This paper was published a few years ago by the Journal of the
National Association of Social Workers
PHANTOM WELFARE: Public Relief For Corporate America
Daniel D. Huff, MSW
Professor, Social Work Boise State University
David A. Johnson, ACSW
Chairman/Professor, Social Work
Boise State University
1910 University Drive
More than twenty years ago Richard Titmus, the noted british sociologist, exhorted students of welfare policy to broaden their definition of social welfare to include more than merely those programs designed for the poor (Titmus, 1965, p.188-199). Some policy analysts in social work have continued to advocate for a broad definition of social welfare, one that includes redistributive schemes such as business subsidies (Abramovitz, 1983, p.444 and Rein, 1977, p.586). In spite of this urging, there are few attempts to describe and quantify the profusion of programs, subsidies and other devices used to redistribute income to the American business community.
While the "phantom welfare state" for business may not neatly fit into conventional definitions of social welfare, knowledge of these programs are important to social workers for a number of reasons. First, continued avoidance of non-poverty welfare programs puts social work in a poor position from which to advocate for fundamental reform of current budget priorities. The dollars shunted into corporate welfare schemes have diverted billions of dollars that might have been more reasonably spent on programs benefiting the poor. In 1980, the economist Gordon Tullock (1983) estimated that if corporate welfare dollars were distributed to the poorest ten percent of American families, each family would receive an additional yearly income of forty-seven thousand dollars (p.2). Secondly, the corporate welfare system is at least partly responsible for the growing economic imbalance between the poor and the rich that has accelerated during the nineteen eighties. The poorest segments of our nation now receive a smaller share of national income than at any time since the late nineteen forties (Levy, 1987, p.14). This trend helps to explain why in the past decade we are losing the battle against poverty in the face of large social welfare budgets. Finally, we cannot continue to ignore this fiscal colossus, which is estimated by some analysts as totalling more than 500 billion dollars a year (Anton, 1989, p.16). The "phantom welfare state" represents a vast redistribution of our national wealth and is simply too large to ignore during a period when traditional welfare programs for the poor are under constant attack.
There are five major vehicles used to distribute benefits from various federal sources to American businesses: direct expenditures, credit programs, tax expenditures, subsidized services and import restrictions.
(Insert Table #1)
1. DIRECT SUBSIDIES:
The simplest and most straightforward of all corporate welfare vehicles are those that simply send money. A host of businesses from airlines to gold mines receive direct expenditures. The largest single recipient of this type of aid is the agriculture industry, which receives subsidies from the Commodity Credit Corporation (CCC). The CCC provides farmers with a guaranteed minimum income, paying the difference between the market price and the target, or guaranteed price, of selected commodities. These payments totaled more than 11 billion dollars in 1988 (Office of Management and Budget, 1989, p.A34).
Another major recipient group for direct expenditure programs are local industrial interests that receive funds through community development grants. Commonly known as Community Development Block Grants and Economic Development Assistance, these programs provide funds to stimulate local economies. While not all the funds funneled through these programs go to private interests, the Congressional Budget Office estimates that almost 2 billion dollars a year goes to local industries (Congressional Budget Office, 1984, p.17).
An assortment of businesses receives federal support through research and development activities. The energy industry accepts about 2 billion dollars annually for such purposes, agricultural interests receive a billion dollars per annum, and airlines get another billion (Congressional Budget Office, 1984, p.17). The maritime industry receives direct subsidies that average sixty thousand dollars per sea-going billet, totaling about 350 million dollars a year. These funds are used to maintain our merchant marine fleet in the face of cheaper foreign competition (Reischauer, 1982, p.238).
The sum total of direct expenditures devoted to supported American businesses is more than 13 billion dollars a year (Congressional Budget Office, 1984, p.238).
2. CREDIT SUBSIDIES:
A much more complex set of programs extend a myriad of federal credit subsidies to a wide assortment of commercial pursuits. In 1985 all federally sponsored credit totaled more than a trillion dollars (Bosworth, 1987, p.1). The world of government subsidized credit is an intricate maze of specific programs, each with its own methods and subsidy levels. In some instances the government supplies the total loan at below-market interest rates. In other instances the government relies on the traditional capital markets, providing a subsidy through guaranteeing the loan. Individual programs also differ in the amount of subsidy they provide, with some extending loans at near market rates, while others provide loans at less than half the market value (Office of Management and Budget, 1989, p.F5-F8). The loan guarantee programs dispense multiple subsidies providing investors with a source of credit and guaranteeing a profit to the banks while the government assumes all the risks.
