During 2010, the Tea Party got the attention, but the election revolt against bailouts, subsidies, and spending came from all sides. Voter sentiment hasn’t changed much — but you wouldn’t know that from the action last week on the US House floor, where renewing Export-Import Bank subsidies for big business was the order of the day.
Compared with big-spending Democrats, Republicans still have a long way to go before losing the mantle of limited government. But if the overwhelming vote to reauthorize the bank is any guide, they think the widespread disdain for subsidies has run its course. Last week’s Indiana primary shows otherwise.
Worse yet, the Ex-Im Bank vote shows that too many members of Congress think that being pro-business means being pro-subsidy. Wrong again. Avoiding burdensome regulations is pro-business; lowering the marginal tax rate is pro-business; but programs that bestow unique benefits to favored companies or industries are simply giving away money.
As big government goes, the Ex-Im Bank isn’t the worst thing in the world. Its big-ticket financing makes life a bit easier for exporters of airplanes, gas turbines, and the like. But these companies hardly have trouble getting private financing, and it’s tough to explain why taxpayers should be backing their loans. Instead of scaling things back, however, the House voted on Wednesday to recharter the bank and raise its lending limit to $140 billion.
Yet targeting winners and losers is bad policy no matter who’s in charge; no government bureaucrat can allocate capital as efficiently as the marketplace. For Republicans, it’s also self-defeating politics. It will be far tougher to criticize President Obama’s government-knows-best attitude if Republicans pander to their own set of interests using the same playbook.
If the Ex-Im Bank is pro-business, as supporters maintain, then so is every corporate handout large and small. Arguments for similar largesse range from “saving the family farm” (agriculture) to “saving an American icon” (tax benefits for thoroughbreds and racetracks) to “Germany and China are doing it” (solar and wind subsidies). These are all fine industries, but singling them out only encourages others to pursue campaigns of their own.
Inevitably, special treatment for the few becomes subject to exploitation, expansion, and mission creep — and can come back to haunt you. In 2004 a Republican Congress created a credit for manufacturers that lowers their marginal tax rate from 35 to 32 percent. Today, liberals call that program a “loophole” for oil and gas companies. It was a bad idea to start with, but repealing the provision just for a few companies would be equally unfair. Why should a company operating a wind farm be labeled a manufacturer, while one drilling for natural gas is not?
Targeting winners and losers is bad policy no matter who’s in charge.
Unfortunately, with such a weak economy, it’s easy to wrap subsidies in the warm blanket of “jobs.” (With billions in federal subsidies, you too could create a few jobs!) The important question, though, is whether the policy is economically efficient and fair. Sometimes even great-sounding programs are a poor use of taxpayer funds, but no politician likes to say no.
So on Tuesday, voters said no. Despite 36 years of outstanding service, bipartisan acclaim, and historic accomplishments leading the Foreign Relations Committee, Senator Richard Lugar lost his primary. Challenger Richard Mourdock hammered Lugar’s support for the bank and auto bailouts to overwhelming response. Most voters don’t care about Beltway spoils like committee assignments or seniority. And they shouldn’t. They care much more about a candidate’s vision, principles, and ability to represent them.
In another big “no” on Tuesday, a mulleted felon beat President Obama in nine West Virginia counties, receiving over 40 percent of the statewide primary vote. In just a few years, Obama has gone from promoting billions in “clean coal” subsidies to a regulatory policy that prohibits the construction of another coal-fired electric plant in the United States. A region of the country that once revered progressives like Robert Kennedy is now out of play for the president.
These very different voting groups are sending a similar message: Stop trying to pick winners and losers in our economy. Instead, fight for policies that work for all businesses and the employees who depend on them. The forces of politics may sometimes make that a tough path to follow, but don’t say no one warned you.