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Republican leaders are trying quietly to reauthorize a corporate welfare agency this week, using a few opaque words slipped into a bill providing foreign aid to Africa.
The Overseas Private Investment Corp. is a federal agency that subsidizes U.S. companies investing in foreign countries — such as Ritz-Carlton building a hotel in Turkey. OPIC provides a taxpayer backstop for the banks and the developers in case anything goes wrong.
OPIC’s charter expires Sept. 30 — the end of the current fiscal year. A standalone bill to reauthorize OPIC would face a tough fight, given the strong Tea Party, anti-corporate-welfare strain in the House.
Instead, House Foreign Affairs Chairman Ed Royce — a former opponent of OPIC — teamed up with Democrats to stick reauthorization into the “Electrify Africa Act of 2014.”
The Electrify Africa bill has broad bipartisan support. Even if it grates on some Republicans’ libertarian beliefs, there was no real opposition.
So it was slated for the House floor’s “suspension calendar” Wednesday. The suspension calendar is a tool for expediting bills, skipping some of the committee process for measures with two-thirds support in the full House. Electrify Africa, with more than 110 co-sponsors, was sure to get two-thirds of the House.
Reauthorizing OPIC without debate is a more contentious issue. So it was convenient that a few inscrutable lines in a 22-page, non-controversial bill would do the deed.
Section 8 of the bill would introduce reforms of OPIC, including more congressional oversight. But buried amid the technical language of this section is language that would reauthorize OPIC for three years.
I could find no news reports explaining that the Electrify Africa bill would reauthorize OPIC. Republican staffers were mostly unaware. I asked foreign affairs committee staff, though, and they confirmed the bill would reauthorize OPIC.
Foreign Affairs GOP staff touted that the bill included reforms and lasted only three years — the Obama administration wanted a longer reauthorization.
Chairman Royce, however, was formerly ardently opposed to OPIC. In 2007, he said, “Fundamentally … I remain unconvinced that OPIC is doing something worthwhile that the private sector wouldn’t do.”
Royce had good company: Milton Friedman, the Nobel Laureate, wrote to Congress in 1996, “I cannot see any redeeming aspect in the existence of OPIC. … It is special interest legislation of the worst kind, legislation that makes the problem it is intended to deal with worse rather than better. … OPIC has no business existing.”
OPIC officials and defenders point out that the agency helps U.S. companies by reducing their risk in overseas investments.
It also helps the banks (mostly big banks) who get risk-free lending opportunities. But this is just a matter of shifting resources around the economy
“From the point of view of the U.S. economy as a whole,” the non-partisan Congressional Research Service wrote years ago, “there is little theoretical support or empirical evidence that supports claims that subsidizing exports or overseas investment offers a positive net gain in jobs to the U.S. economy.”
If you’ve ever visited Istanbul and stayed at the Ritz-Carlton, however, you’ve enjoyed the benefits of OPIC.
“This luxury hotel, set in the heart of the city and overlooking the Bosphorus, beautifully blends modern sophistication with historic Ottoman touches, found everywhere from the spa’s traditional hammam to the exceptional accommodations,” the hotel’s website reads. “[T]he graceful lobby is adorned in Turkish carpets, antique furniture and an oversized oil painting from contemporary artist Timur Kerim Incedayi.”
OPIC extended $50 million in financing in 2000 to subsidize the hotel.
More recent OPIC projects include $250 million in taxpayer-backed financing for Sun Edison to install a solar farm in South Africa, and $150 million in OPIC insurance for Citibank to open branches in Pakistan, Jordan and Egypt.
Citibank is America’s third-largest bank, with total assets of $1.8 trillion, yet it can’t line up insurance without taxpayer backing?
By the federal government’s accounting, OPIC doesn’t add to the deficit, because it collects fees, and defaults haven’t been high in recent years.
Past defaults included a local Indian government reneging on a controversial power-purchase agreement with an Enron-run power plant.
The free-market Club For Growth found out Tuesday the OPIC renewal was quietly moving to the floor Wednesday.
Vice President Andy Roth told me the group would include the vote on its scorecard — dinging any congressman who supports the bill.
It looks like OPIC almost made it through the House undetected. Now the agency might have to justify itself.
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