The Corner

Politics & Policy

Cronies Want a Pushover as President of the Ex-Im Bank

It is unfortunate that so many Republicans, conservatives lawmakers, and pundits conflate being pro-market with being pro-business. These are two separate things. Unfortunately, this confusion has produced thousands of government handouts and privileges to companies in the name of being pro-business — and these companies have developed a sense of entitlement. Worst of all, for many of them, government-granted privileges are an inherent part of their business models.

The latest example of this has to do with the nomination by President Trump of former Representative Scott Garrett to become the new president of the crony Export-Import Bank. The institution has been pretty much zombified since 2015 thanks to a few Republicans in Congress who actually believe in the free-market and despise government subsidies (no matter what form they take) to big businesses. As a reminder, during the heyday of the Ex-Im Bank, ten massive domestic companies benefited from 65 percent of the agency’s activities, which subsidized loans to equally massive and often state-owned foreign companies.

Also, while the bank also subsidizes billion of dollars in loans to companies in countries that President Trump claims are hurting us on trade, such as China and Mexico, Trump has reversed his position on Ex-Im and wants it up and running and sponsoring large firms again. Go figure. The silver lining is that while the bank will be back in business, at least the man he has nominated understands full well the many problems with the institution — including fraud, abuse, and mismanagement. Scott Garrett was a staunch opponent of the Ex-Im Bank and he is exactly the kind of guy you want there.

The truth of the matter is that there is nothing Garrett can do to destroy it, but he can flag inappropriate loans, make sure that the Bank doesn’t lend money to Iran to buy Boeing planes, and maybe even put in place a few reforms.

But that is not to the taste of the president and CEO of the National Association of Manufacturers who drafted an op-ed in the Wall Street Journal complaining about Garrett’s nomination.

President Trump has been a vigorous and outspoken supporter of manufacturers. That’s why his nomination of Scott Garrett as president of the U.S. Export-Import Bank is such a disappointment. . . . 

A quick look at the Garrett record as a congressman before he lost re-election last year shows his contempt for the agency he now seeks to lead. In 2012 and again in 2015, he voted against multiyear reauthorizations of the bank and declared to his House colleagues: “We have the opportunity today to keep the Export-Import Bank out of business. We should take each of those opportunities.” . . . 

Those like Mr. Garrett who have stood in the path of a fully functioning Ex-Im Bank are responsible for moving our jobs, our wealth and our factories to other countries. The president should withdraw his nomination.

You got that? Giant manufactures such as Boeing and GE will get their subsidies back — but they would rather have a pushover for president of the bank.

The most ridiculous claim is that Scott Garrett and those of us who want to see cronyism reduced in the U.S. are responsible for moving jobs, wealth, and factories abroad. Don’t make me laugh: GE and other manufacturers moved thousands of jobs abroad while the Export-Import Bank was alive and kicking. Oh, and while we are talking about manufacturing jobs, this is time to note that the glory days of manufacturing were the 1970s. The decline in manufacturing jobs started long before the Ex-Im Bank was handicapped. Manufacturing output, however, is at an almost all-time high. Why? Because the manufacturers that Timmons represent have implemented labor-saving innovations — those innovations have increased the productivity of manufacturing workers but also reduced the number of manufacturing jobs.

So Mr. Timmons, if jobs are what you care about, talk to the people you represent and ask them if they want to go back to the manufacturing techniques and labor force of the 1970s. The answer will be a loud and clear “no.” And please, spare us the nonsense that manufacturing jobs and output are highly dependent on the Ex-Im Bank. It’s a joke.

I have ranted enough for today, but I will add that Timmons isn’t the only one making these ridiculous claims. He has some friends in South Carolina who are no doubt carrying the flame for Boeing (a company that made almost $5 billion in net income last year):

The leader of South Carolina’s largest business association wants South Carolina’s two U.S. senators to oppose President Donald Trump’s nominee for the U.S. Export-Import Bank.

Trump nominated Scott Garrett to lead the credit agency that helps buyers get financing to purchase U.S. exports in April. Garrett called the bank corporate welfare while in Congress in 2015.

South Carolina Chamber of Commerce CEO Ted Pitts said in a statement Wednesday that the bank is critical to help South Carolina manufacturers and needs to be reformed, not undermined.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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