Reason.com

Free Minds & Free Markets

Bernie Sanders Is Right to Trash the Ex-Im Bank

Hillary Clinton's rebuttal shows her crony corporatist side.

Democratic presidential candidate Bernie Sanders is one of a kind. He is the only self-proclaimed socialist in Congress, and he is also the only Democratic candidate in the presidential race to oppose crony programs such as the Export-Import Bank of the United States. Hillary Clinton, a big supporter of the bank, and Sanders clashed quite vigorously on the issue during the recent presidential debate in Flint, Michigan.

The Export-Import Bank is an outfit that mostly extends loans to powerful foreign companies in exchange for buying products from large and well-connected U.S. companies. As Sanders asked Clinton, "Do you know what the other name of the Export-Import Bank is, what it's called in Washington? It's called the Bank of Boeing because Boeing itself gets 40 percent of the money discharged by the Export-Import Bank." Sanders is right.

Moreover, close to 70 percent of the bank's loan guarantees benefit Boeing alone. In spite of what most Democrats in Congress try to argue, the Ex-Im Bank is indeed in the "big business" business, with about 65 percent of its activities benefiting 10 domestic firms. The same is true for the bank's beneficiaries abroad. The Ex-Im Bank's own data show that such wealthy companies as Mexican state-owned oil giant Pemex and the airline Emirates are the top beneficiaries of the U.S. taxpayers' largesse.

You would think that this is exactly the kind of program that Democrats would oppose because it's a shameful giveaway to large corporations that don't need it—though you would be wrong to think that. This wasn't always the case, but today only two Democrats in Congress oppose this corporate boondoggle: Sanders and Rep. Alan Grayson, D-Fla. The remaining Democrats hide behind the fact that 20 percent of the bank's financing benefits "small" businesses (defined as a company with up to 1,500 employees and $21.5 million in revenue) to justify their support for the bank. In other words, they're perfectly happy to carry water for big corporations as long as they can claim that a few smallish companies benefit, too.

Clinton's support for the Ex-Im Bank may be more straightforward—and a beautiful example of what cronyism is about. In April 2014, The Washington Post reported that while serving as secretary of state, "Clinton functioned as a powerful ally for Boeing's business interests at home and abroad, while Boeing has invested resources in causes beneficial to Clinton's public and political image."

How much are we talking about? Clinton negotiated a $2 million deal with the aerospace giant to host a pavilion at a world's fair and then delivered a $3.7 billion aircraft purchase deal between Boeing and the Russian government in 2010. Shortly thereafter, Boeing announced it would contribute $900,000 to the Clinton Foundation.

Then there's the fact that Boeing's senior vice president for government operations, Tim Keating, worked for the Ready for Hillary super PAC along with, in the words of Time's Mark Halperin, "an array of well-connected Democratic lobbyists and politicos." But make no mistake; she is well-connected at the Ex-Im Bank, too. In fact, the head of the bank, Fred Hochberg, whose connection to the Clintons is well-documented, has been campaigning on behalf of Hillary Clinton.

This "scratch my back and I will scratch yours" mentality is way too common in Washington between large companies and politicians. Unfortunately, while the exchange is mutually beneficial for Clinton and Boeing, the Ex-Im Bank is of no benefit to the thousands of unsubsidized companies and millions of workers who are left to face this unfair competition.

COPYRIGHT 2016 CREATORS.COM

Photo Credit: TV

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Jackand Ace||

    Pretty tough to kelp up here this week on Sanders. He's right about the bank, he's wrong on trade. He's right on corporate welfare, he's wrong on foreign policy.

    On other words, he is like every other candidate to every other voter.

    You can't always get what you want, but if you try sometimes, you just might find, you get what you need.

  • UnCivilServant||

    You can't always get what you want, but if you try sometimes, you just might find, you get what you need.

