When Sen. Ted Cruz (R-Texas) recently blasted his own party leader on including the renewal of the Export-Import Bank in a highway funding package, he thrust "crony capitalism" to the front of the national agenda.
Cruz is at odds with some of his competitors in the Republican presidential field about the bank and on other examples of tax dollars going to private companies. But even Cruz, who is among the most fiscally conservative candidates in the field, doesn't have a flawless record among governors, senators and former office holders seeking the 2016 GOP nomination.
A bad bet on a casino, grants to green energy companies, money for a basketball arena and the usual support for a thriving federal-backed ethanol industry are among the programs that many Republican candidates for president have supported.
“Crony capitalism” has frustrated many conservatives who want government to stay out of picking winners and losers in the marketplace. The most recent battleground has been on the Export-Import Bank, but numerous grants and tax incentives are used at the state level.
“Whether it’s economic development incentives or the Export-Import Bank, these subsidies, grants and favors, are not good for the economy or for generating jobs because it’s helping one company at the expense of another company,” Ryan Young, a fellow with the Competitive Enterprise Institute, a free market think tank, told TheBlaze. “If a governor or senator wants to burnish his 2016 resume, he should stay away from these policies.”
Young added that pro-growth policies that treat every individual and company equal is a preferred solution.
“If you give one company a special break, that’s an implicit admission that your tax policy sucks,” he said.
Several campaigns referred to previous statements on the issues or did not respond to questions from TheBlaze.
Cruz: Against Picking Losers
In 2013, Cruz voted in favor of federal subsidies for tobacco. But his vote was largely against a proposal from Sen. Dianne Feinstein (D-Calif.) that excluded payments to tobacco farmers while providing payments to other farmers.
Cruz opposed Feinstein's proposal, consistent with his belief that government should not be picking winners and losers. Feinstein's proposal would have essentially been picking a loser without providing fundamental reform to agriculture subsidies, a Cruz campaign official told TheBlaze.
Cruz also switched a previous vote in March 2014 in favor of reforms to the National Flood Insurance Program to delay the reforms. It was based on being an improved version of the program, even though it was not what he was looking fore.
Conservatives and libertarians are critical of the federal-run flood insurance program because it is in debt, while critics say it encourages people to build homes in flood-prone areas, and encourage towns to expand into flood prone areas. Critics also say the insurance program subsidizes wealthy people with waterfront properties.
"This bill is a substantial improvement over the previous Senate version in that it is far more fiscally responsible,” Cruz said at the time. “The federal flood insurance program still needs further reforms to ensure its long-term solvency, but today's vote protects investment-backed expectations of Texans all along the Gulf Coast"
Jeb Bush and Green Energy
As governor of Florida, Jeb Bush backed a $310 million state grant to lure the Scripps Institute to leave California for Florida. He also supported $50 million for the state’s Quick Action Closing Fund, which pays companies in cash to move to Florida.
In 2006, Bush further signed the Renewable Energy Technologies and Energy Efficiency Act, a four-year, $100 million program to promote green energy. He signed the bill at an ethanol production facility in Tampa. The funding was to be used for grants, rebates and tax incentives for alternative energy sources to drive the development of alternative fuel technologies.
"Grant programs and targeted investments for emerging technologies will speed up the development of viable, cleaner alternative energy sources and create opportunities for new industries, services and jobs," Bush said.
Paul: Libertarian Whiskey Incentive
Conservatives are skeptical of Bush already. A less likely suspect for any kind of giveaways is libertarian Sen. Rand Paul (R-Ky.), who co-sponsored a bill with fellow Kentuckian Mitch McConnell, in May to provide special tax breaks for Kentucky bourbon makers, the Fiscal Times reported.
The tax break bill for the type of whiskey prominently made in the Blue Grass State is called the Advancing Growth in the Economy through Distilled (AGED) Spirits Act.
“The [bill] will preserve Kentucky’s signature bourbon industry by boosting job creation and establishing a level playing field between bourbon and whiskey producers at home and their competitors abroad,” Paul said in May.
Walker: Spending Bucks for Basketball
Wisconsin Gov. Scott Walker has been a solid top-tier candidate largely for his fiscal conservative record, but has faced some fire for proposing a $220 million state package to build a new stadium for the Milwaukee Bucks professional basketball team. The goal is to prevent the team from leaving the state.
The Walker administration further contends that the “pay their way” plan protects taxpayers by issuing a bond that will be paid back by NBA players and NBA executives that profit from the new stadium.
“This solution allows for the state to make an investment in economic development in Milwaukee, while protecting Wisconsin taxpayers from risk,” Walker said in a statement in January explaining the plan. “This ‘pay their way’ plan will help to turn a great potential loss in revenue into the potential for great gain.”
New Jersey Gov. Chris Christie announced in 2012 that the New Jersey Economic Development Authority would provide $261 million in tax incentives for the Revel casino, and another $2.6 million for job training of what was touted as “5,500 permanent” jobs.
Two years later, the casino folded, and 5,900 jobs were lost. However, as a spokesman for the governor’s office said, no actual tax dollars or tax incentive went to the casino, because the perks were contingent on making a profit, which never happened.
