LPA Foundation
Advisor Veronique de Rugy

Advisor Veronique de Rugy — LPA Foundation

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Ex-Im’s Only Defenders Are the Special Interests It Serves

March 3, 2015

Last week, I discussed how as the fight over the Ex-Im Bank heats up, special interests who benefit from the program are doing all that they can to pressure Congress into saving it.

Last week, they brought hundreds of small business owners to Capitol Hill in an effort to create the illusion that giant corporations weren’t the main beneficiaries of the program. Nothing will change the reality that 64 percent of the Bank’s activities benefit just 10 giant corporations. But everyone loves small businesses, and even though even they shouldn’t be the beneficiaries of government granted privileges, it is an effective technique to win some support from the lawmakers who still fail to understand the profound difference between being pro-market and being pro-business.

I should hope that even those lawmakers are smart enough to see through such a transparent propaganda effort. At the exact same time as the small-businessmen made their excursion to Capitol Hill, the representatives of the 3 biggest corporate interest groups behind the Ex-Im reauthorization (the Chamber of Commerce, the aerospace industry, and the financial industry) appeared in various newspapers with their own pro-Ex-Im talking points.

So much for Ex-Im championing the little guy! The bank’s biggest backers are the large corporations who directly benefit from it, and the lobbyists who they pay to defend its continued existence.

The great news is that over the years, many people have started to stand up for the unseen victims of Ex-Im. Most people have come to realize that there is no policy justification for such a corporatist program. Economists have long known that these kinds of export credit subsidies will never raise the overall level of trade; rather, they redistribute wealth away from unsubsidized American firms, employees, and consumers and direct it toward a tiny number of subsidy beneficiaries. But while until now, the bank had been allowed to prosper and grow only because its costs were spread to millions while its benefits were jealously protected by a few clients, things have changed.

Over the last decade, many people have awakened to the unfairness of these government privileges. The fight against the Ex-Im Bank is an expression of the understanding that things must change and politicians cannot continue to support programs that only benefit a few companies at the expense of everyone else. It is worth repeating that when you put all Ex-Im beneficiaries together, large and small, and compare them to all non-exporting firms, they make up a ridiculously small number of exporters and a small number of workers. In fact, many in the free-market movement now view the fight over the Ex-Im Bank as a litmus test of how serious lawmakers are in providing small government and opportunity for all, rather than for a well-connected few. It is no coincidence that at CPAC and the Club For Growth last weekend, every aspiring candidate was asked to take a position on Ex-Im, and every one of them said they would support killing it one way or another.

Dan Mitchell sums up the issue nicely:

In the case of the Export-Import Bank, though, victory is possible. Authorization for this odious form of corporate welfare automatically sunsets later this year.

In other words, so long as either the House or the Senate say no (which simply means choosing to do nothing), taxpayers win.

This is why getting rid of the Export-Import Bank is a real test of whether Republicans are serious about shrinking the size and scope of government. …

The bottom line is that the only argument for the Export-Import Bank is that it helps to perpetuate a corrupt insider scam.

But if you’re not a lobbyist, cronyist, corporate fat cat, or other form of insider, the Ex-Im Bank is a lose-lose proposition.

If you think it doesn’t make that much sense to use Ex-Im as a litmus test, ask yourself this: If Republican lawmakers can’t stand up to the special interests represented by the Chamber of Commerce, how can we trust them to stand up to all the special interests who will object to fundamental tax or entitlement reforms? That’s the big picture behind the Ex-Im fight.

Issue Categories : Finance & Banking