Export-Import Bank Shut Down, China Gets The Business Instead
Republicans have shut down the Export-Import (Ex-Im) Bank as of midnight, July 1. They are touting it as a blow against “corporate welfare” and “crony capitalism.” But who are the real winners here?
It’s certainly not us workers.
Last year the bank helped finance almost $30 billion worth of U.S. exports — things made here, by workers employed here. Germany, Japan, China and many other countries have similar agencies. Now they will be picking up that business. Our trade deficit will increase. Jobs, wages and factories will move elsewhere.
Export Assistance
The United States does not have an economic/industrial policy that supports American manufacturing. Meanwhile, other countries support their industries. As a result, the U.S. has an enormous, humongous trade deficit, trading American assets for foreign-made commodities. We lose jobs, factories, companies, and entire industries to countries that understand the long-term benefits to their economies of national investment in key, strategic industries. On the other hand, a few people here get enormously wealthy from selling off our net worth in the short term. So, there’s that.
One of the smaller efforts our country has made to help American companies export is the Ex-Im Bank. The Ex-Im Bank provides financing assistance — credit insurance, guarantees and direct lending — to American exporters, if other financing cannot be found. If a U.S. company makes and exports something, but the buyer cannot otherwise obtain financing, the Ex-Im Bank can help the company make the sale. China’s Ex-Im bank supports 12.5% of China’s exports. Ours supports only 2.42% of our exports.
Does the Ex-Im Bank provide “corporate welfare?” The bank helps American companies compete on a level playing field against foreign companies. If you want our economy and jobs to do OK, you want American companies to be competitive in the world. The bank doesn’t play favorites. It provides the same assistance to all American companies that export. It does not provide subsidies, tax breaks, or any other kind of favor to corporations at the expense of the rest of us.
If an American company has a foreign customer that can’t find financing, the Ex-Im Bank helps. This boosts all of us, together, without costing us or favoring any particular company or interest.
Ninety percent of Ex-Im Bank transactions supported American small business exports in 2014. The dollar volume of Ex-Im transactions can look as though the bank favors companies like Boeing, but these smaller companies sell things that cost much less than commercial airplanes. So, one Boeing sale transaction can add up to thousands of transactions by smaller companies with lower-cost products. If you let Airbus get a sale because France offers financing that the U.S. does not, then American wages come under increased pressure, as one more export sale falls through. Same for GE locomotives. Same for a $10 widget made by SmallCo. This is unfortunately the case now with the Ex-Im Bank shut down.
Even though it is not the government’s job to “make money” when providing services, the Ex-Im Bank does not “cost” taxpayers anything. It has run a surplus of $7 billion over the last couple of decades, which reduces government borrowing.
Koch-Backed War On Ex-Im Bank
The fight against the Ex-Im Bank is just part of the larger Koch bothers-funded fight against government. Writes Dave Weigel at Slate, in “Ex-Im Exit: The years-long, Koch-funded, libertarian campaign to kill the Export-Import Bank could finally succeed“:
It took years of messaging, much of it by groups funded by the omnipresent Koch network, but Ex-Im has emerged as a test for whether “libertarian populism” can win a vote in Congress.
New York Times in March, “Koch-Backed Group Bolsters Effort to Shut Down Export-Import Bank”:
A trade association linked to the conservative billionaires Charles G. and David H. Koch will begin a new lobbying effort pressuring lawmakers to shut down the Export-Import Bank, a top target of conservative activists and outside groups that will cease to exist after June 30 if it is not reauthorized by Congress.
The group, called Freedom Partners, will begin a six-figure digital advertising campaign and has set up a new website, eximexposed.org, to criticize the institution, which it has called a haven for cronyism and corporate welfare. But the real impact may not come from the size of the advertising campaign: The group’s members include the Kochs and several hundred other big conservative donors, whose allegiance (and wallets) are avidly sought by Republican lawmakers and presidential candidates.
Time in March, “Koch Brothers Battle Against Export-Import Bank Heats Up”:
Freedom Partners Chamber of Commerce, a group backed by the Koch Brothers, is re-launching its effort Monday to end the bank when its charter expires at the end of June.
[. . .] The new Freedom Partners website—www.eximexposed.org—includes shareable info-graphics highlighting controversial Ex-Im investments, as well as a roster of Republicans who have come out against reauthorizing the bank.
The Ex-Im fight is just one part of the Koch-funded anti-government campaign. Another Koch front group is calling for an end to national parks. Seriously.
Majority Support
A majority of the Congress supports renewing the Ex-Im Bank charter. It will pass the Senate. But, thanks to the Koch campaign, it is not clear if the bank is supported by a majority of House Republicans. The “Hastert Rule” is an informal conservative strategy to force the country to the right by keeping the House from voting on things that conservatives do not support, even it a majority of the public and the House does support them. Conservatives threaten to throw out leadership that allows votes on things conservatives don’t support, but that would pass if a vote occurs. So the issue is whether Republican leadership will “allow a vote.”
If the Republican leadership allows a vote in the House on renewing the Export-Import Bank charter, it will pass.
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This has been reposted from the Campaign for America's Future.
