"Corporate welfare in the defense of liberty is no vice."
That's the punchy opening my AEI colleague Tom Donnelly uses to defend the Export-Import Bank, the imperiled federal agency that subsidizes U.S. exports by extending taxpayer-backed financing to foreign buyers.
Donnelly is completely correct: The Export-Import Bank's loans and loan guarantees are corporate welfare. And Donnelly also is very clear on something most Republican congressmen (and all Democrats) seem to miss: There's no good economic defense of Ex-Im.
Donnelly's argument is that national security ought to trump economics. So he wants an expanded Ex-Im, through which we bear an economic cost for strategic geo-political gains.
Donnelly is a security-policy expert, and I'm not. So I won't quibble here with his belief that the U.S. needs to send more fighter jets, tanks, and other military equipment to all sorts of allies around the globe.
(1) Come on. Nobody is going to expand Ex-Im to subsidize the sale of tanks to Lithuania or fighter jets to South Korea.
(2) If your goal is to subsidize our defense industry, and arm foreign allies, there are many better tools than the trade-focussed federal agency whose expertise is getting China Air to buy Boeing.
Donnelly says Ex-Im is better at its job than the Defense Export Loan Guarantee Program. But the only reason to use loan guarantees at all is to disguise the budgetary impact, increasing taxpayer risk to decrease the federal outlays in a given year.
If our government wants to get more arms to our allies, a direct subsidy — such as DOD footing half the bill of a new fighter jet to Georgia — would be far more direct and transparent, and it wouldn't create all the economic inefficiencies Ex-Im creates.
Finally, on national security grounds, Ex-Im's history isn't stellar -- the agency has subsidized the China National Nuclear Corporation, a known proliferator of nuclear weapons technology.