Let the Export-Import Bank Fade AwayPosted: June 12, 2014
Let the Export-Import Bank Fade Away
by JBS President John F. McManus
The U.S. Export-Import Bank (Ex-Im) came to life in 1934 when, via the executive order route increasingly favored by recent presidents, Franklin Delano Roosevelt created it with his pen. He did so after he had legitimized the murderous USSR a year earlier with formal diplomatic recognition. Having taken that incredible step, Mr. Roosevelt needed a way to send millions to keep Josef Stalin’s tyranny afloat. Not only did Ex-Im money flow to Moscow, after World War II the bank started sending loans and loan guarantees to numerous other communist-led regimes in Europe (Romania, Yugoslavia, Poland) and even to the blood-drenched tyrants running China. It also sends funding to governments and companies considered friendly, but these become competitors of American firms that aren’t subsidized. As Professor Donald Boudreaux of George Mason University summarized, “… at best the Ex-Im Bank creates jobs in export industries by destroying jobs in non-export industries.”
Ex-Im leaders and its partisans claim the bank earns money for the U.S. government when the loans and interest are paid back. And, they add, jobs are created when foreign entities purchase U.S. products. Texas GOP Congressman Jeb Hensarling disputes these supposed benefits and says that using fair-value accounting, as recommended by the Congressional Budget Office, Ex-Im would likely “show a $200 million loss.” But even if money is not being lost, where in the Constitution does anyone find authorization for supplying financial assistance to companies here and abroad?
The chief U.S. beneficiaries of this unique form of subsidization turn out to be General Electric, Ford, and Boeing. They are among the 10 large corporations receiving 60 percent of Ex-Im’s financing. Hensarling says that we should never forget that “Fannie and Freddie made money until they didn’t; the National Flood Insurance Program made money until it didn’t; and Social Security used to make money until it didn’t.” Obviously, he sees potential for Ex-Im to follow the same pattern.
The Export-Import Bank must gain congressional reauthorization every two years. In 2008, candidate Barack Obama stated during a Green Bay, Wis., campaign stop that the Ex-Im Bank was “little more than a fund for corporate welfare.” As a candidate, he was its opponent and now, as President he supports the scheme saying, “As long as our global competitors are providing for their exports, we’ve got to do the same.”
California Republican Tom McClintock has claimed in the past that the bank “dragoons American taxpayers into subsidizing loans to foreign companies making it cheaper for them to buy products from politically favored American companies.” He noted that past beneficiaries “include such upstanding enterprises as Solyndra and Enron,” both of which failed completely at great cost to taxpayers.
Ex-Im’s funding runs out in September. One of its chief backers, Virginia Republican Eric Cantor, the GOP‘s Majority Leader, lost in a 2014 primary race and consequently has lost much of the clout he previously possessed. And Hensarling, as chairman of the House Financial Services Committee where legislation to keep Ex-Im functioning would have to emerge, seems dead set against such a move. If Congress simply does nothing, this form of “crony capitalism” will cease because positive reauthorization is required.
Hensarling (202-225-3484) should receive messages from many Americans encouraging him to allow the Export-Import Bank to go out of business.
Visit Hensarling’s Freedom Index rating, a congressional scorecard rating congressmen on their adherence to Constitutional principles of limited government, fiscal policy, national sovereignty, and a traditional foreign policy of avoiding foreign entanglements.