In the last several weeks, you might have heard for the first time of a little-known agency of the federal government called the Export-Import Bank. The Heritage Foundation and the Daily Signal have been reporting on it for a while, and I’ve written about it recently as well.
Long story short, the “Ex-Im” Bank is a government entity which uses taxpayer dollars to underwrite loans for foreign companies to purchase U.S. exports. Most of the financing benefits a few very big corporations, which means that our tax-dollars are put at risk to subsidize well-connected special interests. I thought this was an issue that could bring Right, Left, and everyone in-between together to oppose corporate welfare and big government cronyism.
I was surprised to find that many on the supposedly populist Left are siding with the big corporations. Liberals who paid lip service to Occupy Wall Street protestors are now defending Ex-Im cronyism from conservative reformers who want to end the subsidies. Yet, I’ve been even more surprised to find some on the right are also cheerleading for Ex-Im.
But when I realized that this is the same odd mix of people who defended pork barrel earmarks a few years back, it all started to make sense.
Earmarks, of course, were the little bits and pieces of spending that Senators and Representatives would pack into bills to benefit special interests in their home states. This was a constant source of waste and corruption, and it took a long, hard fight to get rid of them. The House gave in to public pressure and banned earmarks in 2010, and the Senate followed suit in 2011. To his credit, Speaker John Boehner has indicated they will be off the table for the foreseeable future.
A lot of people who wanted to keep their earmarks back then said that the ban would hurt businesses and limit Congress too much. Now they’re using the very same Chicken Little “the sky is falling!” arguments against ending Ex-Im, and again they’re wrong.
As a recovered “earmarker” myself, I remember the arguments for letting the government pick winners and losers in the marketplace. But then we wasted billions of taxpayer dollars on fiascos like the Bridge to Nowhere. And then a member of Congress went to jail for taking bribes in exchange for earmarks.
Government programs that dole out favors to special interests are incompatible with the spirit of free enterprise and fair play embodied in the Constitution, and they inevitably lead to waste and corruption.
Similarly, the Ex-Im Bank distorts our free market by subsidizing a tiny percentage of exporters—mostly by providing billions of dollars in discount loans to benefit massive companies like Boeing, General Electric and Caterpillar. Just like earmarking funds for favored groups, allowing the government to subsidize well-connected companies is unfair to all the other domestic firms that fend for themselves. If we want all U.S. exporters to remain competitive overseas, let’s free them all from high taxes, burdensome regulations, and restrictive labor policies.
Everyone said earmarks were just a small amount of money ($17 billion a year; “small” is relative), but we knew they greased the skids for irresponsible spending for years. It’s no coincidence that spending increases are at their lowest point in decades; Congressmen and Senators have lost a self-serving incentive—earmarks—to vote for bloated spending bills.
The Ex-Im Bank may be small in comparison to other government programs, but cutting the export subsidies may prompt some big businesses to stop chasing corporate welfare and instead seek comprehensive tax reform and better trade policy for all. The same goes for unnecessary trade tariffs and tax extenders for special interests: They won’t make or break the country by themselves, but they represent an important opportunity to change the focus from cronyism to what’s good for America.
The conventional wisdom in Washington was that we’d never succeed in eliminating earmarks. We were mocked and dismissed more than once trying to do it. But we did, and the nation is better for it.
Ronald Reagan, who once famously said, “a government bureau is the nearest thing to eternal life we’ll ever see on this earth,” fought against Ex-Im. In 1985 he asked, “Is it fair to ask taxpayers to help pay billions for export subsidies to a handful of America’s biggest corporations?” He continued, “We’ll also save billions by eliminating taxpayer subsidies to some of America’s biggest corporations through Export-Import Bank loans.”
To be sure, just like the earmarks, the Ex-Im Bank has powerful proponents who won’t let go of their corporate welfare without a fight. Yet, if we can inform and engage our fellow citizens, we can finally end this cronyism. It would be a victory for taxpayers and level the playing field for all American businesses … and we’d win one for the Gipper.