Few Americans know much about the Export-Import Bank, yet this obscure government agency is currently the focus of intense debate in the nation’s capital. So what gives?
At the most practical level, lawmakers must decide whether to reauthorize Ex-Im’s charter, which expires on Sept. 30. The bank provides taxpayer-subsidized financing to foreign firms so they can buy American exports.
Proponents claim that Ex-Im plays a crucial role in promoting the sale of U.S. goods and services abroad (not really), while critics (rightly) contend that the agency is a font of cronyism beset by mismanagement and dysfunction.
But the dispute also represents a threat to the powerful bond between Big Business and Big Government. It’s been 80 years since President Theodore Roosevelt created the bank by executive order, and in all that time, Congress has embraced Ex-Im reauthorization by either unanimous consent or voice vote in all but a couple of instances. Never has there been such a concerted effort to end it.
Political powerhouses such as the U.S. Chamber of Commerce and the National Association of Manufacturers have been forced into the equivalent of a street fight over Ex-Im, their lobbyists beseeching members of Congress, one by one, to support reauthorization, rather than settling the matter with party leaders in rarified back rooms.
Many in the mainstream press are fixated on the idea that the tea party is somehow responsible for this rather abrupt turn in Ex-Im’s political fortunes. (The very same tea party that said press otherwise portrays as disordered and ineffectual.) They are wrong on both counts.
The Ex-Im fight actually reflects a much wider public vexation with cronyism, whereby the federal government splits the spoils of political power with those wielding economic power. This anger does not belong to conservatives alone. Remember Occupy Wall Street? Ever hear Ralph Nader preach on corporate welfare?
But rather than act on principle, most congressional Democrats are more concerned with defeating any GOP initiative, notwithstanding the wishes of constituents who are angry about the government favors conferred upon special interests: the corporate kind, in particular.
But change in Washington rarely occurs on a grand scale, and the Export-Import Bank is neither the biggest nor worst manifestation of corporate welfare. It is simply the most practical and rational target at present, for reasons both material and ideological.
There isn’t an economist alive who could coherently argue that subsidies don’t distort credit and labor markets — and always to the detriment of those who remain independent of the welfare state.
Indeed, Ex-Im’s discount financing tilts the competitive landscape in favor of foreign firms to the detriment of small and medium-sized American businesses, while benefiting major corporations including General Electric, Westinghouse, John Deere, Caterpillar, Ford Motor Co. and Bechtel. And then there is Boeing, the world’s largest aerospace company (with a market capitalization exceeding $91 billion), which has benefited from 197 Ex-Im deals totaling $48 billion in just the last five years.
It is perfectly understandable, of course, that these corporations and the other beneficiaries of the bank utilize the subsidized financing. It is the responsibility of corporate officers to maximize shareholder value — including the retirement investments of millions of American workers.
That is why Congress must do the right thing for American families and businesses and end this economically harmful subsidy. And they have the opportunity right now because for the first time ever, reauthorization of the Export-Import Bank is in serious doubt. For millions of Americans, it’s about time.