Politics & Policy

Pull the Plug on the Export-Import Bank

(Dreamstime)

Who says Republicans can’t compromise? Their first stab at a continuing resolution, the funding bill that has to be passed by October 1 to keep the federal government running, already includes a concession to Democrats and big business. It will temporarily reauthorize the Export-Import Bank, a federal institution that hands out loans and loan guarantees to a tiny slice of U.S. exporters, almost all of them large manufacturers and contractors such as Boeing and Bechtel. (Wall Street banks get some nice fees, too.) Conservatives have been pushing all year — as they did the last time Ex-Im was reauthorized, in 2012 — to simply let the bank wind down, and refuse to reauthorize it, stopping it from making new loans. 

Of course, Wall Street, the Chamber of Commerce, and American manufacturers vigorously support plenty of sound free-market policies. This just isn’t one of them. Politics, not economics, is why Ex-Im survives. Its small number of substantial beneficiaries fight very hard to keep the federal government issuing billions in taxpayer guarantees every year. The economic consensus is that export-credit agencies, a prominent institution in many economies less free and less successful than ours, reallocate and distort economic resources but don’t create wealth.

House leadership contends, quietly, that extending the bank’s authorization until June 2015 is a step toward ending it. They’re right that a Republican-controlled Senate in 2015 is more likely to let the bank wind down than, say, a lame-duck Congress three months from now (another proposal that had been mooted).

But if this extension is their way to set up Ex-Im’s final demise, they should say so. And if they really were committed to ending Ex-Im, their first offer to Harry Reid would be a continuing resolution that did so.

The bank, though it involves a great deal of‎ taxpayer exposure in absolute terms, is just one small part of the federal government’s massive crony-capitalist machine. But in principle, the fact that Ex-Im is such small beer and House Republicans can’t publicly promise to end it suggests just how little appetite they have for advancing conservative preferences at odds with corporate interests.

It’s not clear the House will be able to cobble together a majority for the nine-month deal: Democrats want a long-term extension and enjoy stoking the fight between leadership and the House’s right flank, while conservatives know this isn’t a credible commitment to bury the bank for good. Passing a spending bill without Ex-Im, on the other hand, would have been a shrewd and credible conservative proposal. Harry Reid should have to explain why guaranteeing the delivery of Boeings to Dubai five years from now is a key priority of the federal government.

Bad federal programs sometimes seem to have nine lives — don’t offer Ex-Im another nine months.

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