New Database Shows Big Business Dominates Federal Subsidies
Contact: Philip Mattera (202) 232-1616 ext. 212; pmattera@goodjobsfirst.org
Federal "Corporate Welfare" Database Now Online
Study: Large Corporations Dominate Federal Subsidy Awards; Banks, Foreign-Owned Energy Firms and Federal Contractors Among the Biggest Recipients
Study: Large Corporations Dominate Federal Subsidy Awards; Banks, Foreign-Owned Energy Firms and Federal Contractors Among the Biggest Recipients
Washington, DC, March 17, 2015--Two-thirds
of the $68 billion in business grants and special tax credits awarded
by the federal government over the past 15 years have gone to large
corporations. During the same period, federal agencies have given the
private sector hundreds of billions of dollars in loans, loan guarantees
and bailout assistance, with the largest share going to major U.S. and
foreign banks.
These are key findings of Uncle Sam's Favorite Corporations,
a study with accompanying database released today by Good Jobs First, a
non-profit and non-partisan research center on economic development
accountability based in Washington, DC. They derive from the first
comprehensive compilation of company-specific federal subsidy data. The
study and database are available at www.goodjobsfirst.org.
The
database, which collects more than 160,000 awards from 137 programs,
expands Good Jobs First's Subsidy Tracker, which since 2010 has posted
economic development data from states and localities. The federal data
was enhanced with Good Jobs First's proprietary subsidiary-parent
matching system, enabling users to see individual entries linked to more
than 1,800 corporate parents, along with each parent's total subsidies.
"For
more than 20 years, so-called corporate welfare has been debated widely
with little awareness of which companies were receiving most of the
federal assistance," said Good Jobs First Executive Director Greg LeRoy.
"We
now see that big business dominates federal subsidy spending the way it
does state and local programs," said Philip Mattera, principal author
of the study and creator of Subsidy Tracker. "Our hope is that the new Subsidy Tracker will serve as a resource in the ongoing debates over federal assistance to business," Mattera added.
Other key findings:
- Six parent companies have received $1 billion or more in federal grants and allocated tax credits
(those awarded to specific companies) since 2000; 21 have received $500
million or more; and 98 have received $100 million or more. Just 582
large companies account for 67 percent of the $68 billion total.
- The
largest recipient of grants and allocated tax credits is the Spanish
energy company Iberdrola, which acquired them by investing heavily in
U.S. power generation facilities, including wind farms that have made
use of a renewable energy provision of the 2009 Recovery Act.
Iberdrola's subsidy total is $2.2 billion. Other top grant/allocated tax
credit recipients include NextEra Energy (parent of Florida Power &
Light), NRG Energy, Southern Company, Summit Power and SCS Energy, each
with more than $1 billion. The results exclude the numerous corporate
tax breaks that cannot be attributed to individual companies.
- Mainly
driven by the massive programs launched by the Federal Reserve in 2008
to buy up toxic securities and provide liquidity in the wake of the
financial meltdown, the total face value of loans, loan guarantees and bailout assistance
run into the trillions of dollars. These include numerous short-term
rollover loans, so the actual amounts outstanding at any given time,
which are not reported, were lower but likely amounted to hundreds of
billions of dollars. Since most of these loans were repaid, and in some
cases the government made a profit on the lending, we tally the loan and
bailout amounts separately from grants and allocated tax credits.
- The
biggest aggregate bailout recipient is Bank of America, whose gross
borrowing (excluding repayments) is just under $3.5 trillion (including
the amounts for its Merrill Lynch and Countrywide Financial
acquisitions). Three other banks are in the trillion-dollar club:
Citigroup ($2.6 trillion), Morgan Stanley ($2.1 trillion) and JPMorgan
Chase ($1.3 trillion, including Bear Stearns and Washington Mutual). A
dozen U.S. and foreign banks account for 78 percent of total face value
of loans, loan guarantees and bailout assistance.
- A
small number of companies have obtained large subsidies at all levels
of government. Eleven parent companies among the 50 largest recipients
of federal grants and allocated tax credits are also among the top 50
recipients of state and local subsidies. Six of the 50 largest
recipients of federal loans, loan guarantees and bailout assistance are
also on that state/local list. Five companies appear on both federal
lists and the state/local list: Boeing, Ford Motor, General Electric,
General Motors and JPMorgan Chase.
- Foreign direct investment accounts for a substantial portion of subsidies. Ten of the 50 parent companies receiving the most in federal grants and allocated tax credits are foreign-based; most of their subsidies were linked to their energy facilities in the United States.
- The
Federal Reserve aided a large number of foreign companies in its
efforts to stabilize banks that had acquired toxic securities
originating mainly in the United States. Thanks largely to those
programs, 27 of the 50 biggest recipients of federal loans, loan
guarantees and bailout assistance were foreign banks and other financial
companies, including Barclays with $943 billion, Royal Bank of Scotland
with $652 billion and Credit Suisse with $532 billion. In all cases
these amounts involve rollover loans and exclude repayments.
- A
significant share of companies that sell goods and services to the U.S.
government also get subsidized by it. Of the 100 largest for-profit
federal contractors in FY2014 (excluding joint ventures), 49 have
received federal grants or allocated tax credits and 30 have received
loans, loan guarantees or bailout assistance. Two dozen have received
both forms of assistance. The federal contractor with the most grants
and allocated tax credits is General Electric, with $836 million, mostly
from the Energy and Defense Departments; the one with the most loans
and loan guarantees is Boeing, with $64 billion in assistance from the
Export-Import Bank.
- There
is also a link to the current debate over so-called tax "inversions."
Federal subsidies have gone to several companies that have
reincorporated abroad to avoid U.S. taxes. For example, power equipment
producer Eaton (reincorporated in Ireland but actually based in Ohio)
has received $32 million in grants and allocated tax credits as well as
$7 million in loans and loan guarantees from the Export-Import Bank and
other agencies. Oilfield services company Ensco (reincorporated in
Britain but really based in Texas) has received $1 billion in support
from the Export-Import Bank.
- Finally, some highly subsidized banks have been involved in cases of misconduct. In the years since receiving their bailouts, several at the top of the recipient list for loans, loan guarantees and bailout assistance have paid hundreds of millions, or billions of dollars to U.S. and European regulators to settle allegations such as investor deception, interest rate manipulation, foreign exchange market manipulation, facilitation of tax evasion by clients, and sanctions violations.
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Thank you for your interest.
Sincerely,
|
Greg LeRoy, Good Jobs First
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