Last week, the U.S. House of Representatives voted to extend the legal ability for the Export-Import Bank to run … for another nine months. The people’s legislature passed the “stop-gap” measure, 319-108, with both bipartisan support and bipartisan opposition.
Just last month, President Obama expressed dismay that Republicans could possibly be against it.
“For some reason,” he intoned, “right now the House Republicans have decided that we shouldn’t do this….” He pretended incredulity and puzzlement. He gave the usual reasoning for the subsidized financial guarantees, and insisted that “every country does this.”
“When,” he inquired, “did that become something that Republicans opposed?”
Obama could’ve asked all those members of his own party who likewise opposed it. He didn’t.
But then, he could have simply asked himself.
Back in 2008, he very clearly put the Ex-Im Bank on the theoretical chopping block. Candidate Obama gave up the big business bank as a program that “didn’t work” and one that had become “little more than a fund for corporate welfare.”
So why the change of mind, Mr. Obama?
Has the Ex-Im ceased being a fund for corporate welfare?
No. It’s still there, propping up big businesses doing business abroad — indeed, multinationals abroad, the kind of companies that Obama’s Occupier friends despise so deeply.
Chris Chocola calls the bank “a government-sponsored slush fund.” Chocola is a former Indiana congressman and the current president of the Club for Growth, which is arguably the Ex-Im bank’s biggest opponent. The Club maintains that the Export-Import Bank is crony capitalism at its worst.
Ex-Im has long been known as the “Bank of Boeing.” More than 60 percent of its loan subsidies go to the aerospace company’s customers to buy from, and thus benefit, Boeing.
Still, the airline company isn’t the only behemoth to receive the bank’s bennies. Perusing “The Club for Growth’s Top 10 Clients of the Export Import Bank,” one finds such financial diamonds-in-the-rough as Solyndra, Enron, an oil company with ties to the Russian Mafia, the China National Nuclear Power Corporation, First Solar (“to export solar panels to itself”), Mexican drug cartels — well, you probably get the idea.
And choosing such clients doesn’t come without hits to government integrity. That is, the bank doesn’t work without some corruption. “The U.S. Export-Import Bank has suspended or removed four officials in recent months amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies …” reports the Wall Street Journal.
Diane Katz, a research fellow in regulatory policy at The Heritage Foundation, testified before Congress that “government authorities have documented a variety of problems with bank operations, including mismanagement, dysfunction, fraud, and corruption. Such problems invariably arise when government assumes a function far beyond its proper purview.”
And yet we’ve been told over and over that this is a good deal for the taxpayers. The U.S. Chamber of Commerce tweeted recently that “The Ex-Im Bank doesn’t cost the American taxpayer a dime.”
Isn’t this easy money? After all, it’s just loans and loan guarantees we are talking about here.
Who has ever heard of banks making bad investments?
Lesson No. 1 of our time: look up “moral hazard” …
Of course, if you want to keep funneling money to big business, it helps to keep bad books. “The Congressional Budget Office reported May 22 that if Ex-Im used proper accounting methods,” writes the Washington Examiner’s Timothy Carney, “it would be budgeted as a $2 billion cost to the taxpayers per decade.”
That isn’t free.
Last but not least, there’s the principle that government shouldn’t be in the business of picking winners and losers in our economic lives any more than it should be favoring one religion or philosophy over others in our personal lives. Let private banks loan money at their own risk. Not the taxpayers.
“Market forces should dictate trade flows, not bureaucrats and politicians,” argues Chocola. “The sooner we can shut down this corporate welfare dispensary, the better.”
Get the cronyism out of capitalism.
There is no shortage of reasons to demand that our representatives in Washington do the right thing and take a sledge hammer to this piggy bank. Unfortunately, last week’s vote can’t even be used by the Club for Growth to determine the positions of members of Congress. As happens so often, the House leadership hid the Ex-Im provision inside a “continuing resolution” that contained other consequential matters, notably funding “moderate” rebels in Syria.
So politicians have maintained their beloved wiggle-room.
Unless voters ask candidates for Congress: How will you vote on next year’s re-authorization of crony capitalism à la the Export-Import Bank?
September 21, 2014
This column first graced the pages of Townhall.com.