Wednesday, August 5, 2015

Corporate Welfare?

The Export-Import Bank, according to far-right Republicans, is corporate welfare.  Well, if the Ex-Im Bank really were corporate welfare, would it be turning a profit?  Since when does welfare generate income for the government?  Ex-Im provides loan guarantees for foreign buyers who purchase American products, and the bank has been managed well enough so that loans very rarely go into default.  Hence, the insurance premiums Ex-Im collects always have exceeded payouts.

Eliminating the bank will result in fewer exports, further expanding America's negative balance of trade, and encouraging American companies to move manufacturing to countries that will offer loan guarantees.  (Boeing, the Bank's biggest customer, is threatening to do just that.)

Speaking of government enterprises that generate income, those same right-wingnuts who want to end the Export-Import Bank also want to re-privatize Fannie and Freddie, which currently are earning, on average, about $15 billion a year — money that goes straight into the Treasury.  As I've said in the past, why in hell should we nationalize all the losers and privatize the winners?

Fannie and Freddie were government enterprises until the Lyndon Johnson administration, and were privatized mostly to generate some fast cash to fight the Vietnam War.  During the housing bubble, Fannie and Freddie's shareholders demanded a chunk of the fast cash the banks were scooping in by buying up and securitizing high-risk mortgages, so many of which went unpaid.  The good sense Fannie and Freddy had shown in the past was thrown out the window.

Taken over and bailed out by government in response to the crisis of 2008, Fannie and Freddie were returned to responsible management.  Continuing under responsible (government) management, there is no reason they should not continue to generate profits and, in the event of another housing collapse, not be hurt so badly as to need another expensive bailout.

Let's see...  What else might we like to nationalize?  People who hate paying taxes should be happy if their government finds ways to turn a profit.

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