The Corner

Economy & Business

Ex-Im Cronies: 0; Pro-Market Advocates: 1

After the Export-Import Bank’s charter was reauthorized at the end of 2015, it was still unable to function at its full crony potential. The bank needs a quorum of its board if it wants to approve loans larger than $10 million, but it currently only has two members instead of the three needed. I would like to see the Bank fully dead, but since that doesn’t seem to be in the cards right now I am pretty content with this current state.

Now, not everyone feels the same way I do. Trying to change the situation, Representative Charlie Dent of Pennsylvania, a loyal ally of large corporate interests, violated the promise of Speaker Ryan that we would return to regular order in the House by attaching an amendment to an omnibus spending bill that would have lifted the requirement to have three board members to authorize big deals.

Thankfully, Jeb Hensarling, whose committee has jurisdiction over Ex-Im, was watching and had the language removed.

The House Rules Committee has granted a request from House Financial Services Committee Chairman Jeb Hensarling (R-TX) to remove language from an omnibus spending bill that would have changed the quorum rules for the Export-Import Bank.

The language — drafted by Rep. Charlie Dent (R-PA) and added to the spending bill as an amendment during Appropriations Committee consideration — would have set a quorum for the bank at the number of members already confirmed . . . 

Hensarling, a longtime opponent of the bank, sent a letter to Rules Committee Chairman Pete Sessions (R-TX) requesting removal of the quorum language. A group of House Democrats responded by sending a letter to Sessions urging him to keep Dent’s amendment.

The committee granted Hensarling’s request at its meeting Tuesday evening. The language will be stricken after the rule for floor debate is adopted by the House, which is expected to happen today.

Interestingly, Democrats tried to serve their corporate masters in the process by trying to block Hensarling’s effort. Like Dent, they have failed for now.

It is worth remembering that since the partial demise of the Ex-Im Bank, the sky hasn’t fallen as we were told it would and former beneficiaries are doing quite well. I recently looked at Boeing’s performance without Ex-Im since it was the main beneficiary of the government handout:

Boeing’s market cap has also grown from $99 billion in June 2015 to roughly $120 billion. Though I can’t say that Boeing wouldn’t be even richer and bigger with full Ex-Im support, it’s clearly doing well. It’s also the case that it’s not the role of the federal government to prop up the profits of private giants with subsidies.

The company has been doing well against its competitor Airbus, in part because of the European maker’s problem selling its A380 superjumbo. And in the end, this is what this business is all about. If you make a plane that no one wants to buy at a given price, no subsidies will change that.

In addition, Airbus hasn’t been able to soak in as much in subsidies as usual, either, because the U.K.’s Serious Fraud Office has launched a criminal investigation into the dealings of Airbus because of allegations of bribery, fraud and corruption. It shows that the world will continue to produce commercial planes even if Airbus and Boeing sales aren’t subsidized by taxpayers.

That’s because the foreign airlines that received Ex-Im’s cheap loans could typically get credit and find lenders without an Ex-Im guarantee, could afford to buy planes without the subsidies, and didn’t decide to buy a plane based on the existence of the subsidies.

U.S. exports haven’t been affected either:

U.S. exports in general don’t seem to have been affected by the end of Ex-Im, either. Monthly trade numbers from the U.S. Commerce Department show a downward shift in U.S. merchandise exports beginning in January 2015 — six months before the bank’s charter expired. The slowdown also seems to affect service exports, which would indicate that Ex-Im funding was not the explanatory variable.

Also, the 2017 data, when compared with the data from the same period in 2016, show exports rebounding without any change in the status of Ex-Im. As my colleague Dan Griswold, the co-director of the Mercatus Center’s Program on the American Economy and Globalization and the who gave me this data, noted, “the bottom line is that U.S. export growth was decelerating beginning in 2012 and has picked up again in 2017, driven mostly by global growth rates. The Export-Import Bank’s status was simply not a factor.”

This isn’t too surprising. Economists have shown that export subsidies do very little to affect the balance of trade. So can we please let it go now?


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