Another "strange bedfellows" coalition that includes House Budget Committee Chairman John Kasich (R-Ohio) and socialist Bernie Sanders (I-Vt.) has banded together to kill a high-profile example of corporate welfare.
Their target is the Overseas Private Investment Corporation, which gives loans and "political risk insurance" to U.S. businesses that invest in potentially unstable countries. Its beneficiaries include such large companies as Coca-Cola, McDonald's, and US West. Congressional opponents believe the federal government has no business promoting major corporations overseas. Free market critics say these activities should be left up to the private sector. If private companies won't insure or make loans for some of the investments that OPIC currently backs, then perhaps those ventures were too risky to begin with. Sanders and others on the left argue that OPIC is, in effect, exporting jobs.
OPIC's supporters tell a different story. They say OPIC expands trade and creates jobs for Americans. And, far from being a burden to taxpayers, they assert, the program boasted a profit of $209 million last year, money that helps shrink the deficit. But critics say backing corporate investments in Third World countries with the full faith and credit of the U.S. government is not only corporate welfare, but a serious potential liability. If, say, Russia's economy or political system imploded, taxpayers could be out billions of dollars. "Taxpayers are being exposed, much like the S&L crisis," says Tom Sheehy, a staffer with Rep. Ed Royce (R-Calif.).
Another Hill staffer notes that two-thirds of OPIC's "profit" is actually interest payments from the Treasury. And when Congress authorizes a spending figure for discretionary spending, OPIC's income is included as a negative spending item. "The net effect [of OPIC] is higher discretionary spending, not lower deficits," says the staffer. Both sides predict a big battle this year over renewing OPIC's authorization, which expires in June. Opponents won a major victory last September, when the House voted down 260-157 a proposal to double OPIC's insurance authority to $25 billion and its financing authority to $20 billion. However, they admit that they caught OPIC's backers napping--something that won't happen again.