An important debate about the future of the Export-Import Bank of the United States is raging in Congress and in the media. The House Financial Services Committee held a hearing last month to ask if the bank was “corporate necessity or corporate welfare?”
The Ex-Im Bank originated as a New Deal-era program, financing loans to international companies to purchase goods from American corporations. According to its charter, the bank seeks to “contribute to the employment of United States workers” by “financing and [facilitating] exports of goods and services” to foreign companies.
The fact is, anyone who cares about corporate cronyism, good government and wasteful spending should hope for the demise of the Ex-Im Bank.
For decades, efforts to end the Ex-Im Bank seemed unrealistic, if not impossible. But now that Rep. Eric Cantor is slated to be replaced as majority leader by Ex-Im Bank opponent Rep. Kevin McCarthy, a new hope has filled the halls of Congress among Tea Party conservatives and anti-corporatist liberals who want to finish off this New Deal relic. The bank’s authorization will expire on Sept. 30 if Congress doesn’t intervene.
Ending the Ex-Im Bank should be an issue of bipartisan agreement. Even President Barack Obama called the bank “little more than a fund for corporate welfare” during his 2008 presidential campaign, although his views later “evolved” as the corporate welfare recipients began supporting him.
But others on the left have held firm in their opposition. As Salon’s David Dayen points out, liberals have a decades-long history of opposing the bank for giving, as Sen. Bernie Sanders put it, “huge subsidies and loans to the largest multinational corporations in the world.” Decidedly left-of center publications like Mother Jones have pointed out many questionable projects funded by the Ex-Im Bank, from nuclear reactors for dictatorships to sponsorship for one of the world’s largest coal plants in South Africa. Liberals should be able to find common ground here with anti-crony Republicans like Sens. Jeb Hensarling of Texas and Rand Paul of Kentucky.
Anyone who cares about government transparency should also be troubled by allegations that Ex-Im Bank officials accepted kickbacks in exchange for helping companies gain financing and improperly awarding contracts. Though clearly unethical, none of this should come as a surprise. Wherever government is empowered to offer special privileges, there will always be special interests lining up to get a cut of the action.
Some people may have concerns about the economic impact of shutting down the Ex-Im Bank, given the nation’s weak recovery from the Great Recession. However, the fact remains that there simply isn’t a market demand for government-backed export subsidies. According to research conducted by the Mercatus Center, the Ex-Im Bank funds less than 2 percent of the total value of U.S. exports. That’s a negligible amount compared to the export-related loan funding the market provides. There’s no reason to think that Boeing or other firms wouldn’t be able to find support for their projects in the private sector if they are indeed as profitable as they appear to be.
The Ex-Im Bank is an outdated institution that’s proven itself to be economically unnecessary and prone to corruption. This is a chance for politicians to back up their rhetoric against cronyism with decisive action. Let the bank expire.
– See more at illinoispolicy.org