Rather than frame the issue in its proper context — as a battle between reformers, who seek to rein in corporate welfare, and big business, which is fighting to protect its privileges — main stream media have characterized the Ex‐Im reauthorization debate as a Republican Party civil war between its more cosmopolitan establishment wing and its unrefined, upstart Tea Party wing. In the script, the reformers have been cast as the villains.
Buzzwords, overt or poorly‐veiled ridicule, and a general disdain for the reformers are all evident in popular media coverage of the issue. The title of a Washington Post story on the subject last Sunday was “Long‐building conservative anger at Export‐Import Bank reaches boiling point,” which seems to cater to the stereotype that Tea Party activists are better at emoting than cogitating. The lede to that story was:
The tea party had waged wars against President Obama’s health‐care plan and government spending. But in early 2012, it was beginning to sound its next battle cry, one that is now deepening the split within the Republican Party: “crony capitalism.”
Interpretation: here they go again and this time their misguided fixation is something worthy of faux scare quotes, if not an emoticon eye roll. And, in the story, this is how an Ex‐Im opponent at the Club for Growth, who’s been researching Ex-Im’s funding activities is portrayed:
Every few hours, Keller would howl with news the bank had helped a special corporate interest: the corrupt energygiant Enron, or the solar‐panel‐maker Solyndra, or Hollywood studios. In the eyes of Keller and his bosses, Ex‐Im was emblematic of a culture in Washington that puts corporate interests over ordinary people. (emphasis added)
It’s almost as if the story is being narrated in hushed tones by a National Geographic reporter reluctant to get too close to his primate subject frolicking in the bush.
A seething New York Times editorial last week titled “Tea Party Mischief on Exports,” started with this lede:
In one of their odder quests, some Tea Party members have decided that the United States must shut down the Export‐Import Bank of the United States, an obscure but important federal agency that helps American businesses sell their goods abroad.
And without mentioning — much less addressing — even a single argument for shutting down the bank, the editorial concludes:
Congress should ignore the ridiculous arguments against the bank and reauthorize it.
Chalk it up to disdain for the messenger. After all, the editorial boards at both of these newspapers have devoted gallons of ink to opining about the excesses of corporate power and the consequences of crony capitalism. All of a sudden they’re Big Business’s biggest boosters?
In his column on Wednesday, Samuelson wrote:
I was against the Export‐Import Bank before I was for it, and I may someday be against it again. But right now I’m for it, because the congressional fuss over the renewal of its charter is mostly political grandstanding.
That sounds awfully petty, especially for someone whose columns usually reflect a willingness to follow the evidence wherever it leads, regardless of political or ideological sensibilities. Of course, Samuelson cites some figures to explain his support for Ex‐Im reauthorization, but they are essentially the talking points of Ex‐Im and the Chamber of Commerce:
As I said, I’ve favored curbing or eliminating the Ex‐Im Bank in the past. I might again. But this is the wrong time for two reasons. First, in this fragile economic recovery, we shouldn’t jeopardize job creation. Ex‐Im estimates that its programs helped support 205,000 jobs in 2013; whatever the actual figure, it’s a plus. Second, other countries provide export credit subsidies. The United States sometimes needs a counter. In 2012, China’s credit subsidies alone exceeded Ex-Im’s by almost 50 percent.
If Samuelson is moved by those statistics, his assertion that he “favored curbing or eliminating the Ex‐Im Bank in the past” lacks all credibility. Otherwise, what was the basis for his opposition then? Isn’t he at least familiar with the arguments, if no longer moved by them? Shouldn’t he have afforded his former self the courtesy of identifying the data and arguments that led to his one‐time (and possible future) opposition to Ex‐Im?
There is a large and growing body of data and analysis that makes a much stronger case than one to be summarily dismissed as mere “political grandstanding.” For example, here is Caleb Brown’s interview with Tim Carney, who succinctly but comprehensively presents the arguments for terminating the Ex‐Im. Here is a link to an article that includes (toward the bottom) links to several year’s worth of Cato Institute analyses of the subject. And here is a link to Veronique DeRugy’s compellig recent testimony before the House Financial Services Committee.
