Congress may have punted on deciding the fate of the Export-Import Bank, but the issue has not simply gone away. By placing the Ex-Im Bank on life support with a temporary extension of its charter until June of next year, Congress has managed to dodge the matter until after the midterm elections in November. Supporters of Ex-Im and its crony-capitalist agenda no doubt breathed a sigh of relief, but as it turns out, this may have been premature as the extension is little more than a reprieve.
Just recently, no less a figure than Alan Greenspan, former chairman of the Federal Reserve, weighed in on the issue in an interview with The Hill. Greenspan told The Hill he understood why shortsighted political concerns might lead some to support the bank’s reauthorization, but “as an economist,” he could not do so.
Greenspan adds his voice to a broad array of national figures from all over the political spectrum who have criticized the United States’ embattled foreign credit agency. In Congress, these range from liberal firebrand Rep. Alan Grayson, D-Fla., to the second-highest member of the Republican leadership team, House Majority Leader Kevin McCarthy, R-Calif.
The bank’s most prominent elected foe is House Financial Services Chairman Jeb Hensarling, R-Texas, a noted conservative whose committee’s attempts to conduct effective oversight of the bank’s activities have been repeatedly obfuscated by the government agency. Ex-Im Chairman Fred Hochberg won’t allow Hensarling’s investigators to interview officials at the bank and the documents he has so far turned over are chock-full of redactions.
Outside of government, even Ralph Nader has come out against the bank, noting that it “has long been accused of being little more than a corporate welfare fund.” Similar phrasing has been employed against Ex-Im in the not-too-distant past with then-Sen. Barack Obama referred to it as “little more than a fund for corporate welfare” at a campaign stop in Wisconsin in 2008, before reversing course and supporting the bank as president.
Greenspan got right to the heart of the issue in his interview with The Hill. “The Export-Import Bank is fundamentally a subsidy for American exporters,” he noted, and that it is. Ex-Im backs loans for foreign companies to help them purchase American goods, doing much of its business with major corporations such as Boeing and General Electric. Sixty percent of the bank’s financing ends up supporting just ten large companies.
These taxpayer-backed subsidies give an unfair advantage to foreign firms and can weaken their American competitors, threatening jobs stateside. The U.S. airline industry is estimated to have already lost more than 7,000 jobs thanks to Ex-Im giving foreign airlines — many of which are state-owned or supported — sweetheart deals on Boeing jets.
“[I]f I were a politician running for office,” Greenspan said, “I suspect I might” support reauthorizing the bank’s charter. But that, he argued, was a purely political calculation. “There is just no doubt that, from a political perspective, all that is visible is the immediate subsidy advantage.” He offered an observation that lawmakers of all stripes who fashion themselves as leaders would do well to remember, “[i]n politics, it’s the short term that regrettably sets policy.”
Regrettable, indeed. Politicians on both sides of the aisle should seize the opportunity to make a decision with the long view in mind, not mere short-term politics. Greenspan put it plainly, “If no country artificially boosted their exports, the global economy would function better.”
The government has no business picking winners and losers in the marketplace — domestically or internationally — and that is precisely what the Ex-Im Bank exists to do. Instead of being held hostage by short-term thinking and politics, we should lead. And next summer, bold action must be taken to cut off the stream of corporate welfare once and for all.
Stephen DeMaura is president of Americans for Job Security.