Welfare for the Rich

[REDWAVE]

If this doesn't make you mad as hell, you must be comatose. At a time when vast numbers of people are suffering from poverty and unemployment, and the "social safety net" has been ripped to shreds, welfare for the rich is very much alive. The Export-Import Bank hands out billions of dollars of taxpayers' money-- your money-- to the already rich! Here's the link:

http://www.nytimes.com/2002/09/01/business/yourmoney/01EXIM.html

 

[brokenbrainwave]

nice post red, what I gotta register so your ilk can keep tabs on me???

 

[Lasher]

Lemme guess... For each person you get to sign up a nickel goes to help keep Lenin's Tomb smelling lemony fresh.

 

[HeavyStick]

cut and paste

 

[Guest]

Yea I'm sure Redwave is receiving kickbacks from The New York Times to get you to sign up......it must be a conspiracy.

Red, will you quit conspiring with those underground no name newspapers?

The story is really long. Here's the first page:



A Guardian of Jobs or a 'Reverse Robin Hood'?
By LESLIE WAYNE


ASHINGTON -- It is hard to imagine why Thaksin Shinawatra, a billionaire who is Thailand's prime minister, would need a helping hand from the United States government for his family business, an Asian telecommunications giant called the Shin Corporation.

The Shin business empire, which Mr. Shinawatra founded and is still majority owned by his family, spreads from India to Indochina. It is Thailand's largest telecommunications company. But last May, to the consternation of competitors, Shin Satellite, a subsidiary, won a $160 million loan guarantee from the Export-Import Bank of the United States to buy a new telecommunications satellite and strengthen its grip in Southeast Asia.

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For the bank, a Depression-era agency founded to promote exports, the rationale was simple. Loral Space and Communications, an American manufacturer run by Bernard L. Schwartz, a longtime Democratic Party donor, was Shin's supplier, and commercial banks, according to the bank, would not finance the deal without the loan guarantee.

Crying foul, Shin Satellite's competitors tried to block the deal in Congress. "How is it that billionaires like Shinawatra and Bernie Schwartz can get the U.S. taxpayers to subsidize their deals?" asked Franklin G. Polk, a lobbyist for New Skies Satellites, a rival based in the Netherlands that, like other companies, was able to get private financing, but not at the rates as low as Shin's government-backed loans.

How indeed?

At a time when the Bush administration says it wants to cut back on corporate welfare, the Export-Import bank, often called a "reverse Robin Hood" for taking money from American taxpayers and giving it to wealthy corporations, is growing. In June, while the public was focused on corporate scandals, President Bush quietly signed legislation to double the scope of the bank's operations and allow it to provide up to $100 billion in international trade assistance at any one time.

Even before this increase, Export-Import was already by far the largest federal agency providing international credit aid, outpacing international food and disaster aid programs. The bank has long expanded beyond its initial mission of aiding American exporters when times were tough. And a growing chorus of critics — from free traders on the right to trade unionists on the left — say the bank has become a tool for an elite group of politically well-connected corporations to get sweetheart deals and cheap financing courtesy of American taxpayers.

"We already regard Ex-Im as the poster boy for the anti-corporate-welfare movement," said Stephen Moore, an analyst at the Cato Institute, a Washington research group that promotes free trade. "It's a huge amount of money that goes to the wealthiest corporations. There is no rationale for the government to be involved in this."

In fact, Export-Import policies in recent years have had the perverse effect of sending American jobs, rather than goods and services, overseas. There was, for example, the case of a Chinese steel mill, the Benxi Iron and Steel Group, that received an $18 million Export-Import backed loan in December 2000 to buy American-made equipment only to be found a year later to be dumping steel into American markets and slapped with a 90 percent antidumping tariff. In that year, steel companies in the United States laid off 30,000 workers and more than 20 of the companies filed for bankruptcy.


More fundamentally, there are questions about why the bank exists at all. Less than 1 percent of all American exports receive Export-Import financing, which comes in the form of direct loans, loan guarantees or export credit insurance. The bulk of Export-Import's benefits go to a small number of large companies that are sophisticated enough to get financing on their own: Boeing, Halliburton, General Electric, Northrop Grumman, Lucent Technologies, ChevronTexaco, Caterpillar and Dell Computer, among others.

"This is naked corporate welfare," said Representative Ron Paul, a Texas Republican and one of a handful of Congressional critics. "It never ceases to amaze me how members of Congress who criticize welfare for the poor on moral and constitutional grounds see no problem with the even more objectionable programs that provide welfare for the rich."

But there is a clear reason the bank thrives, no matter who occupies the White House or the top jobs in Congress. While the bank cannot lobby for itself, its beneficiaries can.

