The Hidden Welfare of the Rich: Misconceptions and Realities

When people are referring to welfare, they often don’t understand the complexity or the true nature of these social policies. In the popular mind, welfare is often equated to 'handouts' or programs that provide support to those in need, particularly if some of the beneficiaries are Black individuals. However, this is a gross oversimplification that fails to recognize the many forms of welfare programs and their beneficiaries.

Common Misconceptions and Realities

Most people who casually speak about welfare typically don't know that the term encompasses a wide range of programs designed to support various segments of the population. Often, when people hear 'welfare,' they assume it is a blanket term for government aid to individuals, typically without realizing that there are different specific programs for housing assistance, food stamps, Medicaid, and SSDI (Supplemental Security Income).

However, the reality is far more nuanced. The term 'welfare' is often used to describe a broad spectrum of government assistance programs. While people often associate welfare with direct cash assistance, there are also indirect forms of support that benefit both lower-income individuals and certain segments of the wealthy.

Forms of Transfer Payments and Corporate Welfare

Transfer payments, both direct and indirect, form a significant portion of government spending, often directed towards wealthy individuals and corporations rather than the general public. For instance, agricultural payments and price supports, which significantly exceed the typical welfare programs, are forms of transfer payments designed to support the agricultural sector.

In 2017, the US government spent more than $1 trillion in farm crop, banking, and financial insurance payments, surpassing the total historical aid and transfer payments to any individual or group. This dwarfs the Social Security benefits received by any individual, such as Ms. Ida May Fuller, who received many thousands over her lifetime without ever paying in nearly as much.

Welfare for the Rich: A Closer Look at Corporate Welfare

Corporate welfare, or government assistance given to specific industries and corporations, highlights the broader scope of welfare programs. One of the most notable examples of corporate welfare is the Federal Deposit Insurance Corporation (FDIC), a single-payer 'health' insurance for banks.

The FDIC was established to protect taxpayers from potential failures in the banking industry, effectively providing a form of 'corporate welfare' to banks. For instance, the FDIC provided a loan of $35.5 million to the Commonwealth Bank of Detroit, which was the first bank to exceed one billion in assets, and was never repaid. Similarly, the Continental Illinois National Bank and Trust Co received a $4.5 billion bailout from the FDIC, and the federal government held an 80% stake in the bank until 1994.

Comparison and Contrast

While individual beneficiaries like Ms. Fuller can receive substantial support, these amounts pale in comparison to the corporate welfare provided to large and essential banks. For example, the bailout of Continental Illinois during the 1980s savings and loan crisis cost taxpayers a staggering $153 billion, with higher estimates reaching up to $300 billion.

As for the 2018 Farm Bill's Biomass Crop Assistance Program, despite its noble intention, the reality is that it essentially subsidizes the production of ethanol as a component of gasoline, which requires an unsustainable amount of water and is perceived as a waste of taxpayer resources.

Conclusion

Understanding the true nature of welfare programs is crucial. While programs like housing assistance, food stamps, and Medicaid provide essential support to those in need, the reality is that a significant portion of government spending is directed towards corporate welfare, often in ways that may not be transparent or widely known. It is imperative to recognize these hidden forms of welfare and the broader implications they have on our economy and society.