Ending Corporate Welfare as We Know It: An Institutional Analysis of the Dual Structure of Welfare

By Olson, Paulette; Champlin, Dell | Journal of Economic Issues, September 1998 | Go to article overview

Ending Corporate Welfare as We Know It: An Institutional Analysis of the Dual Structure of Welfare


Olson, Paulette, Champlin, Dell, Journal of Economic Issues


In 1996, after years of debate and the accumulation of a vast literature on poverty, economic dependency, and family structure, the U.S. government voted to "end welfare as we know it." The federal government officially withdrew the entitlement to cash assistance and imposed strict time limits on Temporary Assistance to Needy Families (TANF), the replacement for Aid to Families with Dependent Children (AFDC) [Burtless 1997]. Federal regulations require all recipients to work within two years and limit all forms of assistance to 60 months. States are free to impose shorter time limits and more stringent work requirements as they see fit. While government assistance for individuals at both the federal and state levels is clearly in retreat, government assistance for the business sector appears to enjoy broad public support. Under a wide array of programs, the federal government assists business in the form of direct services, cash grants, subsidized credit, as well as through various tax credits and deductions. Plainly, the call to Wend welfare as we know it" did not apply to all recipients of government aid.

Corporate welfare is estimated to cost the federal government between $170 and $200 billion each year [Collins 1996]. This figure far exceeds the amounts ever budgeted for individual welfare programs. The Aid to Families with Dependent Children (AFDC) program cost the federal government $11 billion in 1989. Even Medicaid, which benefits primarily the elderly, was budgeted at $30 billion. This is about half the amount lost to the federal government through tax credits and deductions given to corporations [Huff and Johnson 1993]. The irony of fiercely debating programs designed to provide basic food, shelter, and medical care for indigent individuals while dispersing billions to wealthy corporations has been remarked upon by a number of analysts. In 1983, Mimi Abramowitz pointed out that in the "narrow and compartmentalized view of the welfare state," only the poor receive aid [Huff and Johnson 1993, 442]. Corporations receive "economic incentives."

Recently, corporate welfare has come under attack not only by those who object to the inequity of providing "assistance to the wealthy" while withdrawing "assistance to the needy," but also by those who object to government assistance in all forms [Bandow 1996]. Despite the political coalition supporting an end to corporate welfare, such efforts are unlikely to succeed as long as they are based on appeals to "equity" or to "economic efficiency." Attitudes toward welfare are deeply rooted in cultural myth, not in benefit/cost analysis. That is, individual welfare is perceived as an undeserved "hand out" that constitutes a drain on the public treasury. In contrast, corporate welfare serves the public interest by promoting economic growth [Gray 1996].

The purpose of this paper is to examine the dual structure of welfare. The first section reviews the dual structure of welfare policy in the United States. In the second part of the paper, welfare is analyzed in terms of the controlling cultural myths. Underlying the dual structure of welfare policy is a cultural dualism identified by many feminists in which activities associated with the "economy" attain a higher degree of status and legitimacy than activities associated with the "family" [Fraser 1989, 149-151; Jennings and Waller 1990, 627-629]. Within the framework of this dualism, assistance to corporations has a higher degree of status and legitimacy than assistance to individuals. So powerful is this dualism that it has undermined the powerful myth of laissez faire in which government assistance to business is viewed not only as illegitimate, but as counter-productive. Hierarchical dualisms endow one side of the dualism with higher status and legitimacy. In the case of welfare, the higher status and greater perceived value to society accorded to corporate welfare recipients have led to a greater sense of entitlement to public resources.

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