Wednesday, May 23, 2012
Export/Import Bank ~ Should Obama Terminate The bank?
May 23, 2012
Terminate the Export-Import Bank!
It seems that the Obama administration has no problem with subsidizing foreign companies while he preaches about the evils of big business here at home. Instead of stopping the handouts, the President and his policy advisers are making it a priority to prop up foreign firms with taxpayer dollars. Reauthorizing the Export-Import Bank (“Ex-Im Bank”) and increasing its loan limit from $100 billion to $140 billion is nothing more than corporate welfare and bad news for U.S. taxpayers.
The Ex-Im Bank is the official export credit agency of the United States; it lends money and extends credit to foreign companies that buy U.S. exports. President Franklin D. Roosevelt established the Ex-Im Bank in 1934 in order to make loans to the Soviet Union, and it has since financed over $450 billion of purchases. The last time Congress reauthorized it was in 2006; its current authorization is due to expire at the end of the month.
Yesterday, the House approved the reauthorization by a 330-93 vote, and the Senate is expected to take up the House bill shortly. Reauthorizing the Export-Import Bank and increasing its loan limit from $100 billion to $140 billion is exactly the kind of government meddling in the economy that free-market advocates should forcefully reject. President Obama should veto this bill if it crosses his desk.
The Ex-Im Bank has nicknames that connote what it really does—it’s called “a corporate welfare slush fund,” “the Fannie Mae for exporters,” and the “Boeing Bank.” Even Barrack Obama himself said the Bank was “little more than a fund for corporate welfare,” when campaigning for his current job in late 2008.
Candidate Obama was right: the Bank is corporate welfare, plain and simple. It gives money to a small number of politically-connected companies and industries, and then passes the cost onto taxpayers. The biggest beneficiary is Boeing, which received 44 percent of the total loans and long-term guarantees that Ex-Im Bank extended in FY2010. Last year alone, Ex-Im Bank provided more than $11.4 billion to foreign airlines to purchase Boeing airplanes. This practice hurts American firms because it forces them to pay more for aircraft than their foreign competitors.
President Obama frequently repeats his refrain that he wants to end corporate welfare, but signing the bill to reauthorize the Ex-Im Bank would suggest the exact opposite. It’s just like how the Obama administration sends a $147 million check to Brazilian cotton farmers each year instead of cutting cotton subsidies here at home. As George Will recently observed, “And so it goes, subsidies begetting counter-subsidies, as U.S. trade policy is increasingly set by foreign governments.”
Boosting exports is the ostensible purpose of the Ex-Im bank, but the free market would better serve this end. Firms in the private sector can step in and extend credit without burdening taxpayers and obstructing free trade. To accomplish this goal of increasing exports, the Obama administration and Congress should focus on policies that reduce regulatory barriers to foreign investment.
Cutting the federal corporate tax rate would be a great start, since it discourages businesses from opening their doors here
Read more: http://americansforprosperity.org/051012-obama-should-veto-export-import-bank-reauthorization#ixzz1wCsbJsm4