The Export-Import Bank Means Picking Winners and Losers
The bank’s charter should be allowed to expire in June.
The massive defense contractor Boeing has produced a lot of things, but this may be the first time its been accused of delivering a “bit of bluster.” Yet, that’s exactly what Rep. Jeb Hensarling (R-TX) called Boeing’s threat to leave the country if Congress doesn’t reauthorize the Export-Import Bank (Ex-Im), a little-known federal agency that gives loans to foreign customers to buy U.S. goods — including those produced by Boeing.
Created in 1934 by executive order (that should have been the first warning), Ex-Im faces extinction if its charter is allowed to expire June 30.
But here’s the thing. Increasingly, conservatives are catching on to the fact that, just like the “too-big-to-fail” bailouts meant the government picked winners and losers, Ex-Im means the government picks winners and losers. Basically, the bank decides what companies, or countries, receive taxpayer-backed financing to purchase U.S. products. And it’s for good reason Ex-Im has been nicknamed the “Bank of Boeing,” given that Boeing receives 30% of the bank’s financing, or, as Veronique de Rugy points out, more than $66 billion between 2007 and 2014.
Those opposed to letting the bank close its doors next month include, not surprisingly, Barack Obama, progressive darling Elizabeth Warren, and House Speaker John Boehner, who claimed that “there are thousands of jobs on the line that would disappear pretty quickly if the Ex-Im Bank were to disappear.”
Only, there aren’t. First, as de Rugy notes, Ex-Im subsidies don’t “create” jobs but merely “redistribute” them from non-subsidized ones to subsidized ones. Hmm, if you like your job you can keep your job? Second, tales of thousands of jobs lost may be greatly exaggerated, as evidenced by criticism from the Government Accountability Office and others of the job numbers provided by the bank.
Furthermore, even if Ex-Im went dark, the life of current loans and loan guarantees wouldn’t be cut short. For Boeing, this would mean, as Hensarling notes, an additional 18 years of financing. Plus, the primary recipients of Ex-Im subsidies have work backorders that would sustain their business for years — Boeing’s threat notwithstanding.
So what’s Congress to do? Well, several members, including several presidential candidates or potential candidates, say the bank needs to go — whether quickly or over time. Senators Ted Cruz, Rand Paul and Marco Rubio, all with eyes set on 2016, have come out against the bank, as have Governors Jeb Bush, Scott Walker and Bobby Jindal, as well as former CEO Carly Fiorina. Senator Lindsay Graham, not surprisingly, has come out in favor of the bank.
Texas Governor Rick Perry, who was for the bank before he was against it, recently announced his opposition to Ex-Im, not on philosophical grounds, but given “recent revelations of corruption and bribery at the institution.” Indeed, Ex-Im has been called out for noncompliance with congressionally mandated reforms and is the subject of 31 open fraud investigations. We’re shocked that any executive agency could have even a smidgeon of corruption.
At issue is whether the federal government has a constitutional reason to redirect taxpayer dollars to foreign countries and customers. Subsidizing the purchase of U.S. exports picks winners and losers at great expense and it’s probably contrary to what the market would dictate.
For the party in congressional power — which supposedly stands for free markets — letting Ex-Im’s charter expire should be a no-brainer. Unfortunately, as we’ve seen all too often, even no-brainers can sometimes prove a stretch for Republican congressional leadership.
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