Exposing the Folly of Corporate Welfare

By NORMAN PEARLSTINE, EDITOR-IN-CHIEF

Reviewing the coverage of this year's White House scandals set me to thinking about the state of investigative reporting in America. These days investigative reporting has largely given way to and is confused with reports of investigations. No matter that prosecutors (special and not) and their targets have made selective leaks a part of their strategy. Ditto the public relations gurus who are so effective at leaking on behalf of their corporate and celebrity clients. We in the media are too often happy accepting credit for disclosing that which has been dumped in our laps.

The stories that result may be legitimate, but in too many cases relevance and importance take a backseat to titillation. The more trivial the item, it seems, the more shrill the reporting, in print and over the air. It is sometimes hard to distinguish the evening news from Hard Copy. No wonder the National Enquirer is up for sale. Circulation and profits have been falling, in part because the rest of the media have become so competitive on stories that in years past none would touch. It is not surprising that many Americans view the media with increased distrust and disgust.

TIME strives for its share of scoops, taking news tips wherever we might find them--and working through many other sources to confirm them and add context. Most weeks I am happy with the results, although we also have some scalps on our belt (this summer's infamous Tailwind story immediately comes to mind) that I wish weren't there. But along with the scoops and the stories of the week, we have devoted substantial resources to special reports that take you behind the headlines so you can understand how our society really works.

Our founder, Henry Luce, urged us through his life and in his will to practice journalism "in the public interest as well as in the interest of [our] shareholders." In recent weeks we have printed two special reports, one about a week in the life of a hospital and another on how to educate your child, that were specially crafted to help fulfill Luce's pledge. Neither has anything in common with the "Gotcha!" journalism so prevalent today, but both will endure as important investigative reports.

This week we take our commitment to public-service journalism to a new level by publishing the first of a series by Don Barlett and Jim Steele on the folly of corporate welfare. Barlett and Steele came to Time Inc. 18 months ago from the Philadelphia Inquirer, where, over 26 years, they earned their reputations as America's finest investigative reporters. Along the way they garnered almost every major journalistic prize, including two Pulitzers--for stories on auditing practices of the IRS and special tax breaks engineered by Congress--two Loeb awards for business reporting and four George Polk awards.

Although their reporting always makes a point, it doesn't reflect a point of view so much as conclusions gained from extraordinary digging. This series has included interviews with several hundred people in 24 states. "If you ask Don and Jim the sources for a point, be prepared for memos that tell you more than you ever want to know," says Steve Lovelady, the Time Inc. editor-at-large who worked on this project and who, as the Inquirer's managing editor before that, worked with Don and Jim on half a dozen other major series.

Don and Jim don't ignore rotten apples, but their passion is for writing about rotten barrels. They also focus not only on the winners--in TIME's series, the recipients of the government giveaways--but also on the losers: people who have no clout. The result, I hope you agree, is an unparalleled expose of a system gone terribly wrong.

Some may call this series antibusiness, but I believe nothing is further from the truth. Although the largest companies are the primary beneficiaries of various corporate-welfare programs, I don't view them as villains. Business enterprises like General Motors and General Electric are designed to make money. They would be derelict if they didn't seek to avoid taxes and gain special subsidies. No, the villains are the federal, state and local governments that reward some companies while denying similar largesse to other corporate and individual taxpayers. Those many chambers of commerce and other business organizations that argue for more corporate subsidies need also to be singled out for censure.

Although ending corporate welfare as we know it is essential, it has become so much a part of the way corporations do business that change will not come easily. No individual or corporation wants to pay higher taxes. Rather than give corporations uneven and unfair exemptions, it may make more sense to simply do away with both corporate welfare and corporate taxation. That would create a level playing field that would replace the current system of favoritism, bribery, subsidies and threats.

I am not sure that Don and Jim (or, for that matter, many of our readers) would go that far. But after reading their series, I think it will be hard to argue that we need the wasteful programs they have exposed. Change won't come, however, until all of us realize that corporate welfare represents a giveaway that takes all of us for a ride.

Norman Pearlstine, Editor-in-Chief