The Corner

Economy & Business

The Trump Budget Kills OPIC but Maintains Ex-Im?

I’m planning a longer article tomorrow on the Trump budget after I have had some time to digest the whole thing. Tonight, however, I would like to focus on the following: Why on Earth would the OMB director, Mick Mulvaney, keep the Export-Import Bank alive when he decides to kill the Overseas Private Investment Corporation?

Don’t get me wrong. OPIC deserves to be terminated under any circumstances. But so does Ex-Im. Both institutions are pretty similar in what they do. They use some of same fake rational to justify why they do what they do. Moreover, the budget team shows that it gets why crony programs like OPIC and the Ex-Im Bank must be terminated. Look at the great justification (on page 102 of the one of the budget books) they give for killing OPIC:

OPIC, which provides financing and political risk insurance to help American businesses invest in emerging markets, is not currently authorized beyond 2017. Development Finance Institutions (DFIs) like OPIC can at times displace the private sector, particularly in emerging and developing markets that have active international finance firms or domestic financial institutions capable of providing similar financing. While the Administration wants U.S. businesses to invest in emerging markets to grow their businesses and create American jobs, private sector financing is often available.

OPIC has not had a stand-alone authorization bill since 2008; instead, Congress has extended OPIC’s authorization annually via appropriations. This has allowed OPIC to operate for nearly 10 years without any changes by its authorizers, avoiding significant reforms that may have addressed some of these challenges while OPIC’s portfolio continued to expand.

Due to OPIC’s outstanding $22 billion portfolio and the long-term nature of some OPIC transactions, OPIC cannot be eliminated immediately without putting taxpayer dollars at risk. While the Budget would not support any new OPIC transactions starting in 2018, the Budget would support significantly reduced OPIC staff to monitor and maintain OPIC’s existing portfolio, allowing for repayments to be collected and minimizing the risk to the taxpayer from OPIC’s outstanding exposure.

Exactly!! These are the same reasons for why we should kill the Export-Import Bank. So what gives? I guess the Democrats, Boeing, and GE haven’t lobbied the administration for OPIC like they have for Ex-Im.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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