I know that when it comes to the unhealthy marriage of government with big businesses, I have a particularly short fuse. But, you know what gets my blood boiling super fast? When crises are used to push the same crony-capitalist agenda through because no one is looking. And it makes it even worse that I have a feeling that no one in Congress will care.
Case in point: Under the cover of the COVID-19 crisis, the Export-Import Bank pushed out some new programs in the name of helping exporters. However, as I explain in detail over at AIER, out of these four new programs, three are clearly meant to serve Boeing. In fact, two of them are actually designed specifically for Boeing, and one was retrofitted in such a way that it was, so far, only used by, you guessed it, Boeing. If you add to this the utterly useless Ex-Im reforms to the additional guidelines (basically criteria that loan officers are supposed to us to assess if a borrower is eligible for an Ex-Im loan) recently adopted by the bank, you know that nothing will change at the Bank despite the promises made by Chairman Reed to Senator Toomey.
Since Ms. Reed is supposed to testify tomorrow before the Senate Banking Committee, here follows a list of questions I wish the senators would ask her.
Ms. Reed, you promised this committee that things would change at the Bank. Then why are these additional guidelines still singularly focused on foreign-export credit agencies? Do you really believe that economic growth and the economic health of our nation come down to a competition between government banks?
Ms. Reed, do you know that the top OECD country by volume of exports backed by ECA financing is Italy? (Perhaps you have seen that Italy is always so prominently displayed in Ex-Im competitiveness reports as an example of a hyperactive ECA that the U.S. must compete with.) How is all that export-subsidized financing working out for Italy? There are no signs that this policy is helping Italy’s economic growth. In fact, all economic performance indicators show that Italy is in decline. That country is also one of the worst economic performers in Europe. Meanwhile, Germany, which was doing well pre-COVID-19, has fewer than 1 percent of its exports backed by an ECA (0.7 percent)? It seems hard to argue that Germany’s strong economic performance has much to do with the Germans’ ECA. All other high-performing nations on the list have low shares of their exports financed by ECAs. Even in China, the top-ranked country on the list, the share of export credit represents a mere 2.1 percent of the country’s total exports. This reality shows the abundance of private capital available to exporters around the world.
Ms. Reed, if your new guidelines are so different from the old guidelines, which as we know mostly extended Ex-Im financing to large companies in high-income countries with no problem accessing capital to buy from large U.S. companies, I assume you’ll have no problem giving us a list of all the companies that got loans in the past that would be excluded today?
Ms. Reed, if Ex-Im continues to extend loans to large companies in high-income nations, how is Ex-Im going to become a tool to fight China’s power grab via heavy-handed subsidies to lower-income nations?
Ms. Reed, why are three of the four COVID-19 relief programs put out by Ex-Im clearly meant to provide a handout to Boeing? Two of those programs are in fact designed for Boeing specifically. Is this serious at a time when Boeing has been found at fault for the Max’s disastrous crashes, the FAA’s cozy relationship with the manufacturer has been exposed as part of the problem, and to this day the agency continues to “stonewall” senators trying to get to the bottom of this sordid story? Finally, I assume you have heard that the associate administrator of NASA’s human-spaceflight directorate, Doug Loverro, was investigated and resigned from his position for providing guidance to the Bank’s favorite domestic client — Boeing — in order to give it a leg up during the procurement process?
There are so many more questions. That being said, it is hard enough to have witnessed the hit taken by the economy during this pandemic. It would be tragic if this episode were used to further cronyism at the expense of us all.