A call to end a corporate welfare agency 

If you believe the likes of liberal columnists Thomas Frank, Frank Rich, and Jane Mayer, the Cato Institute is part of a "pro-corporate movement." I would like Frank, Rich, and Mayer, then to explain this Cato Institute paper calling for the abolition of the most blatant bit of corporate welfare in our government -- the Export-Import Bank of the United States.

Ex-Im exists to subsidize the exports of U.S. manufacturers -- mostly Boeing -- by loaning money and guaranteeing private bank loans to foreign buyers who buy American goods. In short, Ex-Im puts taxpayer money on the line to boost the sales of Boeing, GE, Halliburton, Bechtel, and Westinghouse.

For all of President Obama's talk about ending special interest favors and "turning government into a game only [the wealthy] can play," it's the libertarians -- not the Obamaites -- calling to end corporate welfare here. In fact, ramping up Ex-Im activity is one of Obama's stated goals.

Here's mu favorite chart from Sallie James' Cato paper:

James also directly takes on the claim that Ex-Im "creates jobs":

The bank only redistributes resources by taking them from other areas of the economy. It reallocates capital that otherwise would be available for other uses.

And here's her conclusion:

The Bank benefits a few firms at the ex- pense of taxpayers, consumers, and other businesses. It does not correct for so-called market failures, instead, it creates distortions in the domestic economy. U.S. exports, the recent downturn notwithstanding, have seen impressive growth, despite only a very small proportion of them being supported by Ex- Im financing. The bank may create some jobs in supported industries, but it does so at the expense of the rest of the economy. Most im- portantly, Congress should not finance this negative-sum game because the Constitution does not authorize the use of taxpayers’ funds to benefit politically favored groups.

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Timothy P. Carney

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