(Insert Table #2)
Approximately half of all federal credit subsidies funnel through the Rural Electrification Administration and are used to finance electrical power plants, chiefly nuclear plants (Congressional Budget Office, 1984, p.30).
Two billion dollars in credit subsidies are earmarked for agricultural interests through a system that provides loans to farmers on which they then default if crop prices fall below the loan value (Congressional Budget Office, 1984, p.31).
American manufacturers receive substantial subsidies through the credit programs of the Export-Import Bank (EX-IM Bank). The EX-IM Bank extends low- interest loans to foreign governments wishing to purchase U.S. equipment and goods, but who lack either the economic or political stability to qualify for conventional loans. As with most of these activities, the experts differ on just how much subsidy is in these arrangements. Recently critics have charged the Ex-IM Bank with using "creative accounting" methods and claim the Bank is losing about 2 billion dollars a year (Gannon, 1989, p.5f).
The administration has estimated that the subsidies inherent in overall federal credit activities totals more than 15 billion dollars a year (Office of Management and Budget, 1989, p.F-8).
3. TAX EXPENDITURES:
The Internal Revenue Service provides subsidies to businesses through tax exemptions and deductions. The current budget lists them under the nomenclature of "tax expenditures". While one of the goals for the tax reform bill of 1986 was the elimination of "tax breaks", these devices continue to provide liberal subsidies to U.S. businesses. The accelerated depreciation allowance, which allows the depreciation of buildings,machinery and other equipment at rates greater than their actual deterioration, provided more than 23 billion dollars of subsidies in fiscal 1988. Investment credits, often criticized for encouraging American corporations to invest in machines that displace workers, were worth another 11 billion dollars to corporations during the same year (Peachman, 1987, p.360). Tax subsidies encouraged the rash of corporate takeovers recently plaguing Wall Street. Those buyouts, which create no new jobs and produce no new goods and have put hundreds of people out of work, are only possible because current tax policies make no distinction between borrowing for capital improvements and borrowing to acquire other companies (National Economic Commission, 1989, p.415).
One of the advantages enjoyed by businesses that receive government subsidies via the tax system is that the subsidy is obscure and public scrutiny, such an important aspect of traditional welfare, is difficult. A good example of just how difficult tracking such devices can be is observed in the example of Industrial Development Bonds or IDB's. Since the 1930s states have been able to issue bonds which are exempt from federal taxes and as a consequence entice lenders to charge lower interest rates (Congressional Budget Office, 1984, p.22). These IDB's are a subsidy for everyone involved. The borrower can obtain lower than normal interest rates, the lender receives lower tax rates on his profits and the financial institutions receive participation fees (Congressional Budget Office, 1984, p.23).
While many of these Industrial Development Bonds have financed worthwhile projects, many others have underwritten more controversial activities. The Congressional Budget Office found IDB's financing private golf courses, restaurants, and even a topless nightclub (Richardson, 1981). The tax reform bill of 1986 restricted the size of IDB transactions, but the costs of this
subsidy was still more than 3 billion dollars in fiscal 1990 (Office of Management and the Budget, 1989, p.F9).
The largest single tax loophole for American businesses is the accelerated depreciation allowance, worth 26 billion dollars a year, followed by the investment credit deduction, worth another 11 billion per annum. Total tax expenditures for corporate America totaled more than 79 billion dollars in fiscal 1988 (Peachman, 1988, p.360).
Federal tax expenditures are only part of the total tax subsidy picture. state and local authorities offer an array of tax breaks to businesses located within their borders. While their diversity and jurisdictional intricacies make it difficult to calculate their value, we do know that those subsidies are worth billions of dollars (Vaughan, 1979). What makes many state and local tax expenditures so curious is that although their purpose is to encourage the relocation of new industries, there is no evidence suggesting that they do in fact cause such desirable migration. Furthermore, since virtually every state now offers what amounts to similar tax packages, it has become a zero sum game, with no single state or area enjoying any real advantage (Leonard, 1988, p.132).
4. SUBSIDIZED SERVICES:
The federal government provides a mixture of services to a diverse collection of businesses at rates below true costs (Congressional Budget Office, 1983, p.iii). The water transportation industry receives major assistance in the maintenance and administration for coastal harbors and inland waterways. Typical fees for these services are less than half the actual costs and represents an annual subsidy of approximately five hundred million dollars a year (Congressional Budget Office, 1983, p.23).