The collective evidence demonstrates — among many other important points — that Ex‐Im largesse serves the interests of some U.S. companies at the expense of other U.S. companies. Ex‐Im facilitates exports and job creation for some U.S. companies, but inhibits exports, domestic sales, and jobs at other U.S companies. I suspect Samuelson understands that denial of reauthorization will not “jeopardize” job creation in this “fragile economic recovery,” just as Ex‐Im has never created jobs in the U.S. economy. It has possibly affected a reshuffling of jobs between industries and firms, but taking resources from one pocket of the economy and putting them into the other pocket does not create jobs or growth.
If Ex‐Im is correcting a market failure by providing low‐rate financing to high‐risk customers that private banks wouldn’t service, it is putting U.S. taxpayer resources at risk (regardless of what the average historical returns have been). As the bursting of the housing bubble and subsequent implosions of Fannie and Freddie demonstrated, taxpayers aren’t on the hook — until they suddenly are. If its loans and guarantees do not put taxpayer resources at risk by financing otherwise untouchable transactions, Ex‐Im is muscling in on the existing market of private sector banks and other financial institutions.
If the justification for its existence falls to the argument that other governments provide export financing to the customers of their exporters and that Ex‐Im is needed to “level the playing field,” take a step back and ask yourself why it is in YOUR interest to flip part of the bill for the customers of certain U.S. companies. How do you benefit if you don’t work for those companies or own their stock? Wouldn’t it be better if you received the lower prices from that U.S. company instead of paying through your taxes to give foreign purchasers lower prices? Instead, you pay more as foreign demand for that companies’ wares is artificially inflated.
Moreover, if Ex‐Im is justified as a means of “leveling the playing field” between U.S. exporters and the subsidized exporters of other countries, how is the subsequent adverse unleveling of the playing field between other U.S. companies and their foreign competition justified? It’s not.
It should be very clear that Ex‐Im assists some U.S. companies at the expense of others. When U.S. taxpayers provide foreign firms with low‐rate financing to purchase U.S. exports, they are subsidizing the competition of downstream U.S. companies, whose cost structures are made relatively higher as a result. This is analogous to the tariff‐rate quotas of the U.S. sugar program (to give one example), which benefit cane and beet producers and refiners, but put U.S. sugar‐using firms at disadvantages vis‐à‐vis their foreign competitors.
The debate over whether to reauthorize the charter of the Export‐Import Bank of the United States features two sets of advocates: defenders of the status quo, whose success requires a public easily seduced by sleight of hand, and; proponents of reform, who want to expose the magician’s trick. By obediently focusing on the immediate effects of policy and paying no mind to the secondary effects, most media and the public are practically begging to be bamboozled by Washington’s hucksters. But to those disciplined enough to look beyond the first order effects to the broader effects of policy, the arguments for reauthorizing the charter of the Export‐Import Bank are unpersuasive.
I would have put Samuelson in this latter group. In fact, I think he belongs there. But for the time being, at least, like so many in the media, he has contorted his position like a pretzel to avoid coming down on the same side of an issue as those irascible Tea Party extremists. Still, it is disappointing that someone who is usually more analytically robust would choose style over substance and reject a proposal because he doesn’t care for the messenger.
“My complaint about today’s debate is that it’s political theater. By exaggerating Ex-Im’s importance, the tea party types pretend they’re making a major assault on government spending when they’re not. This pretense in turn gives them an excuse to avoid harder spending choices. Large programs, starting with Social Security, are popular and untouchable precisely because they’re large. Only when the tea party and others face up to this will they be serious.”
For reform‐minded folks who can see their ways past the grudges they may hold for the Tea Party “types,” shutting down the Ex‐Im Bank is an excellent first step toward reining in corporate welfare and crony capitalism.