“NO” on the Electrify Africa Act of 2014 (OPIC Reauthorization)
Today the House is scheduled to vote on the Electrify Africa Act of 2014 (H.R. 2548), which includes a three-year reauthorization of the Overseas Private Investment Corporation (OPIC). Created in 1969, OPIC is a taxpayer-backed federal agency that subsidizes private domestic companies investing in foreign countries.
The Heritage Foundation has opposed OPIC for decades. In 1996, Heritage analyst Brett Schaefer noted the “irony of using a government-run program to encourage other countries to end government interference in their economies.” Schaefer concluded:
Encouraging foreign investment is an admirable goal, but it should not come in the form of government subsidies to private U.S. firms — subsidies that discourage economic reform in the target countries and put the American taxpayer at risk.
That same year, Nobel laureate Milton Friedman wrote a letter to the House budget chairman: “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.”
Bryan Riley, Heritage’s Jay Van Andel Senior Policy Analyst in Trade Policy, compared OPIC to the Export-Import Bank, writing they “should not receive taxpayer backing.” Riley continued:
OPIC shifts risk to U.S. taxpayers while denying them a commensurate share of the returns. Although doubtful, this practice may have been justified when OPIC was created in 1969. But the original vision for OPIC was based on encouraging private-sector investment in developing countries, and it makes little sense to maintain government-subsidized loans, guarantees, and insurance when ample private-sector alternatives exist in today’s era of global markets and foreign direct investment in developing countries is surging.
The Examiner’s Tim Carney noted, the OPIC reauthorization is “more contentious issue” than the bill itself, “So it was convenient that a few inscrutable lines in a 22-page, non-controversial bill would do the deed.”
Heritage Action opposes H.R. 2548 because of its inclusion of OPIC and will include it as a vote on our legislative scorecard.
Heritage Action’s Legislative Scorecard
Tight Budget? Congress Can Save $42 Billion by Eliminating Bad Government Programs
Heritage: Don’t Reauthorize OPIC
Heritage: The Overseas Private Investment Corporation: Myth and Realities
Heritage: OPIC-ing The Taxpayers Pocket