Recent rumors of a congressional deal to reauthorize the Ex-Im Bank is a perfect example of how status quo politics can suffocate attempts to push principled, sound policy.
This morning, Politico reported that “House Republican leaders will try to extend the Export-Import Bank’s authorization in the next few weeks, according to multiple GOP sources.” The story claims that “Speaker John Boehner and House Financial Services Chairman Jeb Hensarling of Texas have a private agreement to act on a short-term re-authorization of the government-sponsored international finance bank.”
There was just one problem: Hensarling says he’d made no such agreement. Later in the day, Chairman Hensarling had to shoot down the rumor. The Hill reported:
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) on Wednesday rejected a report that he’s reached an agreement with Speaker John Boehner (R-Ohio) to act on a short-term reauthorization of the Export-Import Bank.
“There is no agreement,” Hensarling’s committee spokesman, David Popp, told The Hill.
Earlier Wednesday, Politico reported that Hensarling and Boehner had a private agreement to issue a short-term reauthorization of the bank.
This incident reveals the kind of environment that small-government Republicans like Chairman Hensarling have to work in: Principled politicians that challenge the status quo don’t receive the support they should be getting from their party. Cronyism and corruption is a bipartisan issue, and one that has a lot of lobbying muscle and money devoted to obscuring it.
The case against the Ex-Im Bank is a remarkably clear one for anyone who claims to support market freedom and small government:
First, contrary to what Ex-Im advocates claim, economists have long known that the bank doesn’t promote U.S exports. Export credit schemes redistribute prosperity away from unsubsidized firms and funnel profits towards subsidized firms.
A Congressional Budget Office report from 1981 notes that “subsidized loans to exporters will increase employment in export industries, but this increase will occur at the expense of non-subsidized industries: the subsidy to one industry appears on other industries’ books as increased costs and decreased profits.” The Bank promotes the bottom line of some winners (mostly giant corporations) at the expense of millions of losers like U.S. taxpayers, consumers and companies that aren’t benefiting from the government’s largess.
Second, the bank is not the net job creator it claims to be. Nor is it a savior of small businesses (most of the funding goes to a few corporate giants and many of the “small businesses” benefiting from the bank would be considered large corporations by most Americans)
The arguments in favor of the Bank keep changing, but one thing has stayed the same: They all amount to public cover for pure cronyism.
In the context of the Ex-Im fight, when the issue is clear enough, one does have to worry about politicians who are either firmly in favor of reauthorization or would rather not have to come out against it in public. Are they going to stand up to interest groups when it comes other issues?
For instance, who will have the courage to stand up to insurance companies and put an end to the “risk corridors” — the insurance bailouts that’s just one piece of cronyism in Obamacare? Who can summon the strength to stand up to status quo–obsessed senior-citizen interest groups and enact desperately needed fundamental reforms to entitlement spending?
If politicians can’t even do something as simple as sit on their hands and wait for the Ex-Im Bank’s charter to expire, how can they be trusted to rise to any other challenges?