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Corporate Welfare Comes Back Under Scrutiny

New York State gives away $4 billion a year to corporations, while at the same time cutting programs for low income New Yorkers-it's time for a change

$80 Billion; that's how much money states, cities and counties give to companies every single year, according to the New York Times. In their series "United States of Subsidies", which had its second installment today, the paper examines the costs and benefits of what the grants given to corporations, and finds the benefits accrue almost exclusively to the corporations rather than the local communities.

In the nineties, progressives helped brand these subsidies "corporate welfare", in an effort to counterbalance the war on the working class that right-wing republicans were waging at the time, especially against communities of color. At the time, former President Clinton cut many different benefits program as a result of the effective attacks that republicans directed towards certain groups of Americans who relied on these programs for survival, attacks which started under President Reagan but came to fruition under the stewardship of Newt Gingrich. And yet during that entire period, as the Times makes clear, companies were benefiting from billions in subsidies which rarely created benefits for anyone but shareholders.

The auto industry alone has received $13.9 billion in subsidies since 1985 but during the same period has closed 267 plants across the country, according to the Times' research. The articles from both yesterday and today's papers give examples of towns in Michigan, Ohio, Texas, Illinois and other states who fell over themselves throwing tax abatements and other grants to corporations that only a short time later would close up shop, taking with them the profits those communities had helped them achieve.

In New York State alone, we spend over $4 billion a year on these subsidies, much of it to some of the most profitable corporations in the world. One of the top recipients is JP Morgan Chase, who received $157 million last year in property tax abatements from both the state and New York City. By population, the is $210 per New Yorker that's going to corporations in the form of subsidies. These funds are not going to the mom-and-pop stores that are struggling to make it through the tough times; they're going to the corporations who are shrewd enough(or unethical enough) to constantly threaten to move their operations elsewhere, forcing states like New York, Connecticut and New Jersey to play a zero-sum game with each other where the only winners are the corporations themselves.

The news today is full of talk about the "fiscal cliff", where taxes will go up for nearly all Americans if Congress can't reach an agreement on the budget. The core argument is over whether to generate revenue(i.e. increase taxes on the rich) or to cut spending. For Republicans, cutting spending means first and foremost cutting the programs which are lifelines for the working class. This means not only the "safety net" programs like food stamps or social security, but also funding for education and other programs which help to create greater opportunities for the working class children that benefit from them.

We rarely if ever hear a debate on the subsidies we continue to dole out to corporations who give so little back in return. These subsidies help them create profits, which these companies then either give out to corporations or use to increase salaries for those at the top of the organization. There are not nearly enough new jobs created, and more often than not, the companies find ways to "cut costs" which translates into cutting jobs. If we're going to talk about cutting spending in this country, rather than starting with the programs that benefit people who need it the most, lets look at corporate subsidies. For the past three decades, we've been paying for the rich to get richer; it's time to make decisions that benefit all Americans.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

fred December 06, 2012 at 01:02 PM
Peter other than your opinion do you have anything to support that tax breaks and subsidies create jobs? The Islanders move is net zero. One areas loss is anothers gain.
Peter Ticali December 06, 2012 at 02:08 PM
Fred, In response to your comment - the article states that JP Morgan got about $157 Million in these incentive packages. Simple division amongst their 260,157 employees according to CNN - That's a cost of $603.48 to keep someone employed, spending and paying taxes. Now that may not reap the benefits that you and I want to see at minimum wage - but JP Morgan isn't paying minimum wage. And those wages are taxed, and the rest of the money is going back into the economy. As for net zero for moves - Government is like any other business. We, as the board of directors for our local governments elect officials we hope will follow though and execute plans that mean things to us. For the Islanders - it really doesn't excite me to give more jobs to NYC when Long Island has been suffering for decades. This may have been a net zero in the big scheme of NY and the US - but for you and - the LI economy took a significant blow.
fred December 06, 2012 at 02:58 PM
Fair answer Pete! However first JP Morgan had net income of 18.9Billion. Your presumption is that if they didn't receive the 157 million they would fire everybody. A more realistic evaluation would be sales per employee. Using that method the 157 mill preserves 480 jobs. Not that great a deal anymore. Bottom line does business really need hand out from governments? Adam Smith would be rolling over in his grave if he knew what was going on!
Spud December 06, 2012 at 04:07 PM
Hear hear Terra FIrma! All these socialist state governments handing out subsidies like the state sponsored industry of china! Let them live or die on their own abilities, pure capitalism, not the chrony, phony capitalism, who do you know, who got a cut capitalism we have here, cut the subsidies, cut the bail outs, live and die on your won, make big profits, pay big bonuses to ceo's, pay the workers nothing, close the factories, move them to china and get a subsidy! Lower taxes, no capitals gains, tax write offs for private planes, thats what we want, pure live or die capitalism.....
2 Turn Tables December 08, 2012 at 08:12 PM
"The auto industry alone has received $13.9 billion in subsidies since 1985 but during the same period has closed 267 plants across the country, according to the Times' research" - The UAW has destroyed the auto industry Lisa. The UAW in which Progressive/Socialists put in a pedestal, amongst other organized labor groups are sucking the lifeblood out of the economy. A Chevy has $2-3K on it's price because of UAW benefits. The quality went down the toilet, while the prices when higher. Take my advice, a Progressive shouldn't use the auto industry as a crutch. It's a perfect example on why your movement is destructive. And.. when did it become a crime to do well financially in the United States. It's now a mark of shame.

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