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Congress Should Focus on Saving Our Economy, Not the Export-Import Bank

Congress Should Focus on Saving Our Economy, Not the Export-Import Bank

Eighteen years ago the American public told Congress that enough was enough. The nightly news ran stories about rampant welfare fraud and how people had turned the federal safety net into a permanent cash cow.

But if anything, the polemics disguised how the old welfare system stripped people of hope, deprived them of a future, and robbed them of their dignity. It wasn’t easy, but eventually a divided Congress worked with a Democrat in the White House to reform the welfare system.

After the welfare reform legislation was signed into law, many welfare recipients were surprised to learn that they were now “on the clock,” that the new law established a maximum lifetime limit of five years for an individual to receive federal cash assistance (some states made the limit even shorter). Moreover, states were required to help people become self sufficient through rigorous work requirements. The message was clear: able-bodied people can’t use t{C8FDDE0E-4ADC-40F0-9C1E-0A832383A86B}&la=en&fo={C8FDDE0E-4ADC-40F0-9C1E-0A832383A86B}axpayer money as a crutch for dealing with difficult circumstances. It was a tough love approach, but one based on a belief that the great bulk of individuals are strong and, with some help, can solve their problems better than a Washington bureaucrat can.

Not everyone starts life in the same place, and sometimes obstacles arise that make life even more difficult, but the 1996 welfare reform law proved that dependence on government leads to worse outcomes, not better ones. When we made it easier for people to find jobs and less attractive for them to rely on government assistance, the vast majority made good choices and improved their lives.

So why does the federal government ignore these valuable lessons when it comes to big corporations? It makes no sense to hold individuals to a tougher standard than we hold mega companies. But we do. Many listed on the Fortune 500 are treated more lavishly than our neighbors who are struggling to feed their kids and make ends meet.

The Export-Import Bank is open for business and eager to dole out taxpayer funds to some of the largest and most profitable corporations in the world. Let me be clear, the Ex-Im Bank is not the friendly banker around the corner. It is a vast federal bureaucracy (its own taxpayer-funded website lists over three dozen corporate officers!) run by a person who is hand picked by the President of the United States and confirmed by the US Senate.

Ex-Im’s charter is set to expire next month, unless that same US Senate pushes the reauthorization bill all the way to the President’s desk. But I can promise you that the President’s political appointee at Ex-Im–and its three dozen “officers”–will spend the next several weeks trying to convince Americas that they are just the friendly local bankers trying to help out the mom and pop stores on Maple Avenue.

The Export-Import Bank is a bastion of corporate welfare. It likes to issue talking points regarding the number of “transactions” that are made on behalf of small businesses, but it will do all it can to avoid admitting that the great bulk of its work benefits just a handful of giant companies. Because of the institution’s role in wasting taxpayer money, establishing unfair advantages for foreign companies, and empowering golfing buddies and the political powerful, the American Conservative Union opposes its reauthorization.

President Franklin Roosevelt created the Ex-Im Bank by Executive Order in 1934 as a means to enhance US exports by providing loans and loan guarantees to various companies in the Soviet Union and Cuba. Over the past eight decades, however, it has morphed into a massive, $140 billion bureaucracy riddled with wasteful spending and complicit in the frustration of the free market. In the past few months alone, several senior officials have been suspended from their posts pending an investigation into acceptance of gifts and favors from companies seeking to gain an advantage in trade regulations.

These unprincipled practices have resulted in preferential treatment to foreign companies seeking to gain an upper hand over American firms, especially in the airline industry. Through its loan provision system, the Ex-Im Bank offers low-rate lines of credit to foreign airlines that, in turn, use this financial advantage to undercut American businesses. Many of these foreign airlines are state-owned, which gives them an added business advantage over their private equivalents in the United States. According to a recent study, US airlines have suffered losses to the tune of $750 million due to the Bank’s decisions, along with around 7,500 jobs. 

The Ex-Im Bank’s strategy speaks to a larger problem of the government favoring certain businesses over others, at the free market’s expense. Recently, The Wall Street Journal reported on the relationship between the Ex-Im Bank’s financing of foreign companies and purchases of jets from Boeing by those same firms. This public financing arrangement gives Boeing an unfair advantage in the US marketplace because the latter company can sell its planes for a lower rate than of other companies. This agreement also hurts smaller businesses trying to gain a toehold in the market by granting large corporations a lopsided advantage based upon government connections.

In the era of welfare reform, it was understood that individuals would be better off if they didn’t rely on government assistance. The same must be true for corporations. President Obama, who’s been on both sides of this issue, has shown his true liberal stripes by continuing to support what he once called “little more than a fund for corporate welfare.” The logic that was once comprehensible to President Obama should still be understandable to others: unbridled federal assistance produces more harm than good.

What America truly needs to boost exports and grow the economy is not more layers of government but a free market that rewards innovation and creativity. As House Majority Leader Kevin McCarthy said on Fox News Sunday, “One of the biggest problems with government is they go and take hard-earned money so others do things the private sector can do.” To succeed, American companies need tax and regulatory relief, not promises of government handouts to the well connected. Instead of choosing which companies to hand subsidies to, we ought to be lowering the cost of production on all our companies.

In addition, smart action by Congress to combat abuses in the import-export process can lay the groundwork for a fair and robust economic future for our nation. On the other hand, the chaos of bureaucratic cronyism created by the federal government only serves to strangle the life out of the market.

The fate of the Export-Import Bank will soon be determined. We urge Members of Congress to allow this program to expire and instead focus on passing common sense legislation that will actually help rebuild our economy and our future. 

Dan Schneider serves as Executive Director of the American Conservative Union (ACU), America’s oldest and largest grassroots conservative organization.


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