“It would be inaccurate to lump the governor and New Jersey into a story about so-called ‘crony capitalism’ because the incentives program offered this state does not fit the cliché,” Christie spokesman Brian Murray told TheBlaze in a detailed statement.
Essentially, the New Jersey economic development funds don’t kick in until the firm begins to grow jobs.
“Revel actually is a good example of the safeguards inherent in the incentives program operated by our Economic Development Authority,” Murray added.
Christie’s administration also offered $66 million in tax incentives to Common Core test maker Pearson Education to locate in Hoboken, New Jersey and $200 million in incentives was directed at the American Dream Mega Mall in the Meadowlands near the New Jersey Turnpike. As with the casino and other projects, these have not yet received funding.
“Again, none of them have received a dime to date,” Murray said. “All of these programs are performance-based, which means once approved, a project must meet the specific closing and certification requirements of the program for which program it was approved in order to receive assistance. Each program has different closing requirements and each project has specific conditions for closing.”
Graham and the Bank of Boeing
South Carolina Sen. Lindsey Graham (R-S.C.) is proudly one of the leaders on advocating for the Export-Import Bank.
Graham continues to push for reauthorization of Export-Import Bank even this year, as most other Republican candidates for president oppose the bank.
“We are one of the leaders in the Senate on that issue,” Graham spokesman Kevin Bishop told TheBlaze. “Our opponents have called it the ‘Bank of Boeing.’ It's a big issue as eight out of every 10 Boeing 787s made in South Carolina are eligible for Ex-Im financing.”
The Export-Import Bank that has been the focus of such division among Republicans makes loans to companies to promote selling U.S. products abroad. The bank's charter expired on June 30 when Congress did not renew it. Advocates of the bank say it makes it easier to sell American products abroad, and makes America competitive with subsidized economies in Europe and China, while opponents say it’s a major corporate welfare boondoggle, with 87 percent of the bank’s funding going to Boeing, General Electric and Caterpillar.
Graham voted in favored of the National Flood Insurance Program in 2014 and in 2011, voted to increase loan limits for the Federal Housing Administration and Fannie Mae and Freddie Mac.
Like most other senior Republicans at the time, Graham voted in 2008 in favor of the Troubled Assets Relief Program (TARP), the $700 billion bailout for the banks.
Perry: Lacking a Plan
While serving as governor of Texas, Rick Perry faced scrutiny for the state’s spending on private companies. A 2014 report from the state auditor’s office on the Texas Enterprise Fund shows that $222 million was awarded to businesses that provided no plan for creating jobs, the purpose of the fund. That’s out of a total of $500 million state funds allotted under the program.
This reportedly included $40 million that went to a project between the firm Sematech and the University of Texas at Dallas; $400,000 for Cabela; $35 million for Aerostrunctures and the University of Texas Health Science Center; $25 million for Anderson Cancer Center; as recipients of state funds that never outlined how the funding would be used for jobs in the state.
Meanwhile, the Dallas Morning News reported in 2010 that $16 million from the Texas Emergency Technology Fund went to companies with investors and executives that contributed to Perry’s campaigns. Perry has further gone on record in support of the Ex-Im Bank.
Huckabee and Farm Subsidies
Having governed a rural states with an economy heavily reliant on its agriculture industry, former Arkansas Gov. Mike Huckabee has previously come out strongly in favor of farm subsidies, arguing the payouts keep the price of food low and help American farmers compete with the rest of the world.
“We take for granted that our food is not only plentiful and diverse but also inexpensive. As a percentage of income, we spend about half of what people in other developed countries do, which gives us an enormous economic advantage,” Huckabee wrote in his 2009 book, “Do the Right Thing." “Part of the reason prices are so low is that subsidies keep production at high levels, so keeping American farmers in business is not just good for them but good for all of us.”
“We must continue subsidies because our farmers compete with highly subsidized farmers in Europe and Asia, and they face costs (land, equipment, seeds, supplies) whether or not they produce a crop,” Huckabee’s book said. “Subsidies insulate farmers from natural disasters like draughts, floods, hurricanes and tornadoes, as well as from sudden spikes in the prices of fuel, feed and fertilizer.”
Rubio: Justification for Federal Sugar Subsidies
Florida Sen. Marco Rubio has advocated sugar subsidies, which would not make him so different from other members of Congress from the Sunshine State. Similar to Huckabee, Rubio argued that such subsidies are necessary to remain competitive with other countries that subsidize crops.
Like other conservative senators, Rubio also voted to delay reforming the National Flood Insurance Program in January 2014 in favor of a slightly improved bill. He also voted for a continuing resolution in September 2014 for a continuing resolution that extended the Ex-Im Bank.
Jindal Fostering a Chicken Plant
Bobby Jindal has a record as both governors of Louisiana and in Congress to defend.
In 2009, Jindal steered $72.2 million toward Foster Farms to purchase the Pilgrim’s Pride plant in Farmerville, Louisiana. Had the plant closed, it would have reportedly cost 1,300 jobs in the state.
As a House member, Jindal also voted in favor of sugar subsidies and against eliminating Fannie Mae and Freddie Mac’s borrowing authority.