    In this case, however, Sanders is so dnagerously wrong where it counts most that he should not be allowed near a position of authority. (Vermonters need to stop voting for him too)

  • coloraDOOM||

    I wish he would go to the house. As a former vermonter, I get why they like him. But he has far too much power in the Senate. He's their Ron Paul. I get that.
    (I don't agree with him on pretty much anything policy wise, and would like him out of congress)

  • Hyperbolical||

    Sanders is not just wrong on important issues, he is dangerously naive. His acceptance of Socialism as a philosophy alone is enough to make that case. Socialists are extremely ignorant about human nature and the nature of trade and technology. Sanders is a man who could only succeed in the world of political bullshit and he's done nothing to recommend himself even for that. His policies will bring about the opposite of what he claims to want but he can't see that because of his ignorance and naivete. If he somehow gets to the White House just after Barack Obama, he will eviscerate the US economy with taxes, regulations, executive orders, and screwing up trade deals--to the extent that congress allows.

  • ||

    I don't know if they're ignorant per se but rather, I think, they believe they can 'engineer' or mold human nature; its virtues and vices to comply with their world view.

    That's why it's destined to (spectacularly in some cases) fail infinitely no matter who is Top Men.

  • Hyperbolical||

    I don't know if they're ignorant per se but rather, I think, they believe they can 'engineer' or mold human nature; its virtues and vices to comply with their world view.

    You may be right. I'm just amazed at the naivete of those who buy into socialism and latch onto candidates like Sanders. They seem unable to understand that trade is something that humans do to deal with scarcity. It's not a government program.

  • livelikearefugee||

    You're supposed to outgrow socialism by the time you have kids and are paying a mortgage. Socialism is the Mattel version of political systems. We need an adult in the white house - not the school yard loudmouth that is Trump or the campus Marxist that is Bernie.

  • kbolino||

    Sanders would abolish the Ex-Im Bank and replace it with export and import controls. He would abolish "corporate welfare" and replace it with crushing corporate income taxes.

    For a rough analogy that the economically illiterate can understand, that's like saying you want to remove any civil penalties for adultery without mentioning that it's because you want adulterers to be stoned to death instead.

  • The Last American Hero||

    I need toilet paper the next four years, so I will not be supporting the candidate who would have us all be equal but wiping our asses with our hands.

  • Bill Jeffs||

    No, he's not right about the banks....

    Sanders is distorting the basic facts about the Ex-Im Bank to score political points in the debates. He has wrongly suggested that Boeing is among corporations that “have shut down in America and have gone abroad.” Boeing doesn’t ‘get’ the loans guaranteed by Ex-Im. International customers use them to buy airplanes that are all assembled in the United States. Taxpayers don’t bear the cost of Ex-Im financing; Ex-Im Bank actually generated more than $7 billion beyond its cost of operations in the past 20 years. The majority of Ex-Im financing transactions are not with large corporations. And Boeing does not manufacture commercial airplanes outside the U.S. All of their airplanes are assembled in the U.S. and the majority of their suppliers are U.S. companies. If the Ex-Im bank isn't approved, thousands of people in the U.S. will be out of a job because those customers who buy their products will go to the competitor, who have multiple sources of financing not available for Boeing due to U.S. law....

  • Nativist, Racist & Xenophobe||

    Two posts down we just got a column decrying Sanders's economic illiteracy.

    After we kill all the lawyers, bury the economists with them.

  • UnCivilServant||

    You see, reason sent out it's Theme for the morning, and it was "Bernie Sanders", but the page giving the opinion angle to express got lost in transit.

  • Rich||

  • UnCivilServant||

    Not profitable enough to cover the profligacy of the legislature.

  • Jerryskids||

    I know a guy who won the lottery, too. That doesn't prove that buying lottery tickets is a great investment. Sure, bailing out the auto companies was arguably a good deal - as long as you overlook the fact that you've now established the principle of bailing out bankrupt companies doing stupid shit and you've just weakened the greatest disincentive there is to stop doing stupid shit, that being bankrupting your company. Sure, having the taxpayer underwrite your loans arguably worked out okay for Boeing - as long as you overlook the fact that you've now established the principle of the government underwriting loans the private sector thinks are too risky to underwrite.

    To paraphrase a wise man: When government subsidizes something, government is paying people to do something they otherwise wouldn't do.You don't have to pay people to do things that benefit them, people are smart enough to willingly do things that benefit them. Therefore, any time you see government subsidizing something, you're seeing government pay people to do something stupid.

