Tim Carney, Republicans, Anti-Cronyism
Mandeville, LA – Exclusive Transcript – “And the second thing is, when you mentioned the Export-Import Bank, last time I had the pleasure of interviewing Congressman Paul, one of the things that he and I talk about almost every time I have a chance to talk to him is: Why has the term gold standard been completely chased from the political lexicon? It actually came up during the last Republican debate, albeit for only a moment or two, and that’s because Senator Paul mentioned it.” Check out today’s transcript for the rest….
Begin Mike Church Show Transcript
Mike: What is this headline that you had last week – I read this and I actually shared it with the audience because you wrote it – about Republicans becoming the anti-cronyism party? I must have missed the coming out party. What can you tell me about it?
Tim Carney: I had an old boss who once told me: Tim, every one of your columns is negative. Can you try to write one upbeat column a year? You found it, Mike. It might be overly optimistic, but what I say in the column is, right now it’s a rhetorical shift but that’s something. A few years ago, you would not have heard Republicans using big business or corporate lobbyists as bad words. When you were having me on your show six years ago, we could talk about that. If you tried to get me to go on with Sean Hannity and I said the word lobbyist as a bad word, he would have said: Get off my show, you liberal.
The Republican establishment, the mainstream conservative movement, in all of those places, they’re starting to realize that, to the extent that they believe in limited government, which obviously is not to the bone but it’s there, to the extent they believe in limited government, that they have to be skeptical and at times combative with big business, that big business is going to be their enemy half the time. This realization has sunk in at least on a rhetorical level. You can see some substantive things there, too. Every presidential candidate except for basically, I think, Pataki, Santorum, and Lindsey Graham opposes the export-import. Rubio, while he’s awful on sugar, he has to make up for that by being good on Export-Import Bank, on crop subsidies, on all sorts of other things. There is an element that at least they know they should be the anti-corporate welfare party.
Carney: Two books.
Mike: Two books about this. You’re a bit of an expert in the field. Was the old boss that you referenced, was that Bob Novak?
Carney: No. Novak never would have encouraged me to write something positive.
Mike: I was going to say, how out of character that would have been for Robert Novak. And the second thing is, when you mentioned the Export-Import Bank, last time I had the pleasure of interviewing Congressman Paul, one of the things that he and I talk about almost every time I have a chance to talk to him is: Why has the term gold standard been completely chased from the political lexicon? It actually came up during the last Republican debate, albeit for only a moment or two, and that’s because Senator Paul mentioned it. I didn’t hear anything in the debate about the Export-Import Bank. People listening at home right now – I know about it. I know that you know about it. Some listeners may be scratching their heads going: What is this Export-Import Bank and why do we oppose it?
Carney: This is my favorite topic. I could talk about this all day. The Export-Import Bank is a government agency created by Franklin Roosevelt, which begins to tell you what you need to know about it. What it does is it subsidizes U.S. exports. I don’t know why the word import is in the name. It doesn’t do anything about imports. It subsidizes U.S. exports, primarily through loan guarantees for U.S. banks or European banks to lend money to foreign buyers, or direct loans from the taxpayers. It’s a government agency backed by the taxpayers.
Say Boeing wants to sell a jet to Air China. It’s like buying a house. Air China doesn’t pay in just cash for it; they finance it. They get a loan from maybe JP Morgan. That’s kind of the way it happens in the free market. That’s the way that Boeing sells most of its jets, including most of its exports. Some portion of those exports get subsidies from the Export-Import Bank by – EXIM will guarantee the loan. If Air China fails to pay back JP Morgan, the US government comes in and makes them whole. Sometimes the Export-Import Bank will directly loan the money to the foreign buyer. It’s not foreign aid because the whole point of the loan is to help Boeing or GE or Caterpillar make the export. It’s subsidizing JP Morgan. It’s subsidizing Air China. It’s subsidizing Boeing. All the risk is being carried by the U.S. taxpayer.
Mike: Of course, Boeing is Senator McCain’s favorite onshore, for-profit charity, right?
Carney: I use Boeing as an example, not just arbitrarily, but because it’s the number one recipient, beneficiary as far as exporters go. About 40 percent of all EXIM money goes to finance Boeing sales. I’ve got nothing against Boeing. I think they actually make better airplanes than Airbus, but I don’t think that’s an appropriate use of government spending. I don’t think that Republicans or Democrats can really justify it. That’s why they always talk about it and they take the mom-and-pop exporter who gets a $1,000 subsidy instead of Boeing, which literally gets about $10 billion a year in subsidies from Export-Import Bank.
