Skip to comments.Ex-Im Bank and the GOPís Cronyism Test: Republicans should take a stand against corporate welfare
Posted on 04/07/2014 7:00:37 AM PDT by SeekAndFind
For five years now, the Republican party has attacked the economic policies of President Barack Obama as crony capitalism.
And with good reason.
From the stimulus to cash-for-clunkers, from the bailouts to cap-and-trade, from Dodd-Frank to Obamacare, every name-brand initiative of the Obama era has distorted public policy to privilege well-connected insiders and elites at the expense of taxpayers and consumers.
Republicans have slammed all this corporate welfare and venture socialism for unfairly picking winners and losers in the marketplace. In 2012, for the first time, crony capitalism was even singled out for condemnation in the Republican party platform.
The Rights resistance to corporatism is a welcome development. Special-interest favoritism represents a uniquely malignant threat to the economic, political, and social ecosystem that makes America exceptional.
Policy privilege corrupts the free market by rewarding political connections over competitive excellence. It subverts the rule of law by codifying inequality. It undermines social solidarity by pitting citizens against one another, twisting cooperative communities into rival special interests.
And even as cronyism poisons the moral credibility of our institutions of democratic capitalism, it degrades the economic benefits those institutions yield.
According to a 2010 study by the Kauffman Foundation, all net job creation in the United States between 1977 and 2005 came from firms five years old and younger. Yet half of all new businesses fail in their first five years. That is, almost all new American jobs come from the small fraction of new businesses that rocket from startup to superstardom.
Cronyist policies from tax loopholes to regulatory advantages to direct subsidies deliberately tilt the playing field to keep those very firms down, to bury them in red tape and slow their disruptive growth.
But its precisely the dynamism that new firms bring into the marketplace that creates the jobs and growth our economy needs.
Without it, the American people have every reason to doubt our systems moral and material legitimacy. After all, if ordinary citizens who work hard and play by the rules only end up subsidizing, propping up, and bailing out privileged insiders who dont, then the land of opportunity really isnt.
Obamanomics has delivered record corporate profits but sagging middle-class wages and an anemic, jobless recovery. It has promoted and exacerbated inequality. It has isolated the poor and squeezed the middle class.
It has also exposed the presidents party to extreme political vulnerability.
But to seize this opportunity to fix whats broken in Washington and our economy a still-distrusted GOP first must end cronyism in our own ranks. The GOP has to close its branch of the Beltway Favor Bank and truly embrace a free-enterprise economy of, by, and for the people.
Impossible? Thats what they said about earmarks.
Too radical a change? These are principles we already espouse.
Imagine a reformed Republican party seizing the moral high ground against political corruption and economic dysfunction. Imagine its leaders, advocating populist, free-market reforms to restore jobs, growth, and fairness to the economy. Faster than you can say TARP, we could pin the Left between their egalitarian facade and their elitist agenda, and force them to choose between K Street and Main Street.
That Republican party could not only unify and excite conservatives, but appeal to hardworking families in the purple and blue communities that President Obamas special-interest favoritism is leaving behind.
For three years now, Republican leaders have challenged anti-establishment conservatives to come up with a viable plan to make principled conservatism inclusive and popular to grow our party into a national majority.
Well, here it is.
The question is whether Republicans Obama-era opposition to policy privilege has been sincere or situational.
One test will be this summers expiring congressional authorization of the federal Export Import Bank. The Ex-Im Bank exists to dole out taxpayer-backed loan guarantees to help American exporters. Most of the benefits go to large corporations that are perfectly capable of securing private financing anywhere in the world.
In short, Congress allows the Ex-Im Bank to unnecessarily risk taxpayer money to subsidize well-connected private companies. President Obama himself called the program little more than a fund for corporate welfare back in 2008, when total taxpayer exposure to Ex-Im Bank guarantees was less than half its size today.
Whether the beneficiaries of particular Ex-Im Bank loan guarantees are respected, successful companies like Boeing or crony basket cases like Solyndra is irrelevant. Twisting policy to benefit any business at the expense of others is unfair and anti-growth.
Whether congressional Republicans say so and do something about it during the coming Ex-Im Bank debate will tell us a lot about what, and who, the party really stands for in 2014 and beyond.
Mike Lee is a U.S. senator from Utah and a member of the Senate Judiciary Committee.
Yeah, especially the crony, fascist companies for obummer like GE, and many many others who get freebies.
Far too many GOP are coporatist crony capitalists themselves. This is why they want cheap foreign labor regardless of how it hurts the US job seeker and job holders.
Bingo! you hit the nail right on the head. The rich Republican Corporatists are only conservative as it affects their wallets. As far as amnesty and their support of it they are just proving Lenin’s dictum that the capitalist will sell the rope to his own hanging. I think the rest of us conservatives should end our support of tax breaks and any other sweet candy for these people until the border is secure and the corporatist media is fair with us. They should either put money into media like the rich Libs do they should pay for the socialism that they are creating. I think ourmotto should be “If yousell out then you shell out.”
“Republicans” and “should”...maybe those two words ought not be used in the same sentence.
Which party was it that helped build ADM and Monsanto through targeted legislation and tax structures in the sixties and seventies?
I will take the elephant for the win.
Vote for individuals, not parties. Both parties have been irredeemably corrupt since before I was born.
Most farmers vote demoncrap.
A much better long term solution is to devise an unpublished formula for the division of companies that become too large and too powerful. It has a much deeper rationale than does antitrust law.
1) CATO Institute speculates that when corporations reach a certain size, they self destruct, so should be allowed to do so naturally. However, such companies fight to stay alive and prevent collapse, corrupting politicians to vote them favorable laws, etc. Then, when they do collapse, they cause enormous damage to the economy.
Instead they need to be gradually divided, which reduces the harm the division causes.
2) Multinational corporations have been playing fast and loose with national laws and taxes for too long. So a law of this sort would say that if a corporation has a sizable presence or market in the US, it should pay a concomitant portion of taxes for that portion. Otherwise, it will be subdivided so that its US subsidiary is the only portion through which it can do business in the US, as a wholly US registered company.
3) Investments by US corporations in unregulated markets such as derivatives must still come under the regulation of the SEC, and prohibited from investments that exceed their entire capital formation. This is done to protect the US economy being exposed to tens or hundreds of trillions of dollars in capital losses.
4) The law must take into account the break up of oligopolies, monopolies of several corporations that have close to total control over markets. Examples include the MSM, trucking companies, software companies, and several other industries.
When did that come about, and why?
The farm bills of the sixties a d seventies were loaded with subsidies lauded to the public as intended to save the family farm, but written in fact so that primarily the two corporate entities I mentioned were able to collect on those subsidies and many family farms were excluded.
Corporate welfare on the part of Republicans was the point of my post.
Your post is the pretty predictable fall out from that and few Republicans in the period I referenced noticed or cared. The graft from lobbyists made a few powerful Republican congressmen happy and the party was not interested in the few whistleblowers of the period.
Are Democrats doing the same thing now? Surely. But the Republican Party installed this particular vomitous mess and the damage has been lasting.
Do you have names of these 1960’s RINOs?
Farmers have voted demoncrap since the 1800’s.
The winners were the ones who donated a lot. The losers are those who did not donate to the right person.