Another water associated subsidy is extended to western irrigators. Benefits from federal water projects include not only larger profits from the additional production of crops but also enhanced land values resulting from the transformation of dry acreage into more prolific irrigated farms. In spite of legislation demanding that the recipients of federal water projects pay their own way, most are supported by a ninety percent subsidy. For every dollar spent by the government to provide irrigation water, the farmer pays ten cents (General Accounting Office, 1981, pp.26-27). Federal Irrigation projects constitute a 1 billion dollar a year subsidy to select western growers (Fitzgerald, 1988, p.212).
Many western ranchers benefit from another form of government provided service, access to government grazing lands. Access to these lands is so much a part of western custom that "grazing rights" are usually considered a part of a ranch's assets (Culhane, 1981, p.116-117). The actual amount of subsidy fluctuates from region to region, but typical grazing rights leased from the government cost a third of what is charged for similar private land (Ferguson, 1983, p.205). The estimated value of the subsidies inherent in our current land leasing policies is more than three hundred million dollars a year (Lash, 1984, p.270).
Oil and coal mining companies also use public lands for commercial purposes. Oil and coal companies must bid for access rights to develop mines and wells. These bids are usually not competitive and once a mine or well develops, royalties paid to the government are well below rates paid to private land owners (Culhane, 1981, p.143). For example, federal onshore oil leases engender royalties of twelve to sixteen percent, while royalties paid to private land owners are usually thirty-three percent (Friends of the Earth, 1982, p.17). The General Accounting Office has estimated that a modest royalty increase up to a more reasonable twenty percent, would generate additional annual revenue of 2 billion dollars (Culhane, 1981, p.287).
No industry enjoys quite the same benefits from our national lands as hard rock mines which has free access to public lands and never pay a cent in royalties. Phasing in a royalty charge of twelve to fifteen percent would generate an annual revenue of 2 billion dollars a year (Culhane, 1981, p.287).
The Congressional Budget Office (1983) puts the amount of subsidies involved in providing accesses and services at more than 6 billion dollars a year (p.17). That figure does not include subsidized access to public lands granted to the lumber, coal, oil and mining industries. Adding those subsidies to the CBO's estimate brings the total amount up to 10 billion dollars a year (Culhane, 1981, p.287 and Friends of the Earth, 1982, p.126).
5. TRADE RESTRICTIONS:
Government sponsored trade restrictions provide a unique type of relief to American businesses. Trade restrictions, which include not only tariffs but the newer and more effective voluntary import quotas, protect specific industries from foreign competition. The cost of those activities is reflected in higher consumer prices. Import restrictions are not only a hidden tax, but are regressive, hitting hardest the pocketbooks of low income consumers. An analysis conducted in 1985 found that trade restrictions represented a twenty three percent surcharge for people earning less than ten thousand dollars a year, while costing those with incomes above sixty thousand dollars a year merely three percent (Federal Reserve Bank of New York, 1985).
In spite of a political atmosphere that seems to favor free trade practices, current U.S. trade policies impose some form of restriction on virtually all imports and sets tariffs on sixty six percent of all imported items (Weidenbaum, Murray, 1988, p.123). While the bulk of those policies protect manufactured goods, American farm products, particularly dairy items, also benefit (Hufbauer, 1986, p.17-18).
(Insert Table #3)
The costs of trade restrictions are spread throughout the economy and hidden in slightly higher prices of thousands of items purchased by millions of consumers. The total subsidy dispensed through restricting the import of foreign goods is more than 60 billion dollars a year (Consumers for world trade, 1989 and Navarro, 1984, p.65).
Besides the above major mechanisms used to distribute subsidies there are other arrangements that are more oblique. Since accurate cost estimates are difficult to extract they have not been included in the overall figures. They are supplied here only to give the reader a notion of their significance and provide a frame of reference.
Government regulations administered through a host of regulatory agencies furnish subsidies to favored business interests through restricting entry of competition into the marketplace and mandating artificially high rates (Tolchin, 1983, p.258). Regulated industries have been ingenious at using regulatory authority for their own benefit. Even the apparently neutral Environmental Protection Agency has protected segments of the power industry from new competition. The 1977 Clean Air Act required all new electric plants to include expensive sulphur scrubbing equipment. The regulation, promoted by eastern coal interests, virtually eliminated competition from western low-sulphur coal (Bardach, Eugene, 1989, p.214).