"You have an incredibly well-funded lobbying operation led by companies that are not only campaign contributors but also talk about creating jobs," said Thomas A. Schatz, president of Citizens Against Government Waste, a public interest group. "That's a big rallying cry for members of Congress. They think that jobs will help them get re-elected, and once you say that jobs are at risk in their district, they go running for cover."

Money has always flowed from the bank to the politically savvy. In its heyday, Enron was one of the bank's biggest beneficiaries, receiving a total of $675 million in aid since 1994. Enron's former chairman, Kenneth L. Lay, was one of the bank's most active supporters, buttonholing politicians on all levels of government on its behalf, including George W. Bush when he was governor of Texas, according to memos and letters in the Texas State Library and Archives Commission. (The Justice Department is investigating Enron's dealings with all federal agencies, including the Export-Import bank.)

These days, blue-chip companies have even formed a trade association, the Coalition for Employment Through Exports, whose sole job is to protect the bank from budget cutters. Members include Washington lobbying powerhouses like the United States Chamber of Commerce, the National Association of Manufacturers and companies like United Parcel Service, Verizon Communications, United Technologies, Bechtel, Oracle, Citigroup and Bank of America.

"We have a highly organized set of trade associations and, through them, a large number of companies that depend on Ex-Im," said Edmund B. Rice, president of the coalition. "We use the resources of our members to help make our case and apply that clout to the administration and members of Congress."

Not only are these companies major campaign contributors to members of Congress, they often are leading employers in many Congressional districts, not shy about dispatching top executives or plant managers to plead the bank's case on Capitol Hill. Export-Import works hand-in-glove with these lobbyists, giving them the ammunition they need.

The bank keeps an extensive data bank that breaks down all the deals it has done, Congressional district by Congressional district, subcontractor by subcontractor, and contains the names of 300,000 executives with whom it has met. From it, a lobbyist can get tailor-made information on Export-Import activities going back five years to make the bank's case.

"In administration after administration, Export-Import was always on the top of the list to get cut," said Mr. Moore at Cato. But he added that such efforts "have never succeeded because of the full-court lobbying blitz by Fortune 500 companies."

"We've never succeeded in pulling the plug on it," he said.


Rather, the bank is so flush that it has begun to spend some of its vast resources on industries that may not appear to need help.

For instance, the bank recently started a program to support one of the nation's strongest exporters, the film industry. Among the first four independent films to receive Export-Import loan guarantees is a story of troubled youth called `The United States of Leland,' produced by and starring Kevin Spacey, the Oscar-winning actor. Other films with Export-Import backing are about a lethal virus, a military project gone awry and a reality show.

 

[Guest]

In case you're interested, here's page 2

A Guardian of Jobs or a 'Reverse Robin Hood'?
(Page 2 of 3)



A bank news release says the film project is to "promote more U.S.-based film production and preserve entertainment jobs in the United States." That said, only 51 percent of the film's budget needs to be spent on American goods and services, which can include the salaries of American stars. Nor is there a requirement that the films be shot in the United States, although these four will be.

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"I've never met a government agency so willing to be helpful," said Lewis Horwitz, a financial backer of independent films who is getting Export-Import aid for four films.

The bank's own experience, surviving so many attempts on its life, could make a movie script.

When Mr. Bush took office, his administration called for a 25 percent cut in the bank's budget as part of an effort "to reduce subsidies that primarily benefit corporations rather than individuals," according to a White House statement on the 2002 budget. But Mr. Bush has now endorsed a five-year expansion plan that will increase the total value of the loans the bank can guarantee to $100 billion from the $56 billion currently outstanding.

The increase breezed through Congress. When the Bush administration first tried to cut the program, 31 senators, including top Republicans, sent a letter to the president opposing his action. The legislation to expand Export-Import's reach passed the House, on a vote of 344 to 78, and was approved by unanimous consent in the Senate.

"We said to Congress, `This is what we need,' " said Eduardo Aguirre, a former Bank of America executive in Texas and the bank's vice chairman. "And they said `O.K.' "

Facing political reality, Mr. Bush has joined the chorus singing the bank's praises. An administration spokesman said a new policy, allowing the bank to guarantee more loans against fewer reserves, and thus requiring less government money while increasing risk, had earned it points in the White House.

During a meeting in May with President Vladimir V. Putin of Russia, Mr. Bush actually promoted the bank as the way to finance a $2.9 billion Caspian Sea pipeline that the two leaders favor. While nothing official has been announced, the companies involved in this project are BP, Exxon Mobil and ChevronTexaco.

Commercial banks, meanwhile, love Export-Import loan guarantees because they turn corporate loans for business in risky places into risk-free loans. If a corporate borrower halts payments on an Export-Import backed loan, the federal government must step in and pay it off. The bank claims a default rate of less than 2 percent.

