The GOP-led House has attached the almost-dead Export-Import to the must-pass, six-year extension of the pork-packed Highway Bill, likely resurrecting the bank from extinction.
What does a taxpayer-guaranteed lending agency have to do with the nation’s roads and bridges? Nothing, except that many mega-corporations and donors on K Street want the Export-Import Bank revived. Burying the bank in the $300 billion road bill will ensure the Senate and House can revive the bank with the least amount of public scrutiny or political blame.
New Republican Leadership? Same as the Old Republican Leadership, apparently.
The Export-Import Bank was created in 1934 by President Franklin Roosevelt, as part of his “New Deal.” The federal bank provides taxpayer-backed loans to foreign companies to purchase goods made by American firms. Perhaps the bank made sense 80 years ago. It certainly doesn’t make sense in a world of zero-percent interest rates.
In fact, purchases made through the Bank’s subsidized loans only account for about 2 percent of America’s total exports.
With both the European Central Bank and the Federal Reserve both exploring a period of negative-interest rates, where entities are effectively punished for not issuing debt, taxpayer-backed loans invite cronyism and corruption.
Since 2009, there have been at least 74 cases where the Bank’s Office of Inspector General had to take action because of questions of “integrity” surrounding loans. At least four Bank employees have recently been under investigation for accepting kickbacks for approving taxpayer-backed loans.
In a report to Congress in 2013, the Bank’s Inspector General faulted the bank for “weaknesses in governance and internal controls for business operations.”
The Bank has also been “captured” by a few mega-corporations. More than 60 percent of the loans underwritten by the bank benefit just 10 companies. Worse, 40 percent of the subsidized loans back a single company, Boeing.
The loan subsidies to purchase Boeing aircraft, of course, are used by foreign airlines who then have a competitive advantage over U.S. airlines like Delta and United who can’t use the Ex-Im Bank’s cheap loans to buy aircraft from Boeing.
This contradiction alone is a good reason why the government shouldn’t be in the business of picking winners and losers.
In the spring, conservative legislators blocked the bank’s vital reauthorization. Last week, a gang of establishment Republicans — plus nearly all the government-loving Democrats — used a legislative procedure to revive the bank. That wasn’t enough to save the bank, since it also needs to get approval from the Senate ASAP.
But, somehow, the Ex-Im bank has been attached to the must-pass transportation blowout. Unless the GOP leaders really fight hard when the House and Senate blend their bills in the closed-door conference, the Ex-Im bank will soon re-emerge, alive, kicking and spending.
Putting the Export-Import Bank into the highway bill can only be done with acquiescence from House Republican leadership., meaning , it had to have the closed-door approval from new House Speaker Paul Ryan. That is not a good sign for the new House leadership.