Export-Import Bank

Beyond the Export-Import Bank: This Is the Next Corporate Welfare Program We Should Cut

The Overseas Private Investment Corporation is ripe for termination.



Now that the Export-Import Bank's charter has expired, it's time to examine other programs that should follow in Ex-Im's footsteps. The Overseas Private Investment Corporation (OPIC), a federal agency that subsidizes U.S.-owned overseas businesses with taxpayer-backed financing, is ripe for termination when its charter expires on September 30.

Immediately focusing on a new target on the heels of Ex-Im's expiration is important. As Heritage Foundation's analyst Diane Katz expressed to me in an email, "We should certainly celebrate the success of blocking Ex-Im from doling out yet more subsidies, but the victory may be temporary and is certainly incomplete. Ex-Im is only one of dozens of corporate welfare programs, such as OPIC, that must be ended."

In the Washington Examiner, Timothy Carney explains what OPIC does and why it should go. "Want to set up a factory in a different country? OPIC can make it cheaper for you. For instance, a Brazilian granite business gets an OPIC subsidy, even though that hurts its U.S. competitors."

The parallels between OPIC and Ex-Im are chilling: two government agencies that focus on artificially propping up U.S. companies in the name of economic growth and job creation by providing cheap financing to companies that could find capital on their own. In the process, both agencies transfer large risk to taxpayers.

Both claim to serve small businesses—a claim that should be taken with a grain of salt. Both fund politically favored projects like the now-defunct solar company Solyndra. OPIC is also known to fund questionable projects like the construction of a luxury Ritz-Carlton hotel in Turkey.

While OPIC focuses on developing and emerging markets and U.S. operations abroad (as opposed to Ex-Im, which tried to sell as many Boeing airplanes abroad as possible), both agencies' activities create similar market distortions by shifting resources, jobs, and exports away from non-subsidized companies toward subsidized ones.

By propping up foreign and U.S. companies that invest abroad with cheap loans, both agencies hurt domestic competitors. That's right; in both cases, our government is directly responsible for hurting American companies by lending support to a few lucky projects abroad.

Take Carney's example of the Brazilian granite project. In 2012, OPIC approved a $6 million taxpayer-backed loan to support a U.S. company called Wisenbaker Building Supply to expand its granite extraction operations in Brazil. Once extracted, the granite is cut it into slabs for countertops and sold outside of Brazil, including the United States. Obviously, the recipient of OPIC's largess, Wisenbaker, loves cheap loans. This gives it an edge over its competitors. However, these competitors also include other U.S. companies in the same industry.

One of the most overlooked similarities between Ex-Im and OPIC, however, is that they are the poster children for programs that privilege big lenders. Indeed, both programs extend loan guarantees allowing lenders—including many large banks such as JP Morgan, Citibank, or Wells Fargo—to transfer most of the risk of doing business to U.S. taxpayers while cashing in large fees and interest payments (albeit at lower rates than commercial loans) from the borrowers.

In 1996, Nobel Laureate Milton Friedman wrote a letter to the then-House Budget Chairman John Kasich (R-Ohio) that stated: "I cannot see any redeeming aspect in the existence of OPIC. It is special interest legislation of the worst kind, legislation that makes the problem it is intended to deal with worse rather than better. …OPIC has no business existing."

Friedman's analysis was correct in 1996, and it still is today. Letting OPIC's charter expire on September 30—just as Ex-Im's charter expired on June 30—would deal another needed blow to special interests.

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  1. I suppose Lizzie is going to shed some Cherokee tears for this program too.

    1. Iron Eyes Warren.

  2. I don’t like these programs, but one of the reasons I suppose people don’t get so excited about ending them is that no one believes the money they “save” by cutting these programs will actually go unspent. People think if they don’t spend this money on crony capitalism, it’ll likely get spent on something even less capitalist.

    Is there any spending more wasteful than debt service paid to facilitate borrowing so that we can spend more money on programs that are outright socialist–rather than merely crony capitalist?

    There needs to be some kind of bill mandating that at least some of the money saved when a spending program is retired must be used to retire debt. Guarantee Americans that the money saved by cutting government programs will definitely be used to retire debt, and people will get a lot more excited about ending these kind of crony capitalist programs–and a lot of other wasteful programs, too.

