Maine deals with corporate welfare and welfare for the poor in shockingly different ways.
The most obvious difference lies in the fact that the poor who receive a welfare benefit must meet eligibility requirements almost always predicated on some form of “need,” which must be demonstrated by the recipient: income below, or only slightly above, the poverty level, actual unemployment, and injury, handicap, or disability.
Moreover, benefit eligibility is continually monitored. If a recipient’s income rises because he/she took a second part-time job, if they fail to search actively for work (however that is defined), if injury or health conditions improve – these changes will almost certainly give rise to a cutting off or reduction in food stamp, unemployment, disability, or other benefits.
Corporate welfare recipients, on the other hand, seldom confront “need” requirements when they press for state and local subsidies to finance new capital investment. There is no duty to show that profits, cash on hand, or private borrowing is unavailable to finance new capital investment.
The wealthiest corporations in Maine – National Semiconductor, Bath Iron Works, Walmart, Central Maine Power, and hundreds of other profitable corporate entities – are eligible, as a matter of right, for tax increment financing, business and equipment tax refunds, and for a variety of other tax exemptions and credits that reduce their capital investment costs, and thus increase their already large profit margins, all at the expense of state and local taxpayers. And these subsidies are seldom tied to job creation or retention, the ostensible justification for the subsidy.
Beyond the need to show continuing eligibility, the duration of many welfare benefits for the poor is measured in weeks or months. When the limit is reached, the recipient is cut off without regard for continuing need. For example, unemployment benefits in Maine, even if one qualifies for extended emergency benefits, is 40-63 weeks. Durational limits for corporate welfare recipients are either non-existent, or extend for years: 12 years in the case of BETR reimbursements, 15, 20, or 25 years in the case of most TIF recipients.
Finally, the amount that poor welfare recipients can receive, even if they are eligible for more than one benefit program, is closely monitored and continually being pared down as state revenues shrink (the goal of the LePage administration), and/or to avoid the pyramiding of benefits that might lift some recipients above defined poverty levels deemed adequate to meet their needs.
These benefit caps, whether federal or state, are seldom adequate. For example, food stamps for a household of four are capped at $668 per month, minus 30 percent of net family income. Try feeding four persons for a month on that.
Caps on welfare benefits for the poor account for the fact that 21 percent of Maine children live in households with income below the poverty level, and that Maine ranks 41st in welfare assistance to the poor.
On the other hand, corporate welfare recipients seldom confront caps (an upper limit on annual or total disbursements to a single corporation). BETR reimbursements to the top 20 corporate recipients in 2001 totaled $35.4 million; in fiscal 2013 they totaled $27.1 million; half of the corporations on the 2001 and 2013 lists received well over $1 million; more than half of the 20 corporations on both lists were among the top 20 recipients every year between these two benchmark years.
TIF and other payments show a similar pattern. In 1997, BIW received an $85 million TIF subsidy from the city of Bath spread over 25 years. In 2011, the city of Portland gave Thompson’s Point Development a $31 million TIF subsidy spread over 30 years. In 2013, Maine gave Great Northern Paper Co. $40 million in tax credits spread over seven years. There is clearly no cap on corporate welfare disbursements in Maine.
The disparities in treatment of corporate welfare recipients and poor or unemployed or disabled recipients of welfare is patently unfair. It should trouble us, but seemingly hasn’t. The hypocrisy is worse.
Corporate leaders and their Republican supporters endlessly tout the “rugged individualist” rhetoric of Ayn Rand, the free market economics of Friedman, von Hayek, and Smith, asserting that an “invisible hand” produces order (a greater good) out of the chaos of the marketplace. They argue that those who fail have no one to blame but themselves, they are lazy at best, scamming the system at worst. They’re part of Mitt Romney’s famous 47 percent.
All of this rhetoric is blather. While demonizing the poor, corporate leaders and their political allies have created a legal framework that is anything but a free marketplace. Everybody knows it is a stacked deck, a framework of laws that has allowed an unwarranted level or corporate subsidies, a level of wealth held by corporations and the top 1 percent of our population that is unprecedented, while the needs of the poor and middle class languish.
It is a framework that assures that the poor stay poor and the rich get rich.
The Legislature has the power to change this shameful framework of laws. If we are to be what we claim to be – a nation of “liberty and justice for all” – the time to act is now.
Orlando Delogu of Portland is emeritus professor of law at the University of Maine School of Law and a longtime public policy consultant to federal, state, and local government agencies and officials. He can be reached at email@example.com.