With endless discussions of “the greatest economic crisis since the Great Depression” one might think that the President and the Congress would focus their attention on the recovery of the American economy. Instead it has become increasing apparent that an inordinate amount of benefits bestowed by the federal government in the past year have in fact flowed to foreign entities, from banks to car companies to entire countries.
Earlier this year various congressional investigations uncovered billions of dollars of the so-called TARP funds ended up bankrolling foreign banks. American banks that actually received the funds from the U.S. government operated as covert pathways to often bail out foreign banks, rather than lending the money to American consumers.
While more than $180 billion in TARP funds conspicuously flowed to the notorious AIG conglomerate, $58 billion of the total passed through AIG to foreign banks. The three largest recipients were the French bank Societe Generale ($11.9 billion), Deutsche Bank in Germany ($11.8 billion) and Barclays Bank in Britain ($8.5 billion).
Other major American banks that received TARP funds have subsequently made huge foreign loans. As Rep. Duncan Hunter (R.-Calif.) reported from investigations by the House Oversight Committee, three American banks that each received $25 billion in TARP funds went on to make foreign investments. Citigroup loaned a public-sector company in Dubai $8 billion, while JP Morgan Chase invested $1 billion in India, and Bank of America provided China with $7 billion.
Unfortunately the foreign benefits bestowed indirectly by American taxpayers do not end with massive TARP bailout funds. The House of Representatives has passed the so-called American Clean Energy and Security Act. While allegedly designed to combat the questionable phenomenon of global warming, the bill will actually boost both job-creation and the production of greenhouse gas emissions in other countries at the expense of the American economy.
Full Employment for China, India
As Stephen Moore of the Wall Street Journal has said, the bill should be called the “full employment act for India and China.” When it was debated on the House floor an amendment was defeated that would have suspended the act if China and India failed to cut their own greenhouse-gas emissions. The bill tremendously disadvantages American companies trying to compete in the global marketplace by burdening them with taxes and regulations that foreign firms will not have to contend with. Moreover, the act will only encourage American companies to expand production overseas rather than in the United States.
While the Senate has been stymying passage of the House version of the American Clean Energy and Security Act, the Obama administration has already taken numerous executive decisions that will both export energy-producing jobs overseas and increase American dependency on foreign oil and natural gas. Interior Secretary Ken Salazar has halted the development of 77 natural gas leases on 100,000 acres of land in Utah and put in place again a moratorium on new outer continental shelf oil development that was approved by Congress last year. The net effect of these actions will mean larger imports of both oil and natural gas from overseas and also more jobs for foreign workers.
Meanwhile President Obama has proclaimed an alternative plan to produce “clean and green” energy supplies in the United States. During a high-profile visit to Indiana in August, President Obama announced that $2.4 billion in federal grant money would stimulate the production of hybrid and electric cars. Unfortunately, as reported in the Washington Times, a close look at the details of the grants shows that nearly half the money went to 48 projects at six energy companies with overseas production. For example $249.1 million was granted to 123 Systems Inc., which now produces all of its batteries in China. Only one of all the American companies that received grants, EnderDel, has battery production facilities up and running in the United States currently. And even this company is a subsidiary of another company in the British Virgin Islands. The road to energy independence chartered by President Obama appears to be a dead end, but still entails a very expensive trip deeply entangled with foreign subsidiaries.
Two of the other signature programs of the Obama administration, designed to rescue struggling American automakers, also involve major foreign diversions of American funds. The bailout of struggling Chrysler Corp. with $4.5 billion came with the caveat that Chrysler sells its assets to Italian carmaker Fiat. Moreover, of our $15.4 billion in loans to General Motors, $4.3 billion may be used to finance the recovery of the German-based company Opel.
Similarly, the so-called “Cash for Clunkers” program also turned into a foreign boondoggle. On the second proclamation of the end of the program as a replenished $3 billion in funds ran out, Secretary of Transportation Ray La Hood hailed the alleged success of the program as “jump-starting a major sector of the economy and putting people back to work.”
Unfortunately initial data collected indicate that more than half of the vehicles sold, each underwritten by a $3,500-$4,500 taxpayer subsidy, were in fact foreign brands. Indeed GM, now dubbed Government Motors, accounted for only 18% of the cars sold under the program. Thus the massive $3 billion federal subsidy program has actually done more to revive Japanese and Korean rather than American automakers.