American exporters love it even more. With an Export-Import loan guarantee, they can borrow money from banks at lower rates and more favorable terms than usual. And if they get into a jam overseas, the Export-Import bank can be a powerful ally. "You've got the full weight of our U.S. embassy, our ambassador, the Treasury Department here and overseas, the State Department, all coming in," said Mr. Rice at the export coalition. On the other hand, small businesses, which often need the help more than large companies, get short shrift from the bank, despite Congressional pressure to change that practice. Only 18 percent of the bank's financing last year went to small business, down from 21 percent in 1998.

Moreover, in its eagerness, the Export-Import bank rarely if ever analyzes the larger economic impact of its programs and its executives acknowledge that they cannot determine exactly how many jobs — if any — have been created or saved by its financing. Last week, environmentalist groups sued the bank, seeking to force it to consider potential global-warming effects of projects it backs.

Yet Export-Import officials, having heard it all before, bat it away.

"People who say it's corporate welfare do not understand Ex-Im," Mr. Aguirre said. "Our mission is jobs. Jobs to support exports. Well-paying jobs. What they say is corporate welfare I say is sustaining jobs. We are here to finance exports that would not take place without Ex-Im financing. Tell that to the people who would not have jobs without us."

By far the biggest user of the bank's financing is Boeing, which last year received $2.5 billion in loan guarantees, more than one-quarter of the bank's $9.2 billion in transaction volume. This aid helped win aircraft sales for Boeing to China, Austria, Ireland, South Korea, Turkey and Chile that otherwise might have gone to rival Airbus. Some even call the bank "the Bank of Boeing."

Cheryl Russell, director for federal affairs at Boeing, said: "These deals might not have gone forward without Ex-Im. We are the largest exporter of manufactured goods in the U.S., so it is logical that we are the No. 1 user of the bank. Our overseas sales are growing at a much faster rate than our U.S. sales. That makes Ex-Im even more important to us in the future."

Some Boeing workers have a different view.

Workers at the company's plant in Wichita, Kan., fume about the seepage of their jobs, particularly work involving tail sections, to manufacturers in China under deals backed by the Export-Import Bank. In the last two years, the bank has provided $791.5 million in aid to help Boeing sell planes to Chinese airlines in deals that often require some parts of the planes to be built in China.

"Why in the world would you permit the use of taxpayer money to finance deals that drain our national industrial and skill base?" said Matt Bates, a spokesman for the International Association of Machinists and Aerospace Workers, which represents Boeing workers.

"There were huge scandals in this country 25 years ago when aircraft executives were found to be sealing deals by handing over briefcases of money," he added. "That's been outlawed. Yet it is perfectly legal for companies to seal aircraft deals by agreeing to transfer tens of thousands of highly skilled jobs to other countries with taxpayer money."

Boeing says such offshore manufacturing arrangements are an inevitable cost of doing business.

"As with most large international companies with extensive overseas sales, foreign buyers expect to have a certain amount of manufacturing work that accompanies the sale," Ms. Russell said.

Perhaps no recent single transaction causes as much furor as the $18 million China steel deal. The bank provided the loan guarantees over vigorous protests from the steel industry and unions.

 

[Guest]

In case you're STILL interested, here's page 3. (Now maybe you can see why Red didn't post it.)

A Guardian of Jobs or a 'Reverse Robin Hood'?
(Page 3 of 3)



"Why are they pouring money into other countries to build additional steel capacity?" asked George Becker, a former president of the United Steelworkers of America, who has testified about the bank before Congress. "This isn't trade. It's dismantling our manufacturing base and robbing our workers of their right to earn a living."

Terrence D. Straub, a lobbyist for United States Steel and a member of the Export-Import bank advisory board, said: "The China steel deal really reflected an arrogance by the lending officials at Ex-Im. All the red flags were there, and they were waved vigorously. The deal did not make sense."

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That aid package prompted insertion of a provision in the Export-Import bill signed by President Bush to prevent similar deals from happening again and led to legislation that cut $18 million from Export-Import budget.


But the same issue has come up again. Last month, after protests from the Ohio and Pennsylvania Congressional delegations and the steel industry, the bank announced that it was dropping plans to provide $19 million in loan guarantees for a Turkish steel company to buy American-made equipment.

"We pounded on this one like hell," said Gary Hubbard, a spokesman for the United Steelworkers of America.

Still, the bank is considering a $35 million financing to a Mexican company for the purchase of American-made equipment that would increase its automotive crankshaft production by 700,000 units a year; the crankshafts would then be exported to the United States, where American auto workers do the same job, but for higher wages.

The bank is also deciding on a $14 million loan guarantee to an American company, which it would not identify, so that a Mexican company, which it also would not identify, can increase output of aluminum engine blocks by 550,000 units a year — with the output to be shipped to the United States. Bank officials declined to say whether these projects would cause a loss in American automaking jobs.

