The Establishment Position Isn’t the ‘Reasonable’ One on Ex-Im

by Veronique de Rugy

The fundamental case against the Ex-Im Bank is simple and unavoidable: It is not the role of the federal government to subsidize private businesses, period.

This is true whether the companies are small or large, whether they export or not, or whether they produce green energy or dirty energy. This is still true when you really, really like the company that receives government privileges or whether Boeing has a huge plant in your district, or whatever.

But this argument isn’t convincing to most lawmakers — Republicans and Democrats alike — since so many of them are slaves of special-interest politics. Consider the laughable Manchin-Kirk Ex-Im reauthorization bill being touted among D.C. insiders and lobbyists as a compromise. The bipartisan protectionist bill would reauthorize the bank for another 5 years and increase the Bank’s taxpayer-backed exposure limit from its current, already perilous level of $140 billion to $160 billion. Just close your eyes and try to forget about the Bank’s financial negligence, alleged internal corruption, and billions in projected losses. Boeing wants its taxpayer-backed goodies.

Kirk’s office isn’t even trying to hide the naked cronyism. An aide reports that Kirk’s “consistent support of reauthorization is rooted in protecting Illinois companies like Boeing.” His priority? To make sure that “Ex-Im funds support Boeing airplanes.” Welcome to Washington.

Only in a twisted culture like our nation’s capital can such corporatism be applauded while principled opposition is questioned. This bizarro world, pro-corporatist Ex-Im narrative has been hand-written by political insiders and gets uncritically repeated in many media stories. 

Take a Politico piece from this morning: Suggesting the anti-corporatism cause driving opposition to Ex-Im as a cynical fight for “ideological purity,” Jake Sherman and Anna Palmer suggest Representative Jeb Hanserling’s efforts to end the bank as a choice “not to govern.”

Opposing corporatism, the piece suggests, has to be seen as a radically conservative maneuver. In bizarro Washington, the same Democrats, progressives, and media members who were so sympathetic to the message of Occupy Wall Street now eagerly defend big-business subsidies. In fact, Senator Chuck Schumer, ever the opportunist, sees a chance to score some political donations from the traditionally-Republican big business contingent.

It’s absurd to portray the case against Ex-Im as an ideological fixation when the policy case against it is serious and strong. A recent S&P report makes it very clear that in a world without Ex-Im, Boeing is the only company whose business model will be affected. Without Ex-Im, it will have to face more of the risk of doing business because it will have to organize more self-financing for the planes it sells than it does now. That risk is currently born by taxpayers; Hensarling wants to transfer the risk back where it belongs. In a world without Ex-Im, S&P notes, Boeing will have to be more competitive to succeed at the same level. That’s a good thing. Consumers benefit when companies compete — they get better goods and services at a lower price. 

The cases for Ex-Im aren’t nearly as serious or solid as defenders of the status quo pretend. First, the idea was that the bank promotes US exports — it doesn’t. Then, it was that it “creates jobs.” Nope. Next, it is a savior of small business. Wrong again. But it’ll create profits for taxpayers. No way, José. The most recent rationalization is that it’s a critical tool to stave off the export-import banks of foreign nations. That’s another whopper. The story keeps changing, but one thing has stayed the same: The arguments accepted by the establishment are just public cover for pure cronyism.

We need more politicians like Jeb Hensarling, not more lawmakers protecting corporatist boondoggles at the expense of the millions of normal taxpayers that they represent. 

The only acceptable policy position is to end Ex-Im. Period. All the reform proposals going through Congress right now should be exposed for what they are: just attempts to save a program that doesn’t need to be saved. These compromising reformists shouldn’t be celebrated like the “reasonable” ones in town.