How much are these hidden subsidies worth? Some experts estimate the cost of regulation to be as high as 26 billion dollars a year (Parenti, 1980, p.66). Ironically, the consequences of deregulation will cost much more. When congress passed deregulation legislation for the savings and loan industry in the early eighties, a part of the package increased deposit insurance from forty thousand to one hundred thousand dollars. Another deleted regulation permitted the S & L Banks to expand their loans from secure home loans to more speculative ventures, thus setting the stage for the current debacle which many predict will exceed 250 billion dollars (Congressional Budget Office, 1989).
Congress has passed a number of laws restricting government purchases and thereby eliminating competition from cheaper foreign products (Congressional Budget Office, 1984, p.88). Such prohibitions force the Defense Department to exclusively purchase American made clothing and requires the Navy to purchase only vessels made in America. A particularly peculiar bill obliges the Defense Department to purchase U.S. coal to heat overseas bases, a stipulation that costs the taxpayers an estimated 1 billion dollars a year (Weidenbaum, 1988, p.41).
In spite of a 1947 law requiring the Defense Department to submit all purchases to competitive bidding, only about six percent of all weapons contracts are put out for bids (Stubbing, 1986, p.226). The result is that almost half of the Defense Department's budget, 150 billion dollars a year, is available to the defense industry on a cost plus basis, insuring contractors of substantial profits at little or no risk (Gansler, 1988, p.96). One critic, Iowa's Senator Grassley, has said of defense contractors, "They are the new welfare queens, isolated from competition and the consequences of their mistakes and with the government always ready to bail them out..." (Connell, 1986, p.92). Authorities have estimated that reforming current purchasing policies would save between 20 billion and 30 billion dollars a year (National Economic Commission, 1988, p.227, Kaufman, 1972, p.101, Lambros, 1984, p.128).
UPSIDE-DOWN MEANS TEST:
Not only do the corporate welfare programs constitute a drain on public resources, making the adequate funding of programs for the poor more difficult, but they contribute further to the disparate allotment of wealth that has become a growing problem during the eighties. Furthermore, distributive policy not only favors the corporate community over the poor, but favors wealthy businesses over smaller enterprises. In almost every instance, corporate welfare programs heavily favor the affluent and powerful. Nowhere is this more apparent than in those subsidies designed for agriculture, subsidies that are commonly sold to congress as important aids to struggling family farmers.
In absolute terms agriculture is one of the largest recipients of corporate welfare schemes and annually costs more than 25 billion dollars (Luttrell, 1989, p.137). Two thirds of the payments went to just three hundred thousand farmers who had sales exceeding one hundred thousand dollars a year. Half of the nation's poorest farmers received no subsidy at all (Pearlberg, 1988, p.35). Irrigation provided by the Bureau of Reclamation was originally planned as a subsidy for small farm families and today's project policy limits recipient farmers to owning no more than one hundred and sixty acres. A 1981 study by the California Institute of Rural Studies found that in five water districts two-thirds of the land was owned by only eight companies. These agri-businesses are a far cry from the striving family farmer so colorfully depicted during debates in congress over farm subsidies (Keisner, 1986, p.385).
The EX-IM Bank distributes its largess disproportionately to the larger wealthier manufacturers, with just eighteen companies receiving sixty percent of all subsidized credit (Lambus, 1984, p.145). The federal government has spent 40 billion dollars over the past thirty years promoting and subsidizing the nuclear power industry, an enterprise totally reserved for a few mega-corporations (Munson, 1985, p.136). This practice of subsidizing large powerful companies can hardly help the smaller businesses that are at a disadvantage when competing with corporations that not only have millions of dollars at their disposal but also receive additional help from government subsidy programs. The billions of federal dollars available to large businesses greatly exceeds the relatively small amount, some 334
million dollars, earmarked for the Small Business Administration (Office of Management and the Budget, 1989, p.A35).
DISCUSSION AND CONCLUSIONS:
How much are corporate welfare programs worth? Planned obfuscation makes accurate estimates difficult. If we take a very conservative view, eliminating indirect benefits and schemes which are so complex they foil projections, we still arrive at an annual projection of more than 170 billion dollars for the phantom welfare state. The magnitude of this amount is more easily grasped by comparing phantom welfare expenditures with federal government expenditures on other significant programs.
