It isn’t drawing front-page coverage, but the Republicans’ budget-cutting battle to abolish the Export-Import Bank deserves our attention and support.
This outdated agency, founded during the New Deal, is the epitome of corporate welfare and crony capitalism at its worst. It’s also one of the programs that the GOP’s senior leaders in the House and Senate and America’s foremost conservative organizations are fighting tooth and nail.
The fact that it is on the GOP’s lengthy budget-cutting list — along with Obamacare — tells us a lot about what the new GOP Congress hopes to accomplish, were it not for President Obama’s veto pen.
The Ex-Im Bank offers low-interest loans to the tune of more than $20 billion to major foreign companies that help rich U.S. corporations such as Boeing, Caterpillar and General Electric sell their products abroad.
Last year, more than $15 billion, or three-quarters of the bank’s authorized funds, was dished out to these and other hugely profitable global exporters.
It’s not just Republicans in Congress who want to end this program. A growing number of the GOP’s major corporate donors, like billionaires Charles and David Koch, want to pull the plug on the agency.
Subsidiaries of Koch Industries have benefited from Ex-Im loans in the past, but now the two brothers are lobbying against its reauthorization.
While the legislative fight is getting no attention on the nightly network news, the GOP’s struggle to cleanse the economy of corporate welfare says a great deal about the direction the party wants to take the country.
“I think we should let it expire. Just let it go,” House Ways and Means Committee Chairman Paul Ryan told reporters last week.
“Most of the benefits go to a few very large companies. I see it as crony capitalism,” said the GOP’s 2012 vice presidential nominee.
The GOP’s field of likely presidential candidates want to end its charter, too, pointing to “billions for Boeing” as an example of the corporate giveaways they would abolish.
Former Gov. Jeb Bush of Florida, Wisconsin Gov. Scott Walker, Florida Sen. Marco Rubio, Kentucky Sen. Rand Paul, Texas Sen. Ted Cruz, Indiana Gov. Mike Pence, and Louisiana Gov. Bobby Jindal were among those who spoke out against the bank at the Club for Growth’s Winter Economic Conference.
While the bank became a hot issue in the big-spending debate soon after the new Congress opened for business, it’s not a new issue for this columnist.
It was one of my chief targets in the first book I wrote on wasteful spending (“The Federal Rathole”) back in 1975 as a young reporter covering Congress for United Press International.
I dug into 50 federal agencies and programs that were unnecessarily costing taxpayers tens of billions of dollars a year. A Wall Street Journal editorial said that “if the title [of the book] isn’t all it could be, neither are the agencies Mr. Lambro cites.”
“There are numerous government programs that work in direct competition with and to the detriment of the American worker and taxpayer, but few quite so deceptively and despairingly as the Export-Import Bank,” I wrote at the time.
The agency and big spenders in Congress insisted the program actually paid for itself. But auditing reports by the government pointed to hidden subsidy costs.
“The interest and other financial expense reported by Ex-Im Bank include interest charges on a significant part of the borrowings from the U.S. Treasury at rates lower than the rate prevailing at the time the funds were borrowed,” the General Accounting Office said in a 1971 report.
The Wall Street Journal said at the time that there was no way anyone “could persuade us that wresting capital away from Americans, then forcing it abroad through the subsidy mechanism, does anything but distort relative prices, misallocate resources and diminish revenues, with zero effect, at best, on the trade balance.”
Now this was at a time when the annual federal budget was “only” $350 billion and the gross federal debt had reached just $504 billion.
Flash forward to today when the bank’s supporters are still insisting that its lending pays for itself and will return $14 billion to the Treasury.
“Yet this analysis fails to account for the market risk of the bank’s loans,” Chris Rufer, the founder of the Morning Star Co., wrote in The New York Times last week.
“The Congressional Budget Office, using the fair-value accounting method that is common in the private sector because it is considered more accurate, estimates that the Export-Import Bank will actually lose $2 billion over the next decade — a $200 million annual tab for taxpayers,” he says.
This is why House Republicans like Mr. Ryan, House Majority Leader Kevin McCarthy, Majority Whip Steve Scalise, Financial Services Committee Chairman Jeb Hensarling and a bevy of conservative leaders say that the Ex-Im Bank should not be reauthorized.
It’s “another example of government trying to do what the private sector does best, and doing it badly,” says David McIntosh, president of the Club for Growth.
In many ways, the battle to shut down the Ex-Im bank, among other programs, is sharply redefining the GOP and its efforts to enact pro-growth, pro-capital investment and pro-job policies.
Barack Obama and the Democrats rose to power in 2008 promising to rescue the economy by rejecting those ideas, saying that increased federal spending, higher tax rates and still more corporate welfare was the solution to all of our troubles. They were wrong.
Conservatives are pushing a pro-growth agenda to slow spending, delete the loopholes and exemptions, and cut tax rates across the board. Getting rid of the Ex-Im Bank is a good beginning.
• Donald Lambro is a syndicated columnist and contributor to The Washington Times.