Veronique de Rugy writes about the problem both major US political parties have (and neither really wants to get rid of):
In his 1986 memoir The Triumph of Politics, former Reagan administration budget director David Stockman wrote: “I had long insisted, to any liberals who would listen, that the supply-side revolution would be different from the corrupted opportunism of the organized business groups; that it would go after weak [corporate welfare] claims like Boeing’s, not just weak clients such as food stamp recipients. Giving the heave-ho to the well-heeled lobbyists of the big corporations who keep the whole scam alive would be dramatic proof that we meant business, not business-as-usual.”
After four years as the Reagan administration’s fiscal whiz kid, Stockman left, objecting to the president’s inability or unwillingness to make good on his promises to cut government spending. Crony capitalism, having avoided a showdown with a principled adversary, has thrived ever since.
Cronyism is the practice by which government officials — Democrats and Republicans, liberals and conservatives — give preferential treatment to particular firms or industries in exchange for votes, campaign contributions, or the pleasure of promoting pet projects. Favored companies reap financial rewards, reduce their exposure to risk, and gain an advantage over rivals who don’t get the same government help.
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Corporate double dipping isn’t new. Bipartisan federal, state, and local support for the “weak claims” of corporations has been going on for far more than 30 years, and not just in new and exotic industries such as alternative energy. The target of David Stockman’s ire, aerospace giant Boeing, continues to receive almost unfathomably huge direct and indirect subsidies from the federal government. Ninety percent of the value of the loan guarantees issued by the Export–Import Bank in 2011 went to subsidize Boeing. As a result, Carney reports, Boeing “accounted for 45.6 percent, or $40.7 billion, of Ex-Im’s total exposure in fiscal 2011.” With the help of federal guarantees, the company gained contracts from the likes of Air China and Air India.
Boeing shows its gratitude to taxpayers by overcharging them at every turn. The nonprofit Project on Government Oversight recently reported that “Boeing charged the U.S. Army $1,678.61 for a plastic roller assembly that could have been purchased for $7.71 internally from the Department of Defense’s own supplies. In another transaction, a thin metal pin worth 4 cents that the Pentagon had on hand, unused by the tens of thousands, ended up costing the Army $71.01 — a markup of more than 177,000 percent.” The watchdog group’s investigation found that Boeing overcharged the Army nearly $13 million in dozens of transactions, jacking up the price on small, mundane parts and in some cases charging thousands of times more than they were worth. What Stockman called the “corrupted opportunism of the organized business groups” has become business as usual.
