Yesterday, the two Fiscal Commission co-chairs, Alan Simpson and Erskine Bowles, put forward their long-awaited draft proposal. I was looking forward to seeing bold, creative ideas for getting America's fiscal house in order. I wasn't disappointed. They leave no sacred public cow untouched. However, one thing nearly made me fall out of the chair. These seemingly well-informed insiders want to shut down the Overseas Private Investment Corporation (or OPIC). They argue that OPIC, which provides market-based financing and insurance for U.S. businesses investing in poorer countries, actually provides no net public benefit to the United States.
How does one begin with that? I'll give the co-chairs the benefit of the doubt. In typical Washington fashion, let's just blame this gross misjudgment on poor staffing. In contrast to the co-chairs stated rationale, OPIC provides huge benefits to the United States. According to OPIC, it has supported over 270,000 U.S. jobs and $72 billion worth of American exports over time. And due to U.S. legislation, it won't support transactions that would cause the loss of a single U.S. job at home.
OPIC also is the U.S. government's premier agency for promoting private sector-led development overseas. Without OPIC, U.S. companies likely would not invest in places like Afghanistan and the Democratic Republic of Congo. It is simply too risky. And, U.S. financial institutions won't touch them either. The ensuing OPIC-supported investments provide real economic opportunity and improve livelihoods for the citizens of these poor countries. All of this is bread and butter U.S. economic and national security policy. A real no brainer.
But, let's put these substantive issues aside for the moment. Instead, let's focus on co-chairs' core mission, cutting the budget deficit. Here's where the room really starts spinning. OPIC actually costs U.S. taxpayers nothing. More than that, it makes them money and helps pay for other international programs. According to OMB, it has contributed roughly $2.2 billion since 2005. In fact, OPIC has provided a net contribution to the federal budget every year since 1971. Put differently, the Fiscal Commission isn't sacrificing a sacred cow -- it's killing the government's cash cow.
If you're interested in reducing the budget deficit, then the question isn't whether OPIC should be shut down. That's absolutely ludicrous. Instead, the real question is how can we empower OPIC even more? How can we encourage it to generate even more profits, support even more private sector-led development in poor countries, and create even more U.S. exports and jobs?