Crony Capitalism on Steroids!
By C.A. Bamford
With US debt spiraling into trillions of dollars, our economy growing at a snail’s pace and reports of mismanagement, blatant corruption and incompetence in every branch of our government surfacing almost daily, ordinary Americans are beginning to pay more attention to what is going on in the no longer hallowed halls of our nation’s capital.
One troubling example of blatant cronyism is the Export-Import Bank, which provides taxpayer-backed loans and loan guarantees to foreign countries and companies to purchase U.S. products. Its charter was set to expire on September 30,, 2014, but with growing opposition to the bank, a 5 year renewal was rejected and supporters settled for a 9 month extension of its existing charter. That extension expired at the end of June.
While Ex-Im claims that 90% of its 2014 transactions supported small business, The Heritage Foundation and George Mason University’s Mercatus Center data shows that only 20% of total Ex-Im authorizations go to small businesses. A number of reports have found that the agency benefits a small number of politically-connected businesses like Boeing, General Electric and Caterpillar. These are all fine companies, but do they really deserve taxpayer-funded handouts when so many other equally fine companies are struggling? In 2013, approximately 30% of the banks transactions benefitted Boeing, earning Ex-Im the nickname “Bank of Boeing”.
General Electric Chairman and CEO, Jeff Immelt says letting Ex-Im bank’s charter expire, ending their export subsidies for GE and others would be “economic catastrophe”, but the facts say otherwise.
House Finance Committee, Jeb Hensarling, after holding a number of hearings on Ex-Im’s future, chose not to bring a bill reauthorizing the bank through his committee. Hensarling has called the bank a form of “corporate welfare”, stating that big banks primarily profit off Ex-Im. JP Morgan & Chase Co. for example has received more than $5.1 billion from Ex-Im. “To support more robust economic growth, economic justice and equal opportunity for all, it is time to wind down Ex-Im,” Hensarling said.
Meanwhile, Ex-Im officials have revealed that there are 31 open fraud investigations and the potential for many more indictments stemming from Ex-Im transactions. A former bank loan officer, Johnny Gutierrez, pled guilty to accepting bribes 19 different times from 2006 to 2013.
Currently a non-partisan government accountability organization has submitted a FOIA request for text messages between bank officials from a top Ex-Im official, Scott Schloegel. Unfortunately, Schloegel claims that he accidentally deleted the text messages.
Only Congress has the authority to reauthorize the bank’s charter. And although support for the bank has been steadily eroding, the Senate once again voted in favor of reauthorization. In the true spirit of political gamesmanship, Democrat Senators Maria Cantwell of Wa State, Heidi Heitkamp of North Dakota and GOP Senator Lindsay Graham of South Carolina held the Pacific Trade legislation hostage until (with a little encouragement from President Obama via phone) Senator Mitch McConnell caved and provided the winning margin to extend the life of Ex-Im. Graham bragged about the deal-making on Twitter; “Most important aspect of agreement is we will also have the opportunity to vote on #ExIm reauth attached to the Highway Trust Fund reauth.”
Most important aspect of agreement is we will also have the opportunity to vote on #ExIm reauth attached to the Highway Trust Fund reauth.
— Lindsey Graham (@GrahamBlog) May 21, 2015
The House is now set to let the bank expire and there have been discussion of the Highway Trust Fund being the vehicle for reauthorization. House and Senate Leadership should use this as an opportunity, especially after the recent Supreme Court rulings, to log a win for conservatives.
Now based in Alaska, longtime contributor Charlene Bamford is a policy adviser and intellectual thinker who teaches at the International School