FRONT PAGE CONTRIBUTOR
Corporate Welfare Gets New Life in the House
Ronald Reagan once said that, “The closest thing to eternity is a government program.” Case in point: The Export-Import (Ex-Im) Bank, which has made most every conservative list of programs to eliminate over the last few decades.
The House Financial Services Committee—controlled by Republicans—recently passed legislation (H.R. 2072) to reauthorize the Ex-Im Bank, which is nothing more than corporate welfare to corporations that export. It was passed without a recorded vote so we don’t know who would have opposed the legislation, but the voice vote does tell us that a sufficient number of conservatives did not mobilize against the legislation in committee.
In short, the Ex-Im Bank subsidizes lending (direct loans, loan guarantees, export credit insurance etc.) for American corporations that export and foreign corporations that purchase U.S. exports. H.R. 2072, authored by Rep. Gary Miller (R-CA), would extend the program for four years and increase the Bank’s exposure cap by 60 percent from $100 billion to $160 billion
Even though the Ex-Im Bank claims to be a self-sustaining institution that collects fees to cover its operating expenses and reserve obligations, federal taxpayers are still on the hook for potentially bad loans. Supporters note that the loans can only be made if there is a “reasonable assurance of repayment,” but of course, the individuals making these investment decisions are backed by the full, faith, and credit of the U.S.—not trying to ensure that their own hard-earned money gets enough of a return to allow them to stay in business. Lending standards inevitably slip. As Daniella Markheim has noted in calling for the elimination of the Bank, “U.S. government programs that subsidize risk offer above-market returns, in effect privatizing gains while potentially socializing losses.” Not to mention, any time you have a government institution making lending decisions there is a high risk of politics conspiring against the interest of taxpayers.
So in the few short months since re-taking control of the Financial Services Committee, Republicans are showing that they really were not paying attention to the financial crisis of the last few years—a crisis brought on, in large part, because of a political class that thought it was a good idea to create mammoth “self-sustaining” institutions (Fannie and Freddie) that privatized gain at the expense of socialized losses. This lesson should have been learned by now, and Republicans should be attempting to sunset corporate welfare programs such as the Ex-Im Bank. Instead, they extend and expand. H.R. 2072 should not be scheduled for consideration by the full House of Representatives, and if it is, it should be vigorously opposed.