The Corner

Economy & Business

Republicans Are Taking a Stand against Reauthorizing Ex-Im

The day after the elections this past November, Republicans and the voters who supported them were ecstatic — they had landed the largest GOP majority in the House since 1928.

With such a majority, you’d think that it would be easy for Republicans to take down the Ex-Im Bank, an agency that has been distorting markets and promoting the welfare and profits of few giant companies in the United States and abroad for over 80 years. Opposing the bank while Democrats tried to save it would show the world that on this issue, Democrats are the real corporate shills.

Well, as it turns out, doing the right thing isn’t always obvious for Republicans, and there’s still a risk they reauthorize Ex-Im this year. But, on the other hand, plenty of Republicans are coming out against it.

The top tier of Republican presidential candidates – Ted Cruz, Marco Rubio, Rand Paul, Scott Walker, and Jeb Bush – have all gone on record against Ex-Im reauthorization. That’s a sharp contrast with Hillary Clinton, who has come out in favor of it.

It’s notable, of course, that this puts congressional backers of the bank closer to the Democratic party in 2016 than to their own. The real fight is in Congress, where we’ve already heard enthusiastic denunciations of the bank from Senator Marco Rubio

The Club for Growth has an ad calling out a few members of Congress who are in favor of the bank, and there are encouraging signs about how vigorously some congressmen are going to fight reauthorization.

Yesterday, for instance, Republican representatives Ken Buck (Colo.), Jim Jordan (Ohio), Dave Brat (Va.), and Alex Mooney (W.V.) participated in special-order speeches against the bank. You can watch them here:

A tidbit from Representative Jordan:

Now, our job, as Members of Congress, is to remember people like the second-grade teacher and the second-shift worker and fight for things they care about. Here is one: they care about this concept that goes on in this town, where connected companies get special deals with their tax money, and they want that to stop. We now have a chance to do that, to start the process of stopping the corporate welfare, and that is what Mr. Buck’s Special Order hour is all about, stopping the Export-Import Bank from continuing the corporate connectedness, the corporate cronyism, and the corporate welfare.

Here is Represenative Brat:

Everyone likes free money, and that gets to the crux of this issue, and I want to go real slowly over this issue because everyone knows there is no such thing as free money or a free lunch. Every economics student learns that in their first course in economics.Let’s just be real clear on that one point and take our time. If you get free money, right, if a corporation gets free money or you get free money, that is good for y, a, and you are going to hear a lot of people up here saying: Hey, this hurts business, this hurts my company because I am getting free money. The flip side of that free money is someone is paying the tab for that. Guess who that is, that is you. That is the public. That is the taxpayer. You are footing the bill for this free money that falls out of heaven up here, working through special interests and corporate cronies.

The Export-Import Bank provides cheap, below-market credit to certain exporters. “Below market,” that means the market system is not working, and something has jumped in to distort free markets. Below-market is just a fancy way of saying “disguised subsidies.” Subsidized exporters and their foreign customers like the goodies. 

Representative Mooney:

Mr. Speaker, I have some serious concerns about the future of the Export-Import Bank, particularly with this administration. In the past, the Bank has been used to push extreme environmental policies from the President to guide how it awards their loans. We all know that the President has declared a war on coal; and through his administration, he is doing everything he can to prosecute that war on coal. We have seen the EPA and other departments in this administration, through regulation–not through Congress, but through regulation–attempt to shut down the coal industry and bankrupt the coal industry. The president himself said his goal was to bankrupt the coal industry. This, of course, along with the Export-Import Bank, is hurting coal companies and costing American jobs as they try to compete in the global market.

I know that American coal has been hurt because the Export-Import Bank has awarded loans in countries that do not have to adhere to President Obama’s leftwing environmental regulations. They don’t have an EPA in many of these countries, yet we are financing deals there. 

Representative Buck:

The Bank does not maintain or create jobs. It does not support small businesses as much as its supporters would like you to think. It does not level the playing field for U.S. exporters. It is not even a good deal for taxpayers. The Ex-Im Bank has become more like a train with no conductor at the helm, running faster and faster, heading straight off the tracks. As so often happens when accountability is slim and punishment is nonexistent, the Ex-Im Bank has become a breeding ground for corruption, cronyism, and fraud. If you think I am wrong, even President Obama agreed with me back in 2008. Before he ascended to the White House, Mr. Obama said that the Ex-Im Bank was “little more than corporate welfare.”

The whole thing is here.

The best news: Doing the right thing is as easy as doing nothing, since the bank’s charter is set to expire at the end of June on its own.

For more new detail on the bank, you can read my short paper with Heritage Foundation’s Diane Katz on Ex-Im’s top foreign buyers (hint: they make it hard to believe that the bank is really boosting U.S. competitiveness).

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

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