Posted by Jed Lewison on Fri May 18, 2007 at 5:03 AM Pacific

The corporate welfare state

For all the debate we have in this country about welfare spending, we sure seem to focus on the programs focused on reducing poverty. In general, conservatives find them to be wasteful theft from taxpayers, liberals see them as part of a strategy to expand the middle class. And almost everybody forgets that illegal immigrants pay taxes too!

You can see how easy it is to forget about corporate welfare.

Well, you can rest assured: corporate welfare is alive and well. It's thriving, really, in the Bush Administration.

A report prepared in 2006 by the House Committee on Government Reform, provides a detailed look at federal contracting, one component of the corporate welfare state. (Other components include things like special tax breaks, expansion of anti-consumer intellectual property laws, and the use of public resources for private gain.)

Here's the reality of the federal contracting piece of the corporate welfare state, through 2005:

Under Bush, contracting spending increased from $203.1 billion in FY2000 to $377.5 billion in 2005, an average annual increase of 13%
Nearly half of the increase in spending under Bush was spent on federal contracts
In 2005, 39% of the discretionary federal budget was paid to private contractors
More than 90% of the increase was consumed by the Department of Defense, which now accounts for 70% of contracting spending

Ah, but isn't this an example of reinventing government by infusing entrepreneurial spirit into the public sector?

Unfortunately, no. It's more like an example of reinventing graft.

The U.S. Government Accountability Office, agency inspectors general, Defense Contract Audit Agency, and other government investigators identified $745.5 billion in problem contracts
The top five federal contracts received 21% of all federal contracting spending
The type of agency you'd expect to benefit for outsourcing, the Department of Transportation, has actually had a 29% reduction in contracting
Contracting out services like intelligence actually makes it harder for the government to hire its own employees!

You can see how easy it is to forget about corporate welfare.

Well, you can rest assured: corporate welfare is alive and well. It's thriving, really, in the Bush Administration.

Here's the reality of the federal contracting piece of the corporate welfare state, through 2005:

Under Bush, contracting spending increased from $203.1 billion in FY2000 to $377.5 billion in 2005, an average annual increase of 13%
Nearly half of the increase in spending under Bush was spent on federal contracts
In 2005, 39% of the discretionary federal budget was paid to private contractors
More than 90% of the increase was consumed by the Department of Defense, which now accounts for 70% of contracting spending

Ah, but isn't this an example of reinventing government by infusing entrepreneurial spirit into the public sector?

Unfortunately, no. It's more like an example of reinventing graft.

The U.S. Government Accountability Office, agency inspectors general, Defense Contract Audit Agency, and other government investigators identified $745.5 billion in problem contracts
The top five federal contracts received 21% of all federal contracting spending
The type of agency you'd expect to benefit for outsourcing, the Department of Transportation, has actually had a 29% reduction in contracting
Contracting out services like intelligence actually makes it harder for the government to hire its own employees!