Donald Trump, during the last presidential election, said the Export-Import Bank, which subsidizes foreign buyers of U.S. goods, shouldnât exist. Hillary Clinton said she wanted to put the Ex-Im Bank âon steroids.â
Trump was correct, and he won. Yet two proposals before the House of Representatives this week would put the Ex-Im Bank on steroids. Republicans and Democrats alike should reject both of these bills, which are aimed at stripping away accountability for a government agency that peddles corporate welfare and enriches Chinaâs government.
The main House bill sponsored by California Democrat Maxine Waters and a separate one sponsored by Oklahoma Republican Frank Lucas would both reauthorize the Ex-Im Bank for 10 years. Neither bill reforms the agency, which is desperately in need of reform. Both bills should die. If Congress is not ready to wind the agency down, both parties should go back to work and craft a two-year reauthorization that fixes the Ex-Im Bankâs most glaring problems.
Waters, chairwoman of the Financial Services Committee, has been a persistent advocate for bailouts and handouts. Now, she has proposed a truly dreadful bill that the White House rightly opposes.
Watersâ bill has this going for it: The authors were upfront about the fact that the Ex-Im Bank is not really an economic tool but a political tool for picking winners and losers.
The Ex-Im Bank extends taxpayer-backed financing to companies such as Air China and Saudi Aramco to induce them to buy Boeing jets, U.S.-made drilling equipment, and GE engines. Lobbyists and pro-subsidy politicians such as Waters and Lucas argue that this helps the U.S. economy and creates jobs. There is no evidence for this, and there’s quite a bit of evidence that it’s false.
âMost economists doubt ⦠that a nation can improve its welfare over the long run by subsidizing exports,â the Congressional Research Service wrote. â[S]ubsidized export financing merely shifts production among sectors within the economy, rather than adding to the overall level of economic activity.â
Waters is unusually honest that the Ex-Im Bankâs job is to transfer wealth to politically favored entities. Set-asides for women and minorities are a central part of her Ex-Im Bank bill. Watersâ bill also calls for more green energy and battery subsidies.
Some Republicans object to Watersâ special-interest set-asides, which is why Lucas wants to replace her bill with a different 10-year extension.
Lucas’ bill is no better, and it contains all of the worst provisions of Watersâ bill.
Lucasâ bill is the counterpart of a Senate bill proposed by subsidy-friendly Arizona Democrat Kyrsten Sinema and North Dakota Republican Kevin Cramer. This bill is aggressive in shielding the Ex-Im Bank from accountability, both by granting the agency a 10-year authorization and by making sure the agency can extend massive subsidies even without a congressionally approved board of directors.
The Lucas bill fails to reform the Ex-Im Bank at all. It wouldnât turn the Ex-Im Bank away from being Boeingâs bank â about 40% of the Ex-Im Bank financing supports Boeing sales. It wouldnât cut off the Ex-Im Bankâs pipeline to the communist-run government of China, which is the top recipient of the Ex-Im Bank subsidies. It would allow the Ex-Im Bank to keep expanding at a time when it should be contracting.
Both the Waters bill and the Lucas bill are bad. House members who consider themselves conservatives should vote down both, as should liberals who oppose the unjust enrichment of corporations by taxpayers. It’s time to make the Ex-Im Bankâs defenders reform the agency.
