In a recent WSJ article by Nick Timiraos – House Votes to Reauthorize U.S. Export-Import Bank – WSJ writes:
The U.S. Export-Import Bank in Washington has been closed since its charter expired in July of 2015.
WASHINGTON—The House Tuesday approved the reauthorization of the U.S. Export-Import Bank, with a majority of Republicans joining almost all Democrats to demonstrate a broad bipartisan coalition to revive the export-finance agency.
The measure passed 313-118.
More than half of the House’s 247 Republicans—127 in all—voted to renew the bank’s charter. Three years ago, 147 out of 242 backed it.
Leading up to this vote, I received several interesting pros and cons on the matter. That in and of itself is not unusual, but who was on what side was most surprising. Congressman Bridenstine, my congressman, usually for smaller, government justified his support of the matter as ‘national security’. Hmmmm, the great catchall for more government like the unpatriotic Patriot Act?!
Here is a quote from his article (full text here) “While the Ex-Im Bank was not created for national security purposes, it has enabled development of domestic, commercial industries – from satellite communications to ships – essential to U.S. national security. Strong support for domestic defense-related manufacturing capabilities is desperately needed at a time when the defense budget is inadequate to confront international threats.” To which I said, “[I] totally disagree with you on this one, the Ex-Im Bank needs to die a natural death and reduce the cost of government a little while reducing crony government handouts to big business a lot! Let the free market work please…”
Paul Ryan, the new Speaker of the House, surprisingly (to me anyway) went on record lambasting the reathorization as crony capitalism (full text here) saying, “”I think there are plenty other ways to expand opportunity in this country, and corporate welfare is not one of them. The biggest beneficiaries of this bank, two-thirds of their money go to 10 companies. Forty percent goes to one company. And this bank does cost money—just ask the Congressional Budget Office when they use real scorekeeping. Remember Fannie Mae? Remember their accounting? Remember when they told us they weren’t going to cost any money—until they did? And it cost us billions.”
Several years ago Ron Paul warned us of this matter (link via my good friend J Bradley Jansen and you can see his remarks here: Center for Financial Privacy and Human Rights » Rep. Ron Paul’s Statement on H.R. 1370 Reauthorizing the Export Import Bank (1997). In this report, Ron Paul says, “H.R. 1370, reauthorizing the Export-Import Bank, should be rejected for several reasons. The claim to constitutionality is dubious. The Bank rewards special interest groups with political favors. Reallocating money from the job-producing, productive sectors of the economy to the less efficient sectors distorts credit allocation. Reauthorization of the Bank is both bad economics and bad politics.”
There is a lot more history on reauthorizations through recent years here in Capitol Words. Check out the right side bar and follow the path of recent reauthorizations. When will we find enough Congressman/women to put a stop to this nonsense?
TOM PAINTER commented on the Wall Street Journal article saying, “Supporters of the bank say it keeps U.S. firms on a level playing field against foreign competitors that enjoy similar support from their governments. Supporters need to back that up with measures that require THAT to be the case when an American company comes calling at the Ex-Im Bank. They haven’t and they won’t because that “reason” is an excuse for the crony-capitalism they are promoting, for the corporate campaign contributions they will get for that support. TOO MANY Ex-Im backed loans cannot pass the smell test as necessary due to unfair foreign competition.Additionally, some loans rob some American interests as well. Ex-Im subsidies for purchase of Boeing aircraft often go to foreign airline companies seeking to grow to compete with American airline companies, while not Boeing’s or any other aircraft sales get Ex-Im bank style sweeteners for U.S. airlines. That places Ex-Im subsidies as hurting American airlines.”
Recently,Congressman Thomas Massie had this to say on facebook, “What is the Ex-Im bank? In a nutshell: Congress set up a program for the US government to guarantee loans for foreign companies to buy American products. The goal is to improve the export market for American companies. Doesn’t sound too bad until you consider (1) the arrangement primarily benefits a single corporation (2) this hurts some American companies, like domestic airlines that compete with foreign airlines whose airplane purchases we’ve subsidized using Ex-Im bank (3) if the foreign companies fail, Americans will be bailing them out with the loan guarantees. In my opinion, this is not the proper role of the US government. I do not plan to vote to re-authorize Ex-Im bank. Because the Ex-Im bank is not widely supported by congressmen, there is talk that the Ex-Im bank will be reauthorized by attaching it to unrelated must-pass legislation….
The Export Import bank is crony capitalism and I oppose its reauthorization. Some argue that the Ex-Im bank makes money, but so did Fannie Mae and Freddie Mac until the day they didn’t. Proponents of the Ex-Im bank neglect to mention that American taxpayers are on the hook for loan guarantees if the foreign entities default.
When our government picks winners, it inevitably causes others to lose. For instance, Ex-Im subsidizes new airplane purchases for Air India. Consequently our domestic airlines lose international routes. The end result is that pilots and crew members in Kentucky lose their jobs. What sounds like a well intended program, with benefits for some, has negative consequences for my constituents. The free market is better suited for determining which companies should receive capital investment.”
And if that were not enough, here is one more article with lots of very interesting comments:
The Export-Import Bank Story the Post-Dispatch Refused to Print | Hennessy’s View opens saying, “Huge multi-national corporations like to preach from the “small business” bible when it comes to the Export-Import bank. Unfortunately, most of the Ex-Im propaganda about how “small business” benefits crumbles under scrutiny.” He goes on to explain that the Ex-Im definition of “a small business has up to 1,500 employee and revenue of $21 million. So the Ex-Im idea of small is relative.” The points made in the article continue in the comments.
So it looks like it will be renewed for another 7 years. Can we as a nation last that long? I hope so. Time will tell.