Stop Maligning the Export-Import Bank. America Needs It.
Recently, pseudoconservative Sen. Mike Lee (R-UT) and a few of his Congressional chums, along with the neoconservative Heritage Foundation, have resumed their utterly misguided and dishonest propaganda campaign against the Export-Import Bank, maligning it with a litany of lies. Furthermore, because the Bank’s 2-year operating authorization is set to expire soon, Lee and his fellow pseudoconservative Congressional pals seek to kill the Bank, as does the Heritage Foundation and its lobbying outfit, Heritage Action.
They falsely claim that the Bank hands money out to “politically connected” businesses, skews free markets, and exposes taxpayers to unnecessary loan risk. They falsely claim that over 80% of its loans go to huge corporations like Boeing and General Electric. They malign the Bank as a “crony capitalist” agency.
All of their claims are utterly false, however. In this article, I will correct the record.
The Facts About The Export-Import Bank
Here are THE FACTS about the Export-Import Bank:
- It does NOT receive any funding from the taxpayers and does not cost them a single cent. In fact, thanks to its interest rates, it returns a profit to taxpayers every year – to the tune of $1 bn last year.
- It does NOT provide any subsidies to anyone. It only provides LOANS to businesses – which have to be (and are always) fully paid back with interest.
- Over 90% of its loans are provided to SMALL BUSINESSES, NOT big companies like Boeing and GE.
- It is NOT a crony capitalist agency, because crony capitalism is the act of providing handouts to those individuals or businesses who are politically connected or sympathetic to a sitting government. The Ex-Im bank provides loans without regard to businesses’ and their owners’ political sympathies or contributions.
- It is absolutely necessary to help American companies level the playing field on the global market, which is heavily skewed towards foreign competitors who are lavishly subsidized (not merely provided with loans, but outright subsidized) by their national governments. Foreign countries always have (and will, for the foreseeable future) lavishly support their manufacturers, especially in key industry sectors. The only choice for the US is to either do the same or stop aiding its exporters and thus lose its industry entirely over time.
- Big companies, such as Boeing and General Electric, receive only a small portion of the Export-Import Bank’s loans.
- Ex-Im has NEVER loaned any money to Solyndra, despite Heritage Action’s utterly false claims.
Ignoring these facts, Sen. Mike Lee nonetheless presses for the Export-Import Bank’s deauthorization and has recently declared in the National Review that “whether the Export-Import Bank provides loans to respected, successful companies like Boeing or failed companies like Solyndra is irrelevant.”
Excuse me? Whom it provides loans to is irrelevant?
Are you on drugs, Sen. Lee?
It matters a lot!
Whom the Bank loans money to matters, because it determines whether the loan is likely to be paid back with interest or not. In the last 27 years, it has always been in all cases.
Sen. Lee protests that it’s irrelevant because loaning money to private companies – even to American exporters – supposedly skews the free market and violates conservative principles.
But as I will demonstrate, this is utter gibberish.
Economic Nationalism Leads To Prosperity, Free Trade To Economic Decline
Supporting American exporters – especially with loans rather than subsidies – does NOT skew free markets and is NOT a violation of conservative principles.
Globally, there are NO free markets – the global marketplace is already heavily skewed… in favor of America’s and American companies’ competitors, that is.
Virtually all major traders around the world, except the US, protect their industry with subsidies, loans, protective tariffs, and in many cases (e.g. China), currency manipulation.
China, India, Japan, Russia, Germany, France, Mexico, Canada – all of them, and many other countries around the world, protect, nurture, and generously aid their industries, especially exporting companies.
The US and the UK are the only major traders in the world who don’t do so and instead indulge in “free trade” fantasies.
It is therefore no surprise that the US has huge trade deficits with almost every other country around the world: with Italy and Ireland, $20 bn annually each; with Germany, over $30 bn annually; with Mexico, over $60 bn per year; with South Korea, $25 bn per year (it has tripled since the ratification of the KORUS free trade agreement).
America’s trade deficit with Japan is the largest America has ever had with Nippon.
America’s trade deficit with China last year was the largest ever recorded in human history between any two countries, at over $300 bn! Not just the largest between the US and China, but the largest trade deficit ever recorded between any two countries!
Such are the disastrous results of suicidal “free trade” policies that the GOP and the Heritage Foundation have promoted for decades.
These folks, including Sen. Mike Lee, are obviously ignorant of the fact that EVERY country which ever became an economic power did so by protecting and supporting its industrial base, especially exporters: England under the Acts of Navigation, Britain until the mid-19th century, France under Jean-Baptiste Colbert and Napoleon, Prussia under the Customs Union, Germany since the 19th century, Japan since the Meiji era, America from the 1790s to the 1960s, China today.
NO country has ever become an economic power, or generated prosperity, by indulging in free trade fantasies. Free trade is only for dupes and idiots.
America’s own history is instructive here. The US used to be, economically, a totally independent country and THE world’s factory of all sorts of goods. Today, it has been largely deindustrialized and is dependent on China for the necessities of life – thanks to suicidal “free trade” policies.
From the Founding Fathers’ era until the 1960s, the US followed the Founding Fathers’ economic preceipts: Manufacturing, not finance or services, is the nation’s economic muscle. Trade surpluses are preferrable to trade deficits. Exports are preferrable to imports. To protect the economy and Americans’ jobs, the US industrial base must be protected by any means necessary. “Made in the USA” should always be preferred.
It is no coincidence that all four Presidents who made it to Mount Rushmore were protectionists.
“Thank God I’m not a free trader”, President Teddy Roosevelt remarked once.
But starting in the 1960s, America began to unilaterally open up its huge market to foreign companies without obtaining reciprocation from foreign countries.
Thus became the deindustrialization, and the unilateral economic disarmament, of America.
And even though it was a Democratic-controlled Congress who passed, and a Democrat President (JFK) who signed, the Trade Promotion Act, it is Republicans who have led the way in this unilateral economic disarmament.
And, predictably, it has proved just as disastrous for America’s well-being as the Democrats’ campaign to unilaterally disarm America militarily.
Indeed, America now has two pro-unilateral-disarmament parties: the Democratic and Republican Parties.
The Democrats, led by Harry Reid and Edward Markey, want to unilaterally disarm America militarily. Republicans, led by Sen. Mike Lee, want to unilaterally disarm America economically.
America has now fewer than 25% of the nuclear arsenal she had in 1991, at the Cold War’s end, and one of its last protections for the US industry is the Export-Import Bank. If that is terminated, the US industrial base is likely to go the way American civilian shipbuilders went after the Reagan Administration cut off aid to them: out of business.