"Is this the best way to create U.S. jobs?" asked Representative Bernard Sanders, the Vermont independent and one of the few Congressional critics. "Absolutely not. Export-Import is generous with taxpayer dollars and we get nothing in return. It's vulgar. At a time when we are having a real crisis in this country and are losing jobs, Ex-Im is sending them overseas. Yet these are the most important corporations in the United States and they get what they want in Washington."

In the debate over the recent Export-Import legislation, an attempt by Representatives Sanders and Paul to deny aid to American companies shifting jobs overseas failed on a vote of 283 to 135.

It's no accident that the votes are so lopsided.

"As a staff member for a congressman, you can call up Ex-Im and say, `My congressman represents District 13 in the state of whatever,' " said a Treasury official. "They will spit out a report saying, `Here are the businesses by name in your district that receive Ex-Im help.' The bank is politically savvy. It's active in promoting its products in each Congressional district."

The bank also knows how to make individual legislators look good before voters. One of its biggest outreach efforts is seminars throughout the country, about one a week, that bring together local executives and Export-Import officials to promote its programs. Whom does it also invite, to show voters the benefits that Washington brings to Main Street? Each district's local Congressional delegation, which can take credit for what Export-Import has done.

 

[REDWAVE]

Thanks

Thanks, Moon Wolf. Howwwl! Anyone care to defend the indefensible and try to justify this outrageous welfare to the rich, at a time when the people who really DO need help are getting none?

This is a magnificent example of the "wonders of the free market"! The only real wonder is-- that people put up with it!

 

[Guest]

Welcome, Red.....

I think I'll ask for a loan.....reason? I'm starving.

Moon

 

[REDWAVE]

Catch 22

If you really need the money, you can't get it. But if you're a billionaire, you can have all you want.

 

[Unclebill]

Re: Thanks

Originally posted by REDWAVE
Thanks, Moon Wolf. Howwwl! Anyone care to defend the indefensible and try to justify this outrageous welfare to the rich, at a time when the people who really DO need help are getting none?

This is a magnificent example of the "wonders of the free market"! The only real wonder is-- that people put up with it!

Please tell me you're really not so fucking bonehead stupid you actually believe this is a free market. Not even a lawyer could believe that, could they? I suspect that grade of stupid is only available in politician.

 

[horny_giraffe]

Not just playing the devil's advocate, here, but what about trickledown?

There is something to be said for providing jobs--especially to countries like Mexico who have exported as many laborers as they can legally and illegally to the United States. One could even argue that this is humanitarian aid. American-owned corporations operating all over the world doesn't sound like a bad thing for the U.S.--stinks of corporate colonialism, perhaps--but not necessarily bad for the U.S. economy.

In Korea, I've heard that expanding middle class is rapidly becoming a viable consumer base for American products. On a television show, I heard that there is a trend for U.S. style commodes/toilets, in particular.

People have talked about the United State's enormous trade deficit, and it sounds like this is attacking just that problem.

The question then becomes, of course, are we actually providing jobs and exporting resources, or are we just lining the pockets of wealthy businessmen?

I suppose that if we really had no faith in corporate trickledown, we could go with a communist model of government-run corporations. Yeah, that would be efficient. Or else we could just go with traditional welfare--which seems to work equally well.

 

[miles]

Redwave, you're still a fucking idiot. Get an IQ transfusion.

 

[takingchances42]

I actually agree with Redwave on this one... (Now I'm worried...)

The US does not have a true capitalist economic system, it has a corrupt economic system, and we all pay the price for it. Real job growth and innovation comes from real competion, as well as from small to medium sized companies. But the rules are stacked in favor of the large corporations that get direct corporate welfare, favorable tax treatments, and the ability to stomp on their competition through lack of enforcement of anti-trust laws. The ROI (return on investment) of buying politicians is simply amazing... political whores give way more bang for the buck than working girls...

 

[Sillyman]

I actually agree with Redwave on this one... (Now I'm worried...)

The US does not have a true capitalist economic system, it has a corrupt economic system, and we all pay the price for it. Real job growth and innovation comes from real competion, as well as from small to medium sized companies. But the rules are stacked in favor of the large corporations that get direct corporate welfare, favorable tax treatments, and the ability to stomp on their competition through lack of enforcement of anti-trust laws. The ROI (return on investment) of buying politicians is simply amazing... political whores give way more bang for the buck than working girls...

REDWAVE is occasionally right and sometimes has his points. The problem is is he gets so very devoted to his cause that he slants evidence and alienates his audience.

I agree with this particular sentiment as well however. Businesses must be allowed to succeed and fail on their own merits, or else the market will not function properly.

 

[miles]

The only thing keeping redwave from being more boring than pp_man is that he's sober.