Tag: Ex-Im

Will Republicans Make a Principled Stand Against Ex-Im Reauthorization in 2014?

Jobs are good. Exports create jobs. We create exports. Renew our charter.

Such is the essence of the marketing pitch of the U.S. Export-Import Bank, whose officials have begun ramping up their lobbying efforts ahead of a 2014 vote concerning reauthorization of the Bank’s charter, which expires in September.  Last go around, in 2012, Ex-Im ran into some unexpected turbulence when free-market think tanks, government watchdog groups, and limited government Republicans in Congress raised some compelling – but ultimately ignored – objections to reauthorization.

The ostensible purpose of the Ex-Im Bank is to assist in financing the export of U.S. goods and services to international markets. Even if that were a legitimate role of government, the public must keep a watchful eye on how much and to whom loans are made – especially given the current administration’s tendency to bet big on particular industries and specific firms, and in light of its commitment to seeing U.S. exports reach $3.14 trillion in 2014.

From the U.S. Export-Import Bank’s 2013 Annual Report:

The Ex-Im Bank’s mission is to support American jobs by facilitating the export of U.S. goods and services. The Bank provides competitive export financing and ensures a level playing field for U.S. exporters competing for sales in the global marketplace. Ex-Im Bank does not compete with private-sector lenders but provides export financing that fill gaps in trade financing. The Bank assumes credit and country risks that the private sector is unable or unwilling to accept. It also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters. The Bank’s charter requires that the transactions it authorizes demonstrate reasonable assurance of repayment.

The defensive tone of this mission statement anticipates Ex-Im critics’ objections, but it certainly doesn’t answer them. The objectives of filling gaps in trade financing passed over by the private sector and expecting a reasonable assurance of repayment are mutually exclusive – unless the threshold for “reasonable assurance” is more risk-permissive than the private-sector’s most risk-permissive financing entities.  Therefore, Ex-Im is either putting taxpayer resources at risk or it is competing directly with private-sector lenders for customers in need of finance. And if the latter, then as it seeks to create the proverbial “level playing field” for the U.S. companies whose customers it finances, Ex-Im is un-leveling the playing field for the finance industry, as well as for the U.S. firms in industries that compete globally with these U.S-taxpayer financed foreign companies.

PPI Considers Ex-Im Debate ‘Senseless’

What is the proper role of government in a free society? That is not an unreasonable question to debate in the public square – and to revisit with great frequency. Our era of $4 trillion federal budgets, debt-to-GDP ratios above 100 percent, and policymakers betting big on particular industries – even particular firms (check the WH visitor’s log) – renders that question all the more urgent.

Apparently, the Progressive Policy Institute disagrees. Last week, PPI’s managing director for policy and strategy condescendingly characterized the “protracted battle over the reauthorization of the Export-Import Bank” as “senseless,” as though the serious questions raised about Ex-Im’s operations, raison d’etre, costs, and externalities were simply unworthy.  

But on what grounds is it senseless to ask Ex-Im apologists to explain why that boondoggle is not corporate welfare that puts taxpayers and “unchosen” businesses at risk? Why is it senseless to force a debate on the merits of earmarking $140 billion for the benefit of a select few companies, when in the “mother of all budget battles” that transpired last year, only $38 billion was cut? Why is it not appropriate to raise questions about the sustainability of a subsidy race that effectively outsources U.S. policy to Beijing or Brussels?

Debate is illuminating.  It can be reinforcing and it can raise fresh doubts.  And it is essential to the eternal vigilance we must exercise to protect our liberties.  Unfortunately, at least one scholar at PPI is so convinced that the questions raised in the debate over Ex-Im are so irrelevant that she recommends a much longer reauthorization period (5, 10, or 15 years) to avoid debate in the future.  

Progressives tend to have an abiding faith in the goodness of government, but this proposal would make a dictator blush. 

The Ex-Im Bank and Crony Capitalism

My esteemed colleague Sallie James broke ground last summer with an excellent expose of the corporate welfare role played by the Export-Import Bank of the United States.  Until this past weekend, Sallie’s had been about the only analysis in the public domain to find the Ex-Im Bank’s activities unseemly, market-distorting, and anathema to free market capitalism.

Thus, I was heartened to see that an editorial in the last Saturday/Sunday edition of the Wall Street Journal picked up on Sallie’s theme and emphasized some of her most salient points.  Hopefully, the WSJ and other prominent news outlets read and amplify Sallie’s follow-up, forthcoming analysis, which shines some light on ExIm’s growing role in the business of financing the domestic sales of select U.S. companies.