In 1990 the federal government spent 4.7 billion dollars on all forms of international aid. Pollution control programs received 4.8 billion dollars of federal assistance while both secondary and elementary education were allotted only 8.4 billion dollars. More to the point, while more than 170 billion dollars is expended on assorted varieties of corporate welfare the federal government spends 11 billion dollars on Aid for Dependent Children. The most expensive means tested welfare program, Medicaid, costs the federal government 30 billion dollars a year or about half of the amount corporations receive each year through assorted tax breaks. S.S.I., the federal program for the disabled, receives 13 billion dollars while American businesses are given 17 billion in direct federal aid (OMB, 1989, PA-39, a-40).
(Insert Figure #1)
The injustice of current spending priorities are apparent when we ponder what could be done with these dollars. Economist Alicia Munnell estimates that every person in America could be guaranteed an income above the poverty line for about 80 billion dollars more than is now spent on means tested poverty programs (Munnell, A., 1986, p.4). A less ambitious program providing a minimum income for low income families equalling 65 percent of the federal poverty standard and assuring all children necessary nutritional and developmental support would cost 21 billion dollars (Smeeding, T., 1991, p.53). This is about one eighth of what is now spent on current federal subsidies to American businesses.
Over the past several decades policy makers and politicians have created a multi-tiered welfare state. In the past decade one segment of this system, programs for the poor, have been slashed and their hallmark has become the stringent means tests that are required before meager benefits are doled out by a parsimonious government. On the other hand, another segment of the welfare state is reserved for the upper classes, distributing lavish allowances that are neither contained by a means test nor subject to the moralizing that often accompanies poverty programs. The distributive elements described in this paper help explain why the eighties have been so kind to the very wealthy. In the past ten years, more than two trillion dollars have been redistributed to American businesses and many of those dollars were directed back into the pockets of shareholders. Political analyst Keven Phillips has recently estimated that the richest 1% of Americans owns 60% of all privately held corporate stock (Phillips, 1991, p.A15).
In her article, "Everyone Is On Welfare," Mimi Abramovitz (1983) noted that a constricted image of social welfare, "... perpetuates a narrow and compartmentalized view of the welfare state. In this view, only the poor receive aid, making them especially vulnerable to cuts when the government's economic policies go awry" (p.442). Social work must expand the traditional boundaries of social welfare to encompass the programs that direct scarce funds to the more affluent segments of our society. Such a redirection will lead to the profession's developing more expertise on non-poverty welfare programs and prepare social workers for a leadership role in a crusade to reform present budget priorities. Indeed, the current budget crisis may be an opportunity for helping turn the country in a more compassionate direction.
Since its birth, Social Work has been in the vanguard of many national reforms often speaking on behalf of populations who are too beleaguered to forcefully represent themselves. Of late, too many social workers have abandoned our traditional mission as advocates for social justice. In this age of tight money, bank failures and low taxes, social work priorities should be re-ordered. As Social Workers, we must rededicate ourselves to leading a new reform movement dedicated to a more equitable redistribution of America's wealth.
Abramovitz, Mimi. (l983, Nov-Dec). Everyone is On Welfare, Social Work, Vol.
Anton, Thomas J. (1989). American Federalism and Public Policy. Philadelphia: Temple Univ. Press, p.16.
Bardach, Eugene. (1989). Social Regulation As A Generic Policy Instrument, in Beyond Privitization: The Tools of Government Action. Solamon, Lester, Ed., Washington DC: The Urban Institute, pp.192-212.
Congressional Budget Office. (1984). Federal Support Of U.S. Business.
Connell, John. (1986). The New Maginot Line. New York: Arbor House, p.92.
Consumers for world trade. (1989). Statement before the International Trade Commission: Investigation, pp.232-262. The Economic Effects of Significant Import Restraints.
Culhane, Paul. (1981). Public Land Politics. Baltimore: John Hopkins Press.
Federal Reserve Bank of New York. (1985). Consumer Costs of US Trade Restraints. Quarterly Review, Summer.
Ferguson, David & Nancy. (1983). Sacred Cows at the Public Trough. Bend, Oregon: Maverick Publications, p.205.
Fitzgerald, Randall. (1988). When Government Goes Private. New York:Universe Books, p.212.
Gannon, James. (1989). Lawmakers view Export-Import Bank as Red-Ink Gusher. Idaho Statesman, May 21, p.5f.
Gansler, Jacques. (1988). The Defense Industry. Boston: MIT press, p.96.
General Accounting Office. (1981). Federal Charges for Irrigation.
Hufbauer, Berliner, Elliott. (1986). Trade Protection In the United States: 31 Case Studies. Washington D.C.: Institute For International Economics, pp.17-18.
