Export-Import Bank

Dem Proposes Saving Ex-Im Bank with Even More Cronyism


"There's always money in the Export-Import Bank."
Credit: Third Way / photo on flickr

(Edited because I accidentally left out "West" in "West Virginia")

It's probably safe to say Democratic Sen. Joe Manchin of West Virginia's political future may depend on how well he is able to tamp down the Obama administration and the Environmental Protection Agency's regulatory "war on coal," at least in his home state.

So with the rhetoric heating up over the "crony capitalism machine" (Reason Contributing Editor Veronique de Rugy's words, not mine) known as the U.S. Export-Import Bank and its future in jeopardy, Manchin apparently sees an opportunity to create a bipartisan push to save a mechanism to give money to favored business interests. He's hoping the ability to let the Ex-Im Bank loan money to coal companies would draw in some Republicans to renew the bank's charter come fall. Politico takes note:

The West Virginia Democrat's measure would extend Ex-Im's charter for five years and lift its lending authority from $130 billion to $160 billion. But it would also roll back a rule Ex-Im put in place last year that bars assistance to environmentally "dirty" projects.

That provision helped attract four Republican co-sponsors: Sens. Mark Kirk of Illinois, Lindsey Graham of South Carolina, Roy Blunt of Missouri and Mike Johanns of Nebraska. But it has also drawn the ire of environmental groups and liberal Democrats like Sen. Barbara Boxer of California, leaving Manchin at risk of losing support from within his own party.

Other Democrats said they don't have a problem with Manchin's pro-coal provision, although they said they fear it could open the door to a raft of reform proposals that could slow any renewal down.

"I'm concerned about starting to add things and conditions, and making it more complicated and bogging it down that way," said Sen. Sherrod Brown (D-Ohio). "I don't particularly object to Manchin's efforts, but I think that sets us down a path we may not want to go."

Manchin's efforts at the potential cronyism gravy train it may inspire by other members of Congress is exactly why the Ex-Im Bank is such a problem in the first place. This is pork at its most obvious. Any additional "reforms" are bound to favor the states or congressional districts of the reformers.

Rep. John Campbell (R-Calif.) is also proposing some reforms that would reauthorize the bank but reduce the amount of money it loans a year to $95 billion. Campbell also tells Politico that he is a bit surprised at how much attention to usually unknown Ex-Im Bank is getting these days:

"The vast majority of the American public has never heard of it. I'd never heard of it before I was elected to Congress," he said.

"Here's this obscure little thing that has become the poster child of being either in favor of business and jobs or against crony capitalism, depending on which side you're on," Campbell said. "And I think it's overrated in both those senses."

But killing off the Ex-Im Bank a test of commitment for actual support of small government. De Rugy has detailed in the pages of Reason, and elsewhere, and even before a House Committee, that the defenses of the bank can easily be shot down, and there's little evidence the bank is actually necessary. If this cronyist patronage appendix in the federal government cannot be surgically removed, is there anything in the federal government that can actually be cut?

Maybe that's why progressives like Sen. Elizabeth Warren (D-Mass.) end up supporting the bank, even though there's no rational or ethical reason anybody on the left should feel anything but revulsion toward the thing. The Export-Import Bank is proof that the size of government can and should be cut and evidence that the federal government is too powerful. If the bank is permitted to die, it may well embolden both politicians and average Americans who believe the government does too much.


NEXT: Paul Ryan's Poverty Plan: Good on Incarceration, Licensing, Perverse Incentives; Not So Good on Paternalism

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  1. He’s from *West* Virginia. Don’t blame us.

    1. Ahem, it’s “West By God Virginia” TYVM.

  2. He just wants to wet his beak.

    1. Just the tip.

    2. You mean he wants to keep wetting his beak.

  3. Count on the Repubs to throw him a lifeline on this.

    They have zero downside with their voters, and maybe a little upside, to closing Ex-Im. They will save it, though, on the idiotic belief that authorizing cronybux for coal companies will help them more than it helps Manchin.

    1. It’s the classic “friends of” trap that has compromised or even sunk liberal movements over time. In order to organize for freedom in a polity that has even a modicum of democracy, you need the help of those who would benefit from freedom. Trouble is, those who would benefit from freedom would also benefit from pork & privilege, as long as it’s their pork & privilege.

