6/11/2014
By Charles Payne

“The issue is that the Republican Party has been paying way too much attention to Wall Street and not enough attention to Main Street”

- David Brat

Nobody predicted this, but as much as it seemed like the Republican power elite would come through the primary elections overwhelmingly unscathed, the apparent heir was crushed. Despite being outspent $5.7 million to $231,000, the economics professor, Eric Cantor, pulled off the political upset of the century. Headlines focused on Cantor’s unrepentant stance on immigration, which largely amounted to a form of amnesty, but economics were at the root of this shocker too.

While there’s still a general election, these results change everything.

David Brat really took Cantor to task for Cantor’s running interference for Wall Street and Big Business, both of which are key components of Big Government. I think this is a huge win for the nation that has a yearning to get back to basics in so many ways, but especially the way we approach economics. The war on success and rabid infatuation with higher taxes as a cure-all just aren’t resonating, which is a point underscored by the polling results on President Obama’s public approval; all sources reflect record-low readings.

Corporate Welfare

Two years ago, the House extended the life of the Export-Import (Ex-Im) Bank: the taxpayer-owned bank established by FDR in 1934 used to facilitate trade with the Soviet Union at the time. Since then, it’s become a slush fund for large American businesses doing business aboard. The bank makes loans to foreign entities in return for pledges. Those funds are then used to purchase products and services from American companies. But why would we have to seduce foreigners to buy the best products available for their needs, anyway?

Case in point; Ex-Im provided a $2.0 billion loan to Petrobras to buy services from US companies is completely nuts. America makes the best offshore drilling equipment in the world (a fact Venezuela is learning the hard way); there’s no need to grease the wheels. Moreover, Petrobras posted revenue of $141 billion last year, up from $91 billion in 2009; they don’t need financial help from American taxpayers. But the beat goes on – but for how much longer?

Officials at Ex-Im boast of $1.6 billion in profits since 2008, but risks at the bank have grown to $114 billion against loan loss reserves of only $4.4 billion.

As crony capitalism runs amok, the bank pumps taxpayer money into large businesses that hardly need any favors.

The last time the House took up the vote, the bank was extended by a count of 330 to 93 all “no” votes coming from Republicans. That passage not only extended the life of the bank, but it hiked the lending ceiling by $40 billion to $140 billion. Now, the bank wants a five year extension and new lending ceiling of $160 billion. The vote was going to be close, but after last night, I think even the GOP elite will ditch this long-standing relic of corporate welfare.

Click here to add a comment

Charles Payne
Wall Street Strategies

Add a Comment!