Kaufman, Richard. (1972). The War Profiteers. Princeton, NJ: Doubleday, p.101.
Keisner, Marc. (1986). Cadillac Dessert. San Francisco: Viking Publishers, p.385.
Lambus, Donald. (1984). Washington DC City of Scandals. New York: Little & Brown.
Lash, Joseph. (1984). A Season of Spoils. New York: Pantheon Books, p.270.
Leonard, Herman. (1988). Checks Unbalanced. New York: Basic Books, p.132.
Levy, Frank. (1987). Dollars and Dreams: The Changing American Income Distribution. New York: Russell Sage Foundation, p.14.
Munnell, Alicia. (1986). Lessons From the Income Maintenance Experience: An Overview, in Lessons From the Income Maintenance Experiment. Alicia Munnell, Ed., Federal Reserve Board and Brookings Institute.
Munson, Richard. (1985). The Power Makers. Los Angeles: Rodale Press, p.136.
National Economic Commission. (1989). Report On The Deficit.
Navarro, Peter. (1984). The Policy Game. New York: John Wiley and Sons, p.65.
Office of Management and Budget. (1989). Special Analysis of the Budget, Fiscal 1989.
Peachman, Joseph. (1987). Federal Tax Policy. Washington DC: Brookings Institute, p.360.
Pearlberg, Robert. (1988). Fixing Farm Trade. New York: Ballantine Books,
Phillips, Keven. (1991, Feb. 7). Capital Gains Tax-A Worse Idea Than Ever, Wall Street Journal, p. A15.
Rein, Martin. (l977). Equality and Social Policy. Social Service Review, December, p.586.
Richardson, Pearl. (1981). Small Issue Industrial Revenue Bonds. Washington, DC: Congressional Budget Office.
Smeeding, Timothy. (1991). The Debt, The Deficit, and Disadvantaged Children: Generational Impacts and Age, Period and cohort Effects, Debt,and the Twin Deficits Debate. James Rock, Ed., Mountain View California, Mayfield Publishers, pp.31-54.
Stubbing, Randall & Mindel, Richard. (1986). The Defense Game. New York: Harper & Row, p.226.
Titmus, Richard. (1965). The Role of Redistribution In Social Policy, Social Security Bulletin, pp.188-199.
Tolchin, Susan & Tolchin, Martin. (1983). Dismantling America: The Rush to Deregulate. Boston: Houghton Mifflin Company, p.258.
USA Today. (1989). March 21.
Vaughan, Roger. (1979). State Taxation and Economic Development. Washington, DC: Council of State Planning Agencies.
Washington Post. (1984, Jan. 27).
Weidenbaum, Murray. (1988). Rendezvous With Reality. New York: Basic Books.
Type Source (Billions)
Direct Expenditures CBO (1984) 17
Credit Subsidies 1990 Budget 8
Tax Expenditures Peachman (1988) 79
Subsidized Services CBO (1983) 10
Trade Restrictions Consumers for 60
World Trade ______
Rate1 Rate2 Subsidy
Federal Agency and Program (1) (2) (1)-(2)
Department of Agriculture:
Farm ownership 14.5% 10.4% 4.1%
Farm exports 14.9 11.51 3.4
Commodity loans 13.8 10.6 3.2
Department of Interior:
Reclamation 15.1 2.0 13.1
Department of Transportation:
Ship financing 17.4 13.1 4.3
NASA 14.2 12.7 1.5
Export-Import Bank 15.2 11.2 4.0
Tennessee Valley Authority 13.6 10.1 3.5
Foreign economic aid 15.3 2.8 12.5
Foreign military aid 14.6 6.2 8.4
Credit unions 11.0 9.9 1.1
1Interest rate available from banks and other private lenders.
2Interest rate actually charged by the federal government.
Source: CBO (1986) Helping or Hindering Business, p.26.
Estimates of the Cost of Protection to U.S. Consumers
Item Subject to Protection Consumer
Automobiles (for each unit imported from Japan) $2,500
Dairy products (yearly) $1.5-$4.9 billion
Meat (yearly) $1.2 billion
Motorcycles (for each unit imported) $400-$600
Peanuts (yearly) $200 million
Steel (quotas and other similar restraints) $7.2 billion
Sugar (yearly) $3 billion
Textiles and apparel (for 1980) $19 billion
Source: How Much Do Consumers Pay for U.S. Trade Barriers?
(Washington, DC: Consumers for World Trade, 1984).