipartisan failing. In a free market, for example, corporations compete against one another on their merits. Government doesn’t pick winners and losers or prefer one type of industry over another.
Yet, Rick Santorum shares President Obama’s desire for special tax breaks for “manufacturing.” Both Newt Gingrich and Mitt Romney join President Obama in backing government subsidies for ethanol and other alternative energy.
Confusing support for free markets with support for the corporate agenda is a bipartisan failing.
And obviously, in a free market, when businesses fail because they made stupid investment decisions, they go bankrupt. But both Romney and Gingrich joined President Obama (and President Bush) in supporting TARP and the bailout of some of America’s biggest banks and investment firms. This was not a one-time situation brought about by a unique crisis: Dodd-Frank enshrines the principle of “too big to fail,” all but guaranteeing future bailouts.
The Cato Institute estimates that corporate welfare now tops $125 billion per year. Among the biggest beneficiaries are companies such as Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric. At a time when we are facing a $15.3 trillion national debt and borrowing 34 cents out of every dollar we spend, should we really be spending money to subsidize McDonald’s advertisements for Chicken McNuggets overseas?
Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.