Elizabeth Warren Sells Out to Her Corporate Masters
She is supporting the Ex-Im Bank for the worst reason possible.
Democratic Senator Elizabeth Warren of Massachusetts rode to Washington—and progressive icon status—by promising "to work for the middle class and working families every chance I get" and, unlike Mitt Romney and other Republican corporate lackeys, ensure that "we don't run this country for corporations, we run it for people." So one would think that she would be the one leading the charge against the government-funded Export-Import bank that even President Obama once described as "little more than…corporate welfare."
In fact, it was Tea Party Republicans who fought to scrap this relic of the Great Depression when its term was set to expire at the end of this month—and Warren who said she was on the side of the bank's corporate beneficiaries.
Her office recently released a statement noting not that the bank is a hotbed of corruption (given that four of its employees were recently removed for allegedly accepting bribes and kickbacks), misgovernance (the bank has numerous times doled out financial assistance to companies filing fraudulent applications) and a taxpayer rip off whose time is up. Rather, it said that Warren "looks forward to reviewing the reauthorization" of the bank because it "helps create American jobs and spur economic growth."
Earlier this month, she ended up voting against the bank not because she had a change of heart about its value. Rather, its funding until 2015 was attached to Senate legislation to help arm moderate Syrian rebel, which she didn't support. (Ironically, some opponents of corporate welfare, such Republican Sen. Marco Rubio ended up voting to keep the bank alive because they supported the broader bill.)
Be that as it may, Warren must know that the bank does not live up to her rosy claims. In fact, it is the very essence of what she despises: crony capitalism or what she condemns as socialism "for rich people."
Created by FDR in 1934 with the baffling goal of financing trade with the Soviet Union, the bank, among other things, offers loans on sweet terms to foreign companies, even government owned ones, so that they can purchase American goods and create American jobs. For example, the bank extended financing to the Dubai-based Emirates Air to buy Boeing planes, never mind that the company already has access to limitless cash given that it is owned by the oil-rich United Arab Emirates. This in fact puts American airlines that have to purchase their planes on normal market terms at a competitive disadvantage, prompting Delta Airlines and Air Line Pilots Association to sue the bank.
In principle, the bank is supposed to help all exporters—big and small—equally. In practice, over 75 percent of its activities have supported a handful of large corporations. In 2013, as in previous years, Boeing got 30 percent—or $8.3 billion—of its total financial assistance—earning the bank the nickname of "Boeing's Bank."
Warren is certainly aware of this record because she gently queried Ex-Im President Fred Hochberg about it during recent reauthorization hearings. But in contrast to the legendary whipping she gave former Treasury Secretary Tim Geithner for bailing out too-big-to-fail Wall Street banks while letting smaller ones perish, she amiably accepted Hochberg's assurance that the bank would redouble its efforts to help small businesses going forward. Apparently, 80 years is not enough time.
But if the bank's record in helping small businesses is pathetic, its job creation record is downright abysmal. The bank claims that last year its $27.3 billion activities helped sustain 205,000 export-related American jobs. This calculation is based on a dubious methodology that has been questioned by the Government Accountability Office. But even if one accepts it, Veronique de Rugy of George Mason University's Mercatus Center notes, this works out to $131,200 in taxpayer exposure for every job sustained.
If the country must take on debt, wouldn't it behoove Warren, the self-proclaimed progressive champion of ordinary Americans to do so, say, to finance middle-class tax cuts rather than corporate boondoggles?
Why is Warren so sweet on the bank? It's not like Massachusetts companies receive disproportionate export aid. It's because, as former Democratic Massachusetts Congressman Barney Frank told the Huffington Post, Democrats have made a tactical decision to close ranks and dump their previous opposition to Ex-Im because they want to wrest Corporate America—and presumably its campaign contributions—from the GOP.
In other words, it appears the woman who went to Washington to vanquish the corporate powers-that-be has become a classic Washington insider serving those powers for their money. With a direct vote on the matter delayed until next year, she has time to reconsider, but don't stand on one foot.
A version of this column appeared in USA Today.
