Extending and expanding the export-subsidy agency called the Export-Import Bank is one of President Obama’s policy priorities this spring. The reauthorization of Ex-Im is required every few years, and it is typically uncontroversial. But in the post-Tea Party world, there’s been something of a revolt among free-market advocates.
The Club for Growth and the Heritage Foundation both said they would ding any lawmakers who voted to reauthorize. The Wall Street Journal carried an editorial inveighing against the agency, and George F. Will — no unwashed libertarian ruffian — wrote an op-ed critiquing Ex-Im today, which he says is being “pushed to further politicize credit markets.” Will predicts:
Ex-Im is naked corporate welfare — it subsidizes mostly large U.S. corporations at the taxpayers’ risk — but Democrats and Republicans defend it by saying it creates jobs.
I won’t deny it often creates jobs for the companies it favors (mostly Boeing), but that comes at a cost — less politically favored companies in competition for the same lending capital lose out because they don’t have a taxpayer-backed loan guarantee. The jobs they thus fail to create should always be weighed against the ones created by Ex-Im.
But sometimes Ex-Im contributes directly to killing American jobs. Sometimes Ex-Im subsidizes U.S. companies’ outsourcing.
In 2000, General Electric was moving refrigerator jobs from Bloomington, Indiana, down to Mexico. Ex-Im came in and subsidized the factory complex GE was building (through a joint venture) in Chihuahua. ”
“Well, that’s just great,” Joe Adams, who was laid off in 2005, told me at the time. “My taxes are paying to ship my job to Mexico.”
Ex-Im also subsidized the Arbomax factory in Celaya where Chrysler outsourced its camshafts.
If Chrysler or GE had built these factories in the U.S., they could not have gotten Ex-Im subsidies. But because they built the factories in Mexico, they got U.S. subsidies, as long as the factories included U.S.-made equipment.
Offshoring is often the result of free trade. In these cases, offshoring was subsidized.
