Tag Archives: Federal Subsidies

Charles Koch Blasts Crony Capitalism, Calls Subsidies ‘Welfare for the Wealthy’

At last week’s EY Strategic Growth Forum in California, Koch Industries CEO Charles Koch said that government policies aimed at benefiting certain monolithic companies in the short term cause more harm than good in the long term. He blasted corporate welfare and called for CEOs to join him in lobbying against policies that create market distortions favoring particular companies or industries over others.

Koch told Yahoo Finance, “This is creating a two-tiered system where opportunities for the disadvantaged are being destroyed and we’re creating welfare for the wealthy, so it’s unjust.

It’s an unjust system, and it’s making people’s lives worse,” he added.

[RELATED: Obama Praises Rand Paul, Koch Brothers in NAACP Criminal Justice Reform Speech]

Koch admitted that his own Koch Industries currently benefits from a variety of incentives, but feels that his company and the U.S. economy would flourish more if politicians leveled the playing field and stopped doling out special favors to certain companies. Government subsidy tracker Good Jobs First notes that Koch Industries has received over $200 million in federal and state subsidies and federal loan guarantees.

We advocate the elimination of all these distortions, even those from which we currently benefit – such as ethanol mandates, restrictions on the export of crude oil and natural gas, and import tariffs. As an ethanol producer and large consumer of U.S. crude oil and natural gas, we profit short term from these market distortions. But rules like these – that don’t lead to good profit – leave virtually everyone worse off long term, including us,” wrote Koch in his book Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies.

Koch said that he fears that government interventions into the economy will lead to a future in which the government and the Federal Reserve control American companies. He said that he believes that free market policies allow customers to drive corporate decision-making, which he feels benefits the economy more than bailouts and subsidies aimed at strengthening top U.S. companies.

[RELATED: DONEGAN: Citizens United Ruling Lets Advocacy Groups Expose Politicians’ Voting Records]

PR Watch points out that the Koch brothers’ Freedom Partners advocacy nonprofit “has spent hundreds of millions in elections in part to tackle ‘rent-seeking,’ ‘corporate welfare,’ and other forms of cronyism.

Koch wrote in a 2012 Wall Street Journal op-ed, “Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.

ObamaCare Subsidies Upheld By Supreme Court

In a 6-3 decision, the Supreme Court has ruled that the federal subsidies received by millions of Americans are legal.

The plaintiffs in the case of King v. Burwell argued that only insurance customers of exchanges run by a state should receive federal subsidies. The ruling upheld that credits shall be allowed in all 50 states, not only in the states that have established their own insurance exchanges.

The decision, written by Chief Justice John Roberts, noted that the ACA was passed “to improve health insurance markets, not to destroy them.”

Roberts wrote that “The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner.”

Over 6 million people are using federal subsidies to offset the cost of insurance.