The Wall Street Journal opined that "if the GOP wants to have a principled battle about fiscal waste and market distortions, this is a good one.” Ken Blackwell wrote here at Townhall that “if the mortgage crisis, student loan crisis, and the disastrous failure of green-energy firms have taught us anything, it is government has a unique ability to destroy that prosperity and ruin lives while sticking taxpayers with outrageous bills.” These sentiments are spot on.
This week, the Special Inspector General of the Troubled Asset Relief Program reported that TARP—the federal program to bail out financial institutions—has lost $60 billion so far, with $118.5 billion in loans still outstanding. That money comes out of taxpayer’s wallets, and so do Ex-Im Bank losses. Back in 1987, the Ex-Im Bank sought a $3 billion bailout for bad loans according to the Los Angeles Times. Increased loan authority would put taxpayers on the hook for even bigger losses.
Even loans that don’t go bad often wind up hurting U.S. employers and consumers. Chris Chocola of the Club for Growth notes that the Ex-Im often subsidizes foreign competitors of U.S. firms. Writing in the Richmond Times-Dispatch, he gives the example of the bank financing “foreign airlines that in turn purchase American aircraft, allowing them to compete against U.S.-based carriers. These foreign companies use our subsidy to offer lower prices since American companies cannot qualify for this corporate welfare, and they, in turn, lose business."
And the bank doesn’t restrict its dubious lending practices to foreign entities. Among its domestic “clients” are the now famously bankrupt Enron and Solyndra.
The bottom line is this: The Ex-Im Bank uses taxpayer resources to prop up government- favored companies. And, all to often, government-favored companies are bad investments.
This slush fund for foreign business and domestic cronies should be terminated. That would protect taxpayers from bad investments and protect free markets from the distortion of federal favoritism.