Preserving Corporate Welfare

JUNE 25, 2012

Who could be opposed to cutting funds for a government program that subsidizes U.S. corporations’ overseas advertising? I’ll give you two guesses on which U.S. Senators voted against the following amendment to the farm bill: “To reduce funding for the market access program and to prohibit the use of funds for reality television shows, wine tastings, animal spa products, and cat or dog food.” If you guessed Maryland’s senators Mikulski and Cardin, you’d be right.

Sen. Tom Coburn, the author of the amendment opposed by Cardin and Mikulski, published a whole report explaining why the Market Access Program (MAP) needs to go:

More than ten years ago, many of the financial beneficiaries of this program were some of this country’s largest corporations. [This report] has found that many of those same companies are still indirectly receiving the government funding through this program. You will recognize many of these as household names, such as Welch’s, Sunkist, and Blue Diamond. Despite their combined $2 billion in sales in 2009, these companies received more than $6 million in 2012 from taxpayers for product promotion. Also receiving millions from taxpayers for private overseas advertising are the agricultural trade groups whose members include Tyson Foods, Purina, Hershey’s, Georgia-Pacific and Jack Daniels.

The California wine industry, which had domestic sales of $17.9 billion in 2009, drank in nearly $7 million this year through its industry promotion group, the Wine Institute, Cotton Council International, on behalf of the American cotton industry received $20.2 million from MAP (and another $4.7 from another USDA market development program) in 2011, the same year in which U.S. cotton crop receipts were estimated to exceed $8.2 billion.

This vote is disappointing because, in other circumstances, these senators say all the right things. They seem to oppose corporate welfare. Sen. Cardin has been very good on ending corporate welfare for ethanol. According to Sen. Mikulski in May of last year, “I am for cuts. I am for a government that is frugal and thrifty.” That’s why she wanted to end what she saw as corporate welfare for oil companies (in reality, she wanted to change the tax structure of these companies so it was different from what other companies’ pay, but that’s a debate for another time). She concluded, “We can’t afford to give billions of tax dollars to pad oil companies’ pockets.”

However, with this vote she did decide we could spend millions of tax dollars to pad the pockets of Jack Daniels, Tyson Foods, and the California wine industry.

Some may defend this program as being necessary to help the economy. As Sen. Coburn’s report points out, there is bipartisan agreement that there’s no evidence to back up this claim:

In all, this program has spent more than $2.1 billion since 1999, but its overall benefit to the economy is unclear. Despite the billions of dollars in taxpayer funds, little, if any, data exist to show how the program has had any significant impact on American agriculture’s total share of global exports.

The Market Access Program is a case study of federal inefficiency and overlap. President Obama clearly summed up the failures of MAP best in his budget proposals for FY 2010 and 2011: “MAP's economic impact is unclear and it does not serve a clear need.” In addition to MAP and four other USDA foreign market development programs, at least nine federal agencies or departments operate dozens of market development assistance programs.

The only reason I’m singling out Cardin and Mikulski for criticism is that they are our U.S. Senators. They were joined by a large majority of other senators from both parties in supporting the program. This fact should illustrate just why it is so difficult to trim federal spending. If there’s no will to cut a program that’s as useless and outrageous as the Market Access Program, there’s little hope that senators will have the fortitude to address our true fiscal problems.

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