The state of US corporate welfare

From left: Bank of America branch, Boeing 747-8 freighter jet, Tesla Roadster © Nell Redmond/AP (B of A), Ted S. Warren/AP (jet), Tesla Motors

Should the U.S. government subsidize any industry? Most people would say yes. For all but the most stalwart free-market defenders, some government support is viewed as necessary to spark growth and foster job creation.

But when the focus shifts to which companies are being subsidized, and why, opinions quickly diverge.

Should companies like Tesla Motors (TSLA) and General Motors receive handouts to manufacture electric cars before certain practicalities about the technology are nailed down -- and when the cars are priced beyond the means of average buyers?

Is it proper to subsidize operations of coal companies such as Peabody Energy (BTU), Massey Energy (MEE) and Arch Coal (ACI) when many Americans would prefer to see the industry scaled back or even shut down in favor of more environmentally benign energy producers?

Is it logical that food-stamp money -- which can't be spent on cigarettes or alcohol -- can be used to buy sugary beverages from Coca-Cola (KO) or PepsiCo (PEP) that can contribute to obesity and other health problems?

And why would BP (BP) and other big oil companies have access to tax breaks and subsidies at every stage of hydrocarbon production? Potentially more problematic to some was the news that BP planned to use tax credits to shed $10 billion of the cost of cleaning up the Gulf of Mexico after the Deepwater Horizon rig exploded and sank, creating the biggest offshore oil spill in U.S. history.

Click ahead for a look at 10 industries where many prominent players receive some form of government handout. For more on the story, go to Minyanville.

Next: Oil industry

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Nuclear energy

NRG Energy CEO David Crane © Mel Evans/AP

If you knew that there was only a 50% chance that someone asking you for a loan would pay you back, would you fork over the cash?

Probably not, which is why the federal government has had to step in and say that it would guarantee bank loans given to producers of nuclear energy, an industry with a history of cost overruns and loan defaults.

Earlier this year, President Barack Obama announced that the federal government would supply $8 billion in loans to Georgia electric utility Southern (SO) for construction of twin nuclear reactors in eastern Georgia, the first ones planned in the United States since 1977.

NRG Energy (NRG) and Constellation Energy Group (CEG) have also been promised money by Washington to fund new nuclear power projects.

These loan guarantees were authorized by the Energy Policy Act of 2005, which earmarked more than $18 billion toward expanding the use nuclear power in the United States.

To see what Warren Buffett has to say about the economics of nuclear power, go to Minyanville's website.

Next: What do you think?

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Published Sept. 20, 2010

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