Loan Guarantees

Every day the federal government offers certain companies—and in some cases foreign companies—favorable loan terms, such as below-market interest rates. Politicians claim the loans create jobs or boost American businesses and exports.

But these benefits typically go to politically favored companies. This puts hardworking taxpayers on the hook for a private company’s profits.

When the loans work out, private companies reap the rewards. If the loans go bust, taxpayers pick up the tab. The now infamous energy firm Solyndra received $535 million in loan guarantees from the U.S. Department of Energy in 2009. Two years later, the firm filed for bankruptcy, leaving taxpayers on the hook.

And like countless other examples of corporate welfare, Solyndra had deep political ties that ran all the way to the White House.

Such loan guarantee programs operate through the Export-Import Bank, the Department of Energy and the Department of Agriculture among many others. By one measure, American taxpayers are on the hook for $3 trillion in private loans.

Wherever these special loans exist for private companies, they expose taxpayers to billions of dollars of risk in order to benefit special interests. All of them should be eliminated.