    1. There needs to be some kind of bill mandating that at least some of the money saved when a spending program is retired must be used to retire debt.

      Who would enforce it?

      1. I will… for a fee.

      2. Everything that’s enforced on Congress is enforced by way of the voters.

        And I think people are a lot more fiscally conservative than is generally appreciated–especially now that the gay marriage distraction is largely out of the way.

        But even if they aren’t, that’s what needs to happen before we can really start taking the chainsaw to this kind of spending. That’s the way you rally the support of fiscal conservatives–make cutting spending actually mean a reduction in debt.

        1. Everything that’s enforced on Congress is enforced by way of the voters.

          You mean the voters who elect incumbents 99% of the time?

          1. If you’re saying that it doesn’t matter much which issue it is, incumbents do what it takes to get reelected, then,yeah, when being an incumbent requires you to be fiscally conservative, then Congress will become more fiscally conservative.

            1. Incumbents get reelected on name recognition more than issues.

              1. They stay rooted by bending with the wind.

                The fiscal conservatives who came in with Gingrich’s Contract With America were the same ones who were spending hand over fist under George W. Bush.

                The same Democrats who took a populist stand with Clinton against gay marriage were the same ones who came out of the closet to support gay marriage once it became popular with their constituents to do so.

                The fiscal conservatives of tomorrow are already in Congress today. It’s just a question of what’s popular among their constituents. That’s why I keep saying that what we say to other people is far more important than who we vote for.

                Principles not principals.

  3. OT: NYC to review Trump contracts after controversial remarks.
    So, a government entity is considering taking action against a private citizen based on their speech? Sure, sounds legit.

    1. I’ll be holding my breath while everone vacates the various Trump-branded residences in an offended huff.

  4. Hell,the new deal was built on cronyism.It has gotten worse over the years,more permits and fees and certs of need. It is very had to start many smalll businesses due to the fees and regs.Building a one man barber shop in Ohio (someting I know quite a bit about ) is priced outbof the reach of many.

    1. That’s the hypocrisy of progs. The uberregulatory state is what they want and when shit doesn’t go their way they squeal like stuck pigs.

  5. The parallels between OPIC and Ex-Im are chilling

    If this “chills” you, you really don’t have the stomach for dealing with politics at all. Wasteful as OPIC and Ex-Im are, among the many crony capitalist programs and government misdeeds, they are absolutely minor. Heck, at least they don’t kill people (at least not directly).

    1. No they just take money at gun point and give it to big companies,so,yeah.

    2. There is stupid and then there is really fucking stupid , Win Bear FTW. Apparently Win Bear has a position where he gets paid from the idiots running this idiocy and thinks we should be happy he fellates the state

      One could use cruder language, but this dude has proved he’s am imbecile.

      Hey there’s a lot of money out there, Win Bear thinks he should get some of it.


  6. OT: Be careful what you ask for, you just might get it.


  7. It’s hard to get excited about EX-IM or OPIC unless you understand what they do, and even then, I doubt we’ll see any sign-waving “End OPIC” campaigns out there. But this is exactly the kind of thing that *ought* to chill people who believe in government as a defender of rights and championing equality and “level playing fields”. Government is all about UN-leveling the playing fields.

    1. Sadly it won’t, the American people don’t realize how incompetent their government is and I don’t see that changing.

      I’m turning 60 this year and I imagine I’ll get mine, 30 years from now, my nieces and nephews, not so much.

  8. Sometimes the pictures with the articles are a little odd.

    1. It’s some geezer’s idea of a hip millennial, I think.

  9. Correct, another troubling aspect of OPIC is its willingness to tolerate financial fraud against OPIC from sponsors.

    Every OPIC supported project has a sponsor and
    this person has to be a U.S. citizen.

    The law requires OPIC to take action when a case
    of financial fraud against OPIC by a sponsor beneficiary is proven but
    as in most bureaucracies it is easier to look the other
    way specially when the sponsor is well connected.

  10. There are a lot of government programs that need to be eliminated. Let’s hope the Ex-Im stays dead, OPIC is a good next target. It’s about time we start judging our elected officials on what they end or repeal rather than what new legislation they pass.

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