Visible Hand(outs): Ending corporate welfare as we know it.

Six years ago, there seemed to be only one point of common ground in Washington. The newly elected Republican Congress was at odds with a Democratic White House on everything from school lunches to Medicare. Newt Gingrich tried to associate the Democrats with Susan Smith, who drowned her children; President Clinton tried to associate the Republicans with Oklahoma City bomber Timothy McVeigh. But on one issue, everybody professed agreement: Corporate welfare had to go. Clinton and Gingrich, Ralph Nader and Dick Armey, John Kasich and Robert Reich, the Heritage Foundation and Friends of the Earth all agreed that the federal government should stop giving subsidies to business. Colin Powell, too, blasted corporate welfare.

Clinton, Gingrich, Kasich, and Reich are all out of power now. But corporate welfare is still here. A forthcoming paper by Stephen Slivinski of the Cato Institute lists $87 billion of such subsidies in this year's budget. And corporate-welfare spending is growing. It's up 30 percent since 1997. Stephen Moore, a former Cato analyst now running the Club for Growth, concludes, "We fought a war against corporate welfare. Corporate welfare won."

One reason it won is that the consensus against it was shallow. Different groups had different views as to which programs counted as corporate welfare. Conservatives argued that most tax breaks could not be counted as welfare. Letting companies keep more of their profits was not the same as giving them taxpayers' money. In addition, conservatives viewed many business tax breaks as a partial corrective to the tax code's bias against savings and investment. If some industries were able to shield a portion of their investment from taxation, the solution was not to end this exemption but to extend it.

Reich, meanwhile, claimed that many of the programs Republicans wanted to abolish were not really corporate welfare because they gave indirect benefits to the public as well as direct benefits to companies. So elastic was the Clinton administration's conception of the public interest that in the end it was unable to identify any subsidies it wanted to eliminate. Clinton vetoed the Republicans' budget in 1995 partly because it did eliminate some subsidies. The campaign against corporate welfare has never really recovered from that veto.

That campaign has not, to be sure, entirely disappeared. President Bush's budget cuts corporate welfare by about $12 billion. No president since Reagan has had a more ambitious program of retrenchment. But Bush's cuts exist only on paper. He has said nothing in public about the cuts, done nothing to pressure Congress to make them, threatened no vetoes if they do not. Congress, not surprisingly, has ignored Bush's proposal.

Since 1995, opponents of corporate welfare have repeatedly tried to eliminate the Advanced Technology Program. Its budget has, however, grown by 40 percent during this period. Bush wants to eliminate the program, but so far his proposal is going nowhere. Senate budget- writers are suggesting a 38 percent ($55 million) increase.

The House has not been much more eager to wield the scalpel than the Senate. Bush's budget cuts the Market Access Program-which gives money to agricultural trade associations to advertise overseas-by 27 percent. The House Agriculture Committee wants to double the program.

Corporate welfare is likely to continue pretty much as is, unless the president makes an issue of it. There is a strong case for the president to give his proposals to rein in corporate welfare more publicity, and indeed to expand those proposals.

Fighting corporate welfare is the right thing to do. The federal government has no business subsidizing business. Corporate-welfare programs fall into two categories: either they pay for ventures that corporations would have financed on their own because they make economic sense, in which case they're unnecessary; or they pay for ventures that corporations would not have financed on their own because they don't make economic sense, in which case they're foolish.

Sometimes a program straddles both categories. The Advanced Technology Program is supposed to be a funder of last resort for high-tech projects that could yield benefits to the economy. But many of the companies that apply for grants under the program-63 percent of them, according to a 1996 review by the General Accounting Office-never looked for any other funding before going to the government. The program often duplicates privately funded research. Let companies pay for their own research. Ditto for their marketing and their insurance, to mention other things corporate welfare covers.

