Government Gone Bad: It’s Time to Let the Export-Import Bank Die

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

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What Both Parties Can Learn from Sheryl Crow

by Whitney Pitcher

There is probably very little that Sheryl “one square” Crow and I agree on politically, but I’ve always enjoyed her music. In 1995, she wrote a song called “Leaving Las Vegas” for a film by the same name.

Neither the song nor the film really have anything to do with gambling nor politics, but the song’s theme of leaving Las Vegas is one that both political parties should learn from, metaphorically speaking–leave behind the practice of betting with the American taxpayers’ money.

Today, President Obama launched a two day bus tour with the theme of “Betting on America” touting his support of the auto bailout and slamming Mitt Romney’s business record. This is an interesting messaging approach for a man who has twice slammed people for spending time and money in Las Vegas. While President Obama tries to tout a message of supporting the American worker (betting on America), he has actually been betting with American taxpayer money throughout his presidency. He has attempted to pick winners and losers, such as in the infamous Solyndra loan where one of his donors won a more than half billion dollar green loan and the American taxpayer ultimately lost big time. He has invested millions in biofuels, again in a company with ties to one his cronies,  for the military at cost that is 4 times the average cost for the fuel in a normal market.

However, President Obama and the Democrats are not the only ones who have been involved in picking winners and losers at the taxpayer’s expense. Republicans are also culpable, as a piece in the Washington Examiner notes of green energy loans:

George W. Bush and Barack Obama have also tried to boost wind and solar power with government money. The 2007 energy bill created a loan guarantee program in the Department of Energy, and Obama’s 2009 stimulus expanded the program, ultimately putting Solyndra’s losses and other green energy busts on the taxpayers’ back.

This kind of behavior is not limited to only green energy loans. It extend to other kinds of loans–even loans to companies like Boeing. The Obama administration has demonized Boeing for wanting to build a plant in a right-to-work state and has denounced the use of corporate jets–which Boeing produces. Even still, he has allowed for the American taxpayers to be the guarantor of loans of to companies like Boeing when he signed the re-authorization, supported by both Republicans and Democrats, of the Export Import Bank. The Washington Examiner again notes:

Obama plans to use the Export-Import Bank — a federal agency that gives taxpayer-backed loans and loan guarantees to foreign buyers who buy American goods — to subsidize U.S. manufacturers even when they are selling to other American companies. 

This would be a significant step in the federal government’s transformation into a venture capital firm and investment bank involved in all corners of the economy. It’s private profit and public risk. Conservative Sen. Jim DeMint calls it “venture socialism.” 

Ex-Im has been financing exports for decades. Taxpayer-backed loan guarantees push down interest rates for foreign buyers, thus greasing the wheels for U.S. manufacturers and eliminating risk for U.S. banks.

These loans are perhaps less risky than the “green” energy loans of the Department of Energy, but nonetheless, as the article states, they are ” public risk”. If the companies default, it’s at the expense of the American taxpayer.

This is why it is important to make the distinction between big government, pro business, and pro market approaches to handling the economy. This is something that Governor Palin understands very well– both in  how the government should handle green energy and  the economy as a whole. Regarding government investments in green energy, Governor Palin noted in an interview with Breitbart.com (emphasis mine):

Yes, for the private sector. I don’t think there is anything wrong with setting goals for alternative energy, but we have to be realistic. A truly effective alternative energy source needs to be efficient and profitable. No amount of Obama’s subsidizing his campaign donors’ bankrupt green energy companies—some with harebrained ideas that will never be economic—will get us to that efficient and profitable alternative. The free market will determine this. Sure, we can support research and development when it’s appropriate, but as scientists and venture capitalists continue to look for viable alternative energy sources, we should be encouraging the development of natural gas as a clean and plentiful bridge-fuel to a more renewable future. We have enough natural gas in America to be energy independent for many decades!

This is a pro-market approach to green energy, and it should be applied to all aspects of the economy. No more betting with the American people’s money. I wrote in a previous post about Governor Palin’s pro-market approach to the economy:

The big government views of the Left and the “pro business” views espoused by many in the GOP think that government exists to do things for the people or for businesses. Governor Palin is pro market. Who is empowered in a pro market economy? The consumers (the people). The people determine whether or not a business fails or succeeds by their purchasing power–not by the special loans of the big government Left or the special tax breaks of the pro-business GOPers, but of the the Galileoan pro-marketers. 

This is what makes Governor Palin’s speech in Iowa late last summer so compelling. She laid out a vision of a pro market economy–no corporate taxes, but no corporate welfare, no special tax breaks or subsidies either. In other words, let the people decide what business fail or succeed by their purchasing power. Also, as Governor Palin wrote in a Wall Street Journal op-ed, echoing Peter Schweizer’s book Throw Them All Out,  let there be no more crony capitalism and no more special treatment of politicians.

Both parties need to stop trying to do things for their cronies and stop doing things to the American taxpayer.    The economy is not a giant casino with green energy slots or big business roulette tables, and the taxpayers should not have to finance the government’s addiction to OPM  (other people’s money) and gambling. The need to leave this “Las Vegas” behavior behind. Otherwise, the voters will continue having to choose which party is their favorite mistake, rather than the party that stands with them.