You have to feel bad for the export-subsidy lobby. With all economic reasoning arrayed against reviving the expired Export-Import Bank, the subsidy lobbyists are reduced to argument-by-anecdote — usually sob stories about small businesses that Ex-Im used to help.
Even then, their anecdotes tend to crumble under scrutiny.
Ex-Im is a federal agency that used to subsidize U.S. exports by extending taxpayer-backed financing to overseas buyers, such as foreign companies or governments. On June 30, Ex-Im’s Congressional authorization expired. Under law, the agency still exists, so that it can liquidate itself in an orderly fashion. Ex-Im is not allowed to process new financing.
President Obama, congressional Democrats, Wall Street and big manufacturers want to bring the agency back from the dead. A minority of Beltway Republicans agree.
Ex-Im mostly subsidizes the exports of Boeing and a handful of other manufacturing titans: the top three beneficiaries amount for a majority of Ex-Im’s financing. Boeing, GE, Caterpillar and Halliburton don’t make the most compelling charity cases, and so Ex-Im supporters instead play up the 20 percent of financing that subsidizes small exporters. To this end, Democrats and industry will typically trot out a Mom & Pop firm that benefits from Ex-Im.
Ex-Im supporters rely so heavily on Mom & Pop sob stories because they can’t make actual economic arguments. It’s clear to economists of all stripes that export financing simply redistributes capital, profits and jobs around the U.S. economy, harming half of U.S. industry to help the other half.
Given their multi-million lobbying budget to revive Ex-Im, you’d think industry could come up with better anecdotes.
Industry’s latest Mom & Pop story is CC Solutions, a small financial services firm based in Manhattan. CC Solutions recently sent a letter to congressmen fretting about the “deep impacts on business here and overseas” due to Ex-Im’s liquidation. Democrats featured CC Solutions at a rally for Ex-Im in July.
CC Solutions isn’t an exporter. It doesn’t even finance exports. The company instead sells software that helps foreign companies apply for and process Ex-Im subsidies. CC Solutions co-founder Valerie Colville calls the company “an interface between these overseas borrowers [and] U.S. Ex-Im.”
You might already see the problem here. But this company somehow became the Democrats’ poster child for Ex-Im.
“American businesses must be supported so that they can compete in foreign markets,” Rep. Jerry Nadler, D-N.Y., whose district includes CC Solutions, said at the July event. It’s an odd argument: Businesses have popped up to service a federal agency, and so we most preserve that agency in order to protect those businesses.
Here’s another fact that makes the Democrats’ choice of Ex-Im poster-child an odd one: CC Solutions also works hand-in-glove with the Export-Import Bank of Korea, the UK Export Finance agency and all sorts of foreign counterparts to U.S. Ex-Im. “We’ve done a couple of very large transactions with borrowers overseas that have nothing to do with U.S. anything,” Colville tells me. “We are a global company. … We’re neutral to agency. We happen to be in the United States.”
But these foreign agencies that CC Solutions relies on for profit are supposedly the bad guys whose perfidious financing of foreign companies’ exports justifies the U.S. doing the same thing for American exporters through Ex-Im.
“The world’s largest exporters — including China and South Korea — all have export credit agencies aggressively helping their businesses claim a larger share of the world market,” Rep. Carolyn Maloney, D-N.Y., explained at the July rally where CC solutions was a star. Letting Ex-Im stay dead “is total surrender, a form of unilateral disarmament,” she said.
But foreign Ex-Im officials tell me they see U.S. Ex-Im as a partner, rather than a competitor. And some top beneficiaries of U.S. Ex-Im, such as GE, are multinational companies that are also top beneficiaries of European export subsidies.
Colville says her support for foreign export subsidies doesn’t hurt U.S. companies: “When we’re working with Korea Ex-Im, it’s not at the expense of U.S. Ex-Im. When we’re working with U.S. Ex-Im, it’s not at the expense of UKEF.”
It’s nice that the export subsidizers of the world can all get along. But the deals they’re supporting — and the exports Ex-Im helps secure for CC Solutions’ clients — aren’t free money. A loan guarantee for CC Solutions’ client is a loan some other U.S. business doesn’t get. Subsidizing foreign buyers of John Deere tractors drives up the price for U.S. farmers. Helping Air India buy a Boeing aircraft drives up prices for Delta.
Argument by anecdote is a handy tool for those who want to pick winners and losers. But Ex-Im’s defenders need to find better “winners” to showcase.
Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Tuesday and Thursday nights on washingtonexaminer.com.
