EDITORIAL Corporate welfare tactics

Before they do serious damage, U.S. lawmakers and administration officials should quit slinging around the words "corporate welfare."

The very phrase is a reductionist gimmick, a self-convicting allegation designed to fit television news formats. By asserting the existence of corporations on the public dole, it snuggles comfortably into the moral dialectic of congressional fairness judges: Welfare for poor people and welfare for corporations must somehow balance. If the government cuts the former, it must also cut the latter.

Anything tagged "corporate welfare" thus becomes a target for budget cuts as latter-day liberalism co-opts conservative fiscal sympathies. Congressional Republicans should know better.

Agencies threatened

The welfare shadow of doom lately has fallen over agencies that help U.S. companies conduct business abroad, such as the Export-Import Bank, Overseas Private Investment Corp., and Trade and Development Agency. To varying degrees, these agencies do spend federal money or at least expose resources to the risk of loss. And they do so on behalf of corporations. By the reckoning of some, this represents corporate welfare, ripe for fiscal sacrifice on the altar of fairness.

The view threatens oil and gas companies and service firms-and not just because many of them use services of the trade agencies. Companies should promote a more reasonable argument. They should suggest that the government quit trying to balance wholly dissimilar programs in quest of fairness and instead confine itself to what works in service to national interests and what doesn't.

Social welfare, as historically practiced, failed. It institutionalized the problem it was supposed to solve. It hurt national interests. Changing a failed system of social welfare creates no moral dilemma for the U.S.; in fact, changing such a system is its own moral imperative, to which programs alleged to represent "corporate welfare" are irrelevant.

Unlike social welfare, agencies designed to promote U.S. trade generate benefits worthy of their costs. They help U.S. companies to compete abroad and thus to prosper, employ Americans, and pay taxes. Unlike social welfare, they work. Companies use their services. And they do so partly to remain competitive with non-U.S. companies helped similarly by their own governments.

If the agencies cease to serve national economic interests, or if they come to no longer work efficiently, they should indeed be changed or eliminated. What's important is that they be assessed in terms of their service to national interests and the efficiency of their operation. Using the corporate welfare contrivance to link their funding levels and fates to social welfare programs is absurd.

But much more than the continued availability of trade agency services is at stake in this debate. The Clinton administration has deployed the corporate welfare brand in its recommendation to further limit the federal tax credit for income taxes oil and gas companies pay on income earned outside the U.S. If it succeeds, the tactic would prove the corporate welfare tag to be an extremely dangerous weapon.

The tax credit is no special favor for U.S. companies. It just avoids double taxation of income from foreign sources. How is this welfare? And why does the Clinton administration propose to restrict use of the credit by oil and gas companies but not by companies in other industries?

Economic interests

Profitable international business by U.S. companies serves national economic interests. It creates jobs, generates tax revenues, and opens markets for U.S. goods and services.

Toward these ends, Congress and the administration should be promoting the competitiveness of U.S. companies abroad, not detracting from it. In the modern world of commerce, competitive compromise based on fanciful notions about corporate welfare looks especially foolish.