The Washington Post recently reported that the Bush administration’s is proposing cutting funding to the U.S. Export-Import Bank by up to 25 percent. The Export-Import Bank represents corporate welfare at its worst. The bank provides government-backed loans to some of the largest corporations in the country to finance overseas sales.
Chris Ullman, a spokesman for the Office of Management and Budget told the Post that, “As we try to slow the rate of growth of spending, and put money towards the president’s priorities such as education, spending on things such as corporate subsidies needs to be diminished.”
Okay this is a good start, but why stop at merely diminishing the subsidies? It’d be better just to eliminate the Export-Import Bank completely. How can the United States honestly say that it supports free trade when it provides such massive subsidies to some of the richest corporations on the planet?
Opponents of even a 25 percent cut resort to that explanation popular with children worldwide — everybody else is doing it. Since nations such as China, India and Japan provide lavish subsidies to domestic firms, supporters of the Export-Import Bank argue that the United States has to subsidy its firms in order for them to be competitive in those foreign markets.
That makes no sense at all from an economic point of view. The only thing corporations receiving these loans are being competitive at is using the levers of power to transfer wealth and income from other people into their own coffers. If a corporation needs government aid to survive in a market, by definition it is not competitive.
That didn’t stop ten business groups, including some that normally can’t talk enough about the beauty of free trade such as the U.S. Chamber of Commerce, from sending a letter to the Office of Budget and Management complaining that the proposed cuts would “set the Bank back nearly 10 years.”
We can only hope.
Source:
White House wants to curb ex-im lending. Paul Blustein, The Washington Post, February 14, 2001.