Tell Congress to Oppose Corporate Subsidies

by ActRight Community in Heritage Foundation

Later this month, the House of Representatives is expected to vote on Securing American Jobs Through Exports Act of 2011 (H.R.2072).  The misnamed legislation would reauthorize the federal Export-Import (ExIm) Bank, which dates back to 1934, for four years and expand the bank’s lending cap by 60%, to $160 billion.  Without a reauthorization, the bank’s legal charter will expire on May 31, 2012.

The ExIm Bank provides taxpayer-subsidized loans to U.S. exporters under the auspicious of increasing exports, but according to Wall Street Journal, ExIm’s contribution to increasing exports is “negligible.”  As is the case with any subsidy, taxpayer-backed loans result in market distortion and crony capitalism.  Exporters jockeying for low-cost loans, and those that receive the loans have an advantage over their domestic competition.  The dynamic plays out internationally, too.  Because exports are subsidized, the exported product can be sold cheaper to foreign buyers than domestic buyers.  As a result, domestic companies face a disadvantage in the global market, resulting in job losses at home.  For example, the U.S. airline industry has lost between 4,700 and 7,500 jobs due to taxpayer subsidies to foreign carriers.

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