The House Financial Services Committee held a hearing today on the reauthorization of the Export-Import Bank, a federal credit agency whose financing expires this September 30. Chairman Jeb Hensarling opposes the reauthorization of the bank, which finances the purchase of U.S. products and services by foreign corporations.
His opening statement nicely limned the case against the bank: While defenders point to the business and jobs it creates and the way it fits into trade policy, the costs of the bank — to the taxpayer, by the proper accounting methods, and to U.S. exporters and other businesses that don’t benefit from Ex-Im — are frequently ignored. Hensarling laid them out, and they’re significant.
Hensarling did go a bit wobbly at the end. “Now I will admit that Republicans disagree on whether Ex-Im should be reformed, or allowed to expire,” he said. “And I certainly hope that this hearing will help illuminate that decision. But we are united in believing that we cannot reauthorize the status quo, and we are also united in believing that the smarter and fairer way to promote U.S. exports is by fundamental tax reform, strong trade agreements, a regulatory freeze with the exception of health and safety, and greater American energy independence with projects like the Keystone pipeline.”
NR’s editors have a dispositive take today, referring to recent news that Ex-Im employees are being investigated for criminal corruption. The corruption, they argue, can’t be removed by any reform, and historically Ex-Im has failed to follow through on reforms, anyway. The same goes, likely, for reforms intended to lessen its distortionary effect on markets. The conclusion:
The kind of malfeasance that Ex-Im commits is, in some sense, inevitable. Public-choice economics teaches us that government programs work for special interests and bureaucrats, not the taxpayer. The corruption this engenders is certainly hard to investigate and fix, as we’ve seen at the VA and the IRS.
The good news is, basic economics teaches us that we don’t need to fix Ex-Im. We can just end it altogether.