Corporate-Welfare Recipients: Are They Eating Steak And Driving Cadillacs?
Today is a typical day for 51-year-old J. Gordon Grantham III, as he drives his luxury-model Cadillac to a favorite restaurant to meet with potential investors. Over a lunch of porterhouse steaks, a deal is brokered, and, using his company credit card, Grantham picks up the tab.
At first glance, this scenario might not seem terribly unusual. But J. Gordon Grantham III is one of the nation's approximately 2.6 million recipients of corporate welfare.
Grantham, CEO of Global Tetrahedron Consolidated, one of the world's largest petrochemical-manufacturing concerns, receives more than 0 million a year from the federal government in the form of tax breaks, incentives, grants and no-interest loans.
Defenders of Grantham's welfare-queen lifestyle say people like him wouldn't be able to survive without a lifeline of public aid. But many Americans are growing tired of what they view as abuses of the system. To them, Grantham and corporate-welfare recipients like him are living high on the public dole, growing fat on the handouts of others.
"I work for a living," said Reston, VA, delivery driver Ted Schacht, 41. "I'm a responsible, tax-paying citizen. I can barely afford the insurance payments on my '91 Subaru. So why should my money pay for some welfare recipient's imported Italian loafers?"
"These parent companies can't afford to support the subsidiaries they already have, but they go right on acquiring more of them anyway," said Ellen Gertsen of Medford, OR. "And who winds up paying for them? Hard-working taxpayers like me, that's who. It's a damn shame, is what it is."
Defenders of the corporate-welfare system say such attitudes are insensitive and cruel. "These are not just corporate-welfare recipients; these are human beings, struggling to survive," said Sen. Don Nickles (R-OK), one of Congress' most outspoken proponents of the current welfare system and co-sponsor of the Aid To Companies With Dependent Subsidiaries Act. "They have households full of domestic servants to support. Many of them can't even provide decent housing for their polo ponies. Offering them a helping hand is the only decent thing to do."
Corporate welfare accounts for 95 percent of all government welfare expenditures each year, a figure many find excessive. Yet, according to the recipients themselves, it is not nearly enough.
"Even after downsizing 75 percent of our domestic workforce and relocating half of our manufacturing plants to Central America and the Far East, third-quarter profit margins were still 15 percent off last year's figures," says Charles Beeman, 47, associate vice-president of a multinational textile conglomerate. "If I can't make ends meet by the end of the fiscal year, I could lose my corner office."
"Most of the recipients we work with only get a few hundred million in tax breaks a year," says Elaine R. Jansen, executive director of the Corporate Welfare Survival Task Force, a D.C.-based group that lobbies for welfare recipients' rights. "Come April 15, some of these people will have no place to go with their unreported earnings. The least we can do as compassionate human beings is provide them with a safe, warm tax shelter."
Still, anti-welfare sentiment is growing, with critics arguing that the system just fosters the welfare lifestyle.
"These people are exploiting the system to feed their destructive habits," U.S. Rep. Douglas Verstadt (D-FL) said. "They say they need this welfare money to survive. But how do we know they're not just using it to buy drug companies?"
Worse yet, critics say corporate welfare leads to gang violence. In recent years, Wall Street has become overrun with so-called multinationals—"merged" companies that team up to enforce strict control of their market-share "turf," often through brutal, hostile takeovers of the competition. The advertising world is already overrun with the gang signs, or "corporate logos," of these vicious aggregations of power, which blanket the nation's streets as they ruthlessly mark their territory.
Such problems seem to be getting worse, prompting some corporate-welfare opponents to take action. Last fall, the Wisconsin Legislature passed CW-2, or "Corporate Workfare," an experimental program many hope will become a model for corporate-welfare reform across the U.S.
Under the provisions of CW-2, welfare-receiving CEOs are required to attend job-training seminars and adult-education classes, and work at least 16 hours a week, to remain eligible for benefits. Though CW-2 has been vociferously opposed by Wisconsin Gov. Tommy Thompson, who blasted it as "cruel and unfair to needy companies," the policy is winning wide support.
"Before CW-2, Wisconsin's corporate-welfare benefits were so generous, it turned us into a 'welfare magnet,' drawing lazy and indigent corporations to our state from the poorest business environments of Chicago," said Wisconsin Sen. Fred Risser, co-author of the CW-2 legislation. "But ever since CW-2 was implemented, the decent folks of this state have been fighting back."
James Haltigan, CEO of Wis-Tek Electronics, is one of many Wisconsin corporate-welfare recipients affected by the new law. Before CW-2, on a typical weekday afternoon, Haltigan usually found himself at his large oak desk, barking orders at secretaries. Today, he is standing on the side of a public highway in a blaze-orange reflective vest, picking up litter for the Transportation Department as part of a special CW-2 work detail.
"This is ridiculous," Haltigan said. "I had to cancel an important conference in the Cayman Islands for this? My stockholders are depending on me, and I can't adequately address their concerns if I'm stuck out here collecting trash on I-90/94."
It remains to be seen whether such attempts at corporate-welfare reform will be successful in the long run. But one thing is certain: More and more Americans are convinced that the system, one way or another, has to change.
As delivery driver Gus Drummond of Cincinnati put it: "Take, take, take. It's time these freeloading welfare fat cats pulled their weight. This is a global free-market capitalist economy we're living in, not some charity ward."