If the federal government simply gave money to sugar growers or paid a small portion of the cost of exporting a Boeing, these programs would be front and center in the crosshairs of budget cutters, pork watchers and anti-corporate crusaders.
But our government subsidizes many of the things it subsidizes not through tax breaks or handouts, but through loans and loan guarantees. And the U.S. Government’s portfolio of loans on its books is bigger than the federal budget: $3 trillion.
Mike Grunwald at Politico Magazine has an in-depth, eye-opening expose of what he calls “the real bank of America.”
The 120 different loan programs “help politicians dole out money without looking like they’re spending,” Grunwald explains.
Some of these programs have spectacularly high failure rates, Grunwald reports: “The Department of Agriculture’s loan programs promoting biofuel refineries, rural broadband and renovations of rural apartment buildings have all performed even worse than [the U.S. Maritime Administration], recovering less than 40 cents per dollar.”
The Maritime Administration has two of the more colorful failures: “a massive loan to help the billionaire investor Sam Zell build cruise ships [went] bust in 2001,” Grunwald reports. And this gem:
Other programs have very low default rates, sparking Grunwald to ask, “If the deals are low-risk layups, why is Uncle Sam involved?” For instance, when Goldman Sachs is selling corporate jets to the largest bank in the world (which happens to be owned by the Communist Chinese government), I’ve asked why the U.S. taxpayer needs to grease the skids with a loan.
This is what Jim DeMint has called “venture socialism”: taxpayers bear the risk, while private players get the profit.
It’s a great article by Grunwald. You’ll be amazed at the things your government, pretending it’s a bank, is tied up with. Print this article off, take it home and read it this weekend.
