Will the real 47 percent please stand up? Although Republican presidential candidate Mitt Romney in a now famously leaked video suggested that nearly half of Americans believe that they are victims for relying on Social Security, Medicare, Medicaid, unemployment benefits, etc., we thought it might be helpful to look at who benefits the most from government largesse.
Writing in The New Yorker, columnist James Surowiecki notes that, “Even as he assails people on Medicaid and Social Security, and those who receive the earned-income tax credit, for being dependent on government, Romney didn’t mention another prominent group that’s dependent on government: the American companies whose profits rely, in one form or another, on government assistance.”
Historically, the federal government has protected American business with high tariffs, land grants given to railroads, and more than 80 million acres both onshore and offshore leased to energy companies. An 1872 law still in effect lets mining companies lease federal land for just $5 an acre while keeping the profits from all the gold, silver or uranium they find. Renewable-energy companies are subsidized; farmers receive nearly $5 billion a year in direct payments and billions for crop insurance and drought aid despite record-high food prices.
As currently written, the tax code helps business. American manufacturing enjoys a $20 billion annual tax break, while state and local governments cough up $70 billion a year to lure companies or prevent them from moving away. While this strategy creates new jobs in a given locale, some see the incentives as giveaways to help companies move from one state to another. Another form of assistance is government regulations which can boost corporate profits, especially copyright law, patent protection and intellectual-property rights. According to economist Dean Baker, patent protection is worth hundreds of billions of dollars a year to the pharmaceutical industry alone.
Realize that we are not taking side. We simply want to suggest that government assistance exists on both the 53 percent and 47 percent side of this electoral divide. Surowiecki says that corporate welfare isn’t necessarily a bad thing. Some of these giveaways arguably do a lot of good. But companies that benefit from these policies are just as dependent on the government as the guy who gets the earned-income tax credit.