Mike: That’s a shocking amount, folks. 844-5-CRUSADE, our telephone number. Timothy P. Carney of the Washington Examiner newspaper, an online newspaper – that’s kind of an oxymoron, right, online newspaper? He’s on the Dude Maker Hotline with us. I’m reminded back in 1813, John Taylor of Caroline County wrote a book about this entire subject. Of course, they didn’t have an Export-Import Bank them. It was called Tyranny Unmasked. This has deep, deep roots in the American system. What they were trying to do then was basically what Taylor called protection. What he meant by protection was: Why are the bay leaves grown in Massachusetts, why do they get a tariff that is assigned to prevent the import or a duty, an impost to be paid on bay leaves imported in from Great Britain? (Or whatever the case may have been.) How come the Southern cotton doesn’t get the similar thing? He saw the system of protection as what he thought was the ultimate tyranny. For the listener out there that is kind of new to this, how large of a subsidy problem are we talking about? You mentioned $10 billion for Boeing. Do you know what the –
Carney: You can’t put a price tag on it, Mike. Just think of your example of protective tariffs. Those don’t cost the taxpayers money. That’s not transferring money from the taxpayers to the recipient. You can do this with food stamps. You can measure how much money is paid out to food stamp recipients. You can’t do that with most corporate welfare because it takes these perverse forms. The cost is in higher prices paid by us, but then there are more indirect costs, which are the distortions. That money goes into some parts of the economy instead of where the market would allocate it, and thus everybody is made poorer.
For me, I always say the worst three examples we have today are the sugar subsidy, beloved by Marco Rubio. What that does is that’s protection. It keeps out foreign sugar by charging a tariff. It has loans from the U.S. government. Most years, like Export-Import Bank, it doesn’t directly cost taxpayers money. What it does is it hugely drives up the cost of sugar. There are some price tags that people have put on that in the billions, that consumers and food makers in the U.S. pay more. It’s worse than that. Marco Rubio will defend it and say: If you got rid of the tariffs, then all that land down in Florida might go to condos. Now we’re realizing that it’s driving up the price of housing in Florida.
Export-Import Bank is up there in the top three, or down there in the bottom three, however you want to look at it. Again, most years, that doesn’t cost the taxpayers money because most of the loans get repaid. It’s a break even. What it does is it kills jobs in other industries and drives it over to U.S. industry. Then, like with Fannie Mae, that didn’t cost taxpayers money for a long time. When the airplane bubble bursts, if it does, then you have a huge cost to taxpayers. Those costs are born through distortions and picking winners and losers.
Ethanol, which is beloved by I think every presidential candidate except for Rand Paul and Ted Cruz right now, that happens through mandates. There is no direct tax transfer. We are forced to put it in our gas tank. Any corrosion to the engines or whatever, but it also drives up the cost of food. The farmland goes to ethanol corn instead of the things we can actually eat. You can’t put a price – you could, but it would be incredibly hard because it’s not just a taxpayer cost. It’s all the economic distortion.
Mike: Let me just add to this, one of the more pernicious results of the sugar tariff is, what nation is it in the Caribbean that would principally benefit from exporting sugar? You may say Cuba because they don’t really do that anymore but they will someday. Haiti, the poorest country in the entire hemisphere, is loaded with sugar. They can’t sell it.
Carney: That’s exactly right. We actually give each country quotas that they get to import before the tariffs kick in. The number one country is the Dominican Republic. They get to import the most. The family that is responsible for most of the sugar grown in the Dominican Republic is the Fanjul family, which is also responsible for most of the sugar that is grown in Florida, and also hosted the first big fundraisers for a state senator down in Florida back in 2009 named Marco Rubio. I think Rubio is good – that was the point of my column. He’s good on most of these and he takes the lead on all of this. It’s such a corrupting influence that they get to you early. I think Rubio actually believes the ridiculous arguments he makes on sugar. The fact is that all of them make this one exception. Ron Paul used to call these lobbyists “free market but.” We believe in a free market, but . . . . What a coincidence, the one time we make an exception is in our own industry.
Mike: It just happens to benefit us. 844-5-CRUSADE is our call-in number if you’d like to be on the program today. This is Timothy P. Carney of the Washington Examiner online publication and newspaper. One more note on this before I move on to my next question in the little bit of time I have left with you, Tim. You pointed out that Carly Fiorina brought up in the GOP debate the classic of crony capitalism. The big have gotten bigger. 1,590 community banks have gone out of business. To me, that is the most regrettable and demonstrable thing about the whole endeavor that you can’t find – if you can find – if you do have a community bank, they are probably treading water and existing on what is known as old money. They have basically all been run out of business by the Feds.
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Carney: That’s exactly right. Sometimes we like to talk about the bad guys in the story, the Boeings, the Fanjul sugar farmers. The real point here is how it kills, how big government, through regulation, through bailouts, through subsidies to the well-connected, how it kills small businesses, in two ways. It drives them out of business, but even more pernicious, it prevents them from being formed in the first place. That’s why they like things like Dodd-Frank. The banks try to work around the edges of the Dodd-Frank financial regulations. But in the end, Jamie Dimon of JP Morgan says this builds a moat around our business. Goldman Sachs CEO said there’s never been greater barriers to entry than there are right now. He says that as a positive thing because he’s inside the castle wall. A huge concentration of industry – not Dodd-Frank specifically. Sometimes Republicans go overboard in pretending that this is Obama’s fault. No, this is stuff that Republicans did, Democrats did, all before Obama. Big government, mostly through regulations but also through tax complexity, bailouts, and subsidies, prevents small businesses from coming into the industry. That hurts the would-be small-business men, it hurts consumers, it hurts the whole economy. It’s disastrous and that’s why it’s like thievery.
End Mike Church Show Transcript