  • Bill Jeffs||

    The government has always subsidized something, since the inception of this country, either directly or indirectly. There will always be arguments for or against subsidization. In this situation, those subsidies are helping a company to provide good paying jobs to thousands of workers nation wide....even world-wide....every things a risk...some more than others.... the housing subsidy was a bust that almost brought the economies of several countries to its knees....but that was easy to foresee....

  • Swiss Servator||

    I wonder how hard Boeing's lobbyists cringe whenever they hear that "Bank of Boeing" crack? Or do they just sit back, smile and light a cigar with a $100 bill after adjusting their monocle?

  • ||

    Bernie may be right, but it is for all the wrong reasons. Nationalizing industries would result in a different situation from the Ex-Im bank how?

  • Hyperbolical||

    A different set of cronies would benefit?

  • dbw1977||

    That's about it.

    Transfer of wealth from the public to government.

  • Alex Anonomite||

    I dunno about that either. He seems pretty friendly about small business and family farms, but seems to hate all big corps.

    I kinda like him, oddly.

    I do think he might be a libertarian socialist. I'm centrist nowhere near as left (healthcare!) as he is...but I suppose congress can blunt anything completely ridic.

  • rudehost||

    How do you argue that a guy who has warmly embraced totalitarian communist regimes is a libertarian anything?

  • Jerryskids||

    But Bernie, doesn't the Ex/Im help secure jobs - good-paying jobs for union workers - at the Boeing plants here in America? Why do you hate the American working man so much, Bernie? Aren't you a big fan of government putting a thumb on the scale of commerce to make sure the working man benefits and isn't the Ex/Im a perfect example of government putting its thumb on the scale? Why, yes, yes it is a perfect example.

    Bernie doesn't hate the Ex/Im because it's blatant crony capitalism and a perfect example of how the government intervention in the free market that Bernie loves so much actually works in the real world - Bernie just hates it because somewhere some rich guy is making a buck. Bernie would rather see a thousand working men starving in the street than to see a rich man make a nickel. Maybe Bernie needs a new pair of glasses if he can't see that, all across the world, government intervention in the free market looks exactly like Hillary and Boeing and the Ex/Im bank. His socialist fantasy of only the good and the wise and the benevolent authoritarians running the show are about as realistic as any other acid trip. If you give government the power to decide how many types of deodorant the market needs, do you really think there isn't going to be a market for the buying and selling of that power?

  • Hyperbolical||

    Bernie would rather see a thousand working men starving in the street than to see a rich man make a nickel.

    Socialists seem mostly to be ne'er do well malcontents who chafe at others doing well. That's why they want equality. It's not the poor that they fight for, necessarily, but the lazy and inept. Their policies usually hurt the poor by raising the cost of living while reducing supply. So you're right, as long as they can stick it to the rich and successful, they care nothing of the side effects on the poor.

  • Charles Easterly||

    Several fundamental differences and important points have been raised here, but I wonder what any of this has to do with Thandiwe Newton dancing ridiculously?

  • Citizen X||

    +1 full-bodied dry heave set to music

  • Charles Easterly||

    Indeed. I felt comfortable labeling the dancing "ridiculous" since the actress herself called it such in an interview.

  • Citizen X||

    If Bernie's trashing Ex-Im, i guess he's decided not to ask Liz Warren to join the ticket.

  • SimonD||

    "------Clinton negotiated a $2 million deal with the aerospace giant to host a pavilion at a world's fair and then delivered a $3.7 billion aircraft purchase deal between Boeing and the Russian government in 2010. Shortly thereafter, Boeing announced it would contribute $900,000 to the Clinton Foundation.-------"

    I don't mean to crash the party (who am I kidding, of course I mean it). Isn't this what would, in a saner era, be considered a 'bribe'?

    Just sayin'.

  • JFree||

    Here here. Let's focus all our attention on an almost completely irrelevant and minor and baldfaced example of cronyism. So we can exhaust ourselves - and ignore all the big elephants of cronyism

  • Rational Exuberance||

    Given the choice, I still prefer a deliberate crony corporatist to a faux socialist.

    Parasites like Hillary make you a bit sick, but they tend not to kill their host. Sanders is more like Ebola.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online