There's a big difference between free enterprise and crony capitalism. One fosters competition to serve consumer demands but the other feeds off taxpayers and exploits privileged access to Washington's political class for private gain and protection from competitors. Increasingly, America's corporate giants are opting for cronyism over the rigors of competition.
In 2008, when Washington voted to bail out Wall Street, people across America were outraged. In fact, the seeds of the modern Tea Party movement can be traced back to this momentous event, which sparked voters to mobilize against the cronyism fostered by big government. While the magnitude of the Wall Street bailout was unprecedented-$700 billion-Washington's rush to dole out money to special interests was, unfortunately, business as usual.
As the reach of government grows, more often than not, the road to corporate profits runs through Washington. Many corporations have come to rely on government largesse rather than innovation and entrepreneurship to boost their bottom lines, something that has only been reinforced by the Obama administration's aggressive expansion of the government's control of the U.S. economy. Stimulus spending, health care legislation, and financial services legislation have inserted Washington squarely into activities best decided by the marketplace. Politicians-many of whom decry the role of special interests in Washington-enjoy these new levers of power and the lucrative fundraisers sponsored by those seeking to do business in the world that Congress has created.
With New York and Washington continuing to blur the distinction between the private and public sector, many corporations have set up shop in the nation's capital, with an army of lobbyists working to turn the law in their favor. Few corporations better represent the crony capitalism business model than GE. Hardly described as a bank, GE became a major recipient of the bailout, issuing some $74 billion in debt backed by taxpayers under the Temporary Liquidity Guarantee Program-a program that GE persuaded the government to expand so it qualified as a recipient. At the same time, GE managed to avoid new federal restrictions on executive compensation required under the TARP program.
Elsewhere, GE has joined forces with a number of other companies under the banner of USCAP to endorse a costly cap and trade energy program that would drive up the costs of fossil fuels while promoting new forms of energy.