Pun Salad

As many of you know, I have been and remain an advocate for the agency’s termination. I have written extensively on why termination is the best policy.  The gist of the argument is this: Export subsidies are a net negative on the economy and EXIM is a quintessential example of corporate welfare since it is mostly in the service of large foreign and domestic companies and at the expense of the American economy as a whole.

That said, after four years of laying semi-dormant due to its inability to make deals above $10 million, EXIM got revived and last December it got reauthorized for 7 years without any fundamental reforms. 

The question I have faced since is ‘What should I do?’ Should I move on? Or should I keep fighting to help people understand what is wrong with export subsidies? And if I fight, what does it look like? I decided not to give up. There are three things I think those of us who care about crony capitalism and bad economic policies can do on this front.

The word inequality sparks thoughts of the very rich and the very poor. But data on the degree of inequality tell us nothing about the degree of poverty or the lives of the poor. Inequality can grow even while the poor and almost everyone else are becoming better off. Indeed, in the last half-century, while U.S. income inequality grew, the poor and the middle class became substantially better off. And the even better news is that global income inequality has fallen and is likely to fall even further.

Great wealth, meanwhile, is a problem only to the extent that it is unjustly extracted. Government favoritism to politically powerful people may increase income and wealth inequality, as it did in the case of Lyndon Johnson and his wife. But it is the government favoritism, not inequality per se, that is the true problem.

The title of Senate Bill 663 offers no hint that it would make this switch. The bill would create a tax credit to fund the Graduate Retention Incentive Partnership (GRIP), established last year. But inserted into the middle is a provision to slash the Education Tax Credit by 60 percent.

SB 663 would fund the GRIP tax credit dollar-for-dollar with money taken from the Education Tax Credit, which finances scholarships for children whose families earn no more than 300 percent of the federal poverty level.

The bill would take $3 million from lower-income families and redistribute it to college graduates, many of whom would make more money than the families of the children who receive tax credit scholarships.

Libertarians are fond of quoting Henry David Thoreau’s aphorism, “That government is best which governs least.” Thoreau was evidently paraphrasing his contemporary John O’Sullivan, but no matter who first said it, the quotation has become an axiom of those who love freedom. But is it true?