It would prove that Bush is not a servant of the Fortune 500. The idea that Bush is the president of corporate America is part of the received wisdom, and it's hurting him. Marshall Wittmann, a political analyst at the Hudson Institute, points to polls that show that people consider Bush a friend of big business and the wealthy rather than of average people. "That's the worst number he has consistently had," he says.

It would establish Bush as a "different kind of Republican." Republicans are associated with corporate welfare. As it happens, that's a bum rap. A lot of corporate-welfare programs are legacies of the New Deal and the Great Society. Even the tax provisions that are sometimes considered (rightly or wrongly) corporate welfare were largely the handiwork of Democratic Congresses. And the Clinton administration both defended existing corporate-welfare programs and pushed for new ones. But unfair as it is, the misperception offers Bush an opportunity to redefine himself with practically no political cost. Fighting corporate welfare, says Wittmann, would be "playing against type but in a free-market way, consistent with conservatism, that would win the accolades of the Heritage Foundation and the Cato Institute."

He needs the money. Bush is in a budget bind. He pledged to devote payroll-tax revenue solely to Social Security. If income-tax revenue comes in low because of the recession, or if spending rises, he won't be able to keep that pledge-unless he finds spending to cut elsewhere. The Congressional Budget Office is projecting that $9 billion of payroll-tax revenue will have to be tapped. The mere projection has led Democrats to charge Bush with breaking his pledge and "raiding" Social Security. It's a bogus charge, but one that could be dispelled if Bush were able to cut a few billion more from corporate welfare. Some programs may be too politically sacrosanct to touch: the programs that benefit agribusiness, for example. But Bush can demand at least the $12 billion in cuts he initially proposed, and then some, out of an $87 billion annual corporate-welfare budget.

It would put Bush in a better position to win other budget battles. David Stockman, Reagan's first budget chief, once said that budget- cutters had to prove that they were willing to say no to "weak claims," not just to "weak claimants." Saying no to demands for taxpayer money from corporate executives-his own presumed constituents-would increase Bush's moral authority in saying no to others' demands.

Ending corporate welfare would have salutary political effects. The advocates of ever-more-stringent campaign-finance regulation complain that businessmen sometimes use political contributions to buy special favors at the expense of the American people. Corporate welfare is a standing demonstration of the truth of that claim. Its existence does not, of course, prove the wisdom of the regulatory remedy. Reducing corporate welfare would lessen the incentive for companies to contribute to politicians (and, incidentally, prove the regulators wrong in their contention that no such reform can be effected until their nostrums are put in place).

Perhaps more important, ending corporate welfare might make business lobbies better allies of conservatives. Grover Norquist, the head of Americans for Tax Reform, says, "Eliminating corporate welfare would mean that corporate America's only interest in Washington would be in cutting taxes and free trade." (From one perspective, of course, trade barriers are themselves a particularly damaging form of corporate welfare, but Norquist's point is sound.)

It would ally Bush with John McCain. The Arizona senator can be an effective spokesman for conservative positions when he agrees with them, and on corporate welfare he does. Why not direct his energies in a constructive direction? Doing so would make it harder for reporters to keep writing the Bush-McCain feud story they love, with its implications of Republican disunity and White House pettiness. It might even force them to write a Bush-McCain reform story.

It would ally Bush with environmentalists. The environment is probably the single cluster of issues that has most bedeviled the Bush administration. Republicans have not found a distinctive policy on environmental issues, one that simultaneously advances free markets and environmental protection. Taking on corporate-welfare programs that despoil the environment would be a good start, not least because established environmental groups already support the idea. Friends of the Earth and like-minded groups run a "Green Scissors Campaign" that lobbies for it.

Which brings us to a final argument Bush might want to consider. Taking on corporate welfare would put the Democrats in a tough spot. Many liberals oppose corporate welfare; so does the public. A Bush initiative on the subject would force Democrats either to praise the president's leadership or to become the party of corporate welfare. Whether or not Bush could get corporate welfare cut, it would be a debate worth having.