Anyone who thinks that House Republicans are copping an attitude against the Export-Import Bank (Ex-Im) and cooler heads will prevail should take stock.
This was the same bunch that was willing to default on American debt and bring on a worldwide depression, all in the name of an extremist ideology that has come to control one of our two great political parties.
The GOP has moved even further right with the primary defeat of Majority Leader Rep. Eric Cantor, an Ex-Im supporter but hardly a liberal or even a centrist. Now dogma, ignorance of history and fantasy are in control. This is now a party that would not allow Ronald Reagan to win a school-board primary.
The fantasy is that an Ayn Rand “free market” of heroic capitalists will succeed if only government gets out of the way of the hidden hand.
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The real world doesn’t work this way and never has.
Alexander Hamilton’s dream of a great republic of commerce depended on a big role for government, especially with tariffs to protect manufacturing. Transcontinental railroads were built with heavy government support. Then they were nearly killed when government took to subsidizing interstate highways and airlines.
The real Ayn Rand world is on display in places such as Somalia. The United States is a mixed economy, with the private sector and government intertwined in myriad and delicate ways. Undo one thing thoughtlessly, and the consequences can be severe. We see this with the poisonous industry concentration brought on when Washington stopped enforcing antitrust laws.
The Ex-Im Bank was established in 1934 by Franklin Roosevelt and helps finance about 2 percent of U.S. exports. This is an important 2 percent, representing deals that couldn’t otherwise find financing in a timely manner.
Specifically, the bank makes and guarantees loans to foreign buyers of U.S. products. In fiscal 2012, it backed $50 billion in American exports, supporting 255,000 jobs. The default rate is low. And while the “Bank of Boeing” is important to some big players — Caterpillar and GE, too — it also provided financing for 3,400 American companies of all sizes.
At least 59 other government credit agencies exist around the world to help those nations’ exports, so Ex-Im is hardly unique. Indeed, it is an essential backstop for American exports — and jobs in the state of Washington.
Nor is it the drain on taxpayers that critics claim. The bank says it earned $1 billion in fees in 2013. According to the accounting rules set by Congress, Ex-Im would save the government $14 billion over 10 years.
To be fair, the Congressional Budget Office reports that applying “fair value accounting” would mean the bank would cost $2 billion. Whether it is useful to look at it this way is a source of argument among experts.
Also, the bank recently suspended or removed four officials over allegations of accepting gifts and kickbacks, as well as steering contracts to favored companies.
Indeed, America does suffer from a toxic “crony capitalism,” as Dave Brat, who defeated Cantor, complained.
Example No. 1 is deregulated Wall Street and the Too Big to Fail Banks. Then there’s the tens of billions of subsidies for fossil-fuel companies, the future of the planet be damned. Don’t forget $256 billion in farm subsidies in 2013, much of it going to Big Ag and fat-cat farmers. And the Military Industrial Complex.
And Delta Air Lines complaining about Boeing and Ex-Im. That’s rich considering how Delta grew huge, thanks to the federal antitrust nap and a federal bailout after 9/11.
Citizens United has also given big business and the richest Americans unprecedented and undemocratic power in our politics.
So the delicate checks and balances that created the most powerful economy in the world and the greatest middle class have indeed been knocked askew. Often it has been done by the same ideologues that now want the scalp of the Export-Import Bank.
Author Thomas Frank aptly calls them the Wrecking Crew. It would be a shame if they took their sledgehammers to one of the nation’s important success stories.
You may reach Jon Talton at firstname.lastname@example.org