For some lawmakers, corporate welfare is okay, unless it hurts someone in their district.
Four lawmakers from Minnesota and Michigan are up in arms over a proposed $650 million financing deal for Roy Hill, an Australian mining company. The deal, backed by the Export-Import Bank, the U.S. government’s export credit agency, is for the purchase of Caterpillar mining equipment manufactured in the U.S.
But Senators Amy Klobuchar (D–MN), Al Franken (D–MN), Carl Levin (D–MI), and Debbie Stabenow (D–MI) don’t like this deal because Roy Hill competes with American iron ore producers, the majority of which operate in the Senators’ home states of Minnesota and Michigan. In a letter to the Export-Import Bank, the Senators claim that they are
concerned the proposed Ex-Im Bank financing and the large amount of iron capacity that it would subsidize will…substantially injure American iron ore and steel producers and their employees that are competing in the same global marketplace.
The Senators are essentially arguing that the Export-Import Bank shouldn’t be subsidizing the purchase of U.S. mining equipment because it might hurt miners in the U.S. How ironic, considering all four of them voted for the reauthorization of the Export-Import Bank just over three months ago.
In reality, the Export-Import Bank is just bad policy, embodying corporate welfare and encouraging cronyism. The bank essentially subsidizes large business and U.S. exporters using taxpayer loans and loan guarantees to finance the purchase of U.S. exports.
The U.S. government should get out of the export financing market altogether. Doing so would save everyone a lot of time and money. Not only would taxpayers save the money going to these huge corporations, but Members of Congress could get back to solving some of the country’s serious issues, such as the debt. But until then, these lawmakers will continue to be for corporate welfare before they were against it.