In arguing the case for more taxpayer help, United's CEO, Glenn Tilton, wrote, "United's financial crisis was precipitated by the 9/11 events. . . . A (federal loan) decision was deferred to give United time to work on several concerns, which have been addressed through our restructuring. United has significantly reduced costs, gained competitive flexibility and improved revenue."
Besides, in our capitalistic system, people already exist to provide money to businesses. We call such people lenders. Or investors. They include banks, venture capitalists and "angels." They assess risk, making decisions based on the company's debt, assets, management, business model, future prospects and ability to pay.
Quite simply, government does a lousy job of picking winners and losers in the marketplace. Take, for example, the Small Business Association (SBA). The SBA lends $11 billion dollars per year, with a default rate of about 10 percent. By contrast, bankers get nervous when they see a default rate higher than their usual 1 to 4 percent.
Corporate welfare, of all types -- subsidies for businesses ranging from farms to automotive to energy research -- was budgeted, in 2003, to cost taxpayers $86 billion. Republicans properly trumpet the success of the Welfare Reform Act of 1996, which reduced welfare rolls by 50 percent. Government welfare, whether corporate or personal, takes money from party A and gives to party B, lessening the initiative of both the giver and given. Welfare distorts behavior, makes one less personally responsible and reduces the role of private charity.
This principle applies to corporate welfare.
The bad news is that House Speaker Dennis Hastert, R-Ill., aggressively, if unsuccessfully, pushed for the corporate bailout. (Coincidentally, United's headquarters is in the speaker's home state.) Hastert's attempt represents another example of Republicans who talk the talk of personal responsibility, but fail to walk the walk. The good news is that the Air Transportation Stabilization Board denied United's latest application. Maybe some Board members recognize that the Founding Fathers designed the Constitution to prevent the federal government from spending taxpayers' money, no matter how noble or worthy the cause.
James Madison, the Father of the Constitution, denounced Federal government charity: "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."