Crony-Capitalist Export-Import Bank Loses Authorization for First Time in 81 Years!
The reprieve is temporary, but it's still a victory against corporatism at its worst.
For the first time in 81 years, authorization for the Export-Import Bank (Ex-Im) has lapsed. Established during the Depression by Franklin Roosevelt, Ex-Im has become a leading symbol of crony capitalism. It guarantees loans and other support for foreign companies to buy U.S. goods. Unfortunately, the bank will be reauthorized within a few weeks, once Congress comes back in session and does whatever it needs to in order to dole out huge perks to the likes of Boeing, Caterpillar, and John Deere.
Reason columnist and Mercatus Center economist Veronique de Rugy has done as much or more than any single person to highlight the faulty claims and bad policy underwriting Ex-Im's existence (beyond writing countless articles and policy papers, she has also appeared many times before Congress on the matter). Here she is, talking about the bank's demise in the Wash Times:
This government bank claims to promote U.S. exporters by lending cheap, taxpayer-backed loans to foreign and domestic corporations. However, in the process, Ex-Im Bank puts millions of consumers, firms and workers at a disadvantage. As such, closing it down is an important first step in the battle against the unhealthy marriage between the government and corporate America….
Contrary to lobbyist talking points, the Ex-Im Bank is firmly in the "big business" business. On the domestic side, 40 percent of its activities benefit one giant company: Boeing. Over 60 percent of the bank's financing aids 10 giant beneficiaries, like Caterpillar, Bechtel, and General Electric. On the foreign side, the cheap loans go to state-owned companies like Pemex, the Mexican government's oil and gas giant, or Air Emirates, the airline of the wealthy United Arab Emirates….
It is critical that we consider the unseen victims of political privilege who pay for these benefits.
These victims are taxpayers who now bear the risk for $140 billion in liabilities. These victims are consumers who pay higher prices for the purchase of subsidized goods. These victims are unsubsidized firms competing with subsidized ones. They not only pay higher financing costs but also lose out when private capital flows to politically privileged firms regardless of the merits of their projects.