      So to organize against the mercantile interest of the Federalists, the Democratic Republicans had to side with the farmers, who were for, relatively speaking, laissez faire. But that interest group was also for inflation, slavery, and other unsavory things.

      My understanding is that the same thing happened to the Liberals in Denmark.

      There is no consistent constituency for liberty, only an ideology of it. And Americans especially are anti-ideology. That’s mostly been a benefit over time, because most -isms are untoward ones. By avoiding ideology, the USA has avoided extremes and has been considerably freer than the vast majority of the world.

  4. The idea that “there’s little evidence the bank is actually necessary.” shows just how far some libertarians have their heads in the sand when it comes to how shit really works.

    Many nations and companies can’t afford large-scale capital expenditures on US products. The Ex-Im bank is a way to extend a line-of-credit for those large-scale capital expenditures on US-made products. As long as other nations continue to provide loans for the purchase of their products (and they do), we MUST do the same. To not do so puts our major export-producing industries at a disadvantage. Of course, if we want to continue to produce another generation of burger-flippers and convenience store clerks, by all means, make it more difficult to finance the purchase of US-made goods.

    1. “Fuck! Other countries are trying to give us free shit! Stop them before it makes us poor!”

      1. Other countries aren’t trying to give us free shit. Other countries are assisting in the purchase of airplanes, oil exploration, mining equipment, power generation facilities, and other really expensive shit that keeps their industries functional and their citizens employed. Try to keep up.

        1. Like that supply of credit just comes magically into existence, and doesn’t deplete what’s available for other borrowers?

          1. Read and learn: http://www.exim.gov/newsandeve…..m-bank.cfm

            “The Export-Import Bank of the United States (Ex-Im Bank) is an independent, self-sustaining agency with an 80-year record of supporting U.S. jobs by financing the export of American goods and services. ”

            “Over the past five years, the Bank has generated $2 billion more than the cost of its operations. That’s money Ex-Im Bank generates for the American taxpayer, to help reduce the federal deficit. ”

            “With nearly 60 other export credit agencies around the world trying to win jobs for their own countries, Ex-Im Bank helps level the playing field for American businesses.”

            “As reported to Congress, as of March 31, 2014, Ex-Im Bank’s default rate was, 0.2111 percent?less than one quarter of one percent.”

    2. As long as other nations continue to provide loans for the purchase of their products (and they do) use taxes to subsidize loans that the private sector won’t touch, we MUST do the same.


      Hey, look! There’s a bunch of people jumping off a bridge! Let’s go!

    3. So, because other countries are using their tax dollars to lower the prices if goods sold to us, we must do the same?

      Howsabout we save our tax dollars AND buy their shit below-market? Win-win, no?

      1. You don’t understand. We’ve been doing this stupid thing for 60 years, therefore it must be useful, therefore, to stop doing it will be a disaster!

    4. Reliable statist, as always.

    5. Many nations default on the capital expenditures financed by the Ex-Im bank. Are you justifying it as a welfare program, an economic program, or what? Actually, either way, you’re not making a very good case.

  5. Hypothetically speaking, how does one get on this gravy train?

    1. I’m asking for a friend.

      1. Obviously.

    2. Step 1: Be Boeing.
      Step 2: Ride the train.

    3. You need loco motive.

    4. Is this gravy train a light rail train?

  6. Manchin apparently sees an opportunity to create a bipartisan push to save a mechanism to give money to favored business interests. He’s hoping the ability to let the Ex-Im Bank loan money to coal companies would draw in some Republicans to renew the bank’s charter come fall.

    What if we expand he ExIm Bank’s scope of activities to provide loans to American coal companies to buy mining and earth moving equipment from American companies (Cough- Caterpillar! cough), to be used in American mining operations?

    Bipartisan consensus!

    1. Bipartisan consensus!

      Well, except for the rather sizable environutter wing of the Dem party, yeah.

      1. Ixnay on the oisonpay illpay

  7. Who knew that coal mines needed help in selling their wares to the Chinese?

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